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QuickChat #231, April 30, 2012 225 comments
Back from the battles, battered but unbowed...
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This post has 225 comments:
Frontier & Emerging Markets, ETFs, ETNs, & Closed End Funds (an incomplete listing):
http://bit.ly/IQhC8q
Long PEY:CA and TLM. TLM reports earnings tomorrow before market open and may present dip opportunity.
Also interesting development among 11 producers in a new consortium. Is this the beginning of GAS-PEC?? http://bloom.bg/JCDnsf
Jon: the lesson I (and I suspect many others) keep learning is that profits accrue by buying when no one else wants to AND selling when everyone wants to hold on -- as hard as that may be.
I am always inspired by the words of Baron Rothchild: "To make money in the market, I never buy at the bottom and I always sell too soon."
Very hard to do consistently!
When I do my best I am buying when the crowd is fleeing the theatre, and blood is running down the aisles.
For a long time I would often hold such buys until another "event" threatened, but not anymore. I find my planning horizon growing shorter and less certain every month...
What was a 5 year plan is now 3 - what was 3 is less than 2 - and what was 1 is best described as "short term, cyclic".
QREDF is a perfect example, with me selling "too soon" at .18 today what I bought only a short while ago at .14 - .15. I have another bloc purchased at .16 which I am holding for a sale at .20+, if it gets there... And I am retaining 10-20% of each trading cycle's shares to attempt to accumulate toward my 3 year plan.
Before my painful education in the preferred activities of HFT quantmonkies and their flashcrashing ways, I hoped to time major trading cycles in terms of quarters rather than weeks or even days.
Answer:
Greetings king707,
This is an interesting question.
Mongolia is my #1 investment in Frontier and Emerging Markets. However, I can diversify my Mongolia-related holdings and have done so to some extent.
Axion Power is my #1 invesment in Micro-Caps and Small-Caps. I do not diversify that holding and do not own other battery-related companies.
Thus, on the one hand, I have more exposure to Mongolia. On the other hand, my exposure to Axion Power is pretty chunky.
If I'm wrong on both, it will hurt significantly. If I'm right on either Mongolia or Axion Power, it will probably add 50% or more to my total holdings (looking out 5 to 7 years, not tomorrow).
The last time I answered a question directly on what my highest conviction holding was, the company promptly went down more than 60% and then I exited. Thus, I'll disclose what I'm doing, but I'll state nothing with conviction. I hope you can understand my mildly superstitious nature and response..
#theyneverlearn
#theiregotistical
stupiditywilldestroyusall
http://bloom.bg/ID5tWU
I believe that's game over Sarkozy.
Same thing is coming for Germany next year.
Meanwhile, we will be zigging while they are zagging...
Could be fireworks when the new left EU leaders troop up to their friendly neighborhood Fed window for another emergency shipment of dollars to bailout (fill in the blank) and find it "closed".
Wait for the vote.
Sigh. I'm wrong again.
Hollande wins France.
http://bbc.in/KdlaD0
Merkel stands alone, I think.
Sarko is the 2nd coming of Napoleon. He'll be back after the post-euro collapse. I don't like him, but I respect what he is.
Precious metals going down today is comical.
Sold AGQ to reload into UGL in a few days.
Given the money stashed in self directed IRAs and artificially low interest rates, is it any wonder that stressed savers and retirees trying to live on interest income would be buying into the equities market? Rising dividends and cap gains look very good to those earning negative (or near negative) returns on "safe" investments like US Treasury or corporate paper.
But if the world economic climate ( EZ ) deteriorates more, which I think it will, earnings will fall and dividends and cap gains will follow. Worldwide interest rates will rise. What happens to the P/E when the E starts dropping? When MM funds go to other markets for higher interest paper? Will cautious, especially new, equity investors hold firm and watch their asset value slide?
I have a bad feeling about this market. An artificial, Fed feel.
I completely agree with you, although I never underestimate the ability of the powers that be to keep up appearances at least until the US national elections (albeit with a few dips in between.) The question IMO will be whether those retail investors will have the discipline to take gains off the table as we enter the uncertainties of 2013.
The Boyz are good at extracting money from new investors. I remember well :-(
HardToLove
mj
At this point, I don't expect to leave gains on the table much past 1-2 more days, but will watch carefully lots of data coming out of China this week e.g. retail sales, CPI, and industrial production. All Asia in the red tonight and the market mostly ignored good data out of Australia. USD going up and Dow futures now down 140 points -- but that's better than the 169 in the red it was earlier. We'll need to tighten our seat belts on Monday, but I expect that another euphoric day is not too far away. Politicians and Central Bank interventions always find a way to lift market spirits short-term.
I am watching China as well. I am expecting more easing for their banks and some loosening of domestic stimulus programs... Though this will occur very gradually.
As for the central bankers, I am looking for news of new QE out of Europe.
mj
I would tend to be a buyer at the bottom of the down spike, or somewhere along the slopes if the speed of the drop plateaus.
Right now I am out of the pm miners and paper pm, with just my long term holdings in Sandstorm (streamer).
SA's ETF editors directed me to this site http://bit.ly/KoYZWW after I shared with my list of Frontier and Emerging Markets ETFs as a way to keep up.
The one thing I noticed at the site listing new ETFs is that the pace of new ETF issuance is ridiculous.
Just any thoughts you might have on the subject.
I admit I haven't gotten much beyond "what's up with this?".
Derivatives generally make me nervous, but they can be very useful for betting against some trend while avoiding shorting individual stocks or buying PUT options.
Too many of the ETs are lazy and people don't consider the fees they pay on ETFs & ETNs in the same way they were aware of them with mutual funds.
Most of them are best as trading vehicles, and often its best to short them (e.g. short a short ETF to go long, and short a long ETF to go short) then actually use them directly to capitalize on their tracking errors (not something I do, but it makes sense to me).
The argument for ETs vs. mutual funds is "liquidity" and that you can exit at any time during the market day. (And we wonder why markets are messed up when you can now day-trade Emerging Markets Utilities (UGEM) or Asia Local Debt (http://bit.ly/IEx9ed) ? ) What the ET industry has really done is built more churning into average investors portfolios which is good for discount brokerage and full-service brokers alike. Its also taken away thinking ahead. Mutual funds that have early withdrawal penalties and can only be sold at the closing price makes an investor think and analyze differently, and more.
The problem isn't the ETs, its who is getting ETs. Do they even know what they have? They fabricate index names that they track which are meaningless to an investor looking at the website. "Oh look honey, this SuckerPunch ETF is awesome, it tracks the Humperdinck Las Vegas Pacifier Everyone Wins Index, its up 20% year over year. Pretty good, huh?"
Will one ET fund family one day go belly up and scare the heck out of every ET holder in the world and cause a global panic?
I don't know.
I just know this is ridiculous and people are investing in a lot of stuff when:
- they have no idea what they really own
- they have no idea what is really in the index
- they have no idea they are paying management fees
- they could make a portfolio that is perfectly well diversified directly trading companies
Of course... I still use ETFs and think they have their place... but scroll through my incomplete list on Frontier & Emerging Markets and tell me why we need all of them (including 4 for Russia, 5 for Korea, 23 for some generic version of long emerging markets, and about 33 for all things China): http://bit.ly/IQhC8q
*pause to rant; must do other things*
However, closed-end funds and mutual funds did the job before. Its unfortunate that in the scheme of things mutual funds and ETs have succeeded while closed-ends have not. You can see both NAV and market sentiment (premium/discount) with closed end funds.
Of course, I have issues with closed-ends too. I had a Southern Africa fund for years that was trouble, but a little outlet of diversification. They folded the fund right before the markets it was invested in took off. Hard to invest in the dark before the dawn when a fund folds up its tents at the end of the night.
This becomes a chicken & the egg question. Do stocks that appear in a lot of ETFs top 10 holdings list have a high P/E and P/B ratio because the ETFs invest in them or because they're "good stocks"? Do stocks that appear in few or no ETFs top 10 holdings lists have lower P/E/ and P/B ratios because the ETFs don't invest them or because they're "bad stocks"?
Welcome to "Overthink Time With Jon." Today on Overthink Time, we're talking about ETFs.
*tip of the hat to OG on this comment*
No wonder I see you on here all hours of the day and night. With such conundrums it must be hard to sleep. ;-)
If it is an index ETF, I seriously doubt they ever beat the index it tracks after fees, taxes & expenses.
Also, for the time being, I wouldn't be shorting treasuries. I recently ran across a short doc I wrote to someone where Treasuries and SPX moved together during some periods and inversely during other periods.
With the ROW printing now as fast as the FED and the uncertainty in the EZ coming to the fore again, might be a good time to enter wait mode on these, where I've been for a while now. I got in briefly too early once earlier and realized my mistake.
MHO,
HardToLove
http://bit.ly/IyYHlZ
10:31 AM Germany denies a secret deal has been cooked up between Merkel and France's putative next president for a €200B stimulus program. Separately, a spokesman declines to comment on remarks by Eurogroup chief Juncker that he's stepping down because he's fed up with Franco-German interference in management of the debt crisis. [Global & FX] 1 Comment
Look for an abrupt halt to the not-so-quiet Franco-German alliance when the French Left resumes control of that country.
(May 2, 2012) Special Report: Inside Chesapeake, CEO ran $200 million hedge fund. From: Reuters, by Joshua Schneyer, Jeanine Prezioso and David Sheppard
Behind the scenes, a Reuters investigation has found, McClendon, the ex chairman and current CEO of Chesapeake ran a lucrative business on the side: a $200 million hedge fund that traded in the same commodities Chesapeake produces.
The fund, Heritage Management Company LLC, was started by McClendon and Chesapeake co-founder Tom Ward. The hedge fund listed Chesapeake's headquarters in Oklahoma City as its mailing address, documents show. Heritage's staff included an accountant who was simultaneously employed by Chesapeake. The fund also earned McClendon and Ward management fees and a cut of profits from outside investors.
There is no evidence that McClendon or Ward used inside knowledge gleaned from Chesapeake in their hedge fund trading [LOL!]. Neither the company nor McClendon would comment, and Ward said he saw nothing wrong with the arrangement.
But experts on energy trading, corporate governance and commodity-market regulation said they were stunned by the latest revelation.
"An executive's first responsibility is to shareholders and the betterment of their investment," said Carl Holland, who ran the trading-compliance department at former U.S. oil major Texaco. "Personal trading in the commodity around which the CEO's business is based would be a clear no. We would never have tolerated that, ever." Personal dealing in energy markets is typically forbidden by oil and gas companies for a variety of reasons.
McClendon would have been aware of major decisions that could affect natural gas prices before that information became public. Accounting for 5 percent of U.S. natural gas production, Chesapeake holds tremendous sway over markets. On January 23, the company announced sharp output curbs in response to low prices. In response, U.S. natural gas futures surged by 8 percent the same day.
"If the company needs to make an operating decision which might move the market against the CEO's positions, there's a risk that will influence the decision-making at the top of the company," said Jeff Harris, former chief economist at the market's U.S. regulator, the Commodity Futures Trading Commission.
Another potential problem is known as "front-running." That's when a trader buys or sells a commodity in advance of a client's or his company's orders. In theory, McClendon's first-hand knowledge of Chesapeake's own plans to trade would enable him to profit by trading ahead of Chesapeake - a move that could raise costs for the company.
"Advance knowledge of Chesapeake's activities could be perceived as having insight into the movement of commodities prices, which certainly raises conflict-of-interest issues as well as ethical issues about the ability to enrich himself on non-public information," said Tim Rezvan, oil and gas industry analyst at Sterne Agee in New York. http://tinyurl.com/bot...
---
By the way, Tom Ward is the current Chairman of the Board and Chief Executive Officer of SandRidge Energy (SD). Is HE sill involved with the Hedge fund he helped create: Heritage Management Company LLC? If so, then we have two chairmen and CEOs of energy companies with direct conflicts of interest. What else will Reuters uncover as they turn over some more rocks? Or will the reporters be stopped?
The world wonders.
To all traders:
AAPL options are currently unavailable.
http://bloom.bg/KFVdxC
#h8him
Now he's not even one of "da boyz".
But there is a lot of whispering that he is the Bernank's stalking horse...
Problem is, the agenda could be getting worked either way. Is it Deflation Slayer Ben talking through a sock puppet, or good soldier in the globalization effort Benjie?
If this drum thumping continues (note that we had essentially the same message from various Administration sources last week, including the VP), it could well become a self-fulfilling prophecy... Short to medium term.
All I read is how NOT to sell in May & go Away....glad I have sold most trading blocks.
It's really alarming how they're trying to push all the folks that don't have time to learn what's really going on.
I guess it's the only hope the boyz have of bringing some fresh meat and volume back to the market so they can increase their profits through various activities.
Not one word about "return of money" vs. "return on money" concerns.
They just keep pointing out the risk of capital losses with bonds being so over-priced.
IMO, if folks don't have a *very* good and reliable adviser, they should keep their money parked somewhere safe.
When the drums start beating so heavily, it can only mean that somebody's going to get scalped. Just a matter of time.
MHO,
HardToLove
And they are not hard to find.
Regardless which flavor of politics one favors, we would all be wise to look upon this and other investment "advice" as suspect in this, the season of craziness which presages a major election cycle.
59 countries will be tallying up votes - local, state or national."
- http://bit.ly/IHL4hy
colorful easy election calendar
http://bit.ly/KrzAvZ
dour more thorough election calendar
http://bit.ly/IHL4hE
APPL down 10-20% off it's highs
CAT down 15% and may go lower
Financials down 10-15% almost straight across the board
You sorta catch my drift, and they have done it without damaging the indexes. This summer could be a "sector" rotation. Leaving the indexes in place. Last summer it's obvious the hedges loaded up on the leaders and it appears to me they have taken some profits on them in the last 60 days.
Trust me, I do not believe in this enough to be 100% risk on, nor can I chance shorting it either. So I have some cash, and my long term holds are all up 8% + in the last month (KO, KFT, MSFT, etc.) So I am going to ride it out until the EZ is clearer..and out mkt. is clearer. But each week/month puts us closer to a catalyst either way. I expect it to be down for some stocks, but up for some other sectors. Also the EZ & US may very well go for more stimulus too, that would be less bearish IMO.
A perverse "Good news, good news! Fewer people found work! Hooray".
HardToLove
The stage dressing is being hung - the red, white and green bunting cheerfully framing the podium - and da Boyz are tuning up in the orchestra pit...
What we don't know yet is what song they will play.
Will it be a joyous rush to a flashcrash finale, delivering the unwary into the teeth of the hft quantsharks? Or a stirring march, the drumbeat leading the little lemmings to some sweet, but short lived, goodies as the grinning piper dances toward the white columned finish line?
But that assumes a certain level of competence, and just why should we make that assumption? If da Boyz flub their instructions from on high, will we see a QE orgy just in time to perk up incumbent's election chances, or a fumbled attempt that leaves the bondholders fearing a rebirth of high interest rates, while the equity markets plunge toward the trigger for another recession?
http://on.mktw.net/IoN1N9
HardToLove
http://on.mktw.net/KuN5Lm
Doug Kass: The elusive rally continues: Buy stocks/Sell Bonds
http://bit.ly/Kzk8OV
Thanks,
HardToLove
They will take the 2% treasury yield with a minimum amount to maintain some sort of guarantee to stay in business mixed with mostly corp. debt yielding 4-8%. They need income to meet payouts and preservation of capital along the way. I think they are satisfied for the next few years with this say 4-5% return the safe old fashioned way. While the global crisis's run their course.
The latest WalMart debacle is just an example of why they are exiting stocks...Stock picking is just too complicated and risky for them. Along with some powerful CEO's are nearing retirement or like Steve Jobs death, Warren Buffets health (there was an article saying Buffet adds a 10% premium to Berkshire that has to come out at some time)
7:59 AM Crude oil continues its big late-week slide, -1.6% to $100.90/barrel. The price stood at $106.30 less than 72 hours ago. The steep decline coincides with a strong move higher in the greenback. Coincidence? Comment! [Commodities, On the Move, Global & FX]
Microsoft (Nasdaq: MSFT) with a Buy rating and a $38 price target Oracle (Nasdaq: ORCL) with a Buy rating and a $34 price target Red Hat (NYSE: RHT) with a Buy rating and a $70 price target Citrix (Nasdaq: CTXS) with a Buy rating and a $100 price target Tibco (Nasdaq: TIBX) with a Buy rating and a $38 price target Concur Tech. (Nasdaq: CNQR) with a Buy rating and a $67 price target Ariba (Nasdaq: ARBA) with a Buy rating and a $45 price target Ultimate Software (Nasdaq: ULTI) with a Buy rating and a $87 price target Kenexa (Nasdaq: KNXA) with a Hold rating
MICROS (Nasdaq: MCRS) with a Hold rating Teradata (NYSE: TDC) with a Hold ratingCheck out our Ratings Insider portal to get the most comprehensive and up-to-date analyst coverage on the Street.
News Provided by Acquire Media Corporation
http://seekingalpha.co...
So no "austerity", only massive inflation. Don't you feel better already?
At least out foreign exchange balance might improve as we slowly change to "home grown" motor fuels.
I plan to hold onto anything that looks like real property and/or has a revenue stream and pricing power. Industrials that MAKE things, for example. Oil and gas producers and transporters. Companies that can reduce other companies energy or transportation costs, which will only rise with inflation.
Social media stocks are at the bottom of my list. Maybe just my prejudice.
http://bit.ly/IORyrC
I'll be unhappy if he's right, but not surprised.
Still down a total of ~$320, all attempts considered, but this gets me in the right direction ... for a change! :-)
HardToLove
I kept my hedges in place over the weekend. If we get euphoric Monday I may give up some of the gains -- but does anyone really expect good news out of the Gr and Fr elections?
I didn't do much with my shopping list the last couple of days except added SLW yesterday and got back into Peyto Explorations and GBX today.
Hope everyone has a good weekend.
On the TSLA options, doing well so far. The SPXU is just closing out what I started as hedging and added to later. I'm still down a few hundred, all totaled, on the SPXU - remember I've made several swings at that and wiffed it.
My one play on UPRO did well - maybe I should stick to being bullish on "The Market", vs. individual stocks where I seem to do better at both directions (uh, given a long enough time horizon that is!).
My big failing is still being too early. Got to work on that!
I wanted to close out for reasons of both "dry powder" and today was a volume "spike" (197.96M) ending (I believe) a three day volume run up for three consecutive down days. 25-day average yesterday was ~149.2M.
*If* it was a "spike", that often signals a nearing end of the trend as the sellers (or buyers) are likely exhausted and folks looking for opportunity exclaim what an opportunity there is *now*.
Plus, I'm cheating - going back through 12/19/11 start of run, only twice has there been more than three consecutive down days.
Today is day three.
Computer programs are soooo predictable, you know? :-))
You'd think I would've done better on my prior SPXU forays with that in mind, wouldn't you?. :-((
Last thought that drove me - ADD market. They have a whole weekend to forget all about what scared the pee-waddin' out of them today.
I do believe that we do start the choppy trend down throughout the summer now. *if* I've really learned anything, I *might* be able to now play it properly.
xxx <-- fingers crossed as usual!
Have a good weekend and I'll "see" you Monday, if not sooner, you fellow "workaholic"! :-)
HardToLove
EDIT: I forgot - I also left because it hit ~$1,370, a potential support area. Actually, I think I recall I had $1365 as my point. Today got $1,367.38 low - it was "close enough for gummit work"!
http://seekingalpha.co...
Everything down bad except utilities. (SO, AEP) DaBoyz must not like the jobs and EZ election predictions.
The spin on German state elections... Merkel losing power http://bit.ly/JpZGAK
The spin on France, "Au revoir, austerity! New Euro crisis as French vote for return to ruinous spending"
http://bit.ly/J40ujl
You spin me right round, baby
Right round like a record, baby
Right round, round, round
http://bit.ly/JpZGAL (amazing hair)
Everyone here knew that France and Greece would change leaders.
So did DaBoyz... so why the big deal? It's not really news, it was expected....so how do we play it?
The best part to me that is new is that Merkel is losing steam too....I don't like her at all. So I hope she goes next & the Bundesbank banker with her, but I doubt it will happen. Quite frankly, I think she overplayed her hand and will be lucky if the EZ holds together. She popped off again saying the deals were signed and Greece had to honor the austerity....I think they are going to tell her where to go and leave. Followed by others if Merkel tries to enforce these deals.
They had to do "some" austerity, but they overdone it too much too fast. Now the EZ is in recession/depression, less tax receipts, lower GDP, higher unemployment, etc. Germany benefited at first, now they are beginning to show signs of effect too, their unemployment just rose a tad, and orders are down....I think they will pay the price sooner now than later. Without global assistance, I think the EZ is shakier now than I did 6 months ago.
Germany's foreign minister, Guido Westerwelle, congratulated Hollande and called for a jointly drafted growth pact.
http://yhoo.it/IOrd24
Still, all pols lie and then hope the voters forget.
Maybe they should import more oil and nat gas like Germany? That's not my idea of controlling the balance of trade problem. Or maybe they will drill for shale gas? I can hardly wait :-)
No country gets a higher percentage of its energy from nuclear than France (though the U.S. has more reactors). France is a leading exporter of energy in Europe. But it makes sense: curtail a major business to lower tax revenues so you can make a case to raise taxes - LOL.
BUT I suspect they will keep the nukes until all the others can "shoulder the load".
HOWEVER this (like similar comments from Japan and German Greens) will have its effect on the strategic minerals sector, particularly U miners like (DNN).
“The market has positioned itself for euro weakness,” said Neil Dwane. The chief investment officer for Europe at Allianz Global Investors helps manage about 300 billion euros globally. “It’s been surprising to people and frustrating to politicians that the euro isn’t at $1.15 rather than $1.32,” he said in a phone interview on May 2.
House prices jumped 5.5 percent last year, the most since the country’s post-reunification boom of the early 1990s, the Bundesbank said. Public-service workers may get 6.3 percent higher pay by the end of next year, Ver.di labor union said March 31. Loans to non-financial companies rose in March to the highest since September 2009, central bank data show.
http://bloom.bg/JWwlxG
But I would agree, reading that our general economy was growing enough and creating sufficient job pressure in the markets to drive wages up that much WOULD be excellent news. I also agree with the shot at our Federal Income Tax system...
http://bloom.bg/Jb1wF0
Another reason to break up the 2Big's.
The conflict of interest with a 2Big2Fail bank acting as both insurer and mortgage holder in these situations is immense and very troubling.
Similar to when a 2Big is both the broker representing a retail customer, the banker financing the deal, and the middle-man representing a company seeking to raise funds.
I am surprised, no, SHOCKED that any of these fine, uipstanding corporate citizens would elect to overcharge or screw the little guy in these deals...
LOL.
Oddly, the first coalition with ND would be more likely to maintain the current deal than the 2nd (Syriza is VERY critical of the deal worked out by PAZOK while they were in charge).
http://bit.ly/IF1GZq
11:39 AM Most European markets close sharply higher, reversing post-election, knee-jerk dives at the open. Truth is, there was little surprise in the results - maybe the bigger news is Spain's first move towards a bank bailout. Stoxx 50 +1.6%, Germany +0.1%, France +1.6%, Italy +2.3%, Spain +2.8%, U.K. closed. Euro -0.2% at $1.3055. [Global & FX] 1 Comment
In the second 11:39 post above: The US tried to get the EZ to recapitalize banks when we did, they refused. Now gov'ts are going to do it on their own with or without Germany. If Germany tries any more tough measures, Look for mass exits from the EZ..then massive devaluing and printing. It's coming this time unless Germany backs off.
I don't understand Greece gov't. Much less how it works.
http://on.mktw.net/KGbDB3
http://on.mktw.net/Jba0xc
6:45 PM Why there's no recovery in stock trading volume, as has occurred after past recessions and crashes, according to Josh Brown: "They sold us out" - they being HFT "trading robot[s] based in Kansas, far from regulatory scrutiny" and exchanges now used as "exit ramps and liquidity dumps once the real money has been made." But it's darkest before the dawn; Brown says his rant actually sums up the bullish case. [Quick Ideas] 1 Comment
The breakup of the EZ has already begun:
http://seekingalpha.co...
7:46 AM Morgan Stanley (MS) says a credit rating downgrade (currently being considered by Moody's on a number of large U.S. financials) could trigger a margin call of up to $7.2B on derivatives contracts. "CEO James Gorman has met with the ratings firm more often than usual in the past quarter." Indeed. (10-Q) [Financials] Comment!
http://bit.ly/JPYdlm
Note: as with most stocks pps is likely to drop after the "of record date" to reflect value of distribution. Also, this stock is sensitive to oil prices which have recently been declining.
I know that you look at Lynas from time to time...
LYSDY (Lynas ADR) just touched $.99 this morning, and I have added some programmed buys at that point and below. Good news is forthcoming from the Malaysian RE Symposium, and even longtime enemies of Lynas are singing their praises now...
LOL, so of course it is dropping like a rock today.
The ADR is harder hit than the pink listing, in part (I believe) because of the sales recently by institutional investors with rules against holding stocks under $1.
I wonder if we will see the 1310-1320 S&P some of us have been looking for, perhaps by late this week or early next week?
It doesn't stretch the imagination to consider your lower levels on the S&P as possible. I thought Skull&Bones over on StockTalk provided an excellent reminder to all -- i.e. it took the sharpest tools on Wall Street a full 2 weeks after Lehman to climb into the express elevator ride down ... Just food for thought.
I am still averaging 60% cash in my equity allocations after daily short term trades.
Interesting take on Spain vs the other PIIGS. I tend to agree that Spain, in particular, is "different".
by Rich Toscano
http://bit.ly/KDuoeN
http://on.mktw.net/KELuZJ
ISTR that in the latter half of the prior century, CEO pay was around 40 times the ... average of their company? The lowest - can't recall for sure. Anyway, recently that number was around 108 times IIRC.
I wonder just how much that contributed to the "barbelling" of income distribution in our society, decimating the "middle class".
Most of that effect is not due to that, I think, but it's likely contributed to the effect.
HardToLove
http://lat.ms/JeTso7
However you want to crack it up, something is amiss here.
HardToLove
One thing that has occurred is the automation of much of what used to be accomplished by human beings. Many companies have far fewer employees than they did 3 decades ago, but produce far more due to major capital and technology investment.
If any boards used to compute CEO pay based upon some multiple of the average worker in their employ, I'm not aware of it. This is a formula with meaning primarily for class warfare purposes...
Another way to look at the progress of CEO pay would be to look at market cap for a corporation, then and now, and create a ratio in each case. I suspect that this will be more meaningful but less valuable for purposes of beating on the CEO-class.
HOWEVER, I do believe this is a conversation which has deeper meaning for any society once it is couched in terms of the effects of macro conditions (political, regulatory, immigration, eduction, etc) within the society which impact job markets. My experience has been that it is easy to ignore the march of technology, until one day you look around and your factory that 12 years ago was producing 1200 widgets per day selling for $100 each with 1200 employees is now producing 2000 widgets per day selling for $300 each with 200 employees... And this is a real story from an old industrial engineer who helped create that new reality.
Now, deciding what to do with the results as far as the greater society is concerned IS one of the big issues which never seems to get any respect or attention. Perhaps demagoguery about the ratio of CEO to workforce NEEDS to happen to act as the 2x4 upside the noggin of the plodding mule/governing class...
Good news. Plans are in the works to outsource our people to where their jobs went.
http://bit.ly/Jf9FrT
http://bloom.bg/JfdpJO
http://on.mktw.net/ITRaxi
A pattern has emerged that we drag down with the EZ markets and once they close SPX starts running up.
Yesterday saw support demonstrated on the SPX around $1,350, with only a little overshoot. Today looks to open around $1,352/3, ATM based on futures and (SPY) action.
An early (SPXU) play with a rotation to (UPRO) around 11:15 or so, *if* the trend starts to change intra-day as it has recently, might be a profitable move.
But watch the EZ markets - if they change trends strongly early in the day, this scenario falls on its face.
Another uncertainty: the USD index is showing strength, ~$80.20 ATM. At times we've seen an inverse dir4ectional correlation with the SPX and other times they move directionally together. ATM it looks like inverse is the relationship. I've a sneaky hunch this has to do with EZ markets activity - those markets down, dollar up as folks there do some kind of arbitrage?
I really don't know.
HardToLove
I have been watching the EUR/USD fall below 1.30 since last night -- and it is now @1.2944 http://bit.ly/uMwi4n. If I buy anything -- it has to be something I am willing to be "stuck with" for a while and my cash levels remain elevated. Most commodities are in the red -- but nat gas is still up -- LOL.
BTW the site for real time futures data appears to be down this am -- do you have an alternative to: http://bit.ly/nXGqkT ??
Entered (SPXU) pre-market at $10.09. xxx<-fingers crossed! As you know, I've not a great track record with this one.
HardToLove
I think the "sector rotation" is at play big time..even against what gold & commodities bugs have stressed:
1. Gold down and going lower (all PM's)
2. Oil down and going lower..even the Saudi's say oil is too high
3. therefore oil stocks down, APPL down, CAT, CMI, the previous mkt leaders are weak....I predict short of a huge catalyst that APPL trades at the $530 mark soon.
4. Euro down, see the post at the bottom. I really don't know how this plays out across the EZ. This is the "uncertainty" that the mkt. hates.
5. I agree with HTL above that there is a huge arbitrage play going on by US & EZ banks right now forcing the euro lower. Germany is still running a huge surplus and Merkel has overplayed her hand and either Germany backs up or as the recent elections have proved there is going to be a huge un-doing of the past deals on austerity.
In short, the rest of the EZ is just simply NOT going to tolerate it (being Germany profiting while everyone is in a deep depression) much longer.
6. I have no clue how to play it, however I do not think our indexes get crushed, correct maybe further...but look at Bloomberg this morning:
60%+ of CEO's now more positive
Toyota profits up huge and bringing more manufacturing to US & . China
Goldman & the big bond funds saying QE-3 in June
US politics hampering anything...and both sides are losing to extremists is going to create uncertainty going forward.
Shareholders are revolting against CEO's and top mgt. pay packages while shareholder value has declined with stock prices declining...they say this is positive as more emphasis will be put on creating more value that lucrative perks.
Bottom line is I think Da Big Boyz are/have taken profits and will look to new sectors going forward. Bio-tech being one, and beaten down stocks like solar, some clean energy stocks such as nat. gas and bio-fuels...I think it could be a surprise what they rotate into as they are so "out of favor" for now. VRTX is a good example, they knew about the pipeline but held it down for a long time while it was accumulated and then $20 in one day and up $30 total in 3 days-a week.
This would fit with ECRI's recession call for the June time-frame.
Bernanke has stated repeatedly he's ready to provide support and the market is hooked on the heroin now - fundamentals don't matter anymore except as to how it forecasts the next "fix", or lack thereof.
MHO,
HardToLove
I'm leery of playing (UPRO) here.
Hardtolove
"... expect that gross domestic product in the first quarter grew at an annual rate of about 1.9% — matching MarketWatch’s consensus view. In late April, the government estimated that GDP rose at an annual rate of 2.2% in the first quarter".
"... lowered their view after the U.S. Commerce Department reported that wholesale inventories rose 0.3% in March to about $480 billion — about $2 billion less than government analysts had previously believed".
More chit-chat in the article.
Could ECRI be right?
http://bit.ly/J8NZ3g
HardToLove
I should forget that thought before I think on it too long-term ;-)
Its like the difference between an editorial opinion and a factual report. Both may have quality and value, but its best to never confuse them.
http://bloom.bg/KSizLu
Let's hope China doesn't own all of the U.S. when the good times return.
HardToLove
I agree with the conclusion reached by the article I link here. The Rare Earth Sector is a buying opp right now.
"Some creditworthy borrowers having trouble getting mortgages"
OTOH, maybe it's me that's a slow learner.
HardToLove
Note that FSLR is mid-meltdown, down over 30%. WFR has also been hit hard, down over 13%.
Overall the group is down just over 6%, largely because TSL showed a neat 16% increase (must have hired a new Chinese accountant, LOL, and no, I really do NOT trust these guys and their numbers).
At any rate, I would say that we are a good bit closer to the "blood running in the streets" level, but not QUITE ripe for buying still. I would look for FSLR to lose another large fraction, and for WFR to fade back into the mid $2 range...
And for the Chinese companies to swap places on the profit/loss chart on a regular and seemingly random basis.
Overall the basket MIGHT make sense after another 10 points of losses, but even then the geopolitical and political elements have at least 6 more active months to ferment.
I do like even the chinese stocks in the $2 or less range.
Thanks for remembering my post.
Interesting charts on global debt and real interest rates.
Thanks for the note about Bernanke LT. Days like this when I don't have time to pay attention to much of anything I really appreciate this group. Oh heck, I always really appreciate this group.
http://seekingalpha.co...
Disclosure: I am long MSFT
It has only been 6 short years since Art Laffer et al were making the argument that debt creation was the same as wealth creation. This will work out to be true if failure is pushed to the point of being total.
Only goes to show that you pay attention.
- Funny. I say something just like that every time someone from the Democrat Party calls me for money.
(did I just out myself? nah... no one believes I'm a liberal... me telling someone I'm a liberal is like John Cusack's character telling people he's an assassin in Grosse Pointe Blank - no one believes it)
My much abused analogy to explain my view of Demican and Republicrat is that they are essentially twins, with the difference being that Democrats are born with enlarged right feet...
This explains the operational difference between the 2 species, ie, both will sell their mothers to drive the train, and both have worked for over a century to lay track to the same destination, and the only difference in the end is that big throttle foot means the Demicans drive faster than the Republicrats.
We Libertarians, of course, are perpetually beating out heads in trying to rip up the tracks and install brakes on the locomotive, to no avail, we always lose.
MarketWatch.com reports:
US has first budget surplus since '08
http://on.mktw.net/Kq9IDZ
HardToLove
JP Morgan is holding a special Conference Call before releasing it's latest 10-Q because of a large "mark to market loss".
4:49 PM JPMorgan (JPM) is conducting an unusual conference call ahead of its quarterly 10-Q filing. The lender says its Chief Investment Office (CIO) unit has suffered significant mark-to-market losses. Shares -3.9% AH. Comment! [Financials, Breaking News]
10:38 AM U.K. gamblers seem convinced that Greece's exit from the euro is a foregone conclusion to the point that bookmakers have had to suspend betting on it. This follows a surge in bets that had pushed the odds down to 1/4 at William Hill, for example. The company has also closed betting on the euro still existing by the end of 2015. [Global & FX] 6 Comments
After originally denying the power of this individual, J.P. Morgan CEO Jamie Dimon essentially confirmed that he may have been partially to blame for the $2 billion trading loss in its synthetic credit portfolio, disclosed tonight.
* Republicans want to repeal liquidation powers
* Markets skeptical government bailouts would not occur
By Dave Clarke
For Reuters Top News page click the following link:
Since the end of March, the company's Chief Investment Office "has had significant mark-to-market losses in its synthetic credit portfolio," the company said in a filing late on Thursday.
Chief Executive Jamie Dimon called the mistakes "egregious" and apologized to stock analysts on a conference call that the company suddenly scheduled after making the disclosure in a quarterly filing to the U.S. Securities and Exchange Commission.
Dimon acknowledged that the errors are especially embarrassing in light of his public criticism of the so-called Volcker rule to ban proprietary trading by big banks.
"It plays right into the hands of a bunch of pundits out there, but that is life," Dimon said. He said he still believes in his arguments against the Volcker rule. The problem at JPMorgan, he said, was with the execution of the hedging strategy.
The strategy "morphed over time" and it was "ineffective, poorly monitored, poorly constructed and all of that," Dimon said.
"This violated our principles. This trading violates the Dimon principle."
The Chief Investment Office is an arm of the bank that JPMorgan has said is used to make broad bets to hedge its portfolios of individual holdings, such as loans to speculative-grade companies.
(Reporting by David Henry in New York and Rick Rothacker in New York; Editing by Richard Chang)
((David.Henry@thomsonr... Messaging: david.henry.reuters.co...
Keywords: JPMORGAN/TRADING
For Reuters Top News page click the following link:
Financials could look bad tomorrow. Then the unaffected banks could rally. IMO
What are the odds that only JPM discovered that marvelous hedge technique?
But it's very early. Anyway, financials are one of the "market bellwethers", so if the JPM effect persists through tomorrow we could see a down day.
I was thinking tomorrow might be down anyway as today's trading had a down trend begin at ~13:30 and go right into the close on rising volume the last 20 minutes with only a small rise in the last 5 minutes even with good volume.
When we have pushes up that can't hold on strength and it keeps hitting the limits, that suggest weakness.
HardToLove
My last financial find today:
6:28 PM Deutsche Bank agrees to pay $202M to settle a case brought by the U.S. last spring that charged the bank with recklessly lying about mortgage loan quality to keep access to federal financing. A fourth notch for the U.S. under the False Claims Act; DB -2.7% AH. Comment! [Financials, On the Move]
In an unexpected after hours call with investors CEO Jamie Dimon said JPMorgan [JPM 40.74 0.10 (+0.25%) ] was facing massive losses - legal losses of $4.2 billion were reasonably possible, the bank said -- with trading losses totaling $800 million in the second quarter.
I can only imagine what the silver bears are going to say about the jpmorg...
ATT lost $4 billion of shareholder money on the failed T-Mobile deal
JPM loses $2-4 billion of shareholder money trading
In 2011 it is impossible to know how much Hedge Funds lost with bad bets.
No wonder at the outflows from Mutual Funds, Hedge Funds & people wonder why the little guy won't come back to Wall ST.
Citigroup may not look so bad, and regional banks should score big on this.
Just think about it.. IF this money had been invested to create value, invested in the economy in the USA, not counting credit worthy borrowers unable to get a loan, or small business credit.
As a capitalist I view it as a clear example of what's wrong with our current hybridized system. Washington is littered with hybrid private/public entities, many of them infamous for their role in the recent financial metldown. Heck, even our central banking system, the Fed, is a frankenstein monster of quasi government mandates mixed with quasi private customs, both sides lacking the salutory advantages which should be inherent to their calling.
Too big to fail banks (slash brokerages slash insurance underwriters slash predatory investors) are the latest threat from this trend. It has been famously pointed out that these monstrosities rake in any profits or gains they might make when the times are good, but promptly shift the damage for their poor choices to the taxpayer. This sleight of hand with the results of their risky behavior is a sure sign of a hybrid privgov operation.
I have no problem with private firms risking their own money and losing (or winning) as a result. All fine with me, and in this case it looks like JPM plans to eat their own cooking rather than shift it over to the taxpayer... Yet what if the problem is even larger than now perceived, and the losses threaten to disrupt more glass houses? Will more enfolding wrappings of porous regulation and corrupt Federal agencies (themselves long since snared in the same culture which produces these horrific hybrids) fix anything? No.
We can rest assured that, in that event, the government will gallop to the rescue and save the cunning bankers from themsevles once again.
For that reason, if no other, these grotesque threats to all things free should be dismantled into their component parts - their smaller and definitely NOT "too big to fail" parts.
Every institution now related to Wall St. is just gambling with shareholder and sometimes tax payer money combined. Examples are expensive buybacks, overpaying for acquisitions, borrowing money to pay dividends. CEO and penthouse management still rakes in the enormous salaries & bonuses. The agencies you are referring to can NOT do their jobs because the politicians and Corp. mgt. is too tight and bound together. They lobby and get laws watered down or blocked, while begging for regulation when it helps them and hurts the smaller competition.
Like any ponzi scheme (Madoff springs to mind, but these banksters all have a similar element working for them now), there will always be some investors who insist on putting money into them, ignoring (or ignorant of) history.
In this case the shareholders should hang the board and the company's leadership out to dry, but I suspect they will not - further reinforcing my idea that such lax shareholder due diligence deserves the fallout (vs the rest of us who will get to share it via our taxes and the national debt).
I absolutely agree that stupidity (AT&T, LOL, my wife worked there for 40 years, I know it WELL) is its own reward (or to repeat a theme, should be).
I can't agree that "every institution" is guilty, however. 100% is a lot of percent. But "a lot"... Yes.
I do suggest that we investors do some soulsearching as a class before castigating the behavior of those who are our employees (private, in the corporate boardrooms - public, in the bureacracies of government - and, LOL, privguv, in places like the Fed). We hired them, after all.
I have had discussions with many friends, some of them quite wealthy, who literally have no idea who is running that company they are heavily invested in - or who their Congressman is in the House of Representatives - or, god help us, who Ben Bernanke is. THESE folks are signing the proxies that empower the likes of Jamie Dimon - voting the party ticket without a clue - and who think the Bill of Rights is something they get from the dry cleaners.
I absolutely agree, LT, that there are bad actors in all these groups, but until we get the concept of citizens doing their job, the other problems will be (obviously, its sure working out that way) with us.
Agree with much of what you both have said. It is a very sad commentary on our banking system when someone like me -- who held assignments at 3 of the TBTF wouldn't touch any of the big US banks for my investment portfolio. My biggest job satisfaction came from managing a national business center of 2,000 small and mid-size financial institutions -- many of which I would consider investing in. The only financial institution I hold is a sleepy Norwegian S&L with nothing exotic on its balance sheet -- but it does pay me a not-so-sleepy 7% yield in hard Norwegian Kroners.
TB, I am completely with you when you say "When I invest in a company I avoid these hybrids, and folks like Dimon, like the plague..." As long as "extend and pretend" and TBTF (Too Big To Fail) are alive and well -- trust in our financial system will remain very low.
The corps say they can't be competitive if they have to pay it, well the losses I just showed you above would have more than funded good solid retirement plans like your wife probably enjoys but that your grandchildren and children may never have.
Sadly, your last paragraph of "citizens doing their job" will probably never happen in my lifetime. Thanks for your comments and also MJ's ... I do value you guys here very much.
Bundesbank Prepared to Accept Higher Inflation
http://bit.ly/JlN9Ob
&
http://on.ft.com/KrnmqD
“In this scenario, Germany could in the future have an inflation rate somewhat above the average within the European monetary union, although monetary policy will have to ensure that inflation overall in the Emu is consistent with the goal of price stability and that inflation expectations remain firmly anchored,” the bank said.
I am not totally against that for today, inflation can be contained later, but deflation will bankrupt the entire EZ if it keeps going.
There is/has been a vicious cycle going on now for years. Up until they removed food & energy, workers received wage increases = to true inflation. When the gov't changed the formula, it has been down hill ever since. They claimed 1-2-3% inflation when it was actually 8-10%. That is what generated income inequality and also began the huge second mtg. market and debt skyrocketed.
Inflation is a double edged sword....it takes some to grow. Deflation is deadly. The entire system has to be redone to find balance.
http://nyti.ms/IGQOGX
A quote from him relating to Japanese debt: “Madoff taught us something,” he said. “You can make promises for a long time as long as you don’t have to keep them.”
The bank says its portfolio has proven to be riskier, more volatile and less effective as an economic hedge. The stock loses nearly 5% in late trades. (has been down 8% overnight in overseas mkts.)
Tennessee has no income tax, but trust me they pay more than we do as in a 9.25% sales tax on everything. Property taxes are 4x what ours are too.
http://bit.ly/KV4htA
I had 400 shares, now 80. Last trade $10.04, bid now 49.75 and no ask shown.
Equivalent last trade would be $50.02.
HardToLove
SA:
Friday, May 11, 10:45 AM Chesapeake's (CHK -1.7%) use of off-balance sheet liabilities via "volumetric production payments" is considered accepted practice in energy production, prompting FT's Izabella Kaminska to wonder if CHK is just the first of many to have these deals outed. "If banks were willing to do such deals for Chesapeake... who’s to say other companies are not saddled with similar liabilities?"
This is what I can't understand MJ, I get grilled when I mention it usually....but this has to STOP. Corporations, gov't, individuals or management & board of directors must be held accountable for this type of action. It should Not be tolerated, but the entire nation seems to think it is business as usual.
As you said " why is it NOT listed under liabilities on the balance sheet?"
It should ALL be disclosed clearly. It's just another example of Corporate and banking cover ups and in the sake of "profits" and fees.
I am not on a soapbox, but at some point the entire financial system and Wall St. are both at risk of being handcuffed or maybe even almost put out of business as we know it.
Think about those companies that make large "profits" per share. Do they really? Given the off-the-books games played, with the connivance of banks, how do we the lowly investors know?
If they consistently pay a dividend without selling off pieces of the business, you can be less concerned they are playing financial games to give the corporate officers bigger bonuses.
Would just add " entitlement" is a fuzzy word, misused by politican's. The FICA programs have good disclosure and people are "entiteled" because they pay in and there are reserves built up.
IMHO a COMPLETLY separate problem from the unfunded give away's.
They are combined to mask the fact that 16 trillion owes 9 trill to the Trust funds.
Reality is 42% of gov rev ( trust payments ) have 9 t of surplus's and 47% ( personal income tax) + rest of funding has 16 tril of deficits. The Trust funds should be invested safely, but 100% treasuries is the political compromise
Of course, as the JPM fiasco just proved, there is no way to be insured through derivatives as the banks had planned.
Banks are silently preparing for Greece to return to the Drachma
http://yhoo.it/IR32R6
Is the stock mkt. dead - there is no trust
http://bit.ly/JFUzPF
http://bit.ly/IYIKE2
Euro parity with dollar ... watch out for consequences to US & China
I am one of the supporters who has been expecting a powerful surge in QE or outright money printing for Euros. I consider it inevitable. And I also expect the US to compete in the race to the bottom. China will have to join the fray, of course, but they will simply reset their peg to suit their needs and to maintain their export markets (which despite all the news about domestic focus, is still a necessity for them, and the EU is their #1 customer and the US is #2).
So look for the Euro to crash, the $ to start to soar and then follow, and the Yuan to join the hunt third (assuming they don't just ignore the dollar and jump in 2nd, which would not surprise me).
Don't you think one reason the euro has stayed up and they refused to print is that it hurts Germany more than anyone else ?
Looks to me that Germany has capitalized on things pretty well as they are/have been. As you have stated elsewhere, China has their own agenda and way of dealing with things. I expect this fear is also a small part of the slowdown in China, and even a tad of the bringing some jobs back home to the USA.
The dream of a United States of Europe dies hard (and this modern version was really midwifed by Germany), but it IS dying, and dying ugly.
What we are discussing is the long, drawn out death from cancer. In the end many (probably most) of the components can survive quite well without the USofE (and the EU and even the EZ can survive indefinitely in some reduced format or another, so I am not one of those who sees "the end of Europe" in this process).
Germany can continue to capitalize on the situation if they can educate their citizenry and avoid losing the political war so that they can also lose the EZ and economic war.
Germany's economy is fueled by exports, particularly exports to its fellow members of the EZ (and to a lesser extent to the non-EZ EU members). There is a multiplier at work on whatever they loan out via the ECB and the various bond supports which rebounds directly to those exports. Politically the citizens are just like people everywhere, they MUCH prefer to have their cake (healthy economy, low joblessness, fueled by heavy exports) and eat it too (get tough with the less hard working customers that make the cake possible in the first place). Politically its one of those things which are very common, predictable, and quite likely to occur in 2013 when their national elections come 'round again.
Oddly enough, the new Leftist government is much more likely to take steps to bring down the EZ and disrupt the EU than the Center Right Merkel government which is trying to support the socialist ideal enshrined in the EZ.
I meant to add that the German banker "dared" Greece to leave the EZ....
I don't take dares well, and Greece may not either with a new gov't.
I do believe that the bankers in Germany are still very hardline, and the pols are softening. Merkel has said she might go along with a growth plan for Greece....Seems Germany is really beginning to fear some leaving the EZ which would cripple Germany's exports to the EZ in the long run. After all, who is going to buy from the gorilla who forced austerity on you?
David Jackson had a comment a while back that SA does not accept advertisements from FX trading companies because 95% of their clients lose money.
The Chief China Economist at ANZ bank said “We think another cut could be in mid-June.” http://bloom.bg/KSXlTS
Precious metals are also expected to react favorably to the news.
In what way/reason are PM's to react. I have begun to dabble a bit in the miners because I believe they have been hit and undervalued. I suspect that China allowing their currency to rise makes the dollar weaker with respect to it and that is where PM's will benefit from the China news, does that sound accurate?
I have been struggling with PM's because of the Euro thing.
1. The EZ in my mind is without a doubt going to print more money, this will cause the dollar to get stronger and consequently PM's to get weaker.
The US *could* then print money as well in the "race to the bottom" which would counter the weaker Euro, but I am not sure I believe the US will.
What I am looking for is bullish reasons for PM's near term that are not already known i.e. we already know banks have huge amounts of capital ready to sump into the economy creating inflation and that the Fed has set interest rates to near zero through 2014. Are there other reasons like QE3 but beyond QE3 for bullishness at current gold prices?
Thanks to anyone who would like to pipe in. That includes Trip and JS who are probably sick of talking about this with me through Private messages.
I like and have physical silver. I can't tell you what it is going to do as it is too volatile. Eventually it will go up, in its own sweet time (much like Axion). I have known day traders that have done very well trading the volatility and others that got hurt badly. So, I put a chair cushion on top of my pile and sit waiting patiently. It may end up that silver is watching the paint that is watching Axion.
We probably get QE-3, but then at some point it is over. The mkt. will react to that way early, maybe even a year early just like they will in bonds. PM's could be like a falling knife. Some will still say buy, buy, this " can't " last, and they will be wrong, IMO.
There will probably be some support levels on the way down, but this whole thing with the EZ, Greece maybe leaving, etc. and central banks intervention is just beyond mine and most pro's ability to predict. It is very dangerous out there right now.
I do hope others will chime in with more informed perspectives than mine. My statement above re: a potential favorable reaction by PMs to the China rate cut today was referencing more of a short term TRADING opportunity (for some of the reasons you cite) -- rather than an investment opportunity (short or long-term). Nevertheless FWIW my approach to PMs goes like this:
1) I have NO idea when gold and silver will reach bottom, but folks smarter than I am seem to think they know: Goldman is out with a gold rally forecast http://bloom.bg/KUwSpg AND other experts are completely bearish near term http://on.wsj.com/LCTQxL So -- pick your side;
2) Even if you pick the right side -- you have to remember how highly manipulated gold and silver may be (by Central banks and by the likes of JPM). One SA author who provides lots of insight re: manipulations is Avery Goodman. IMO he is worth following on the topic and the comments to his articles often add value: http://bit.ly/KUwPK2 I also do not play the ETFs in PMs. If ETFs are leasing and lending some of the bullion in their vaults over and over again -- I do not want to be holding the bag in a meltdown.
3) I have made lucky calls with big gains in miners (e.g. Lihir) and I have also booked losses on the likes of Kingross who execute poorly and pay too much for acquisitions;
4) I like how cheap some quality miners are right now (e.g. Newcrest out of Australia) but at this moment I am only willing to play streamers (I booked my gains on Sandstorm a while back and for silver I do range trading frequently with Silver Wheaton because I like its business model and low cost base -- and the beta is high which is good for range trading. Right now, however, I am a little underwater on SLV in a small position;
For trading purposes, I will watch how the futures move early tomorrow evening to decide whether I want to play off of this temporary China move or not: http://bit.ly/nXGqkT The resistance on gold futures now seems to be $1600/oz and the support on silver now seems to be $28/oz.
Finally, let me say that I look at PMs as one more way of diversifying my USD exposure which is well over 70% even though I have diversified with NOK, AUD, CAD, SGD, YUAN, etc. As you know the time to buy other currencies or PMs for that matter is when the USD is strong and buys more of those other stores of value. And as long as our irresponsible US fiscal policies prevail -- I do not expect USD strength to prevail long term and that is why I diversify.
Hope that helps.
I received a direct message saying "I didn't know you were long Nokia." Well I am not. So let me be clearer -- my list of US dollar diversifications listed above refers to the Norwegian Kroner (NOK), the Australian dollar (AUD), the Canadian dollar (CAD), the Singapore dollar (SGD), and the Renminbi (YUAN). They all go up and go down vs. the USD -- but the point of diversification is just that -- to diversify my currency risk long term.
mj
"For good or ill, Europe has embarked on a program that will require multiple trillions of euros of freshly minted money in order to maintain the eurozone.............This is a Ponzi scheme that makes Madoff look like a small-time street hustler."
From Eric McCury's hot-off-the-press "ECRI Reaffirms Recession Call Again".
There's many other considerations in the article - it's well worth a read. One of the things mentioned, being an election year (adjust tin-foil hat) is the "revisions" to GDP which come far after-the-fact.
The ECRI call aligns well with some calls for a weaker H2 of '12 that came out late in '11 and conflicts with some conference calls I've recently listened to (MTRN) that currently expects H2 to show strengthening.
So it's a coin-toss: who do you believe?
http://seekingalpha.co...
HardToLove
Steve Hansen in "Can Consumer Credit Fuel Retail Sales Growth?"
ISTM this adds to the potential headwinds going forward since consumer is ~70% of GDP.
http://bit.ly/Kka0hD
Also in the article, "These graphs only tell part of the story. What is missing is the write-offs in consumer credit. It is reported that in March that there were $20 billion in consumer credit write-offs according to CUNA. Write-offs distorted the point where new credit began fueling a retail resurgence. This $20 billion would have accounted for all the retail growth year-over-year in March".
HardToLove
Get the young workers in debt up to their ears then they will have to do what we say.
This from "Stocks Headed For Steep Decline As Economy Skids And Europe Tumbles" on 5/10 by Colin Lokey, which also has a few other interesting data points.
http://bit.ly/K8lUW8
I guess "Gentle Ben" and his cronies had been supporting the markets all by themselves. Unfortunately, not being Atlas seems to be presenting problems in carrying the whole world on their backs.
HardToLove
EDIT: *Very* early (18:05 EDT) e-mini futures are suggesting a drop of ~$5 on the (SPX), ~$1348. USD index on Forexpros jumped to $$80.53-$80.58. But, again, *very* early.
Also note that Bloomberg reports the Saudis now expect Brent oil to drop another 10% -- and during the past few weeks hedge fund bullish bets on oil have been reduced 33%.
Should be another roller coaster Monday.
Watch Italy's attempt to sell three-year bonds today. This will be an indication of contagion issues impacting demand for lower-rated euro zone debt.
New QC this way.
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