"Ever since the inception of Bartercard into the Australian economy in 1991, the way companies across the country conduct their day-to-day business has been revolutionised. Bartercard’s world-leading innovative trade exchange system enables over 75,000 trading members in 9 countries to benefit from the cashless economy of barter."
Tudor Investment Q3 Investment Letter, Likes Gold, Emerging Equities & Commodities to Absorb Liquidity (10/15/09)
"Our job is to identify the best performing assets of this “Great Liquidity Race.” At present, it appears those assets are gold, emerging market equities denominated in local currencies, and commodity related stocks."
Source: Seeing Next Boom, Tudor Goes For the Gold (NYT Dealbook)
HYG, High Yield Bonds Selling Off With Risk, Leveraged Loan Index Testing '08 Resistance. Does Someones Yield Have To Give?
Carl Icahn Speaking at Yale in Robert Shiller's Class (2008), He's Trying To Block a Pre-Packaged CIT Bankruptcy (Bloomberg Video)
Source: Open Yale Courses: ECON 252: Financial Markets (Spring, 2008)
Here he is out of the classroom, trying to print money on his CIT Group debt. He owns $2 billion (face value) of $CIT debt and it's on the brink of a pre-packaged bankruptcy.
Live Economic Calendar Powered by the Forex Trading Portal Forexpros.com
$UUP Volume Spiked to 2008 High, Call Volume and ISEE Ratio Analysis With Potential Trade Lurking (Live US Dollar ETF Chart w/ Technicals)
7,450 November $23 calls with 30,750 open
35,805 December $23 calls with 96,637 open
17,114 December $24 calls with 38,816 open
Volume was WAY below open interest, so I'm not sure if the trades were bought-to-open or close. On the ISE, UUP's total option volume was 6x the average. The ISEE ratio was down -98.42% to 517. The ratio measures opening long calls/opening long puts*100 (without market makers). Closing trades? Or did the high volume skew the data. Volume on the actual ETF exploded to a level not seen since 2008 (6.9 million shares). Watch that downtrend line and support level on volume. Either it breaks through downtrend resistance or tests $22. It closed at $22.58 today. The next US Dollar judgment day is upon us. Lock and load..
Hang Seng Broke Rising Wedge, Heading For Support, Downpayment On Luxury Hong Kong Property Now 40% (HSI, HSNP)
Hong Kong's Hang Seng Index broke through rising wedge support. Catalysts:
Sino Land Leads Hong Kong Developers Lower on Mortgage Curbs (Bloomberg)
Hong Kong raises required deposit on high-end property to 40pc (AustralianBusiness)
Hong Kong property stocks fall after tighter mortgage rules (MarketWatch)
Hong Kong Stocks Drop Most in Three Weeks on Home Price Concern (Bloomberg)
Hong Kong Raises Down-Payment Level for Luxury Flats (Bloomberg, 10/23)
I provided static images courtesy of Google Finance to show the gap down on the Hang Seng Index (HSI) and Hang Seng Property Index (HSNP). HSI is currently down 1.63% (22,217) and HSNP is down 3.43% (28,387). I had a few posts showing a nice symmetrical triangle breakout and the Aug '09 resistance pierce to 30,000. It broke back below 29,000 support so it needs to figure itself out...
- Banks will dilute equity to raise more capital.
- End of quantitative easing will bring markets lower.
S&P 500 Overvalued by 40%, Set to Fall, Smithers Says (Bloomberg)
Bank of America Falls as Bove Says Firm ‘Chained’ (Bloomberg)
Will The Stock Market's Rally Endure? (TheAtlanticBusiness)
A Tsar Too Far (Value Expectations)
QE according to Smithers (FT Alphaville)
The US stock market is overvalued by 40% (FT Alphaville)
"Corporate ex-financials profit margins remain above average and, if I am right about the coming seven lean years, we will soon enough look back nostalgically at such high profits. Price/earnings ratios, adjusted for even normal margins, are also significantly above fair value after the rally. Fair value on the S&P is now about 860 (fair value has declined steadily as the accounting smoke clears from the wreckage and there are still, perhaps, some smoldering embers). This places today’s market (October 19) at almost 25% overpriced......"
"Conversely, I have some modest hopes for a collective sensible resistance to the current Fed plot to have us all borrow and speculate again. I would still guess (a well informed guess, I hope) that before next year is out, the market will drop painfully from current levels. “Painfully” is arbitrarily deemed by me to start at -15%. My guess, though, is that the U.S. market will drop below fair value, which is a 22% decline (from the S&P 500 level of 1098 on October 19)."
He talks about the great depression, Chinese growth etc..
"There are no inflationary pressures in the US economy. Capacity utilization remains very low around 60% and there is no wage push at all with high unemployment, currently just under 10% and headed above 10%. So in those circumstances the US will not be generating any inflation for any time soon."
"I think further more that gold will get very dangerous within a year from now. When rates start going up, it becomes very expensive to hold a non-income producing asset. So though gold has positive momentum for the next few months, gold is a dangerous place to be when rates start turning up. As they will in a year or two's time."
He believes Treasuries are less dangerous because in a deflationary environment, where growth is slow, rates can remain low. He thinks 2-4% could be a new range for the next few years.
I'd prefer to just watch the charts.. Just in case Einhorn is right.
Roubini: If Dollar Carry Trade Unravels, Markets Could Crash (CNBC Video - 10/26/09), Did He Spark $UUP Call Volume Today?
BTW, did Roubini spark up some $UUP call buying today?? So far today, 6,000 $23 November calls traded with 30,750 open (last 0.15), 32,100 $23 December calls with 96,637 open (last 0.25) and 6,800 $24 December calls with 38,816 open (last 0.10) (hat tip OptionMonster). All volume was UNDER open interest so you'll have to decipher the nature of the volume and new open interest. Also there is nice volume on UUP, charting it out.
Transports $IYT Showing Weakness, AAR Rail Numbers Less Bad But Negative YoY, Industrials In Rising Wedge, Sector ETFs 50dma and RSI Comparisons
- S&P 500 Retreat Signaled by ‘Bearish Wedge’: Technical Analysis (Bloomberg)
- Bernanke Says Financial Firms Should Pay for Closings (Bloomberg Video)
- Goldman Sachs Still Paid for Swaps on Redeemed Bonds (Bloomberg)
- VIX Futures Show Lingering Risk of Stock Swings: Chart of Day (Bloomberg)
- U.S. Risks Japan-Like ‘Lost Decade’ on Stimulus Exit, Koo Says (Bloomberg)
- Irish Bar Values Plunge 40% as Pub Culture Mirrors Economy Bust (Bloomberg)
- China Economy May Slow Next Year, Stephen Roach Says (Bloomberg)
- Obama Declares Swine-Flu Emergency (WSJ)
- Capmark, Big Commercial Lender, May File for Bankruptcy (NYT)
- Capmark Financial near bankruptcy: WSJ (MarketWatch)
- U.S. Bank Failures Exceed 100 for Year, First Time Since 1992 (Bloomberg)
- Blackstone plans IPO for Merlin Entertainments: report (MarketWatch)
- Existing-home sales rebound to 2-year high (WashingtonPost)
- Suit: Cocaine, sex in Madoff's workplace (CNN)
- Shift to e-books to hurt bookstores, analysts say (AP)
- CIT Warns of Big Losses if Investors Reject Plan (NYT)
- Icahn Could Become Top Shareholder at CIT Group (WSJ)
- JAL faces $8.8 billion excess debt if liquidated: source (Reuters)
- GM board to reconsider Opel in early November (Reuters)
- Secondary Market Now Driven by Mega-Funds, Not LP Liquidity (PE Hub)
- DEALTALK-Las Vegas Sands loan faces bumps, may pressure IPO (Reuters)
- Soros says taxpayers right to resent bank bonuses (Reuters)
Big Unusual Volume On XHB November $16 Calls, Existing Home Sales and Tax Credit Speculation (Chart, Links, 10/22/09)
On the ISE, XHB option volume was 7.6x average volume and the ISEE exploded 10,600% to 856 with 21,770 calls opened/2,540 puts opened on the International Securities Exchange. The chart is being squeezed in a triangle just above $15 support from 2008. It closed at $15.38 today just above the 50 day moving average on strong volume. RSI and MACD have been trending lower with neutral price movement, however both are hovering around the neutral 50 and 0.0 level respectively. Obviously a breakout or breakdown would be a nice trade. It's also testing the downtrend from 2007. Are these calls levering up here?
Calls go through roof in homebuilders (optionMONSTER)
SPDR S&P Homebuilders (XHB) $15.28 +3.38% (WhatsTrading)
Bullish bets placed on the home builders: XHB TOL LEN (Trading RM, LLC)
Also this is interesting: Goldman Sachs Positive On Homebuilders Ahead of Earnings/Tax Credit Extension (XHB, DHI, MTH, TOL) - (Street Insider)
Hat tip Adam Warner on StockTwits today.
Niall Ferguson: US Dollar Could Lose Another 20%, $UUP Around $22 Support, Put/Call Open Interest Ratio and Short Interest (10/22)
- The stock market rally from the foreign investor's perspective has been an illusion because "the dollar's depreciation negated all the appreciation of the S&P 500 from March". Why would they want to hold dollars with a sliding currency and no investment returns.
- The real trade weighted dollar index is "only down 9% from it's post crisis peak, it could go another 20% and be well within historical probability."
- Reserve currencies don't last forever.
- "Fed could get pushed by the bond market into monetizing more debt".
FEATURE: Deserted shopping mall bleak symbol of Fed bailout (Reuters)
Fed Chairman Bernanke: Crossroads Mall landlord (NewsOK)
Bear Stearns Rescue Turns The Fed Into A Lawsuit Magnet (Business Insider)
Fed becomes reluctant landlord (Reuters Blogs)
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I am testing the waters on the HKEX (Hong Kong Stock Exchange) on Google Finance. I've been watching the Hang Seng Property Index (HSNP:Hong Kong) and Henderson Land Development (0012:Hong Kong) on the HKEX for a few weeks now. The Hong Kong Property Index broke out of a symmetrical triangle recently and ran all the way up to 30,000 (above the August highs). It is currently trading at 29,952 after reaching 30,112 a moment ago. I talked about this trade on October 5 and October 13 when it was approaching the potential break out point. It could fly or retest support from here.
Hang Seng Properties Index break (HSNP:Courtesy of Google Finance)
The reason why I'm watching the Hong Kong Property sector is because Henderson Land Development just sold a unit (翠錦園:39 Conduit Road) for a world record price of HKD439 million aka $57 Million!
This is from the press release:
"A Record Breaking Deal that Tops Asia
Mr. Lam stated, "The supply of new luxury residence in Mid-Levels is extremely scarce while luxury properties in such area have always been a sought after choice. We have recently witnessed record-breaking deals in luxury property market. As a result, we have offered exclusive previews of showflats of 39 Conduit Road for selected VIP buyers the past weekend. Market response has been encouraging and we have received numerous enquiries since then. Among all our deals, the top floors special units recorded a HKD71,280 per sq ft (68th floor, unit A, size at 6,158 sq. ft) deal that totaled to HKD439 million. The deal also created records in numerous area, including the followings:
* Record-high of construction price per square foot
* Price per square foot surpasses all residential properties including mansions and houses
* Set new record among properties in Asia
* Challenges to be the highest global price per square foot on split level units (comparing usable area)
* The second highest deal in '39 Conduit Road', reached HKD64,605 per sq ft (68th floor, unit B size at 6,144 sq.ft) deal that totaled to HKD397 million. The Deal also sets a record deal in Hong Kong property market. " (Source: hld.com)
China markets up as Hang Seng property index surges 5.8pct (ProactiveInvestors.hk)
Hang Lung boss a skeptic over sky-high luxury prices (The Standard)
Legislators slam Hong Kong developer's tall storeys (AFP)
In Hong Kong, a $56.6 Million Apartment (New York Times)
Hong Kong Has World's Most Expensive Apartments (조선일보(영문판):Chosun.com)
Singapore's DBS Group retains "buy" rating for Henderson Land Dev't (HK$57.50) (ChinaKnowledge)
Hong Kong flat 'most expensive' (BBC News)
Hong Kong apartment sold for a record 57 million dollars (Rabihdagher.com w/ BBC Video)
Here it is...
"View a 7-minute clip from the groundbreaking documentary from the Socionomic Institute, History's Hidden Engine, which discusses the existence of the Fibonacci ratio or "Golden Number" in many of life's systems, including the financial markets. To view the entire 1-hour documentary for FREE, click here." (Source: ElliotWaveIntl)
Full disclosure: Although I do work as an affiliate for Elliott Wave International, I have followed Bob Prechter's work and am confident in the quality of his products and services.
Brazil Taxing Foreign Debt, Stock Purchases, BZF, EWZ, USD/BRL at Resistance (Charts). Will It Work?
Recent option activity: EWZ saw a November Put spread on 10/16/09. 10,000 November 74 Puts were bought at $3.10 and 10,000 69 Puts were sold at $1.45 according to Andrew Wilkinson of IB. That trade will profit below $72.35. It could make it. Someone also bought 2,000 November 75 calls that day for $3.30.
Brazil Real Cut to ‘Underweight’ at RBC on Tax (Bloomberg)
Brazil’s ‘Desperate’ Tax Won’t Stem Currency’s Rise, Cunha Says (Bloomberg)
Brazil’s ‘Moment’ at Risk as Real Gains, Freitas Says (Bloomberg)
Brazil Exchange-Traded Fund Plunges 3% on Tax on Foreign Inflows (Bloomberg)
EWZ (Brazil ETF)
Hat tip 0HEDGE for tax news.
So now hedge fund manager David Einhorn of Greenlight Capital, who publicly shorted Lehman before it's demise, is positioning for a currency crisis by buying gold. He's not singling out the US Dollar either, he doesn't have faith in the Yen, Euro or Pound. The full speech PDF is available at Rolfe Winkler's Reuters blog post. Interesting points he made:
"I believe there is a real possibility that the collapse of any of the major currencies could have a similar domino effect on re-assessing the credit risk of the other fiat currencies run by countries with structural deficits and large, unfunded commitments to aging populations..."
"I have seen many people debate whether gold is a bet on inflation or deflation. As I see it, it is neither. Gold does well when monetary and fiscal policies are poor and does poorly when they appear sensible. Gold did very well during the Great Depression when FDR debased the currency. It did well again in the money printing 1970s, but collapsed in response to Paul Volcker’s austerity. It ultimately made a bottom around 2001 when the excitement about our future budget surpluses peaked.
Prospectively, gold should do fine unless our leaders implement much greater fiscal and monetary restraint than appears likely. Of course, gold should do very well if there is a sovereign debt default or currency crisis..."
"....When I watch Chairman Bernanke, Secretary Geithner and Mr. Summers on TV, read speeches written by the Fed Governors, observe the “stimulus” black hole, and think about our short-termism and lack of fiscal discipline and political will, my instinct is to want to short the dollar. But then I look at the other major currencies. The Euro, the Yen, and the British Pound might be worse. So, I conclude that picking one these currencies is like choosing my favorite dental procedure. And I decide holding gold is better than holding cash, especially now, where both earn no yield.
Along these same lines, we have bought long-dated options on much higher U.S. and Japanese interest rates...."
He was right about Lehman and the bond insurers, so keep an eye on gold. He did say he could be wrong if "our leaders implement much greater fiscal and monetary restraint" (Volcker style interest rate policy). But he's been right more than he's been wrong... We shall see!
Medical Marijuana Inc. MJNA Up On Obama's Medical Marijuana Guidelines (Videos, Press, Charts - 10/19/09)
"Oct. 19 (Bloomberg) -- The Obama administration is advising federal prosecutors not to seek criminal charges against those who use or supply marijuana for medical purposes in accordance with state laws".
Medical Marijuana Inc. (MJNA) is up 20% today at 0.32 last time I checked. Below I found an interview with the CEO. He might be high but he thinks it is the next Microsoft! Go to the website: Medicalmarijuanainc.com.
Full disclosure: I do not have possession of Medical Marijuana Inc or Cannabis Science and there is no recommendation to buy marijuana stocks, or pot on this post.
Egan-Jones On Why Carl Icahn's CIT Overtures Are Irrelevant (Zero Hedge)
CIT’s Changes Do Little to Enhance Debt Swap, CreditSights Says (Bloomberg)
Icahn offers CIT Group $6 billion loan (AP)
UPDATE: Icahn Offers To Underwrite $6B Loan To CIT (WSJ)
Icahn Offers CIT $6 Billion Loan, Calls Board ‘Incompetent’ (Bloomberg)
Icahn offers CIT 6 bln dlr loan, blasts board (AFP)
The Daily Docket: CIT Amends Exchange Offer (WSJ/Bankruptcy Beat)
CIT Sweetens Exchange Offer (WSJ)
CIT Group Revises Debt Plan (NYT)
10/13: CDS On CIT Hover As Bankruptcy Looms (Derivatives Weekly/subscription)
10/5: If CIT fails, Goldman wins -- with a $1 billion payoff (DailyFinance)
10/5: CDS in the spotlight in Goldman purchase of CIT debt (Financial Times)
The Elliott Wave Principle
In the 1930s, Ralph Nelson Elliott, a corporate accountant by profession, studied price movements in the financial markets and observed that certain patterns repeat themselves. He offered proof of his discovery by making astonishingly accurate stock market forecasts. What appears random and unrelated, Elliott said, will actually trace out a recognizable pattern once you learn what to look for. Elliott called his discovery "The Elliott Wave Principle," and its implications were huge. He had identified the common link that drives the trends in human affairs, from financial markets to fashion, from politics to popular culture.
Robert Prechter, Jr., president of Elliott Wave International, resurrected the Wave Principle from near obscurity in 1976 when he discovered the complete body of R.N. Elliott's work in the New York Library. Robert Prechter, Jr. and A.J. Frost published Elliott Wave Principle in 1978. The book received enthusiastic reviews and became a Wall Street bestseller. In Elliott Wave Principle, Prechter and Frost's forecast called for a roaring bull market in the 1980s, to be followed by a record bear market. Needless to say, knowledge of the Wave Principle among private and professional investors grew dramatically in the 1980s.
When investors and traders first discover the Elliott Wave Principle, there are several reactions:
- Disbelief – that markets are patterned and largely predictable by technical analysis alone
- Joyous “irrational exuberance” – at having found a “crystal ball” to foretell the future
Just like any system or structure found in nature, the closer you look at wave patterns, the more structured complexity you see. It is structured, because nature’s patterns build on themselves, creating similar forms at progressively larger sizes. You can see these fractal patterns in botany, geography, physiology, and the things humans create, like roads, residential subdivisions… and – as recent discoveries have confirmed – in market prices.
- And finally the correct, and useful response – “Wow, here is a valuable new tool I should learn to use.”
Natural systems, including Elliott wave patterns in market charts, “grow” through time, and their forms are defined by interruptions to that growth.
Here's what is meant by that. When your hands formed in the womb, they first looked like round paddles growing equally in all directions. Then, in the places between your fingers, cells ceased growing or died, and growth was directed to the five digits. This structured progress and regress is essential to all forms of growth. That this “punctuated growth” appears in market data is only natural – as Robert Prechter, Jr., the world's foremost Elliott wave expert and president of Elliott Wave International, says, “Everything that thrives must have setbacks.”
The first step in Elliott wave analysis is identifying patterns in market prices. At their core, wave patterns are simple; there are only two of them: “impulse waves,” and “corrective waves.”
Impulse waves are composed of five sub-waves and move in the same direction as the trend of the next larger size (labeled as 1, 2, 3, 4, 5). Impulse waves are called so because they powerfully impel the market.
A corrective wave follows, composed of three sub-waves, and it moves against the trend of the next larger size (labeled as a, b, c). Corrective waves accomplish only a partial retracement, or "correction," of the progress achieved by any preceding impulse wave.
As the figure to the right shows, one complete Elliott wave consists of eight waves and two phases: five-wave impulse phase, whose sub-waves are denoted by numbers, and the three-wave corrective phase, whose sub-waves are denoted by letters.
What R.N. Elliott set out to describe using the Elliott Wave Principle was how the market actually behaves. There are a number of specific variations on the underlying theme, which Elliott meticulously described and illustrated. He also noted the important fact that each pattern has identifiable requirements as well as tendencies. From these observations, he was able to formulate numerous rules and guidelines for proper wave identification. A thorough knowledge of such details is necessary to understand what the markets can do, and at least as important, what it does not do.
You have only just begun to learn the power and complexity of the Elliott Wave Principle. So, don't let your Elliott wave education end here. Join Elliott Wave International's free Club EWI and access the Basic Tutorial: 10 lessons on The Elliott Wave Principle and learn how to use this valuable tool in your own trading and investing."
I attempted to chart out some waves on SPY and also provided trends and Fibonacci retracements on the S&P 500. Mr. Prechter please comment with your thoughts.
Is it time to hedge a potential wave? I know this goes against the Bernanke liquidity trade, but there HAS to be a decent correction at some point! Watch the streaming S&P chart below to see what happens. By the way, visit the Afraid To Trade blog by Corey Rosenbloom for Elliot Wave analysis.
There are also options on VIX futures contracts that you can follow. For a few months now (chart below), implied volatility on the VIX has been higher than 30 day historical volatility. Spikes in $VIX implied volatility have translated into underlying $VIX moves, however the VIX moves translated into either a higher market (late July) or minor sell offs.
Now we have interesting action again in the $VIX, $VIX implied volatility and VIX futures. As of 10/17, VIX Implied Volatility is at 106.59% while VIX Historical Volatility is at 58.42%! That is a decent spread between what the market is implying going forward vs. 30 day historical VIX volatility. Hat tip @smsearsBarrons. Not only that, there's a big spread between VIX put implied volatility and call IV. Ivolatility.com data shows that VIX Put IV is at 111.54% while call IV is at 101.64%. People like those puts, watch the 10/16 Volatility Sonar report. Eventually VIX volatility will sell off (imo) and the $VIX will move, just like the July 22 peak (Put IV was also higher than Call IV at that time). The actual $VIX calculation is hitting lows at 21.43, the October VIX future is at 22.35 while the February contract is at 27.30. Something has to give here, again.
For better interpretation and knowledge hit up OptionMonster, VIXandMore, DailyOptionsReport and InvestingWithOptions. If you have a website on volatility put a link in the comment bar, I'd like to see it.
"My idea is we're kind of bouncing around a resistance level... My price/earnings ratio is around 20 now... You know it's ok to buy stocks but don't expect a dramatic continuation of this".He's shocked by the market momentum and rebound in home prices. "This is the sharpest turnaround we've seen since 1933". Watch the whole video.
Goldman Sachs made $10.02 Billion from trading and principal investments! Fixed income, currency and commodities (FICC) net revenues increased 368% to $5.9 Billion from $1.6 billion a year ago (8/29/2008). These numbers were lower than Q2. I have some good news for the U.S Taxpayer though. From their earnings release.
"On July 22, 2009, the firm repurchased the warrant issued to the U.S. Treasury pursuant to the Treasury’s TARP Capital Purchase Program for $1.1 billion. The U.S. taxpayers’ annualized return on their total investment in the firm was approximately 23%" (Source: Goldman Sachs)
Goldman you should come out with a rap album to demand respect in the game.
- Galleon Statement (Reuters)
- Galleon Busted In $20 Million Insider Trading Case (Zero Hedge)
- One Of U.S.' Richest Men , 5 Others, Charged In Insider Trading (NPR)
- Who Cooperated With The FBI On Galleon? (DealBreaker)
- Insider Trading Arrests Rock Wall Street (Thestreet.com)
- Hedge-Funder Raj Rajaratnam Got Cranky When People Refused to Partake in His Insider-Trading Scheme (NYMag)
- GALLEON PRESS CONFERENCE BLOG: FBI Says 'Average' Investor Got Hurt (WSJ)
- Galleon's Rajaratnam, Others Charged In Insider Case (WSJ)
- Galleon’s Rajaratnam Charged in Insider Trading Scam (Bloomberg)
- Hedge Fund Executive Is Charged With Insider Trading (DealBook)
Full report by David Faber at CNBC.com (Six Charged With Hedge Fund Insider Trading)
How about recent ponzi scheme news while I'm at it (I found Indian and Canadian schemers as well, to make the US feel a little bit better). I present to you Madoff aftershocks.
- SEC Charges Three Florida Men in Alleged $14.3 Million Ponzi Scheme (WSJ)
- S.F. man accused of 30-year Ponzi scheme (SFGate)
- Florida man indicted in $20 million Ponzi scheme targeting Harrisburg area (TheSentinel)
- New Jersey man confesses to $6 million life insurance Ponzi scheme (IFAwebnews)
- Elk Grove Village man accused of stealing millions from investors in Ponzi scheme (Chicago Tribune)
- FBI, IRS looking into Canadian Ponzi scheme (MontrealGazette)
- Detroit Man Indicted in $200 Million Ponzi Scheme (Bloomberg)
- Mass. Hedge Fund Manager Gets Seven Years For Ponzi Scheme (FINalternatives)
- Breaking: Alleged Ponzi Schemer Nicholas Cosmo Jailed (WSJ Blogs)
- Broker accused in SEC complaint of luring elderly into Ponzi scheme (Freep)
- Second Man Arrested for Fraud in Canada’s Biggest Ponzi Scheme (Bloomberg)
- Firm booked for duping investors of Rs 1.2 cr (TimesofIndia)
- Beverly Hills investment advisor pleads guilty in Ponzi scam (LA Times)
- Riverside County man sentenced to 100 years for operating Ponzi scheme (LA Times)
- Montana Seeks Assets in Alleged $14M Ponzi Scheme (NY Times)
- If you're looking at a forward P/E over 16, that prices in a vibrant economy, not an economy that is still suffering.
- Regarding banks: Fed is giving away money for free and they lend it out at 5% (easy money).
- If the economy is so great, why is the Fed keeping interest rates at 0%?.
- "I'm betting still that the problems that we have in housing and unemployment and the deficit rising are going to trump all of that".
- Foreclosed shadow inventory will put pressure on housing.
- Realistically we have to be 15-20% lower to start. Looking at cyclically adjusted P/E and the Q-Ratio (total price/replacement cost) he sees a 35-40% retracement.
- The market is not efficient.
West Texas Intermediate Crude Oil ($WTIC - Courtesy of Stockcharts.com)
October 14, 2009
An 11,000 apartment complex in Manhattan, owned by Tishman Speyer (a unit of BlackRock Inc), could default on it's loans. And it looks like pension funds could lose $600 million. From the video below: The property was bought for $5.4 Billion and financed with a $3 billion first mortgage plus a $1.4 billion mezzanine piece. An equity investor included the Church of England. Real Point said the property is now worth $2.1 billion.
- Update: Stuy Town Still Screwed (Gothamist)
- High-Profile Tishman/BlackRock Property in New York in Danger of Default (WSJ.com)
- NYC housing complex on verge of loan default: report (Reuters)
- Pension funds stand to lose $600M in Manhattan venture (LA BizJournals)
- Real estate deal could cost CalPERS $500 million (SacBee)
- T Minus Four Months Until Stuyvesant Town Defaults (New York Magazine)
- Church of England could lose in StuyTown (The Deal)
- Real Estate News: Stuy Town Teeters, Insurers Drop Drywall Victims (WSJ Blogs)
- The Government is printing a "stupendous" amount of money.
- He mentions that there are shortages developing of everything (agriculture, mining products) and capacity constraints.
- "All of this before has led to higher prices".
- "The way inflation works is, it starts slow and it gets worse and worse and worse".
- "The Federal Reserve has laid the groundwork for some serious inflation down the road by printing all this money but so have many other Central Banks."
The seventies had stagflation mainly as a result of shortages from price controls. So prices went up even when the economy was bad.
Explaining the 1970s stagflation (Source: Wikipedia)
"Following Richard Nixon's imposition of wage and price controls on August 15, 1971, an initial wave of cost-push shocks in commodities was blamed for causing spiraling prices. Perhaps the most notorious factor cited at that time was the failure of the Peruvian anchovy fishery in 1972, a major source of livestock feed. The second major shock was the 1973 oil crisis, when the Organization of Petroleum Exporting Countries (OPEC) constrained the worldwide supply of oil. Both resulted in actual or relative scarcity of raw materials. The price controls resulted in shortages at the point of purchase, causing, for example, queues of consumers at fueling stations and increased production costs for industry."
The deflation argument is still alive and well though (Prechter on 10/6). Aaron Task also mentioned something interesting on Twitter:
"When the Dow 1st hit 10K in '99: total U.S. debt was $24.6T vs $50.8T now, gold was $280 vs $1,070, oil $16.44 vs $74.80 etc. -Peter Bookvar" (Source: @atask)