Xyrus

Preparing for the Fall

Adan- Some companies allow you to do that with PCRAs (personally directed retirement accounts). You can buy just about anything you want. I think it would be a good idea to make that standard, but unfortunately that's not the case.

Daffy- You should do yourself a favor and stick with topics you actually know something about. I can tell, quite easily that you know squat about climatology.

For your benefit, what you are describing are meteorological events. Meteorology is for short timescales; there will be anomalies (periods of heat or cold, drought or flood, etc.).

Climatology is based on long timescales, usually decades to centuries. To illustrate, a week of above normal temperatures really won't affect climatological results that much. However, ten years of above normal temperatures will.

In other words, you can't point to your thermometer and say, "It's below freezing outside, so much for global warming." It doesn't make any sense. That would be like me pointing to a single blade of dead grass on my lawn and saying, "There's a blade of dead grass, so much for Chem-Lawn!".

Another piece of information you overlook is that the warming is an average taken over the globe, not your backyard or any particular city of choice. Some places will get warmer, others will get cooler, and yet others will stay the same. It's the overall global average that is going up, not your backyard.

Lastly, global averages have been rising. Now whether you want to believe it is anthropogenic (man-made), or some natural cycle, or a combination of both is up to you. The copious scientific research pretty much lays most of it at our feet. But what do scientist know compared to some semi-anonymous poster on a financial board.

As far as the article goes, I'm sending the author a bill for the bandwidth I had to use to download it. While it is pretty clear to see that market it is for some rocky times, it has little to do with some spooky global conspiracy or the general intelligence of the investing population. The sky is dipping, not falling. And for anyone on this board, that shouldn't indicate a time to panic, but a time to buy.

~X~

Another Rough Jobs Report: This Trend Has Legs

Why does everyone point to the consumer spending numbers and say, "AHA! People are spending money so the economy is going to be O.KZAY!"

Have people forgotten that the FED borrowed a few billion from China to hand out checks? OF COURSE CONSUMER SPENDING WILL BE HIGHER, YOU JUST HANDED OUT A BUNCH OF "FREE" MONEY!

And they didn't put it into savings, or paying off debt. They treated it like free money and are out spending it.

Duh.

It's seems like every other day we read about company X is laying off workers and company Y is shutting down locations. If people are out spending money but people are losing jobs, you should be suspicious.

~X~

Consumer ETFs: Retail and Consumer Discretionary Are Whipping the Indexes

Consumer discretionary is doing well because the average individual has all the financial know-how of a grapefruit.

The savings rate in the US is negative, consumer debt is at record levels, and we have unprecedented numbers of people going late or defaulting on their loans and credit cards.

And as Walmart et al. have shown, people aren't taking their FED checks (that our children will be paying for, thanks congress) and paying off their debts, or even putting it away for a rainy day. They're spending it on discretionary items.

One definition of insanity is doing the same thing over and over again and expecting a different result. That's the average consumer. They're once again spending (borrowed) money in the hopes that it somehow makes their debt go away.

Congress, of course, also hopes that by going deeper into debt (FED checks), that they will somehow stimulate the economy. Of course they're wrong. Those checks won't last more than a month or two, especially with prices spiraling up. Then we will see what consumer spending is really like, given the somewhat poor state of the economy.

By all means play the consumer discretionary angle. But you may want to get out before August. However, in a slow economy Walmart is always a good bet.

~X~

Calling a Housing Bottom

Not necessarily bds.

The lending industry is critical to a lot of the market, not just homes. Everything from car loans to mergers are being affected by lending constraints.

When there is a bottom in lending, it may take months or years for housing to pick back up, especially if the now inflation conscious Fed has raised rates back up to reasonable levels.

We have a negative savings rates, an inflated dollar, a massive oversupply of homes, a slow economy, and bleeding financial companies. All of this impacts the home builder end home buyer in one way or another.

~X~

Homeowner Equity at Post WWII Low

That would make sense analyst, but that isn't what Americans have done. Instead, they went on a massive spending binge from all the available cheap credit under the auspices that their homes would keep going up. It was at best, naive.

Houses, compared to wages, have been high priced for a while. Maybe this corrction will level that out a bit.

~X~

Airlines Will Profit No Matter What

Current best geophysical estimates of total world oil reserves including tar sands and oil shale is 3.74 trillion barrels of oil. The easily extractable crude is less than a third of that.

But if you want use your magical figures, let's say there is 13 trillion barrels of oil. A barrel of oil is 84% carbon, and most of a barrel is used for generating fuels. So a barrel of oil is roughly equivalent to about 105 kg (210 lbs) of CO2 production per barrel.

Now using you're magic 13 trillion barrel number, burning it all would release about 1.37x10^15 kg of CO2 into the atmosphere. Dividing by the volume of the earth's atmosphere, that gives us an increase in atmospheric carbon of 5.3x10-4 kg/m^3.

That doesn't sound so bad? The total mass of the atmosphere is about 5.2x10^18 kg. So you've jacked up the CO2 concentration from .03% to 3%. Not so bad still? That's toxic, as in prolong exposure can kill you, as well as most forms of surface dwelling life. Not to mention our planet would be a boiling sauna. Given the carbon cycle is about 150 years and our consumption rate, we'd pretty much guarantee our own extinction, along with the other unfortunate critters who happen to exist at that time.

But fortunately we don't have that much oil, so the damage we can cause from oil is limited. At our current consumption rate (and rate of increase), IF we can extract all the oil, we are looking at 70 years best case. If everyone ramps up to US levels, you can shave another couple decades off that. The easy stuff will be gone in the next 20 or 30 years.

Coal is a whole different (and uglier) matter.

~X~

Closed-End Funds: The Preferred Way to Play the Financials

Not to second guess your investment decision, but there are some things to consider before investing in something like JQC.

First and foremost, JQC (like a number of other closed end funds) has a managed distribution policy in place. For those who don't know, a managed distribution policy means the fund pays out a regular amount at whatever interval they specify (monthly, quarterly, etc.). The good part is that you get income you can count on every month without any fluctuation. The bad part is, if the earnings of the fund are less than what is required for the payout, they return capital. That's not necessarily a bad thing (like for retirees), but before you follow the sweet dividend yields make sure you're not just getting your money back. According to CEFA, the income only yield was 6.99% but the distribution is over 10.7%.

Second, XLF has an expense ratio that is 0.75% less than JQC. That should be factored in as well.

Third, XLF has outperformed JQC over the long haul, though JQC has only been around a couple of years so that may not mean much.

Lastly, there is at least one ETF that invests in preferred securities. PGX is a fairly new ETF that invests in a bucket of preferred securities, many of them in the banks you listed off. It currently yields around 7.3%, which isn't too shabby for an unleveraged ETF. Plus it doesn't have any hidden gotchas that closed end funds can have.

~X~

Dow: Gov't Failure to Develop Energy Policy Is Harming US Industry (At Our Expense)

To give you an idea of what we could have done vs. what we have done:

Estimated Cost of Iraq: $3 trillion
Estimated Number of Households in US: 112,000,000
Cost per household: $26785
Avg Cost per Watt of Solar Power (Installed): $9

Using those numbers, every household in the US could have received a 3 KW solar installation, which depending on where you live and how much electricity you use could save anywhere from 20-60% of electrical usage. That's a good reduction in the amount of fossil fuels used by our country.

Just an example.

~X~

Is There Profit In Tree Hugging?

Bjorn Lomberg is a mathematician (a statistician more accurately), not a climatologist. You might as well read Dilbert for insight into open heart surgery.

If you are serious and open minded, you may want to study the volumes of research world scientists have been producing about climate change. And if you're technically inclined, you can even download the models they use and run them yourself.

Despite what people such as Brian here would have you believe, there is no global conspiracy. The research methodologies, the data, and even the source code to the models themselves are available to the public. A few minutes using google and some technical know how could have you running the models yourself.

Given the intelligence of the average American and the general decline of education in math and hard sciences, I find it amusing that people would rather listen to those who have no training in the climatological sciences than those who have spent their lives researching the subject. This would be like getting sex tips from a monk.

To put it another way, if it isn't in a peer-reviewed science journal, then it doesn't mean squat. Any idiot can write a book promoting or decrying the favorite trend of the month. However, you have to have a VERY solid case before you get published in a science journal.

So until we start seeing peer-reviewed and duplicated results showing that no warming is happening, I'm going to have to go with the researchers.

Peak Oil Myth? You mean like how world demand will outstrip supply this year without an increase in production? Peak oil simply means the point where demand outstrips supply. That's been threatening to happen for the past couple of years, and looks likely to occur this year. Can supply increase? Sure. But can it increase to the point to exceed demand again considering countries like China and India are ramping up? Maybe. But when processing tar sands begins to look profitable you may want to consider that the glory days of easy oil might be coming to an end.

Unlike global climate change, we don't have the world monitoring technology that would allow us to know how much oil is left. We can make some decent approximations based on known reserves, but we don't know if there is a little more, a lot more, or no more places to look (yet).

Yes, there is plenty of profit in tree hugging. As energy and materials continue to climb, Joe Sixpack is going to find that alternatives are becoming competitive. If oil goes to $200, you may see a lot more solar panels.

~X~

When Will American Realize the World Has Changed?

FatCat, we don't have the resources. That's one of the problems. You can talk about ANWAR drilling until you're purple, but the simple fact is there isn't enough oil there to run the country for more than a few months at our current consumption rate.

I'm surprised an article like this has taken so long to appear on SA. The government and media have a vested interest in keeping Americans thinking that we're still on top of the world. The truth is, we aren't. For some bizarre reason our leaders have thought that all we need to do is keep doing what we're doing and we will remain on top. The Romans thought that too, and that didn't get them very far.

The fact is, third world countries won't stay third world forever (unless through authoritarian control you keep them there). We've been surreptitiously or blatantly throwing our weight around for decades, and the world has become a little bit tired of it (especially after the last eight years). Now that they have clout, they're beginning to turn the tables. Surprise, it sucks.

We are following the same path of decline that many other great nations have followed before us. It seems strange that no one is doing anything about it. In fact, they're making it happen faster. Can anyone else think of something better to do with $400 billion for this country than throwing it into the deserts of the Middle East?

I think the world (not the one portrayed to you by CNN) has realized that the US may actually be in trouble. We have the strongest military, but in this day and age that is almost meaninglessly. Wars are too costly and end up using/destroying resources and infrastructure that can be put to better use. The rest of the world has figured this out for the most part, but we haven't. The rest of the world is more than happy to watch us spend ourselves into oblivion for our arrogance, while they use their economies to accomplish their goals.

The world changed. We didn't. Now we're in a game of catch up but we have dug ourselves into quite a hole. We have maybe a decade or two left to figure things out before we really hit some bad times.

But for now American Idol will have to do.

~X~

Farm Bill Stands to Overhaul Retail Forex Industry

Die are you serious? Why would you want to deal with an unregulated bucket shop, which most currently are?

If someone wants to lose consistently, it's well within their right to chase offshore firms that will happily bilk them out of their money. But for those who actually want do some real trading in the FX market, having some strict regulations would be a nice change.

Of course, that probably means less leverage and would knock a lot of the retail investors out of the market. So much the better. You shouldn't be trading with 100:1 leverage anyway. You want those kind of risks, go to Vegas.

fxtrader, what about silver and gold then? People buy them as safety nets and (less often) as appreciation. Should people be banned from investing in them? Gold and silver really aren't all that much different than any other commodity. They're resources, and there is only so much of them.

Silver is also an industrial metal. So is platinum. So exactly which commodities should be allowed for investors and which shouldn't be? Do you draw the line at bullion? Do you make it illegal for people to buy and sell bullion as well? Do you draw the line at consumables? Who, in fact, would be allowed to buy these commodities? Do you artificially hamstring the buyers in high demand markets? Do you implement price controls when the legitimate buyers hoard due to supply underruns? What about surpluses?

You can't just cut out certain classes of investors and have rainbows and puppies in the market. There are a lot of questions that would have to be answered and very careful crafting of rules if you were going down that path. And even then, the whole thing could blow up in your face very quickly. For example, what happens if you cut out the investors and the "legit" players take up the hoarding. Now they are even more dangerous as they control larger stakes. The market would be at their whim.

Speculation is the name of the game, from stocks to real estate to commodities. You can't just take a knife and cut out the parts you don't like without considering ALL of the consequences.

~X~

E*Trade Primed for a Breakout

Improvement? Maybe. Breakout? Unlikely. They could have the best management team, but until their books look better I don't see a whole lot of people rushing to buy, even at these prices. Too risky.

A buyout is possible, but unlikely until they shovel more of the garbage off their books, unless they are bought at lower prices to account for the toxicity.

This one would be a wait and see for me.

~X~

Inflation Falls for Fourth Straight Month

Hocus Pocus Alakazaam, make these CPI numbers a SHAM!

*POOF* Uh...er....wait.

Inflation under control? Flat energy? Decrease in gasoline? Which country are they talking about? It certainly can't be the US, as anyone who eats and buy gas would clearly tell you that is a huge load of BS.

My grocery bills, electricity bills, and gas have all increased by quite a bit just in one year. I even drive a hybrid and I notice.

Now I do ok for myself, so I can absorb it but what about everyone else who is now paying $4 for gallon of milk and $3.50 for a loaf of bread, and $4 for gas?

Yeah. CPI = Fairy dust.

~X~

Except for Autos, Retail Sales Beat Guidance

What consumer spending?

What I see are people buying non-discretionaries at higher prices using credit cards. That's no consumer spending. That's the consumer praying their credit limits hold out long enough for some sort of turn around.

I can tell you why weak job growth and weak economy don't immediately affect consumer spending. It's because the average consumer is a financial idiot. The average American has a negative savings rate at the moment, but they have multi-thousand dollar credit limits. When things start getting tight, they don't cut back spending. They put it on a credit card. And when that card is full, they'll put it on another one.

Credit is the American Way. Spending more than you can really afford is the American Way. Or at least that's what sold to the populace.

~X~

Commodities: Bubble or Not?

CrossingTheT, you are incorrect.

Democratically elected governments go to war whenever they damn well feel like it. They just have the additional hurdle of convincing their population that there is a clear and present danger that has to be dealt with. Once you have the population believing in whatever boogeyman you've created, you can get them to do pretty much anything you want them to do. As an example of this, look at Hitler's rise to power. He didn't slash and burn his way to the top. He got the people to believe in him and they WILLINGLY gave him all the power he wanted.

The same thing has happened many times throughout history, even in democratic regimes. And, more than likely, it will continue to happen many years into the future. Our current set of "problems" we have started over 50 years ago when we decided that securing our oil supply was more important than some nations soverignty (Iran), so we decided to help overthrow a democratically elected government (in Iran) and replaced it with the Shah (made Saddam look like a cute cuddly teddy bear). Yeah, couldn't see that one coming back to bite us on the ass.

Nuclear war? For what? What would they gain? The point of any sort of resource war is to capture the the resource. Nuclear weapons do not capture anything, thy destroy. What good is an oil field if it is irradiated to the point of lethality for the next 10000 years? Nuclear weapons are used for mass destruction of infrastructure (cities, manufacturing centers), production (people who work there), military centers (bases and such), and under certain conditions ship and troop conglomerations. Nukes are really a useless weapon unless you're talking about obliteration. Annihilating a country gains you little. Sure you have a victory but then what? A radiated wasteland full of charred remains is hardly what one would call a spoil of war.

There is no bubble. But there is a series of events which have happened at the right time to jack prices. The dollar has lost a good percentage of its value, which in turn drives up the price. There is also an increased demand. In some cases, there is ample supply but there isn't enough infrastructure to move it around or refine it. Whenever there is a bottleneck in a supply chain, the prices will go up.

PaulTaut, you have no idea what you're saying. Suspending EPA regulations for refineries? Do you have the slightest idea how dangerous the chemicals are coming out of a refinery? Let me guess, as long as thy don't build it near you it's okay, right? Even with the regs, no one wants to be near a refinery and they still pollute the environment.

So in summary, we have a decreasing currency, and increasing demand. In some cases, we have the supply but lack the infrastructure to move it/refine it. All that leads to higher prices. Bu don't kid yourself. A good chunk of that profit your seeing isn't profit, it's just offsetting inflation.

~X~