untrusting investor

Giving Thanks for the Unemployment Rate

Maybe Larry Summers can take most of the $5+million he received for consulting and speaking for Goldmannite events and clients and actually hire a few thousand people with his own money to kick start some employement.

The Must-Know Connection Between Stocks and the USD

Cliff,
But the Forex/currency market is many many times the size of the equity markets. With the much larger size of the currency markets, it only seem logical that they would tend to have more important effects that you want to give them credit for.

In addition, with the role that the US dollar plays as an asset in and of itself in foreign country reserves, then it also seems illogical to consider it any less of an asset than equities, bonds, commodities, or any other class of assets. Certainly one would think that China considers their $1+ trillion of US dollar reserves as an asset.

Further, if as you state that assets such as equities or commodities are reflating or increasing in value, then you need to explain why that should be so. As many commentators, including yourself have stated views that assets are overvalued by most fundamental and historic metrics at this point in time. In short, it sure seems like the falling dollar (falling asset value of the dollar) is a much better explanation of the rise in other equity and asset values as opposed to the visa vera view you are proposing.

Will Dubai's Standstill Spark a Reversal in the Dollar?

Yes, it looks pretty ugly with US futures pointing to big sell-off. Oil, gold, silver, etc down 5%+ late on Sunday evening. Sell-offs in equities in Asia and Europe looking not very good. If the short covering on dollar shorts get rolling, it could well be a pretty nasty sell-off for awhile now. And if fear picks up, it could make for even more of a nasty correction. Will be interesting to see how this plays out Friday and the following week.

How Low Can the Dollar Go?

Well,guess we will all find out about the carry trade and the US dollar shortly here. Since the Dubai debt default rumor on Thurs. it seems both Asia and Europe are selling off a bunch. US futures are poised for a big sell-off on Friday morning. If short covering on the US dollar carry trade gets rolling it could get to be a pretty ugly picture for the longs, commodities, gold, and currencies. We shall see how the dip buyers react to what is looking like some fear returning.

Canadian Royalty Trusts – Will Dividends Rise or Fall?

Think you are wrong. Would be very surprised to NOT see the HTE deal go through. The HTE shares continue to trade 1/2-1 million shares/day since the announcement and would suspect that KNOC or their agents are buying every share they can at current market prices which are basically trading at $10 Canadian divided by the C$ exchange rate daily. They are extracting about a $0.10/share premium, ie paying 10 cents less than market value as above to buy shares every day.

Thus would be very very surprised if the deal does not go through. Would suspect that between HTE management, KNOC and agents, and low price buyers ($3-6 ranges), that between them they own more than sufficient shares to approve the deal.

BTW, we purchased quite a few shares of HTE back in the $3-5 ranges and have now sold all of our HTE holdings gradually after the KNOC announcement and ramp up above $9, with the last part being sold yesterday. After the last HTE dividend payment, it just made little sense to continue to hold with the shares essentially selling at deal price adjusted for exchange rate, and it made more sense to lock in pretty good gains plus dividends by exiting the HTE stock.

Unfortunate for the "old" $10-$40 HTE shareholders, but just cannot see anyway that they can ever recover on the investment. Maybe some competing higher bid will magically appear, but we personally think that is unlikely.... but you never know, it is an outside possibilty. Just not one we personally are willing to gamble on.


On Oct 22 08:22 AM longoil wrote:

> KNOC has made a bid for all outstanding HTE trust units:
>
> "CALGARY, ALBERTA--(Marketwire - 10/21/09) - Harvest Energy Trust
> ("Harvest") (TSX:HTE.UN - News) (NYSE:HTE - News) today announces
> that it has entered into an agreement (the "Arrangement Agreement")
> with Korea National Oil Corporation ("KNOC") for the purchase of
> all the issued and outstanding trust units (the "Units") at a price
> of C$10.00 per Unit for a total cash consideration of approximately
> C$1.8 billion plus the assumption of C$2.3 billion of debt."
>
> This is great new for anyone who purchased HTE over the last year
> at $7.00 or lower a share that stand to make a 50% profit.
>
> However, I will be very surprised to see this deal go through. Many
> HTE share owners were Viking and Calpine trust unit holders who bought
> in at anywhere from $10 to $40 per unit and were then taken over
> by Harvest Trust. I doubt they would be willing to take a huge capital
> loss to give KNOC access to cheap Canadian oil.
>
> The Koreans are following in th footsteps of their big brothers (The
> Chinese) and are scouring the world for dwindling oil resources.
> Given the currrent market conditions, they are taking advantage of
> the poor share price of HTE brought on the inept management of CEO
> John Zahary et al.

Unemployment Claims: Best Data We've Seen in a Long Time

Very interesting. Had not seen this before. Sir James Goldsmith pretty much accurately predicted (in 1994) some key current issues such as rising unemployment in developed countries and declining incomes. His arguements make perfect sense in explaining that capitalists will always seek the lowest labor costs since capital, manufacturing, and technology can easily be exported to the lowest labor cost country and then goods/services are reimported to the developed countries for greater profits for the capitalists. And he is 100% correct in showing that such a process basically destroys the stability and economic system for the majority of citizens of the developed countries (even though it benefits the elites, oligarchs, and politicans). It has resulted in the outsourcing, offshoring, negative captial flows, high unempoyment, lower income distribution, etc. in the US and Europe exactly as he predicted.

This is exactly what has and is continuing to happen in both the US and Europe and it will continue to get worse. The standard of living in the US and Europe will continue to decline unless major structural changes are made. Of course the primary beneficaries being politicans, lobbyists, wall street, and large public companies .. ie. the elites will continue to benefit and have attempted to mask the large structural issues with massive government borrowing and absurd public policies that continue to significantly harm the developed world's economic and social systems.

It is not that there are no rational solutions, as Goldsmith proposes, because there are. But nothing rational will change in the US with the current system of total economic and political control by a tiny elite composed of politicans (both parties), lobbyists, wall street, large public corporations and big vested interest groups.




On Nov 25 05:57 PM Al-USA wrote:

> James Carlini said:
> "
> The middleclass has been gutted and I don't see the other sectors
> - government, teachers, unions being able to take up the slack.<br/>"
>
>
> Yes, the working/middle class has been and will continue to be gutted,
> as per the design of the capitalist elites, way back in the passage
> of GATT in 1994, and perhaps earlier. But, as is apparent now, certainly
> the process of capitalist globalization was the beginning of the
> end for the relatively high living standards of the American masses.
> Of course, the absence of increasing wages, relative to inflation,
> was substituted for a time by the introduction of massive credit,
> or debt. But the limit to credit or debt, to substitute for the lack
> of rising wages during the boom period of capital from roughly 1982
> to 2000 has now been reached; with the inevitable crisis of capitalism,
> or crisis of over-production.
>
> But don't take my word for it, get it from one disgruntled billionaire
> elite, privy to the plans of this elite class, years ago, when, in
> 1994, he said publicly that globalization would result in reduction
> in wages, benefits, mass unemployment and soon, increased taxes on
> the masses of the working/middle class.
>
> This elite, billionaire Sir James Goldsmith laid it all out to Charlie
> Rose in a 1994 video, titled,
>
> "1994 Globalization Warning"
> solari.com/blog/?p=3309
>
> This is the establishment, aka Financial Oligarchy, corrupt capitalist
> elites, and their political cronies, against everybody else, but
> principally against the American masses.
>
> Now, a conscious policy decision was set in motion, at least as far
> back as 1994, to increase the profits of the capitalist elites with
> the purposeful end game result of persistent mass unemployment, after
> the massive debt/credit (which substituted for the absence of wages
> to increase, after inflation) was maxed out.
>
> If you care to see how this parasitic elite class thinks of the rest
> of us, take a few minutes to see the 1994 video below. I could summarize
> in text, but getting it from the elite himself is most informative.
>
>
> "1994 Globalization Warning"
> solari.com/blog/?p=3309

The Stimulus Fallacy: The Problem Is Who the Money Was Given to

Wait till you see where unemployment insurance premiums and related payroll taxes are going to get to in 2010 and 2011. Somebody has to pay for these and employees and employers will see large increases. Just saw a comment by a small business owner that sees payroll tax increases going up so much he cannot afford to bring back the 1/2 staff layed off, even if business does pick up, as he needs to conserve cash to pay for increased costs next year.

Saut: Expect More Upside, Driven by Underinvested Institutional Investors

Interesting that Saut would claim instutional investors are underinvested and thus will have to invest. Seems there was just another article claiming that institutional investors are cutting their equity stakes because they have little confidence in the recovery rally.

Can 2004 Teach Us Anything About 2010?

Well, was it the unions that asked for a superdome, or was it the corporate and business owners that demanded a superdome including any concessions and subsides that went with it?

You also fail to mention that corporate management and the BofD is responsible for the corporation. Any corporate management that is honest has to take responsibility for all decisions, instead of blaming unions, government , consumers, or whomever.


On Nov 24 04:34 PM Tomcat101 wrote:

> The unions have made Michigan a great, big ghost town...
>
> On Nov 24 02:13 PM JAMES CARLINI wrote:

ETF Market Trends: Excess Liquidity Still Drives Equities, Commodities Higher

Clinton,
You missed a possibly major bearish factor. Effective Dec.01/09 the margin requirements for 2x and 3x ETF, as per new regulation, will now double and triple.

This effective reduction in margin credit may well have a pretty significant effect on the 2x and 3x ETF's and cause some significant selling in these ETF's. In our view, this will pretty much kill off or at worst make virtually all 2x-3x ETF's a totally unattractive trading vehicle.

If that is not pretty bearish, not sure what would be.

Institution Confidence in Rally Fades

Good information. Thanks for posting it. Not surprised to see that institutional investors are not willing to allocate more capital to equities. The big pension funds can't afford yet another disaster if the market falls, so it would not be surprising to see them allocate more to fixed income.

John Hussman: Alert for Tanks

Probably about the only thing one can do somewhat safely is to "trade in and out" as you mention you have done.

Is The Fed Getting Real About Valuation And Bubbles?

Andrew,
An interesting piece and certainly there may well be a role for IVS under certain conditions. However, as a practical matter one has to guess that it will never be implemented in most cases.

It some respects, your article thrust reminds us of the old Enron, Worldcom debacles back in about 2000. They both went to the heart of the "audit process" of large public companies. Both Enron, Worldcom, Tyco, and every other large public company was audited by large public CPA firms and certified to basically "fairly present the financial condition" of the public companies. Well nothing could have been further from the truth as Enron, Worldcom, and other large public companies were infested with fraud, misrpresentation, and grossly overvalued financial statements.

Well, audits are basically supposed to "reasonably guarantee" that financial statements are fair (valued properly). They cost a great deal of money, certainly in the millions annually for large public companies. What "reasonably guarantee" and "present fairly" mean to CPA's is that the financial statements are NOT MATERIALLY MISSTATED. Thus the technical definition of "materiality" is important to CPA's and audits in assessing the fairness/accuracy of financial statements. The definition of materiality is somewhat flexible, but a good working proxy would be 10% of revenues or 10% of net income. This still provides quite a bit of room for error, but most people would probably agree that if reported revenues or reported profits were more than 10% wrong, then it would be pretty hard to argue that the financial statements were fair or very accurate. Yet Enron, Worldcom, and other received "clean audit opinions" when in fact they were "materially misstated" for at least several years prior to their implosion.

The point of the above is that no matter what valuation or standard ... audit, IVS, or any other that one ascribes to any security, property, or asset ... it will not eliminate the dishonesty, fraud, theft, etc. that is a outcome of dealing with large sums of money and the temptation to steal one's way to wealth.

We personally believe that there is a much more cost effective and practical way to deal with the central issue, namely fraud, misrepresentation, overvaluation of assets, dishonesty, etc. The central problem is simply that it pays to steal, lie, cheat, misappropriate assets, overvalue assets, etc. And the more and bigger the fraud, the more profitable it is of course. And the price of getting caught is far far too low. To wit you can cite hundreds or thousands of examples of this. For example: Haliburton/Brown contractor frauds in Iraq, Pfizer multiple frauds and settlements with medicare, Boeing and contractor frauds, etc. Let alone the ratings agencies and Wall Street banks with derivitives, AIG, etc.

The fact is that the US has laws prohibiting and making all this illegal (namely Rico Law and Foreign Corrupt Practices Act and many others) but they are simply not prosecuted and enforced. Thus it pays to steal and the bigger you steal the more you make, and the big boys certainly know it.

The simple solution is to set up a National Fraud Enforcement Division and make fraud and other white collar crimes a national priority.
- Should use a "contingency fee" model, just like private lawyers do and not cost the US taxpayer a dime. Should easily be able to fund itself as asset recovery via Rico law provides for total consfiscation of assets and severe jail time for convictions and should result in many billions of dollars in asset recoveries. We would think that staffers could literally become millionaires within 10 years.
- Could be staffed with literally thousands of lawyers, investigators, FBI agents all earning their pay based on pay for performance.
- When CEO's, board members, public company executives, inside traders, medicare fraudsters, ratings agency executives, and other beneficaries come to understand that they can lose every asset they have and go to jail for many years and they actually are prosecuted .... then the risk-reward will substantially change in corporate america. One would then expect that much of the excess that has gone on for decades might well be reigned in then.

Just our view on one solution that might well be a lot more cost effective and go a lot further towards dealing with the culture of greed, dishonesty, fraud, and so on (of which valuation is just one subset of the problem) which so infects wall street and the entire public company and finanacial markets environment.

NPR's Planet Money spends a day with Barney Frank's Financial Services Committee. "We talked to 13 congresspeople, 12 of whom admitted that they don't understand this at all. And the guy who thought he did really didn't."

Bill,
So who do you suggest then, if not CPA's or at least someone who has the ability to understand fairly complex financial issues? At least professional finance people can understand what the issues are.

Ethics, morality, dishonesty, and self-serving behavior are not the pervue of one particular group. There is certainly plenty of that in virtually any group whether they be politicans, lawyers, CPA's, contractors, economists, artists, athletes, or whatever.

Somebody has to make legislation and regulations, so as a point of interest, who do you think should be doing that?




On Nov 21 08:14 PM Bill S. Friend wrote:

> More legislation formed by people who dont understand the issues.
> I question the motives of the accountants employed to inform the
> ignoramuses. There surely wont be any loopholes in this regulatory
> structure... Perhaps we should burn it and start fresh after reading
> The Constitution one more time.

Is Monday the New Rally Day?

It was not an analysis nor a prediction .... but merely a ST observation. Possibly helpful to ultra ST traders looking to get in/out of trades within a few days.

Other SA articles, such as Bespoke, have run quite a few comparisons on: days of week, months of year, bull/bear trend runs, etc for whatever folks choose to interpret them as.


On Nov 21 06:13 PM Gross Profits wrote:

> I'm not a statistician, but I can recognize that this is a weak analysis.
> The market during this period generally moved up, so most days were
> up days. How about comparing the returns on Mondays to the average
> of all other days during the period of interest. Better yet, since
> the market is cycling, compare returns on Mondays to only up days.
> The fact that the dollar is down on these days simply confirms the
> strong correlation everybody knows between equities and the dollar.