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  • Financial Conditions Almost Back to Normal [View article]
    I have to agree with the cynical comments above. Normal for credit spreads, implied volatility and interest rates, so says the author, yet if you talk to your local bankers you're not going to find them loaning money like you would expect from the chart. Maybe it's normal, but if so it's the "new normal", explained by Bill Gross throughout the fall monthly outlooks he publishes, where the costs of doing business and growth potential of the U.S. has changed fundamentally from the crisis.

    It's rediculous to suggest that credit markets are "normal", because the bloomberg graph only identifies flows and rates between the BIG financial firms and governments who are playing a shell game with finances and propping up the now semi-private banking sector. There are still major fundamental issues in the lending market and we won't see the full effects of the shadow inventory of mortgages or the rate resets this winter until mid 2010.

    If you believe this cute little piece I'm sure I'll see you selling your hat in a bread line come 2013.
    Dec 7, 2009. 09:28 PM | 4 Likes Like |Link to Comment
  • Gold: Expect a Technical Correction Before the Final Frontier [View article]
    Gold most definitely MATTERS, it's just a matter of when and how. It has no production value so from an investment standpoint it provides little long term benefit. A recent Bloomberg article shows that an interest bearing checking account would have yielded a higher profit over the last 30 years even at current levels (

    The fact is that gold matters because there is a finite supply (i.e. you can't print gold), yet it is produced and the supply can fluctuate from time to time. Gold is important NOW because nations are borrowing extensively from their central banks, citizens and foreign sovereign funds and it's tough to tell just where the currencies are going to end up relative to eachother's value. Watch Fed policy and Bernanke for any change in sentiment towards the economy for a shift away from the carry trading which has continued to devalue the USD.

    Check out a great synopsis of a Peruvian gold play that we recommended at and then closed for a profit. There could be more chances to make profits on this name soon...

    Dec 7, 2009. 09:21 PM | 3 Likes Like |Link to Comment
  • Bernanke: Don't Expect Rate Hike Before U.S. Economy Is on Solid Footing [View article]
    Well it's completely obvious now, if it ever weren't before that Bernanke is specifically manipulating the equity market (stocks) to fit his agenda, only now traders everyone is getting wise. When he said today that the economy remained weak, he was specifically speaking to rumors about the Fed raising rates sooner (i.e. Within 6 months), causing the temporary shift to dollar strength to wither and for stocks to end up flat.

    Bernanke want's a WEAK dollar because it makes Americans feel more rich when stocks appear to be more expensive, therefore they may spend more. He's a magician playing with fire.

    For more check out:
    Dec 7, 2009. 05:04 PM | Likes Like |Link to Comment
  • The Destruction of the Dollar: It's Nearly Inevitable [View article]
    Long term I've got to agree with you, but these short-term traders have manipulated the world into believing in the value of these stimulus propped U.S. equity shares so what's to say we can't get a short term significant move higher from the dollar. We've seen sharp deterioration in commodity shares on good data (Employment Report) and futures are lower Monday morning for almost all assets (including the S&P 500, SPY, SPX).

    A short term pop in the Dollar would see Equities and Commodities go low, low, lower. It's counter intuitive, yes, but the infinite 0% Fed Funds fantasy must end in the next few months and when it does, the carry trade party will end with violently abrupt vigor.

    Check out this weeks econ data and what to watch on the Diamond Slice "Weekly Spectrum":
    Dec 7, 2009. 09:50 AM | Likes Like |Link to Comment
  • Our Current Economic Illusions [View article]
    Doom and Gloom is at least a beneficial exercise. At worst it will remind us to liquidate those long gold commodity plays and buy stuff we can actually use (i.e. physical wheat, pork bellies, orange juice, etc.) when the time comes...
    Dec 4, 2009. 12:12 PM | 3 Likes Like |Link to Comment
  • Jobs Report: An Actual Green Shoot [View article]
    I'm just as negative as the lot of you, and I don't see how the rest of the world is ignoring such blatant imbalances and brutally eased quantitative measures by central banks. But it does send a chill up the spine when you think of how many of us SA "Illuminati" are calling for the same abysmal failure of the entire system compared to the bulls who voice their opinion in this forum. Are we the bears roaring towards the cliff, or is this forum simply the conference zone for the few best brains in the nation to congregate and postulate?

    Your thoughts fellow SA advocates...
    Dec 4, 2009. 12:00 PM | 6 Likes Like |Link to Comment
  • Cash: How Much Is Really on the Sidelines? [View article]
    Ok, so you want to get nitty gritty about it, that's fine...

    The "sidelines" most definitely includes your grandmother's mattress (which wasn't out of the question in Fall '08, for those who remember), but could describe a checking account, or even a marginally appreciating savings account. I would have to rule out a money market account, since this is essentially an investment fund you are buying into which is managed by your financial institution.

    The definition of the "sideline" is obviously not the point of the article here. The guts of my point concerns the level of funds which have been put back into risky assets (i.e. stocks, commodities, bonds) since the flight to cash last year. This article points to the S&P 500 U.S. stock index, and suggests that the surge of dollars into the basket of equity shares may by bloated due to factors separate from the ability of the actual firms to grow profits.
    Dec 4, 2009. 11:45 AM | 2 Likes Like |Link to Comment
  • Bunning vs. Bernanke [View article]
    If Dodd has his back, which he says he does, Bernanke will surely pull Frank, Pelosi & Friends along with. The fact that Bernanke even wants the job after the dozen times he's been bent over antique Mahogany in front of congressional committees, should be a testament to his commitment at the post.

    While the decisions he made were wrong (milking the strength of the dollar for stimulus spending, expanding the Fed balance sheet to disguise the effectively bloated national debt, and investing printed money into failed firms and defaulting assets), I don't see anyone else having done it differently. I despise the situation and I think he deserves much blame, but I don't care who's running the Fed at this point.

    Empathetic is the word of the day... Bernanke played his hand and pushed his chips all in. No new Fed chairman can change what the future holds because there's no decisions left to make. It's wait and see time, but no one wants to open their eyes...

    Find out how much cash is really on the sidelines...
    Dec 4, 2009. 01:12 AM | 2 Likes Like |Link to Comment
  • Goldman's Hubris [View article]
    IQ would be the first difference between Blankfein and Wilson. Second would be the success of their firms delivering to their stakeholders. Goldman is a monster, but they're our monster, so that makes them a little less scary...

    They do pay taxes... but when their execs end up working for the government in retirement and shape global finance to fit their cronies' mezz trades, it hurts.
    Dec 3, 2009. 09:29 AM | 2 Likes Like |Link to Comment
  • Equities Update: Flat Finish as Energies Weigh [View article]
    The wish wash in equities may have been due to a trend change. Any one else notice the dollar up, gold up, and oil down? Could this mean we have an ounce of realism sprouting from the trading based on trading mentality?

    Dollar up, Gold up, Crude down (if sustained) busts two myths: (A) All commodities move in tandem in a weak dollar environment and (B) Gold is being bought as a dollar hedge and not a safety play.

    The froth is getting thick, but consolidation is an upside risk to all assets as prices flatline...

    Get an edge at
    Dec 3, 2009. 02:55 AM | Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    With earnings finishing up for Q3 we can see the S&P 500 p/e clocking in right above 20 yet again. Does the potential return on investment really warrant valuations any where near these levels? Is growth potential really that great, just because we have loads of capital investment sitting around waiting for the consumer on the other end of the line?

    Check out a good recap of where p/e's have been over the past 10 years and how GDP and housing has played a role below:
    Dec 2, 2009. 07:41 AM | 5 Likes Like |Link to Comment
  • S&P Real Yields: Spike Signals Return of Equity Risk Premium [View article]
    The re-risking theme is definitely evident in the Bernanke and prior Greenspan authorities, yet what should be noted is instead the realistic dividend yields offered by firms and the unrealistically high prices of the underlying stock. The problem is a shift to higher p/e valuations over the period which are unsustainable in many sectors which aren't synonymous with rapid growth (many dividend offering firms).

    For further analysis of unrealistic p/e ratios, contradicting economic data and security price trends in the current market, see the Market Synopses section of Diamond Slice:

    Dec 1, 2009. 04:59 AM | Likes Like |Link to Comment
  • 5 Reasons to Expect a Near-Term Selloff [View article]
    The mortgage reset is an issue which has received little attention thus far, but will become a headline issue as the ever expanding U.S. Fed balance sheet has no where to go but bigger amidst nationalized GSE mortgage trusts. No one ever talks about the difference between Fed "policy", as released through the rhetoric of the minutes, and actual Fed balance sheet fluctuations but the data shows a Fed financing more and more of the mortgage industry. The credit markets won't ignore the shift of non-performing debt from private to public balance sheets forever.
    Nov 30, 2009. 08:45 AM | 13 Likes Like |Link to Comment
  • Will Dubai's Standstill Spark a Reversal in the Dollar? [View article]
    Breaking down the situation and looking at the recently unfolded events from an analytical standpoint, we must admit that the Dubai World debt extension is effectively a default. As described in an FT opinion piece on the matter, Dubai is a "vacuum"-like atmosphere of "top down" decision making, offering little more than government level talk to the strengths of the Arab developers such as Nakheel (firm responsible for the ostentatious man-made palm island real estate venture) when investors had requested reassurance.

    The default is essentially a default by the Dubai government, since they have guaranteed all debts of the fund, and implies weakness throughout the Arab economies and perhaps the world. Implicit repercussions will be felt by all Middle East business, not the least of which include major risk taking firms such as Emirates airline, which has made broad plans to expand their fleet of new jets.

    The situation completely discredits Middle East borrowers and calls in to question the ability of nations throughout the world who have rushed to the table to borrow on recently lower rates.

    Perhaps this will be just the event necessary for credit and equity markets to snap out of the stimulus illusion and into reality.

    For more global analysis see:
    Nov 27, 2009. 06:44 AM | 5 Likes Like |Link to Comment
  • The U.S. Dollar: Now at Parity with the Swiss Franc [View article]
    The U.S. Government and Federal Reserve have been playing high stakes no-limit holdem' for the past 10 years as growth cycles in the U.S. have been fueled by a competitive advantage in capital while the recessions have been bailed out by expanding the Treasury and Fed's balance sheet. Uncle Sam is the player who can't stop buying in for more chips on credit when the river keeps busting up his straits, and now the few dollars he's made on a winning streak are buying less whiskey.

    Check out a chart of the S&P rebound discounted into Yen and Swissies for a look at how much foreign investors have made from the "recovery rally" at:
    Nov 27, 2009. 03:37 AM | 1 Like Like |Link to Comment