basehitz

Gold Explodes, Silver Shines, What's Up with Natural Gas?

As you are aware, Hugh Hendry and Robert Precter are USD bulls and think the market is headed south. Last year, the playbook was - SPY down = USD up. Intraday charts still show that now. On longer durations, the dollar bears/gold bulls point to Banana Ben actions inevitably trashing the dollar as “cure” to the debt. I agree. Still, traders using a short term mindset won’t care if the USD is trashed 3 years from now. If they’re selling stocks, they’ll want to hide somewhere. Notice also Treasuries have been moving higher this last leg of the market run, which is new and suggests that some traders are already positioning for the market fall.

Maybe it’ll be different this time, but I’m gonna assume they replay last year’s playbook. That is, a market selloff ramps UST and USD, which temporarily pulls down commodities. Since I do not buy that we’ve fixed the banks, or the US serious structural problems, I want to use that as an opportunity to buy a basket of commodities and producers.

The Five Economic Horsemen

For any readers who have not listened to the 3 hr presentation on Chris’ website, I found it a good investment of time. It is not comfortable to learn the predicament we have put ourselves in from decades of living beyond our means. But I’d rather understand what is going on and at least have a chance to prepare.

www.chrismartenson.com...

Chris, you said “the Federal Reserve is printing up roughly $15 to $30 billion dollars a day just to keep things limping along“

That equates to $5.5-10.9T/year. I assume that includes all the bankster backstops, giveaways, etc.

Thanks for the time you've invested to help educate us.

Is a Crash Impending?

I am also suspicious that when the phony support fails, those trading machines will work just as fast in reverse.

What irritates me is those “advisors” pushing their clients to buy stocks now. I recall vividly early March. In spite of the fear mongering from the “experts”, I bought aggressively. However, my resolve was weakened by the fear mongering from these experts and I sold too quickly. Those same jackasses who couldn’t see the buying opportunity in early March, NOW recommend buying. And CNBC throughout this process has typified that back-asswards thinking.

Over the last 2 years, track records are being established. As a result, almost all my research now is through bloggers who have earned credibility. And I have completely stopped watching Cheerleading Central and am suspicious of everything that comes out of the WS propaganda machine, for which the shills at CNBC serves as the mouthpiece.

Buck Is Bottoming: Time to Go Long

Precter was recently interviewed on Tech Ticker. He sees 1-2 year bull market in USD.
finance.yahoo.com/tech...

As hard as that seems to believe, this robotic market continues to buy USD when equities sell. Commodities of course sell off when that happens and US Treasuries have been a beneficiary of HAL9000. I’m looking to position for that via long UST, short stocks, out of all commodities.

Natural Gas ETF: The Short-Term Story

Thank you for the informative post. The opposing forces of low NG prices and near capacity storage limits creates a dilemma for traders. Add the ETF structural issues and it is difficult to justify the huge premium to NAV. So I’m still waiting.

One point of clarification. . . Bloomberg article states “Supplies may reach 3.9 trillion cubic feet, which would be near U.S. storage capacity”. However, EIA states “As of mid-2008 peak working natural gas storage capacity in the Lower-48 States was estimated at 3,789 Bcf”. (April 2009 report)
www.eia.doe.gov/pub/oi...

The “Lower 48” referenced above is also used here.
www.eia.doe.gov/oil_ga...

That 110 Bcf storage could come into play. Using recent fill rates, we will breach the EIA limit in the last week of October. If weather moderates as expected, it could be sooner. Hurricanes are the wild card.

Asset Price Driven Economic Recovery Underway

“How many do not believe the government and the Fed will do whatever it takes to put a floor under the housing market?”

And every other market it seems. The indebted are helped by inflation. So they will try to prop up everything, with short-term fixes:
1) massive subsidies to political allies, some of questionable long term benefit. Example, GS saved/LEH flushed (Hank Paulson former GS CEO). Example, GM given $50B but CIT denied $3B, though CIT provides critical financing to 1 million small businesses. (1m businesses = a lotta jobs. Was this really just about jobs?)
2) handouts to consumers for short term boost to housing, autos, appliances, whatever. All short term, at the expense of future spending and much needed consumer saving.
3) A confidence building campaign designed to inflate stocks, which Da Boyz then cite as “proof” that good times are ahead. (Ignore all those “stick saves”, sandbagged estimates, distorted news releases, etc. The market “knows”.) Instead, listen to Tout TV and forget that they led you off a cliff last year.

Long term solutions are lacking. Consumers are still deep in debt with a weak job market, a particularly nasty combination. And due to decades of outsourcing, the long term prospects are weak also. Yet consumers are being seduced to stop saving and resume over-spending. Bad idea.

Add to that CRE risks, on-going home foreclosures, foreign resource dependency, unfunded liabilities, weakening demographics, etc. Handouts and hype are producing a sugar high. Long term prosperity requires something better.

This is not fear mongering, as is being increasingly suggested by some. (A rising market does that.) We’ve got some really serious problems, that wishful thinking will not fix. Here’s just one of them.

2.bp.blogspot.com/_vIR...
(ht TraderMark)

Barney and Ben: Will the Fed Be Held Accountable After All?

I understand that Pelosi was stonewalling this bill even though a majority in the House were co-sponsors. The banksters are also opposed as Zero Hedge reported. And Obama announced BB's reappointment.

Many are suspicious of Bazooka Ben's balance sheet given he was also stonewalling this measure. I expect some have a lot to hide.

So it seems the bets have been placed. This will be interesting.

A double-dip recession? "Simply out of the question," says Lakshman Achuthan of the Economic Cycle Research Institute, whose Weekly Leading Index was on pace for its highest annualized growth rate in 38 years. Achuthan said the recovery is moving at the strongest pace the U.S. has seen since the early '80s.

Before the economic implosion, ECRI said "recession is no longer a serious concern". Roubini, Marc Faber and others were calling for a severe recession.

Now Roubini is saying "The risk of a double-dip recession is rising".
www.ft.com/cms/s/0/902...

Double or nothing.

Despite the govt throwing money at everything and Bazooka Ben keeps printing money, my bet is on Roubini. Because eventually even that will blow up.

More Bad News Bears / Banks

“the FDIC is backing looser requirements for . . . banks and is . . . raising leverage”

“A lot is being bet. . . ”

Haven’t we seen this movie before? The usual suspects (WS, Washington, Tout TV) have the same game plan as the last downturn. Use “financial innovation” and propaganda to delude an over-leveraged public into relapsing back to their over-spending ways and hope “recovery” happens.

One tiny problem. Last time, the “recovery” was almost entirely offset by home equity withdrawal alone ($500B/yr). In other words, the last recovery was a mirage. That mountain of new debt is still there, the equity is not. So we need a new gimmick, Bazooka Ben and his printing press. Chris Martenson did a great post on this shell game. That and other peculiarities in various markets could be why BB, Pelosi and BHO are stonewalling auditing the Fed’s balance sheet. I suspect if it became public what they did, even CNBC wouldn’t be able to apply green shootery to that pig.

As you say John, a lot is being bet.

Energy Secretary Chu Wimps Out Again

Sec Chu infamously said we should paint roofs white to save energy. And to maximize embarrassment, he said this overseas, so they’d know we’re idiots. Then he estimated how much energy that could save, something like 10%. One for the blooper reel.

When Obama emphasized energy innovation as a priority, I was hopeful NG would be a priority. Very disappointing.

U.S. Dollar: Can the Fed Pull a Rabbit Out of Its Hat?

Let’s look at Uncle Ben’s track record. Here’s a montage of some of his embarrassing forecasts from 2005-2007:
• Didn’t buy the premise of a housing bubble, or of house prices dropping nationwide.
• Didn’t think housing slowdown will impact national economy. It’s a local problem.
• Feb ’07 –dismissed fears of subprime mortgage market spreading into broader economy

Impressive, eh? Here’s a video of those clippings.
www.youtube.com/watch?...
Glad he’s being reappointed to direct monetary policy since he completely missed the coming economic implosion.

Your post references Elliot Wave. Robert Precter was on Tech Ticker predicting a USD bottom and major rally.
finance.yahoo.com/tech...-

His basis is wave pattern, one-sided trade, and extremely bearish sentiment. He doesn’t credit Bazooka Ben at all. But he’s thinking 1-2 year dollar rally. Imagine the trade setup in commodities if that happens.

Investors Intelligence Hits Most Bullish Level Since January 2008

The bearish number nearly matched the lowest reading I could find for last bull market on 7/4/07, when it was 18. Some may argue there is a little more to go. But I doubt we’ll reach the same levels as many recognize our structureal problems, including excessive consumer debt, and weakened job outlook due to outsourcing.

Doug Kass, who correctly called the bottom early March, is now bearish. This read was well worth the time.
www.thestreet.com/stor...

Analyzing Strange Volume on the NYSE

"The ordinary investor who has a brain sees it as an amusing sideshow, but the unfortunate fool who gets sucked "

Blogs are all over this nonsense. But many are getting sucked in too late, or won’t sell until recovering last year’s losses. Someone actually told that. The unrelenting BS from WS and Cheerleading Central works. I saw a headline from Jim Crammer dismissing the low volume issue. Bull!

I thought the bankster telethon prompted by the (un)stress tests would suffice. Not even close. Months later they're still shoveling while insiders are dumping and retail investors are "afraid to miss the rally" as briefing.com noted yesterday. Greed motivates the BS artists. It also motivates those afraid to miss it.

Notes from the Fully-Subsidized Market

Love the irreverent critique of a blatantly manipulated market and sugar-high economic “recovery” packages.

An update on SA virus:
Last night I received following email on it’s resolution. It includes a link with more details.

Dear Seeking Alpha user,
First we want to thank you for contacting us regarding the issue.
We really appreciate that you took the time and reported us about it and in addition were willing to continue and help us resolving the issue.

I'm very happy to update you we are quite certain we have identified the problematic ad, it has been removed from our site.
You can find more details at: seekingalpha.com/insta... .
Thank you again for the patience and cooperation and we apologize for the temporary inconvenience.

Best regards, and hope you will continue visit and enjoy our site.
Elinor Dreamer
[e-mail]

Wednesday Outlook: Commodities, Global Markets

Update/resolution of SA virus. Last night I received following email. It includes a link with more details.

Dear Seeking Alpha user,
First we want to thank you for contacting us regarding the issue.
We really appreciate that you took the time and reported us about it and in addition were willing to continue and help us resolving the issue.

I'm very happy to update you we are quite certain we have identified the problematic ad, it has been removed from our site.
You can find more details at: seekingalpha.com/insta... .
Thank you again for the patience and cooperation and we apologize for the temporary inconvenience.

Best regards, and hope you will continue visit and enjoy our site.
Elinor Dreamer
[e-mail]