This Week in Barrons – 08-16-09:
Thoughts:
The wheels are coming off the train. It's a slow motion train wreck, but make no mistake about it, the wreck is in progress.
- Toll Brothers released earnings – Q3 signed contracts were up 3%, and revenues down 5% from a year ago. Deliveries were down 36% and 42% respectively.
- Home foreclosures rose 3.8% - so of those home sales – 36% were foreclosures – with the median price of a home sliding 15.6%. So much for Cramer’s call for a ‘housing bottom’ (two months ago)!
- FACTUALLY -- We are currently running 18.7M home vacancies (that’s not counting new homes unsold) – but ONLY 3.8 of those homes are for sale! That means that 14.9M homes are NOT even being offered for sale because the banks that have foreclosed on these home (14.9M of them) – as soon as they put them up for sale – will need to do all the paperwork on them – show the loan losses for what they really are – and potentially file for ‘bankruptcy’ protection themselves. So these ghost homes sit vacant – for the time being.
- Reuters came out and said that almost 48% of the people in 2011 will owe more on their houses than what they are worth!
- Maguire Properties Inc., one of the largest office-building owners in Southern California, is planning to hand over control of seven buildings with some $1.06 billion in debt to creditors, the latest sign that rising vacancies and falling rents are causing stress in the commercial real-estate sector.
- Over the coming months – as many as 1.5M jobless Americans will exhaust their unemployment insurance benefits – now do you suppose that just some of those 1.5M people might have homes that they are just barely clinging to?
- Thanks to Steve F. for contributing → From the perspective of second quarter GDP, it appears that it has been revised downward to -1.7% from -1.0%. Along with the Census Bureau reporting that sales and manufacturers' shipments although improving – the recovery will have a long way to go, as sales are still down 18% since June 2008.
- On Friday the regulators closed 300+ branches of Colonial BancGroup – a major lender in the real estate development market.
Now let’s look at the working ‘Average Joe’ in this country.
In 2007, the latest census bureau reading, the "average household" takes in was 50,233 dollars. Now, the median income per household member (including all working and non-working members above the age of 14) was $26,036. Now, if you start to take expenses, and taxes out of that income, we come up with a shocking problem - life costs more than the ‘Average Joe’ makes. The only true reason we as Americans have lived life so very high on the hog – for so long - has been CREDIT. With both parents already working – the cost of life exceeding wages – the only logical movement is to have (wage earning) children move back in with parents – in order to reduce costs and potentially increase earnings.
But it's not just jobs, falling housing, crashing Commercial real estate - this is just the warm up pitcher. (Reuters) - Banks in the United States are poised to make $38.5 billion in customer overdraft fees this year, citing research by Moebs Services. A large portion of the revenue is likely to come from the most financially stretched consumers, according to the paper. Many banks have increased charges on overdrafts and credit cards in order to boost profits. Banks are returning to a fee-driven model and overdraft fees are the mother lode. Overdraft fees accounted for more than 75 percent of service fees charged.
So how’s this playing out in the rest of the world? The Baltic Dry Index (one of the best indicators of true growth we have) – has crashed because the global economic crisis is wreaking havoc on shipping. Ports are filling up with fleets of empty freighters. We’ve never had a shortage of ‘cargo’ before – and this crisis has fueled cut-throat competition and not all companies will survive.
What's really happening is the "monetization" of all our debt. Don't forget – the FED has pledged to buy $1.2 trillion in mortgage backed stuff, and several hundred billion in straight treasuries. This money goes straight into the major investment banks – who are buying up stocks and commodity futures. When we let "them" change the rules and allowed assets to be market to fantasy versus marked to market, the banks were allowed to carry all their toxic sludge, without accounting for it's true value. So, they took the TARP money, and all Bernanke's monetization money and went to work in the markets.
This is NOT an accident, however we are in completely unexplored territory. Never before, and I mean NEVER has the world been in a synchronized recession, while at the same time operating on Fiat currencies. To think that all these Central bankers are going to be able to pull the right levers and push the right buttons to right this ship is just beyond my scope of imagination. I don't believe they can pull it off correctly. In other words, it's my guess that the truly worst of this nightmare lies ahead of us, not behind us. Nothing has been fixed, all we've done is rearrange the chairs on the Titanic. Please continue to buy gold and silver as they are the only two things that have a shot at remaining valuable.
The Market:
Last Week's Insiders Transactions: 10 Buys For $60 Million, 136 Sells For Over $1.15 Billion. NOW, if all these company insiders really thought things were as rosy, wouldn't they be BUYING their own stock?
My ‘recent’ bottom line is that the market will always do what inflicts the most pain on the most people. At this point in time, who would stand to take the biggest beating over the next week? Would it be the shorts as the market just plows higher, or the bulls as it rolls over? Unfortunately the cries are pretty even from both sides, and that is a major problem. There's an awful lot of people screaming that this market is overdone and needs a rest. But there's also quite a few saying that with the stimulus coming, the "better" earnings, the shot at a positive GDP because of inventory rebuilding, we are going higher. The camps are so equally divided that I can't get a real feel for whom the market is going to "smack".
Now I understand that this isn't how you were taught to invest. You were taught to invest in good companies with stable incomes, and pay attention to their earnings, etc. The new game is simply "which way do the criminals want the market to move?" For an example of how that works, from March to June – we had a stunning run - better economic numbers - analysts preaching we were going to the moon - people were buying hand over fist – then from 8800 in early June to 8051 on July 10th – the late comers to the party got seriously singed. Then the guru’s started screaming that the market was putting in a "head and shoulder" pattern and it was going to plunge for over 1000 points – people got nervous – started taking profits and going short – we said that this market ‘will go up’ – and it went from 8051 to 9466 – again burning the maximum amount of people.
Now, in the big picture, I think this rally still has legs – but my guess is in the short term we see some more soggy, sideways trading with a slant to the downside for a few days. But if chorus for "the market is going to tank" gets louder and louder, it will blast higher.
TIPS:
- we’re holding the GDX (a basket of gold mining stocks) with No Auto Stop
- we’re holding NGD (a gold miner) @ $2.48 – hard stop @ 3.25
- we’re holding MOO (agricultural business ETF)
- we’re holding IPI (a potash hold – again in the agricultural theme)
- we sold our XLK (a technology (minus healthcare) ETF)
- we sold our DIA’s @ 84.45 with a stop @ 93
- we sold our SPY’s @ 91.97 with a stop @ 100
- we sold our QQQQ @ 36.26 with a stop @ 39.40
- we sold our UYM @ 22.11 with a stop @ 23.40 → all with nice profits across the board !!
Sunday, August 16, 2009
Sunday, August 9, 2009
This week in Barrons - August 9, 2009
This Week in Barrons – 08-09-09
Thoughts:
Apparently there are two U.S. economies. One that you hear about on TV programs such as CNBC – telling us about how the economy is improving, housing has bottomed, people are feeling better etc. – and one that appears thru absolutely facts. It’s earnings season – and almost to a ‘T’ – each company that is beating their estimates are doing in on incredibly shrinking revenues. So therefore, they need to be beating profit estimates by: 1) cost cutting, 2) or by changing accounting standards - humm. An example of #1 - Garmin – EPS of $0.83 beat by $0.32 à Revenues down 27%. For an example of #2 we need to dig a little deeper – GAAP stands for ‘Generally Accepted Accounting Principles’ – and it is the numbers companies would be POSTING if they were not allowed to charge off items and report ‘proforma’ earnings. Morgan Stanley just reported that if the 500 companies in the S&P were to have used GAAP to report their numbers – collectively the 500 companies would have made $0 in earnings over the past year! Did you know that recently GE had to pay a fine to the SEC for misleading investors – i.e. GE used “improper accounting methods to raise earnings and avoid disappointing investors”? Well, you didn’t hear about it because GE owns CNBC – and well – the rest is left to your imagination. So there are ‘two’ economies - one that CNBC tells you is happening and the real one.
- more than 126,000 new consumer bankruptcy cases were filed in July - up 34% year over year and the most since October 2005, when Congress enacted bankruptcy reform making the process more difficult
- Consumer Confidence is sitting at -49, 92% of the people surveyed say that the economy's in bad shape; 76% say it's not a good time to buy things and 56% rate their personal finances negatively
- The recession is starving the government of tax revenue. As Obama is trying to enact an incredibly expensive health care plan – the government’s tax receipts are down 18% this year – the single biggest decline since the Great Depression – while the budget deficit balloons to $1.8 Trillion
- Individual income taxes are down 22%
- Corporate income taxes are down 57%
- Personal income fell in June by 1.3% as the effects of the stimulus checks wore off.
- Retail sales fell 1.6% in July – worse than expected
- GMAC needs $5.6 Billion more from the Federal Reserve. Since the government has already invested $12.5B in GMAC – the lender is unlikely to find external investors willing to help raise capital
- Finally the Post Office is set to lose $7 Billion this year. Now if we can’t deliver LETTERS profitably – do you really think we can run an entire health care system profitably?
Finally – let’s go down a different path for a change. Since the market started its ascent, we have seen equities gain somewhere around $2.7 Trillion dollars worth of movement – and during that same period, less than $400 Billion has come out of money market funds. So where did all the money come from then to buy all this stock? Most of the hedge funds were close to fully invested all through the disaster, and there's no evidence of a major move out of bond funds. There’s only ONE avenue left - the FED is virtually laundering money through the major institutions, and they are using it to force the equity market higher. The interesting part is that the market gains are being fueled by money printed out of thin air, which is ultimately and always a taxpayer liability.
Tell me how all of this ends well? Tell me how companies beat the estimates while revenues fall 67%? Tell me how this Friday's jobs report, where we lost 247K more jobs is "great news" just because it wasn't 400K. Oh, and by the way, the next rounds of layoffs are where you ‘close up completely’. So, bottom line, the rally is a manufactured illusion – certainly one that’s tradeable – just be ready to ‘SELL.’
The Market:
On Friday the market was euphoric over the jobs number. Wave after wave of experts told us how losing a quarter million more jobs in a month signaled the end of the recession. So what happens now? It's my best guess that we do some backfilling on Monday – potentially seeing a little red. Then Tuesday some sluggish trading, followed by another mindless push higher later in the week. I still think we have some "surge higher" days ahead of us before they turn out the lights, so until proven wrong, we have to continue to buy the dips.
One of the problems lately is the speed of the sector rotation we see. One day tech is hot, the next day it's financials, then over to basic materials, etc. Trying to stay ahead of the rotation is pretty hard to do. You’ll see huge spurts, then nothing, then huge spurts of growth again. Patience is tough, but it's paying off.
TIPS:
- we’re holding the GDX (a basket of gold mining stocks) with No Auto Stop
- we’re holding NGD (a gold miner) @ $2.48 – hard stop @ 3.05
- we’re holding MOO (agricultural business ETF)
- we’re hold XLK (a technology (minus healthcare) ETF)
- we’re holding IPI (a potash hold – again in the agricultural theme)
- we’re holding DIA’s @ 84.45 with a stop @ 93
- we’re holding SPY’s @ 91.97 with a stop @ 100
- we’re holding QQQQ @ 36.26 with a stop @ 39.40
- we’re holding UYM @ 22.11 with a stop @ 23.40
- I like NVDA over 14.00
- I like CHK over 25.00
- I like YUM over 36.75
- If you purchased CitiBank ( C) over 3 weeks back – congrats – I like it going forward..
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
http://rfcfinancialnews.blogspot.com/
Sunday, August 2, 2009
This week in Barrons - 8-02-09
This Week in Barrons – 08-02-09:
Thoughts:
Okay – this Clunker Car program has me baffled. In order to jump start the auto industry your government decided to help people buy new cars and help the environment by letting people get up to $4,500 for a vehicle that gets poor mileage, for one that gets "better" mileage. OK – so we’re using taxpayer dollars, to try and push people into buying taxpayer owned car company products (GM and Chrysler)? Isn’t that ‘robbing Peter to pay Paul?’ But let’s leave that for an instant – what reports ‘thus far’ are showing us is that people buying Hyundai's and Hondas (by a wide margin) – with my U.S. taypayer dollars – which is slightly disconcerting. But let’s ask a different question – where is the money is coming from to pay for this. Well – potentially the TARP program – which means that the FED just PRINTED it! Which really means that we ‘the public’ borrowed it from the FED – that is charging us INTEREST on that money – and we’re using it fund our neighbor’s purchase of a ‘foreign car’. That is our ‘monetary policy’ at work! The ‘cash for clunkers’ program will indeed be found to be a money hole, with no significant gains of employment nor spending, but leaving us with the bills.
Sounds like something Goldman Sachs might do – and speaking of Goldman – their past CEO – Mr. Henry Paulson – here’s the exchange between Congressman Stearns and Hank Paulson. http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Entries/2009/7/31_Congressman_Cliff_Stearns.html Congressman Stearns had his way with Mr. Paulson – which the crux being – “why should we trust you after you begged us for TARP money to buy up toxic assets and then ten days later decided "the heck with that" and gave out billions to his banker buddies, including AIG which of course sent a boatload ($13B) right back to Goldman Sachs. But that’s not what is shocking to me. What I didn't know and this interview exposes is the incredible "deal" that Paulson got when he accepted his governmental position. You see – Hank Paulson was the CEO at Goldman, and owned $200 Million worth of Goldman stock. If he sold that on the open market, he'd get hit with a $35 Million tax bill. Well, no self-respecting banker is going to give Uncle Sam $35 Million in tax money. So what did he do? He took the job of Treasury Secretary for a short period. Why give up such a great position at Goldman? Well – when he became Treasury Secretary - he had to get rid of his Goldman Stock, but the law reads that if you're doing it for a position such as that, your taxes are waived. Yes, that’s right – Henry Paulson paid $0 in income on $200 Million worth of Goldman stock!!!
Now I ask you – did Paulson give up a great job at Goldman making millions, to become the Treasury Secretary because he wanted to do the very best for his country, OR did he accept the short term position knowing he could sell his stock TAX FREE, then get Congress to GIVE HIM BILLIONS which he could distribute to his banker buddies and especially Goldman via AIG? You tell me, if that wasn't the sweetest piece of con jobbing anyone ever pulled. Yet even scarier is the fact that very well connected people in our Government were all for Mr. Paulsen being the Treasury Secretary, and applauded the consistent Goldman connection!
On fact – to act like icing on a cake: just this Thursday we found out that 5,000 bankers got over 1 MILLION dollars in bonuses – that’s amazing in my view – given we’re floundering in the midst of the single biggest economic crisis in 80 years – and that doesn’t include the Goldman bonuses over ½ a BILLION dollars.
The Market:
What a while ride it’s been. Our 401k’s up very large this year – our trades (which we make public) – some examples are: FAS up over 400%. SLW up 150%. UYM up 79%. XLF up 27%. BUCY up 40% - and the list goes on. On Monday and Tuesday of this past week - market "tested" 9K, and each time it held. Then just to make the week complete, by Thursday morning the market was up almost 200. But Monday is the first trading day of the new month and that "generally" brings some mutual fund buying – so we "should" be flat to green on Monday. Now logic would dictate that we roll over after that, but frankly they have a tiger by the tail right now, pushing the market to 9171, and probably don't want to lose much of that - so, our guess is a greenish Monday, followed by some sluggish and soggy trading and then yet another push higher later in the week.
My feeling was, and still is , that we are going to see a wicked run higher, and I do believe that late Thursday we saw the ingredients being put together. Then on Friday we saw the bravado. The jobs number sucked, and don't forget that was the very best number Uncle Sam could give us. All they cared about was that the FED was going to come out with their plan on Monday, and as long as the FED is tossing trillions around, they wanted in. So, the market is in rally mode. AS LONG as we don't get anything supersized that comes out of nowhere, we should see this thing pick up steam shortly and really roar higher – to about 9,600 for a starter.
TIPS:
- we’re holding the GDX (a basket of gold mining stocks) with No Auto Stop
- we’re holding NGD (a gold miner) with No Automatic Stop
- we’re holding MOO (agricultural business ETF)
- we’re hold XLK (a technology (minus healthcare) ETF)
- we’re holding IPI (a potash hold – again in the agricultural theme)
- we’re holding CSCO @ 19.20 / hard stop @ 21.60
- we’re holding DIA’s @ 84.45 with a 90.50
- we’re holding SPY’s @ 91.97 with a 98.00 stop
- we’re holding QQQQ @ 36.26 with a 39.00 stop
- we’re holding FRO @ 23.79 with a 24.00 stop
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Thoughts:
Okay – this Clunker Car program has me baffled. In order to jump start the auto industry your government decided to help people buy new cars and help the environment by letting people get up to $4,500 for a vehicle that gets poor mileage, for one that gets "better" mileage. OK – so we’re using taxpayer dollars, to try and push people into buying taxpayer owned car company products (GM and Chrysler)? Isn’t that ‘robbing Peter to pay Paul?’ But let’s leave that for an instant – what reports ‘thus far’ are showing us is that people buying Hyundai's and Hondas (by a wide margin) – with my U.S. taypayer dollars – which is slightly disconcerting. But let’s ask a different question – where is the money is coming from to pay for this. Well – potentially the TARP program – which means that the FED just PRINTED it! Which really means that we ‘the public’ borrowed it from the FED – that is charging us INTEREST on that money – and we’re using it fund our neighbor’s purchase of a ‘foreign car’. That is our ‘monetary policy’ at work! The ‘cash for clunkers’ program will indeed be found to be a money hole, with no significant gains of employment nor spending, but leaving us with the bills.
Sounds like something Goldman Sachs might do – and speaking of Goldman – their past CEO – Mr. Henry Paulson – here’s the exchange between Congressman Stearns and Hank Paulson. http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Entries/2009/7/31_Congressman_Cliff_Stearns.html Congressman Stearns had his way with Mr. Paulson – which the crux being – “why should we trust you after you begged us for TARP money to buy up toxic assets and then ten days later decided "the heck with that" and gave out billions to his banker buddies, including AIG which of course sent a boatload ($13B) right back to Goldman Sachs. But that’s not what is shocking to me. What I didn't know and this interview exposes is the incredible "deal" that Paulson got when he accepted his governmental position. You see – Hank Paulson was the CEO at Goldman, and owned $200 Million worth of Goldman stock. If he sold that on the open market, he'd get hit with a $35 Million tax bill. Well, no self-respecting banker is going to give Uncle Sam $35 Million in tax money. So what did he do? He took the job of Treasury Secretary for a short period. Why give up such a great position at Goldman? Well – when he became Treasury Secretary - he had to get rid of his Goldman Stock, but the law reads that if you're doing it for a position such as that, your taxes are waived. Yes, that’s right – Henry Paulson paid $0 in income on $200 Million worth of Goldman stock!!!
Now I ask you – did Paulson give up a great job at Goldman making millions, to become the Treasury Secretary because he wanted to do the very best for his country, OR did he accept the short term position knowing he could sell his stock TAX FREE, then get Congress to GIVE HIM BILLIONS which he could distribute to his banker buddies and especially Goldman via AIG? You tell me, if that wasn't the sweetest piece of con jobbing anyone ever pulled. Yet even scarier is the fact that very well connected people in our Government were all for Mr. Paulsen being the Treasury Secretary, and applauded the consistent Goldman connection!
On fact – to act like icing on a cake: just this Thursday we found out that 5,000 bankers got over 1 MILLION dollars in bonuses – that’s amazing in my view – given we’re floundering in the midst of the single biggest economic crisis in 80 years – and that doesn’t include the Goldman bonuses over ½ a BILLION dollars.
The Market:
What a while ride it’s been. Our 401k’s up very large this year – our trades (which we make public) – some examples are: FAS up over 400%. SLW up 150%. UYM up 79%. XLF up 27%. BUCY up 40% - and the list goes on. On Monday and Tuesday of this past week - market "tested" 9K, and each time it held. Then just to make the week complete, by Thursday morning the market was up almost 200. But Monday is the first trading day of the new month and that "generally" brings some mutual fund buying – so we "should" be flat to green on Monday. Now logic would dictate that we roll over after that, but frankly they have a tiger by the tail right now, pushing the market to 9171, and probably don't want to lose much of that - so, our guess is a greenish Monday, followed by some sluggish and soggy trading and then yet another push higher later in the week.
My feeling was, and still is , that we are going to see a wicked run higher, and I do believe that late Thursday we saw the ingredients being put together. Then on Friday we saw the bravado. The jobs number sucked, and don't forget that was the very best number Uncle Sam could give us. All they cared about was that the FED was going to come out with their plan on Monday, and as long as the FED is tossing trillions around, they wanted in. So, the market is in rally mode. AS LONG as we don't get anything supersized that comes out of nowhere, we should see this thing pick up steam shortly and really roar higher – to about 9,600 for a starter.
TIPS:
- we’re holding the GDX (a basket of gold mining stocks) with No Auto Stop
- we’re holding NGD (a gold miner) with No Automatic Stop
- we’re holding MOO (agricultural business ETF)
- we’re hold XLK (a technology (minus healthcare) ETF)
- we’re holding IPI (a potash hold – again in the agricultural theme)
- we’re holding CSCO @ 19.20 / hard stop @ 21.60
- we’re holding DIA’s @ 84.45 with a 90.50
- we’re holding SPY’s @ 91.97 with a 98.00 stop
- we’re holding QQQQ @ 36.26 with a 39.00 stop
- we’re holding FRO @ 23.79 with a 24.00 stop
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Sunday, July 26, 2009
This week in Barrons - 7.26.2009
This Week in Barrons – 07_26_09:
Thoughts:
"I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." -Woodrow Wilson, after signing the Federal Reserve Act
- Another 554,000 people had to apply for unemployment benefits, topping 5 Million in 2 years – but to the ‘talking heads’ that meant that unemployment was slowing!
- Existing home sales were up 3.6% - of course 50% of those were foreclosures
- The FHA is back to taking 3% down and securing 120% on mortgages (isn’t that how we got in this mess?)
- Revenues for our top-line companies such as Caterpillar FELL over 40% - and there were cheers for ‘not as bad as it could have been’ and ‘they beat their estimates’
- Remember 1999 – another time when ‘earnings didn’t matter’ – until THEY DID.
- Microsoft – for the first time since going public – had their revenues decline – and their profits fall 29%
- AND then we had half of New Jersey’s leaders and politicians thrown in jail for everything from bribery to selling body parts.
- MANY of the top-line brokerage houses – Morgan Stanley, Charles Schwab, Credit Suisse are facing criminal charges
- AND there are over 35 criminal and civil investigations into issues including suspected accounting fraud, and public corruption concerning the dispersed TARP funds.
- BUT – there is no sign of investigating Goldman for their trading programs!
Remember – the Government can only directly influence it's people if they 1) want to be led around, or 2) are so financially destitute they have no choice but to rely on them. And remember ‘Hope’ – the ability to show you the light at the end of the tunnel – those ‘green shoots’ → just ask any of your local businesses if they are rolling in the dough or if things seem to be slowly getting better – you know that answer.
However, there are still hundreds of trillions worth of derivatives floating around the world like a ticking time bombs, that no one knows how to price, nor even how many institutions are still solvent enough to cover them. While the US taxpayer had to bailout a bankrupt AIG, AIG then paid off Goldman on a $12 billion CDS scheme, (because NO ONE rips off Goldman – NO ONE). FYI – if you wondered – ‘mark to market’ accounting is STILL suspended. It is presumed that Commercial Loan losses will exceed $30 Billion by the end of 2009 – with some 500 regional banks likely to go under. Alt A loans are defaulting faster than subprime, and some 600,000 more foreclosures could be being kept intentionally "off the market" to keep from lowering existing home values. Factually: Regulators on Friday shut six banks in Georgia and a small bank in New York state, raising to 64 the number of federally insured banks to fail this year.
And yes – I realize that the market “looks forward 6 months".
Now The Market:
On Thursday the DOW closed over 9,000 for the first time since the beginning of the year. You all probably know the arguments. We are technically overbought in the short term. This run has been blistering, making advances over two weeks not seen in a decade. We have been long the entire run, but that doesn't answer the question – is this coming week one of serious profit taking, or is it the pure lust to "get in before the train leaves the station" so great that we just continue higher?
We feel that "overall" the run isn't over yet and the market is going to go higher, possibly much higher. But, in the very short term such as this coming week, logic tells us that a profit taking smack-down "should" occur. And judging by how they defended that 9,000 level they achieved on Thursday, I'm guessing that we might see a "pause" here, as they try and build a new base at this level, and then once again push us higher. For every day that 9K doesn't fall, you can consider that another bullet in their ammo belt, to be used to blast us higher again. But just as importantly, if we were to see 9K fail, and experience a good "whoopin" of say 300 points, I'd think that dip would be completely buyable!
TIPS:
- we’re holding the GDX (a basket of gold mining stocks) with No Auto Stop
- we’re holding NGD (a gold miner) with No Automatic Stop
- we’re holding MOO (agricultural business ETF)
- we’re hold XLK (a technology (minus healthcare) ETF)
- we’re holding IPI (a potash hold – again in the agricultural theme – we’re very slightly underwater here)
- we’re holding CSCO @ 19.20 / hard stop @ 19.80
- we’re holding DIA’s @ 84.45 with a 88.60 stop
- we’re holding SPY’s @ 91.97 with a 96.00 stop
- we’re holding QQQQ @ 36.26 with a 38.00 stop
- If you’re brave and looking for somewhere to go long ☺ …
- FRO on a bounce up to 22.15 is interesting
- SGR over 30.00 looks okay
- UYM over 22.00 is good
- And SUN over 25.00 could make sense
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
Thoughts:
"I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." -Woodrow Wilson, after signing the Federal Reserve Act
- Another 554,000 people had to apply for unemployment benefits, topping 5 Million in 2 years – but to the ‘talking heads’ that meant that unemployment was slowing!
- Existing home sales were up 3.6% - of course 50% of those were foreclosures
- The FHA is back to taking 3% down and securing 120% on mortgages (isn’t that how we got in this mess?)
- Revenues for our top-line companies such as Caterpillar FELL over 40% - and there were cheers for ‘not as bad as it could have been’ and ‘they beat their estimates’
- Remember 1999 – another time when ‘earnings didn’t matter’ – until THEY DID.
- Microsoft – for the first time since going public – had their revenues decline – and their profits fall 29%
- AND then we had half of New Jersey’s leaders and politicians thrown in jail for everything from bribery to selling body parts.
- MANY of the top-line brokerage houses – Morgan Stanley, Charles Schwab, Credit Suisse are facing criminal charges
- AND there are over 35 criminal and civil investigations into issues including suspected accounting fraud, and public corruption concerning the dispersed TARP funds.
- BUT – there is no sign of investigating Goldman for their trading programs!
Remember – the Government can only directly influence it's people if they 1) want to be led around, or 2) are so financially destitute they have no choice but to rely on them. And remember ‘Hope’ – the ability to show you the light at the end of the tunnel – those ‘green shoots’ → just ask any of your local businesses if they are rolling in the dough or if things seem to be slowly getting better – you know that answer.
However, there are still hundreds of trillions worth of derivatives floating around the world like a ticking time bombs, that no one knows how to price, nor even how many institutions are still solvent enough to cover them. While the US taxpayer had to bailout a bankrupt AIG, AIG then paid off Goldman on a $12 billion CDS scheme, (because NO ONE rips off Goldman – NO ONE). FYI – if you wondered – ‘mark to market’ accounting is STILL suspended. It is presumed that Commercial Loan losses will exceed $30 Billion by the end of 2009 – with some 500 regional banks likely to go under. Alt A loans are defaulting faster than subprime, and some 600,000 more foreclosures could be being kept intentionally "off the market" to keep from lowering existing home values. Factually: Regulators on Friday shut six banks in Georgia and a small bank in New York state, raising to 64 the number of federally insured banks to fail this year.
And yes – I realize that the market “looks forward 6 months".
Now The Market:
On Thursday the DOW closed over 9,000 for the first time since the beginning of the year. You all probably know the arguments. We are technically overbought in the short term. This run has been blistering, making advances over two weeks not seen in a decade. We have been long the entire run, but that doesn't answer the question – is this coming week one of serious profit taking, or is it the pure lust to "get in before the train leaves the station" so great that we just continue higher?
We feel that "overall" the run isn't over yet and the market is going to go higher, possibly much higher. But, in the very short term such as this coming week, logic tells us that a profit taking smack-down "should" occur. And judging by how they defended that 9,000 level they achieved on Thursday, I'm guessing that we might see a "pause" here, as they try and build a new base at this level, and then once again push us higher. For every day that 9K doesn't fall, you can consider that another bullet in their ammo belt, to be used to blast us higher again. But just as importantly, if we were to see 9K fail, and experience a good "whoopin" of say 300 points, I'd think that dip would be completely buyable!
TIPS:
- we’re holding the GDX (a basket of gold mining stocks) with No Auto Stop
- we’re holding NGD (a gold miner) with No Automatic Stop
- we’re holding MOO (agricultural business ETF)
- we’re hold XLK (a technology (minus healthcare) ETF)
- we’re holding IPI (a potash hold – again in the agricultural theme – we’re very slightly underwater here)
- we’re holding CSCO @ 19.20 / hard stop @ 19.80
- we’re holding DIA’s @ 84.45 with a 88.60 stop
- we’re holding SPY’s @ 91.97 with a 96.00 stop
- we’re holding QQQQ @ 36.26 with a 38.00 stop
- If you’re brave and looking for somewhere to go long ☺ …
- FRO on a bounce up to 22.15 is interesting
- SGR over 30.00 looks okay
- UYM over 22.00 is good
- And SUN over 25.00 could make sense
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
Sunday, July 19, 2009
This Week in Barrons – 07_19_09:
Thoughts:
Nowhere but in the U.S. could (arguably) the 2nd most powerful man in the world – Vice President R. Biden – utter the words – “We have to spend more money to keep from going bankrupt!” And when given the chance to retract it said: “Yes, that’s what I’m telling you.” With minds like this leading our comeback – is it any wonder why the rest of the world has had to "lend" us $2B per day to keep us solvent? Someone should tell ‘good ole Joe’ that in the real world – if you spend money you don't have, soon you are insolvent. OK ‘Joe’ back into the real world – it’s 2009 and:
- We've shed 5 million jobs.
- Unemployment is almost 20% in real terms.
- Our nation is virtually bankrupt, running more deficits than all the last 100 years COMBINED.
- Our National debt is now 95 TRILLION dollars
- Our Tax revenues are shrinking by 30%.
- There is still $600 trillion worth of derivatives that no one can accurately price, hiding in the shadows.
- Manufacturing is virtually dead.
- Commercial real estate is imploding.
- Sheila Blair of the FDIC said that 500 more banks will fail.
- Credit card delinquencies hit another all time high, foreclosure notices hit 1.5 MILLION households in just the first 6 months of the year, a 15% jump from last year.
- AND Goldman Sachs raped (oops) reaped the largest profits in their history.
The Congressional Budget Office (CBO) said the following this week: “Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy.” And yet despite this - Obama pushes forward for Cap and Trade legislation and with nationalized Healthcare. The CBO itself said: “The health care overhauls released to date would increase, not reduce, the burgeoning long-term health costs facing the government.” AND – in my world – NONE of this was by accident, and I’ll revert to the old Boy Scout Motto – “Be Prepared.”
The Market:
We’re in earnings season, where companies tell the world how their last quarter went and how much money they made. 72% of the companies that have reported have beaten their estimates. But let’s take a peek ourselves – at just one ‘bell weather’ company – GE – who was reported to have ‘blown the doors off” estimates. The Headline Number: “GE’s 2nd quarter results – earned 26 cents per share – beating the estimates by 3 cents on revenues of over $39Billion.” The Reality was: GE’s net income fell 47 percent, to $2.9 billion, down from $5.4 billion a year ago. The company's revenue fell 17 percent, to $39.08 billion, and after adjusting for a stronger dollar, which reduces the value of overseas sales, sales were down 12 percent from the previous year. In a conference call with analysts, company executives said they expected industrial equipment orders to be off about 25 percent for the year. The finance business was the biggest drag on G.E.'s results as its operating profits fell 80 percent, to $590 million, down from $2.9 billion a year ago. And revenue in the finance unit, which includes home mortgages in Britain and private-label credit cards in the United States, declined 29 percent, to less than $12.8 billion, from nearly $18 billion.” So GE’s profits plunged 47%, cut their dividend, lost their AAA rating, revenue fell 17%, finance arm profits fell 80%, but they BEAT the estimates.
The Point is that today it’s ALL about the psychology of the market – and where the government (temporarily) wants the market to go. As always the question is the same, what's next? After the market has gone up 5 days in a row - some form of logic has to enter the picture – yes? In other words, at some point you are going to get a down day, that's just life. But here's the deeper question, the chart slaves were convinced we were going to plunge 1000 points – and the economic news agrees with that, it's all horrible. Yet the market roars for 700 points upward. Now consider the psychology. The shorts that just got burned are now screaming that this is just a bounce, nothing more. Those same shorts are salivating over the idea of reshorting, so they can make their money back. Even the smarter one's didn’t short the last time are now talking about how smart they were to hold off, so they could short this bounce from even higher. Is the market going to reward them?
Considering how bad earnings really are, the economic reports (horrific) – this market should fall like a rock. Is it going to be that accommodating? I doubt it. Our guess is that after an overbought pull down, that adjusts for the recent move up, this thing roars again, eventually taking us to the 9600 level. By then all the shorts will have been chewed up, and all the people that missed the last move will have bought in, so it could THEN roll over and land downward.
TIPS:
- we’re holding the GDX (a basket of gold mining stocks) with No Stop
- we’re holding NGD (a gold miner) from $2.59 and will be doubling up on Monday with this
- we’re holding MOO (agricultural business ETF)
- we’re hold XLK (a technology (minus healthcare) ETF)
- we’re holding IPI (a potash hold – again in the agricultural theme – we’re underwater here)
- we’re holding CSCO @ 19.20 / hard stop @ 19.80
I really wanted to see some ‘red’ on Friday in order to purchase about 20 contracts of the August 80 DIA calls. I wanted to do this on a down day – and on the next decent pullback, even if it's just 100 points I will buy some contracts on the August DIA 80 calls. They were just 6.80 an hour ago, so it's costing you 80 cents a share to gamble on them going much higher in a month. I think I like that gamble.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Thoughts:
Nowhere but in the U.S. could (arguably) the 2nd most powerful man in the world – Vice President R. Biden – utter the words – “We have to spend more money to keep from going bankrupt!” And when given the chance to retract it said: “Yes, that’s what I’m telling you.” With minds like this leading our comeback – is it any wonder why the rest of the world has had to "lend" us $2B per day to keep us solvent? Someone should tell ‘good ole Joe’ that in the real world – if you spend money you don't have, soon you are insolvent. OK ‘Joe’ back into the real world – it’s 2009 and:
- We've shed 5 million jobs.
- Unemployment is almost 20% in real terms.
- Our nation is virtually bankrupt, running more deficits than all the last 100 years COMBINED.
- Our National debt is now 95 TRILLION dollars
- Our Tax revenues are shrinking by 30%.
- There is still $600 trillion worth of derivatives that no one can accurately price, hiding in the shadows.
- Manufacturing is virtually dead.
- Commercial real estate is imploding.
- Sheila Blair of the FDIC said that 500 more banks will fail.
- Credit card delinquencies hit another all time high, foreclosure notices hit 1.5 MILLION households in just the first 6 months of the year, a 15% jump from last year.
- AND Goldman Sachs raped (oops) reaped the largest profits in their history.
The Congressional Budget Office (CBO) said the following this week: “Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy.” And yet despite this - Obama pushes forward for Cap and Trade legislation and with nationalized Healthcare. The CBO itself said: “The health care overhauls released to date would increase, not reduce, the burgeoning long-term health costs facing the government.” AND – in my world – NONE of this was by accident, and I’ll revert to the old Boy Scout Motto – “Be Prepared.”
The Market:
We’re in earnings season, where companies tell the world how their last quarter went and how much money they made. 72% of the companies that have reported have beaten their estimates. But let’s take a peek ourselves – at just one ‘bell weather’ company – GE – who was reported to have ‘blown the doors off” estimates. The Headline Number: “GE’s 2nd quarter results – earned 26 cents per share – beating the estimates by 3 cents on revenues of over $39Billion.” The Reality was: GE’s net income fell 47 percent, to $2.9 billion, down from $5.4 billion a year ago. The company's revenue fell 17 percent, to $39.08 billion, and after adjusting for a stronger dollar, which reduces the value of overseas sales, sales were down 12 percent from the previous year. In a conference call with analysts, company executives said they expected industrial equipment orders to be off about 25 percent for the year. The finance business was the biggest drag on G.E.'s results as its operating profits fell 80 percent, to $590 million, down from $2.9 billion a year ago. And revenue in the finance unit, which includes home mortgages in Britain and private-label credit cards in the United States, declined 29 percent, to less than $12.8 billion, from nearly $18 billion.” So GE’s profits plunged 47%, cut their dividend, lost their AAA rating, revenue fell 17%, finance arm profits fell 80%, but they BEAT the estimates.
The Point is that today it’s ALL about the psychology of the market – and where the government (temporarily) wants the market to go. As always the question is the same, what's next? After the market has gone up 5 days in a row - some form of logic has to enter the picture – yes? In other words, at some point you are going to get a down day, that's just life. But here's the deeper question, the chart slaves were convinced we were going to plunge 1000 points – and the economic news agrees with that, it's all horrible. Yet the market roars for 700 points upward. Now consider the psychology. The shorts that just got burned are now screaming that this is just a bounce, nothing more. Those same shorts are salivating over the idea of reshorting, so they can make their money back. Even the smarter one's didn’t short the last time are now talking about how smart they were to hold off, so they could short this bounce from even higher. Is the market going to reward them?
Considering how bad earnings really are, the economic reports (horrific) – this market should fall like a rock. Is it going to be that accommodating? I doubt it. Our guess is that after an overbought pull down, that adjusts for the recent move up, this thing roars again, eventually taking us to the 9600 level. By then all the shorts will have been chewed up, and all the people that missed the last move will have bought in, so it could THEN roll over and land downward.
TIPS:
- we’re holding the GDX (a basket of gold mining stocks) with No Stop
- we’re holding NGD (a gold miner) from $2.59 and will be doubling up on Monday with this
- we’re holding MOO (agricultural business ETF)
- we’re hold XLK (a technology (minus healthcare) ETF)
- we’re holding IPI (a potash hold – again in the agricultural theme – we’re underwater here)
- we’re holding CSCO @ 19.20 / hard stop @ 19.80
I really wanted to see some ‘red’ on Friday in order to purchase about 20 contracts of the August 80 DIA calls. I wanted to do this on a down day – and on the next decent pullback, even if it's just 100 points I will buy some contracts on the August DIA 80 calls. They were just 6.80 an hour ago, so it's costing you 80 cents a share to gamble on them going much higher in a month. I think I like that gamble.
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Sunday, July 12, 2009
This Week in Barrons – 07_12_09:
Thoughts:
The FED is a private institution that is above the law and accountable to no one (not even the President of the U.S. can see their books). Ron Paul recently introduced a bill where Congress could finally audit the FED. Well this has the FED freaking out. BUT surprising the bill did get by the House and now goes to the Senate. Now with Obama's popularity is falling like a stone, some senators are wondering if they should be connected so closely to Obama and the FED. What’s interesting is that the FED Vice President Donald Kohn – on Thursday – warned that if this bill goes through - the economy would suffer massively. Now you have to ask yourself – Why? Mr. Kohn goes on to say: “this bill could cast a chill on monetary policy deliberations by making officials nervous as ideas they throw around behind closed doors could become public. Any substantial erosion of the Federal Reserve's monetary independence likely would lead to higher long-term interest rates as investors begin to fear future inflation.” Now, why would Mr. Kohn fear inflation simply by us viewing their books? Well, because the FED is printing money like it’s going out of style! If we were to actually see the true amount of their printing, the true destinations of all that money, inflation would be pegged at 14%+ at least and send the world into a very dismal place.
Does the FED equal Goldman Sachs? Potentially some of you have read the article in Rolling Stone magazine about Goldman Sachs (GS) and how they've raped the America's taxpayer for the last 120 years. Now, let’s look at some Goldman Alumni: Jim Cramer, Timothy Geithner, Henry Paulson, Zoellick (president of the World bank), countless White house Chief of staff's, Jon S. Corzine (who has bankrupted NJ) – many more. Now, could it be possible that they used any of their influence to obtain inside information? But what about the matter of last week of the FBI arresting Sergey Aleynikov, a former VP at Goldman Sachs. Aleynikov uploaded secret algorithms used by Goldman Sachs that run automated stock and commodities trading. The data was uploaded to a server in Europe. Shortly after the deed was done, Aleynikov resigned from his $400,000 per year job at Goldman. Now, I bet that this is much more than your garden-variety techno theft – so let’s connect a few dots. Two weeks ago I reported to you that Goldman was set to pay out the highest bonuses in their 140 year history. This at a time when the economy is in the pits, Wall Street has laid off a zillion people, the average returns are negative, and the banking industry was pleading for bail outs or the world would end. So how did they amass these bonuses? Well it's because they are such tremendous traders that there were many days they were making 100,000,000 a day. Yes you got that right, one hundred million in a day. Now this is the same outfit that didn't see any troubles in the mortgage market, CDO's, Swaps, or derivatives, yet they were making more money than any time in their history. Then Aleynikov hit the press which read: "The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways," stated U.S. Attorney Joseph Facciponti. Well – since Goldman built it – we must assume that they have that ability – yes? At the same time the market published a report about program trading – with Goldman leading the category each week doing 400% more program trades than their next rival. The next report (the very next report) Goldman wasn’t even listed. They went from being the top dog leader to not even being listed. Then the market came out and announced they weren't even going to post the list any more, it wasn't "valuable" any longer! Finally - last week, the NYSE had to keep the market open for an extra 15 minutes after the official close to "work out" some irregularities. OK, so Goldman is making billions in the worst recession since the 30's. They top the charts for program trading. Their program is stolen. The Attorney General says it has the ability to manipulate markets. Goldman suddenly disappears from the program trading charts, and then the charts are instantly discontinued. Then the market stays open longer to fix a glitch. Now what if because of Goldman’s particular situation of being a special liquidity supplier to the NYSE, and their inclusion in the Presidents working group on financial markets, their new hot software could "sniff" out stock orders milliseconds before the order is executed, and then their black boxes fire off just ahead of it? In effect they would be able to sneak in just ahead of a legitimate order, and scoop profits and be gone all in the space of a single second. Isn’t that what Aleynikov stole – and then they had to shut down the reporting and ‘disconnect’ the software from the exchange so that Alynikov’s buddies couldn’t muscle in on the Goldman Gold-Mine!
The Markets:
America is bankrupt. "According to the CBO, over the next SEVENTY fiscal years, the federal government will NEVER have a surplus. Rather, the United States will continue to suffer massive, escalating, multi-hundred billion dollar losses (deficits) each and every year for the next SEVEN DECADES, which is when the budget projection stops.”
So Goldman rapes and pillages us while The FED remains locked behind closed doors, and the U.S. is broke beyond repair, to the point where if taxes were 100% of personal income the books wouldn't balance. To make matters genuinely more abstract and absurd, Obama wants to push for universal healthcare, costing trillions we don't have. Yet despite all this, for the most part the American people aren't awake yet.
But the point is simple – the economy will NOT get better. Sure there will be bumps and glimmers of hope, etc, but in the long run, we're on a headlong rush to the ultimate depression.
As far as the stock market goes, here lies the great dichotomy. The market belongs at DOW 4000, but fights daily to move higher. You see the manipulations; you know about the PPT and Goldman, JPM suppressing silver/gold, and buying futures when it suits them. You see companies reporting that revenues are down 50%, but once again their earnings were "better than expected”. If you believe that the market’s current purpose is to punish the most people - then you’d love to see a really big fast sharp sell off that really scares people out – and that would signal your buying opportunity. The problem here is that Obama and the boys are pumping so much money into the system to give the appearance we're going to make it, each good attempt at the "big" sell off gets short circuited.
That said however, I’m hearing more and more "bearish talk" on TV, and therefore we're probably getting closer to a short term bottom that reverses higher soon. We want to catch that next wave up for sure, but be patient and let it develop. Above all remain safe, use smaller positions and move "fast". We're coming into the strong part of earnings reporting season, and it will be interesting to see how it all gets "spun". This "ain't your daddy's market" any longer.
TIPS:
- we’re holding the GDX (a basket of gold mining stocks) with No Stop
- we’re holding NGD (a gold miner) from $2.59 and will be doubling up on Monday with this
- we’re holding MOO (agricultural business ETF)
- we’re hold XLK (a technology (minus healthcare) ETF)
- we’re holding IPI (a potash hold – again in the agricultural theme – we’re underwater here)
o we’re underwater on a couple – just thinking that there’s an easier market move UP and Down at this point
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Thoughts:
The FED is a private institution that is above the law and accountable to no one (not even the President of the U.S. can see their books). Ron Paul recently introduced a bill where Congress could finally audit the FED. Well this has the FED freaking out. BUT surprising the bill did get by the House and now goes to the Senate. Now with Obama's popularity is falling like a stone, some senators are wondering if they should be connected so closely to Obama and the FED. What’s interesting is that the FED Vice President Donald Kohn – on Thursday – warned that if this bill goes through - the economy would suffer massively. Now you have to ask yourself – Why? Mr. Kohn goes on to say: “this bill could cast a chill on monetary policy deliberations by making officials nervous as ideas they throw around behind closed doors could become public. Any substantial erosion of the Federal Reserve's monetary independence likely would lead to higher long-term interest rates as investors begin to fear future inflation.” Now, why would Mr. Kohn fear inflation simply by us viewing their books? Well, because the FED is printing money like it’s going out of style! If we were to actually see the true amount of their printing, the true destinations of all that money, inflation would be pegged at 14%+ at least and send the world into a very dismal place.
Does the FED equal Goldman Sachs? Potentially some of you have read the article in Rolling Stone magazine about Goldman Sachs (GS) and how they've raped the America's taxpayer for the last 120 years. Now, let’s look at some Goldman Alumni: Jim Cramer, Timothy Geithner, Henry Paulson, Zoellick (president of the World bank), countless White house Chief of staff's, Jon S. Corzine (who has bankrupted NJ) – many more. Now, could it be possible that they used any of their influence to obtain inside information? But what about the matter of last week of the FBI arresting Sergey Aleynikov, a former VP at Goldman Sachs. Aleynikov uploaded secret algorithms used by Goldman Sachs that run automated stock and commodities trading. The data was uploaded to a server in Europe. Shortly after the deed was done, Aleynikov resigned from his $400,000 per year job at Goldman. Now, I bet that this is much more than your garden-variety techno theft – so let’s connect a few dots. Two weeks ago I reported to you that Goldman was set to pay out the highest bonuses in their 140 year history. This at a time when the economy is in the pits, Wall Street has laid off a zillion people, the average returns are negative, and the banking industry was pleading for bail outs or the world would end. So how did they amass these bonuses? Well it's because they are such tremendous traders that there were many days they were making 100,000,000 a day. Yes you got that right, one hundred million in a day. Now this is the same outfit that didn't see any troubles in the mortgage market, CDO's, Swaps, or derivatives, yet they were making more money than any time in their history. Then Aleynikov hit the press which read: "The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways," stated U.S. Attorney Joseph Facciponti. Well – since Goldman built it – we must assume that they have that ability – yes? At the same time the market published a report about program trading – with Goldman leading the category each week doing 400% more program trades than their next rival. The next report (the very next report) Goldman wasn’t even listed. They went from being the top dog leader to not even being listed. Then the market came out and announced they weren't even going to post the list any more, it wasn't "valuable" any longer! Finally - last week, the NYSE had to keep the market open for an extra 15 minutes after the official close to "work out" some irregularities. OK, so Goldman is making billions in the worst recession since the 30's. They top the charts for program trading. Their program is stolen. The Attorney General says it has the ability to manipulate markets. Goldman suddenly disappears from the program trading charts, and then the charts are instantly discontinued. Then the market stays open longer to fix a glitch. Now what if because of Goldman’s particular situation of being a special liquidity supplier to the NYSE, and their inclusion in the Presidents working group on financial markets, their new hot software could "sniff" out stock orders milliseconds before the order is executed, and then their black boxes fire off just ahead of it? In effect they would be able to sneak in just ahead of a legitimate order, and scoop profits and be gone all in the space of a single second. Isn’t that what Aleynikov stole – and then they had to shut down the reporting and ‘disconnect’ the software from the exchange so that Alynikov’s buddies couldn’t muscle in on the Goldman Gold-Mine!
The Markets:
America is bankrupt. "According to the CBO, over the next SEVENTY fiscal years, the federal government will NEVER have a surplus. Rather, the United States will continue to suffer massive, escalating, multi-hundred billion dollar losses (deficits) each and every year for the next SEVEN DECADES, which is when the budget projection stops.”
So Goldman rapes and pillages us while The FED remains locked behind closed doors, and the U.S. is broke beyond repair, to the point where if taxes were 100% of personal income the books wouldn't balance. To make matters genuinely more abstract and absurd, Obama wants to push for universal healthcare, costing trillions we don't have. Yet despite all this, for the most part the American people aren't awake yet.
But the point is simple – the economy will NOT get better. Sure there will be bumps and glimmers of hope, etc, but in the long run, we're on a headlong rush to the ultimate depression.
As far as the stock market goes, here lies the great dichotomy. The market belongs at DOW 4000, but fights daily to move higher. You see the manipulations; you know about the PPT and Goldman, JPM suppressing silver/gold, and buying futures when it suits them. You see companies reporting that revenues are down 50%, but once again their earnings were "better than expected”. If you believe that the market’s current purpose is to punish the most people - then you’d love to see a really big fast sharp sell off that really scares people out – and that would signal your buying opportunity. The problem here is that Obama and the boys are pumping so much money into the system to give the appearance we're going to make it, each good attempt at the "big" sell off gets short circuited.
That said however, I’m hearing more and more "bearish talk" on TV, and therefore we're probably getting closer to a short term bottom that reverses higher soon. We want to catch that next wave up for sure, but be patient and let it develop. Above all remain safe, use smaller positions and move "fast". We're coming into the strong part of earnings reporting season, and it will be interesting to see how it all gets "spun". This "ain't your daddy's market" any longer.
TIPS:
- we’re holding the GDX (a basket of gold mining stocks) with No Stop
- we’re holding NGD (a gold miner) from $2.59 and will be doubling up on Monday with this
- we’re holding MOO (agricultural business ETF)
- we’re hold XLK (a technology (minus healthcare) ETF)
- we’re holding IPI (a potash hold – again in the agricultural theme – we’re underwater here)
o we’re underwater on a couple – just thinking that there’s an easier market move UP and Down at this point
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Sunday, July 5, 2009
This Week in Barrons – 07_05_09:
Thoughts:
Over the past 8 years of putting out these letters, we've talked about so many issues that have changed over the years that it's impossible to count them. But what is somewhat bothersome is that right now in 2009, each day is bringing us more laws, regulations, and policies that make most of the last 8 years worth of them look small in comparison. Healthcare reform, Cap and Trade, the Government's take over of the auto business, the bail outs, the stimulus packages, come to mind. But frankly it's the "little things" that continue to change on a day by day basis that often goes by without as much as a whimper that bothers me the most.
There's an old question: "How do you boil a frog?" The answer is that you put the little guy in a pot and slowly bring the temperature up a little at a time. The frog doesn't jump out of the pot and "change" his environment, he just keeps adapting to the higher temps until one moment when the poor guy's "cooked". Then it's too late. This is what's happening to all of us – “a little here and a little there”. No one seems to notice, until one day, when they look around and discover that they've been cooked. As we speak, people all around are waking up to being "economically cooked". Americans are starting to ask questions:
- “What do you mean the Federal Reserve isn't Federal? Isn't it a part of our Government?" No.
- "What do you mean our Constitution says only the Treasury should be in charge of our money, does it really?" Yes.
- "Are you telling me that a small group of PRIVATE bankers actually run our money and policy??" Yes.
We celebrate "Independence Day" because incredible men took incredible chances and decided they needed to break away from the Bankers and Government of the old world. This small group – turned the tide on what was arguably the most powerful military on earth at that time. Now (after 233 years), 1 out of every 6 dollars of income in the U.S. is a Government handout. The Government owns 72% of General Motors. The Government owns banks and wants to own the Healthcare Industry. I hope that Americans will get very tired of Government running their lives, and of the words “me, me, me” and “it wasn’t my fault”, but rather adopt the stance and thinking of the original “Independence Day’ers” that fought against immeasurable odds – and won!
The Market:
WASHINGTON (Reuters) - U.S. bank regulators closed seven institutions on Thursday, including six banks in Illinois controlled by one family and a small bank in Dallas, bringing the total number of U.S. bank failures to 52 so far this year.
But worse than failing banks, (however equally on the shoulders of the American taxpayer) comes the Cap and Trade Bill. Welcome to the new bubble – the “Green Bubble.” This bill REQUIRES the EPA to establish environmental standards for residences. To enforce this ‘code’ they are going to hire an army of people to go door to door and do energy audits. They have the right to demand you produce your energy bills. They have the right to demand access to your house and inspect your appliances, number of rooms, carpets, foundation, etc. You cannot refuse this. Then they will tell you what improvements will be made to bring you up to code. Oh, where does the money come from to make the changes to your homes and to those of commercial properties? O’bama hasn’t answered that question, it goes hand in hand with ‘fiscal responsibility’ and we’re clearly not in that chapter of the book yet! The bill instructs the EPA to regulate greenhouse-gas emissions from mobile sources such as cars, trucks, buses, dirt bikes, snowmobiles, boats, planes, lawn equipment, etc. The secretary of energy is required to establish a large-scale vehicle electrification program and to provide "such sums as may be necessary" for the manufacture of plug-in electric-drive vehicles, including another $25 billion for "advanced technology vehicle" loans. The bill creates: a new United States Global Change Research Program, a National Climate Change Adaptation Program, a National Climate Service, Natural Resources Climate Change Adaptation Strategy office at the White House, and an International Climate Change Adaptation Program at the State Department.
It’s estimated that our energy costs will rise between $1,200 and $2,000 dollars a year, and the costs for the set-up and infrastructure are unimaginable.
The interesting issue now (as the bill goes to the Senate) is that Obama's popularity is falling like a stone, and a politician’s main job is to remain a politician (get re-elected). So if they feel that voting ‘for’ this bill would cost them their job, well it’s interesting to think about.
Bottom Line: GREEN is the next bubble!
Last week in the Market: We saw the TLT (which is a bond ETF (exchange traded fund)) rally from 89 to 95 as the investors that were scared to death of the market, sought the safety of bonds. The mechanics of how all this plays out is really quite interesting. We've just come through one of the most powerful bear market bounces in 70 years, taking us from 6,443 in March to 8,900 in June on the DOW. Now we've backfilled a bit. However, it’s undeniable that a large percentage of people are upset that they missed that massive 2,400-point jump. They are desperate to not miss any more upside, so they'll view pullbacks as a buying opportunity. In other words, despite the fact we “should” fall for another 1,000 points, the chances of that are pretty slim. In other words, any downdraft here should be cut shorter than it would have otherwise run.
I still believe that "overall" we have a date with a higher market. The administration wants it, the Bankers want it and Wall Street wants it. But if the TLT bond fund busts up and over 95 and continues higher, it's showing me that in the near term there are enough people trying to hide that we could indeed take a hit to the downside that takes us under DOW 8K for a period of time. Then they’ll rush in to buy that "dip" and send us hurtling back to 9K+ in short order.
So in the immediate term, we're in no mans land that could go either way. However, in the longer term, I think they'll manipulate, hype and stimulus us to where the market runs for a new high for the year.
Use the boundaries of 8K and 8.5K on the DOW as an indicator. Right now we're smack in the middle at 8280. I wouldn’t get insanely long until 8500 is taken out, and I wouldn't get short until 8K really fails.
TIPS:
- we’re holding the GDX (a basket of gold mining stocks) with No Stop
- we’re holding NGD (a gold miner) from $2.59
- we’re holding MOO (agricultural business ETF) – from $32
- we’re hold XLK (a technology (minus healthcare) ETF) – from $17
- we’re holding IPI (a potash hold – again in the agricultural theme – we’re underwater here) – from $32
- we’re thinking about: ADTN – but this market is tough to commit to right now – so we’re just looking ☺
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
Thoughts:
Over the past 8 years of putting out these letters, we've talked about so many issues that have changed over the years that it's impossible to count them. But what is somewhat bothersome is that right now in 2009, each day is bringing us more laws, regulations, and policies that make most of the last 8 years worth of them look small in comparison. Healthcare reform, Cap and Trade, the Government's take over of the auto business, the bail outs, the stimulus packages, come to mind. But frankly it's the "little things" that continue to change on a day by day basis that often goes by without as much as a whimper that bothers me the most.
There's an old question: "How do you boil a frog?" The answer is that you put the little guy in a pot and slowly bring the temperature up a little at a time. The frog doesn't jump out of the pot and "change" his environment, he just keeps adapting to the higher temps until one moment when the poor guy's "cooked". Then it's too late. This is what's happening to all of us – “a little here and a little there”. No one seems to notice, until one day, when they look around and discover that they've been cooked. As we speak, people all around are waking up to being "economically cooked". Americans are starting to ask questions:
- “What do you mean the Federal Reserve isn't Federal? Isn't it a part of our Government?" No.
- "What do you mean our Constitution says only the Treasury should be in charge of our money, does it really?" Yes.
- "Are you telling me that a small group of PRIVATE bankers actually run our money and policy??" Yes.
We celebrate "Independence Day" because incredible men took incredible chances and decided they needed to break away from the Bankers and Government of the old world. This small group – turned the tide on what was arguably the most powerful military on earth at that time. Now (after 233 years), 1 out of every 6 dollars of income in the U.S. is a Government handout. The Government owns 72% of General Motors. The Government owns banks and wants to own the Healthcare Industry. I hope that Americans will get very tired of Government running their lives, and of the words “me, me, me” and “it wasn’t my fault”, but rather adopt the stance and thinking of the original “Independence Day’ers” that fought against immeasurable odds – and won!
The Market:
WASHINGTON (Reuters) - U.S. bank regulators closed seven institutions on Thursday, including six banks in Illinois controlled by one family and a small bank in Dallas, bringing the total number of U.S. bank failures to 52 so far this year.
But worse than failing banks, (however equally on the shoulders of the American taxpayer) comes the Cap and Trade Bill. Welcome to the new bubble – the “Green Bubble.” This bill REQUIRES the EPA to establish environmental standards for residences. To enforce this ‘code’ they are going to hire an army of people to go door to door and do energy audits. They have the right to demand you produce your energy bills. They have the right to demand access to your house and inspect your appliances, number of rooms, carpets, foundation, etc. You cannot refuse this. Then they will tell you what improvements will be made to bring you up to code. Oh, where does the money come from to make the changes to your homes and to those of commercial properties? O’bama hasn’t answered that question, it goes hand in hand with ‘fiscal responsibility’ and we’re clearly not in that chapter of the book yet! The bill instructs the EPA to regulate greenhouse-gas emissions from mobile sources such as cars, trucks, buses, dirt bikes, snowmobiles, boats, planes, lawn equipment, etc. The secretary of energy is required to establish a large-scale vehicle electrification program and to provide "such sums as may be necessary" for the manufacture of plug-in electric-drive vehicles, including another $25 billion for "advanced technology vehicle" loans. The bill creates: a new United States Global Change Research Program, a National Climate Change Adaptation Program, a National Climate Service, Natural Resources Climate Change Adaptation Strategy office at the White House, and an International Climate Change Adaptation Program at the State Department.
It’s estimated that our energy costs will rise between $1,200 and $2,000 dollars a year, and the costs for the set-up and infrastructure are unimaginable.
The interesting issue now (as the bill goes to the Senate) is that Obama's popularity is falling like a stone, and a politician’s main job is to remain a politician (get re-elected). So if they feel that voting ‘for’ this bill would cost them their job, well it’s interesting to think about.
Bottom Line: GREEN is the next bubble!
Last week in the Market: We saw the TLT (which is a bond ETF (exchange traded fund)) rally from 89 to 95 as the investors that were scared to death of the market, sought the safety of bonds. The mechanics of how all this plays out is really quite interesting. We've just come through one of the most powerful bear market bounces in 70 years, taking us from 6,443 in March to 8,900 in June on the DOW. Now we've backfilled a bit. However, it’s undeniable that a large percentage of people are upset that they missed that massive 2,400-point jump. They are desperate to not miss any more upside, so they'll view pullbacks as a buying opportunity. In other words, despite the fact we “should” fall for another 1,000 points, the chances of that are pretty slim. In other words, any downdraft here should be cut shorter than it would have otherwise run.
I still believe that "overall" we have a date with a higher market. The administration wants it, the Bankers want it and Wall Street wants it. But if the TLT bond fund busts up and over 95 and continues higher, it's showing me that in the near term there are enough people trying to hide that we could indeed take a hit to the downside that takes us under DOW 8K for a period of time. Then they’ll rush in to buy that "dip" and send us hurtling back to 9K+ in short order.
So in the immediate term, we're in no mans land that could go either way. However, in the longer term, I think they'll manipulate, hype and stimulus us to where the market runs for a new high for the year.
Use the boundaries of 8K and 8.5K on the DOW as an indicator. Right now we're smack in the middle at 8280. I wouldn’t get insanely long until 8500 is taken out, and I wouldn't get short until 8K really fails.
TIPS:
- we’re holding the GDX (a basket of gold mining stocks) with No Stop
- we’re holding NGD (a gold miner) from $2.59
- we’re holding MOO (agricultural business ETF) – from $32
- we’re hold XLK (a technology (minus healthcare) ETF) – from $17
- we’re holding IPI (a potash hold – again in the agricultural theme – we’re underwater here) – from $32
- we’re thinking about: ADTN – but this market is tough to commit to right now – so we’re just looking ☺
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.
R.F. Culbertson
rfc@getabby.com
http://rfcfinancialnews.blogspot.com/
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