October 6, 2010 by Bill Cara
Morning Call [8:55am ET] Yesterday I encouraged people to hang in with precious metals and voila, instant performance. Some call it luck of the Irish – I am ¼ Irish by the way – but then again the Irish are not so fortunate today as the Fitch sovereign rating service has downgraded Ireland on account of economic concerns and costs to be borne by government related to the restructuring of Irish banks. Clearly, the Yellow Brick Road that once ran straight to Ireland has been blocked lately.
As for the Gartman Sermon on the (Gold) Mountain that may have scared the pants off the goldbugs, well let’s just say that Dennis has not been so fortunate lately either. On the other hand, I have been pushing Gold a lot these days, including early yesterday before another moonshot. Yesterday btw the GDX was up +3.1% and GDXJ was up +4.0%.
And what’s wrong with moon cycles anyway? I kinda like Art Cashin.
There are many of you who are selling out this week. Cashin in? 🙂
The problem is that while the equity market is overbought and the US Dollar oversold, the central banks of the world, especially the Fed, are doing nothing to raise interest rates that would make the bond market an attractive alternative. So, for now, the price of gold and silver will keep rising, and equities are rotating in a way that eats up time, which helps consolidate the recent price increases and prepares the market for another lift.
Why risks grow daily, the only course of action here, apart from complex options strategies, is to hang in and continue to raise your stops. As of today, S&P 1130 is the new line in the sand that the Fed apparently would like to protect.
Next stop on the elevator heading up is 1220 on the S&P? A case could be made even though the probabilities are likely less than 25%. It mostly depends now on Earnings Season that is presently underway. Costco (COST) impressed. How about Alcoa (AA) tomorrow?
As for Gold, like I commented yesterday, I’m looking at 1430 in the near term based on the momentum I see (or feel). For that to occur, the so-called trade-weighted US Dollar index ($USD) would have to hit a cycle bottom of about 76.50. As the Dollar is over-sold right now, I cannot think the Fed will allow it to fall much further.
Interesting that the European monetary authorities also want the People’s Bank of China to revalue their currency higher. The key for them is that a stronger Yuan will likely mean a Euro that is even weaker than the resultant weaker US Dollar, and that will help Germany’s exports as well as US exports. Of course, it will also mean a higher gold price.
In the past couple months I opined that the world was starting a currency war and that traders needed to go for the gold. A week ago, some South American monetary authorities spoke of this problem and now so has the IMF.
Currency futures: $USD and Euro at 77.99 and 1.3842 respectively.
Gold and Silver futures: $1345.10 (+0.28%) and $22.84 (-0.13%) respectively. Note the relative weakness of Silver.
2-year chart of $USD showing it is over-sold and ready to rally within one month
Have a good day.
CTA Trading Desk Morning Report
[10:44 am ET] Recently, Bank of America chose to delay foreclosures due to not having proper title documents. There are many court cases pending where the banks cannot produce proper documentation and cannot claim the property. Some of these cases are turning into a real mess and Bank of America probably needs time to put together a proper game plan. The scary issue is that these mortgages were bundled into Mortgage Backed Securities and sold to investors as collateralized debt. The home is the collateral with insurance covering the mortgages. Well, if the banks cannot take possession of these homes and the insurance companies have too many claims and go bankrupt, then what happens to the MBS? The value drops dramatically with possibly no market to sell them on. This is the next possible crisis brewing.
Over the weekend, the IMF admitted that the economies of the West are near depression levels. This is hard to believe with extremely low interest rates and the incredible amounts of liquidity pumped into the system by Central Banks. If those two factors haven’t kick-started the economy more than they have, we have a hard time believing that more monetary easing will do much more. Central Banks are pushing on a string and, as we have written about for many moons, until assets are marked-to-market and entities are allowed to fail we probably can’t have sustained growth. This all goes back to the concept of uncertainty for business owners who are hunkered down in their fox holes, peeking out for some shots every once in a while – many of them have cash to expand but, with an uncertain economic and regulatory environment, they choose to hold on to ammunition until they have a better shot at success.
With commodity prices rising recently, we may be on the edge where inflation begins to rear its ugly head and the Fed cannot raise rates without killing the economy.
All of this simply means more liquidity is coming down the pike which tends to buoy assets of many types.
Have a great trading day!
CTA Trading Desk Post-Close Report
You were reading the newspaper this morning and noticed the weather forecast for Wednesday was spectacular. After coming up with some lame excuse to miss work you head to the golf course, periodically checking the markets and relieved to find out absolutely nothing was going on. The Dow finished up +0.28%, while the S&P fractionally declined -0.07%. What a great day to be away – the beverages will taste great on the 19th hole!
It has been a tough year to make money in the market, volume and volatility have dwindled, corporate fundamentals are hard to get a handle on because of “unusually uncertain” conditions, and politics are often at odds with corporate profitability.
You have been wary of the economy all year, deciding the best course of action was to buy high quality blue chip tech stocks for your clients. Back in the middle of January you bought Intel at 21.5, Microsoft at 31, Cisco at 25, and Hewlett Packard at 52.After all, these companies were leaders in their respective industries, generating tons of free cash flow, having little debt, with high profit margins.
In the middle of September you started getting lots of phone calls from agitated clients wanting to know why their portfolios were doing so poorly. Why don’t I own any of the high fliers, one-decision stocks, stocks that are outperforming the market? Although the S&P was unchanged on the year your ultraconservative blue chip stocks were unbelievably underwater. On September 17 Intel closed at 19.08 (clients down -11.25%); Microsoft finished at 25.22 (-18.64%); Cisco at 21.86 (-12.56%); and Hewlett closed at 39.14 (-24.73%).
Your clients are right – you are a putz! Well, time to refocus the portfolio on stocks that are outperforming the market. Out with your stodgy favorites, and in with the new leaders of the high-tech world. The following Tuesday after your morning meetings you buy Netflix (150.08), Equinox (98.13), SalesForce.Com (122.78), and Apple (283.86).
At last, I can get back some performance with these momentum stocks, make some money for my clients, and everyone finally will be happy.
The S&P behaves for the rest of the month, galloping higher into the fourth quarter, and you seem to be positioned for a big final three months. After your golf game today you go home, fire up the computer and check on the stock portfolio, feeling your clients’ holdings should have done fine with most indexes essentially flat.
The S&P has risen +1.75% since your portfolio shuffle, but your no-brainer high-flier purchases haven’t exactly set the world on fire; Apple is up +1.87%, Netflix is essentially flat, Equinox is down -28.32%, and Sales Force is down -10.62%.
Geez, this is harder than it looks.
Performance anxiety has no doubt caused many managers to chase high beta stocks simply because they have been moving up in price. If this trade gets overcrowded the ensuing rush for the exit could quickly erase nine months of gains in a matter of days.
While the S&P scarcely moved today and many high fliers got crushed, other capital markets stretched further to near-term extremes. The US Dollar (DXY-0.49%) continued its sell-off, while investors clamored for more US Bonds (TLT+1.22%) and bought more precious metals (SLV+1.52%; GLD+0.76%) in a flight-to-safety trade.
In the good old days, a flight-to-safety trade meant a soaring dollar but nowadays ballooning deficits are forcing investors to flee the dollar. However, buying US Bonds means holders have dollar risk, having principal risk if inflation expectations rise.
It is about to get very interesting over the next few weeks.
Have a great evening.
Login or register to post comments Comments Gold Submitted by jet8400 (71 comments) on Wed, 10/06/2010 – 09:20 #70875
I hope we see a gold and silver pull back. I’d like to buy more at lower prices. If the FED takes a monetizing break, I could see a little pull back. While the US is doing fine because of our ability to insert fresh money into our markets, much of the rest of the world is left asking, what about us? The only answer we’ve had and probably will have is buy gold. My opinion Gold won’t burst until the FED stops monetizing. From what we’ve seen in the market, I don’t think they can stop now and I doubt a few more republicans on the hill will be able to stop it either.
Login or register to post comments USD Submitted by kim. (3 comments) on Wed, 10/06/2010 – 09:29 #70876
Mr Cara, how did you calculate a cycle bottom for the USD “of about 76.50”?
Login or register to post comments Reading tape Submitted by Bert (142 comments) on Wed, 10/06/2010 – 09:29 #70877
Seems like the equity market should have shown more strength yesterday relative to the amount of money the Fed injected yesterday.
Login or register to post comments Sobering Words From The IMF Submitted by Bull Hunter (1444 comments) on Wed, 10/06/2010 – 09:33 #70878
Real estate downturn could last 8 years.
Note to Les:
Thanks. I’m always looking for ways to improve the morning (Pre-Bill) report.
Login or register to post comments Adding to TZA @ 24.15 Submitted by 2nd_ave (4716 comments) on Wed, 10/06/2010 – 09:39 #70879
I haven’t given up on the bull scenario, not by a long shot. Just trying to game the pullbacks that ultimately allow the indexes to move higher.
Login or register to post comments VXX @ 16.24 Submitted by 2nd_ave (4716 comments) on Wed, 10/06/2010 – 09:41 #70880
For the same reason stated above.
Login or register to post comments Cara 100 Update Submitted by Bull Hunter (1444 comments) on Wed, 10/06/2010 – 09:52 #70881
(continued from yesterday’s blog)
PBR – Downgraded at Barclays to Equal Weight from Overweight as a result of the dilutive effects from the company’s recent equity transaction. Price target sunk to $35 from $40.
SCHW – estimates lowered at UBS through 2011. Company is seeing lower customer trading activity. Buy rating and $21 price target.
Login or register to post comments crk.to Submitted by westcoaster (297 comments) on Wed, 10/06/2010 – 10:17 #70882
re last night’s discussion about resources in the ground in politically secure areas of the world, this crew seems to be getting their mining act together this year and stock has completed consolidation and moved up this morning.
Login or register to post comments More Really Scary Halloween Masks Submitted by Bull Hunter (1444 comments) on Wed, 10/06/2010 – 10:22 #70883
Move over Clive Barker, this is the genuine article.
Login or register to post comments Deconstructing POMO Submitted by Bull Hunter (1444 comments) on Wed, 10/06/2010 – 10:45 #70884
“…today is the day the Fed will likely overtake Japan as the second largest holder of US Treasurys.”
“At a run rate of $10 billion in POMO purchases per week, the Fed will be the largest holder of US Treasuries in the world before the midterm elections.”
Login or register to post comments …. Submitted by baz22 (1408 comments) on Wed, 10/06/2010 – 10:55 #70885
watching for trigger at seed.
Login or register to post comments Re: USD Submitted by Bill Cara (1810 comments) on Wed, 10/06/2010 – 10:59 #70886 (in reply to #70876)
Thanks for joining us and reminding me to specify time frame when referring to a cycle top or bottom.
Yes, I am projecting a short-term cycle bottom in the near future. There was a cycle top of almost 89 in early June, followed by a cycle bottom in early August at 80, then a cycle top in late August at ~83 1/2. Yesterday, based on Bank of Japan open market operations, there was a cycle failure in the $USD at about 78, leading to further weakness, which I am projecting at about 76 1/2.
As you can surmise, projecting price is partly science of mathematics and partly art or feel for how the trading is going, not only with the one currency but with all of them, and with currency-sensitive stocks and bonds.
There are no absolutes in trading and there are not any forecasting systems that one can say are accurate or even consistently useful. There are simply too many variables in capital markets. So, when I project a price cycle top or bottom, what I am really doing is speaking of a comfort zone where I anticipate a cyclic reversal. Depending on strength or weakness of trend, the cycle may be short or long, deep or shallow.
Hope this helps, and I hope you continue to participate in the community forum. It’s a place where we all try to learn — even me.
Login or register to post comments NUMBER GAMES Submitted by kaimu (1798 comments) on Wed, 10/06/2010 – 15:34 #70887
Geithner is out today with Obama touting their brilliance in regards to TARP. All I can say is November is coming fast … Some of the numbers they tout just do not add up. Not according to my sources, but according to the US Treasury itself in its own Statement at the end of FY 2010 on Sept 30th. Doesn’t Tim have some flunky Treasury staff read their own Statements to see if they’re “fool proof”? I would at least want my numbers I mutter in front of the entire Nation and the President to at least be off by no more than $3BIL!
From Geithner …
Apart from the funds spent on housing, Treasury now doesn’t expect to lose money. In the central component of the TARP, the capital purchase program (CPP), Treasury purchased shares of preferred stock in hundreds of banks. Of the $205 billion invested in banks through the CPP, $153 billion has been paid back. With dividends ($16 billion) and the sale of warrants Treasury received ($6.9 billion) bringing in more cash, the program is on a glide path toward break-even. In the TARP Two Year Retrospective, published today, Treasury now projects a profit of $16 billion on the CPP and other programs to aid banks.
If we are to take these numbers as gospel then the US Treasury Statement needs to be revised. According to my calcs TARP has paid back net $122.1BIL, because what Geithner is not saying is that TARP is still handing out funds. On Sept 30th TARP issued $24BIL YTD to banks while some banks paid back $146.1BIL, so net pay back has been $122.1BIL not $153BIL as Geithner claims. Of the $205BIL “invested” in banks TARP is still short near $83BIL($205BIL minus $122.1BIL). I am not sure which dividends Geithner refers to because I see no separate line item on the US Treasury for TARP dividends as it is my understanding that dividends and warrants are commingled under one line item TARP DEPOSITS.
Now we move to the GSE, Fannie and Freddie, which the US Treasury has listed on its statements as GSE INVESTMENT. On Sept 30th the US Treasury reported a total of $52.6BIL USD and only $12.1BIL in GSE dividends. That leaves a deficit of $40.5BIL USD. Add that deficit to the TARP deficit of $83BIL and we see a total TARP/GSE deficit of $123.5BIL. I think that is a far cry from headline numbers of $30BIL. Its a $93.5BIL exaggeration.
I have not even touched on the US FED’s liabilities with the three MAIDEN LANES. Of course if the US FED’s toxic assets fail then who’s lap does all that end up in. If you are thinking Ben or Jamie Dimon(JPM) then think again. All liabilities eventually end at the US Taxpayer, we are the OPM OF LAST RESORT!
So according to Geithner bailing out banks is profitable … This is a set-up so that more bank bailouts in the future will be palatable to the voters. We now have a US Treasury Secretary stating on the record that handing money to banks so that they can take on more risk is a profitable enterprise well worth the “investment”. Geithner and Obama saved the US Banking industry and GM and AIG. In other words they saved the absolute most irresponsible and worst performing industries America has. I wonder if Michelle Obama hires White House kitchen staff based on that credo … I certainly do not in any of my businesses. So what exactly did the most highly responsible and best performing industries get out of TARP? How were those companies rewarded? They were rewarded by having to compete with revamped banks and companies who have no respect for the bottom line. In other words these best performing companies are now competing with “Government Sponsored Monopolies”(GSM). What is the incentive for these great honest, law abiding companies to stay in the USA under such monopolistic conditions, when all they see is this “reverse Darwinism” in play?
Login or register to post comments Today’s FED Manipulation Submitted by Bull Hunter (1444 comments) on Wed, 10/06/2010 – 11:56 #70888
Login or register to post comments Jimmy Rogers does Kaimu Submitted by Grym (2586 comments) on Wed, 10/06/2010 – 12:00 #70889
Jimmy Rogers interviewed today while doing an imitation of Kaimu.
“Do you know anyone leaving Wall St. to become farmers? The world has a shortage of farmers.”
Recommends ag, gold, commodities (a long time favorite of his) and sees a dim global future. (Not chasing, not selling gold now.)
Commenting on are they doing the right thing:
“No their not smart, that’s why they are in Washington.”
Login or register to post comments Re: Jimmy Rogers does Kaimu Submitted by Bull Hunter (1444 comments) on Wed, 10/06/2010 – 12:14 #70890 (in reply to #70889)
Great interview, thanks Grym. Everyone should watch this clip.
“They’ll keep printing money until we run out of trees.”
Login or register to post comments Sold my long positions between yesterday and today Submitted by jack black (830 comments) on Wed, 10/06/2010 – 12:21 #70891
and opened some small short ones. One of my shorts is SLW. The WEEKLY RSI(7) is 88! and this 12th week of raising.
I can’t believe dollar can fall like this nonstop. The WEEKLY RSI(7) is 20!
I will reenter on a dip as I’m bullish LT, especially gold and energy.
Login or register to post comments Banks Submitted by jet8400 (71 comments) on Wed, 10/06/2010 – 12:32 #70892
If you were a bank would you be long? Get free (.25%) money from the fed and receive interest on bonds that you have to hold until you feel like selling it back to them on the next POMO day you’re up. If you buy contracts for the market to go up and it doesn’t, you’re screwed. If you buy contracts for the market to go down and it doesn’t, you lose contract money and business is good. I don’t like it when it makes sense for the banks to bet against the market. The risk reward for being long the market isn’t worth it to me. We will see what plays out. Worst case the market plunges and banks make a killing IMO.
Login or register to post comments Country Risk and Mining Submitted by Dr. Strangelove (770 comments) on Wed, 10/06/2010 – 13:15 #70893
Thank you for the country-risk sources and commentary from yesterday as it relates to SLW and Mexico. It occurs to me that Transparency International (TI) suffers from the same myopia as the bond rating agencies Moody’s, Standard & Poor’s, and Fitch. Contrast your outstanding summations of the U.S. Fed/Treasury malfeasance while TI ranks the U.S. corruption at 7.5, only slightly more corrupt than Japan at 7.7, Austria at 7.9, and Germany at 8.0 with most other countries being far more corrupt than the U.S. including China at 3.6, India at 3.4, and Russia at 2.2. These last three Marxist states are roughly on par with the average rating of African countries.
Is this bias because the U.S. battle fleet tonnage is greater than that of the next 13 largest navies combined with 11 nuclear-powered supercarriers + 6 in reseerve + 1 under construction + 2 ordered? Is it the bigger thug factor by comparison to Mexico’s drug cartels?
As for paying off cops to surf in Mexico, it’s a Third World after all! That doesn’t stop Jim Sinclair from operating mines in Tanzania were the authorities have shakedown huts every 10 miles! And how is a U.S. highway toll different other than they don’t accept FISH.
Login or register to post comments scaling out of CEF Submitted by DavidV (32 comments) on Wed, 10/06/2010 – 13:15 #70894
Just sold 1/3 of my CEF at $17.31. I’ll experiment with two ways for protecting my profits in gold/silver: scaling out of my CEF and then using a trailing stop for my GLD. Let’s see which method will give me a larger difference between the sales price and the price at which I’ll reload on the eventual pullback.
Login or register to post comments Goldman Sachs new must-read view on the currency market Submitted by Jack Senett (61 comments) on Wed, 10/06/2010 – 13:15 #70895
[Goldman reports today] “We are revising the majority of our FX forecasts to reflect broad Dollar depreciation. We have been emphasising for some time that structural US imbalances are the main reason for USD weakness and this remains our key theme. In the near term, a number of factors could still provide a boost for the Dollar, but these no longer form the base case for our 3-month forecasts. Instead, we expect the USD TWI to decline gradually from current levels, by about 4.7%, over the next 12 months and to get quite close to historical lows. Importantly, with USD weakness shared globally, the trade-weighted impact for other currencies would likely be relatively muted. Most other countries would experience relatively little appreciation. For example, the EUR TWI would only appreciate by about 3.9% from current levels, although we project EUR/$ at 1.55 in 12 months. Asia will play an important role and we now expect tradeweighted appreciation in key countries, such as China and Korea.”
AttachmentSize 38821898-goldman-fx-10-6.pdf 406.94 KB Login or register to post comments ever wonder who owns congress – here’s the score! Submitted by jock (591 comments) on Wed, 10/06/2010 – 13:23 #70896
the headcount, and interest group and which owns how many congressmen:
I vote because I can WALK to the polling station. If I had to drive, I probably wouldn’t bother ..
Login or register to post comments Re: Adding to TZA @ 24.15/Closed 24.90 Submitted by 2nd_ave (4716 comments) on Wed, 10/06/2010 – 13:23 #70897 (in reply to #70879)
Login or register to post comments Re: VXX @ 16.24/ Closed @ 16.56 Submitted by 2nd_ave (4716 comments) on Wed, 10/06/2010 – 13:23 #70898 (in reply to #70880)
Login or register to post comments ….. Submitted by baz22 (1408 comments) on Wed, 10/06/2010 – 13:49 #70899
will be watching to see if ‘ mvis ‘ can snuggle down to $ 1.80/ish… funky little tech with potential..
Login or register to post comments Re: Goldman Sachs new must-read view on the currency market Submitted by davefairtex (2293 comments) on Wed, 10/06/2010 – 13:56 #70900 (in reply to #70895)
This should signal an impending bounce in the buck, at least in the near term. I wonder how long they’ve had this FX revision in place inside the company.
Login or register to post comments QQQQ Fashionable bags Submitted by NYUGrad (2872 comments) on Wed, 10/06/2010 – 13:58 #70901
Login or register to post comments Re: ….. Submitted by Ross (365 comments) on Wed, 10/06/2010 – 14:27 #70902 (in reply to #70899)
Microvision was one of my favorite sardine can trades back in 04–05. Thanks for the reminder. I doubled my money twice on that little turkey. I’m going to take an update look see. If I remember, interesting technology with bad management.
Login or register to post comments Re: ….. Submitted by baz22 (1408 comments) on Wed, 10/06/2010 – 14:37 #70903 (in reply to #70902)
watching flow… steady.. Az. might be done… went in..
Login or register to post comments Question i think about everyday Submitted by NYUGrad (2872 comments) on Wed, 10/06/2010 – 14:59 #70904
If the ICI record outflows are true, and the crooks are holding the bag with no one to sell their stock or toxic assets to, other than the govt, what happens when the supply runs out and the last hb&b asset has been sold to the govt?
Is ICI data valid? then is this money all going into Bonds, Gold, or just straight to savings accounts and debt payments?
Login or register to post comments Re: Question i think about everyday Submitted by teamonfuego (2192 comments) on Wed, 10/06/2010 – 15:06 #70905 (in reply to #70904)
I must be one of the crooks because I’m holding longs.
Login or register to post comments I chart these flow Submitted by steveo (134 comments) on Wed, 10/06/2010 – 15:08 #70906
I chart these flow occasionally.
LOTS of money going into Bonds, rest into Foreign equities
Login or register to post comments Re: Question i think about everyday Submitted by NYUGrad (2872 comments) on Wed, 10/06/2010 – 15:14 #70907 (in reply to #70905)
please dont take it personally. I meant in general if volumes are low due to outflows by mom and pop, it must be harder for sell side to play their normal games.
Login or register to post comments TAX Sell Off Ahead? Submitted by MoKat (202 comments) on Wed, 10/06/2010 – 15:18 #70908
I posted a question a few weeks ago about the possibility of a sell off due to the chances of a capital gains tax increase
in 2011. Nobody commented on the possibilities.
I ask again for members opinions or plans to sell if it appears the rate will rise to 20% in 2011.
It’s my guess that the decision will not be made until after Nov 2 election results. If the Rebublicans do not gain enough control to reinstate the Bush cuts, will a big sell off occur? Those holding gold have some of the largest gains in the market. Could the price plummet if holders rush to lock gains and pay the tax at the lower rate? I’m referring to those who own closed end gold funds or perhaps mining stocks, which enjoy the lower cap gain rate, not coins or bars.
Login or register to post comments Re: TAX Sell Off Ahead? Submitted by Bull Hunter (1444 comments) on Wed, 10/06/2010 – 15:28 #70909 (in reply to #70908)
Wish I had an answer for you…. my dividend payers are mostly in my ROTH. I might close my other, taxable account if the tax breaks expire.
Login or register to post comments Re: TAX Sell Off Ahead? Submitted by jet8400 (71 comments) on Wed, 10/06/2010 – 15:31 #70910 (in reply to #70908)
Gold’s fate lies in QE. There has been a lot of discussion amongst the FED to stop QE for the time being. Gold will probably fair better than stocks. Bonds will depend on FED changes in interest rates. Have to keep an eye on the FED decisions. The low volume allows them to hike up the prices of the market and save the banks. Goldman taught them what to do a couple years ago. People and companies can go bankrupt but banks are insured. I have to think Obama will get his tax plan and the stop of QE plunge would be blamed on it. Best of luck but this is my comment.
Login or register to post comments AKAM, RAX, CRM down 10% or so ? Submitted by joe_the_plumber (122 comments) on Wed, 10/06/2010 – 15:45 #70911
Any idea what’s up with these?
Login or register to post comments Re: Jimmy Rogers does Kaimu Submitted by Quasi (373 comments) on Wed, 10/06/2010 – 15:53 #70912 (in reply to #70890)
Yes he’s always rather blunt and pointed with his opinions.
“They’ll keep printing money until we run out of trees.”
True in concept, but I’m sure he knows that US money is actually made of 3/4 cotton and 1/4 linen. However the US bonds and treasury notes are probably printed on paper.
Login or register to post comments speculative positions in bonds and metals Submitted by DavidV (32 comments) on Wed, 10/06/2010 – 15:53 #70913
From David Rosenberg today:
There are now, according to the latest Commitment of Traders report, 79,796 short contracts on U.S. Treasuries on the Chicago Board of Trade, and there are 78,361 long contracts. So how is that a bond bubble exactly?
There are now 70,638 speculative long contracts on the Chicago Mercantile Exchange for the euro, versus 35,308 net short positions. Come again? There are twice as many bullish positions on this piece of you-know-what as their bearish contracts? Yikes! The dollar is hugely oversold here.
And there are now 297,272 net speculative long positions in gold on the COMEX compared with 39,623 net shorts. This has become a very crowded trade, my friends. Silver is far less on the radar screen.
There are also nearly twice as many speculative bulls as there are bears with respect to copper. The global boom trade is on.
Login or register to post comments Re: AKAM, RAX, CRM down 10% or so ? Submitted by Luggie (228 comments) on Wed, 10/06/2010 – 16:10 #70914 (in reply to #70911)
Hi Joe – Looks like the big boys pulled out of the internet data center operators after one of them (EQIX) had third-quarter revenue results below expectations. Happy Trading
Login or register to post comments Re: speculative positions in bonds and metals Submitted by BillySundance (746 comments) on Wed, 10/06/2010 – 16:12 #70915 (in reply to #70913)
DavidV – just curious, how do you determine that contracts are “speculative” as opposed to hedging done to facilitate positions elsewhere? Can you really differentiate? Aren’t these positions generally held by banks that are providing over-the-counter swaps/hedges to clients?
Login or register to post comments Re: AKAM, RAX, CRM down 10% or so ? Submitted by bobbyo (583 comments) on Wed, 10/06/2010 – 19:59 #70916 (in reply to #70911)
I WATCH THOSE AS WELL.The conventional wisdom is that Equinix had poor earnings and caused the sector to get hammered. My unconventional explanation is the short squeezers got the squeeze put on them. I say this because nearly all my Momentum watch list got taken to the woodshed across sectors and industry types. See VHC APKT ISLN. I believe this is very telling on an overall flat day. Just don’t know what it tells. Rotation out of momentum or a stop run for a push higher. If you believe in all things manipulation. The latter will be the ticket. My plan is to reenter two of these names only if: 1. support is found 2. a little consolidation.3. Enter on a bar of strength on a hourly or daily chart. Of coarse I will be looking for a short play if number 3 is a bar of weakness through support. Be careful you could lose 10% in a heartbeat for no apparent reason. See VHC action today.
Login or register to post comments 10 yr note interest rate and S&P Submitted by NYUGrad (2872 comments) on Wed, 10/06/2010 – 16:40 #70917
Found on another website. chart comparing S&P to 10 yr note % rate for past decade. they tracked each other until this yr. The delta between the two is quite wide.
Login or register to post comments how your smartphone spies on you ! Submitted by jock (591 comments) on Wed, 10/06/2010 – 16:42 #70918
2 minute video wherein Duke Univ. researcher shows his “taint droid” tool, which demonstrates what your android phone reveals about you to unknown 3rd parties:
I’m sure Apple’s IOS and Microsoft’s forthcoming Windows 7 phone do the same, since the business of their business is spying on you for third parties.
Login or register to post comments Re: Banks Submitted by loannetter (809 comments) on Wed, 10/06/2010 – 17:52 #70919 (in reply to #70892)
While BAC, JPM and GMAC dodge the foreclosure bullets; WFC announced that not only are then NOT stopping any foreclosure action (Fannie and Freddie told them to keep going) — today they announced they are openng 100 new branches on the east coast with an eye toward paying their ‘newly acquired top mortgage talent’ bottom dollar. Translated: they have whipped the mortgage broker competition in that market and are ready to roll out their new offerings to a captive audience. GAAAA!
Login or register to post comments Re: 10 yr note interest rate and S&P Submitted by BillySundance (746 comments) on Wed, 10/06/2010 – 17:55 #70920 (in reply to #70917)
In 1981, the S&P was about 125 and the yield on the ten year note was 15%+. Now we are at 1,160 and 2.47%. In the long-term, the correlation is certainly not positive.
Login or register to post comments Re: speculative positions in bonds and metals Submitted by DavidV (32 comments) on Wed, 10/06/2010 – 18:21 #70921 (in reply to #70915)
Good question, BillySundance. David Rosenberg was probably using the “aggregated” definition of positions, which are: commercial and noncommercial (a.k.a. speculative). The commercial holders are those who are “engaged in business activities hedged by the use of the futures or option markets,” while speculative holders are not “officially” hedging themselves.
Recently, CTFC started providing more disaggregated Commitment of Traders (CoT) reports, which classify holders as follows: Producer/Merchant/Processor/User, Swap Dealers, Managed Money, Other Reportables and Nonreportable (who do not meet the minimum position size requirement for reporting). So in fact it may be most interesting to look at positions by “Managed Money” and “Nonreportable” holders, who represent the crowd. In order to see their track record, below are some samples of the net long position in these two categories from the previous CoT reports:
February 16 (intermediate bottom for gold): 157K & 31K
June 22 (intermediate top for gold): 219K & 50K
July 27 (intermediate bottom for gold): 153K & 39K
September 28 (latest report): 224K & 45K
So the size of the current net long position in the “crowd” category is at the level of the previous gold top.
Login or register to post comments Re: 10 yr note interest rate and S&P Submitted by gforce (358 comments) on Wed, 10/06/2010 – 18:04 #70922 (in reply to #70920)
Right, Hussman does a take similar to what you are saying…history rendering appears to be an art form.
Login or register to post comments RICO v. MERS Submitted by gforce (358 comments) on Wed, 10/06/2010 – 19:43 #70923
Bill talked about the need to kick some serious axx long ago and now according to this article the banks may not be able to resist awareness even in the face of pretend.
Not to inflame or point the finger, but this is increasingly some serious stuff.
“The United States is on the verge of events leading to potential systemic failure. Few attribute causality to the Fascist Business Model broad implementation and secretive endorsement, but it lies at the center.”
“MERS + RICO + FNM = CHAOS + FAILURE + DEFAULT.”
“Anyone wondering why an inert metal would prevail over investment in a financial structure or debt parade is simply obtuse and of dull mind. Gold represents money in a land where money has been systematically debased. Money today is nothing more than debt in disguise, and legal tender is nothing but denominated debt.”
Gold is indeed a hedge, but against many misfortunes.
The gold market represents a hedge against the USTreasury bubble.
The gold market represents a hedge against the breakdown of the monetary system.
The gold market represents a hedge against coordinated wreckage of the currencies by the central banks, resulting in uniformly lower purchase power of money.
The gold market represents a hedge against a ripple effect from a global spread of sovereign debt writedowns, defaults, and their extension to the currency system.
The gold market represents a hedge against the insolvent banks.
The gold market represents a hedge against an extended banking system shutdown.
The gold market represents a hedge against heightened trade war and great destruction.
The gold market represents a hedge against the loss of wealth, plainly stated.
The gold market represents a hedge against the US systemic failure in progress.
The gold market represents a hedge against the inevitable USTreasury default, whatever final form it takes.
The gold market represents a safe harbor for money, since it is true money.
“In case sleepy observers have not noticed, Team Obama in the economic dugout just disbanded. Nobody is left except a hologram inside a great void. In the president’s hip pocket is found a copy of “Dialectical of Materialism” without much public notice. The helm is empty. The Ship of State is adrift, a derelict vessel. Peter Orszag is gone (broken budget, spiraling deficits). Christina Romer is gone (wise mediocrity but ignored). Lawrence Summers is gone (loser preppy). Cindi Sparks is gone (stimulus plan architect). One can only hope that Tim Geithner departs too. Although not on any economist team, the exit of Rahm Emanuel should be interpreted as meaning that Obama is a political liability. Running for Chicago Mayor might raise difficult questions on his resume, best not asked, since he wears two hats. The legacy of US economic counselors in the past two or three decades has been heresy reinforced by rationalization, embellished by obfuscation, touted as erudite, ignorant of history. They stand atop unsound money, having lost the concept of money, industry, and income. In the current pathogenesis of systemic failure and debt default, Gold wins!”
Login or register to post comments SLV:GLD Ratio Submitted by BillySundance (746 comments) on Wed, 10/06/2010 – 18:06 #70924
If you think gold has some mojo, check out the recent performance of silver versus gold:
Weekly broke above 200 DMA today!
All this and we are still at a physical ratio of about 58:1
Login or register to post comments Re: SLV:GLD Ratio Submitted by gforce (358 comments) on Wed, 10/06/2010 – 18:18 #70925 (in reply to #70924)
“All this and we are still at a physical ratio of about 58:1”
OK, I got back in today…it may be time to sell, sell, sell…lol, hope not.
Login or register to post comments Re: speculative positions in bonds and metals Submitted by BillySundance (746 comments) on Wed, 10/06/2010 – 18:23 #70926 (in reply to #70921)
David – the question is, if there are large long positions in gold contracts held by those involved in hedging activities (banks), it could very well mean that the bank is experiencing high demand for call options from it’s clients and is purchasing long gold positions to hedge the sold calls.
I have a pretty hard time concluding that the size of the long position alone is enough information to suggest toppiness. Without knowing the type of demand that the bank is experiencing for those call options, it is pretty hard to conclude that the long gold position is unjustified.
Now, if you just so happened to answer phones at a major gold derivataives desk and suddenly your clients reverse course and start calling to sell those options back or to buy put options, you would have another piece of the puzzle.
I just don’t think that knowing the COT positions alone tells you much. Aren’t there huge COT short positions on silver (and that hasn’t told us much about price direction)?
Login or register to post comments Re: Question i think about everyday Submitted by teamonfuego (2192 comments) on Wed, 10/06/2010 – 18:32 #70927 (in reply to #70907)
NYU – no offense taken whatsoever. In fact, I appreciate skepticism because it is allowing my long positions to continue to make me profits. The amount of skeptics in this economy is out of control, but it’s setting the stage for a great bull market at some point.
Login or register to post comments Re: speculative positions in bonds and metals Submitted by DavidV (32 comments) on Wed, 10/06/2010 – 18:42 #70928 (in reply to #70926)
BillySundance, there are huge short positions in silver by *commercials,* who are hedging their production. I have updated my previous post with a track record of “managed money” category, which currently has record high net long positions.
Login or register to post comments historical net long positions by the crowd in copper Submitted by DavidV (32 comments) on Wed, 10/06/2010 – 18:45 #70929
Net long position in copper futures for Managed Money & Nonreportables
January 5 (intermediate-term top): 17K & 2000
February 2 (intermediate-term bottom): 16.5K & 450
April 20 (intermediate-term top): 22.5K & 560
June 22: (intermediate-term bottom) 3K & -2600
September 28 (latest report): 29K & 1600
So I would say that copper is even more ripe for a serious correction now than gold.
Login or register to post comments nice closeup Patrick Submitted by navid (125 comments) on Wed, 10/06/2010 – 19:06 #70930
you’re doing a great job
Login or register to post comments Silver – so ripe for a pullback, it’s ridiculous ! Submitted by jock (591 comments) on Wed, 10/06/2010 – 19:12 #70931
After a year of basically sideways mostion (8 unruly months, and 4 compressing in a triangle, SLV has risen 22% in about 6 weeks. Daily 14 period RSI is over 86! (Since its introduction in end ’08, SLV had never been above 79.)
With luck, we’ll have a quick correction to $20, and then resume silver’s rise. Will I be agile enough successfully to day-trade ZSL, the double inverse silver ETF when the break comes?
(Gold looks VERY similar, but silver is the “sprinter” in price moves.)
AttachmentSize slv_daily_at_10.6.10.png 38.56 KB Login or register to post comments LYM – TSX.V Submitted by Johnny (836 comments) on Wed, 10/06/2010 – 19:30 #70932
Lysander Minerals Corporation
Back on Wed, 03/24/2010 – 16:06 #59647
You added a post on LYM, excerpt “I added 142,000 shares of LYM at $0.17CDN.” Today LYM closed @ 0.295 just under it’s 0.30 high on 7/29.
Today, I took positions in two other pink-sheet names you mentioned CVE:PCY (PRPCF) @ 0.57 and CVE:PMV (PMVGF) @ 0.3708. I also took a look at CVE:LYM which had an acceptable 🙂 18% increase today up 0.045.
Do you still feel strongly about LYM and do you still own it?
And congratulations on all three of the above trades. They appear to have done quite well for you.
Login or register to post comments Brent Cook visits Yukon gold exploration sites Submitted by jock (591 comments) on Wed, 10/06/2010 – 19:38 #70933
Terrific videos, which give you a sense of how complex the exploration business is:
Login or register to post comments Who’s Next Submitted by 2nd_ave (4716 comments) on Wed, 10/06/2010 – 20:04 #70934
Alcoa. This stock looks as if it’s ready to head for the teens. But that’s exactly why I’m leery, and have no plans to trade it ahead of earnings. A safer play may be to either go long/short XLE on a good/bad reaction to the news. Or as The Who might put it:
When my fist clenches, crack it open
Before I use it and lose my cool
When I smile, tell me some bad news
Before I laugh and act like a fool
Login or register to post comments Re: Brent Cook visits Yukon gold exploration sites Submitted by Johnny (836 comments) on Wed, 10/06/2010 – 20:09 #70935 (in reply to #70933)
A great set of videos jock. I watched all three.
Thank you for the post.
Login or register to post comments Re: Brent Cook visits Yukon gold exploration sites Submitted by jock (591 comments) on Wed, 10/06/2010 – 20:26 #70936 (in reply to #70935)
FYI, Johnny, Brent believes the Yukon finds of this year are intriguing, but have yet to prove enough bulk tonnage to be profitably mineable. (Given the Yukon’s remoteness and lack of infrastructure, deposits there will have to be VERY good to prove economic to mine.
I find his skeptical stance PARTICULARLY impressive, because I know that he was the one who put Kaminak in touch with Yukon prospector Shawn Ryan, which led to KAM’s acquisition of the Coffee Creek Yukon property which has since propelled that stock.
It’s an unusual guy who is able to maintain a detached, objective attitude towards a deal in which he was the catalyst. A lesser guy would be “drinking his own koolaid”.
Login or register to post comments Re: Brent Cook visits Yukon gold exploration sites Submitted by gforce (358 comments) on Wed, 10/06/2010 – 20:32 #70937 (in reply to #70933)
Enjoyed all three; mining is complex and so advantageous would be the ability to develop models on the fly that help with the the process from start to finish.
Login or register to post comments Re: Brent Cook visits Yukon gold exploration sites Submitted by bobj (48 comments) on Wed, 10/06/2010 – 20:37 #70938 (in reply to #70933)
jock, thanks for posting those. For those of us that have never been to a mine site, or even “moose pasture” that gives a good overview.
Login or register to post comments Re: Brent Cook visits Yukon gold exploration sites Submitted by jock (591 comments) on Wed, 10/06/2010 – 21:04 #70939 (in reply to #70937)
The part of the story Brent didn’t dwell upon in the videos is that examining drill core and other samples guides analysis and conceptualization of “mineral structures” which in turn guides further drilling, and further study. SO, the mental models evolve as results from “step-out” and “in-fill” drilling come in and are considered.
I got to see this at Paramount Gold’s “Sleeper Mine” where 2 smart geos held a dialogue about structures and worthy drilling targets (most of which went over my head) but which led to Paramount’s newly published exploration (drilling) program. At Sleeper, there were already samples from 4,000 holes, drilled by previous owners of the property. STILL, there was lots yet to be learned.
I’m afraid the process of understanding a “resource” then converting it to “reserves” is unavoidably a long, iterative process. Only when a property is so obviously rich (and likely to be contested) as in Aurelian’s gold or more recently Andean’s silver does an acquirer pounce before in-depth studies have been conducted.
Brent likes to visit and invest at early exploration stage, before there ARE any drill results at all. But then he has decades of experience which you or I don’t have upon which to base his judgments.
Login or register to post comments Re: RICO v. MERS Submitted by gforce (358 comments) on Wed, 10/06/2010 – 21:30 #70940 (in reply to #70923)
I wanted to present this already starting process and not attach it to my previous post as it has become rather lengthy:
And here, the states are not waiting:
I ran across this today from Lew Rockwell.com
And Kaimu will recognize this:
Login or register to post comments A visit to the Insane Asylum Submitted by gforce (358 comments) on Wed, 10/06/2010 – 21:48 #70941
Mad I tell you…this guy is trying to say that US government instruments are not safe; do tell:
Hold on there…this person feels strongly in what he is saying:
Login or register to post comments Flash Crash Culprit? Submitted by Seamus (375 comments) on Wed, 10/06/2010 – 22:12 #70942
Pointing a finger at Waddell Reed
WSJ: The Mutual Fund in the ‘Flash Crash’
In the quest to find the culprit in the May 6 “flash crash,” regulators have pointed the finger at a little-known mutual fund based in a nondescript office park outside Kansas City.
Waddell & Reed’s $27 Billion Asset Strategy Portfolio, Part of a New Breed, Acts Like a Hedge Fund
As Market Sank, Waddell Traders Were at an Event
Securities-Industry Fund-Raiser Went On as Stocks Plunged That Day; ‘I Thought I Was Bombing as a Speaker’
Login or register to post comments Re: RICO v. MERS Submitted by MtnGntx (180 comments) on Wed, 10/06/2010 – 21:51 #70943 (in reply to #70940)
hehe….. those titles are NOT legally or lawfully recoverable by the end-investor. Those houses will become the property of whomever happens to show a history of intent and current occupancy….hehe….hehe….
And as far as the rats leaving the Obamanic…. Let them run…hehehe… why in God’s green earth would you want them to remain. We can find them easily enough later if necessary. Time to get down to some real work in this world.
Don’t think that you’ve heard the last of our sitting President. I suspect he instigated the rat-exodus. And don’t think their hasn’t been a large and well-supported cadre of intelligent, capable, compassionate human-beings waiting for their chance to change this morass once these rats vacated. Some have been waiting for years if not decades.
Big changes a comin, boss…. big changes, yessuah.
The world is far grander than most of us dare to imagine. Love and peace to all.
Login or register to post comments A possible longer view Submitted by gforce (358 comments) on Wed, 10/06/2010 – 22:11 #70944
This is a short read, no pun intended:
I am also considering the large sell off in Cloud stocks today.
Login or register to post comments Re: RICO v. MERS Submitted by bobbyo (583 comments) on Wed, 10/06/2010 – 23:04 #70945 (in reply to #70943)
MTNGNTX. Man your happy!Don’t over do the nitrous.
Login or register to post comments Re: LYM – TSX.V Submitted by kaimu (1798 comments) on Thu, 10/07/2010 – 00:27 #70946 (in reply to #70932)
Yes Johnny, I do still own Lysander Minerals-LYM … I have not bought any more shares on the open market since that last post but I have exercised some $0.15CDN warrants from a Private Placement(PP) I participated in last year. Obviously if I am exercising warrants I am still bullish on the company as they move into their next phase to rework and open their anthracite coal mine in the Ukraine. This play is more about energy, with ties to North Sea oil & gas and coal, more actively focused on coal though. All the key people from Western Coal are onboard at Lysander.
WESTERN COAL LINK: http://www.westerncoal.com/
If you go to the “investor” section of Western Coal and select any number of “funding related” news releases like the one I linked to below you will discover that the people who own a large portion of Western Coal are now large shareholders of Lysander Minerals.
NEWS LINK: http://www.westerncoal.com/_pdf/20050119.pdf
The PEOPLE TREE shows that Mr John Byrne and John Conlon, both of Western Coal are major shareholders and/or Directors at Lysander. You will also notice that in that news release they have close ties to Sprott Assets. Also Extract Energy based in the UK is the North Sea oil & gas connection for the company, which last I looked LYM owned a 35% share. The PEOPLE TREE at Extract is littered with ex-Shell Oil execs. My only other exposure to coal is through an Australian company STRAITS RESOURCES(SRL:ASX), which has a strong coal presence in Thailand through a huge energy conglomerate PTT as well as Singapore via SRL ASIA.
Yes, I am very much still onboard with LYM as the deep pockets are as well. The company has always been responsible with regard to dilution and has 87.6mil FD. Yes, LYM is not traded much …
Here is a chart of my major holdings and as you can see LYM is my only laggard, but I suspect that will change in the near future as there will be some movement soon on moving the coal assets closer to production. Yes, LYM went up 18% today, but that is how it moves due to infrequent trading as the one year chart clearly shows.
1YR CHART LINK: http://tinyurl.com/292fabx
Login or register to post comments Re: AKAM, RAX, CRM down 10% or so ? Submitted by Les (3485 comments) on Thu, 10/07/2010 – 00:35 #70947 (in reply to #70911)
Login or register to post comments Re: A visit to the Insane Asylum Submitted by Ross (365 comments) on Thu, 10/07/2010 – 01:10 #70948 (in reply to #70941)
I’ll take door number one for 20,000 shares, thank you. If TBT declines to $25, I’ll add another 20,000. Catching falling knives can be be a very profitable excercise when you know you’re right.
This is a gift from the Gods that should not be ignored. I love bubbles. They tickle. I’d short Jap paper in a minute but I’m too old, out of touch and lazy to research the mechanics.
Treasuries gone parabolic is like the internet crazy days of 2000. Sure you can always sell. But will you? And to whom?
Any government that can confiscate gold, impose wage and price controls and abbrogate a 1,000 years of English contract common law can lock you into your 2.5% T-paper as a hundred year perpetual. But if you really need your corpus, the black market might offer 3 cents on the dollar…and bread goes for $30 a loaf…or 2 loaves for $55!!! Always a gimmic from Madison Ave.
I don’t expect this outcome but lending any money to any sovereign with a printing press will prove to be more hazardous that my 40 tobacco rituals a day to honour my Indian ancestors.
In 05, anyone with half a brain could see the train wreck in the mortgage markets but few acted. Back then, ‘New Century’ was my tell. Today it is Greece and QE II. It’s truely ironic that the HB&B’s are today better capitalized than the sovereigns that bailed them out at our expense!
I believe is the strict construct of ‘Freedom of the Press.’ I’ll bring my own paper and ink. I just want access to the mint!!!
Login or register to post comments dollar loss is equity gain Submitted by davefairtex (2293 comments) on Thu, 10/07/2010 – 01:40 #70949
The recent rally started from the low of Aug 23 – at a time when the buck was trading at slightly above 83. Now with the buck around 77.50 (a 7% move), SPX is up 11.5% from the August lows. Now then, I think its entirely possible for INTC to double in a year (as 2nd_ave has predicted – based on his expectations of a booming economy), but for that to happen in the world I see coming, my guess is the buck would be somewhere around 40, and only after a QE 4.
This rally I believe is almost entirely a creature of a falling dollar. It has nothing to do with expectations of recovery, only of expected money printing by the Fed. And as I always like to say, if money printing was the path to prosperity, Zimbabwe would be the richest country on earth.
If you deflate the SPX using gold, you can see quite a different picture of our market “recovery” since 2009. It doesn’t look nearly so nice. Try it!
Login or register to post comments “It is about to get very interesting over the next few weeks.” Submitted by teamonfuego (2192 comments) on Thu, 10/07/2010 – 01:40 #70950
I agree…just wondering if the S&P will be at 1,225 or 1,300! Seriously, though, I wonder how much downside we have given how much skepticism is out there.
Login or register to post comments Jobs picture in Australia pumped for everything its worth Submitted by Les (3485 comments) on Thu, 10/07/2010 – 02:23 #70951
“Jobs surge smashes expectations” says the headlines. “The Australian Bureau of Statistics says 49,500 overall new jobs were created in September, more than double the 20,000 jobs predicted by analysts.”
yet if we delve a little deeper into the numbers, we find that a) “Unemployment remained at a seasonally adjusted 5.1 per cent in September from August”…
… and b)”The ABS seasonally adjusted monthly aggregate hours worked series showed a fall in September, down 1.0 million hours to 1,594.1 million hours.”
so unemployment, both trend and seasonally adjusted remains steady and hours worked were reduced. Probably because the participation rate crept up .2 – more people are actively searching for employment.
Yet the $A smashed resistance and criticism of the RBA decision to hold rates is widespread. My guess is that someone wants the $A to make parity with the $. Like $gold, overbought but keeping the momentum going. Pretty much like BRL/USD relationship too. Overbought becomes overboughter.
Login or register to post comments insider information from the Fed Submitted by davefairtex (2293 comments) on Thu, 10/07/2010 – 04:20 #70952
It’s real, as detailed by this Reuters article. Cost to obtain: $75,000 per year.
“On August 19, just nine days after the U.S. central bank surprised financial markets by deciding to buy more bonds to support a flagging economy, former Fed governor Larry Meyer sent a note to clients of his consulting firm with a breakdown of the policy-setting meeting.
The minutes from that same gathering of the powerful Federal Open Market Committee, or FOMC, are made available to the public — but only after a three-week lag. So Meyer’s clients were provided with a glimpse into what the Fed was thinking well ahead of other investors.
His note cited the views of “most members” and “many members” as he detailed increasingly sharp divisions among the officials who determine the nation’s monetary policy.
The inside scoop, which explained how rising mortgage prepayments had prompted renewed central bank action, was simply too detailed to have come from anywhere but the Fed.”
Login or register to post comments Re: insider information from the Fed Submitted by kaimu (1798 comments) on Thu, 10/07/2010 – 05:32 #70953 (in reply to #70952)
There is no required registration process for economic and monetary policy consultants, former Fed lawyers say.
Some especially high-profile former Fed officials now have their own shops, too: Former Fed Chairman Alan Greenspan’s Greenspan Associates offers policy consulting to Pimco, the world’s biggest bond fund.
Imagine that … their own “shops” … Who’da thunk it?
You should see what I have to go through to be a “registered certified nursery” here in the State Of Hawaii, yet there is no registration for FOMC insiders … Hummmmm … Hey Obama … a new tax revenue source!!!
I’d love to know how much Greenspan rakes in from PIMPCO for his “consulting services”.
Maybe one of the best investment tools would be to send “wired” buxom blondes to the nearest bars over by US FED offices!! How many inebriated FED employees have blurted out secrets? HA!! It must be the same over at the bars on Wall Street … Jeez, stock tips flying everywhere around 11PM …
The other side of the coin is all the relatives and friends of Ben Bernanke and all the other Fed Governors. I would suspect there would be some choice tidbits of insider info being spewed out at family reunions and Thanksgiving! I mean certainly with junior explorers one of the first people to know about core and assay results are the employees and owners of drilling companies and assay labs. I am sure they disclose valuable info to friends and relatives. There is no way anyone with insider info can be so robotic as to guarantee total secrecy. Human beings just are not built that way, well normal emotional humans aren’t, but then maybe that is one of the prerequisites for working at the US FED … you cannot be human! HUBRIS YES … HUMAN NO!!
Login or register to post comments futures 5:45 am – mixed trading globally Submitted by Les (3485 comments) on Thu, 10/07/2010 – 06:00 #70954
S&P+0.40 / +0.03%
Nasdaq-0.75 / -0.04%
Dow-18.00 / -0.17%
looks like rest day globally. Yen, A$ and CHF all making new highs of this crisis. overbought becomes overboughtest. Interesting though that the dollar is far from its 2008 low when these currencies previously peaked. Seems more like a case of currencies being bid up than $ being bid down.
Login or register to post comments The next global shoe to fall Submitted by Les (3485 comments) on Thu, 10/07/2010 – 06:21 #70955
‘fundamentally unfair’ final salary pensions must end in public sector:
I reckon before any country defaults on its debt it’ll starting cutting its public service ranks in numbers, salary and pension benefits.
The bread winner in this house is a very well paid public servant and a damn good specialised teacher, so I ain’t blowing it out my behind. One of the reasons I’m learning to trade, so as Kaimu puts it “we can maintain our lifestyle”.
Having come into contact with the Tao from a member of Vad’s group and following the debt reduction banner wavers here for a number of years some physical and psychological belt tightening is happening for what will no doubt be leaner years ahead.
Login or register to post comments Re: Jobs picture in Australia pumped for everything its worth Submitted by kaimu (1798 comments) on Thu, 10/07/2010 – 07:00 #70956 (in reply to #70951)
“We are already looking at skills shortages, particularly in the mining sector,” he said.
Without having read most of those articles I would venture a guess that the State of Western Australia had the lowest unemployment rate.
Jeez, where’s the Aussie “birth-death model”?
I find it disingenuous for the RBA to be criticized for holding rates at 3.75% while BOJ, US FED, the SNB and most of the rest of the World’s central banks are at 1% or a hair away from 0%! With the huge per capita external debt facing Switzerland I find it hard to sign onto the idea that the Swiss Franc is as good as gold, yet the Swissie is one of the few “non-commodity” based currencies to rally against the USD. It is my belief that no paper currency, especially those burdened with huge debt liabilities is as good as gold. Note that all commodity based currencies have rallied against the USD since AUG/SEPT there have been some pretty steep run-ups. The Yuan is one of the steepest since August. I think you have to take a look at the “yardstick” … the USD. The fundamentals are abysmal there … I think the US FED and OBAMA would cut their left thumb off for 5.1% unemployment. While the Swiss unemployment rate is lower than that of the RBA at 3.7% if you look at historic Swiss unemployment rates you see that from 1940 to 1991 the unemployment rate was 1% or less, but now on a long term chart unemployment in Switzerland shows higher lows.
Check out this long term unemployment chart and you can see the new Switzerland is nothing like the old Switzerland for many reasons least of which is “frugality”. Current Swiss unemployment rates are the highest since the Great Depression era. Where have I heard that before?
To me the Switzerland of the 1970s and 1980s with markedly less debt and unemployment was closer to “good as gold” than it is today. More “lesser evil” on the FX … Still its a lot easier to manage 7 million people than 23 million or 310 million … Heck America has 42 million citizens on food stamps, six times more than the entire population of Switzerland!
From SECO …
Higher Growth Forecast for 2010 – Bleak Export Prospects Lower Forecast for 2011
Bern, 16.09.2010 – Higher Growth Forecast for 2010 – Bleak Export Prospects Lower Forecast for 2011 Economic Outlook and Forecasts of the Federal Government’s Expert Group on Economic Forecasts – Fall 2010*. As a consequence of the lively economic revival up to the middle of the year in Switzerland, the expert group has increased the federal government’s growth forecast for 2010 to 2.7% (previously 1.8%). The prospects for 2011 are less positive than recently assumed, due to modest world economic prospects as well as higher valuation of the Swiss franc producing significant drag and having a negative influence on Swiss export growth. Based on estimates from the expert group, the economic recovery in Switzerland will not completely cease in 2011 but with forecast GDP growth of 1.2% it will be significantly slower than in 2010.
BOJ sell some Francs please …
Login or register to post comments Re: The next global shoe to fall Submitted by kaimu (1798 comments) on Thu, 10/07/2010 – 07:15 #70957 (in reply to #70955)
I reckon before any country defaults on its debt it’ll starting cutting its public service ranks in numbers, salary and pension benefits.
You left off MILITARY spending, especially DEFENSE VENDORS. At least that’s how it went in the USSR! Watching the US Treasury statements I see no signs of DEFENSE VENDOR spending being cut yet.
Hummmm … “well paid public servants” in Swissie too!
Login or register to post comments Re: RICO v. MERS Submitted by Grym (2586 comments) on Thu, 10/07/2010 – 07:25 #70958 (in reply to #70943)
Any big changes from Obama are likely to simply be an attempt to change the perception of the masses. He may try to reinvent himself, but to people like the woman at his town hall meeting, even to those who were once his biggest backers his charm is threadbare.
Americans habitually have short memories and he will likely put on a campaign now, but save the big guns until it his his turn at the ballot box. A grandstand play (stimulus bribe) designed to woo us again.
The problem, IMO, is he cannot identify with the fact “We the People” are constantly reminded just how bad the economy/job/mortgage situation really is.
To borrow from Slick Willie, “It depends upon what is, IS.”
Login or register to post comments Inflation Expectation Noise Submitted by Grym (2586 comments) on Thu, 10/07/2010 – 07:49 #70959
In his 2002 “Unconventional Measures” speech Bernanke announced deflation as his biggest fear. Many have expressed evidence of inflation here. As one who is on the fence, but tilting to deflation now and for some time to come, I found this view by Mish interesting.
Mike “Mish” Shedlock
Inflation Expectation Noise
Login or register to post comments GRANDSTANDING 101 Submitted by kaimu (1798 comments) on Thu, 10/07/2010 – 07:53 #70960
Hummmmm … November cometh!
“Representative Pelosi, the House speaker, and 30 other Democratic representatives from California told the Justice Department, the Federal Reserve and the comptroller of the currency that “it is time that banks are held accountable for their practices.”
With the election now less than a month away, House Democrats have requested a formal investigation into the highly questionable foreclosure practices by the banks and servicers. According to the Times story, Speaker Pelosi said that “the excuses we have heard from financial institutions are simply not credible.”
The Times also reported that officials from the federal agencies, presumably including the Treasury Department, FDIC, et al, have all declined to comment, and I would be shocked to find out that wasn’t the case.MORE
When will the US CONGRESS hold an investigation to make the US Congress “accountable for their practices”?
Wow … its going to get VERY DEEP before November hits! Its hard to imagine that a group of 30 DEM reps from the bankrupt State of California have the nerve to hold anyone other than themselves accountable for their lack of fiscal disciplines. My first question if I were being grilled by Pelosi would be to ask who balances the check book at her home? The HUBRIS is way, way out of control …
Login or register to post comments Re: Inflation Expectation Noise Submitted by kaimu (1798 comments) on Thu, 10/07/2010 – 08:10 #70961 (in reply to #70959)
I’d say its “all noise” … Its all severe malinvestment in the AMERICAN DREAM, which is anything and everything “debt”!
I really do not care what house prices are but I do care what I have to pay for business supplies and cost of living. None of those prices reflect true “deflation in prices”. That is the big difference between the Great Depression and this Great Depression 2. FedEx is raising shipping costs again on me. Tell MISH that … let him know that a greater majority of us would rather see this “deflation” hit cost of living and cost of business rather cost of housing! Its very easy to get out of a mortgage, just quit paying your payments and go rent. Try quit paying electricity or food or healthcare … or in my case … if I quit paying FedEx I’d be out of business.
Money supply … debt … the real debt to worry about is that of the US Treasury and there is no deflation going on there. It is unlimited on the supply side. The reason you need to worry more about the US Treasury is because they do not have the limitations you and I have with regard to debt attrition. We as mere mortals have to pay down excessive debt, the US Treasury is increasing excessive debt on your behalf. The main reason the US Treasury continues to expand excessive debt levels is what I call PRICE FIXING 101. The US Treasury PRICE FIXES everything from POMO to SNAP to HAMP.
Login or register to post comments Re: Inflation Expectation Noise Submitted by jet8400 (71 comments) on Thu, 10/07/2010 – 08:26 #70962 (in reply to #70959)
If the jobs data coming out shows an increase in hiring, we can expect to see more POMO. If not, we can expect people will be furiously outraged that we continue to QE with no real benefit and should expect a slow or stop.
Login or register to post comments Cara 100 Ratings Changes For Thursday Submitted by Bull Hunter (1444 comments) on Thu, 10/07/2010 – 08:51 #70963
No POMO scheduled for today.
8:30 – Initial/Continuing Claims – down 11000
15:00 – Consumer Credit
Target (TGT Cara 100) same store sales +1.3% vs. 1.9% expected.
AMZN – PT Lifted from $161 to $181 @ RBC. Outperform
COST – Downgraded to Hold @ McAdams Wright Ragen. PT Lifted from $67 to $71.
TEF – Telefonica initiated with a Buy at WestLB.
Doc Halladay for President !
Login or register to post comments Re: Inflation Expectation Noise Submitted by davefairtex (2293 comments) on Thu, 10/07/2010 – 08:46 #70964 (in reply to #70961)
Kaimu – “I really do not care what house prices are but I do care what I have to pay for business supplies and cost of living.”
Ah now we get down to brass tacks. You think there’s inflation not because of an overall assessment of facts, but just because the things you care about are going up in price.
For the vast majority of middle class America, their main store of wealth was their house. They care very, very much what its value is. What’s more, a huge chunk of the money supply in this country is collateralized by the value of those homes standing behind that money. So when those homes drop in value, effectively, so does the money. It make take time to be widely acknowledged, but through defaults, strategic or otherwise, home price deflation makes its way into the mainstream.
And of course those people who have the bulk of their assets in their homes are affected the worst – and those who are leveraged, are even more dramatically affected. Many of them are wiped out. I’m sure they’d all be willing to pay 10% more for FEDEX in exchange for their $200k equity in their home back again.
Kaimu, just because it doesn’t affect YOU does not mean the effects are not dramatic and meaningful to the rest of the country – who are not living in Hawaii, with multimillion dollar positions in PM stocks. I dare say, you’re not representative… 🙂
I’m definitely not impugning the wisdom of your choices, clearly you’ve done well – but to say that something is not important in general just because it isn’t important to YOU – well that’s just silly.
Login or register to post comments Plane Vanilla? Submitted by Ron Sen (575 comments) on Thu, 10/07/2010 – 08:53 #70965
We’re on the Cooked Frog Express today as we’ll see whether Wall Street celebrates creeping incrementalism with a tiny reduction in unemployment claims.
Technically, a lot of “important” issues show Toby Crabel’s (Day Trading with Short-Term Price Patterns) narrowest range of seven days, NR7, price pattern. The pattern corresponds to cyclical price volatility with prediction of price expansion but not direction.
Just a few:
– IYT (Transports ETF)
For what that’s worth.
Login or register to post comments Is the Fed serious? Submitted by Les (3485 comments) on Thu, 10/07/2010 – 08:55 #70966
The dollar is falling like a stone in anticipation of further quantitative easing (QE) by the US Federal Reserve. A number of Fed officials have recently stated their support for further accommodation. I agree with Joseph Stiglitz, however, that the $1.5 trillion the Fed has injected into the economy so far has done little to boost domestic investment…
Given that QE has so far been ineffective, why should the Fed believe that a second tranche would be any different?…
***…Or is this merely posturing to ratchet up pressure on China ahead of the upcoming G20 meeting on exchange rates?***”
Login or register to post comments Re: Inflation Expectation Noise Submitted by Ron Sen (575 comments) on Thu, 10/07/2010 – 08:57 #70967 (in reply to #70964)
Maybe it’s fair to say BOTH are important…and why do we accept inflation statistics from those gaming the system.
Granted, consumers of different ages are affected by different types of inflation. Tuition inflation affecting boomers more and healthcare inflation more impactful on the elderly.
But still, we should be able to present an alternative set of price statistics based on a bundle of goods and services (including food, energy, housing, healthcare, transportation, insurance, tuition, entertainment, etc.) that has meaning.
Login or register to post comments Re: RICO v. MERS Submitted by MtnGntx (180 comments) on Thu, 10/07/2010 – 09:35 #70970 (in reply to #70958)
What most here and elsewhere dont seem to understand is that it is the banks, politicians, and attorneys of the world that have abrogated “1000 years of common law.” Not the borrower. It is and has always been a big ponzi scheme. IT resets roughly every 70 years here in the US. It was designed and implemented as a method of control over the masses. The PTB view humanity, in their own words, as human livestock…. goyim to be exploited, bled, used, and most importantly, controlled.
When I read people’s comments intimating that somehow end-investors will be made whole, or that somehow not allowing them to be made whole is an abrogation of contract law, I know instantly that these individuals do not really understand the esoteric nuance of our banking and legal systems. When they dig deep enough, they will get it. And they will be both dumbfounded and angry at how they have been used, controlled, bled, by this system. Certainly the PTB know the score; this is what abrogating 1000 years of common law looks like (sorry for the link, tinyurl down):
Now with respect to the Obamanator… he was a made man… selected, groomed, installed, and used by PTB handlers and power brokers. He has always been between a rock and hard place. Signs are that he is becoming his own man, much to the gnashing chagrin of those who created him. And that bodes very badly for the PTB. Agreements behind the scenes are removing many of the nasty players that have plagued our society. The “matrix” is crumbling. Obama has a real opportunity, perhaps for the first time, to actually move
things in a positive direction. I think he will/is taking that opportunity.
Don’t get me wrong, I firmly believe that Obama was not even born here in the Republics. But, because the US is actually a tightly controlled corporation, and he in actuality is just the president of that corporation, the republic’s constitution does not legally apply. The corporation can install whomever they wish into the presidency and are not beholding to the Republic’s constitution. This too is becoming more widely understood. And as it becomes more apparent how the game was rigged and by whom, the higher the likelihood of full disclosure, redemption and restructuring.
The masses have been duped and used for too long. This is coming to an end. Revolutionary change is already in motion. Obama can either play along with that momentum, or continue to be the PTB’s biacth. I think he made up his mind a long time ago and has personal problems ever since… including death threats by those who installed him. But it takes a long time to change the course of such a large ship of state.
Login or register to post comments Re: Inflation Expectation Noise Submitted by Grym (2586 comments) on Thu, 10/07/2010 – 09:44 #70974 (in reply to #70961)
“I really do not care what house prices are but I do care what I have to pay for business supplies and cost of living. None of those prices reflect true “deflation in prices”.”
You may be unaffected by house prices, (and are quite possibly right) but for many this is their single most valued asset. You may be confident the American Dream is invalid — they may be believers.
“FedEx is raising shipping costs again on me. Tell MISH that … let him know that a greater majority of us would rather see this “deflation” hit cost of living and cost of business rather cost of housing!”
This is important to you, but ask yourself, “What does the average citizen care or even think about FedEx costs?” If you quit paying FedEx you’ll be out of business, but they fear that if they quit paying the mortgage they will be out on the street.
Who do you think will have the most impact on the economy or the markets — you as an individual businessman or the masses who watch American Idol and their favorite team each weekend?
Paying attention to such noise may be very important.
Login or register to post comments Mortgage monster Submitted by MtnGntx (180 comments) on Thu, 10/07/2010 – 09:47 #70975
Here is how Sinclair sees it:
tinyurl working now.
Login or register to post comments Re: Inflation Expectation Noise Submitted by kaimu (1798 comments) on Thu, 10/07/2010 – 12:53 #71004 (in reply to #70964)
to say that something is not important in general just because it isn’t important to YOU – well that’s just silly.
Please Dave … do you think I that self-absorbed?
I am a business owner and I am a human being that live in the USA. Are you either of those?
I am simply stating the obvious, not only from my perspective, but from everyone I know and do business with. None of us see costs to do business or to live going down. You may want to debate money supply and debt levels but in the end none of that matters to the masses. If you doubt me then take your debate out to your local club or bar or to the produce section at your local grocery store or maybe to the voting booth and see just how relevant your debate is.
Why do I need to debate debt levels or inflation and deflation when all my monetary investments are based on one single thesis … the destruction of the USD. Debating the “supply and demand” of paper debt that is nothing more than political paper backed by insolvent liabilities is akin to debating religion. Who cares which one you belong to because in the end you’re dead any way!
This is THE END … beautiful friend THE END …
Login or register to post comments Re: Inflation Expectation Noise Submitted by Grym (2586 comments) on Thu, 10/07/2010 – 13:43 #71006 (in reply to #71004)
Judging from the overreaction to an alternate opinion I guess perhaps you are.
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