Instablogs are blogs which are instantly set up and networked within the Seeking Alpha
community. Instablog posts are not selected, edited or screened by Seeking Alpha editors,
in contrast to contributors' articles.
Is this the new Quick Chat? And am i the first/only one out here? (It almost feels like the tag line for the first Alien movie - In Space, No One Can Hear You Scream.)
Just what I thought - standing all by myself in left field. Anyway, kudos (belatedly) to you on your thoughts about SDRL (and i guess (NATDF). I held onto SDRL longer than I should because I hoped (how Mr. Market loves that word) would continue its ascendancy.... so naturally watched it go from 42 to 36+. But after the news recently that France might tap its strategic reserves and this mornings action, I finally sold it. I actually am now all cash. What a concept; have not been that way in a long time.
Have not been active here on SA recently, but do appreciate your insights, etc. !!!
Anglico, Cash is a great place to be IMO. On average with intra-day activity I am about 65% myself.
I was just commenting to someone else, that with the drop in oil prices -- some bargains may be had shortly. I have been watching RIG for an entry and its now down $6 in 2 weeks. The Brazilian charges have certainly not helped.
I haven't given up on SDRL and NATDF for future trading purposes -- I just no longer have the long term conviction I once did -- especially after seeing how debt levels and inter-company asset flows are apparently being managed between parent and sub.
Saw your posting on Deep Sea supply -- want to share what you like about it?
An interesting article on volume and what it portends. http://onforb.es/Ho0CFN In an aside the ETF (NCT) will be offering 16M shares @ $6.22 and I will double down on it when it does.
Follow up on Fredikson's empire. One of his minor holdings is DSSPF. I started following it in January at about 1.15. Now it is up over 100% to 2.26. I know on the U.S. exchanges (and the only place I have an account) it is no bigger than a farthing (and thus liquidity IS an issue); too bad its real action is in Oslo (or whereever it is situated).
Exchange location aside, as an oil service provider (or more correctly, rig service provider), its continued increase in price tells me that this sector still has legs (the recent downward pressure in oil/oil services notwithstanding). Would you agree?
Agree Anglico. Deep Sea Supply and Aker Solutions are both on the move. Deep Sea gets around 400,000 trades a day and AKSO gets 1.4 million a day, so yes Oslo Bors is where the volume liquidity is for both of these. Oil service providers have all been thrown under the bus with the pessimistic guidance provided by BHI -- but some names are now approaching bargain territory. mj
Mercy: Apologize for starting chat thought and then disappearing, but unlike those of you fortunate enough to trade full time, I am a simple schlep who has to grind out a living elsewhere; thus, the late response. I will confess - I have not done a detailed analysis of DSSPF vis-a-vis other rig service companies (as opposed to land based oil services companies). What attracted me to it is that it appears to be another Frederison entity and operated along the same lines as SDRL - i.e., buy top of the line, leading edge Anchor Handling Tugs and Platform Supply Vessels and contract out. Imagine (but cannot confirm) that a majority of SDRL rigs are serviced by DSSPF; thus, as goes one so goes the other. BUT ... as you indicated, there may be games afoot in SDRL and NATF. Ergo, is money better allocated elsewhere? Maybe, but there 4Q report shows that they are almost fully leased/chartered for a long time to come. Anyway, just a passing fancy. Will keep you posted as ideas rattle through my cobwebs.
AnglicoTrader: Being fully contracted for a long time is not good right now, as the UDW rig day rates are currently at a much higher level than when the contracts were signed.
I see higher potential elsewhere than NATDF, but I'm still keeping many of my shares. I trust the management and I know they're sharing their income with the shareholders.
I've seen contributors here on SA praising PACD and RIG, and they could be good examples of better investments, as they have newbuilds waiting to be put on contract. I've found SEVDR on the Norwegian stock exchange to show a similar potential to those, and invested quite heavily in it.
I noticed on a previous day’s chat (always a day late and dollar short) a discussion of the Obamacare hearing before the Supreme Court, and have a couple of quick thoughts and questions about it. I anticipate that the court will overturn the individual mandate, and that this likely will cause insurance company prices to fall. During Romney’s campaign, he has been trying to delineate the difference between the federal mandate and his Massachusetts program. Although Obama and the left have sought to blur the distinction, one of the Justices (I think possibly Kennedy) indicated that Romney was correct; the federal government with its enumerated powers could not mandate individuals to purchase insurance, BUT a state could. I live in la la land, also called California. Actually, I live in the conservative enclave of Orange County, which used to be like Lesotho currently appears on the maps, but because of demographics increasingly is going the way of Goa, but I digress. Anyway, I would imagine once the ruling comes out, and states realize the potential to do what Romney did in MA and the fact that the federal government is not going to be the one to do it, that they will try to impose their own mandated health care system. In California we are 1 vote shy of a veto-proof majority in the State Assembly and State Senate and, therefore, anticipate we may be the first state to attempt passage of mandated health insurance. I wonder if California based health-insurance companies are good long term values. Your thoughts brighter minds than I?
Jon, Springer: Greetings. That would definitely get some attention. It would be easily accomplished by using it to put teeth into the existing law requiring a budget be passed every year.
Ain't "stick saves" a beautiful thing to behold? From a low of $1,392 at 11:59 for SPX, claw it's way back up and then 15:00 BOOM! Soaring, now at $$1,402.
(SPX), (SPXU): Tomorrow should be the last day we hold above $1400, IMO.
Three consecutive days with lower highs and lower lows and volume increasing each day. Three days SPX tries to tank early and then claws back after making the lows.
The oscillators I watch, except accum/distribution, have all left any semblance of bullishness in the rear-view mirror and are now either neutral or showing early attempts at trnsition to bearish readings (MFI, stochastic and ADX, with DI- about to cross above DI+).
$VIX acted *exactly like yesterday - making an intra-day high of $17.20 (yesterday was $17.27) and closing low, $15.39.
All combined, this demonstrates what is going on right now, IMO.
(TLT) closed right on $114. Does the 10-year and other U.S. Treasury issues support a flight to safety bias?
On stockcharts.com the 10-year ($UST) edged up slightly again to $128.81 and the yield ($UST10Y) ended at 2.18%, continuing it's slow descent.
The 20-year ($UST20Y) yield continued to slide, showing 2.93% and the 30-year ($UST30Y) ended at 3.27%. Both of these are below and leaving the falling 200-day average in the dust.
I'm *very* curious to see what happens next week when any pressure to "paint the tape" (what I had been calling "window dressing") abates.
I think if I see similar behavior tomorrow in the SPX, with volume up again, I will seriously consider doubling my SPXU position. But, I'll probably chicken out! =8-O
HTL, I would have felt better if they had let it correct 500 pts then rallied to where we were. But the hedges are desperate for a great qtr. to beat the indexes and reverse their losses from last year.
Anything can happen..including the fed QE3...I do not disagree with you, and I may play the VIX, or SPXU with you...short term. I just don't think Bernanke and/or the hedge funds will allow a repeat of last year....they got burnt way too bad.
With all that said, the key stocks I follow such as CAT has dropped from $115 to 104, APPL has stiff resistance at $600. That buyback is all that has propped it and hedges are loaded to the gills on it (I would bet most of their net is in this one stock from $350-600 is one hell of a rise) there are others too, individual stocks that have been mkt. leaders just confirm your TA.
LT: With the pattern changing today - European markets up, SPX futures up, looks like open up - I'm thinking of holding steady or making an earlier intra-day trade.
This may just be a continuation of the sideways trading that has started. But if it is, then a couple days in a row up are likely I think.
All the chart stuff says we should be topping, but it's been suggesting that for a while. It might be better to wait for an established down move to get started before making a move *if* today's change so far indicates either a change in the pattern or a continuation of trading sideways.
That's my thinking ATM - as the charts change, I've got to change with them.
I'm thinking that the biggest move I might make today is if we get a big rise into the late morning, I might try an intra-day SPXU buy cheap and sell on an anticipated re-trace during the day.
Never know if that's the right play though, but it's looking like that might be the best move for now.
With 90 minutes to go before the open, it could change ... a lot!
I want to throw this out and expand on it here. It's not political either, it is reality.
Let's just use one stock as an example...take CAT, they have profited as much or more than anyone on 3rd world expansion and development. But now with the EZ austerity, China slowing, and the Tea Party refusing any big spending bills in the USA...just how is CAT going to beat earnings? Short of a big spending bill in the USA, I don't think they can, same for BA..they are seeing order cancellations starting this week. Almost all corps are depending on a strong USA to make up for EZ shortfalls and congress is not cooperating at this point. I am not advocating this either, so don't make it political. I am saying I believe that industrials and maybe other's is a short.
They overdone financials last year and we've seen a huge rebound this year, but have they gone too far too fast? ex= C from $22 to $38? I wouldn't dare short them, but any of the big banks at $50?
I knew the regional banks were a buy, and they probably go higher. There could be a shift from industrials to the smaller financials....as jobs grow & come back from overseas to the USA, housing recovering,
I know this is a lot, but this summer may be a sector correction that hits say CAT very hard, ex: CAT from $115 down to 80...but in reverse DE goes from $80 up to 100 ? I would think APPL either goes up $100 or down $100...50/50 odds...they only have to miss on anything to go to about $530 for the dividend support.
I look for leading industrials like CAT that have lead the mkt to get hit hard...but smaller laggards to rise to offset this, like Zynga, regional banks, ag, etc. Bio-tech and penny stocks might too.
LT: Spot on. Recall that durable goods, GDP, unemployment all disappointed.
Have to see if there's any bright spots in this mornings: 8:30 PCI, consumer spending, core PCE price index; 9:45 Chitown PMI; 9:55 consumer sentiment final.
As China modernizes, APPL can stand it, but how about the others like AMZN Kindle, they are already selling it at a loss to compete. China won;t be nearly as cheap to do business in in the future.
6:01 AM As part of a pledge to comply with Chinese law and the Fair Labor Association's standards, Apple and Foxconn forge an agreement in which the latter will hire tens of thousands of workers, halt illegal overtime, improve safety and upgrade workers' housing. The deal could have far-reaching affects for the rest of the sector. Comment! [Tech, Consumer]
And this is correctly being interpreted as evidence of the strength of Apple.
Until we start seeing headlines about unexpected growth by their competition (instead of meltdowns) betting against Apple is something I would approach with caution.
As for the macro sitrep in China, this sort of thing is precisely what they need to help engineer a "soft landing", and I suspect this equation is already working through the quantmonkies on Wall Street as well.
Europe...
LOL, its a football match where the kids who own the ball are running for their lives down the back alleys, and its a question of how long they can keep kicking the ball down the gutters and away from the herd of angry players.
Look for the dreaded "I" word to creep back into the headlines...
Just a whisper of "inflation".
Voldemort and his Death Eaters are scrambling like mad to cobble together another collective oil release for the US and the EU, and I expect it real soon...
And its impact will be even more muted than last time.
They are putting a positive spin on something that I view as negative.
Consumer spending up 0.8%....Consumer saving Down to 3.7 from 4.3. Income only up 0.2%.
Spending is up almost entirely due to energy (gas costs)...not retail buying and came dollar for dollar out of savings. See marketwatch.com for reference.
If we can just get our nation's consumers savings rate down to -2% savings rate, we can get this economy going. Once the consumers start spending in earnest, corporations and wealthy people will start making money again, and those people will reinvest in the vigor of the economy (with outlet shops of cheap, but only minorly defective products, increasingly made in foreign factories), which will in turn trickle down to the consumers who will be able to continue to afford a negative savings rate and spend to their heart's content...
We don't need for the existing consumers to consume more...
We need more consumers (ie, productive jobs born from the private sector and capitalism).
We don't need consumers to spend 1% more...
We need 10% more jobs, creating a healthy demand for goods and services.
I'm tired unto death of kneejerk answers, "Oil prices are up, so its time to raise taxes on corporations"...
Who of course are just tax collectors, and will then quickly raise prices even more in order to collect both the new taxes and the higher overhead needed to collect the higher taxes.
Any politician playing this particular bumper sticker slogan should be laughed off the stage.
Offsetting that, Chitown PMI stuff showed weakening trend continues, although still in positive territory. Their employment number was the weakest of their data.
Well, in spite of the higher opening, the early-day (SPX), (SPY) and futures action is acting just as it has been - weakening in a descending trading range.
So maybe it will behave the same and hit a low and then claw back up to close higher for the day.
This would remove any thought I had about doing an intra-day buy of (SPXU) near an SPX high and then sell when it weakens.
Can't decide right now whether adding SPXU at EOD, when I would expect a high, would be attractive or not.
Yep. That was what was causing me to think the "window dressing" or "painting the tape" would make a high that couldn't hold.
But the futures higher and open higher broke the pattern I had been tracking and introduced uncertainty.
So the chicken in me said maybe I should wait on the SPXU and let the longer-term trend I had been matching - expecting the grind lower to kick in around mid-to-late April - develop.
I'd miss, likely, a short-term smaller profit, but would have less risk.
Visa and MasterCard are warning banks around the country of a "massive" security breach at one of their U.S.-based credit-card processors, according to a report posted Friday on the security-industry blog KrebsonSecurity.com.
I just confirmed with Alex Jantsch http://bit.ly/H23ar3 that the photo on his LinkedIn home page is him having a tug of war over his wallet with Warren Buffett http://linkd.in/H6ZuHq (a request to pose as such which Mr. Buffett accepted)
Props to Alex for the creativity. Very cool.
Now... back to the regularly scheduled QC... what should I buy???
Titled "John Paulson has a problem," Kupperman discusses how his own hedge fund's losses were accelerated during the 2008 crash by shareholder redemptions (shareholders that also wanted to short the shares of the companies Kupperman was forced to sell before redeeming).
This article from Forbes regarding the recovery of NASCAR has some interesting data points that go way beyond NASCAR. http://onforb.es/H3M8yp According to the article NASCAR attendance, sponsorship and profitability peaked in 2007. It reached the nadir last year and has started to recover. That tells me more than any twisted government bureau statistics (BS) that there may actually be some real recovery in progress. Think about the folks who comprise the fan base for this sport. They are mostly middle income, drive farther, stay longer and consume more than fans of other sports. Many of them stopped attending or watching when the economy melted down. Many lost their jobs and worse. Sponsors spent less or withdrew completely as the crises deepened and the decline in fan support continued. This year the downward trend was broken. New sponsors appeared and old ones that remained were willing to increase spending as fans returned to the sport. Fans having more discretionary income seems like a real green shoot which is supported by corporate sponsor spending. Where am I off the rails here?
I tend to agree with your polesitter theory, rbf...
Though wouldn't it be ironic if our economy finally started to overcome the multiple boots on its throat JUST as macroeconomic events in Europe, China, Japan, etc. rolled and burned on the back turn?
Things like this will tell more than gov't reports, but also can be used to confirm them. As I posted earlier, I think some leading industrials suffer for the next year, but other (laggards) will make a comeback. There was so much damage done in '08 that it will take years for things to normalize.
Robert - I'm as puzzled as you, maybe more. So NASCAR is getting more airtime on TV? Hmmm. I remember my dad, who is a Depression Baby telling me about him and his brother talking about the time they sold a car for 5.00 because it needed a new carburetor. So I asked why they would do such a thing. The answer was that it would cost 15.00 for the carburator and they didn't have 15 bucks. Hmmm.
I... confirmed news: http://on.wsj.com/H23TMx dug up this clip from the movie Airplane: http://bit.ly/HqDTaN (what do you make of this Johnny?) canceled my lurking buy order on (AXPW) decided against buying (NUGT) bought more (AGQ)
++++++++++
On a separate note, is there a scorecard of how many times governments and central banks issue bad news on Fridays?
Yes Jon, I saw this Bundesbank alert sent to me by the WSJ. I think the impact will sink in next week that the Bundesbank is the first of 17 central banks exercising this permission granted by the ECB to reject collateral bonds backed by governments that have received a bailout.
So what will Ireland, Portugal, and Greece use to replace this collateral that the Bundesbank no longer accepts?? This should definitely add to the EU excitement which is far from over. http://on.wsj.com/H23TMx
I added some SDS at today's low -- just to keep a small hedge in place short term as we head into next week.
"So what will Ireland, Portugal, and Greece use to replace this collateral that the Bundesbank no longer accepts??"
Museum art, state historic sites, and artifacts come to mind.
Something needs to shift. The numbers have become too intangible and abstract for people to get what's going on and the position they are in due to poor prior stewardship. Bring assets they know into the discussion.
Well Jon, I think you have a good point about artifacts perhaps becoming the "new" collateral. They better hurry, however, before more goat farmers play this trick: http://bit.ly/H1kEsh
Its Friday afternoon -- need some lightheartedness!
Have a great week end all. I'm outta here for the week end. I think I'll buy five Mega Millions quick picks (Cash option) on the way home when I stop for beer. If I win I can hire a PI to locate Jon, Corzine.
I was surprised by that with all the blather about "uncerainty" by business about taxes, policy, inability to fill positions, ...
This may be the single best indicator of what's really going on in the economy.
*if* it is sustained, that suggests that the effects of "wage parity" (as suggested by the average starting offer of ~$42K) induced by the devaluation of the USD and rise of wages in the EMs due booming growth is starting to bring jobs back to the U.S., as has been suggested in many recent economic stories from the MSM.
Now if congress gets off it's dead a$$ and keeps the tax cuts from expiring, prevents the "shotgun approach" "sequestration" from occurring at EOY, ...
We might have a chance. We still need to get something going on the non-college grad and youth employment fronts though.
BTW, since nothing is ever easy for us, Steve Hansen's "The U.S. Economy Is Producing Too Many Jobs" offers some more grist for the mill that feeds the "wall of worry".
The Steven Hansen article you're citing is the same one (with a different name about "Bernanke and the Puzzle of Employment...") above at his EconIntersect site. I encourage you all to support Steve and John Lounsbury by reading this article on their EconIntersect website as they need more page views to monetize this excellent project.
If anyone trades in Hong Kong... its 8 minutes from market open there and there's an arbitrage play coming up
SouthGobi (SGQRF.PK) Signs Cooperation Agreement With Aluminum Corporation of China Limited (CHALCO) and Receives Notification of CHALCO's Intention to Make a Proportional Take-Over Bid at C$8.48 Per Share
This looks to be essentially Ivanhoe (IVN) selling its stake in South Gobi to CHALCO at a 28% premium to Friday's South Gobi closing share price of CAD$6.62
Those looking to trade SouthGobi in Hong at the 9:30am opening (minutes away), the symbol is 1878.HK
THANKS to Mogi at CPS International for the alert!!!
HK price equivalents are... Friday's close 51.25 Deal's value 65.65
Here's the link to my most recent comment on it on my Mongolia Weekly Update home page with a bunch of links to news items: http://seekingalpha.co...
Will think about it on my wife & I's 2 1/2 hour drive we're about to set out on and comment a little more tonight when I post my normal update. I'll be curious if Ivanhoe (IVN) shares go up today as this will give them about a $900 million cash infusion.
Link to SouthGobi (SGQRF.PK) consultant and SA contributor Peter Epstein's comment on the sale (a fire sale by (IVN) for cash) and share performance (market not digesting yet the details of the deal).
Highest SouthGobi traded anywhere was abou 8% shy of the deal on the table. That was Hong Kong last night. Went nowhere fast in Germany, Canada, and the U.S. Monday before Hong Kong opened Tuesday with SouthGobi sagging down 4% now.
Will sell out of my SouthGobi speculation by tomorrow night.
Reasoning said the arbitrage was too logical and obvious to miss making a few bucks.
Lesson: sometimes your instincts are smarter than your reason.
Jon, lessons always make us better traders/investors down the line. Just look at it as an investment in your "continuing education."
I, too, might have followed you in -- if the arb play had involved one of my favorite USD diversification currencies e.g. NOK, AU, SGD, etc. The primary reason I didn't is that the HKD is pegged to the USD -- and USD holdings is what I keep trying to diversify long term!
Jim Grant [of Grant's Interest Rate Observer http://www.grantspub.com] Crucifies The Fed; Explains Why A Gold Standard Is The Best Option (in a speech at the New York Fed) http://bit.ly/HB25vV
Solar Trust of America ("STA") files for bankruptcy. STA was the proud recipient of a $2.1 billion conditional loan from the Department of Energy, the second largest loan ever handed out by the DOE's Stephen Chu. Not too good at picking companies is he?
Others expressing the same interest include PetroChina, Mitsubishi, etc. I am holding partial positions in Encana, Talisman, Peyto Exploration, and ARC Resources because IMO they have attractive undervalued nat gas resources and good dividend yields which pay me while I wait. I am also watching GasLog (GLOG) a new LNG shipper.
As always, do your own DD -- these shares may have not yet bottomed.
Mercy, are those companies physically well positioned to move the NG to the LNG processing plant?
Is anyone planning to add new LNG capability?
I keep thinking Japan will be a much larger LNG consumer in the next few years, given the politics and cost of "fixing up" their nuclear power infrastructure. Replacing the nukes with soft, "renewable" power is a joke, given the massive electrical storage infrastructure needed. Then again, what a fabulous potential market for the Axion PowerCube ;-)
Silicon, They all have focused production in the western half of Canada. ECA actually has a stake in the LNG terminal being built, and Peyto is the lowest cost nat gas producer in Canada according to Canadian Edge. Each of the company web sites have presentations with well locations. Feel free to pm me if you have any trouble finding their proven reserve life, production cost comparisons, etc.
Thanks, Mercy. I don't know why I bothered to ask :-) You are notoriously good about your DD.
I already own substantial gas producers/gatherers/pi... companies. But I've never ventured into the Canadian LNG arena. I really have too much tied up in income producing NG stocks for more risk. Sigh. Dividends pay my bills and feed me, so caution is required.
Except for 5% of assets, which is already invested in Axion :-)
Gee, Mercy, I don't know anything about GLOG. But I'm tempted to research it because it combines one of my favorite plays on demographics, LNG, with your and my shared love of Norsk currency, oversight, and, typically, management. [Glogg, pronounced slightly differently, is the mulled wine Norwegians drink at Christmastime] :-)
This may be what we've been awaiting. TLT potential support ~109.37, after that nothing but minor potential supports until potential strong support at ~$97.72.
Sell-off volume was strong and oscillators that had begun bearish turns increased bearishness today.
I think a cautious entry in TMV is justified here.
Risks: EZ, specifically Spain stuff, could bring back flight to safety.
Reasonably permissive stops could be used I think.
I'll be strongly considering a small starter position tomorrow.
Folks, I just rolled some regular IRA money into a new Roth IRA, from which I have been buying Axion as I sell it from other accounts.
The idea being that in 5 years I will be able to sell highly appreciated Axion stock tax free. Yes, I take a tax hit this year, but think of the taxes on a 10 or 20X appreciated stock.
Other than the 5 year wait, I havn't seen anything wrong with this tax reduction plan. Especially when essentially all the gain from Axion will be in cap gains.
I also don't expect the guvmint to give me a big break on long term cap gains in 5 years. My thoughts are that they will be squeezing any source of revenue from "the rich" by that time. Hopefully they won't retroactively change the tax code to raid Roth IRAs.
Long as you're not going to run into a wash-sale rule issue doing that exchange, I wish you well and hope it is a very profitable transaction for you SHB.
Jon: Thanks for the comment. I have been using stock from tax deferred IRA accounts for the source of funds. That should address the wash-sale problem.
Aluminum Corporation Of China, Coking Coal, The Gobi Desert, And An Investment Dust-Up http://seekingalpha.co...
Short version: Chinalco's tender to buy Ivanhoe's stake in SouthGobi looks good for SouthGobi (SGQRF.PK) if/when it goes through. Market is not reacting that way. A lot of geopolitical and corporate knock-on effects from this deal undiscussed elsewhere yet.
A corrected version just posted of Aluminum Corporation Of China, Coking Coal, The Gobi Desert, And An Investment Dust-Up http://seekingalpha.co...
(about Chalco/SouthGobi/Ivanhoe deal)
Information is different than the original. The most significant differences are in the sections: - Chalco Trades Out Deals, Trouble For Mongolia And An IPO Or Not? and - Add An Election Year And Stir Well
"Perhaps it shouldn't be surprising that the Fed, and even the Chairman himself, are alternating between saying dovish things and saying hawkish things (or re-interpreting prior dovish statements to appear more hawkish). The Fed's main tool right now is its "communications strategy," in which it wants to talk down inflation expectations while also talking down interest rates. The former requires hawkish talk, while the latter requires dovish hints. "
I thought that yesterday, the minutes are "loaded", meaning when he wants markets to go up, he hints at QE-3, when he wants the mkt. to cool a bit, they release hawkish comments.
Every one of them no matter what they say, want interest rates low. Especially housing and gov't debt. They will do whatever it takes to keep it that way.
I've slept about an hour but I'll give this reverse psychology thing a go...
Markets go up when Bernanke says the economy is bad and gives indications that more easing will be necessary (a world where bad news leads to more liquidity which leads to Wall Street Happy Party Time)
Markets go down when Bernanke, like yesterday, says things are improving (which means no bonus extra liquidity Wall Street Super Happy Foam Party Liquidity Happy Time)
More seriously... the Fed MUST keep interest rates low. They feel cornered into this position by the ongoing housing crisis. There is a massive backlog of homes awaiting foreclosure. There are too many people still in adjustable rate mortgages. There are too many people that can't or won't purchase homes if interest rates go up. Rising interest rates would create a debilitating housing market that would knock the fragile non-recovery into recession; and further debilitating knock-on effects in the CDO/CDS/CMO markets that would create more problem for all those too-big-too-fail banks, sovereign nations, and the whole system.
Thus, the Fed must keep interest rates low until the market decides it doesn't care what the Fed says anymore ... and that's when the challenging times begin.
Or... the Fed will keep interest rates low until the housing excesses are worked off in the fragile economy the Fed protects while a nascent new economy blooms like springtime, and then the Fed can gradually raise rates to normalcy and everything will be beautiful and perfect like grandma's apple pie.
(Apologies to grandma and her apple pie for using her and it in a sarcastic paragraph)
Thanks for your reply. I understand all that Jon, my real point was that they are micro-managing things week to week or sometimes day to day. That is too frequent, just as I believe we have way too many reports, way too frequent.
FWIW...the minutes are a month old & somewhat outdated before they were released, The comments last week are more recent and therefore I perceive as more relevant. As soon as housing rates go up, he will initiate the QE-3 mortgage bond buying. They won't until they have to, but the mkt will force them as HTL just noted the big TLT drop from $113-110 yesterday.
The 24-hour news cycle is a menace. Its very strange counterintuitive thing that the more media coverage we have, the worse the news gets. That's not the Fed's fault.
I agree with you... less frequent updates would be more valuable.
Pre-market, (TLT) is already showing some recovery $111.48 ATM.
Probably just a small correction from the excessive drop of yesterday?
I'd hate to think BB & crew were reacting that fast and micro-managing at that level.
Could be the primary dealers thinking along your lines and setting up for profit by later sales to the Fed when they do start buying in quantity.
With the USD pogoing up this A.M. (from early yesterday $78.89) to $79.87 ATM (a very large move in currency terms), it could also be effectively using bonds (denominated in USD) to make gains as the USD shows strength. Even if yields should fall, if the dollar rises on expectations of no more QE, purchasing power could still rise.
Maybe some kind of arbitrage? I don't know enough to guess how it might work.
Related, the pre-market e-mini futures shows the inverse market/USD relation is back in play - futures down $9.75 ATM. Implication is SPX $1404 or so from yesterday's close at $1413.38.
One of the areas of "green energy" I like is converting waste to "something useful". Especially if it doesn't involve mass burn technology, which I consider inefficient. Investing in start-ups is very risky and I can only tolerate a small percent of them in my portfolio. But here is a possibility that is interesting and of lower risk. Even pays a dividend.
Thanks for this link, SHB. I wrote a similar article on WM back in March 2011 and added it to our (Investor's Edge) Growth & Value Portfolio then. A little early, but then that's what we often do -- and I believe everyone chasing their tails on under-capitalized "green" solutions are not going to do 1/10th as well as those of us holding the guys with the biggest "in the ground" resources, whether it is coal, oil or trash!
Guide to Profiting from the Coming Japanese Financial Tsunami by Chris Tell and Mark Wallace at Capitalist Exploits (16 pages) http://bit.ly/Hs8N0H
[not read yet; can't concentrate today; still tired and feeling grateful to the deeply religious woman that rang my doorbell three times to convert me 2 hours after I fell asleep (having pulled an all-nighter last night trying to mend my butchered Chalco SouthGobi article)]
I found the article, Guide to Profiting from the Coming Japanese Financial Tsunami by Chris Tell and Mark Wallace at Capitalist Exploits (16 pages) http://bit.ly/Hs8N0H, interesting, but it didn't really say much that was news to me.
EXCEPT, the speculation that the beginning of inflation in Japan would lead to the rise of the Nikkei. That does seem reasonable since only a slight inflation component would give the JGBs an effective negative return, given 1% or so current yield. But will the pensioners who own most of the JGB debt actually make the move from bonds to stocks? Or should I say, the bureaucrats who run the Japan Post?
So bond prices fall and the stock market rises. There has to be a hedge play in there. The problem with buying market index CALLS is the value erosion with approaching end dates. Ya have to pay while ya wait. I want a no-cost and risk free way of playing the Japan problem! ;-)
Perhaps you should appoint yourself as a sovereign nation so that you can print money endlessly without a conscience. It seems to work well for others.
I still wonder if the Japanese government is schizoid enough to be able to sell bonds and then buy them with fresh printed money. Can they hold BOTH inflation to lower debt AND inflation to increase borrowing costs in their head(s) at the same time? Doesn't that define a mental illness?
This just can't turn out well for the Japanese people. The upper end pols must have lots of money stashed in Swiss Franks. Or gold coins.
Maybe they are stocking up on Tokyo real estate! :-)
The Author, Jeff Nielson, seems clueless. The US dollar is a reserve currency and the FED can print all they want. Spain can't print Euros. If they want to import anything priced in Euros over what they export then they must borrow the Euros. No choice. Of course they can also beg a handout, but that stream is slowing rapidly.
If Rajoy makes an honest attempt to fix the balance of payments problem, the private equity folks (vicious bond ghouls, etc.) might decide that Spain has a reasonable chance of meeting the bond payments and loan them money at finite rates. But trying to squeeze more taxes out of an economy in recession with more than 25% unemployment and week banks is likely to further depress the economy. Choices are Bad and Worse for Rajoy. May his deity be with him.
But it isn't a conspiracy. It's bad govmint policy coming home to roost. There is a lot of that going around these days.
What was oil then? I suspect it's a combination of higher cost and seasonality. 4th quarter is traditionally the strong season, IIRC, and this time of year is weak.
Found this webpage with a comparison chart of oil and gold prices... not sure its useful, but it pegs an average value on the relationship: http://bit.ly/HqAwzi
Thursday, April 5, 9:43 AM Barton Biggs expects a 5-7% decline in the S&P, reports Betty Liu. Bloomberg's Hedge Brief charts Biggs' calls over the past few years and finds him mostly a good contrarian indicator, but also proving the adage about a stopped clock.
Rocket fired from Egypt to Israel. No damage. But, I think the drum beat for Israel to "send a message" to its neighbors is growing. http://bbc.in/HiYUJB +++ Greece. Pensioner commits suicide in protest of cuts. People protest afterward. 2 1/2 minute video clip + article. http://tgr.ph/HrDzXX
Another example of how big banks manipulate markets and distort. IF they invested in the economy instead of derivatives...think of the good it would do. $100 billion invested in CDS by one trader.
Now, none of the headlines about CDS discuss the fact that CDS exposure is notional based on reporting only one side of a possible position. They don't even know the offseting position that may exist because that is not reported to the BIS(?).
And these aren't even normal CDSs, but indexes of CDSs they are discussing.
Only the arm of the DTCC (I'm not sure it's them) that is responsible actually knows net positions.
Also, notice who's complaining - folks on the opposite side of the trades in many cases. Motives must be at least suspected.
I had not seen it and just catch as catch can on other frontier markets beyond Mongolia on my radar (Sri Lanka, Myanmar, Vietnam, Namibia, Zimbabwe, Colombia, etc)... tracking Myanmar story a little more closely as its going to be another leveraged play on China story similar to Mongolia (but with a population 18 times bigger and ports).... thanks for helping me catch!
Reminder note: U.S. citizens are currently BANNED from investing in Myanmar in any way, shape or form, including companies based elsewhere that have a percentage of their investments in Myanmar.
Now, with the (un)employment numbers, does the market jump with glee as they expect the Fed will now do QE3?
What a perverse market we inhabit as market fell off as economy improvement was suggested last week, dashing hopes of QE3.
Logic would suggest that market should now go up is they decided these (un)employment numbers suggest a weak economy and, therefore, reviving hopes QE3 is more likely.
Since Barton Biggs expects a decline, and he's a contrarian indicator... Sure... why not?
So, in the story of our markets, if Ben Bernanke was Goldilocks... he would sip three porridges and say: - this porridge is too good (market flat) - this porridge tastes a little like wood chips, but its still okay (market down) - this porridge is just bad enough for me to get away with dropping a whole jar of honey in it (pumps the market full of liquidity; market goes up)
Too soft (slack in the productive capacity - asset owners aren't making enough from their investments) Too hard (wage inflation starts to flow through the economy) Just right (wages continue to fall, offsetting inflationary pressures on commodities and asset classes continue to inflate benefiting a certain segment of our society at the expense of all others).
Adjusted employment number from February went up, to 240k...
Current number at 120k is therefore exactly half of last month.
"Unemployment" number (it isn't, but why confuse the issue with accurate definitions now?) dropped from 8.3 to 8.2...
Meaning a LOT of folks gave up and joined the ranks of the urban outdoorsmen.
Given that spring (especially warm one) normally seeS some hiring for warm weather jobs, this is a nasty bit of news overall. I accidentally watched several politicians being interviewed about the job markets (my remote control battery gave out), and the spin involved was a very unbelievable combination of misdirection smoke and statistical mirrors...
Frankly, I am not surprised that March has been a major speedbump, and the number of my buy targets now dipping to within reach of my accumulated dry powder meshes with my long term plan...
I believe its a clear case of White House handlers not comprehending the numbers. A meeting was held focusing on the "unemployment" number, and how to best get an improvement. Since this group of morons (who however believe fervently they are actually brilliant) has the collective attention span of a gnat, they ignored what they didn't want to hear, and made sure that "their number" was going to be positive...
There will of course now be ANOTHER meeting, and some mad scrambling and arm twisting to "correct" the "bad number", while whoever ignored sage advice in the first place plots to can the troublesome guys from BLS who "screwed up the job".
Simple.
Of course, we can also look for talking heads to start glossing over any short term nastiness with tonnes of "...but the important thing is that we created (royal "we" there) millions and millions of jobs over the past x year, and hundreds of thousands of jobs over the past x month...", etc, etc, ad nauseum.
I mentioned a few days ago last week when Bernanke mentioned QE-3, that he knew something....now we know what it is. Poor jobs number any way you spin it.
In flying we have "auger in", the end result of a stall followed by an unrecoverable spin to an altitude below 0 AGL (Above Ground Level).
I wonder if that's what this week's number portends and ECRI's recession call will be proven correct (although, lo these last many weeks their own leading indicators have been improving).
I recall some recent articles and discussions that because of situations being somewhat dire, the consumer was loading more of daily expenditures onto credit cards and, of course, the $1T education debt being carried by graduates.
Since credit contraction was the real cause of the the GFC and TPTB tried to solve it by getting folks to use more credit and Mises says that once a credit bubble contraction begins it can't be stopped ...
Is this the early warning sign?
Was this additional credit from some of the 120K missing from the new jobs numbers?
Oh wait! How will the market react - nothing else matters right?
Let's see. Bernanke wanted to make more credit available, check - mission getting accomplished, no QE 3. Market tanks ... further.
Or maybe market (and MSM) spins it as "the consumer is back - confidence must be high for them to take on more credit"! So market says earnings will be up, everthings good, we don't need no stinkin' QE3 - rally, rally, rally - where's the beer boys!
I want you guys to take a second and look at the 12 jobs that "employers claim they can't fill"....The link is here and read a couple of my comments because some of it is false, they could fill them if:
1. How long would this welder live breathing air from inside that pipe? Corps & industry refuses to fund any vocational school training, they want that to be the gov't job. 4. How many of us can do skyscrapers? didn't know they were building t hat many anyway. 5. Nurses, I am an RN, the medical field will do nothing to make part time more available or reduce shifts from 12 to 8 hours for the workers over 45, they keep adding patient loads and refuse to hire. They add techs & assistants where ever they can and only add staff when they add a dept. It's a false front.
Trust me ... this saying there is a shortage of workers or "unable to fill positions" is BS on most all fronts. There is reasons they don't tell.
LT: It's the same with higher level technical workers. Senior technicians, 20+ year experienced design engineers. Companies either farm out the work (often to overseas companies) or hire under qualified but cheaper people. That results in lower productivity and the need to "redo" failed designs. On-staff engineers with company product experience would greatly decrease this type of wasted time and effort.
The companies want some govmint handout to defray their labor costs. But mostly they want more visas for importing foreign workers at a substantially lower salary.
There are also millions of foreign students who come here each year to study at our technical universities. Many manage to acquire a visa to allow them to stay and work. These are motivated people who often do not want to go back to the society they have left. It's one more downward pressure on technical wages.
Why take hard subjects in school when the resulting salary is little, if any, above administrative level?
Of course there is the absolutely pathetic story of our K-12 education monopoly and their "teach to the test" culture. The multiple choice test DOES NOT teach students to think or ask relevant questions! School becomes a trial for intelligent kids who will forever afterward consider "school" as a place of misery. Thanks to the federal guvmint and their "progressive" ideas and tax bribe money. Federal money for state schools should be illegal ! The damage the new "no escape" college tuition loans are doing to the current generation of young adults is just wrong! Easy money means poorly prepared students make bad choices about continuing their education.
# 5 highlights the "improving productivity" we keep hearing about.
All the gains made in the last 60 years to improve labor's lot and produce a thriving middle class have been taken back.
Some kind of (hopefully peaceful) revolution will be required to rectify this situation.
It may not have to be here - if emerging markets keep building their middle class and their standard of living rises, our lot will improve after a delay of a generation or two.
Hi LT, Thanks for the link. I don't see why they show a shortage of truck drivers. Many trucking companies (Swift, CRST, Schneider ect.) have in house training for a contracted length of time. It is a tough life, but a good one if you are an over the road driver with very good pay as a company driver (yes it can be stressful and companies can put a lot of pressure on drivers). Tim would be an excellent resource here. I have worked as a weldor, auto mechanic and even repaired appliances, no one wants to pay repair or manufacturing technicians a living wage.
Thanks for the comments and I hope there are more....Most of what's mentioned is exactly my take and point. I will add that SiliconHillbilly is correct in saying "corporations want the gov't handout" to pay for education of their workers. In some cases the gov't can help, but ultimately it is their responsibility too. Corps have lost ALL, Moral, ethical, social, and now most legal responsibility. This needs to end.
Companies could "partner" with education and solve many problems. Reduce gov't spending, for pennies invested. There would be no student loans on this, a competent workforce as not everyone is made for college. It's the same principal here as it is the mkt. dropping whining for more QE money, while the banks/brokerages gamble with their money like the JPM article of distorting mkts. Think about the schools where a teacher took a group of students and made a simple iPad app and it's a hit, It would fund the entire vocational budget. Why doesn't every voc. school teach software writing on a simple level of writing these apps? I tell you, it will work.
Monday will be an interesting day in the mkt. Jobs report has the chance to start a big correction. It could be somewhat muted with talk of QE-3, which I think no doubt comes sooner rather than later.
Bernanke knew this a week ago when he met with bankers. Then they leaked it and thus the big hedge in ZROZ. See marketwatch.com they have a good story on it. But of course the SEC won't do anything about it.
It may be a good time to watch TLT & the USD, maybe even the Euro/USD. I am not taking any more positions until all this works itself out. Short of intervention this could trigger the correction we have been looking for. I am not totally negative, but I just don't see much Reward vs. Risk.
Last, but a point to ponder, When was the last QE initiated? Whenever it was is sorta irrelevant to what I am noticing. Whenever the QE funds work their way through the system, which seems to be faster with each one as banks have learned to play it much faster than at first.....we go down, all the recovery numbers are tepid at best without these funds. I think Wall St. & the big banks are partly responsible for this which is why I harp on the the JPM distorting the mkt. article. Banks are still not investing in the economy, they are back to gambling with trading in whatever vehicle they can sway with their massive amount of cash (capital).
Regional banks are investing properly and their earnings & numbers are showing it.
I just wonder as these QE funds work their way thru the system faster and faster (it used to take about 9 months to show up) now it is almost immediately and the same immediate slow down when they are gone or begin to dry up. IMO, the EZ slowdown is/has been affecting us more than people realize. In Bernanke's meeting last week with the bankers, he was pushing them to assist more with the EZ crisis....To me this is the same subtle hint that things are worse than the numbers show in the EZ, just like he mentioned QE-3 last week when everything looked rosy and then the jobs numbers sucked (which he knew in advance)....IMO, these are indicators are no longer & not necessarily long term problems but that they have moved near term now. Without some quick action, things have the potential to get real nasty globally fairly quickly.
Yes. From all I've read our choices are "slow, prolonged and ultimately *more* painful" or "quick and less painful and faster recovery".
I like choice # 2. Either way, those less able to stand the "pain" are those that are most affected. With # 2 they at least have a chance to recover faster.
Pain is the solution. That's the problem. Our central bankers, banksters, government officials, and general populace of today are like little kids who refuse the medicine they need because they don't like the taste.
For those who have never seen it (most probably have by now), EconStories: Fight Of The Century, Keynes vs. Hayek, Round 2 (10 minute video) http://bit.ly/GQILdd
Thursday, April 5, 6:10 PM Egan-Jones cuts its credit rating on U.S. government debt to AA from AA+ with a negative watch, citing a lack of progress in cutting the mounting federal debt. "When debt-to-GDP exceeds 100%, a country's financial flexibility becomes increasingly strained," Sean Egan writes. "For the first time since World War II, U.S. debt exceeds 100%."
Well, I guess that means the price of our debt is now going "To the moon Alice!", just like it did when S&P downgraded us.
I assume it's because the Fed will step up their purchases even further (being the largest holder of U.S. debt now, what's a ffew more trillion between banking buddies?).
<snark> I'm sure glad we know he's not monetizing our debt. </snark>
I guess that'll help money flow out of the equities markets short-term, unless the Fed has purchased a super-computer that can now "print" even faster to get it to the PD trading desks even faster.
World's top gold market is roiled by a nationwide jeweler's strike (and threats to cut gold imports by 1/3) due to doubling of import duties on gold to 4%, plus .3% tax on unbranded jewelry, and a further tax on all sales over $3900...
This disrupted gold imports estimated at over 655 tonnes for 2012.
This has been bubbling in the background for a while, but I suspect we first saw it firmly established in the spot gold pricing last week.
Well, not only is the Yen strengthening against the dollar, China's CPI and PPI missed the expectations. All told, I guess this will ad downward pressure to our market as signs of China's higher inflation on lower producer prices seems reminiscent of "stagflation" - higher inflation with economic slowdown.
"China March CPI rises a more-than-expected 3.6%" from Marketwatch.
Interesting article on "Energy ETF's": I think all ETF's face this dilemma in the future & mutual funds too as baby boomers begin to use money OUT of them for retirement. This sorta sums up my opinion from the last paragraph of the article: "My recommendation is that investors build their own portfolio of energy stocks rather than trust someone else to do it for them. Otherwise, I think you might get burned." http://seekingalpha.co...
Amazing difference in how companies can either make it big or blow it on a new product launch.
Nokia's 900 smartphone was a big deal for both NOK & MSFT, they blew it by launching it on Easter weekend, and guess what....the ATT stores were CLOSED!! Strong online & Amazon sales were reported. No way Apple would have done this. Unbelievable.
They are already watering down the poor jobs number, of course they have had all weekend for damage control. Expect more, and probably buy on the dip later in the week. http://tinyurl.com/czd...
The only other news I see is MSFT inks $1 billion patent deal with AOL, sending AOL 35% higher this morning. It's been this way a week now....is it the calm before the storm?
It is sorta nice to see most on this board be a couple of weeks ahead of the "herd"....thanks to all who share info here. I appreciate you guys very, very much.
9:46 AM No need to wait until May, writes Doug Kass, sell stocks now. The economy is slowing and the likely return to power of Obama and a Republican Congress (at least the House) means gridlock in D.C. Remember, the default scenario for 2013 is a large fiscal contraction (also pointed out by Alan Blinder). Comment!
What I *think* it implies is that we have a repeat not only of the top followed by a correction that's small (I suggested 4%-7% in a past comment), but that we'll get the real move downward with a lot of choppiness, just as we saw last summer.
But my level of knowledge is a lot less than Doll's. Mine is coming just purely from the similarities to last year's chart and the expectation that "sell in May and go away" will have effect.
If that's true, volume drops either further, meaning prices are more easily moved and that volatility is what the Quants and HFT computers need to scrape their fractional-penny (and larger) profits.
All the insurers are cracking open the Medicaid mkt. All are just interested in gov't contracts. Humana here in KY has a lock on the KY school system & medicaid and I hate them.
There won't be any mortgage brokers left before long:
2:35 PM Ally Financial decides to exit the mortgage-related broker dealer business and will be winding down its operation over coming weeks, reports HousingWire. Presumably the company will continue being a major player in the subprime auto lending area. Comment! [Financials, U.S. Economy]
(TLT): The question is: Is it real fear driving it +2.4% or Memorex?
IOW, is Ben now defending is low-yield targets (and using the (un)employment numbers as cover?) or is this really folks heading for the bunkers.
Volume is high (9.39M), already near the 25-day average (9.816M) and averaging about 55K/hour.
Since the SPX has absolutely crawled upward all day long, albeit on low volume (using SPY as the proxy), it's hard to make any guess with any confidence.
In any case, I'm still holding of any serious consideration of using (TMV) to short bonds at this time as there's still too many moving parts and I *do* feel that Ben is pulling the levers behind the curtain defending his low-yield targets and muttering "The hell with the savers and fixed-income dependent folks - I've got more important things to worry about".
You can bet they are using the employment number to defend low rates, it was getting hairy for them with the last drop from $113 down to $110, it wouldn't take much to have a free fall in bonds when everyone gets scared and runs for the exits. I just don't see how he prevents it over the next 2 years. Really 18 months. Everyone knows it's coming, or at least thinks it is very strongly if the seesaw effect that is the golden rule "when interest rates go up, bonds go down" holds true.
I still bet you this dip is bought before the end of the week. Hedgies need one more month of good numbers. Then they will whip saw this thing around this summer up & down with no rhyme or reason. But, I do not look for as big a drop this summer as we had last. Remember QE-3 by June.
"the American Institute for Economic Research is cautioning that "everyday prices" for such things as food, fuel and prescription drugs are skyrocketing.
"The think tank estimates that consumer inflation, as measured by its Everyday Price Index, will continue to outstrip the government's reading in March, in keeping with the trend so far this year. The EPI jumped 1.3% in January and 1.1% in February, compared with the official CPI number of 0.4% in both months, unadjusted for seasonal factors."
...
"But the CPI "isn't designed to reflect the experience of the guy on the street; it's designed for monetary policy," says Polina Vlasenko, an AIER research fellow who helped create the index. By the EPI's measure, Americans saw everyday costs jump 8% last year, compared with the 3.1% clocked by the CPI. Worse, AIER thinks, inflation could hit 15% by late 2013."
I've liked his stuff ever since I encountered him. But maybe that's just because he's, like me, an anachronism - he uses measures the way they used to be used before the U.S. Government folks decided they should lie to the people as much as possible and obfuscate everything they possibly could.
So, although that makes his stuff very useful for those who care a lot about *reality*, it's irrelevant in a world where reality no longer matters except as "perception is reality".
If his stuff actually had an effect on any policies or more honest dissemination of valid data to the populace, he would be *very* relevant.
I'm not dissing him, I'm just saying unfortunately he's pi$$ing into the wind.
But then, so are the folks in the link I provided. Anybody connecting with reality is doing the same, including me.
HTL, whether we like it or not...they are going to inflate their way out of this mess. No matter who it hurts. That is the trade, go figure how to capitalize on it.
When they changed the inflation formula to the way it is now, especially excluding food & energy, the working man was screwed along with anyone on soc. security. Wages and income have increased less than 2% / yr. for several years now. That is the main problem with the economy since 2000. Workers incomes have not kept up with costs. Therefore requiring credit to live and pay bills, It's all planned. First it was to screw the union workers, then the middle class, now we've destroyed them so get the savers, investors and conservatives next. We been that last phase for 3 years now.
Hope everyone enjoyed their long weekend -- I know I did -- just in time for what may feel like a very long week ahead!
I had my eye on several stocks today, but glad I decided against buying anything since that was a very weak close on a rather weak day. Here's some good perspective from Michael Gayed on why the market action now "Looks and Smells Like a Correction." He includes some good sector performance charts and concludes that playing defense short term may be in order: http://bit.ly/Ik2OQl
(Background: When my wife did her student teaching for her master's last semester, she asked our guide from our Egypt trip in January 2010 if he could discuss the Arab Spring via Skype with her class on current events. He had participated in Tahrir Square and discussed events with the class for 80 minutes. Now, four months later, my wife did a follow up Skype conversation with him today (also 80 minutes). My wife is not student teaching this semester as she finishes her master's, but thought the follow-up was important for her students and our friend in Egypt.)
Our friend in Egypt seems to be disappointed, but hopeful.
Power seems to be parsed out among the military, religious groups and remnants of the old regime.
Three presidential front runners: Omar Sulaiman, Khairat El-Shater, and Abdel Aboul Fotouh. Our friend will, among those three, support the third of them though it would not be his first choice if there were other realistic choices.
The new constitution may be written after the elections which will mean it will be written by a narrow group of elected people and may not be broadly representative. He is hoping the new constitution will limit the powers of the president.
He believes Mubarak's trial may be postponed repeatedly until Mubarak passes away.
44% voted in the most recent round of elections, which he thinks is good considering 1/3 of the people are not literate.
The economy is continuing to get worse at this time. (Tourism is bad/ Mineral resources are not being utilized/explored/mined.) There is a problem with arms from Libya being smuggled through Egypt. He has economic aspirations: getting tourism going again, improving agriculture (area around Alexandria, some of which needs to be cleared of land mines), improving gold mining, deepening and widening Suez Canal.
He is concerned by some aspects of the religious groups but notes major differences between various social religious groups and political religious groups (all together being about 70% of the gov't now; but not a singular group by any stretch of the imagination).
He believes the strength of religious groups comes from before being a repressed group that people associate with social issues. He thinks there may be the beginnings of the general populace losing trust in the religious groups, but its early in that process. Time will tell.
It seems the intellectuals and middle-class cannot manage to get their preferred candidates into office in democratic elections; under the current situation quite a few candidates (including the one our friend wanted to vote for) have chosen not to run for president.
He believes if things go too far in a bad direction (politically) the people are still willing to go into the streets again.
He seemed to have some concern that his conversation was being listened to, but then decided to speak freely anyway.
He also notes that, of course, this could all change next week. He also believes Egypt may not become better for himself, but plans to lay the foundations to make it better for his kids.
Where did this idiot come from...guess he works for Exxon.
6:15 PM High gas prices may not tank the economy after all, James Hamilton asserts: "Evidence suggests that an oil price increase that just reverses a previous oil price decrease - and that is basically what we've experienced so far in 2012 - is not nearly as disruptive as if the price were rocketing into uncharted territory." The U.S. economy continues to grow, albeit at a disappointing rate, he says. Comment! [U.S. Economy, Energy]
Oil prices will not recognize any line drawn in the sand by politically convenient psychobabble. Prices can (and probably will) recapture old highs and more...
And consumers are already demonstrating that the reality check IS being heard loud and clear. Just look at the surge in new car sales, primarily linked to the sale of new lines of internal combustion engine cars and trucks with excellent gas mileage.
Brazil pres. raising cane with Obama today over the US & EZ monetary policy, the cheap dollar is killing them & only high commodity prices have kept them in the game, now commodities may soften and they are struggling to not run a defect....Especially Brazil & Australia. They will soon feel pain too. In defense, the US has had to lower the dollar to compete with China & 3rd world countries to keep exports competitive for CAT, DE, autos, Etc. I don't know how this plays out, but it isn't going to be good for these guys. Large corp's mentioned or the countries affected. CAT down 15% roughly from it's highs. DE off badly now too and forming a triple top. Too many others to list....Just wondering if they aren't trying to manipulate a "sector correction" to soften the collapse?
LT, Australia has been riding a BIG housing bubble for years. Their sales of commodities to China and the Far east has been providing them with the cash to pay the property taxes and interest on those loans. But it had to stop when the Chinese finished "paving over" their country with unneeded building infrastructure. I believe that is happening now. Gold might still be big for Aus, but the iron ore, copper and other metals will decrease in price with the reduced demand.
That will end the commodity bubble and related jobs China provided. The Aus banks are very heavily loaded with housing loans, as opposed to business loans. Those houses are about to become much cheaper when the miners and so forth lose their jobs and need to relocate. There will be lots of pain soon.
The only way I have thought of to play the bust is short the Aus banks, but that makes me very nervous. What if my timing is off; by 1 or 2 years? I'm a buy and hold guy at heart, I guess :-)
I'm not sure about that. A friend of mine who was home in China visiting his family there at the end of March says that growth is still robust in Tier 2, 3 and lower tier cities in China; and that housing prices have only bubbled really in Tier 1 cities. His family is in the Southeastern part of the country (a few hundred kms from the coast).
That said, on the ground data from a country so vast and populous is difficult to compile and assess still as it is still so transitional and the institutions to put together the data in a standardized way aren't there yet (I think... might be wrong... just talking from the seat of my pants).
HTL: I believe that indicates that they already have trouble raising enough taxes to fund the social handouts. Like the massive house loan program they used to keep the bubble from popping in 2008-09
Jon & LT: If one thinks back to 2008, the point about "...the tier 1 cities have a bubble, but not the rest of the country..." idea was widely published here as well. Only the "real" bubble cities and states like Nevada, Florida, New York, and California were going to take a big hit... Except it turned out far worse.
Now, it COULD be that China's leadership is smarter than ours (frankly, I would be shocked if it were otherwise) and they will succeed in engineering their goal of a soft landing, vs our own odd "grand experiment" which was tantamount to adding various anvils and pianos to the payload...
I am seeing clear signals that China is still working feverishly to build the big Acme cushion they need, and its still very much up in the air whether or not they can pull it off.
I felt at the time that just average leadership in 2008 would have seen us skim into and out of a brief, moderate recession. If the Chinese do better, we could well see a very different scenario in front of us for the rest of 2012 (at least as far as their important role in the world economy is concerned).
I tend to agree that the brief heyday of Chinese demand driving commodity prices skyhigh was a horrible miscalculation, mistaking a brief phenomenon for a permanent condition... But I also think that the thesis seeing the creation of gigantic new middleclasses in the BRIC nations still holds (just not so high a threshold, nor so fast moving as was once assumed).
Finally, I am seeing the clear evidence that even the most committed zero-sum leaders in the EU, the US, Australia, Canada and, yes, Brazil, are slowly figuring out that the tiny box they are wearing on their heads is NOT the sum total of the universe, and they need to contemplate the role that organic GROWTH can take in achieving and maintaining a healthy economy. The zero growth goals which underpin much of the thinking in these capitals is being swept away by that most cruel of masters, reality. How this will play out against the sovereign debt disaster in Europe - the various mis-built bubble classes in the commodity producing nations - or the deficit-addicted Americans remains to be seen.
I feel we will witness much political reversal as an early wave prior to the tsunami. Ironically, it may prove that the United Kingdom, who went from a Labor to a Tory government quietly and quickly last year, is the first such shift we can expect. Spain and Italy are following that path, and I expect Germany and France will as well.
Setting new governments in place will be all the rage.
Then we will see how many of them really "get it".
E-mail I opened right before heading to bed: "Of all of this week's victories in science, this one has got to be the strangest: Researchers at the University of British Columbia have discovered a plant-based replacement for ambergris, an expensive perfume ingredient made from aged and weathered whale vomit.*"
Another article on Bloomberg.com about the JPM $100 billion derivatives trade moving mkts. going to cause regulator scrutiny. This one probably won't go anywhere because there are regulators at JPM that are aware of what they are doing.....the question is: In a crash will the CDS pay off and cover the risk? My guess in no....therefore the scrutiny. I expect JPM is trying to cover some risky bets still left on their balance sheet or risks that had to be brought back on balance sheets.
Something new I have been thinking about.....Solar Stocks
They say buy when there is blood in the streets....I have been thinking about purchasing a basket of solar stocks like, STP, YGE, FSLR, SPWR, WFR, TSL...beginning with small starter positions and building on dips. Could be a moderate-long term double. I know this is a very contrarian view, but feedback welcome.
I seen that article yesterday....that is what prompted me to think about it. There is little risk in some of them at the low prices. I have been successful in the past taking the opposite trade on some SA articles.
I think that the blood as yet is just a trickle...
When the funding support for the sector gets pulled completely, and virtually the entire $10billion in DOE grants/loans gets writen off, THEN the blood will be hip deep.
The problem at that point will be locating a survivor more than an investment.
I class this with the ongoing Chinese move to become the monopoly exporter of certain tech to the planet. Just as with the rare earth (antimony, etc, etc, etc) stories, this is not yet quite accomplished, but well-advanced and moving in their direction.
Since I do not invest in pure Chinese plays (LOL, most of the big ones are government owned and operated, or sheltered in "Chinese investors only" categories), I will not be in this game until we see signs of Western leaders "getting it". This has not happened yet, so that too will require a different sort of blood tsunami before opportunities turn up, if any.
I agree with waiting, and I will only use a basket, not just one stock hoping for a winner.....I see a double, and probably in your infamous loved chinese ones ! LOL
Bernanke says banks need more capital as a buffer.....last time he said economy needed more and then jobs tanked.....wonder what he sees now to warrant more capital when we thought banks were capitalized ?
It would be easy for me to read this as a big caveat emptor.
I agree, but he doesn't care about inflation now, in fact he wants it. It's either the EZ debt crisis coming to a head, or he sees a big slowdown in the USA...maybe both & that is the worry factor.
Pump fake in progress, if volume falls off, look for Da Boyz to grab the basketball courts and move in their quant monkies and step ladders...
Voldemort has his Death Eaters camping out on The Bernank's desk like urban outdoorsmen at a free hotdog promotion...
June is the end of The Twist, and we WILL be getting news soon. What I expect:
More of a PROMISE not to raise interest rates for the next 2 years (instead of a "hint")...
New version of Twist, I suspect it will be called "Twist Light" (or maybe some new dance altogether, maybe "The Watusi"?) featuring the same methodology, slightly different focus...
Alteration of the rules for the 2Bigs, perhaps the Fed will stop paying interest on Reserve deposits?
IMO, BB would be foolish ot react to a move only in the market.
He's getting what he wants: lower long-term interst rates (the purpose of "Op Twist") to reduce debt-service cost for the government and reduce mortgage rates.
I think your right....he wants this correction to protect interest rates....so I look for 1320 on the S&P...then you might short the bonds as we spoke of earlier....under 2% today, very very low.
It's amazing how brilliant these guys are...I just can't understand how the finally figured out that $4 trillion in healthcare spending is the problem with US debt & spending, on top of two useless wars and about $4-6 trillion of debt accumulated in 2000-2008, and of course the Bush tax cuts for the 1%.....some of which they never mention. http://bit.ly/IBsVBU
Next we will hear about the $1.3 trillion in student loans being the problem with education....and the $3.2 trillion in corporate cash of which $2.2 trillion is held overseas....
Of course that is nothing that another $2 trillion in US debt won't cover along with a free holiday to move a few billion back.
They can bail out Wall St. & the banks, save insurers, give them inside info & heads up on policy moves so they profit from it, but God forbid Washington to help 11 million homeowners underwater.
Ahhh yes: A conundrum. Who should be rewarded and how to determine the truly deserving? Should we subsidize the 30 something down the street who bought a McMansion he couldn't afford on an ALT-A or ARM with no money down and hasn't made a payment since 2009? How about the retiree who mistook his home for an ATM and borrowed against the preceived value which promptly plummeted leaving him owing more than his home is now worth but has made his payments on time every time? Perehaps we should just pay off the remainder of the balance for the 50 something who has been responsible for 25 years and has his home nearly paid off? What to do what to do!? How about getting "The enterprises." back into the public sector and the government back to being a watch dog/referee instead of an active participant. That would go a long way to stabilizing a very shakey market because all the participants would know Uncle Sugar wasn't just around the corner with a bail out and all would be treated equally under the law.
One of my customary (obligatory? maybe...) but occasional suggestions to read "The Fairtax" by John Linder and Neal Boortz. Yes, the authors are two famous Libertarians, but its a surprisingly fun and short read, and makes a case that applies to this topic (particularly all those trillions of capital flight you talk of, LT) and many others. Its the road never traveled, and the closest thing to a silver bullet for our economic woes that I know of...
I know it's no surprise to anybody here, but $VIX moved from ~$16.44 on 4/4 to $20.39 today. Significantly, it broke above a falling resistance and is now free to move about the cabin ... OOPS! Wrong airline.
Intra-day high was $21.06, so the re-trace into the EOD was much smaller than recently seen.
$22 might offer some resistance, if the markets start to settle down a bit.
I'm not betting on it (literally - no interest in betting on volatility indicated by third-order derivatives).
With the S&P and Dow both breaking their 50 DMA, I am thinking we are seeing a mild correction forming. We are about half way through from the recent high (1422 on the S&P) and I believe we could see another 3 or 4%, with a short term bottom around 1310-1320.
Several of the stocks I am tracking are entering my buy target zone, and I expect more over the rest of this week.
I am tentatively cracking open my shell and contemplating some new positions, assuming this projection plays out, though I may also rotate between sectors if we see a general correction in Gold near $1500, or silver around $28. Oil is also likely to ease back, particularly should we see a coordinated sale from strategic stockpiles as we did last year, and could drop back to $90, at which point I may be looking to become a buyer once again in the oil patch.
I consider GOLDF, GWMGF, IAALF, and perhaps LYSDY as current Buys, and AMJ, EEP, GDLNF, LYSCF, QREDF, and SNDXF as worthy to watch (with all the notes above weighing in the balance).
Here's another reason why bonds skyrocketed lately: of course GS is involved. 7:22 AM Contrarians take note - surging Treasury prices have taken out the stop-loss for Goldman's bond short trade and the firm is recommending clients cover and take a big loss. Goldman remains bearish on Treasurys, but takes note of Europe - "an important headwind to our directional stance." 1 Comment [U.S. Economy]
Areva (ARVCF.PK) (ARVCY.PK) and on its home exchange in France (AREVA.PA)
Astute follower and SA contributor Clemens Scholl stock talk this morning: "has Areva finally hit bottom today? ARVCF.PK up 9% in Paris after losing half its value in a matter of weeks..."
Can pull up a 5 year chart of ARVCF.PK on Yahoo Finance
Big drop in late December 2010 (pre-Fukushima) was a big 10 to 1 stock split that took place alongside the capital increase when Kuwait bought a 5% stake.
(posted this on my precious metals article as well; don't particularly concur with the conclusions... making it all the more important for me to read closely)
Ray Dalio at Bridgewater, An In-Depth Look At Deleveragings
[Excerpt on U.S. deleveraging 2008 to present]
"Like the US deleveraging in the 1930s, the lead-up consisted of a debt driven boom, and the deleveraging has transpired in two stages: a contraction in incomes followed by reflation and growth. However, because of a swift policy response from the Fed, which was prompt in guaranteeing debt and aggressively printing money, the contractionary period only lasted six months (versus over three years in the 1930s), and since then there has been reflation and debt reduction through a mix of rising nominal incomes, default and debt repayment.
"As shown in the charts below, unlike both the US in the 1930s and Japan since 1990, the US has quickly entered a reflation and ended the “ugly deflationary deleveraging” phase of the process (which lasted from September 2008, when Lehman fell, to March 2009, when the Fed instituted its aggressive program of quantitative easing to monetize the debts). During the “ugly” phase, incomes fell, debt burdens rose from about 340% GDP to 370% and stocks lost almost half their value. Because so much debt around the world is dollar denominated, the contraction in global credit and dollar liquidity created a squeeze for dollars, and the dollar strengthened 14.8% against a trade-weighted basket. Exports collapsed faster than domestic demand. Following the reflation that began in March 2009, incomes recovered, debt burdens fell below their initial starting level to around 335% and stocks recovered all of their losses. At this time, the credit markets are largely healed and private sector credit growth is improving. Thus far, this deleveraging would win our award of the most beautiful deleveraging on record. The key going forward will be for policy makers to maintain balance so that the debt/income ratio keeps declining in an orderly way."
Jon, Springer: Greetings. This just doesn't add up. http://bit.ly/IljLLe There has been no wage recovery. We haven't had a raise here in two years and as far as I can tell the economy is still struggeling three years after the event. Wages and debt falling in tandem would logically result in less consumer spending and with inflationary pressure mounting buying power has diminished not increased. How will that spur a recovery?
My response to you in the comments of my the article was an attempt at being balanced...
Here, in a more relaxed forum... let me just respond frankly: Beats the ***t out of me!!!
I think its an elegant faith-based belief that we're recovering because we always recover shrouded in a (quite honestly) deep study of prior deleveragings to show erudite justification for irrational bullish beliefs.
In other words... he put academic horsefeathers on a flawed argument... or lipstick on a pig... or gold lame panties on an alligator... or whatever you like.
Of course, maybe he'll be right... and it was lot of other interesting studies (30 pages worth)... thus I post.
(hat tip to Tom Robbins on the alligator reference)
(SPX): Failed to hold $1,370 today, a level several notable analysts consider important. Personally, my levels were $1,375 and next is $1,365 followed by "psychological" $1,350.
Anyway, the ones that "know" suggest this means the re-trace is still in play and have targets of $1,340 and $1,320 and others, depending on who's mouth is moving.
However, the gain today was on volume slightly above the 25-day average I track and the miss of $1,370 was apparently just some late-day profit taking.
Since (TLT) was down, I suspect this was just a little rotation out of bonds and into equities as folks ran around hollering "Buy the dip! Buy the dip!".
A couple days of potential consolidation with an upside bias (I *suspect*) might follow. Next week is "options expiration" where I expect us to both rise and become a little more volatile.
After that week is when the serious move down should start *if* it tracks as it has the last couple years. That *is* a big "if".
I think we'll see around $1,390-$1,400 again before any serious move starts.
Caveats: Spain and Italy stuff might intervene. You know what that means!
MHO, still learning and still predominately SWAGGING, HardToLove
From Rick Krementz on the Axion blog - a technical note I thought worth bringing over since the topic came up here -
"don't confuse graphite and graphene. They are both essentially hexagonal pure carbon, but have little else in common.
"Graphite is natural; it is a mined mineral. It is found in various grades of purity and alignments of massive hexagonal crystal. http://bit.ly/HCIYlU. It costs in the hundreds of dollars per ton.
"Graphene is a man-made nano-structure allotrope of carbon. Hexagonal sheets exactly one atom thick. Its nano structure gives it some remarkable properties, and is very expensive. In 2008 it was considered the most expensive substance on earth, costing $100,000,000 per cm3, according to Wikipedia http://bit.ly/Huo3wm. The price has dropped a lot since then. Almost anything involving nano-materials is extraordinarily expensive and is highly unlikely to be part of commercial products until manufacturing cost drops many orders of magnitude.
"As an aside, diamond is a bargain compared to graphene. Diamond, another allotrope of carbon, is cubic, not hexagonal, and also has some incredible industrial uses beyond abrasives. One of diamond's unique properties is that it is a semiconductor, yet has extremely high thermal conductivity. This could permit a diamond microprocessor to run at exceptional speeds and not overheat."
QuickChat#229, March 29, 2012 288 comments
Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.
Share this Instablog
This post has 288 comments:
The field is completely open and you have the first pitch. Take a swing!
Have not been active here on SA recently, but do appreciate your insights, etc. !!!
I was just commenting to someone else, that with the drop in oil prices -- some bargains may be had shortly. I have been watching RIG for an entry and its now down $6 in 2 weeks. The Brazilian charges have certainly not helped.
I haven't given up on SDRL and NATDF for future trading purposes -- I just no longer have the long term conviction I once did -- especially after seeing how debt levels and inter-company asset flows are apparently being managed between parent and sub.
Saw your posting on Deep Sea supply -- want to share what you like about it?
Exchange location aside, as an oil service provider (or more correctly, rig service provider), its continued increase in price tells me that this sector still has legs (the recent downward pressure in oil/oil services notwithstanding). Would you agree?
mj
I will confess - I have not done a detailed analysis of DSSPF vis-a-vis other rig service companies (as opposed to land based oil services companies). What attracted me to it is that it appears to be another Frederison entity and operated along the same lines as SDRL - i.e., buy top of the line, leading edge Anchor Handling Tugs and Platform Supply Vessels and contract out. Imagine (but cannot confirm) that a majority of SDRL rigs are serviced by DSSPF; thus, as goes one so goes the other. BUT ... as you indicated, there may be games afoot in SDRL and NATF. Ergo, is money better allocated elsewhere? Maybe, but there 4Q report shows that they are almost fully leased/chartered for a long time to come.
Anyway, just a passing fancy. Will keep you posted as ideas rattle through my cobwebs.
http://seekingalpha.co...
Being fully contracted for a long time is not good right now, as the UDW rig day rates are currently at a much higher level than when the contracts were signed.
I see higher potential elsewhere than NATDF, but I'm still keeping many of my shares. I trust the management and I know they're sharing their income with the shareholders.
I've seen contributors here on SA praising PACD and RIG, and they could be good examples of better investments, as they have newbuilds waiting to be put on contract. I've found SEVDR on the Norwegian stock exchange to show a similar potential to those, and invested quite heavily in it.
I anticipate that the court will overturn the individual mandate, and that this likely will cause insurance company prices to fall.
During Romney’s campaign, he has been trying to delineate the difference between the federal mandate and his Massachusetts program. Although Obama and the left have sought to blur the distinction, one of the Justices (I think possibly Kennedy) indicated that Romney was correct; the federal government with its enumerated powers could not mandate individuals to purchase insurance, BUT a state could.
I live in la la land, also called California. Actually, I live in the conservative enclave of Orange County, which used to be like Lesotho currently appears on the maps, but because of demographics increasingly is going the way of Goa, but I digress. Anyway, I would imagine once the ruling comes out, and states realize the potential to do what Romney did in MA and the fact that the federal government is not going to be the one to do it, that they will try to impose their own mandated health care system. In California we are 1 vote shy of a veto-proof majority in the State Assembly and State Senate and, therefore, anticipate we may be the first state to attempt passage of mandated health insurance. I wonder if California based health-insurance companies are good long term values. Your thoughts brighter minds than I?
Congress has not passed a budget since April 29, 2009. Imagine if you had not made an investment or spending decision for the last 3 years.
Making me get closer to supporting http://nolabels.org
One more day to go.
HardToLove
http://bit.ly/H4bxB1
LoL! As if the Dem-controlled Senate would even consider passing a budget!
I mean, then they might have to deliver something!
But *if* they do, and if it's similar to this one, there's lots of investing implications.
HardToLove
Three consecutive days with lower highs and lower lows and volume increasing each day. Three days SPX tries to tank early and then claws back after making the lows.
The oscillators I watch, except accum/distribution, have all left any semblance of bullishness in the rear-view mirror and are now either neutral or showing early attempts at trnsition to bearish readings (MFI, stochastic and ADX, with DI- about to cross above DI+).
$VIX acted *exactly like yesterday - making an intra-day high of $17.20 (yesterday was $17.27) and closing low, $15.39.
All combined, this demonstrates what is going on right now, IMO.
(TLT) closed right on $114. Does the 10-year and other U.S. Treasury issues support a flight to safety bias?
On stockcharts.com the 10-year ($UST) edged up slightly again to $128.81 and the yield ($UST10Y) ended at 2.18%, continuing it's slow descent.
The 20-year ($UST20Y) yield continued to slide, showing 2.93% and the 30-year ($UST30Y) ended at 3.27%. Both of these are below and leaving the falling 200-day average in the dust.
I'm *very* curious to see what happens next week when any pressure to "paint the tape" (what I had been calling "window dressing") abates.
I think if I see similar behavior tomorrow in the SPX, with volume up again, I will seriously consider doubling my SPXU position. But, I'll probably chicken out! =8-O
HardToLove
Anything can happen..including the fed QE3...I do not disagree with you, and I may play the VIX, or SPXU with you...short term. I just don't think Bernanke and/or the hedge funds will allow a repeat of last year....they got burnt way too bad.
With all that said, the key stocks I follow such as CAT has dropped from $115 to 104, APPL has stiff resistance at $600. That buyback is all that has propped it and hedges are loaded to the gills on it (I would bet most of their net is in this one stock from $350-600 is one hell of a rise) there are others too, individual stocks that have been mkt. leaders just confirm your TA.
This may just be a continuation of the sideways trading that has started. But if it is, then a couple days in a row up are likely I think.
All the chart stuff says we should be topping, but it's been suggesting that for a while. It might be better to wait for an established down move to get started before making a move *if* today's change so far indicates either a change in the pattern or a continuation of trading sideways.
That's my thinking ATM - as the charts change, I've got to change with them.
I'm thinking that the biggest move I might make today is if we get a big rise into the late morning, I might try an intra-day SPXU buy cheap and sell on an anticipated re-trace during the day.
Never know if that's the right play though, but it's looking like that might be the best move for now.
With 90 minutes to go before the open, it could change ... a lot!
MHO,
HardToLove
http://bit.ly/H2s2R0
He has been just as wrong as Kass has been right, but this one I agree on. Any more bailouts and eventually the euro has to come down.
Let's just use one stock as an example...take CAT, they have profited as much or more than anyone on 3rd world expansion and development. But now with the EZ austerity, China slowing, and the Tea Party refusing any big spending bills in the USA...just how is CAT going to beat earnings? Short of a big spending bill in the USA, I don't think they can, same for BA..they are seeing order cancellations starting this week. Almost all corps are depending on a strong USA to make up for EZ shortfalls and congress is not cooperating at this point. I am not advocating this either, so don't make it political.
I am saying I believe that industrials and maybe other's is a short.
They overdone financials last year and we've seen a huge rebound this year, but have they gone too far too fast? ex= C from $22 to $38? I wouldn't dare short them, but any of the big banks at $50?
I knew the regional banks were a buy, and they probably go higher. There could be a shift from industrials to the smaller financials....as jobs grow & come back from overseas to the USA, housing recovering,
I know this is a lot, but this summer may be a sector correction that hits say CAT very hard, ex: CAT from $115 down to 80...but in reverse DE goes from $80 up to 100 ? I would think APPL either goes up $100 or down $100...50/50 odds...they only have to miss on anything to go to about $530 for the dividend support.
I look for leading industrials like CAT that have lead the mkt to get hit hard...but smaller laggards to rise to offset this, like Zynga, regional banks, ag, etc. Bio-tech and penny stocks might too.
Have to see if there's any bright spots in this mornings: 8:30 PCI, consumer spending, core PCE price index; 9:45 Chitown PMI; 9:55 consumer sentiment final.
HardToLove
Dalio Earns $3.9bn to Top Hedge Fund Pay List
http://http://bit.ly/H...
6:01 AM As part of a pledge to comply with Chinese law and the Fair Labor Association's standards, Apple and Foxconn forge an agreement in which the latter will hire tens of thousands of workers, halt illegal overtime, improve safety and upgrade workers' housing. The deal could have far-reaching affects for the rest of the sector.
Comment! [Tech, Consumer]
http://yhoo.it/H6A0Kj
And this is correctly being interpreted as evidence of the strength of Apple.
Until we start seeing headlines about unexpected growth by their competition (instead of meltdowns) betting against Apple is something I would approach with caution.
As for the macro sitrep in China, this sort of thing is precisely what they need to help engineer a "soft landing", and I suspect this equation is already working through the quantmonkies on Wall Street as well.
Europe...
LOL, its a football match where the kids who own the ball are running for their lives down the back alleys, and its a question of how long they can keep kicking the ball down the gutters and away from the herd of angry players.
Stark Says ECB Didn’t Expect Banks to Borrow So Much for 3 Years
http://bloom.bg/H0fHjh
http://buswk.co/H35Av9
Quite frankly, I see no advantage to any of them..all of them require more gov't spending ...higher costs to gov't & consumers.
HardToLove
http://bit.ly/Hwzo0o
Overall, "U.S. personal spending jumps 0.8%, income up 0.2%" did not look like good news, as real purchasing power declined.
http://bit.ly/GXHLAA
HardToLove
Just a whisper of "inflation".
Voldemort and his Death Eaters are scrambling like mad to cobble together another collective oil release for the US and the EU, and I expect it real soon...
And its impact will be even more muted than last time.
...and the music of the calliope plays on...
Consumer spending up 0.8%....Consumer saving Down to 3.7 from 4.3. Income only up 0.2%.
Spending is up almost entirely due to energy (gas costs)...not retail buying and came dollar for dollar out of savings.
See marketwatch.com for reference.
If we can just get our nation's consumers savings rate down to -2% savings rate, we can get this economy going. Once the consumers start spending in earnest, corporations and wealthy people will start making money again, and those people will reinvest in the vigor of the economy (with outlet shops of cheap, but only minorly defective products, increasingly made in foreign factories), which will in turn trickle down to the consumers who will be able to continue to afford a negative savings rate and spend to their heart's content...
And then...
Oh wait... that was the 80s.
Keep it coming!
HardToLove
We need more consumers (ie, productive jobs born from the private sector and capitalism).
We don't need consumers to spend 1% more...
We need 10% more jobs, creating a healthy demand for goods and services.
I'm tired unto death of kneejerk answers, "Oil prices are up, so its time to raise taxes on corporations"...
Who of course are just tax collectors, and will then quickly raise prices even more in order to collect both the new taxes and the higher overhead needed to collect the higher taxes.
Any politician playing this particular bumper sticker slogan should be laughed off the stage.
I've tried laughter. It does cheer me up but it doesn't seem to make them go away.
Strong number.
Offsetting that, Chitown PMI stuff showed weakening trend continues, although still in positive territory. Their employment number was the weakest of their data.
"Chicago PMI slows expansion in March"
http://bit.ly/H86Hrb
HardToLove
So maybe it will behave the same and hit a low and then claw back up to close higher for the day.
This would remove any thought I had about doing an intra-day buy of (SPXU) near an SPX high and then sell when it weakens.
Can't decide right now whether adding SPXU at EOD, when I would expect a high, would be attractive or not.
HardToLove
But the futures higher and open higher broke the pattern I had been tracking and introduced uncertainty.
So the chicken in me said maybe I should wait on the SPXU and let the longer-term trend I had been matching - expecting the grind lower to kick in around mid-to-late April - develop.
I'd miss, likely, a short-term smaller profit, but would have less risk.
Still undecided.
Maybe that's all the warning flag I should need.
HardToLove
I just confirmed with Alex Jantsch http://bit.ly/H23ar3 that the photo on his LinkedIn home page is him having a tug of war over his wallet with Warren Buffett http://linkd.in/H6ZuHq (a request to pose as such which Mr. Buffett accepted)
Props to Alex for the creativity. Very cool.
Now... back to the regularly scheduled QC... what should I buy???
Titled "John Paulson has a problem," Kupperman discusses how his own hedge fund's losses were accelerated during the 2008 crash by shareholder redemptions (shareholders that also wanted to short the shares of the companies Kupperman was forced to sell before redeeming).
Where do I find John Paulson's holdings???
Though wouldn't it be ironic if our economy finally started to overcome the multiple boots on its throat JUST as macroeconomic events in Europe, China, Japan, etc. rolled and burned on the back turn?
There was so much damage done in '08 that it will take years for things to normalize.
I...
confirmed news: http://on.wsj.com/H23TMx
dug up this clip from the movie Airplane: http://bit.ly/HqDTaN (what do you make of this Johnny?)
canceled my lurking buy order on (AXPW)
decided against buying (NUGT)
bought more (AGQ)
++++++++++
On a separate note, is there a scorecard of how many times governments and central banks issue bad news on Fridays?
So what will Ireland, Portugal, and Greece use to replace this collateral that the Bundesbank no longer accepts?? This should definitely add to the EU excitement which is far from over. http://on.wsj.com/H23TMx
I added some SDS at today's low -- just to keep a small hedge in place short term as we head into next week.
Museum art, state historic sites, and artifacts come to mind.
Something needs to shift. The numbers have become too intangible and abstract for people to get what's going on and the position they are in due to poor prior stewardship. Bring assets they know into the discussion.
JMHO
Its Friday afternoon -- need some lightheartedness!
$640 million
$462 million as lump-sum cash pay out (before taxes)
http://bit.ly/HtTFTx
Have a good weekend all !
BATS: 3 ways to protect your computer
http://bit.ly/H5x6bI
http://buswk.co/HaCwzB
Hiding Volatility in Earnings Just Got Harder
http://bloom.bg/Hx5XdS
All Spain All The Time, John Mauldin, http://seekingalpha.co...
Ben Bernanke and the Puzzle of Employment, Steven Hansen of EconIntersect, http://bit.ly/HbQ6Cl
After grad job slump, big hiring is back at U.S. colleges
http://yhoo.it/H6VKCR
This may be the single best indicator of what's really going on in the economy.
*if* it is sustained, that suggests that the effects of "wage parity" (as suggested by the average starting offer of ~$42K) induced by the devaluation of the USD and rise of wages in the EMs due booming growth is starting to bring jobs back to the U.S., as has been suggested in many recent economic stories from the MSM.
Now if congress gets off it's dead a$$ and keeps the tax cuts from expiring, prevents the "shotgun approach" "sequestration" from occurring at EOY, ...
We might have a chance. We still need to get something going on the non-college grad and youth employment fronts though.
MHO,
HardToLove
http://seekingalpha.co...
HardToLove
The Steven Hansen article you're citing is the same one (with a different name about "Bernanke and the Puzzle of Employment...") above at his EconIntersect site. I encourage you all to support Steve and John Lounsbury by reading this article on their EconIntersect website as they need more page views to monetize this excellent project.
SouthGobi (SGQRF.PK) Signs Cooperation Agreement With Aluminum Corporation of China Limited (CHALCO) and Receives Notification of CHALCO's Intention to Make a Proportional Take-Over Bid at C$8.48 Per Share
http://mwne.ws/HzevmR
This looks to be essentially Ivanhoe (IVN) selling its stake in South Gobi to CHALCO at a 28% premium to Friday's South Gobi closing share price of CAD$6.62
Those looking to trade SouthGobi in Hong at the 9:30am opening (minutes away), the symbol is 1878.HK
THANKS to Mogi at CPS International for the alert!!!
HK price equivalents are...
Friday's close 51.25
Deal's value 65.65
Will think about it on my wife & I's 2 1/2 hour drive we're about to set out on and comment a little more tonight when I post my normal update. I'll be curious if Ivanhoe (IVN) shares go up today as this will give them about a $900 million cash infusion.
Full post: http://seekingalpha.co...
Will sell out of my SouthGobi speculation by tomorrow night.
Reasoning said the arbitrage was too logical and obvious to miss making a few bucks.
Lesson: sometimes your instincts are smarter than your reason.
I, too, might have followed you in -- if the arb play had involved one of my favorite USD diversification currencies e.g. NOK, AU, SGD, etc. The primary reason I didn't is that the HKD is pegged to the USD -- and USD holdings is what I keep trying to diversify long term!
http://bit.ly/HAAYzO
Crucifies The Fed; Explains Why A Gold Standard Is The Best Option
(in a speech at the New York Fed)
http://bit.ly/HB25vV
Now it looks to be somewhere over 50% and counting...
Hmmm. We need to turn Chu's name into an insult, ie, like the woeful "Mudd".
"Poor guy, he Chu'd through his IRA and now he's working at Walmart until he dies of old age".
http://seekingalpha.co...
Starts tanking and this time it's not "knee-jerk" - looks to continue a bit.
USD pops up and (TLT) tanks too.
I wonder if (TMV) would be good now?
HardToLove
(11 year-old) Dutch Boy Seeks Economy Prize With Greek Euro-Exit Plan http://bloom.bg/HbSaaJ
American Men Dominate Jobs Recovery Taking 88% of Spots: Economy [article calls the recovery a "mancovery"] http://bloom.bg/HbS9TY
http://bloom.bg/HPxhp6 **AND** http://bloom.bg/HRLtfb
Others expressing the same interest include PetroChina, Mitsubishi, etc. I am holding partial positions in Encana, Talisman, Peyto Exploration, and ARC Resources because IMO they have attractive undervalued nat gas resources and good dividend yields which pay me while I wait. I am also watching GasLog (GLOG) a new LNG shipper.
As always, do your own DD -- these shares may have not yet bottomed.
Is anyone planning to add new LNG capability?
I keep thinking Japan will be a much larger LNG consumer in the next few years, given the politics and cost of "fixing up" their nuclear power infrastructure.
Replacing the nukes with soft, "renewable" power is a joke, given the massive electrical storage infrastructure needed.
Then again, what a fabulous potential market for the Axion PowerCube ;-)
They all have focused production in the western half of Canada. ECA actually has a stake in the LNG terminal being built, and Peyto is the lowest cost nat gas producer in Canada according to Canadian Edge. Each of the company web sites have presentations with well locations. Feel free to pm me if you have any trouble finding their proven reserve life, production cost comparisons, etc.
mj
I don't know why I bothered to ask :-)
You are notoriously good about your DD.
I already own substantial gas producers/gatherers/pi... companies. But I've never ventured into the Canadian LNG arena. I really have too much tied up in income producing NG stocks for more risk. Sigh. Dividends pay my bills and feed me, so caution is required.
Except for 5% of assets, which is already invested in Axion :-)
GO POWERCUBE !!!
:-)
From Marketwatch:
"Fed's Lockhart sees no need for more bond buys"
http://bit.ly/Hfa7as
"Dollar beats stocks, bonds after Fed comments"
http://bit.ly/Hfa8v1
TLT started weakening at11:37 and tanked after the fed minutes, dropping from a high of $113.41 at 11:37 to a low of $110.61 at 15:53.
(TMV) made a nice appropriate inverse move.
This may be what we've been awaiting. TLT potential support ~109.37, after that nothing but minor potential supports until potential strong support at ~$97.72.
Sell-off volume was strong and oscillators that had begun bearish turns increased bearishness today.
I think a cautious entry in TMV is justified here.
Risks: EZ, specifically Spain stuff, could bring back flight to safety.
Reasonably permissive stops could be used I think.
I'll be strongly considering a small starter position tomorrow.
HardToLove
I feel like it will be "it" on the short bonds play when Bernanke intervenes and it doesn't work.
It is "it" now if we think, at a later date, the Fed will try to intervene and fail.
Mind you... that "it" is scary.
The idea being that in 5 years I will be able to sell highly appreciated Axion stock tax free. Yes, I take a tax hit this year, but think of the taxes on a 10 or 20X appreciated stock.
Other than the 5 year wait, I havn't seen anything wrong with this tax reduction plan. Especially when essentially all the gain from Axion will be in cap gains.
I also don't expect the guvmint to give me a big break on long term cap gains in 5 years. My thoughts are that they will be squeezing any source of revenue from "the rich" by that time. Hopefully they won't retroactively change the tax code to raid Roth IRAs.
Comments?
I have been using stock from tax deferred IRA accounts for the source of funds. That should address the wash-sale problem.
% change from 52-wk high
JRCC 80%
PCX 78%
ANR 76%
ACI 71%
OXF 70%
BTU 61%
WLT 59%
WLB 43%
CNX 38%
RNO 38%
CLD 35%
NRP 33%
ARLP 32%
PVR 18%
Aluminum Corporation Of China, Coking Coal, The Gobi Desert, And An Investment Dust-Up
http://seekingalpha.co...
Short version:
Chinalco's tender to buy Ivanhoe's stake in SouthGobi looks good for SouthGobi (SGQRF.PK) if/when it goes through. Market is not reacting that way. A lot of geopolitical and corporate knock-on effects from this deal undiscussed elsewhere yet.
(about Chalco/SouthGobi/Ivanhoe deal)
Information is different than the original. The most significant differences are in the sections:
- Chalco Trades Out Deals, Trouble For Mongolia And An IPO Or Not?
and
- Add An Election Year And Stir Well
though there were some other changes too.
"Perhaps it shouldn't be surprising that the Fed, and even the Chairman himself, are alternating between saying dovish things and saying hawkish things (or re-interpreting prior dovish statements to appear more hawkish). The Fed's main tool right now is its "communications strategy," in which it wants to talk down inflation expectations while also talking down interest rates. The former requires hawkish talk, while the latter requires dovish hints. "
Every one of them no matter what they say, want interest rates low. Especially housing and gov't debt. They will do whatever it takes to keep it that way.
I've slept about an hour but I'll give this reverse psychology thing a go...
Markets go up when Bernanke says the economy is bad and gives indications that more easing will be necessary (a world where bad news leads to more liquidity which leads to Wall Street Happy Party Time)
Markets go down when Bernanke, like yesterday, says things are improving (which means no bonus extra liquidity Wall Street Super Happy Foam Party Liquidity Happy Time)
More seriously... the Fed MUST keep interest rates low. They feel cornered into this position by the ongoing housing crisis. There is a massive backlog of homes awaiting foreclosure. There are too many people still in adjustable rate mortgages. There are too many people that can't or won't purchase homes if interest rates go up. Rising interest rates would create a debilitating housing market that would knock the fragile non-recovery into recession; and further debilitating knock-on effects in the CDO/CDS/CMO markets that would create more problem for all those too-big-too-fail banks, sovereign nations, and the whole system.
Thus, the Fed must keep interest rates low until the market decides it doesn't care what the Fed says anymore ... and that's when the challenging times begin.
Or... the Fed will keep interest rates low until the housing excesses are worked off in the fragile economy the Fed protects while a nascent new economy blooms like springtime, and then the Fed can gradually raise rates to normalcy and everything will be beautiful and perfect like grandma's apple pie.
(Apologies to grandma and her apple pie for using her and it in a sarcastic paragraph)
FWIW...the minutes are a month old & somewhat outdated before they were released, The comments last week are more recent and therefore I perceive as more relevant. As soon as housing rates go up, he will initiate the QE-3 mortgage bond buying. They won't until they have to, but the mkt will force them as HTL just noted the big TLT drop from $113-110 yesterday.
The 24-hour news cycle is a menace. Its very strange counterintuitive thing that the more media coverage we have, the worse the news gets. That's not the Fed's fault.
I agree with you... less frequent updates would be more valuable.
Probably just a small correction from the excessive drop of yesterday?
I'd hate to think BB & crew were reacting that fast and micro-managing at that level.
Could be the primary dealers thinking along your lines and setting up for profit by later sales to the Fed when they do start buying in quantity.
With the USD pogoing up this A.M. (from early yesterday $78.89) to $79.87 ATM (a very large move in currency terms), it could also be effectively using bonds (denominated in USD) to make gains as the USD shows strength. Even if yields should fall, if the dollar rises on expectations of no more QE, purchasing power could still rise.
Maybe some kind of arbitrage? I don't know enough to guess how it might work.
Related, the pre-market e-mini futures shows the inverse market/USD relation is back in play - futures down $9.75 ATM. Implication is SPX $1404 or so from yesterday's close at $1413.38.
HardToLove
http://bloom.bg/HdDYl3
Investing in start-ups is very risky and I can only tolerate a small percent of them in my portfolio. But here is a possibility that is interesting and of lower risk. Even pays a dividend.
http://bloom.bg/Hl6cKH
I own Waste Management stock.
http://bit.ly/H9oFYh
HardToLove
[not read yet; can't concentrate today; still tired and feeling grateful to the deeply religious woman that rang my doorbell three times to convert me 2 hours after I fell asleep (having pulled an all-nighter last night trying to mend my butchered Chalco SouthGobi article)]
EXCEPT, the speculation that the beginning of inflation in Japan would lead to the rise of the Nikkei. That does seem reasonable since only a slight inflation component would give the JGBs an effective negative return, given 1% or so current yield.
But will the pensioners who own most of the JGB debt actually make the move from bonds to stocks? Or should I say, the bureaucrats who run the Japan Post?
So bond prices fall and the stock market rises. There has to be a hedge play in there. The problem with buying market index CALLS is the value erosion with approaching end dates. Ya have to pay while ya wait. I want a no-cost and risk free way of playing the Japan problem! ;-)
Signed: No Risk Capital Left
Perhaps you should appoint yourself as a sovereign nation so that you can print money endlessly without a conscience. It seems to work well for others.
I couldn't agree more with you,
Abby
This just can't turn out well for the Japanese people. The upper end pols must have lots of money stashed in Swiss Franks. Or gold coins.
Maybe they are stocking up on Tokyo real estate! :-)
Trading Lessons From A Reformed Idiot
http://seekingalpha.co...
My favorite lesson (that I went against last week, and thus was rapidly re-taught it again):
"Lesson 2: Focus on what you're good at."
Spain duplicating Greece:
http://bit.ly/HePx82
Spain is a whole new ball game.
Spanish volatility and regionalism is very different from Greeks. Spain itself could break into multiple countries.
Etc.
If Rajoy makes an honest attempt to fix the balance of payments problem, the private equity folks (vicious bond ghouls, etc.) might decide that Spain has a reasonable chance of meeting the bond payments and loan them money at finite rates.
But trying to squeeze more taxes out of an economy in recession with more than 25% unemployment and week banks is likely to further depress the economy. Choices are Bad and Worse for Rajoy. May his deity be with him.
But it isn't a conspiracy. It's bad govmint policy coming home to roost. There is a lot of that going around these days.
Alas, the market doesn't care until it does.
HardToLove
Found this webpage with a comparison chart of oil and gold prices... not sure its useful, but it pegs an average value on the relationship: http://bit.ly/HqAwzi
+++
Greece. Pensioner commits suicide in protest of cuts. People protest afterward. 2 1/2 minute video clip + article. http://tgr.ph/HrDzXX
IF they invested in the economy instead of derivatives...think of the good it would do. $100 billion invested in CDS by one trader.
JPM distorting the credit mkt:
http://bloom.bg/I17QyM
JPM was long thought o be distorting the silver markets with short positions. Could be, but hear this and consider for yourself.
http://bit.ly/HiP1G5
Now, none of the headlines about CDS discuss the fact that CDS exposure is notional based on reporting only one side of a possible position. They don't even know the offseting position that may exist because that is not reported to the BIS(?).
And these aren't even normal CDSs, but indexes of CDSs they are discussing.
Only the arm of the DTCC (I'm not sure it's them) that is responsible actually knows net positions.
Also, notice who's complaining - folks on the opposite side of the trades in many cases. Motives must be at least suspected.
HardToLove
120K added, expected was ~210K and prior was 227.
Futures right now would suggest SPX of 1385, a $13 drop. Dollar dropped from $80.31 to as low as $80.02, a large movement, in one minute.
Monday might be interesting if there's no offsetting news.
Treasury yields drops 8 basis points.
I'll post a link to details when I find them (Marketwatch).
http://bit.ly/HjcKuC
HardToLove
Thought you might be interested in this article, sorry if you have already seen it. It is about Myanmar (Burma).
http://read.bi/Hm23bk
Thanks for the link !
I had not seen it and just catch as catch can on other frontier markets beyond Mongolia on my radar (Sri Lanka, Myanmar, Vietnam, Namibia, Zimbabwe, Colombia, etc)... tracking Myanmar story a little more closely as its going to be another leveraged play on China story similar to Mongolia (but with a population 18 times bigger and ports).... thanks for helping me catch!
Reminder note: U.S. citizens are currently BANNED from investing in Myanmar in any way, shape or form, including companies based elsewhere that have a percentage of their investments in Myanmar.
http://bit.ly/He4OHr
HardToLove
What a perverse market we inhabit as market fell off as economy improvement was suggested last week, dashing hopes of QE3.
Logic would suggest that market should now go up is they decided these (un)employment numbers suggest a weak economy and, therefore, reviving hopes QE3 is more likely.
HardToLove
Sure... why not?
So, in the story of our markets, if Ben Bernanke was Goldilocks... he would sip three porridges and say:
- this porridge is too good (market flat)
- this porridge tastes a little like wood chips, but its still okay (market down)
- this porridge is just bad enough for me to get away with dropping a whole jar of honey in it (pumps the market full of liquidity; market goes up)
And his three beds?
Too hard (wage inflation starts to flow through the economy)
Just right (wages continue to fall, offsetting inflationary pressures on commodities and asset classes continue to inflate benefiting a certain segment of our society at the expense of all others).
MHO,
HardToLove
Current number at 120k is therefore exactly half of last month.
"Unemployment" number (it isn't, but why confuse the issue with accurate definitions now?) dropped from 8.3 to 8.2...
Meaning a LOT of folks gave up and joined the ranks of the urban outdoorsmen.
Given that spring (especially warm one) normally seeS some hiring for warm weather jobs, this is a nasty bit of news overall. I accidentally watched several politicians being interviewed about the job markets (my remote control battery gave out), and the spin involved was a very unbelievable combination of misdirection smoke and statistical mirrors...
Frankly, I am not surprised that March has been a major speedbump, and the number of my buy targets now dipping to within reach of my accumulated dry powder meshes with my long term plan...
But I distrust these Boyz markets, I really do.
I'm really suspicious that TPTB will not let the number(s) stand. I would expect any revision won't be a rinky-dink 10K-20K either.
HardToLove
There will of course now be ANOTHER meeting, and some mad scrambling and arm twisting to "correct" the "bad number", while whoever ignored sage advice in the first place plots to can the troublesome guys from BLS who "screwed up the job".
Simple.
Of course, we can also look for talking heads to start glossing over any short term nastiness with tonnes of "...but the important thing is that we created (royal "we" there) millions and millions of jobs over the past x year, and hundreds of thousands of jobs over the past x month...", etc, etc, ad nauseum.
From ZeroHedge: http://bit.ly/HQJQze
Most interesting... got the link from DrudgeReport... first time I've seen Matt Drudge link to Zero Hedge
I wonder if that's what this week's number portends and ECRI's recession call will be proven correct (although, lo these last many weeks their own leading indicators have been improving).
HardToLove
But it's a long weekend to go yet.
HardToLove
"Consumer credit at highest in nearly three years"
http://bit.ly/HQydZc
I recall some recent articles and discussions that because of situations being somewhat dire, the consumer was loading more of daily expenditures onto credit cards and, of course, the $1T education debt being carried by graduates.
Since credit contraction was the real cause of the the GFC and TPTB tried to solve it by getting folks to use more credit and Mises says that once a credit bubble contraction begins it can't be stopped ...
Is this the early warning sign?
Was this additional credit from some of the 120K missing from the new jobs numbers?
Oh wait! How will the market react - nothing else matters right?
Let's see. Bernanke wanted to make more credit available, check - mission getting accomplished, no QE 3. Market tanks ... further.
Or maybe market (and MSM) spins it as "the consumer is back - confidence must be high for them to take on more credit"! So market says earnings will be up, everthings good, we don't need no stinkin' QE3 - rally, rally, rally - where's the beer boys!
The last few seconds says it all!
http://bit.ly/Hn0U1y
HardToLove
"Bets on ZROZ, employment data smack of Wall Street inside job"
http://bit.ly/HDNI3e
HardToLove
1. How long would this welder live breathing air from inside that pipe?
Corps & industry refuses to fund any vocational school training, they want that to be the gov't job.
4. How many of us can do skyscrapers? didn't know they were building t hat many anyway.
5. Nurses, I am an RN, the medical field will do nothing to make part time more available or reduce shifts from 12 to 8 hours for the workers over 45, they keep adding patient loads and refuse to hire. They add techs & assistants where ever they can and only add staff when they add a dept. It's a false front.
Trust me ... this saying there is a shortage of workers or "unable to fill positions" is BS on most all fronts. There is reasons they don't tell.
The companies want some govmint handout to defray their labor costs. But mostly they want more visas for importing foreign workers at a substantially lower salary.
There are also millions of foreign students who come here each year to study at our technical universities. Many manage to acquire a visa to allow them to stay and work. These are motivated people who often do not want to go back to the society they have left. It's one more downward pressure on technical wages.
Why take hard subjects in school when the resulting salary is little, if any, above administrative level?
Of course there is the absolutely pathetic story of our K-12 education monopoly and their "teach to the test" culture. The multiple choice test DOES NOT teach students to think or ask relevant questions!
School becomes a trial for intelligent kids who will forever afterward consider "school" as a place of misery.
Thanks to the federal guvmint and their "progressive" ideas and tax bribe money.
Federal money for state schools should be illegal ! The damage the new "no escape" college tuition loans are doing to the current generation of young adults is just wrong! Easy money means poorly prepared students make bad choices about continuing their education.
Sorry, rant OFF ;-)
Here is the link to the 12 jobs they can't fill,.... sorry I was mad and forgot to paste it.
All the gains made in the last 60 years to improve labor's lot and produce a thriving middle class have been taken back.
Some kind of (hopefully peaceful) revolution will be required to rectify this situation.
It may not have to be here - if emerging markets keep building their middle class and their standard of living rises, our lot will improve after a delay of a generation or two.
In the meantime, much angst and caterwauling.
And no gains will be voluntarily given.
MHO,
HardToLove
P.S. No link seen.
12 jobs Employers can't fill
http://bit.ly/HpFhLK
Thanks for the link. I don't see why they show a shortage of truck drivers. Many trucking companies (Swift, CRST, Schneider ect.) have in house training for a contracted length of time. It is a tough life, but a good one if you are an over the road driver with very good pay as a company driver (yes it can be stressful and companies can put a lot of pressure on drivers). Tim would be an excellent resource here. I have worked as a weldor, auto mechanic and even repaired appliances, no one wants to pay repair or manufacturing technicians a living wage.
Companies could "partner" with education and solve many problems. Reduce gov't spending, for pennies invested. There would be no student loans on this, a competent workforce as not everyone is made for college. It's the same principal here as it is the mkt. dropping whining for more QE money, while the banks/brokerages gamble with their money like the JPM article of distorting mkts.
Think about the schools where a teacher took a group of students and made a simple iPad app and it's a hit, It would fund the entire vocational budget. Why doesn't every voc. school teach software writing on a simple level of writing these apps? I tell you, it will work.
Bernanke knew this a week ago when he met with bankers. Then they leaked it and thus the big hedge in ZROZ. See marketwatch.com they have a good story on it. But of course the SEC won't do anything about it.
It may be a good time to watch TLT & the USD, maybe even the Euro/USD. I am not taking any more positions until all this works itself out. Short of intervention this could trigger the correction we have been looking for. I am not totally negative, but I just don't see much Reward vs. Risk.
Last, but a point to ponder, When was the last QE initiated? Whenever it was is sorta irrelevant to what I am noticing. Whenever the QE funds work their way through the system, which seems to be faster with each one as banks have learned to play it much faster than at first.....we go down, all the recovery numbers are tepid at best without these funds. I think Wall St. & the big banks are partly responsible for this which is why I harp on the the JPM distorting the mkt. article. Banks are still not investing in the economy, they are back to gambling with trading in whatever vehicle they can sway with their massive amount of cash (capital).
Regional banks are investing properly and their earnings & numbers are showing it.
I just wonder as these QE funds work their way thru the system faster and faster (it used to take about 9 months to show up) now it is almost immediately and the same immediate slow down when they are gone or begin to dry up. IMO, the EZ slowdown is/has been affecting us more than people realize. In Bernanke's meeting last week with the bankers, he was pushing them to assist more with the EZ crisis....To me this is the same subtle hint that things are worse than the numbers show in the EZ, just like he mentioned QE-3 last week when everything looked rosy and then the jobs numbers sucked (which he knew in advance)....IMO, these are indicators are no longer & not necessarily long term problems but that they have moved near term now.
Without some quick action, things have the potential to get real nasty globally fairly quickly.
Quick inaction over the last 40 years would've been better, and also going forward would be the better path.
Just get out of the way and get their fingers out of all the pies.
MHO,
HardToLove
When that does happen, there will be pain, much pain, and it will be global.
I like choice # 2. Either way, those less able to stand the "pain" are those that are most affected. With # 2 they at least have a chance to recover faster.
HardToLove
(silly picture to make my silly point) http://bit.ly/HmuOnF
For those who have never seen it (most probably have by now),
EconStories: Fight Of The Century, Keynes vs. Hayek, Round 2 (10 minute video) http://bit.ly/GQILdd
Loved it.
HardToLove
Well, I guess that means the price of our debt is now going "To the moon Alice!", just like it did when S&P downgraded us.
I assume it's because the Fed will step up their purchases even further (being the largest holder of U.S. debt now, what's a ffew more trillion between banking buddies?).
<snark>
I'm sure glad we know he's not monetizing our debt.
</snark>
I guess that'll help money flow out of the equities markets short-term, unless the Fed has purchased a super-computer that can now "print" even faster to get it to the PD trading desks even faster.
HardToLove
World's top gold market is roiled by a nationwide jeweler's strike (and threats to cut gold imports by 1/3) due to doubling of import duties on gold to 4%, plus .3% tax on unbranded jewelry, and a further tax on all sales over $3900...
This disrupted gold imports estimated at over 655 tonnes for 2012.
This has been bubbling in the background for a while, but I suspect we first saw it firmly established in the spot gold pricing last week.
If the government rescinds the new taxes...
Gold could recapture recent highs.
"China March CPI rises a more-than-expected 3.6%" from Marketwatch.
http://bit.ly/IjBi6B
So what does China do - fight the inflation of stimulate?
I expect the markets will be thinking of this in the A.M.
For the moment, the futures suggest an open of ~1379 for the S & P 500, down about the same as my last post, ~$19.
We'll have a clearer picture in the A.M.
HardToLove
"My recommendation is that investors build their own portfolio of energy stocks rather than trust someone else to do it for them. Otherwise, I think you might get burned."
http://seekingalpha.co...
My Thoughts On Market Vectors Vietnam ETF
http://bit.ly/IiLawf
She does a fantastic job breaking down the issues of investing in a single country ETF.
Nokia's 900 smartphone was a big deal for both NOK & MSFT, they blew it by launching it on Easter weekend, and guess what....the ATT stores were CLOSED!! Strong online & Amazon sales were reported. No way Apple would have done this. Unbelievable.
source article is on the NY Times.
http://tinyurl.com/czd...
9:46 AM No need to wait until May, writes Doug Kass, sell stocks now. The economy is slowing and the likely return to power of Obama and a Republican Congress (at least the House) means gridlock in D.C. Remember, the default scenario for 2013 is a large fiscal contraction (also pointed out by Alan Blinder). Comment!
"IRS gets $500 million to implement Obama’s health law"
http://bit.ly/HXm193
He doesn't care about the Supremes ruling and has no fear that he might be quashed.
HardToLove
http://bit.ly/IrkeqK
HardToLove
If it breaks through $19.07, should be free to run to around $21-$22 range.
HardToLove
"Expect short, choppy correction: BlackRock’s Doll"
http://bit.ly/HsJYrf
What I *think* it implies is that we have a repeat not only of the top followed by a correction that's small (I suggested 4%-7% in a past comment), but that we'll get the real move downward with a lot of choppiness, just as we saw last summer.
But my level of knowledge is a lot less than Doll's. Mine is coming just purely from the similarities to last year's chart and the expectation that "sell in May and go away" will have effect.
If that's true, volume drops either further, meaning prices are more easily moved and that volatility is what the Quants and HFT computers need to scrape their fractional-penny (and larger) profits.
MHO,
HardToLove
OHIO opens Medicaid mkt.:
http://bit.ly/IaM3Jm
(Please note the use of an 8. This message was not affiliated with any movement.)
http://seekingalpha.co...
disclaimer: I am long MSFT.
2:35 PM Ally Financial decides to exit the mortgage-related broker dealer business and will be winding down its operation over coming weeks, reports HousingWire. Presumably the company will continue being a major player in the subprime auto lending area. Comment! [Financials, U.S. Economy]
IOW, is Ben now defending is low-yield targets (and using the (un)employment numbers as cover?) or is this really folks heading for the bunkers.
Volume is high (9.39M), already near the 25-day average (9.816M) and averaging about 55K/hour.
Since the SPX has absolutely crawled upward all day long, albeit on low volume (using SPY as the proxy), it's hard to make any guess with any confidence.
In any case, I'm still holding of any serious consideration of using (TMV) to short bonds at this time as there's still too many moving parts and I *do* feel that Ben is pulling the levers behind the curtain defending his low-yield targets and muttering "The hell with the savers and fixed-income dependent folks - I've got more important things to worry about".
MHO,
HardToLove
I still bet you this dip is bought before the end of the week. Hedgies need one more month of good numbers. Then they will whip saw this thing around this summer up & down with no rhyme or reason. But, I do not look for as big a drop this summer as we had last. Remember QE-3 by June.
http://bit.ly/Is9YyD
http://bit.ly/Isa0X2
"the American Institute for Economic Research is cautioning that "everyday prices" for such things as food, fuel and prescription drugs are skyrocketing.
"The think tank estimates that consumer inflation, as measured by its Everyday Price Index, will continue to outstrip the government's reading in March, in keeping with the trend so far this year. The EPI jumped 1.3% in January and 1.1% in February, compared with the official CPI number of 0.4% in both months, unadjusted for seasonal factors."
...
"But the CPI "isn't designed to reflect the experience of the guy on the street; it's designed for monetary policy," says Polina Vlasenko, an AIER research fellow who helped create the index. By the EPI's measure, Americans saw everyday costs jump 8% last year, compared with the 3.1% clocked by the CPI. Worse, AIER thinks, inflation could hit 15% by late 2013."
http://bpp.mit.edu/usa
And you don't have to wait for a "Think Tank" to connect with reality someday a few years too late either.
MHO,
HardToLove
In his world, we haven't had annual inflation that was less than 5% since Greenspan took the helm in 1987. Makes sense with my supermarket experience.
So, although that makes his stuff very useful for those who care a lot about *reality*, it's irrelevant in a world where reality no longer matters except as "perception is reality".
If his stuff actually had an effect on any policies or more honest dissemination of valid data to the populace, he would be *very* relevant.
I'm not dissing him, I'm just saying unfortunately he's pi$$ing into the wind.
But then, so are the folks in the link I provided. Anybody connecting with reality is doing the same, including me.
MHO,
HardToLove
When they changed the inflation formula to the way it is now, especially excluding food & energy, the working man was screwed along with anyone on soc. security. Wages and income have increased less than 2% / yr. for several years now. That is the main problem with the economy since 2000. Workers incomes have not kept up with costs. Therefore requiring credit to live and pay bills, It's all planned. First it was to screw the union workers, then the middle class, now we've destroyed them so get the savers, investors and conservatives next. We been that last phase for 3 years now.
I had my eye on several stocks today, but glad I decided against buying anything since that was a very weak close on a rather weak day. Here's some good perspective from Michael Gayed on why the market action now "Looks and Smells Like a Correction." He includes some good sector performance charts and concludes that playing defense short term may be in order: http://bit.ly/Ik2OQl
(Background: When my wife did her student teaching for her master's last semester, she asked our guide from our Egypt trip in January 2010 if he could discuss the Arab Spring via Skype with her class on current events. He had participated in Tahrir Square and discussed events with the class for 80 minutes. Now, four months later, my wife did a follow up Skype conversation with him today (also 80 minutes). My wife is not student teaching this semester as she finishes her master's, but thought the follow-up was important for her students and our friend in Egypt.)
Our friend in Egypt seems to be disappointed, but hopeful.
Power seems to be parsed out among the military, religious groups and remnants of the old regime.
Three presidential front runners: Omar Sulaiman, Khairat El-Shater, and Abdel Aboul Fotouh. Our friend will, among those three, support the third of them though it would not be his first choice if there were other realistic choices.
The new constitution may be written after the elections which will mean it will be written by a narrow group of elected people and may not be broadly representative. He is hoping the new constitution will limit the powers of the president.
He believes Mubarak's trial may be postponed repeatedly until Mubarak passes away.
44% voted in the most recent round of elections, which he thinks is good considering 1/3 of the people are not literate.
The economy is continuing to get worse at this time. (Tourism is bad/ Mineral resources are not being utilized/explored/mined.) There is a problem with arms from Libya being smuggled through Egypt. He has economic aspirations: getting tourism going again, improving agriculture (area around Alexandria, some of which needs to be cleared of land mines), improving gold mining, deepening and widening Suez Canal.
He is concerned by some aspects of the religious groups but notes major differences between various social religious groups and political religious groups (all together being about 70% of the gov't now; but not a singular group by any stretch of the imagination).
He believes the strength of religious groups comes from before being a repressed group that people associate with social issues. He thinks there may be the beginnings of the general populace losing trust in the religious groups, but its early in that process. Time will tell.
It seems the intellectuals and middle-class cannot manage to get their preferred candidates into office in democratic elections; under the current situation quite a few candidates (including the one our friend wanted to vote for) have chosen not to run for president.
He believes if things go too far in a bad direction (politically) the people are still willing to go into the streets again.
He seemed to have some concern that his conversation was being listened to, but then decided to speak freely anyway.
He also notes that, of course, this could all change next week. He also believes Egypt may not become better for himself, but plans to lay the foundations to make it better for his kids.
Thanks Jon!
HardToLove
6:15 PM High gas prices may not tank the economy after all, James Hamilton asserts: "Evidence suggests that an oil price increase that just reverses a previous oil price decrease - and that is basically what we've experienced so far in 2012 - is not nearly as disruptive as if the price were rocketing into uncharted territory." The U.S. economy continues to grow, albeit at a disappointing rate, he says. Comment! [U.S. Economy, Energy]
And consumers are already demonstrating that the reality check IS being heard loud and clear. Just look at the surge in new car sales, primarily linked to the sale of new lines of internal combustion engine cars and trucks with excellent gas mileage.
In defense, the US has had to lower the dollar to compete with China & 3rd world countries to keep exports competitive for CAT, DE, autos, Etc.
I don't know how this plays out, but it isn't going to be good for these guys. Large corp's mentioned or the countries affected. CAT down 15% roughly from it's highs. DE off badly now too and forming a triple top. Too many others to list....Just wondering if they aren't trying to manipulate a "sector correction" to soften the collapse?
But it had to stop when the Chinese finished "paving over" their country with unneeded building infrastructure. I believe that is happening now. Gold might still be big for Aus, but the iron ore, copper and other metals will decrease in price with the reduced demand.
That will end the commodity bubble and related jobs China provided. The Aus banks are very heavily loaded with housing loans, as opposed to business loans. Those houses are about to become much cheaper when the miners and so forth lose their jobs and need to relocate. There will be lots of pain soon.
The only way I have thought of to play the bust is short the Aus banks, but that makes me very nervous. What if my timing is off; by 1 or 2 years? I'm a buy and hold guy at heart, I guess :-)
I'm not sure about that. A friend of mine who was home in China visiting his family there at the end of March says that growth is still robust in Tier 2, 3 and lower tier cities in China; and that housing prices have only bubbled really in Tier 1 cities. His family is in the Southeastern part of the country (a few hundred kms from the coast).
That said, on the ground data from a country so vast and populous is difficult to compile and assess still as it is still so transitional and the institutions to put together the data in a standardized way aren't there yet (I think... might be wrong... just talking from the seat of my pants).
That'll be a big help.
HardToLove
Now, it COULD be that China's leadership is smarter than ours (frankly, I would be shocked if it were otherwise) and they will succeed in engineering their goal of a soft landing, vs our own odd "grand experiment" which was tantamount to adding various anvils and pianos to the payload...
I am seeing clear signals that China is still working feverishly to build the big Acme cushion they need, and its still very much up in the air whether or not they can pull it off.
I felt at the time that just average leadership in 2008 would have seen us skim into and out of a brief, moderate recession. If the Chinese do better, we could well see a very different scenario in front of us for the rest of 2012 (at least as far as their important role in the world economy is concerned).
I tend to agree that the brief heyday of Chinese demand driving commodity prices skyhigh was a horrible miscalculation, mistaking a brief phenomenon for a permanent condition... But I also think that the thesis seeing the creation of gigantic new middleclasses in the BRIC nations still holds (just not so high a threshold, nor so fast moving as was once assumed).
Finally, I am seeing the clear evidence that even the most committed zero-sum leaders in the EU, the US, Australia, Canada and, yes, Brazil, are slowly figuring out that the tiny box they are wearing on their heads is NOT the sum total of the universe, and they need to contemplate the role that organic GROWTH can take in achieving and maintaining a healthy economy. The zero growth goals which underpin much of the thinking in these capitals is being swept away by that most cruel of masters, reality. How this will play out against the sovereign debt disaster in Europe - the various mis-built bubble classes in the commodity producing nations - or the deficit-addicted Americans remains to be seen.
I feel we will witness much political reversal as an early wave prior to the tsunami. Ironically, it may prove that the United Kingdom, who went from a Labor to a Tory government quietly and quickly last year, is the first such shift we can expect. Spain and Italy are following that path, and I expect Germany and France will as well.
Setting new governments in place will be all the rage.
Then we will see how many of them really "get it".
http://bit.ly/HCUWIY
HardToLove
http://bit.ly/HwDp3T
Numbers are similar to what those guys discuss - I suspect they also follow him closely.
HrdToLove
"Of all of this week's victories in science, this one has got to be the strangest: Researchers at the University of British Columbia have discovered a plant-based replacement for ambergris, an expensive perfume ingredient made from aged and weathered whale vomit.*"
http://bit.ly/HxcTIb
http://bit.ly/HDVZsQ
Another article on Bloomberg.com about the JPM $100 billion derivatives trade moving mkts. going to cause regulator scrutiny. This one probably won't go anywhere because there are regulators at JPM that are aware of what they are doing.....the question is: In a crash will the CDS pay off and cover the risk?
My guess in no....therefore the scrutiny. I expect JPM is trying to cover some risky bets still left on their balance sheet or risks that had to be brought back on balance sheets.
PreMarket up in USA....Doesn't look so good for commodities long term.
Dip buying beginning, and probably the roller coaster ride up & down. Oil down again is helping.
They say buy when there is blood in the streets....I have been thinking about purchasing a basket of solar stocks like, STP, YGE, FSLR, SPWR, WFR, TSL...beginning with small starter positions and building on dips. Could be a moderate-long term double.
I know this is a very contrarian view, but feedback welcome.
Article on SA about solar stocks.
http://seekingalpha.co...
When the funding support for the sector gets pulled completely, and virtually the entire $10billion in DOE grants/loans gets writen off, THEN the blood will be hip deep.
The problem at that point will be locating a survivor more than an investment.
I class this with the ongoing Chinese move to become the monopoly exporter of certain tech to the planet. Just as with the rare earth (antimony, etc, etc, etc) stories, this is not yet quite accomplished, but well-advanced and moving in their direction.
Since I do not invest in pure Chinese plays (LOL, most of the big ones are government owned and operated, or sheltered in "Chinese investors only" categories), I will not be in this game until we see signs of Western leaders "getting it". This has not happened yet, so that too will require a different sort of blood tsunami before opportunities turn up, if any.
There's a reason they asked TB to play the lead on
CSI: Wall Street
[script from the ad campaign]
19 year old model playing the role of a medical examiner: "It looks like this company died at the hands of bad management."
TB: "It wasn't bad management. Look there, beneath the neck line. The life blood was sucked out of it by government policies."
CSI: Wall Street
HardToLove
Pollen count here in Atlanta is somewhere close to 5 digits...
When my nose is running like a faucet, its easy to imagine horror stories.
Even so, I would suggest waiting until the weekly reports of altenergy failures tail off.
One of the leading venture capital promoters of the alt energy green revolution in America just committed suicide, though...
Hmmm. I still think we need to wait a little longer.
But the "turtle neck" is a definite plus!
It would be easy for me to read this as a big caveat emptor.
Voldemort has his Death Eaters camping out on The Bernank's desk like urban outdoorsmen at a free hotdog promotion...
June is the end of The Twist, and we WILL be getting news soon. What I expect:
More of a PROMISE not to raise interest rates for the next 2 years (instead of a "hint")...
New version of Twist, I suspect it will be called "Twist Light" (or maybe some new dance altogether, maybe "The Watusi"?) featuring the same methodology, slightly different focus...
Alteration of the rules for the 2Bigs, perhaps the Fed will stop paying interest on Reserve deposits?
He's getting what he wants: lower long-term interst rates (the purpose of "Op Twist") to reduce debt-service cost for the government and reduce mortgage rates.
And he let the EZ do the heavy lifting.
HardToLove
They should wait until either volume goes into the crapper, rather than rising, or we get near $1320 on SPX.
MHO,
HardToLove
http://bit.ly/IBsVBU
Of course that is nothing that another $2 trillion in US debt won't cover along with a free holiday to move a few billion back.
Fannie/Freddie on loan principal writedowns:
http://bit.ly/HEJ3D8
OK, we now resume our regularly scheduled Chat.
Intra-day high was $21.06, so the re-trace into the EOD was much smaller than recently seen.
$22 might offer some resistance, if the markets start to settle down a bit.
I'm not betting on it (literally - no interest in betting on volatility indicated by third-order derivatives).
HardToLove
Several of the stocks I am tracking are entering my buy target zone, and I expect more over the rest of this week.
I am tentatively cracking open my shell and contemplating some new positions, assuming this projection plays out, though I may also rotate between sectors if we see a general correction in Gold near $1500, or silver around $28. Oil is also likely to ease back, particularly should we see a coordinated sale from strategic stockpiles as we did last year, and could drop back to $90, at which point I may be looking to become a buyer once again in the oil patch.
I consider GOLDF, GWMGF, IAALF, and perhaps LYSDY as current Buys, and AMJ, EEP, GDLNF, LYSCF, QREDF, and SNDXF as worthy to watch (with all the notes above weighing in the balance).
http://bit.ly/pNLttE
7:22 AM Contrarians take note - surging Treasury prices have taken out the stop-loss for Goldman's bond short trade and the firm is recommending clients cover and take a big loss. Goldman remains bearish on Treasurys, but takes note of Europe - "an important headwind to our directional stance." 1 Comment [U.S. Economy]
Astute follower and SA contributor Clemens Scholl stock talk this morning:
"has Areva finally hit bottom today? ARVCF.PK up 9% in Paris after losing half its value in a matter of weeks..."
Can pull up a 5 year chart of ARVCF.PK on Yahoo Finance
Interesting.
Let me guess, TONNES of complaints about Apple articles...
Ray Dalio at Bridgewater, An In-Depth Look At Deleveragings
[Excerpt on U.S. deleveraging 2008 to present]
"Like the US deleveraging in the 1930s, the lead-up consisted of a debt driven boom, and the deleveraging has transpired in two stages: a contraction in incomes followed by reflation and growth. However, because of a swift policy response from the Fed, which was prompt in guaranteeing debt and aggressively printing money, the contractionary period only lasted six months (versus over three years in the 1930s), and since then there has been reflation and debt reduction through a mix of rising nominal incomes, default and debt repayment.
"As shown in the charts below, unlike both the US in the 1930s and Japan since 1990, the US has quickly entered a reflation and ended the “ugly deflationary deleveraging” phase of the process (which lasted from September 2008, when Lehman fell, to March 2009, when the Fed instituted its aggressive program of quantitative easing to monetize the debts). During the “ugly” phase, incomes fell, debt burdens rose from about 340% GDP to 370% and stocks lost almost half their value. Because so much debt around the world is dollar denominated, the contraction in global credit and dollar liquidity created a squeeze for dollars, and the dollar strengthened 14.8% against a trade-weighted basket. Exports collapsed faster than domestic demand. Following the reflation that began in March 2009, incomes recovered, debt burdens fell below their initial starting level to around 335% and stocks recovered all of their losses. At this time, the credit markets are
largely healed and private sector credit growth is improving. Thus far, this deleveraging would win our award of the most beautiful deleveraging on record. The key going forward will be for policy makers to maintain balance so that the debt/income ratio keeps declining in an orderly way."
Full report: http://bit.ly/Ih4Iiu
Hat tip to Alex Jantsch http://bit.ly/H23ar3 for the link
My response to you in the comments of my the article was an attempt at being balanced...
Here, in a more relaxed forum... let me just respond frankly:
Beats the ***t out of me!!!
I think its an elegant faith-based belief that we're recovering because we always recover shrouded in a (quite honestly) deep study of prior deleveragings to show erudite justification for irrational bullish beliefs.
In other words... he put academic horsefeathers on a flawed argument... or lipstick on a pig... or gold lame panties on an alligator... or whatever you like.
Of course, maybe he'll be right... and it was lot of other interesting studies (30 pages worth)... thus I post.
(hat tip to Tom Robbins on the alligator reference)
Anyway, the ones that "know" suggest this means the re-trace is still in play and have targets of $1,340 and $1,320 and others, depending on who's mouth is moving.
However, the gain today was on volume slightly above the 25-day average I track and the miss of $1,370 was apparently just some late-day profit taking.
Since (TLT) was down, I suspect this was just a little rotation out of bonds and into equities as folks ran around hollering "Buy the dip! Buy the dip!".
A couple days of potential consolidation with an upside bias (I *suspect*) might follow. Next week is "options expiration" where I expect us to both rise and become a little more volatile.
After that week is when the serious move down should start *if* it tracks as it has the last couple years. That *is* a big "if".
I think we'll see around $1,390-$1,400 again before any serious move starts.
Caveats: Spain and Italy stuff might intervene. You know what that means!
MHO, still learning and still predominately SWAGGING,
HardToLove
http://seekingalpha.co...
"don't confuse graphite and graphene. They are both essentially hexagonal pure carbon, but have little else in common.
"Graphite is natural; it is a mined mineral. It is found in various grades of purity and alignments of massive hexagonal crystal. http://bit.ly/HCIYlU. It costs in the hundreds of dollars per ton.
"Graphene is a man-made nano-structure allotrope of carbon. Hexagonal sheets exactly one atom thick. Its nano structure gives it some remarkable properties, and is very expensive. In 2008 it was considered the most expensive substance on earth, costing $100,000,000 per cm3, according to Wikipedia http://bit.ly/Huo3wm. The price has dropped a lot since then. Almost anything involving nano-materials is extraordinarily expensive and is highly unlikely to be part of commercial products until manufacturing cost drops many orders of magnitude.
"As an aside, diamond is a bargain compared to graphene. Diamond, another allotrope of carbon, is cubic, not hexagonal, and also has some incredible industrial uses beyond abrasives. One of diamond's unique properties is that it is a semiconductor, yet has extremely high thermal conductivity. This could permit a diamond microprocessor to run at exceptional speeds and not overheat."