This Week in Barrons – 1-27-2013
Do you remember the old TV series starring Elliott Ness as the unstoppable crime fighter – The Untouchables? This week there was an a lot of buzz concerning a "Front Line" video that emphasized the fact that no high ranking banking officials have been put in jail for the banking (housing) meltdown of 2008 - 09. Despite hundreds of whistle blowers, and millions of lines of testimony from accountants, the Lords of Wall Street's biggest houses got away without a scratch. Watch the video below. It’s about an hour long, but moves quickly and is incredibly well done – showing you exactly (step-by-step) the moves that "blew up" the financial system. http://www.pbs.org/wgbh/pages/frontline/untouchables/
Speaking of Untouchables: CFTC (Commodity Futures Trading Commission) commissioner Jill Sommers unexpectedly resigned this week. On one hand this is great news because she is one of the commissioners that allowed JPM to virtually dictate the silver market. But also, Ms. Sommers has consistently backed the “too big to fail” banksters, and was prominent in the investigation of John Corzine’s – MF Global melt down. Ms. Sommers did NOT resign in order to spend more time with her family. This is all about John Corzine and MF Global. Some new appointees to that investigation were going to make life very difficult for Ms. Sommers, so she ‘bailed’ before the heat started to rise.
Continuing with The Untouchables: just days after the above film hit and stirred up so much controversy, President Obama appointed Mary Jo White as the new head of the SEC. At first glance, you notice that she was a former prosecutor, and Obama made a point of saying just how tough this gal is and how she's going to clean up the Street. And what was omitted from Ms. White’s bio was that after her role as ‘prosecutor’, her most recent role was in the private sector DEFENDING Wall Street kingpins. That part must have slipped people’s minds. The New York Times noted that Ms. White “has defended some of Wall Street's biggest names, including Kenneth D. Lewis, a former head of Bank of America." But not many know that she also was deeply involved in an SEC scandal involving Morgan Stanley’s CEO John Mack. She also prevented Mr. Gary Agguire, (a ‘foot soldier’ in the SEC who was trying to investigate John Mack for fraud, corruption, and insider trading) from doing his job and ultimately got him FIRED. Once again, we have yet another fox guarding yet another hen house.
So in the course of one week we've gotten a very damaging video about the callousness of Wall Street and the impotency of our Government officials. We've had Ms. Sommers, a commissioner that's knee deep in the John Corzine / MF Global scandal resign unexpectedly, after two new commission appointees were noted as possibly making life tough for her and that investigation. And we have Ms. White, the new head of the SEC who was billed as someone who will save us from the Wall Street crooks, but who made the bulk of her money DEFENDING those same Wall Street crooks.
Often I need to go to a movie to see a script like this. In my opinion the fraud now is worse than it was back then. As we enter the ‘get all you can, while you can’ phase of the economy – I’m wondering where Elliott Ness is when we need him.
Do you remember the old Fifth Dimension song: “Up, Up and Away”? The market has been on a tear for the month of January and it doesn't appear like it's over. I've said that I felt that this market would ultimately attack the all time highs set in November of 2007, and we're well on our way there. The part that I missed was thinking that when we got to the recent highs, we would take a pause, back up a bit, and regroup. That didn't happen. We just powered up.
Well now things get a bit dicey. Yes I still believe we ultimately challenge and then set all new highs on the DOW and S&P. The printing presses are cranked up all around the world, and that money always finds its way to the markets. But we have been up 10 days out of 11. The S&P is on a track to set a 7-year streak. Despite the money printing and the celebrations, we are terribly overdue for a pause.
If we do see a profit-taking spell this next week – I don't believe it will be a big dip. I would be surprised if it were more than just a small percentage drop. In fact, I think the dip would be buyable. But because we feel a ‘dip’ is lurking, it makes it harder to dive in and just buy-buy-buy.
We are not far from the all time highs. In fact the DOW is less than 300 points away. The Central bank liquidity has to go somewhere, and right now it's going into stocks. As we approach the new high, I would suspect that we will see some ‘fits and starts’ in order to get past it. But ultimately I do think we pull it off and post all new highs in the not too distant future. So I continue to "lean long", but I’m certainly not shy about taking profits. In fact, if you're NOT in the market right now, you might be best served waiting on a pull back before you commit too much capital.
This week we are going to hear over 100 S&P companies announce earnings, and the market will experience some wild swings surrounding that news. I have been watching the energy patch lately, and it's been doing well. Some names that you might want to watch this week are: LNG, NBR, and NOG.
My current short-term holds are:
- LLTC – in at 36.60 (currently 36.70) – stop at entry
- ORCL – in at 35.14 (currently 35.38) – stop at entry
- LNG – in at 21.03 (currently 21.00) – stop at 20.80
- PAY – in at 34.04 (currently 35.94) – stop at entry
- PTEN – in at 19.78 (currently 20.14) – stop at entry
- NOG – in at 17.30 (currently 17.31) – stop at entry
- HD – in at 61.53 (currently 67.83) – stop at 65.60
- MS in at 18.50 (currently 22.72) – stop at 21.00
- SPY in at 141.97 (currently 150.03) – stop at 148.00
- SIL – in at 24.51 (currently 20.76) – no stop yet
- GLD (ETF for Gold) – in at 158.28, (currently 160.73) – no stop ($1,656.40 per physical ounce), AND
- SLV (ETF for Silver) – in at 28.3 (currently 30.25) – no stop ($31.18 per physical ounce).
To follow me on Twitter and get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
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