This morning, the Department of Labor released Initial Unemployment Claims. Initial claims were reported at 453,000 which was slightly better than expectations of 457,000. Prior claims were 469,000, revised from the original reporting of 465,000. So; today's claims were better than prior claims and the stock market rallied because of the improvement. Now, we don't have the exact numbers, but it sure seems to us that each report has the prior report revised higher which makes the current number look better for comparison sake. We will watch this next week and report back to you.
Q2 2010 GDP third revision was released at 1.7 which exceeded the 1.6 expectation. Another good number to move the market higher. Apparently, the recession is over and this is just another number that points to that "fact", but we wonder how the political process will weigh on future government stimulus and government jobs. Will the government continue to expand under the Democrats, or will it contract under the Republicans? We will find out in November.
Gold is extending its rally as traders shun the US Dollar. That no one wants to own the dollar right now can be a contrary indicator.
Have a great trading day.
– CTA Trading Desk
CTA Trading Desk Post-Close Report
A better than expected Chicago PMI number catapulted stocks higher early Thursday morning. The rally briefly pierced S&P 1150 (high 1157.13) before profit taking set in, aggressive sellers taking the index down -2% by midday. The remainder of the session was unremarkable as end-of-quarter portfolio fine-tuning found buyers and sellers conducting auctions right back in the middle of the box (1130-1150).
At the high this morning the S&P almost reached a measured move objective of 1160. Off the July 1 low the S&P rallied 120 points to a high of 1130 and adding 120 points to the Aug 31 low would yield a target of 1160. The apparent failed break-out combined with large reversals in market leaders would normally be a sign of caution, but the furious shuffling going on at quarter’s end probably means we should put a small asterisk next to the daily price action in our trading journals.
With the 4th quarter beginning tomorrow hopefully the true intentions of the market will be revealed – sooner rather than later. It will be interesting to see if postponed selling pressure materializes on some of the recent leaders (AAPL, AMZN, NFLX, PCLN, BIDU, and CAT among others come to mind). The bloom may be off the rose on these stocks if uptrend lines are broken, 20-day moving averages violated, or weekly swing lows taken out on increased volume. Calling the end of parabolic ascents is a habit sure to lighten your wallet, but allowing the price action of each stock to announce supply has finally overwhelmed demand gives the objective observer the proper time to initiate a trade.
If money does come out of these high fliers it may be redeployed into the oil sector which seems to have found its footing lately, and maybe even parked in some cash-rich established tech stocks like Cisco (CSCO+0.15%), Intel (INTC-0.16%) and Microsoft (MSFT-0.12%) all trading at very reasonable valuations.
No change in near-term support (1115) or resistance (if 1150 taken out on closing basis next target 1172).
Have a great evening.
– Patrick Veech
Comments
Cara 100 Ratings Changes
Good morning.
POMO Injection Today - Outright Treasury Coupon Purchase
Todays Reports:
8:30 - GDP 3rd Estimate - 1.7% http://tinyurl.com/233ttq5
8:30 - Jobless Claims - 453,000 http://tinyurl.com/26eup4g
9:45 - Chicago PMI
------
AAPL - PT Lifted from $350 to $360 @ Stifel Nicolaus. Buy
BBY - Best Buy upgraded to Top Pick from Outperform at RBC Capital. The analyst believes shares remain inexpensive and that the company will be a major beneficiary of "Growing Seasonality" during the holiday season. Target to $48 from $46.
Re: The Fed's second bubble/ The Other Side/ INTC+WFC
Closed the INTC/WFC @ 19.31/25.30 on positive reaction to jobless claims for minor gains. I'll take the gains.
SPY/DIA bidding 115/109
That could easily reverse on Friday, but I don't think bulls drop the ball today.
Re: SPY/DIA bidding 115/109
Most fund traders probably have orders not to drop the ball..
JBLU
Looks to be trying to break out of a 2-year consolidation pattern today. Had a good write-up in Barron's last week and is also benefitting from relative valuation to Southwest's Airtran purchase on Monday and general positive trends in airlines and potential attractiveness as a takeover target by American and US Airways. I am long @ 6.45 from earlier in the week. I think $7.50 may be in short order.
Currencies this month
Month of September currency performance:
Swedish krona +10.57%
Aussie dollar + 8.72%
Euro + 7.88%
Norway + 7.87%
Danish krone + 7.80%
(Source: Daily Pfennig)
Intervention: CBs of Japan, Switzerland & Brazil vowed to keep their currencies weaker, but to no avail as USD continued to weaken.
Overall market volume: With the end of the month, expecting volume to expand some because of quarter end rebalancing.
GDP, Unemployment and Corporate Profit report
Real GDP - Q/Q change 1.7% vs 1.6%E
New Claims - Level 465 K Prior 453 K Actual
After-tax Profits - Y/Y change 37.7 %Prior, - 38.7 % Actual
http://fidweek.econoday.com/
Cara 100 Update
DB - Deutsche Bank upgraded to Neutral from Underperform at Macquarie based on valuation.
FSLR - shares now seen reaching $160, according to Jefferies. Estimates also increased, given higher expected solar pricing. Hold rating.
NE - Noble Corporation downgraded to Neutral from Add at Capital One Southcoast
following an update in its rig status that consisted of downtime and contract disputes. Target to $39 from $42
Germany exporting its way out of unemployment
They have structural issues in unemployment, so 7.5% is low for them. China and Brazil are making Germany's day...
http://www.bloomberg.com/news/2010-09-30/german-un...
Solar breakout
near in JKS.
Chicago PMI
60.4 %
http://tinyurl.com/24gy64w
Re: Chicago PMI/ Shorts forced to cover
Max frustration? It would have to be an intraday sell-off to trap new bears/raise more cash, followed by a run-up into the close.
Cara 100 Update (Final)
MICC - Millicom downgraded to Neutral from Overweight at HSBC (pre-open).
POMO
Can someone provide some clarity on the POMO? The Fed lends money to HB&B at next to nothing so they can buy treasuries...then the Fed buys them back and the banks make a profit...then banks buy stocks at 30 to 1 to pump up the market? Is that how it works?
If so, it seems the banks either are directed to buy stocks by someone, or some entity...or there is major collusion or an "understanding" not to sell the market at this time.
How come someone in the media is not exposing this kind of collusion, if it is indeed happening. How long can this go on and what eventually may happen? This is basically price fixing at an extreme level...
Re: POMO
Q: "How come someone in the media is not exposing this kind of collusion?"
A: The plutocracy controls the mainstream media.
Hammer1,
I've witnessed Sen. Jim Bunning and Rep. Ron Paul grilling Ben about this sort of thing. Ben just him-haws, the pols get their sound bite and nothing ever comes of it.
How long this activity can continue is anyone's guess. My guess is:
Most Likely: Until the US dollar completely collapses.
Unlikely: The US citizens revolt and abolish the FED.
You may find this helpful in understanding how the Fed manipulates things:
http://tinyurl.com/364qzy7 (PDF)
"I believe that banking institutions are more dangerous to our liberties than standing armies." --- Thomas Jefferson
Regards,
BH
Holding TZA
If we make a new high S&P and show any strength of holding it, I'm taking my losses. Plan on trimming the position at 26 and reevaluating.
Hammer,
Anyone who owns bonds expiring on the POMO day are getting newly created money for their note. Most of them are owned by banks however. I don't know about 30 to 1 buying but it is suspected they are buying futures contracts. The media doesn't talk about it because it's all smoke and mirrors to make the public feel comfortable and keep spending.
Stocks And VIX Both Up
change is afoot.
Re: POMO
See Trading Desk Blog for Sept 27, 2010
Grym
Sorry to hear you were hit hard by this cycle. I'm sure you learned a whole lot of lessons during your 72 years. Thanks for sharing and best of luck. Though you may not get back to where you were, if you're a religious man, your fortune awaits you.
Re: POMO
BH,
"The plutocracy controls the mainstream media."
How true. Even with the internet which at least offers an alternative to MSM, It has become easier to spread myths and disinformation (formerly known as lies) from the top down.
The Nazi propaganda machine, and espionage techniques of WW2 were probably the first methodical attempt to influence thought to whole segments of humanity. We seem to be still so naive not to realize how easy it is to discredit an individual or group by use of plants. The media is a sponge soaking it up and squeezing it out. The era of investigative reporting has largely fallen to the budget ax and "need to be first" to report.
Midday Buying Opportunity?
The sell-off needs to be convincing enough to fool traders. Indexes need to hit the red zone and remain there for an extended period of time- at least an hour or two. JMO.
Re: Grym
Thanks jet8400.
I'm still OK, but worry about my kids, my friends and our country.
Jim Jubak has an article which mirrors what I have observed since the 1980s.
http://tiny.cc/60stm
How Obama can fix the US economy
Of most interest to me was:
"European and Chinese makers of high-speed trains are going to fight it out to see who gets billions in U.S. taxpayer money to build a high-speed line in California."
I have sent my idea for a national public rail system to all Presidential candidates since George H.W. Bush had the "peace dividend" to play with. Part of my plan was to convert US auto makers to rail production.
Well, Jubak won't get any attention either. Such is life.
Opened shorts today for the 1st time in a good long while
Picked up some FCX OCT $80 puts for .69/k at the open. I'm going to be a pig and let them ride a little here...
Picked up some SDS OCT $30 calls for .63/k at the open. Letting 'em ride.
Picked up some SDS OCT $31 calls for .31/k at the open, flat so far, but I'm going to give the trade a little time to work.
Still bullish, but market needs a blow here. Nothing wrong w/ an injun taking a few insurance scalps. WOO WOO!
Re: Chicago PMI/ Shorts forced to cover
2nd - if this happens, you're a stock market sage!
Or just an average joe that made a freaking amazing call.
learning about EOQ window dressing
seems the grains were being bid up as well for portfolio dressing, with selling under way now. Sorry, they're not soft commodities - slowly learning to differentiate. DBA has returned to trend line support - curious to see if it breaks it as the new quarter begins or if its got solid support. CORN has a little bit further to drop.
Another lesson learnt about market behaviour.
Re: Opened shorts today for the 1st time in a good long while
nebish,
Just curious as to why you'd buy options on a 2X when the options on the 1x perform better. If it goes your way, you make slightly more with the 1x and they are usually more liquid too. If it goes against you, the 2x options drop to zero quickly.
Re: POMO
Hammer1..
What price fixing? what Manipulation? There is no such thing. Market ONLY trades on Technicals. When it's overbought and ready to reverse based on TA, other news forces hit the wire to prolong the lie and keep it there in the extreme overbought zone for as long as it takes until THEY decide to take it down, keep it there for a month, or two , 6 months, ...etc., and yeah this all agrees with TA 100%, no doubt about that. (grin).
Today's Fed Purchase
http://tinyurl.com/36aluut
seaching for bev
groung control to bev, please come in.
Re: Grym
Do you have a play on the high-speed rail or is this something you're watching?
Re: Midday Buying Opportunity?/ INTC/CSCO
Opening CSCO @ 21.79. Reopening INTC @ 19.12.
Re: Midday Buying Opportunity?
2nd,
Normally, I'd be thinking profit taking in an overbought market, but you've been so in-the-zone with your market calls, I can't go against you.
Good luck.
BH
I closed the puts on SLW
that I opened yesterday. It was a lucky timing and I managed to hit the top yesterday and bottom today. Took fast profit as the position was highly leveraged. Probably left money on the table too. I was also lucky to shed some GDX on close yesterday.
Re: Midday Buying Opportunity?
I agree with 2nd and he is on the roll (as usually). I actually reloaded my puts on FAZ minutes ago.
POMO
I'm still waiting to see non fed money poor into this market. It's just like the government to depreciate the dollar until people with cash can't bear it anymore and spend it. As we said in the Navy "The beatings will continue until moral improves!"
USO up and it breaks out!
from a multi-month triangle. I'm glad I' didn't sell OIH yesterday as I was considering doing it.
USO up and it breaks out!
from a multi-month triangle. I'm glad I didn't sell OIH yesterday as I was considering doing it.
The bad news I was stopped from UNG again! I'm done with that trade. I'm sure it will skyrocket now.
Sorry for the double post, browser hickupped I guess.
Serial Lieing
From this mornings headlines at MarketWatch:
9:46 - US Stocks Open Higher, Boosted By Jobs Data
11:58 - US Stocks Turn Lower On Job Fears
--------
Is it any wonder that folks have no trust in the markets or the media?
These people are such bad liars that they can't even keep their story straight from hour to hour.
Re: Serial Lieing
Hey, but we are still trading on Technicals, are we not? lol
Re: Midday Buying Opportunity?
Jack Black - This little dip can remove my death grip on my longs, even with this massive rally we have had.
Re: Serial Lieing
BH,
That is amazing. Do they really think people won't catch on? Perhaps they were banned from saying the word Europe.
Some interesting anecdotal comments found in Chicago survey
https://www.ism-chicago.org/chapters/ism-ismchicag...
1.Suppliers have cut staff so much there is no support team when a failure occurs, the response is slow, laborious and inadequate.
5. Look for consumer food prices to rise soon. Food manufacturers simply cannot
continue to absorb commodity increases...
Re: POMO
analyst,
picking me as a subject of your sarcasm you make a bad choice. This is first and last warning. Stay civil.
Re: Midday Buying Opportunity?/ Adding WFC
Reopening WFC @ 25.14...
brcm
added at $34.89. Hat tip 2nd. Vad would be out right now with a catch of the day.
Re: brcm
Just wait for today's "catch of the day," that will be classic textbook, "must know" kind of setup. Traded it with smile - it was exactly the kind of entry John Person of Nationalfutures showed during the seminar in LV
Re: POMO
"The era of investigative reporting has largely fallen to the budget ax and "need to be first" to report."
You are being kind Mr. Grym. Reporters are intentionally done away with IMHO...Our controllers took Goebbels lessons to heart and have continued to refine the process.
One quick example and an interesting watch:
Neuro-linquistic Programming
http://tinyurl.com/23gn597
Selling more TZA
One more leg down would form a pretty inverse head and shoulders. I will sell some more TZA around 26.20 if we see it in respect for Bernanke's artisanship.
Fear & Loathing In Europe
A nice photo journalistic piece on the results of European austerity:
http://tinyurl.com/28vdr5b
Looks like it could be....
...a really demoralizing afternoon for over-eager shorts. A mid-morning dip to keep the shorts complacent and hoping for more and a swift reversal catching a few more in the trap.
Re: Midday Buying Opportunity?/ INTC/CSCO> Closed
INTC closed @ 19.37, CSCO closed @ 21.95. Taking profits when I have them.
Re: Midday Buying Opportunity?
did you mean: This little dip can't remove my death grip on my longs?
I don't have death grip but I have stops to protect some profits since end of august.
Dollar is raising though as I said it could yesterday. This could put some pressure on stocks. Thus, I trimmed some of my positions in short term accounts.
Re: Fear & Loathing In Europe
Saw this yesterday and was tempted to buy EUO, didn't.
Re: Grym
"Do you have a play on the high-speed rail or is this something you're watching?
Reply"
No, just something I've tried to get various politicians to consider since the late 1980s.
Re: Looks like it could be....
That's not how I'd look at it. After bouncing up 11 points up this morning on mildly positive economic news, it sold off all that and more. Contrast this with the rocket-and-stall behavior we've seen on other days earlier in the rally, where the market moved up hard initially, and then slowly ground higher all day long to close at the high. Today feels nothing like that.
To me it feels like the move up is feeling a little extended. AMZN and AAPL are looking like they are going to be triple rsi sell alerts, and - is it possible that the dollar has found a bottom at 78.60?
One odd note is TLT, which has not gone green now that SPX is moving down. Perhaps bonds too are overextended?
I'm not loading up short, I'm just watching. But I think the percentages are shifting short now...
That ought to be interesting
(US) SEC expected to release its "Flash Crash" report tommorow, Oct 1
Re: That ought to be interesting
They've had months. Certainly they've come up with a magic bullet theory by now. If it were computers and HFT than why don't we see crazy 25% price flash spikes in anything? I hope they tell the truth but not getting my hopes up. Looking forward to reading the report. Thanks for the reminder it's released tomorrow.
Re: That ought to be interesting
I seriously doubt they'll come up with anything really conclusive. Looking forward to see how they navigate their way to obscure the truth. Here is the truth: we have nothing to say beyond the "market participants withdrew their bids for whatever reason," but we must pretend that we do something to prevent it, so we found the scarecrow to pick on.
Re: Grym
I'm going to have to look into this. I have an engineering background and would love to dig into the details. How they use the landscape and perhaps elevate the terminals to aid in launch and slowing on arrival. I would love to be able catch a quick train ride to a neighboring city if it's economical.
AIG FUNK
ALOHA!!
So November is getting closer and closer I guess its time to clean up the Bush mess Obama style. Just shuffle the deck!
Here is the "cure" for those debt ridden USD that AIG owes the US Treasury(aka: US Taxpayer) ...
From the article entitled AIG LAYS OUT GOVERNMENT EXIT PATH, BUT RISKS RISE dated 09/30/2010:
The Treasury will convert some of its AIG securities into common shares, increasing its ownership stake to 92.1 percent from nearly 80 percent. That stake will be sold off over time.
The Treasury will also effectively buy out the Fed's interest in two large AIG units that are being sold.
The deal is expected to close by the end of the 2011 first quarter and will give taxpayers an instant paper profit of more than $10 billion.
The deal, reached after AIG's board met with federal officials on Wednesday, shows the insurer is making progress in disentangling itself from the government and positions the company to tap the capital markets again.
But at the same time, it increases the risk for taxpayers, as AIG draws down more of the funds authorized under the $182.3 billion bailout and the government swaps preferred stock for common, which can yield a profit but also a loss if the company does not perform well.
The announcement of the plan comes as the government faces pressure to show it is extracting itself from the financial industry, which was offered more than a trillion dollars of taxpayer support in 2008.
The Troubled Asset Relief Program, set up amid the 2008 financial crisis to shore up the industry, expires on Sunday, and when Americans go to the polls for mid-term elections in November, the state of the financial system and the economy will be a big issue.
So first off with the first paragraph the US Treasury will increase its AIG holdings from 80% to 92.1% and they say that "stake will be sold off over time". How much time. Only the US Treasury would call increasing its stake from 80% to 92.1% as "disentangling itself". The US Treasury is the same place that classifies debt as revenue.
Let me remind people and you Benmosche(AIG CEO) that the US FED NY owns AIG loans worth at least $40BIL more, so I am not sure how you get from there to here ... Having the Fed out of AIG would allow the company to again persuade banks to give it loans. "You are not going to be able to go out and negotiate a contingent credit line from a bank when they have to sit behind the Fed," he said.
What about MAIDEN LANE II and III Benomosche? Is that a hidden agenda or is it covered in your "unit" double speak? I can only guess but there is mention of "two large units" the US Treasury is going to buy from the US FED. Are those two units MAIDEN LANE II and III? If so then I am not sure how TARP will get paid back when all we are doing is shuffling toxic debt from the US FED to the US Treasury(US Taxpayer). Then at what price will the US Treasury purchase this junk? Will it be $1 for $1? Of course the price will most benefit the US FED it always does. Isn't this just another taxpayer bailout only through the "back door"? Then as I have pointed out most of those "assets" in MAIDEN LANE II and III are rated BB or less, which is highly speculative, and no doubt junk. This seems like another QE but this time its the US Treasury doing the QE. The angry US public would never stand for another Bush/Paulson style bailout again so the Wall Street and US FED BT is mobilized(BT=Backdoor Team)!
All the US FED and the US Treasury have done is shuffle OPM, mainly US Taxpayer ... Same ole-same ole!
HNU.to
Entered a speculative trade at $3.60
Opened shorts....
Si02,
I don't see how that could be, but I'll certainly look into it - thanks.
Frankly, I don't think I even know what the 1x negative SPY ETF is....symbol?
If you're right, then I'm really glad that I didn't buy the SPXU options...LOL!
GL!!
Re: Serial Lieing
The problem of the talking heads is that the audience wants reasons.
9:46am - US Stocks Open Higher, Boosted By Jobs Data, GDP Revision
11:34am - US Stocks Fall As Investors Get Cautious Ahead Of Friday's ISM
12:00pm - U.S. stocks turn lower on jobs fears
12:44pm - US Stocks Sink As Investors Retreat At Quarter's End
2:15pm - US Stocks Slip As Investors Retreat Ahead Of Friday's ISM Data
2:43pm - U.S. stocks turn lower on job worries
12:22pm - Chip stocks lead broad tech retreat
1:11pm - Chip shares fall on weaker sector outlook
from MarketWatch News Viewer
PBR
Oil's up; Brazilian Real up and under attack by the big fiat currencies; largest successful IPO in history completed to tap the motherload off Rio; still trading well under its 200 MDA; oil catching a bid after lagging the commodities run up ... Brazilian election looking favorable toward PBR; Brazilian gov't ownership to increase ...
I'm in.
Cheers.
Re: Serial Lieing
Olaf,
exactly, and it always has been a fallacy. It creates false impression that there is a direct correlation between news and subsequent move. In fact, all the commentators have two versions for each of those cases: BECAUSE and DESPITE. They write "investors sold the ABCD on a bad report" or 'investors dismissed bad numbers by ABCD."
If it were as easy as buy good news and sell bad news, who would have ever lost any money? Then again, who would buyers buy from if no one sold on good news knowing for sure that it was to prop market up? :)
Re: Serial Lieing
Why only the Cambium Learning Group, Inc. (NASDAQ:ABCD) ;-)
Re: Serial Lieing
LOL. Make it XYZ. I checked this time, no such symbol :)
No real estate distress here
Check out the real estate market in North Phoenix and Scottsdale
These are the homes of the American ( and a few Canadian) elite.
Most deals are cash.
http://www.azcentral.com/business/articles/2010/08...
Re: Looks like it could be....
Dave,
"One odd note is TLT, which has not gone green now that SPX is moving down. Perhaps bonds too are overextended?"
Perhaps temporarily. I sold TLT on Wed. Will buyback (or more likely LQD) before long I'm sure. In and out has been working for me all year. I've not done well with TBT and stopped playing it a couple months ago.
Re: PBR
Hi Dr. S. - Thanks for the nudge - bought and sold PBR for nice gains during the early to late 2009 time frame, and have been monitoring all year looking for entry. The point & figure TA didn't quite do it for me, but while it's trading sideways here the funds will want to load up on this one going forward. Happy Trading
Quick setup example
Classic entry on a setback
http://tradinglog.realitytrader.com/2010/09/sep-30...
Re: Grym
I've always loved trains and there is no better way to move people or products if concerned about cost or ecology.
The town I where I used to live had seven railroads going through it pre-WW2. There were 21 tracks crossing Main St. back then. I got my first electric train at age 8 months and still set it up a Christmas.
I see a system with main lines between major cities and interurban or light rail linking smaller towns to the main terminals.
We were in Britain and Europe many years ago and traveled in comfort on rail. Perhaps now that the US auto industry is nearly extinct someone will "get on board" with this.
Re: Serial Lieing
Olaf,
I'm sure I read the reason for always announcing jobs data and then revising, but don't remember probably because I thought it was nonsense.
What we get is the equivalent of the fans leaving the park after the score at the end of the ninth inning shouting, "My team won, my team won!"
A couple days later the final score is announced and nobody cares.
This is so stupid.
Re: Grym
I hate planes. but a necessary evil in my line of work. However I love trains.
I would pick Amtrak Acela regional from NY to Boston anyday!
We really do need high speed bullet trains from all the major metros.
Where is our president???? where are our leaders???
Re: Looks like it could be....
Dave - I would agree that the move is extended and the upward momentum has decelerated over the last few days. Definetly a time to consider paring some equity exposure if one has been able to ride this wave up. At Tues/Weds closes I pulled some exposure to small cap and international funds in my long-term/retirement account and now have isolated most of my exposure in short-term accounts for increased intraday flexibility.
Still, it is not uncommon for there to be many fits and starts at the end of a move like this that are designed to trap and retrap those on the wrong side. I wouldn't be surprised to see some real volatile swings tomorrow and early next week. Then perhaps a legit pullback/consolidation. If that happens, I'll be looking for SPY and IWM to establish support levels around their 50,100, and 200 day moving averages which are all converging.
One thing is for sure in my mind - the current trend is bullish. IMO - best thing to do is wait for a pull-back and buy at better prices (and/or reavaluate technicals) rather than trying to ride shorts down now with the market. Too many factors on the positive side putting abid under the market including cheap money allowing stock repurchases and M&A/consolidation.
Even if we move into a bear phase later in the year, who is to say that we don't come close to April highs before we roll over? It confounds me that the level of bearishness over the last couple months seems to be much more fervent than bearishness was around the April top. What has really changed? Any reason prices should act more rationally than they did then?
Re: PBR
Luggie -
"The point & figure TA didn't quite do it for me, but while it's trading sideways here the funds will want to load up on this one going forward."
Good point. PBR volume is starting to trend up.
From Wikipedia:
"The Brazilian general election of 2010 will be held on Sunday, October 3, 2010.[1] The Presidency of the Republic, all 513 Chamber of Deputies seats and fifty-four of the Federal Senate seats will be contested in this election, along with governorships and state legislatures off all 26 states and the Federal District.[1] A second round will be held on October 31 if a candidate for a majoritarian campaign (President and Governor) fails to achieve more than half of the valid votes."
Well, Lula will be out by Sunday. Who will replace him?
http://tinyurl.com/29lem7m
Cheers.
Re: Grym
NYUGrad,
I had my first plane ride with a friend who was only 16 at the time. My first commercial was in a DC-3 when I got a three day pass and flew home. After that my experience became one where the "customer" was at the mercy of the airline.
I have not flown since 9/11 and have no desire to anymore.
I would love to be able to take a train coast to coast. There is something about the idea which appeals to — perhaps from the old movies, or maybe just because you are freer to move around, eat in the dining car — whatever.
I sent my suggestion to each presidential candidate since Reagan with no comment from anyone. The construction and manufacturing of rolling stock would be a big economic boost, but think of the permanent jobs it would offer clear across the country.
Thinking big doesn't extend past banks I guess.
A little musical interlude...
An end of the day lighthearted musical bit.
Laurel & Hardy
http://lucianne.com/article/?pageid=ollie_and_stan...
:-)
Re: Grym
Why not send W. Buffett that letter, Grym? He now owns a bit of infrastructure appropriate to your project. You've tried the supposed leaders; might be time to try the real U.S. leaders. W.B. and Berkshire at the head of such a project might just be unstoppable, both politically and economically.
On an entirely different vein, I was thinking about the austerity rallies yesterday in Europe. One Union leader was quoted that "it's all the bankers fault"... and then I was reading a bit about 1720, and the aftermath of the South Sea bubble. Parliamentary legislation was actually debated, in the U.K., that "bankers should be put into bags of snakes and tossed into the Thames"! Cooler heads prevailed.
Re: Looks like it could be....
Billy - "Even if we move into a bear phase later in the year, who is to say that we don't come close to April highs before we roll over? It confounds me that the level of bearishness over the last couple months seems to be much more fervent than bearishness was around the April top. What has really changed?"
For me, its consumer metrics, my leading indicator, saying that we're going to have a "surprise" negative print on GDP for 4th (and possibly 3rd) quarter. And it won't be a gentle one either. And I do not think QE 2 is baked into the cake, and even if it happens, it could well be a lame version, much like QE lite was, given the amount of opposition to more printing currently at the Fed. And the market, ever perverse, may well sell off on whatever QE news that comes out. Buying in anticipation of QE 2 seems to be a classic case of "this trade is way too easy" which is always bound to disappoint.
Just seems like risk is high, and now that the market is selling off on good news, the dollar move down is looking extended too, and so to me the near-term odds have tilted slightly bearish. And historically, Fridays have been bad days.
I think remaining heavily invested here is picking up nickels in front of the steam roller. It works out, until it doesn't. Remember that Citibank CEO: "as long as the music plays, we have to dance" - well not me. You enjoy your nickels, and best of luck. :)
toby,
i still am in ' arry ' .. actually adding to my position. if I had to choose only one, this is it. wish I had held ' incy ' when I brought it up at $ 3.50/ish last year...
Let It Snow
Oh the Main Street weather is frightful,
But Wall Street’s so delightful,
And since September has closed,
Let It Snow! Let It Snow! Let It Snow!
It doesn't show signs of stopping,
But we've got TZA popping,
The lights are turned way down low,
Let It Snow! Let It Snow! Let It Snow!
The rally is slowly dying,
Our analysts still ‘Good Buy’ing,’
But now that we’re good to go,
Let It Snow! Let It Snow! Let It Snow!
No positions in the ultrashorts right now- at some point, however, the market will be screaming 'Bye,' and then they'll be screaming buys.
Re: PBR
Hi Dr. S - Not too sure about Ms. Dilma, she might be another Hope & Change artist with a socialist agenda; however, but I am willing to bet on her apparent respect for the rule of law since the radical tendencies of her youth. Happy Trading
http://en.wikipedia.org/wiki/Dilma_Rousseff
another good Fleckenstein interview this week...
/// http://www.kingworldnews.com/kingworldnews/Broadca...
Re: Let It Snow
Just finished tallying up the results of the month. What a month! There are forces at work here that have got to be unique. We've come full circle in a great 70-year interest rate cycle and everything is frantic.
But TZA??? Do you have a death wish? Maybe holding it for 30 minutes to an hour. These 3X abominations are probably only serving the purpose of regressing us speedily back to some sane trajectory that we lost badly during 1982-2007.
Just stare at this attached chart and ask yourself - is this a sensible place to invest your money?
Re: PBR
Luggie -
Some quotes from Wikipedia regarding Ms. Dilma Vana Rousseff, Brazil's probable next prez, as it relates to PBR:
"Her management of the Ministry [of Energy] was marked by the respect of contracts made by the previous administration, by her efforts to prevent further blackouts and by the implementation of an electric model less concentrated in the hands of the state, differently from what Rosa and Sauer desired. Regarding the free market of energy, Dilma not only kept it as she expanded it as well. José Luiz Alquéres, president of Light S.A., praised the approach taken by Dilma, which is, accordind to him, helping the segment as a whole."
"After becoming a Minister, Dilma defended a new industrial policy from the government, ensuring that Petrobras' platforms had a minimum domestic content, what could generate 30 thousand new jobs in the country. She argued that it was unthinkable that a billion dollar building was not being made in Brazil.[35] The bids for the P-51 and P-52 platforms were then the first in the country to require a minimum domestic content.[36] The requirement was heavily criticized, on the grounds that it would increase the costs of Petrobras,[37] but Dilma defended the country's ability to produce ships and platforms, stating that the nationalization rates of the platforms, which varied between 15% and 18% rose to more than 60% after the requirement.[38] Lula acknowledged that, from the perspective of the company, the costs did in fact got higher, but that Petrobras should not only target the immediate costs, but also the strengthening of national science and technologies.[39] In 2008, the shipbuilding industry as a whole employed 40 thousand people, compared to 500 people in the mid-90s, in part because of the nationalization requirement.[40] Brazil now has the 6th largest shipping industry in the world."
"Another one which had disagreements with the minister on energy issues was the former Congressman Luciano Zica. For him, 'Dilma is the most democratic person in the world, as long as you agree 100% with her.'"
I read Lula is targeting an increase to 40% of PBR state ownership.
She's a cancer survivor.
In summary, I gather that Ms. Rousseff is a hardened socialist with a capitalist taste for state profits through development of national resources. That's PBR friendly, sorta ...
Cheers.
This deflation is KILLING me.
OK, I give. I'm now a certified deflationista. My colored FRN coupons are deflating so fast that even Mexican peso's are beginning to look attractive. Seems whomever beggers thy neighbor faster wins the race to the bottom.
CAT.........average 4% price increase
FDX.........5.9% increase (should make Kaimu happy)
GoDaddy.....7% and 11% increase in domain names.
Tire mfg's Increasing prices 4% to 10%
Goodyear
Pirelli
Toyo
Michelin
TiO2 prices (titanium dioxide for you public school grads) increasing 5% to 11%.(I hope you don't use paper, plactics, cosmetics or need to paint your house!)
Neighboring city increases combined water and sewer rates 11%. Water use has remained constant for the last 3 years. Ain't supply and demand! Might be chlorine prices and EPA.
Alert....This just in.......Ecuadorian Presidente gassed and hospitalized by his own police who are protesting a cut in their benefits. And Ecuador EXPORTS OIL!
Yep, I'm a born again deflationista since the FRN digits on my money markets have deflated from 5% per annum to zilch.
Rough rice prices are up 25% since July. Tough luck for Oriental and third world peoples. We eat corn and wheat by golly.
Poor Kaimu. Paperboard prices UP. Fedex rates UP. He's going to work twice as hard just to stay even.
Winter's coming. I need to change the hydraulics on the log splitter. I just pray OSHA doesn't show up and fine me for a lack of a hard hat, gloves and glasses. I just hope they never find out that I pour used oils around the foundations of my buildings for termite control.
STAGFLATION is a butt-ugly term for spinning your wheels as the price of tire rubber increases.
As Ben Stein's Papa said once, "we're not for inflation. We're not for deflation. We're for flation." He was the chair of the 'I'm not a crook!' president and I swear I'm not making this up!!!
What a world.
Bon chance
Re: This deflation is KILLING me.
with a big smile on my face, look foward to tomorrow.. a good nights sleep to all....
Re: POMO
Vad, apology for not responding earlier to your comment as I had got quite busy at work since as you know I don't work as a day-trader, it's not my career but I am more of a swing trader. Anyhow, I really don't understand why you took offence at my earlier remarks regarding TA. They were not directed at you whatsoever. You are not the only one here who strongly believes that market trade on TA 100%. Quite a few here do as well but I personally don't believe it works 100% and that is my humble opinion, it's OK if we both differ in opinions about this point here. If you read my previous past comments in this blog, you will notice that I traded in the past based on my conviction and where I think the market was heading, ended up taking loses too BUT thanks to Bill he made it clear to me and others that to become a successful trader you have to learn how to read the tape and not fight the trend or forces behind it "Trade what you see, not what you think the market should do". Well, I have been doing that so far and doing far better than I did in the past.
However, when quite of few trades that I traded with other sophisticated traders who trade based on TA fail and I end up taking a loss simply because other forces like huge injection of cash into banks by the FEDS or Feds buying equities or futures at open market to sustain and prolong the overbought conditions for an extended period of time and keep the above RSI7 close to 100 for days or wks to have a good day during auctions events and when banks traders cooperate with such moves then my friend TA that told you to sell and go short few days earlier, when you first hit and got the confirmation of the overbought conditions using different indicators, is in my opinion NOT ACCURATE 100%.
I know that you trade 100% of the time based on TA and it works for you quite well but your time frame is much less than many of us here (one or five minutes or 60 minutes time frames). Some of us here are swing or long term traders and have careers other than day-trading. When I hear that TA works 100% on all time frames I have to disagree with that. I am not sure if others here have similar opinions or disagree with me here. One example very clear to us all here, GOLD has been trading on fundamentals for a long long time on the long term chart not on technicals. Even when it was suppressed by Greenspan in the past like Silver suppressed by JPM, that was not trading on Technicals. That was simply trading with such forces who had the control and power to affect GOLD and Silver prices in market and may still have the power to take it up or down. When Technicals tell you it is way, way overbought but it continues going higher and higher almost in a parabolic move then my friend this is no more Technicals to me (IMO). There are other forces driving it up which is simply the forces who believe now GOLD has become a currency and they don't trust their gov't any more and they seek a safe heaven for the dark days yet to come. No wonder I keep hearing very few are taking short positions in Gold shares here and even if they did their stops are very tight.
Anyway, I respect you VAD and respect your opinions but please accept the fact that others do sometimes disagree with you and that should be OK. I don't take an offence or get worked out when you or others disagree with my comments or approach here. If people here going to be attacked every time they express a different opinion or disagree with other old timers on this blog then they will be quite discouraged from sharing their views any more and soon will disappear from here or stop blogging. I have noticed few have done so already since I joined here.
Anyway, you don't have to respond to my comments above but I would be interested in having this subject debated here if possible and would like to gather few opinions from all members. The question I ask every one here is: "DO YOU THINK THE MARKET ALWAYS TRADE BASED ON TA 100%, or you believe of other forces can still manipulate and control the market moves to act or behave in one way or another every now and then??"
GLTA (Longs and Shorts)
analyst and Ross
analyst: I think Vad was attempting to inject humor onto your frustration driven humor post.
Ross: I think this statement (where I read elsewhere) sums it up...
"Inflation in everything you NEED and deflation in everything you WANT."
Not a pretty situation.
Re: POMO
analyst65, agree with you 100%, I thought your original post was totally benign.
If we as a group cannot express our views but just have to have one type of group think, well, what's the point? I agree that some very good posters have been driven away here because of this type of nonsense.
Disagreement is good and healthy when down in the spirit of trying to see both sides. When you find something that works 100% of the time please share here.
I enjoyed both of your posts immensely.
Re: POMO
This an old post from Kirk who interviewed Eckhardt. analyst65, it does not directly answer your question, but it is an interesting perspective.
Trading Wisdom of William Eckhardt
Thursday, September 30, 2010 at 01:25 PM
Recently I had the pleasure to read an in-depth interview with legendary commodities and futures trader William Eckhardt. William is perhaps best known for the big bet he lost with Richard Dennis of Turtles fame in which he argued that successful trading cannot be taught.
In that old interview, William shared the following observations that are helpful for all of us to remember…
• “If a betting game among a certain number of participants is played long enough, eventually one player will have all the money. If there is any skill involved, it will accelerate the process of concentrating all the stakes in a few hands. Something like this happens in the market. There is a persistent overall tendency for equity to flow from the many to the few. In the long run, the majority loses. The implication for the trader is that to win you have to act like the minority. If you bring normal human habits and tendencies to trading, you’ll gravitate toward the majority and inevitably lose.” – William Eckhardt
• “It’s much easier to learn what you should do in trading than to do it. Good systems tend to violate normal human tendencies.” – William Eckhardt
• “One common adage on this subject that is completely wrongheaded is: you can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits. The problem in a nutshell is that human nature does not operate to maximize gain but rather to maximize the chance of gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance.” – William Eckhardt
• “The people who survive avoid snowball scenarios in which bad trades cause them to become emotionally destabilized and make more bad trades. They are also able to feel the pain of losing. If you don’t feel the pain of a loss, then you’re in the same position as those unfortunate people who have no pain sensors. If they leave their hand on a hot stove, it will burn off. There is no way to survive in the world without pain. Similarly, in the markets, if the losses don’t hurt, your financial survival is tenuous.” – William Eckhardt
• “I know of a few multimillionaires who started trading with inherited wealth. In each case, they lost it all because they didn’t feel the pain when they were losing. In those formative first few years of trading, they felt they could afford to lose. You’re much better off going into the market on a shoestring, feeling that you can’t afford to lose. I’d rather bet on somebody starting out with a few thousand dollars than on somebody who came in with millions.” – William Eckhardt
• “In many ways, large profits are even more insidious than large losses in terms of emotional destabilization. I think it’s important not to be emotionally attached to large profits. I’ve certainly made some of my worst trades after long periods of winning. When you’re on a big winning streak, there’s a temptation to think that you’re doing something special, which will allow you to continue to propel yourself upward. You start to think that you can afford to make shoddy decisions. You can imagine what happens next. As a general rule, losses make you strong and profits make you weak.” – William Eckhardt
• “If you’re playing for emotional satisfaction, you’re bound to lose, because what feels good is often the wrong thing to do. Richard Dennis used to say, somewhat facetiously, “If it feels good, don’t do it.” In fact, one rule we taught the Turtles was: When all the criteria are in balance, do the thing you least want to do. You have to decide early on whether you’re playing for the fun or for the success. Whether you measure it in money or in some other way, to win at trading you have to be playing for the success.” – William Eckhardt
• “Trading is also highly addictive. When behavioral psychologists have compared the relative addictiveness of various reinforcement schedules, they found that intermittent reinforcement – positive and negative dispensed randomly (for example, the rat doesn’t know whether it will get pleasure or pain when it hits the bar) – is the most addictive alternative of all, more addictive than positive reinforcement only. Intermittent reinforcement describes the experience of the compulsive gambler as well as the future trader. The difference is that, just perhaps, the trader can make money.” However, as with most affective aspects of trading, its addictiveness constantly threatens ruin. Addictiveness is the reason why so many players who make fortunes leave the game broke.” – William Eckhardt
• “Don’t think about what the market’s going to do; you have absolutely no control over that. Think about what you’re going to do if it gets there. In particular, you should spend no time at all thinking about those rosy scenarios in which the market goes your way, since in those situations, there’s nothing more for you to do. Focus instead on those things you want least to happen and on what your response will be.” – William Eckhardt
If you don’t think these principles are true, you haven’t been trading very long. Print these out and refer to them often!
Re: POMO
Thanks Telestar3rd for your kind words and thanks for sharing those very interesting educational comments about the art of trading and its correlation with human psychology by William Eckhardt. Very interesting stuff indeed!! I have saved those points/comments and will refer to them whenever needed as a constant reminder to learn more and more about trading and investing.
I also appreciate and enjoy your comments as well and please contribute more, I haven't seen you posting for a while now. Thanks again.
Re: POMO
Analyst,
1. Do not distort what I say. Nothing works 100%, and I repeated that more times than I care to. When you say :"When I hear that TA works 100% on all time frames I have to disagree with that" - this is straw man argument.
2. You know very well what I meant when referred to your sarcasm. If someone missed yesterday's exchange they may not know that, but you do. Pretending that you are getting attacked here for disagreement is disingenuous of you. Disagree all you want, but do it in a civil manner.
Now, how about you express your ideas and I - mine, without injecting this stuff? It's your choice now to go back to discussing issues or continuing this slippery road.
Re: This deflation is KILLING me.
Ross. Total all that up. Now add in the home price declines for most of middle class america, and add to this the fact they're leveraged perhaps 4:1 (i.e. all their home equity has vanished - which for most people, is most of their savings). And while you're at it, add in the wage decreases from 17% under/unemployment AND the wage cuts AND lower contributions to pensions that are so popular these days for those who remain employed.
Is that "less cash floating around" I hear you say? Why yes it is! And once the stimulus money stops flowing, you'll see it for real.
Re: analyst and Ross
I've seen that term "deflation in everything I want." Must be from a marketing guru from Madison Avenue. Of course I don't know any advitizering schmuckstering person who would advise one NOT to purchase because we all know that the price will decline..........and,
Things that I want:
New platinum collar for Fifi, my dog..
New gold necklace for Fifi, my mistress. (I really love my dog!)
A new G5 for gettin round the planet faster.
A flat in Hong Kong. With a concubine who loves silver...
A new 911 turbo in 'arrest me' yellow.
A new Honda for the wife. (up 2.7% this year.)
Smuggled foi gras into California.
My Marlboros from Kiev. (up 23% in the last 3 years)
A new bushog for my Jonny jump. Up 30% in 3 years.
If your talking about any new electronicaligist gewgaws for the kids then yes, Christmas may be cheaper this year. But their edeuacation ain't.
What I need is 95% of what I use and the prices are rising. What I want is ephemeral in my minds eye.
The terms 'inflation and deflation' are couched in the rhetoric of political economists who have been bought for vote getting purposes. No more, no less. Look at your own expense cards from the last 5 years and decide.
The bond bubble is an angst and anxiety herding mechanism that formerly had you looking for eyeball clicks and then infinity leveraged real estate opportunities. There are greed bubbles and fear bubbles.
Re: POMO
Vad, with all do respect, I read my previous comments from previous few days and others can read them too as well, I didn't see any comments directed negatively at your person in disrespect or uncivil manner. On the contrary, I was complementing you and 2nd_ave for pulling it out and succeeding as day traders and being good at it.
Anyway, No I don't wish to continue this slippery road any more so let’s shake hands and move on please and go back to discussing issues.
Thank you.
Re: This deflation is KILLING me.
Dave old buddy,
Does the fact that home price inflation was never captured in the inflation stats offset the fact that prices are now only resetting to normal replacement costs?
For el Mego Bankos, Uncle Sugar has already allowed them to increase their capital at the expense of us savers (ZIRP).
IT WASN'T A MORTGAGE BUBBLE. IT WAS A CREDIT BUBBLE. And as we speak, credit is being created to offset that which was destroyed.
My problem is that I WANTED deflation in the debt markets but debt holders had sway politically and I LOST. I wanted an 1990 RTC workout. Hell yes I wanted deflation in assets but it didn't happen. We just kicked the can and prayed and and and , when Hell gets his tenth piece we are all screwed but who knows when.
Look, guys like Wilber Ross (no relation, pity) can write his own terms. I cannot but I have enough salvo to dent a few hotels were they allowed to trade at clearing prices. Nuf said. Don't fight the federales. They are the printers of last resort...
Corn futures and DBA
Corn futures continue to weaken off this a.m. while oats and wheat show a testing of support. I suspect DBA has further to drop but it hit my target so I am happy. Had it been with real account I suspect I would be trailing with final quarter as I've learnt elsewhere.
Another I am following as indicator - as remarked by Bill - is EWZ. It continues to power along - leaky Fed money feeding peripheral bubbles or risk taking continues; whichever. I continue to look for a reversal signal - double top, lower high etc before engaging mentally with it.
Just putting these ideas down on paper as a focus for future trading. Something that tripped me up many a time is being spread out over too many ideas, not knowing when to buy, when to sell, getting distracted too easily etc. Finding a niche in a market that can confound so easily.
For those frustrated by the apparent miraculous rise in the markets the following says it all to me:
http://www.telegraph.co.uk/finance/markets/8035449...
maximum frustration with gains going to those who obey its movements. Remember Bill's remarks that during the great depression the market over the period went nowhere - but in between had some fantastic run ups and drops. Not obeying the market - key to which is TA - is gonna cause a lot of frustration over the next X number of years.
futures 3:30am - China closed, ASX flat, Asia mostly green.
S&P +2.80 / +0.25%
Level 1,139.50
Fair Value 1,136.70
Difference 2.80
Nasdaq +7.00 / +0.35%
Level 2,002.50
Fair Value 1,995.62
Difference 6.88
Dow +24.00 / +0.22%
Level 10,747.00
Australia's housing market beginning to weigh on the market? New applications have dropped almost 5% and prices are flat. Perhaps the top. Odds on the RBA tightening rates at the next meeting are dropping rapidly.
Watching India for signs of topping out. Rollover or consolidation, can't say for sure yet. Let's see what EOQ brings.
futures 5am - short the gap up?
S&P +4.90 / +0.43%
Level 1,141.60
Fair Value 1,136.70
Difference 4.90
Nasdaq +13.00 / +0.65%
Level 2,008.50
Fair Value 1,995.62
Difference 12.88
Dow +49.00 / +0.46%
Level 10,772.00
Europe green. Euro autos opened up and fell to support. French banks mixed:
http://fr.finance.yahoo.com/q?s=ACA.PA
http://fr.finance.yahoo.com/q?s=GLE.PA
$ just melting away and Euro breaking through 1.37 this am. How far were traders betting the Euro could go?
Re: Let It Snow/ The TZA Omelet
"But TZA??? Do you have a death wish? Maybe holding it for 30 minutes to an hour. These 3X abominations..."
Mac- 'Abominations' is actually a pretty accurate term for the leveraged ETFs. As you point out, the appropriate holding period is measured in minutes or hours. A trade in TZA is like making an omelet- heat the frying pan to an extreme temperature, cook the omelet within 30 seconds, finish the omelet with 2-3 minutes. Any longer, and the experience is all downhill.
Re: futures 5am - short the gap up?
Les- I don't think the rate of price gains we had in September is sustainable, and believe a significant pullback is needed to get us to 1220, but I have to defer to market action, which remains remarkably bullish.
The problem with shorting this morning's gap up is that everyone is thinking the same thing (I certainly am)- so the contrarian trade would be to squeeze the shorts. But who wants to be buying at the top? That's exactly why trading is never easy.
My only position right now is WFC- I wasn't able to find a decent exit price for the second allotment of shares.
I don't really have the guts to buy tops, but if I had to make a trade, my inclination would be wait for signs of panic on the part of shorts, then 'pedal to the metal' on longs for an intraday ride.
Re: futures 5am - short the gap up?
SPY @ 0600 was 114.91 and now sits 114.41... the ramp to .91 was on 5700 shares... it now sits 114.30... things that make you go hmmm
Re: analyst and Ross
"Inflation in everything you NEED and deflation in everything you WANT."
Pretty well sums it up.
So far this year:
My prescriptions up 12.5%
New cars 0% interest.
My son's hours cut 20%.
Our house values definitely down, but our RE taxes 3% up.
Re: This deflation is KILLING me.
Ross,
"Does the fact that home price inflation was never captured in the inflation stats offset the fact that prices are now only resetting to normal replacement costs?"
I think the inflation was masked by the Owner Equivalent Rent aspect of the CPI measures. Now the reverse is so because rents and leases lag real estate prices.
The current market prices (for individuals while banks set their own price on toxic RE) are massively deflationary and payments static.
What good is newly created credit if no one will borrow?
THE 300
ALOHA!!
NO ... not the Spartan warriors but the 300 economists ...
DON'T KILL GROWTH AND JOBS IN THE NAME OF DEFICIT REDUCTION ...
In the fall of 2008 the U.S. and other major economies were in a free fall in the wake of a global financial crisis. Emergency stimulus policies here and around the world broke the fall, but brought us only part way to full recovery.
Today there is a grave danger that the still-fragile economic recovery will be undercut by austerity economics. A turn by major governments away from the promotion of growth and jobs and to premature focus on deficit reduction could slow growth and increase unemployment – and could push us back into recession.
History suggests that a tenuous recovery is no time to practice austerity. In the Great Depression, Franklin Roosevelt’s New Deal generated growth and reduced the unemployment rate from 25 percent in 1932 to less than 10 percent in 1937. However, the deficit hawks of that era persuaded President Roosevelt to reverse course prematurely and move toward budget balance. The result was a severe recession that caused the economy to contract sharply and sent the unemployment rate soaring. Only the much larger wartime spending of the early 1940s produced a full recovery.MORE
LINK: http://ourfuture.org/files/documents/don%27t-kill-...
Haven't we had "stimulus" for some 96 years now? If "stimulus" is defined as government creating debt to fund private industry projects. To me Defense spending is "stimulus", mainly for Defense Contractors and the various domino businesses and labor. How long ago was it Eisenhower warned us of the military industrial complex? Yet here we are still policing the World and expanding military spending not shrinking.
In essence these 300 Economists who propose more stimulus are following my investment theory whereby the USD is debased along with every other major currency, so to preserve wealth during this MEGA currency crash you buy stuff that cannot be debased. In other words "assets" not "liabilities". Anything with the word "debt" attached is a liability.
These 300 Economists argue that our government should take advantage of the now record low interest rates and borrow(deficit spend) even bigger sums because at some time in the future the cost to borrow will go much higher. None of that argument works unless you actually intend to stop spending and pay down the principal on the debt. As I have pointed out the last time in American history any politician paid down the principle was 1836, when Jackson actually paid the entire debt off. He had to outlaw central banking to do it. What the 300 Economists are telling our government to do is borrow like crazy because the American people are broke but don't ever cut spending or pay off one dime of the principle. Sorry to inform these guys but that's what we have been doing in America since I was born and look where we are now ... mired in debt, which is exactly where the central banks want us. Banks prosper on debt WE THE PEOPLE and America does not.
Tomorrow, Friday, Sept 30th, is the YEAR END reporting day for the US Treasury FY 2010. The US Treasury according to their own Statement for Sept. 29th has spent a net $4.31TRIL USD(less redemptions). So tomorrow that number will be higher. So that is $4.31TRIL spent and last year on Sept 30th Bush spent $4.59TRIL USD. We can assume that the next "regime" in office will spend roughly the same amount or more, right around $4.4TRIL per year. What is the total mortgage debt market worth now in the USA? I believe it is around $14TRIL USD. Do the math ... The US Treasury spends the total US mortgage debt roughly every 3 years. Let us further dissect that via this article from Seeking Alpha whereby the average Mortgage Debt/GDP ratio has always been 50% prior to 1977.
LINK: http://tinyurl.com/28s295b
Now lets move to the debt side and see how much debt the US Treasury created in order to pay for that spending since tax revenues fall way short. Based on the Sept 29th Statement, marketable debt issues, US Treasuries, are around $8.3TRIL issued. The total net change in Public Debt added another $1.6TRIL to America's debt burden. While net tax revenues to cover all this spending and debt issues was only $1.56TRIL USD. Now naturally tomorrow we get the debt issues for Thursday, when the US Treasury always issues more debt, so the debt levels will grow maybe closer to $8.5TRIL issued. The way I read those numbers is that the US Treasury has defaulted on roughly 20% of total debt issued for FY 2010. What is a deficit other than a default ... a partial one? It means you cannot pay your obligations. Lucky for the US Treasury those "partial defaults" just keep getting rolled into the next fiscal year and the next one. Now there is supposed to be a "limit" like we all have credit card limits, but imagine if every time you reach your limit you could raise it. Well, that is exactly what the US Treasury does with the help of the US Congress and the approval of the US Fed. The US Treasury has "unlimited credit". Since 1940, in FDR days, the US Congress has always raised the "debt ceiling"(limit) on the US PUBLIC DEBT. It is safe to say that is a trend that will continue in the future. Right now the "debt ceiling" the Statutory Debt Limit is set at $14.294TRIL USD. Another $878BIL and the US Congress will have to raise the limit yet again. Makes you wonder why anyone takes that "debt ceiling" seriously after some 70 years of limit violations. What would happen to you and I if we kept asking our credit card company to raise our limit every year? Would they do it? No, they would consider us a high credit risk and close our account.
I have complete confidence in the US Treasury's ability to spend and debt beyond its means for eternity or until it defaults on its debt service, whichever comes first. I do not believe Geithner cares one iota whether we are in a deflation or inflation, so long as the US Treasury can borrow more and spend more he is happy and so is the US Congress and presto-changeo, so is the US FED. It has been the political and fiscal path for as long as I have been alive and it has been the path of many, many previous Empires as well. You just DEBT yourself to death until the entire Empire collapses under its own hubris.
It is interesting to note that the price of gold went up during the Great Depression, especially after FDR confiscate it and as we see today the price of gold has been going up in this Great Recession as well. In fact it seems gold does even better now days than before the SubPrime crash. How many people here argued that gold would falter in a depression? You messed up ... because you assumed spending would stop and you thought that gold was only a hedge against inflation. You bought the herd mentality. I think its safe to say that gold is a hedge against the C WORD, against "monetary liabilities", which is to say the entire "floating currency" regime we now call money! Its a hedge against debt, the basis of modern money. All for one reason. Gold is an asset not a liability. Gold never files bankruptcy or defaults on its debt because it has no debt, no debt service, no counterparty liabilities.
Remember what that word "mortgage" is derived from?
[Middle English morgage, from Old French : mort, dead (from Vulgar Latin *mortus , from Latin mortuus, past participle of morī, to die) + gage, pledge (of Germanic origin).]
Translated a mortgage is a "death pledge" ... This is the basis of the AMERICAN DREAM that the bankers have created, only they have never marketed a mortgage as a "death pledge". Would you sign a "death pledge"? The US Congress and the US Treasury sign one every day, of course, on your behalf, as your elected representative.