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QuickChat #232, May 14, 2012 214 comments
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Oil now has a 93 handle!
Great picture.
Well worth a quick read.
http://seekingalpha.co...
HardToLove
http://seekingalpha.co...
Compares it to the housing bubble, which seems quite apt in my limited view.
HardToLove
I am trying to figure out how the fallout would look, since the government will just hide the default numbers.
Are we being set-up here for another bailout but it would really be just the government bailing itself out? Or does the government just print it as needed and we will never here about a bursting student loan bubble, since it won't/can't be a Lehman style collapse.
Thanks for the post, I have to think about this for awhile...
Taxpayers, of course, foot the bill. Banks and others that made the loans benefit, short-term.
Longer-term, the fiscal responsibility that *must* kick in will cut back on the availability of the loans and rates will rise.
The colleges that had free-run to jack prices, overstaff, pay outlandish salaries, ... will end up in a bind.
Longer-term, more folks will will go to less-prestigious colleges and/or two-year colleges where they can learn a skill actually involved with wealth creation.
As with any bubble, re-balancing will be distressing but of benefit in the long run - a fact that TPTB apparently don't cotton too as they continue to kick the can in a vain attempt to prevent the credit bubble from completing the burst which Mises (correctly?) says can't be stopped once begun.
HardToLove
Now students will go to the "skilled" sector where they should be.
It will be a terrible disaster with $1.5 trillion in student loans when this unwinds or sticks the young with debt...they will be unable to finance a new home, maybe even a car.....alot to play out here on a macro economical issue.
Then go back and read.
"The Quality Of Earnings This Season" by Greg Feirman.
The chart, for *my* purposes ATM, is more interesting than the text, although his thesis seems sound. Just not enough breadth in it.
HardToLove
My humble apologies!
http://seekingalpha.co...
HardToLove
There could be a nasty undershoot in copper prices, given the wide perception of an EU recession and global slowing. Resource rich countries that have been cruising along on the industrial commodities wave could start to hurt.
Will the housing bubbles in Canada and Australia finally POP! Banks in both countries hold a lot of inflated housing and industrial development real estate loans acquired in the last decade.
This could be very messy!
This price level has only been tested and demonstrated as support/resistance twice before in the last year though, so we can't say it's a strong support this time around.
If the recent pattern holds (a couple days down and then reverse), BB & Co. (or somebody) will ride to the rescue for the next day or two as the ADD market says "Greece? Spain? Whatzat?".
After a day or three to the upside again, they can afford to let it drop.
It's early, but e-mini futures are suggesting $1,338 right now, a common pattern shortly after market close (down is also common). So we'll have to wait until much later to see what really starts to develop.
There appears to be a short-term falling wedge pattern which Bulkowski says breaks upward 68% of the time. But he also says it needs to be 3 weeks to qualify - otherwise its a pennant *if* it has a "flagpole", which it doesn't.
I'm going with the wedge since the advent of HFT, quants, ... has likely shortened the time-frames that Bulkowski was examining years back.
MHO,
HardToLove
I believe you are getting the hang of things, particularly that last para.
Didn't want the trolls on the APC to see it.
HardToLove
I can name three that are not on the list but maybe should be considered at least for review, though of course they may be perfectly legitimate companies and I have insufficient data to be sure: EHSI, OBJE, & GTSO
Quite a few of my closest friends and family members are lawyers... and one is president of a law school now...
But still... you know... we could do with... less...
As an aside, recently read your profile and think we have similar backgrounds and interests. I attended The Fletcher School of Law and Diplomacy; and ever since I realized that Ulan Bator is an oft used crossword puzzle question/answer, I have been interested in Mongolia. Your recent travels there must be fascinating.
Law, diplomacy, and UB are an interesting mix at the moment. Its an interesting place, and I hope I'll have good reason to go back there for years to come... but its at an inflection point right now, and we'll see.
I suspect you were a better student at Fletcher than I was at LSE... and mind you, it is not a high bar to overcome. Happy to help with the oddball thing I can help out with on crosswords... but generally terrible at them - my knowledge is apparently eclectic in an uncrossed way (?).
Be happy to chat sometime about Mongolia or anything... although the next few weeks I am slightly swamped with relocating to a new home.
*Immediately*, market swooned like a late 18th-century southern belle.
I expect that after the smelling salts are administered, tomorrow the lady will likely be making another attempt to get up.
AHs trading in (SPY) indicated this and the e-mini futures are currently suggesting a ~$1,333 ATM. A small move and it *is* early ATM.
HardToLove
JPM fiasco, one JPM trader was selling and another JPM trader was buying, Hedge funds had a hay day.
We are all caught up in TBTF, when the reality is the big banks are just too big to manage. They have no idea what is going on. There is no unity, everyone goes in a different direction doing their own agenda. Nothing is for common good.
I am a firm believer that they can not hedge risk with CDS & derivatives. We seen that with Greece.
Greece is really a non-event from a dollar & cent standpoint. The world can absorb 100% of their debt and not miss a beat. The psychology involved and others leaving is a risk that is higher today than last year.
These guys are getting almost free money from the fed now for 3 years. Another 3-4 years and these guys could be generating huge profits from just banking.
It's worth watching, because IMO the regionals and good banks who manage risk and run an old fashioned up & up bank may do well. I think it's already began to show this year and could get better.
P.S. I found it interesting that Buffett sold Intel and bought GM, wondering if there isn't a big switch away from tech going on across the board. btw, the source of the post above was MarketWatch.
Per CNBC says an NYT article discloses.
Wouldn't surprise me at all.
Gee, with a little coordination they could have supported the prices and prevented all the loss?
HardToLove
Seems to demonstrate the scenario adequately.
HardToLove
Concrete galoshes.
Take a look-see at the 3 year chart if you're precious metals interested.
http://bit.ly/K6kKN3
Fund is trading at a discount to NAV as of yesterday - quite rare in the last decade.
Buying opportunities are present, for those with a strong stomach.
Will precious and base metals follow? I believe they might, depending upon what the usual ex post machina central bankers and governments do.
Today could get nasty, folks...
On Fleckenstein's website a couple of people in the Q&A have indicated they are selling out their positions as they can't take the losses any more. This is happening on a website that people pay to subscribe to where the author is a proponent of calm and an advocate of owning precious metals.
Silver...
$24.
Full disclosure: I am a gold bug and silver slut.
Of course, the pinks are MUCH easier to manipulate vs the ASX100.
Right now we are seeing (if this unusual trend continues) a Lynas share price down under tomorrow close to the $.84 52 week low. The A$ has eroded to essential parity with the US$, so currency exchange factors are almost nothing...
Lynas hit $.91 this morning... So far.
Close.
SPX had gone to as high as $1,41.78 prior to that.
Games are afoot.
The computers read the trend lines too.
"Da Boyz" are in the bushes.
HardToLove
Close enough to count to my 1320 upper goal for a bottom estimate...
the JPM fiasco
Greece & the EZ again (this time they seem to be willing to do anything to prevent the exit)
Big slowdown in China & the EZ killing commodities & will ultimately have to lead to weaker sales for all corps.
An example is MSFT (which I am long) hit the bottom bollinger band today at just under $30...then next MA line is $28.18 and I think we hit it now because of the above list. Maybe not, but I won't bottom fish here or with AXPW either. Even APPL is close to the $530 I expected which should garner support just from a dividend perspective but I won't chase it either. I am just too leery and think there is more blood to come across the board.
Another caveat was what u guys mentioned about the $A being on parity with the dollar....the euro could do the same thing and this could be very disruptive.
SA 5/17/12
8:47 AM "What we're seeing in the eurozone is a slow-motion bank run," says Mike Riddell of peripheral (and even France) deposit flight that's made headlines this week, but has been going on for 2 years. The flight remains small in percentage terms vs. say, the U.K.'s Northern Rock which lost 5% of its deposits in a day and faced queues around the block.
http://bit.ly/KvWeIV
Dollar/Euro parity, its coming... Soon.
Plan accordingly.
Say, WHEN did we start talking about this prospect? 2 years ago?
If Germany leaves parity might be a high point and it could be back to .75 to the dollar. jeeze this is to hard and t risky. Much like everything thats going on these days.
The question then will be whether they can fix the underlying structural problems even with trillions of loose Euros to spend.
I'm thinking it will just be a left/green orgy, like nothing seen since the Roman Empire at its decadent peak!
Talk about a bubble economy...
Dear God TB, I almost went blind just thinking about what that would look like. LOL
Yes they will be printing but I worry so will we...ummm Benny that is, which keeps the exchange rate at the status quo. Benny can print with the best of them you know. Fact is he has gotten a lot of practice lately. sarc/
They would not want the EZ to eat our lunch. That is reserved for the Chinese. Printing is now the new protectionism.
So this is an orgy which will have a BIG invitation list.
"If you are not at the table, you are on the menu."
http://bit.ly/JWacSZ
But we can just print faster, yes? Make those long term obligations go to zero. Too bad, retirees! Watch the "official inflation index" get redefined to report even lower "real" inflation then it does now.
TB, since I don't do the AXPW APC anymore, I will say here that things look bad and there is serious selling going on.... How bad do u think it is going to get? I have an idea, but would like yours. PM me if you prefer
I don't know who is selling or why at these prices, but I see anything under $.40 as "cheap".
These down spikes can get loony, particularly when one focuses on a single microcap.
I came into this correction cash heavy, and I am buying from my picks and list, but I am also surprised at the ferocity of the pullback in commodities, for instance. Today we reached my personal goal (S&P between 1310 and 1320), and I bought some of the shares I have been tracking...
But I am holding back about half my cash with the anticipation that we could see another leg down, into the 1200's (which would elevate the correction to 10%, with a chance for it to bleed into 15% or more).
AXPW has potential to test the lows....and they may not hold short of news. I would not bid if I did not want it.
So odd to do so badly when so completely not surprised.
Back to packing. My legs are now sore enough now that I don't notice my arms and chest. Wondering what the equivalent of that would be financially... hmm... Mongolia so messed up I don't notice my precious metals losses?
I also think they could double that number by next year (if not next week), say something around $76.
They have not even begun to explore the Google formula for mining money out of a site with huge volume.
Now, dinosaurs like me don't spend a lot of time there (frankly, SA and my personal email and web site consume more of my time than I can afford already), but the rest of mankind...
Its going to be amazing.
http://bit.ly/JWacSZ
http://bit.ly/JTk7c9
This sort of stuff needs to be widely disseminated.
I read the pdf linked in the article. Very revealing of the nature of the market, in general, and GS (a.k.a. "Da Boyz") in particular.
HardToLove
So if we compare Facebook with their main rival in their revenue stream that would probably be Google. Google has a trailing P/E of 18.20. So essentially, with a pricing of 38, Facebook is 4 times more expensive than Google or 3 times more expensive if you use the forward P/E. If we use these numbers then, the true valuation of Facebook should have been around 13 not 38.
This was just greed by pricing at 38 with the expectation and hype that it would go to 50 or 70 the first week.
FB had issued a lot of shares thru GS with company values of $50-75 billion already.
With our "capitalism" - we owe these guys a profit.
I wonder how many shares were in the hands of Da Boyz at the end of the day? I suspect a lot of flipping occurred by the market close.
The stock was very close to dropping below 38 till about the 4 minutes from close when it appeared some HFT stepped in and pumped the price up to 38.35 in a matter of about 10 seconds.
"Morgan Stanley just facebooked this IPO."
EOD, morning orders were still not confirmed to many of the parties that had buy orders in when the market opened. Because many of the big traders could not determine their positions, they stepped away and that left it to the underwriters to prop up the price.
Bob Pisani and others at CNBC were all over it all day long.
Nasdaq claims confirmations were sent, but at EOD folks were still tweeting CNBC that confirmations had not been received.
Apparently volume overwhelmed Nasdaq facilities and it was speculated that other exchanges might be seeing this fiasco as a marketing tool for the next big IPO - "You don't want another FB do you?".
HardToLove
See my comment above.
HardToLove
I believe HTL has nailed the identity of the entity likely to take a hit to its reputation as a result of the IPO: Nasdaq.
http://yhoo.it/Ja09ak
http://bit.ly/K1ofpO
Hillbilly was right, they nailed the max it would go off at. I am not surprised, they have delayed the IPO one too many times. I expect because the demand was not there, no matter what the listed excuse was.
The trading problem did not help either. I suspect that traders and retail buyers alike were scared by both issues.
It could bounce higher next week. I wouldn't be surprised.
Private Equity taking over Dentistry and Medicaid Fraud
http://bloom.bg/MwSHum
As we've noted with student debt, even just deferral of payment far into the future invites abuse, in the form of escalating fees by colleges that far exceed inflation in this case.
And folks keep wondering why medical and education costs rise so rapidly. Reading Walter Williams, John Stossel or any of many other informed economic commentators highlight this.
But apparently most in Washington don't get it, or choose to ignore it so that they can further their own agendas.
Everybody becomes a victim in these cases, directly or indirectly.
Corporations have no conscience, only rules and threat of punishment to keep them ... sort of honest. Children are nothing more than billable items.
HardToLove
Someday, corps will pay the price dearly and so will Wall St.
There is a lot of waste in those areas and a good management company can make a world of difference for a dental office in this area but we stay away from dictating treatment. Our job is to stop once a butt is in the chair and start back up once they are out of the chair. Hiring good doctors helps a lot too. There are plenty of crackpots out there.
I think there are certainly some bad apples out there in this business.
John Wiliams the author of Shadow Stats provides great insight in this recent interview http://bit.ly/KxRE8N.
While many of us attempt to assess how real or sustainable the US "recovery" is, he provides plenty of thought provoking questions and data regarding the government reported unemployment, CPI, GDP and other stats. He maintains that:
1) The recovery is an illusion based on skewed inflation data;
2) When GDP is "inflation corrected" the index has fallen;
3) There has been no employment growth in 10 years, despite 10% growth in the population;
4) Housing Starts have dropped 75% since 2006 and the index is bottom bouncing;
5) Consumer confidence has plunged and is bottom-bouncing;
6) Individual earnings are down and so is household income;
7) When retail sales is "inflation corrected" the index has fallen and is bottom bouncing;
8) When Industrial production is "inflation corrected" the index has fallen and is bottom bouncing;
9) We avoided a systemic collapse, but the banking system is still in trouble four years later (BTW JPM loss estimates are now near $5B http://on.wsj.com/KD9CLc);
10) The methodology for measuring inflation changed in the 1990's in part by then Fed Chairman Greenspan -- and having this CPI substitution avoided having Social Security checks double what they are today; using the old 1990 CPI methodology inflation today would be 6-7% -- in other words the returns we all require to stay ahead of inflation.
His final advice is to hedge your USD holdings -- something I personally have been trying to do for the past 3 years by buying and holding equities on foreign exchanges of countries with strong currencies. That diversification is cheapest of course -- when the USD appears to be a strong safe haven -- as it does now.
Whether you agree with everything Williams has to say is not the point. What he does is present good insight so we can each arrive at our own conclusions as we maneuver between short-term market rallies and longer term systemic economic risk.
That was changed to keep income levels down both to corporations and to Soc. Security.
If they had left it alone, we would have made adjustments to SS and been forced to fix the problems.
I truly believe the income lost due to this caused all the problems such as Housing (second mortgages & excessive borrowing) because the consumer could not keep up any other way. Banks loved credit card lending at avg. rate of 18% & corps loved the new pricing power it gave them to raise prices to unsustainable levels.
I would add on final thing to his list....as soon as they fix the EZ (no matter how it turns out)...then the ball comes home to the USA and we have to fix our mess.
The EZ is resisting the "Euro-bonds",,,mainly Germany. So "what if" these bonds must happen and Germany leaves the EZ over it ?
I personally think the Eurobonds are the only thing big enough to put a firewall around the EZ.
I think if Germany left the EZ, that money would/already has flowed into Germany and Switzerland.
Then the euro crashes in value to parity with the USD. The USD could even get stronger. Thus killing the "short US bonds". AT least for a while.
I think both partys will spend us blind and the bonds are going to go ballistic at some point. I wanted to buy at a low point compared to the 2% Benny preaches because I could get out there if things change drastically with a profit. I am not an FX trader but some things seem to be a no brainer....at least to me. I could be wrong...like many times before. LOL
I think German "WILL" leave the euro because they will get in over there head supporting the rest of the euro. Its just a matter of time. Now with France backing out of living within thier means it looks more likely Germany will feel that they will have to leave to pay back Euro bonds with an inflated german mark later. The eurobond firewall is coming I believe or a complete collapse will occur and germany will be on the hook for most of that firewall. It makes sense to just pay off a crippled euro (after germany leaves) with a strong mark. JMHO
It seems that Germany's balance of payments would drive any decision. In my very humble opinion.
Also no matter who the rest of EZ buys from it will be with a weaker currency so it might as well be the Germans.
I dont think this is going to happen tomorrow, I think the eurobonds come out first and prop up EZ for a while but then somewhere down the road that burden gets to much for germany and they leave because the voters elect a govt that is for leaving the euro, not the EZ, just the currency. It was the Germans that pushed for that option last year.
I also agree that the "solution" will founder on the dependency-crippled economies, which by that time (medium-term, say 2 or 3 years out) is likely to include France, particularly if the new government meets its promise to fully dismantle much that the centrist French built (ie, nuclear power system, with a focus on industrial development) in favor of fully pursuing the green rabbit down the spending wormhole.
Longer term Germany may, in extremis, leave the EZ and the Euro, but will by that time be so deteriorated by the long chase after the mirage that they will escape little of the damage.
Frenchies are talking about getting rid of nuclear power? Over 80% of their power is nuclear.
If they're trying that, I need to just shutter the home and go on a long fishing trip. The world has gone completely mad.
Remember how well that is working for Germany? They are now looking for some economical form of storage to fix the wind/solar variability problem. Good luck on that!
***
Anyway... I mentioned this to my wife, and she said, "ARE THEY CRAZY! How are they going to replace that energy?"
***
Oh well... back to hurting my back. Nice to sit.
I forgot to mention it , but fully meant to include that when the EZ is fire walled, the USA is next.
There is another "what if" that I thought of, but didn't want to open the political discussion. Maybe later. But you are right, neither party is anywhere near a balanced budget or dealing with reducing debt.
http://bit.ly/Jif6aD
With FX trades around 4 or 5 to 1 Euro/USD, something that tracked them as a pairs trade might be nice.
I wonder if I'm too late or there's still lots of room there.
HardToLove
HardToLove
You might get a few...or many, laughs from this link.
http://bit.ly/MhkHj7
Quakes on west coast down but bigger and more active in south pacific and southern europe. One would not have thought a euro crisis could attract quakes.
A simple fix would to be 0% loans on all the debt, and let them pay down debt instead or constant write-offs. Of course the banksters hate that.
It was/is OK for the gov't to lend them free money for years to save their a_s, but god forsake doing it for the public.
10:43 AM Global Hunter fires up Buy ratings on a number of shipping stocks including Diana Shipping (DSX +2.5%), DryShips (DRYS +9.5%), Safe Bulkers (SB +2.1%), and Baltic Trading (BALT +4.5%) - while starting Eagle Bulk Shipping (EGLE -0.9%), Excel Maritime (EXM -1.8%), Genco Shipping (GNK +1.1%) with below-keel Reduce ratings. While individual names in the sector tend to get tied up with momentum trading, the overriding theme has been a moderate bounce back off of a 25-year low in the Baltic Dry Index in February. Guggenheim Shipping ETF (SEA) +8.1% YTD. Comment! [On the Move, Consumer]
11:21 AM What those bearish on stocks have to contend with - Morgan Stanley provides a summary of possible central bank firepower over the coming month. (via) Comment! [Global & FX, U.S. Economy]
"Another important area of inquiry could be whether analysts chose only favored clients to share their forecast revisions with - although such selective treatment may not be prohibited. But even if the conduct does not cross the line legally, it could damage a firm's reputation in the eyes of retail clients who feel left out."
http://bit.ly/KxRQ6p
FRANKFURT (MarketWatch) -- The euro on Wednesday tumbled to its lowest level versus the dollar since late August 2010, extending a loss as European equities declined ahead of a summit meeting of European leaders. The euro traded as low as $1.2613 versus the dollar EURUSD -0.2950% , its lowest level since Aug. 25, 2010, according to FactSet
http://on.mktw.net/LqH5nm
Just goes to show that miracles still happen!
Thanks for that link.
HardToLove
Personally, I think it's just the computers. That's why I've not got back in (SPXU) yet. And not in (UPRO) either.
Support and resistance points are in play amidst all the EZ broohaha.
MHO,
HardToLove
The mkt. dropping, EZ bond yields skyrocketing, Money being sucked out of the EZ like crazy has gov'ts playing word games with the mkt. to reduce the carnage. It also helped that France, Spain, Italy, have all agreed on EZ bonds. Germany had to respond someway besides the "astonished Merkel, NO this morning".
7:01 PM The latest patch for Europe's woes, the Eurobond, may be hailed by some as the "Kentucky do-all" solution for fixing the Greek debt crisis, but don't count on it. The very thought of issuing bonds backed by 17 fiercely nationalistic and independent-minded European nations simply reeks of potential problems. Off the top, issues such as duration, how they're guaranteed and getting them to market without violating euro zone membership requirements - will all prove to be a tough sell. [Global & FX] Comment!
Caneyville, KY
Do All, LLC - no web site, very limited data; General Contractor
Lexington, KY
That's all that came up in Google. I suspect this is just another made up term from someone's childhood that never got picked up outside of a local area.
As a certified, factory trained, shade-tree mechanic of long standing, I would venture that it may be similar to a "fix-all" tool near and dear to all shade tree mechanics' heart - the legendary "big enough hammer".
It goes without saying that any such "do-all" would lack any sort of owner's manual, and would accomplish its awesome task in the hands of any truly competent Kentuckian.
6:39 AM A decision from the EU's second highest court denies an appeal by Mastercard (MA) over excessive interchange fees charged on cross-border card payments. The company failed to convince the court that the fees were fundamental or that a significant number of European banks would stop using Mastercard if they were reduced. Comment! [Consumer, Global & FX]
I need to keep reminding myself that my mental map of "bank" is no longer an accurate description of institutions that handle large amounts of money and make loans. My mental dictionary definitions are from the 50s thru 80s and are no longer applicable to the Modern Era of Doublespeak.
Are "investment banks" Banks? Not in my world view. Simple words can be treacherous things. Beware. We need a new word that means "all institutions that gain revenue from processing other peoples money". "Other people" would include taxpayers, who are unaware they are underwriters :-(
"All institutions that gain revenue from processing other people's money:
The list is
Also Known As ("AKA"):
GE
GS
JPM
DB
GLE
CS
C
BRK
MS
AIG
The IMF
The World Bank
Governments everywhere.
I love that phrase and how it's spelled too...the USA needs to grow some backbone in dealing with corps too. LOL
Some of the pol's are putting bills forward to break them up (about 1/2 the size now) and limit the size they can ever be.
I would say that the breakup does not happen soon but will later on, tough regs' are coming, and much tougher now than earlier. It's gonna be a fight that will be tough for some politicians. If they pass them, they lose big time funding, if they fight tough regs-they lose votes. Expect severe backlash to the ones who support big banks.
http://bit.ly/JturVG
Who lost the Euro:
http://buswk.co/JfnWoc
Thank you!
HrdToLove
2:09 PM Procter & Gamble (PG -0.2%) CEO Bob McDonald says the company will stop chasing profits in emerging market until it stabilizes its 40 largest business lines. While the company has been able to grow sales faster in emerging markets, it still generates less profit than in developed markets due to price sensitivity and fierce competition. Comment! [Consumer]
The do need to redo the tax structure and close ALL loopholes. Before long we will have zero corp taxes here because of dummy corps holding the patents to charge royalties and they will keep all profits overseas....There is no easy fix that won't be called protectionism or the govt has to charge a federal sales tax...then if it's sold here, they pay here.
http://bit.ly/Kl7iX2
http://bit.ly/JMTk2F
And the operating theory is that the economy is still "growing".
There is a chill wind blowing through the country, summer weather notwithstanding...
This correction may bottom soon and we could see a nice bounce...
But what comes next could be nasty.
The Eurosummit today was a non-event, not a spine in the whole building. Believe it or not, they are collectively holding their breath in hopes that the upcoming French parliamentary elections and (wait for it) the GREEK do-over elections (LOL, yes, it is amazing) will yield results SUPPORTIVE to saving the EZ.
You can't make this up, gang.
Not only have they managed to put the donkey BEHIND the wagon, the drivers are now lashing the passengers with their whips and wondering why the wagons don't move.
Almost everyone is predicting that they get Greece thru this year and then an orderly planned exit from the EZ next year with a 40-60% drop in the new currency. I buy this IMO.
I still believe that Greece is just the trial run for Italy & Spain. As I have said before, Greece debt of $1 trillion could be written off worldwide and them be debt free....but they can't write off multi-trillions in the other two elephant countries.
If Greece exit goes peacefully and as planned, then others will go. There is talk of a "dual-currency" which I think is what they are after. They want debt payment made in euro's if possible.
P.S. your right about HP, they are getting their a_s kicked...the CEO is known for cutting deep. It's all about appeasing Wall St.
This will also skew unemployment numbers again too. She is also not above doing this for political reasons AND to change the demographics of the HP workforce to younger people etc.
As I posted about PG above, look for much "on shoring" of jobs next year no matter who wins the election...corps have to have profits from the developed countries now...so they will set things up here.
http://bloom.bg/LkuLFF
http://bloom.bg/LeniLO
http://bloom.bg/LkuLFG
I can'f find the links, but they are on MarketWatch, Bloomberg, or SA about Goldman is going to invest $60 billion in Clean ALternative Energy next year, and Icahn and Blackrock have loaded up on CHK...here is part of why:
http://bloom.bg/LeniLV
http://bit.ly/Ll5gUJ
Add in that the FB IPO has now cost brokers/funds over $100 million in a week...it is easy to see why individuals are out and are not coming back. Note they have referrenced "buybacks"...as part of what is holding equities up..
http://bit.ly/JqZkgV
Do not overlook "short" opportunities in a sector that many here probably never look at. I have a farm background so I keep up with trends and prices in general.
Yesterday, in a casual situation I overheard that in a cow/calf auction that pairs were bringing $2500. They always bring a premium in the spring of maybe 20%, but to give you an idea...in 1990 the top price was $750-1000. Feeder cattle here in KY (which always bring a premium in the spring) hit $2.00/lb. for a 400 lb. feeder calf, they were about $1.00 in 1990. I checked the futures again this morning and feeders was about $1.60, fat cattle (ready for slaughter) was $1.20-1.30. They were .70 in 1990.
We are just coming off of very, very high grain prices (corn, wheat, soybeans). Corn & wheat is down for about $8 & $12-14 respectably. Soybeans are still at $13+, that is down off the highs but not as much as corn & wheat.
There is always an argument that meat prices will follow grain prices. That is not always true. IN fact right now it is the opposite. Of course summer is the high use season (people grill out more).
Where I am headed with this, is that IF, fat cattle follow the feeder prices up in comparison, you can look to short cattle. Also watch soybeans & corn....IF we have a good growing season, you can short soybeans...maybe corn too. It is all about two things on grain, the number of acres planted & WEATHER. Any signs of dry weather or anything short of optimum yield will send prices higher, but average to good growing season will send prices plummeting and expect meat prices to drop accordingly. Hogs too....84 cents yesterday is high too based on history.
I went to the grocery last night, bacon was $3.50/lb on sale, and hamburger runs about $5.00/lb. Steaks basically double that. My take is that the higher meat prices on hoof or sorta factored in for now, but any further rise (especially in fat cattle) will send prices in the grocery skyrocketing. This usually dampens demand.
I am usually early on these trends, and it is my own take and IMO only. It could pay very handsome dividends in an uncertain mkt. if I am correct. Especially on any rise in meat prices or Soybeans.
Just watch soybean planting and weather ...
We will know by July 15 how corn yields will be and Aug.1 on soybeans. (this in USA only) Maybe 2 weeks earlier.
Declining oil imports - not necessarily due to the recession....
http://seekingalpha.co...
IMO, look for short term bounce, then resume decline.
7:37 AM The real nightmare scenario for the EU power elite is what if Greece exits EMU and thrives, says BNY's Simon Derrick. If Greece leaves, devalues, collapses, and then quickly rebounds (a la Iceland, though it was never part of the eurozone), the other struggling states (and their electorates) are sure to take notice. 3 Comments [Global & FX]
The more I read on the EZ...the more I see where Germany stacked the deck from the beginning and grant you other mistakes were made and not addressed, but mostly the opposition now is because they are the only ones thriving (that may be changing) but they want to keep it that way.
Expectations have been lifted skyhigh for cultures that do NOT share the work ethic of the northern Europeans, so now we see a demand for outcome-based lifestyles. The concept of earning these lifestyles is anathema to the entitlement culture, and will inevitably be a discarded concept. This basic incompatability dooms the EZ experiment to eventual failure, despite some befuddled (and extremely belated) attempts to change the entitlement cultures to be more productive. Short to medium term I still believe a massive effort will be launched (for political reasons) to "maintain the union", and it will take years for the final failure to register.
Back on the subject of changing entrenched cultures, it is much easier to imagine Germany becoming more like Greece than Greece becoming more like Germany...
Should Germany persist in the grand experiment too long, it may well lose the work ethic which provides its own standard of living.
Further out, though, it falls apart.
Will institute cancellation fees - too low to affect many ATM - but seems to be a response to the (FB) failure caused by such activities.
Further, Santelli reports the OSLO exchange is going to do something similar.
HardToLove
At least it's a warning shot....maybe it's a start.
Excellent find HTL
mj
Install the FairTax and include a transaction tax as part of the nrst. Abusive HFT's would vanish. False volume and fake "liquidity" would too, of course.
* Iaea says uranium particles enriched up to 27% at fordow site, higher than reported level
* iran doubled 20% uranium output in quarter, iaea says
* iaea inspectors say no guarantee all nuclear material peaceful
* iran tells inspectors that 27% uranium a technical glitch
* iran has installed 368 new enrichment centrifuges at fordow underground site – Reuters
Uranium enriched over 20% is considered "Highly Enriched."
http://tinyurl.com/78s...
It seems strange that Iran would let IAEA inspectors find highly enriched Uranium... Another WMD moment?
What is the most beneficial time for an Israeli attack? Before the US election, or after it? ME war = oil prices up. Probably gold as well. A lot of potential risk is coming to the surface starting in mid-June.
I keep wondering about the wisdom of locating one of our aircraft carriers in the Arabian sea.
A la N. Korea tactics.
hrdToLove
this is not good news. Israel may have been correct that time was running out. I thought it was a real threat because of the unity on strict sanctions.
The risk may not wait until June...I like no part of this.
1. I would have been shocked had the IAEA NOT found highly enriched U in Iran.
2. Iran has enriched Uranium far beyond 27% in the past, and probably already has constructed at least 4 or 5 warheads. This knowledge leaked to the various intelligence services about a year ago, and various events have transpired to confirm the news.
3. "No guarantee all nuclear material peaceful" - LOL, this is a joke, right?
4. "* iran tells inspectors that 27% uranium a technical glitch" Nothing but the truth - they were shooting for much more enriched levels...
5. "* iran has installed 368 new enrichment centrifuges at fordow underground site". Correct. And they have lots more at other sites where the IAEA has never been.
6. Iran seems to be teasing someone (and we all know who the primary targets are), daring them to do something about it...
7. Iran has successfully squashed its own Arab Spring street demonstrations. Hope that internal pressure would result in regime change has faded away...
Iran needs an Israeli pre-emptive attack to push forward their geopolitical plans.
If this doesn't work they may try another attempt to fit a warhead to an ICBM. Last time did not go well, but hey, practice makes perfect they say.
"I keep wondering about the wisdom of locating one of our aircraft carriers in the Arabian sea."
FPA, plunking a carrier task group in the Arabian sea is our own version of what the Iranians are doing, except in our case it is an inadvertent mistake of awesome proportions made by a naive President and his sychophant aides. Astoundingly, I really don't believe these idiots know how dangerous and foolhardy this is - how much it entices the enemy to initiate a successful and devastating first strike - nor what they would do if such a strike occurred.
Nuclear carriers are "strategic assets".
This would take us back to the conspiracy days when the idea was that W blew up the World Trade towers to give him an excuse to attack Afghanistan.
I give Voldemort more credit than that.
(OK, that was hard to admit, but...)
HardToLove
The whole system is designed around about 200+miles of operational space (minimum) for the support craft to protect the carrier. This includes antisubmarine and antimissile defensive perimeters. Plunk the task force into a bathtub environment and response times approach zero (and simply don't work). This is particularly true because it is impossible to operate at a constant state where everyone's fingers are literally on the weapons hot trigger.
Also, anti-sub operations simply do not work in such shallow coastal waters, particularly when much of the space is actively controlled and patrolled as part of the enemy country's shoreline and territorial waters.
Its a tactical nightmare. Those sailors are just targets sitting in a shooting gallery.
Radiation link
http://abcn.ws/LE67iJ
Missile base link
http://bit.ly/KZFwBQ
As An Encore to Bailing Out the Big Banks, Government to Backstop Derivatives, Clearinghouses … In the U.S. and Abroad
http://tinyurl.com/bnr...
I don't like the process of bailing out and I like even less the consequences of where it leads. The political process here in the U.S. is in grave danger of being broken beyond repair it allowed to continue down this very dangerous path, imo.
http://seekingalpha.co...
But that would, indeed, be speculative of course.
After the election, no matter who wins, IMO we get a huge package to boost housing. I think housing leads this time (not the million $$ homes) but normal houses. I already see it happening a bit here in KY & Tenn.
Grain prices are likely to be supported by growing import demand from Asia (including indirect demand for things like chicken which industry consumes a lot of grain to produce the meat products). The wacko American and European experiments with converting foodstuffs to fuel continues unabated, so that source of demand will also persist in supporting grain prices. In an election year any threat to the ag subsidies of all kinds will be muted, so any threat to prices which might stem from curtailing agcorp welfare should be discounted...
There is a real estate supply crisis (overbuilding in a number of regions, the results of which will be with us for years to come) rather than a housing crisis as such. As always (since day1) the answer to any such economic problem with the demand side of the equation which does NOT respond to the normal carrot of, say, very low interest rates and relatively easy credit availability - will shine a spotlight on job markets, which are the true driving force.
Job creation OUTSIDE of parasitic makework projects for government should be the focus, but I suspect that a mixed approach featuring huge government infrastructure building will inevitably be tried. We can only hope that a few small bones will be thrown to the nation's entrepreneurs, whence comes any hope of organic job growth.
National averages...
I wonder.
Still, I believe farms and farmland will lead the way out of the real estate valley of death. When it becomes possible to once again sell your small farm for a price anywhere near 2007 levels I would expect real estate conditions to begin to generally heal.
Housing MIGHT have been decoupled from land prices for the first time in living memory, however. The flood away from individual homes and into apartments is well advanced, and only a powerful period of job creation (and middle class expansion) can hope to reverse it.
Couldn't agree more with this entire paragraph...IMO, we get it in 2013 when things get tough with new debt limits and deficit spending. The only way to get anything passed will be to tie it to a very large stimulus program. As I said before, regardless of who gets elected. Obviously it will be easier if one of them does.
All you have to do to sell a good farm anywhere here or in the grain belt is price it...almost no matter what the price with multiple buyers wanting to bid it even higher.
Abnormally low interest rates combined with overly high, and I mean real high grain prices have fueled farmland into almost unsustainable prices for farming...corporate interest in land has also helped.
Trust me, true good farmland has a surplus of buyers and is not lower than it's highs.
I am not sure where you base your info from, and trust me I don't doubt your belief but i would like to see the stats you base this on.
Most of the farms being held off the market are waiting for prices to improve. I monitor land prices for producing farmland as part of my regular diligence... And they are still tracking far below what they were at the peak, though much improved from the bottom. "Farms" is really a separate category from "farmland", however, in that they usually include organic infrastructure (homes, livestock structures, etc) where the bulk of the value (and the value destruction) occur.
I too have read the recent scarelines about 20% increases in farmland prices in Iowa... Of course, it would be interesting to chart those prices through the recession, tag on something for inflation (which to be applicable should include food inflation of course), and see where the chart lands. There is a cause/effect dislocation in many of these debates, where the assumption is that the cart is pulling the donkey... Farmland prices are being bid up at the margins, and balance sheets are inflating as large holdings by agcorps are being "marked to market". This is an old part of the agcorp power game's manipulation, and one glaring reason to get government OFF their team and back to being an impartial referee.
I see prices going up for farms as a good thing indicating some improvement in the overall economy, but COULD this manipulation by major players (ADM, etc) cause some painful volatility just when it can hurt the most? Absolutely. Imagine the effect on agcorp balance sheets if their recent purchases of headlined parcels (designed of course to yield big "gains" in land prices just where it will do them the most good) create a backlash which pops the faux bubble (meaning that the true conditions in the underlying land markets are once again recognized AS reality)...
But now that the local land markets are utterly controlled by these nefarious forces, what else should be the expectation? Really, its a sword that cuts both ways. Its possible they will overplay their hands, but its more likely they will achieve what gains they need, then let the land prices subside a mite to protect their winnings. Like the Chinese and their avidly watched captive command economy, the agcorps have a fine sense of their own survival at work.
Will they engineer another 20% pop next year? Only if that chart I speculated about earlier (and underlying food inflation) will support it, in which case YES, they will do it and bank the asset value increases for their megamillions of productive acres and show a banner year once again.
In the end, the matter will be decided by the market's reaction to inflating food prices. Food prices are the donkey, not the cart.
But the more I think about it the more I like the idea that they will protect their winnings and cash their hedges soon, and let the ag markets cool down a bit... IF the macro situation is not still putting a strong wind at their backs. I believe that is not the case, so...
My read is that the market is still hot for US farmland values -- but there may be some merit to what you are both saying: "Land values in Iowa, Illinois, Indiana, Michigan and Wisconsin kept rising at the start of the year but fell “short of the torrid pace of 2011,” the Chicago Fed said. http://reut.rs/JPLHmt
In 1979-80 prime land values here in KY went to $2000/acre, then with the recession in the '80's and 20% interest it dropped to about $1000/acre. The same farms here are now $5000 - 10,000/acre. I personally know farmers who have turned down $10,000 for very prime land in a great location.
It stayed depressed until about 1990 when interest rates began to decline and quickly regained the $2000/acre and has now gained back to the levels above.
I would expect land in the states that MJ mentioned (the corn belt) and here in KY & part of Tenn, to stop the 20% /yr. gains, but if they just hold then land is OK...
I won't go into all the subsidy scenario's, with exception to one, and that is crop insurance that has premiums paid for by farmers. This is not a bad thing. Prime reason being, premiums mostly offset losses and are paid by only the farmers benefiting ...secondly, all crops are planted on borrowed capital. It is a requirement for a production loan. Without it you will see farmers reduce fertilizer and expenses that hurt yields and further reduce the supply....I seen this happen in the 80's when farm credit was extinct. The insurance was forced on washington and the gov't is the only entity that will insure it. Bush tried doing away with it, but it was overturned by him in a week when creditors told them they would not lend without it.
For my part I agree about the source of much of the manipulation - but barring a change in the political or geopolitical (exports) factors (history has shown how important these are to big agbusiness), what do you see happening to drive prices down again?
Perhaps we are on the same page, however. I think the manipulations have reached a peak, and will taper off now as the agcorps bank their gains and rake in their hedges. I don't see this as a particularly shocking reversal, but more of a normal episode of volatility. I don't gamble on agfutures, but for those that do, I agree, now is NOT the time to go long, though next year we could see another push upward as world demand for food once again resumes the inevitable consumption cycle.
If the idea is to exit American agstocks now and wait and see, that seems a good strategy to me, short-medium term.
We are basically on the same page TB, the key here being "agcorps bank their gains and rake in their hedges." They create the reasons to break markets. It is always not rational or what should be. Speculators do not stand a chance with these guys.
I expect credit conditions in the global setting will be the main reason. Along with increased acreage planting, and IF it's a good growing season just 2-3% in supply can drop mkt.'s 50%. No rhyme or reason but it happens with ag commodities.
Credit conditions...
Could be. I believe in this case that those credit conditions are more a shadow cast by the true political and geopolitical root causes, however. Again, a subtle case of discerning cause and effect. This time around I am NOT expecting dramatic shifts due to the upcoming elections (not even the American ones), though the headlines and wailing from the losers will make it seem like whatever happens IS the end of the world (normal).
No, this time around we are in a very unusual situation, where dying center-right regimes in Europe are handing off costly (and failing) socialist/fascist (nasty hybrids, those) to ascending socialist/fascist governments (France, Germany, even Greece) while in America we see a leftist regime handing off socialist/fascist experiments to a centrist administration (and a center/right Congress) which will receive steady but lukewarm support from the new government. As regards topics like American and European agsubsidies, "no change" would be the most likely overall result, or perhaps even "slightly more" transfer payments from long-suffering food consuming taxpayers to parasitic agcorp welfare recipients.
So, I expect the headlines to be wild, but the results to be mild.
Pretty much business as usual, but only if one can interpret the insane world situation as "usual".
Anybody else?
HardToLove
EDIT: This on articles entered by clicking a link in e-mail, if that makes a difference.
They are changing things again....
Not surprising that we see no effect on the blogs.
They don't count anyway.
3:43 AM Last month Citigroup (C) dismantled the panel in charge of overseeing its disposal of toxic and unwanted assets, confirms a company spokeswoman. At the time, around $200B of assets remained in Citi Holdings, down from $600B when the unit was created following the bank's near-collapse in 2008. [Financials] Comment!
2:05 AM Fifteen years after the Prius (TM) went on sale, the car has somehow escaped niche status and transformed into the world’s third best-selling car. Sales jumped to 247,230 vehicles in Q1, with U.S. demand and Japanese incentives contributing to the hybrid's continued surge. [Consumer] 1 Comment
As has been exhaustively discussed elsewhere, most knowledgeable observers agree that the prius-type hybrids can be a good choice for the right buyer, particularly given upwards of $10,000 in transfer payments from your fellow Americans (plus whatever the Japanese taxpayers chip in), whereas EV's are another story...
It will be intersting to see how the Prius EV does on its own, vs being subsumed into the herd of its hybrid brethren.
6:12 AM Reuters calculates that JPMorgan (JPM) has offloaded $25B of profitable securities in order to boost its Q2 earnings following the massive losses at its CIO. Reuters uses Jamie Dimon's assertion that the bank made a $1B profit on the asset sales and JPM's historical return of below 4% from such instruments as a basis. However, taxes would have eaten up $380M. [Financials, Top Stories] Comment!
Its a sign of desperation in the board room, imo.
"Syrian opposition “liquidates” Assad’s brothers
In the past two days, Syrian opposition sources have claimed to have liquidated Dep. Chief of Staff, Bashar Assad’s brother-in-law Asif Shawqat Sunday morning and his brother, 4th Division chief Maher Assad Saturday. US intelligence circles soon established that Maher Assad was alive".
Its not all one-sided in Syria. Syria's nonfriends among the Arab states (particularly Saudi Arabia and the oil sheiks) have been reportedly massing forces and working with Turkey...
American naval movements (though grossly incompetent, as discussed earlier) are in place...
If Iran is even partially neutralized on that side of the equation, something could happen very soon.
The Canadian action did not occur in a vacuum.
http://bit.ly/KZBtFx
Something to watch out for if you think of investing in traditional banks. "Term Risk". Since the purpose of "Operation Twist" is to reduce long-term interest rates, and everybody and his brother wants mortgage loans made by the banks, this operation introduces a term imbalance onto the banks.
IOW, they issue loans at very low rates that are 15+ years in duration and they are getting treasuries and bonds that are both lower-yielding and of shorter duration than the outstanding mortgage loans.
Now, I'm a total n00b at this stuff, but from what I've read so far, this is a no-no. If rates begin to change ...
The thought was sparked by "Stocks: A Decisive Month Ahead In June" by Eric Parnell. That wasn't the main topic of the article, but my associative processor kicked in.
If I'm off-base, likely since I'm not educated in these areas, I would appreciate being enlightened.
HardToLove
New QC is ready.
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