once the effects of record government spending wear off, we slip back into a deep recession, setting up a classic “W.” Unemployment never does stop climbing, reaching 15% by year end, and 25% when you throw in discouraged job seekers, jobless college graduates, and those with expired unemployment benefits. This afflicted Franklin D. Roosevelt in the thirties. So Congress passes another $2 trillion reflationary budget. Everybody gets wonderful new mass transit upgrades, alternative energy infrastructure, smart grids, and bridges to nowhere. But with $4 trillion in extra spending packed into two years, inflation really takes off. The bond market collapses, as China and Japan boycott the Treasury auctions. The dollar tanks big time, gold breaks $2,300, and silver explodes to $50. Ben Bernanke has no choice but to engineer an interest rate spike to dampen inflationary fires and rescue the dollar, taking the Fed funds rate up to a Volkeresque 18%. %. The stock market crashes, taking the S&P well below the 666 low we saw in March. Housing, having never recovered, drops by half again, wiping out more bank equity, and forcing the Treasury to launch TARP II. The bad news accelerates into the 2012 election year. Obama is burned in effigy; Sarah Palin is elected president, and immediately sets to undoing all of his work. Republicans, reinvigorated by new leadership, and energized by a failing economy, retake both houses of congress. National health care is shut down as a wasteful socialist mistake, boondoggle subsidies for alternative energy are eliminated, and the savings are used to justify huge tax cuts for high income earners. We invade Iran, and crude hits $500. If you’re over 50, and all of this sounds vaguely familiar, it’s because we’ve been through it all before. Remember Jimmy Carter? Remember the “misery index,” the unemployment rate plus the inflation rate, which hit 30, and catapulted Ronald Reagan into an eight year presidency? A replay is not exactly a low probability scenario. This is why credit default swaps live at lofty levels. It’s also why the investing public is gun shy, favoring bonds over stocks by a 15:1 margin. Are the equity markets pricing in these possibilities? Not a chance. The risk of economic Armageddon is still out there. Personally, I give it a 50:50 chance.
I believe there is manipulation of prices. But hasn't it always been so? It's a zero-sum game: over time, many must lose so a few can win. How does knowing that help me prosper?
Bill's comment: "The Canadian Loonie is looking like it could lift to parity, which would be more than simply problematic for the Canadian economy – at least outside the Western Cdn oilfields and farms. With a Loonie at par, eastern Canada manufacturing and tourism will be a mass of red ink, foreclosures and unemployment. Go West young man, to Saskatoon."
Agreed! Whatever the US authorities may say: "free markets, allowing currencies to find their own level" and all that, it's obvious to me that the greenback's swoon is totally orchestrated. Canada can stand by and watch the destruction of its manufacturing base or it can engage in a destructive round of competitive devaluations. Hobson's choice, except there isn't even one plausible option.
I got out of my gold positions at 963 based on a feeling that the spot had gone up too far too fast at the 987 level and my belief that central bankers do manipulate the price, moderating its rise, in order, among other things, to keep interest rates down. I am still bullish but standing aside for now.
Not very scientific, I am afraid, but that is why I did what I did.
I continue to be bullish on the big board. It seems to be going up in steps - four weeks to break 8200, another 4 to break 8500 and now 2 weeks bumping up against 8800. I don't expect a big dramatic drop until I see a "greed spike."
The technicals may be weakening but, overall, I read them as being bullish for now. I still think this is a bear market rally.
Canadian prairies - wheat basket of the world
Oil & gas - plenty thanks, want some?
basic materials - got 'em all
precious metals - lots
diamonds - yes, some of those too
potable water - plenty thanks, want some?
non-carbon energy - plenty thanks, want some?l
lumber - so much American producers can't stand it.
health care - nobody dies because they can't afford it
quality of life - wouldn't trade.
Mostly I play the indexes and oex puts and calls - partly on technicals, partly on my mood - not very scientific I admit but, each to his own.
As I have noted before, the dow was range bound between 7,800 and 8,100 from April 2 to April 28 - a little less than four weeks. And then it was/is range bound between 8,200 and 8,500, from May 4 to May 27 -- again a bit less than four weeks.
Szoo... what next? I dunno. But I think true bears were selling calls like bandits on the Tuesday runup. I considered it myself, but I am far too cautious (trsl: chicken).
I am a cautious man but I have made up my mind: if the DOW drops below 8,200 tomorrow or Friday... I will be buying puts or selling calls (probably selling) - Looking for the big board to retest the March lows.
Come into my parlour, said the spider (Washington Post) to the fly (Mom & Pop) ....
"The financial system, frozen solid for the past nine months, is in a spring thaw. And it's happening even though many of the Obama administration's major rescue programs have yet to get off the ground.
"The improvement reflects the combined impact of a wide range of actions, many of them taken with little public attention, according to government officials and private economists. But more important than any single program, the sources say, is a deepening confidence from financial markets that the government is prepared to take aggressive action -- a confidence that Obama officials have repeatedly worked to cultivate in speeches and public appearances."
Seems to me that the United States is still a manufacturing giant, biggest producer of manufactured goods in the world. Assembly plants have been outsourced around the world and this, it seems to me, is a salubrious trend, not always but frequently, for both the US and the other countries. Share the wealth and all that. Also, you find foreign companies setting up assembly and manufacturing plants in the United States for a variety of very good reasons.
Since I am a swing trader now standing aside (waiting for the blow-off), I can afford to read news and opinions all I want. And I must say that Bill's daily comments are right up there with the most cogent and penetrating that I have found - he provides me with perspectives that I would otherwise know nothing about. This is a long way round of saying "thank you." So, thank you Bill.
"For the first time since the Bloomberg Professional Global Confidence Survey began in 2007, investors are forecasting that the Standard & Poor’s 500 Index will climb."
I agree... If the taliban get their hands on those nukes, they'll disperse them around the world in a heartbeat. India will flip. Israel will flip and uncle sam will get weird with crazy on top.
All (3/10ths) in at 1245. Adjusting buystop. Won't bore y'all with further notes from my diary.
adding to shorts at 1252 lower buy stop to 1255.
think I'll go to 3/10ths of trading stash at 1245
Shorting gold at 1,256.16 buy stop 1,257.53: mought
be a tad early
two dojis and break in the rising trendline.
From hedge fund guru John Thomas"
once the effects of record government spending wear off, we slip back into a deep recession, setting up a classic “W.” Unemployment never does stop climbing, reaching 15% by year end, and 25% when you throw in discouraged job seekers, jobless college graduates, and those with expired unemployment benefits. This afflicted Franklin D. Roosevelt in the thirties. So Congress passes another $2 trillion reflationary budget. Everybody gets wonderful new mass transit upgrades, alternative energy infrastructure, smart grids, and bridges to nowhere. But with $4 trillion in extra spending packed into two years, inflation really takes off. The bond market collapses, as China and Japan boycott the Treasury auctions. The dollar tanks big time, gold breaks $2,300, and silver explodes to $50. Ben Bernanke has no choice but to engineer an interest rate spike to dampen inflationary fires and rescue the dollar, taking the Fed funds rate up to a Volkeresque 18%. %. The stock market crashes, taking the S&P well below the 666 low we saw in March. Housing, having never recovered, drops by half again, wiping out more bank equity, and forcing the Treasury to launch TARP II. The bad news accelerates into the 2012 election year. Obama is burned in effigy; Sarah Palin is elected president, and immediately sets to undoing all of his work. Republicans, reinvigorated by new leadership, and energized by a failing economy, retake both houses of congress. National health care is shut down as a wasteful socialist mistake, boondoggle subsidies for alternative energy are eliminated, and the savings are used to justify huge tax cuts for high income earners. We invade Iran, and crude hits $500. If you’re over 50, and all of this sounds vaguely familiar, it’s because we’ve been through it all before. Remember Jimmy Carter? Remember the “misery index,” the unemployment rate plus the inflation rate, which hit 30, and catapulted Ronald Reagan into an eight year presidency? A replay is not exactly a low probability scenario. This is why credit default swaps live at lofty levels. It’s also why the investing public is gun shy, favoring bonds over stocks by a 15:1 margin. Are the equity markets pricing in these possibilities? Not a chance. The risk of economic Armageddon is still out there. Personally, I give it a 50:50 chance.
I believe there is manipulation of prices. But hasn't it always been so? It's a zero-sum game: over time, many must lose so a few can win. How does knowing that help me prosper?
Bill's comment: "The Canadian Loonie is looking like it could lift to parity, which would be more than simply problematic for the Canadian economy – at least outside the Western Cdn oilfields and farms. With a Loonie at par, eastern Canada manufacturing and tourism will be a mass of red ink, foreclosures and unemployment. Go West young man, to Saskatoon."
Agreed! Whatever the US authorities may say: "free markets, allowing currencies to find their own level" and all that, it's obvious to me that the greenback's swoon is totally orchestrated. Canada can stand by and watch the destruction of its manufacturing base or it can engage in a destructive round of competitive devaluations. Hobson's choice, except there isn't even one plausible option.
I too thought NY was the bellwether but BC watches markets like a hawk every day so I'll pay more attention to these relationships.
Three successive dojis, or near doji, on the DOW are supposed to signal a reversal.
I got out of my gold positions at 963 based on a feeling that the spot had gone up too far too fast at the 987 level and my belief that central bankers do manipulate the price, moderating its rise, in order, among other things, to keep interest rates down. I am still bullish but standing aside for now.
Not very scientific, I am afraid, but that is why I did what I did.
I continue to be bullish on the big board. It seems to be going up in steps - four weeks to break 8200, another 4 to break 8500 and now 2 weeks bumping up against 8800. I don't expect a big dramatic drop until I see a "greed spike."
The technicals may be weakening but, overall, I read them as being bullish for now. I still think this is a bear market rally.
out. standing aside.
just a little leaven to the cake you bake, Les
Canadian prairies - wheat basket of the world
Oil & gas - plenty thanks, want some?
basic materials - got 'em all
precious metals - lots
diamonds - yes, some of those too
potable water - plenty thanks, want some?
non-carbon energy - plenty thanks, want some?l
lumber - so much American producers can't stand it.
health care - nobody dies because they can't afford it
quality of life - wouldn't trade.
Good point. Always have a number to call to get you out of trades when the net is down.
From Bloomberg this am:
World Recession Easing;
Signs Worst May Be Over
Stocks Rise on Evidence of Recovery
So stop worrying.
Mostly I play the indexes and oex puts and calls - partly on technicals, partly on my mood - not very scientific I admit but, each to his own.
As I have noted before, the dow was range bound between 7,800 and 8,100 from April 2 to April 28 - a little less than four weeks. And then it was/is range bound between 8,200 and 8,500, from May 4 to May 27 -- again a bit less than four weeks.
Szoo... what next? I dunno. But I think true bears were selling calls like bandits on the Tuesday runup. I considered it myself, but I am far too cautious (trsl: chicken).
I am a cautious man but I have made up my mind: if the DOW drops below 8,200 tomorrow or Friday... I will be buying puts or selling calls (probably selling) - Looking for the big board to retest the March lows.
Comments welcome.
Well... it's not mom & pop who hold most of the dough, it's the trillions held in reserve by hedge funds & institutions.
no?
Come into my parlour, said the spider (Washington Post) to the fly (Mom & Pop) ....
"The financial system, frozen solid for the past nine months, is in a spring thaw. And it's happening even though many of the Obama administration's major rescue programs have yet to get off the ground.
"The improvement reflects the combined impact of a wide range of actions, many of them taken with little public attention, according to government officials and private economists. But more important than any single program, the sources say, is a deepening confidence from financial markets that the government is prepared to take aggressive action -- a confidence that Obama officials have repeatedly worked to cultivate in speeches and public appearances."
Seems to me that the United States is still a manufacturing giant, biggest producer of manufactured goods in the world. Assembly plants have been outsourced around the world and this, it seems to me, is a salubrious trend, not always but frequently, for both the US and the other countries. Share the wealth and all that. Also, you find foreign companies setting up assembly and manufacturing plants in the United States for a variety of very good reasons.
Since I am a swing trader now standing aside (waiting for the blow-off), I can afford to read news and opinions all I want. And I must say that Bill's daily comments are right up there with the most cogent and penetrating that I have found - he provides me with perspectives that I would otherwise know nothing about. This is a long way round of saying "thank you." So, thank you Bill.
"For the first time since the Bloomberg Professional Global Confidence Survey began in 2007, investors are forecasting that the Standard & Poor’s 500 Index will climb."
I agree... If the taliban get their hands on those nukes, they'll disperse them around the world in a heartbeat. India will flip. Israel will flip and uncle sam will get weird with crazy on top.