You all saw $12 billion hedge fund manager, David Tepper, say a week ago on CNBC that he was bullish on stocks hedged with a rolling "Bernanke Put" on the economy. Now, according to the articles below, $30 billion hedge fund manager, John Paulson, during a speech at the University Club of New York, said buy stocks (based on earnings yield/10y spread), buy multiple houses, sell bonds, and gold could overshoot to $4,000 on double digit inflation and a lower US Dollar. See Paulson & Co.'s recent letter to investors from Zero Hedge. This is nothing new, Paulson and his book have been bullish on the economy since the bailouts. Did he talk about hedging positions during his speech? I guess that's what the Federal Reserve is for. So I guess socialized greed, for a lack of a better word, is good! Courtesy of freshly printed Federal Reserve Notes, laced with cocaine, yep. Don't forget about the E in P/E if the economy doesn't pick up (via David Rosenberg). If that's the case, equity put options and credit default swaps are just a mouse click and premium installment away.
Articles:
John Paulson: Sell Bonds; Buy Stocks; Double Digit Inflation Coming - Robert Lenzner at Forbes.com
John Paulson Lecture: "Bonds Are Wrong, Stocks Are Right" - Zero Hedge
Gold Price Could Hit $4,000, Says Paulson - GoldAlert
John Paulson's Scary Speech: Double Digit Inflation By 2012, Gold At $4,000 - Business Insider
Tuesday, September 28, 2010
John Paulson: Buy Multiple Homes, Stocks, Gold; Sell Bonds on Double Digit Inflation, Lower Dollar (Courtesy of Fed Policies)
Sears Offers $665mln Senior Secured Notes, CDS Tightens By 32% (SHLD)
Sears (SHLD) is offering $665 million in Senior Secured Notes (due 2018) to "repay borrowings under our senior secured revolving credit facility, to fund working capital requirements of our retail businesses, capital expenditures and for general corporate purposes, including common share repurchases and pension funding obligations" [full release].
Get the money while it's cheap. Remember Tom Lee of JP Morgan said there would be a giant refi-boom in corporate debt? These unregistered notes are being offered privately to "qualified buyers" and $165 million to the Sears Pension Fund. I was browsing CMA Datavision's CDS market movers and saw that Sears Holdings was the top tightener. Sears 5Y CDS (tightened by 32% in basis points, credit quality improved) to 256bps. Look at all the Sears Roebuck Acceptance Corp bonds outstanding.
Get the money while it's cheap. Remember Tom Lee of JP Morgan said there would be a giant refi-boom in corporate debt? These unregistered notes are being offered privately to "qualified buyers" and $165 million to the Sears Pension Fund. I was browsing CMA Datavision's CDS market movers and saw that Sears Holdings was the top tightener. Sears 5Y CDS (tightened by 32% in basis points, credit quality improved) to 256bps. Look at all the Sears Roebuck Acceptance Corp bonds outstanding.
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| Courtesy of CMA Datavision |
Gold, S&P vs. Dollar Correlation Back On In September (DXZ, GCZ, ESZ)
The "real" crew appears to be back. Since March of this year Gold significantly outperformed the S&P. We'll see if this correlation continues in October. Overnight the Dollar is rallying, ES is down and Gold is down. The S&P and Gold need upside confirmation here after their huge September runs (imo). You can see what a correlation retracement would look like on the chart. The December Dollar Future needs to take out 80 resistance. Charts after the jump.
Interesting currency updates I just came across:
Two currency blocs — same problem, different solutions (EUR, RMB or Yuan) - FT Money Supply
China May Retaliate for Currency Measure, U.S. Businesses Say (Yuan) - Bloomberg (h/t fal)
Brazil's Mantega sees global "currency war" (BRL): FT - MarketWatch (h/t empiractor)
Monday, September 27, 2010
Warren Buffett on Rail Shipments, Carpet Yardage Retracements (CNBC)
On the recession: "I think we're in a recession until real per capita GDP gets back up to where it was before. That is not the way the National Bureau of Economic Research (NBER) measures it, but I will tell you that, on any common sense definition, the average American is below where he was before, or his family, in terms of real income GDP. We're still in a recession and we're not going to be out of it for a while, but we will get out of it."
Railroad, carpet, brick and insulation business retracements and employment: "[rail] If you take the peak period per shipments and then you go all the way down to the bottom, we're 61% of the way back up". "Our carpet business, our brick business, our insulation business, they're not back 61% but they are moving back".
"If you take our carpet business, it fell from 13 million yards a week we'll say to 7 million yards a week. That cost 6,500 jobs. We're back up to maybe 9 million yards a week [33% retracement] but we haven't had to add yet. If we get to 10 million we'll start adding people, but it's lagging and it will continue to lag"
Look at the BRKA (Berkshire Hathaway A-Share) chart. It is trading just above the 61.8% retracement level as well, peak to trough. Nice v-shaped recovery for the stock and now it's 21% away from the 2007 high. Now what?
TechCrunch Disrupt 2010 Conference Live Video (SF, #tcdisrupt)
Here is the TechCrunch Disrupt conference live on TechCrunch TV + chat embedded via Ustream. Also this just in from GigaOM, "Breaking: AOL Close to Buying TechCrunch".
David Rosenberg Takes Other Side of David Tepper's Longs Hedged With Fed Put Options
David Rosenberg, Chief Economist at Gluskin Sheff and former North American Economist at Merrill Lynch, wrote a note about David Tepper's CNBC appearance. This is macroeconomic warfare! From Business Insider.
Brace yourself for my EWI Dow 1,000 themed post! So will azazel the deflation demon silently invade the U.S. economy or is that risk officially backstopped by the Fed? It's also interesting that David Rosenberg thinks gold will hit $3,000 an ounce.
"Too bad we weren’t invited as a guest on CNBC last Friday to engage in a friendly debate with this portfolio manager because he didn’t outline the third scenario, either because he doesn’t believe it or he just plain didn’t contemplate it or he’s simply not positioned for it. That third scenario is that the economy weakens to such an extent that the Fed does indeed re-engage in QE, but that it does not work. So the “E” goes down and the P/E multiple does not expand. [Read more ]
Brace yourself for my EWI Dow 1,000 themed post! So will azazel the deflation demon silently invade the U.S. economy or is that risk officially backstopped by the Fed? It's also interesting that David Rosenberg thinks gold will hit $3,000 an ounce.
David Tepper's Bullish Bet on the Fed's Put (CNBC Video)
Sunday, September 26, 2010
Trading Update on EWZ (iShares Brazil ETF)
Here's a trading video on EWZ (iShares Brazil ETF) by Adam Hewison over at Market Club. He likes it better than the U.S. market. The chart looks interesting.
Iran Industrial Systems Attacked By Stuxnet Worm (Videos, Links)
Did the cyber-warfare trend just break out? See CNN/Bloomberg videos after the jump featuring experts.
Stuxnet computer worm takes its toll on Iran, where nuclear plant may be target - VentureBeat
Iran Fights Malware Attacking Computers - New York Times
Iran confirms massive Stuxnet infection of industrial systems - Computerworld
How Stuxnet Malware Used AutoRun Trick to Infect PCs (Microsoft Windows) - eWeek
Malware Hits Computerized Industrial Equipment (Siemens AG) - NYT Bits
PressTV - US, Israel behind cyber-attack on Iran?
Al Jazeera - Iran 'attacked' by computer worm
Stuxnet computer worm takes its toll on Iran, where nuclear plant may be target - VentureBeat
Iran Fights Malware Attacking Computers - New York Times
Iran confirms massive Stuxnet infection of industrial systems - Computerworld
How Stuxnet Malware Used AutoRun Trick to Infect PCs (Microsoft Windows) - eWeek
Malware Hits Computerized Industrial Equipment (Siemens AG) - NYT Bits
PressTV - US, Israel behind cyber-attack on Iran?
Al Jazeera - Iran 'attacked' by computer worm
Saturday, September 25, 2010
President Obama's Speech to United Nations (Video, Text)
I embedded Mahmoud Ahmadinejad's speech to the United Nations General Assembly; how dare I not embed President Obama's speech video with text? See it after the jump..
Q2 M1, M2, MZM Money Velocity Chart Updates, Rising Since Q4 2009
Update on M1 Velocity, M2 Velocity, MZM Velocity (money velocity at the St. Louis Fed - FRED database) and Monetary Trends (page 12 of the 9/21/2010 St. Louis Federal Reserve report).
Definition from the St. Louis Fed: "Velocity is a ratio of nominal GDP to a measure of the money supply (M1 or M2). It can be thought of as the rate of turnover in the money supply--that is, the number of times one dollar is used to purchase final goods and services included in GDP".
With the Government bailouts and dramatic increase in the money supply, velocity should confirm if money is actually leaving the banks and stimulating (or trying to stimulate) the economy. If money velocity starts going crazy, that's where the hyper-inflationary fears come in, which will probably result in the Fed raising rates dramatically. The Fed doesn't see that happening any time soon though (see FOMC Statement 9/21/2010). Q3 data should be arriving soon. Charts after the jump.
Definition from the St. Louis Fed: "Velocity is a ratio of nominal GDP to a measure of the money supply (M1 or M2). It can be thought of as the rate of turnover in the money supply--that is, the number of times one dollar is used to purchase final goods and services included in GDP".
With the Government bailouts and dramatic increase in the money supply, velocity should confirm if money is actually leaving the banks and stimulating (or trying to stimulate) the economy. If money velocity starts going crazy, that's where the hyper-inflationary fears come in, which will probably result in the Fed raising rates dramatically. The Fed doesn't see that happening any time soon though (see FOMC Statement 9/21/2010). Q3 data should be arriving soon. Charts after the jump.
Recession is Over, Poverty Rate at 1994 High, Uninsureds Skyrocketing, Temp Employment Booming, Money Velocity Up Since Q4
Friday, September 24, 2010
Weaker Dollar Propels Oil Higher Amid Mixed Economic News - Guest Post
Submitted by OilPrice.com
Weaker Dollar Propels Oil Higher Amid Mixed Economic News
Oil Market Summary for 09/20/2010 to 09/24/2010
Crude oil prices battled their way to a gain for the week as worries about the economy warred with the upward pressure from a weakening dollar.
Positive news in several categories of durable goods orders helped boost oil prices nearly 2% on Friday, so that the benchmark West Texas Intermediate futures contract, which switched from October to November this week, could tack on nearly 4% for the week.
Weaker Dollar Propels Oil Higher Amid Mixed Economic News
Oil Market Summary for 09/20/2010 to 09/24/2010
Crude oil prices battled their way to a gain for the week as worries about the economy warred with the upward pressure from a weakening dollar.
Positive news in several categories of durable goods orders helped boost oil prices nearly 2% on Friday, so that the benchmark West Texas Intermediate futures contract, which switched from October to November this week, could tack on nearly 4% for the week.
Video: Stephen Colbert's Opening Statement Before House Judiciary Subcommittee on Immigrant Farm Workers (9/24/2010)
"Witnesses spoke about the American agricultural sector's reliance on foreign, and often undocumented, workers to pick fruit and vegetables on America's farms. Comedy Central's Stephen Colbert appeared in character to testify. Mr. Colbert was part of a United Farm Workers campaign calling on unemployed Americans to take jobs in the agriculture sector. As part of the program he spent a day laboring at a vegetable farm in New York in August 2010."
Gold Spot (XAU/USD) Approaches $1,300/ounce! Charts of the Day
Gold Spot (XAU/USD or Gold in U.S. Dollars) is approaching $1,300/ounce. Look at the 2-year move. You can step in front of the train first.
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/quotes_2a.gif)
Gold Spot (XAU/USD) tonight $1,297 via fxstreet.com
Gold Spot 3-Year Log Chart - fxstreet.com (look at that 2 year move)
Live Gold Spot Price from Kitco.com
Thursday, September 23, 2010
Mahmoud Ahmadinejad Full Speech Video at United Nations (9/23/2010)
Mahmoud Ahmadinejad (President of Iran) spoke at the United Nations today. He talked about how the U.S. Government and American Statesman orchestrated the 9/11 attacks. Wtf? Enjoy!
Wall Street 2's Shia LaBeouf Interviewed, Had Dinner at Soros's House
Shia LaBeouf was interviewed by Aaron Task at Tech Ticker and said he turned 20k into 650k when he started trading at a Schwab office in California. The movie comes out tomorrow in theaters. I found a video on the Wall Street 2 Youtube channel with Gordon Gekko (Michael Douglas), Shia LaBeouf and Josh Brolin talking about credit default swaps at dinner, lol.
Here's a quote from Shia LaBeouf from the Tech Ticker interview. Oliver Stone was also on there.
Here's a quote from Shia LaBeouf from the Tech Ticker interview. Oliver Stone was also on there.
"Went to George Soros' house for dinners. Hung out with Donald Trump and talked about real estate," he says. "I'd hang out with Jim Chanos. Nouriel Roubini was like my closest friend through all of this." (source: Tech Ticker, video after the jump)
The Game is Changing and the US is Now on the Defensive - Guest Post
Guest post submitted by Global Intelligence Report
The Game is Changing and the US is Now on the Defensive
The People’s Republic of China’s PLAN in the Indian and Pacific Oceans: The Game is Changing and the US is Now on the Defensive
Two warships of the People’s Republic of China (PRC) People’s Liberation Army-Navy (PLAN) docked at a port in Myanmar on August 29, 2010, in the first publicized PLAN ship visit — but not the first actual PLAN visit — to Myanmar.
It was a move designed to help pre-position the PRC in its relations with Myanmar in the lead up to that country’s upcoming national elections. The move also ended two decades of discreet PRC approaches to its naval presence in the Indian Ocean. It also follows the open PLAN task force presence in anti-piracy operations off the Horn of Africa, and the now open commitment to use of the Pakistani Baluchistan port of Gwadar, at the entrance to the Persian Gulf.
Significantly, although the PRC maintains itself as both a heartland and maritime power, it is aware that the great challenge to break out from US global strategic dominance is essentially a maritime matter. Given economic and other realities, the US will be forced to rely increasingly on the US Navy — and particularly the Seventh Fleet in the Pacific and Indian Oceans — to project US influence.
The Game is Changing and the US is Now on the Defensive
The People’s Republic of China’s PLAN in the Indian and Pacific Oceans: The Game is Changing and the US is Now on the Defensive
Two warships of the People’s Republic of China (PRC) People’s Liberation Army-Navy (PLAN) docked at a port in Myanmar on August 29, 2010, in the first publicized PLAN ship visit — but not the first actual PLAN visit — to Myanmar.
It was a move designed to help pre-position the PRC in its relations with Myanmar in the lead up to that country’s upcoming national elections. The move also ended two decades of discreet PRC approaches to its naval presence in the Indian Ocean. It also follows the open PLAN task force presence in anti-piracy operations off the Horn of Africa, and the now open commitment to use of the Pakistani Baluchistan port of Gwadar, at the entrance to the Persian Gulf.
Significantly, although the PRC maintains itself as both a heartland and maritime power, it is aware that the great challenge to break out from US global strategic dominance is essentially a maritime matter. Given economic and other realities, the US will be forced to rely increasingly on the US Navy — and particularly the Seventh Fleet in the Pacific and Indian Oceans — to project US influence.
Wednesday, September 22, 2010
$SPY Head and Shoulders Pattern, Symmetrical Triangle 2007/2009 (Chart)
$SPY is testing the January highs, or perhaps the left shoulder in a head and shoulders formation. Unlike the failed mini head and shoulders pattern we experienced from May-July 2009, this one's been forming for 10 months now. For the H&S reversal to be in play, I need to see a decent sell off at the right shoulder. Since the beginning of September, exposure to GLD, SLV and SPY (capped) have been working. If I were long what I just mentioned, I'd have my finger on the put protection trigger. Futures are up tonight and DX is at 79.81 (pierced August low).
$SPY is also near the inflection point in a symmetrical triangle from the 2007 high and 2009 low, meaning directional judgment day for the market is near! Keep an eye on those moving averages (50day-blue, 200day-red). They are both acting as support levels, but, imo, a bloody red day would violate both of them. I recommend you also watch the weekly and monthly moving averages (recent posts w/charts: 9/14/2010, 9/8/2010, 9/2/2010). I'm embedding Prechter Tech Ticker videos next. From what I remember, he believes the head and shoulders pattern is valid. The next few days, or weeks, will be critical for SPY as it trades closer to that apex point in the symmetrical triangle. Thoughts?
$SPY is also near the inflection point in a symmetrical triangle from the 2007 high and 2009 low, meaning directional judgment day for the market is near! Keep an eye on those moving averages (50day-blue, 200day-red). They are both acting as support levels, but, imo, a bloody red day would violate both of them. I recommend you also watch the weekly and monthly moving averages (recent posts w/charts: 9/14/2010, 9/8/2010, 9/2/2010). I'm embedding Prechter Tech Ticker videos next. From what I remember, he believes the head and shoulders pattern is valid. The next few days, or weeks, will be critical for SPY as it trades closer to that apex point in the symmetrical triangle. Thoughts?
SPY (SPDRs S&P 500 ETF) - Courtesy of FreeStockCharts.com (click for larger view)
Hussman Update, China Debates, Top Step, Credit Default Options, Bond Bubble (Siegel), State Pensions, Breakfast w/ Dave
powerLINKS, financial news arbitrage (pL archive)
Goldman Sachs, Morgan Stanley Split on Junk as Prices Soar: Credit - Bloomberg
Sequential Signals by John Hussman - Hussman Funds
Breakfast with Dave: Surveys Say Hunker Down for a Slow Recovery by David Rosenberg - FMXconnect
Swaps on U.S. Government Debt Climb to Highest in Six Weeks (CDS 49.4bps) - Bloomberg
Treasury 10-Year Yield Trades Near Three-Week Low Before Home Resales Data (2.56%) - Bloomberg
Gov't needs $133.78 a share to recover GM money - AP
Exposure at Default: Does Bank American Have Any Alternatives for Countrywide? - by Chris Whalen of Institutional Risk Analytics - Zero Hedge
CHANOS: CHINA IS THE NEXT ENRON - Pragmatic Capitalism
Shaun Rein (bull) vs. Andy Xie (bear) on China property market - CNBC Video (after jump + more links)
Goldman Sachs, Morgan Stanley Split on Junk as Prices Soar: Credit - Bloomberg
Sequential Signals by John Hussman - Hussman Funds
Breakfast with Dave: Surveys Say Hunker Down for a Slow Recovery by David Rosenberg - FMXconnect
Swaps on U.S. Government Debt Climb to Highest in Six Weeks (CDS 49.4bps) - Bloomberg
Treasury 10-Year Yield Trades Near Three-Week Low Before Home Resales Data (2.56%) - Bloomberg
Gov't needs $133.78 a share to recover GM money - AP
Exposure at Default: Does Bank American Have Any Alternatives for Countrywide? - by Chris Whalen of Institutional Risk Analytics - Zero Hedge
CHANOS: CHINA IS THE NEXT ENRON - Pragmatic Capitalism
Shaun Rein (bull) vs. Andy Xie (bear) on China property market - CNBC Video (after jump + more links)
Blockbuster R.I.P? At 5 Cents, Expected to File Chapter 11, Subordinated Notes at $4.0 ($BLOKA, $BBI)
Continued from my post on April 2, "Icahn Dumps Blockbuster In March 13D Filing, $BBI Financial Trends and Senior Subordinated Notes At 20.25", a Chapter 11 bankruptcy filing could be imminent for the company. Blockbuster ($BLOKA, formerly $BBI) is trading at $0.05 on the pink sheets. R.I.P? The subordinated notes are at $4.0 (see chart below) and, according to @credittrader of Credit Derivatives Research, the first liens are at $52. Any Blockbuster credit default swaps outstanding? I didn't see any action on CMA's website. From Reuters:
Tuesday, September 21, 2010
FOMC Statement 9/21/2010, Expect 0-1/4 Percent For Extended Period
Federal Open Market Committee Statement from FederalReserve.gov.
"Release Date: September 21, 2010
For immediate release
Information received since the Federal Open Market Committee met in August indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months. The Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be modest in the near term.
For immediate release
Information received since the Federal Open Market Committee met in August indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months. The Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be modest in the near term.
September CMBS Update: Total Delinquencies Up, 90+ Days Down (RealPoint)
RealPoint has their September CMBS (Commercial Mortgage Backed Securities) Delinquency report up for the month of August at Realpoint.com. Key points from the executive summary.
"In August 2010, the delinquent unpaid balance for CMBS increased by an additional $551.8 million, up to $61.39 billion from $60.84 billion a month prior."
Papandreou: Greece Won't Default, 10y GGB Inflection Point (11.36%)
Greek Prime Minister, George Papandreou, was interviewed on the floor of the NYSE yesterday by Bloomberg TV. In the video he said "We (Greece) are not going to default" and refuted Roubini's claim that Greece was insolvent (read: The Eurozone’s Autumn Hangover - Project Syndicate 9/15/2010).
The 10-Year Greek Government Bond (GGB) is yielding 11.36%, around the May high. It doubled since November 2009 and is now testing trend support. If the 10y GGB yield breaks down, it could violate a few trend lines and retrace. The Greek 5-Year Credit Default Swap closed at 881 basis points, which is still elevated but below the June peak of 1125bps. The CDS appears to be losing strength as well. I'm not quite sure what's going on behind the scenes, but watch the charts for breaking news. Betty Liu interviews Papandreou after the jump.
Also.. Riot Police On Standby, As Greek Truckers Form Massive Protest Blockade (BusinessInsider)
The 10-Year Greek Government Bond (GGB) is yielding 11.36%, around the May high. It doubled since November 2009 and is now testing trend support. If the 10y GGB yield breaks down, it could violate a few trend lines and retrace. The Greek 5-Year Credit Default Swap closed at 881 basis points, which is still elevated but below the June peak of 1125bps. The CDS appears to be losing strength as well. I'm not quite sure what's going on behind the scenes, but watch the charts for breaking news. Betty Liu interviews Papandreou after the jump.
Also.. Riot Police On Standby, As Greek Truckers Form Massive Protest Blockade (BusinessInsider)
Sunday, September 19, 2010
Worries About Consumer Demand, Deflation Drive Down Oil Prices - Guest Post
Guest post by OilPrice.com
Worries About Consumer Demand, Deflation Drive Down Oil Prices
Oil Market Summary for 09/13/2010 to 09/17/2010
Flagging consumer sentiment and renewed concern about deflation sent oil prices into the doldrums this week, as prices dropped 1.2% on Friday to close the week down 3.6%.
The benchmark West Texas Intermediate futures contract settled at $73.66 a barrel on Friday, down 91 cents on the day, compared to $76.45 a week ago.
A pair of bearish statistics on consumer sentiment and inflation drove down crude oil prices on Friday.
Worries About Consumer Demand, Deflation Drive Down Oil Prices
Oil Market Summary for 09/13/2010 to 09/17/2010
Flagging consumer sentiment and renewed concern about deflation sent oil prices into the doldrums this week, as prices dropped 1.2% on Friday to close the week down 3.6%.
The benchmark West Texas Intermediate futures contract settled at $73.66 a barrel on Friday, down 91 cents on the day, compared to $76.45 a week ago.
A pair of bearish statistics on consumer sentiment and inflation drove down crude oil prices on Friday.
Friday, September 17, 2010
Flagstar On Unusual Stock Volume (FBC), $600 Million Share Sale #banks
MatlinPatterson Global Advisers LLC, the majority owner of Flagstar, who provided a $250 million capital injection in December 2008, is trying to raise $600 million through a stock offering. For a better explanation, listen to this Bloomberg audio interview with an Oppenheimer analyst.
It will be interesting to see what happens. Below is part of the press release, $FBC's stock chart with volume and a ychart showing the five year net income and revenue trend ending on 6/30/2010. $FBC hit a 52 week low of $1.73 on 9/15 and closed at $1.94 today.
FLAGSTAR RESPONDS TO UNUSUAL MARKET ACTIVITY
USD/JPY 15 Minute Wedge Getting Tighter After Yen Intervention Spike
“The BOJ pretty much left the full amount of intervention in markets, a sort of effective unsterilization,” Nishioka said. “The chance for additional policy easing is increasing after the government finally intervened in the currency market.”Keep an eye on the Yen and JGBs (Japanese Government Bonds). Keynesian end point?
Thursday, September 16, 2010
George Soros on Gold's Bubble, "Blah" U.S. Economy, China (Video)
Wednesday, September 15, 2010
AIG CDS Chart Reflection (Insurance on the Insurer) 2008-2010
Below is the 5-Year AIG Group Credit Default Swap from 2008-2010 via Bloomberg.com (link: CAIG1U5). The chart shows the insurance premium to protect against the default of the biggest property and casualty insurance company in America (in 2006 and 2007). AIG's Fortune 500 rank was #9 in 2006, #10 in 2007, #13 in 2008 and #245 in 2009. AIG Group CDS is currently trading at 2008 levels, the period of complacency before the Lehman bankruptcy bomb hit. Pretty big moment in history no?
Alan Greenspan Converses With Council on Foreign Relations 9/15/2010 (CFR.org)
Alan Greenspan (President of Greenspan Associates and Former Federal Reserve Chairman who kept interest rates artificially low in the early 2000's, heh), had a conversation with Mort Zuckerman at the Council on Foreign Relations today (September 15, 2010).
He discussed the future of the housing market, prospects for recovery, how raising taxes would decrease the deficit and how "stimulus is crowding out private investment".
Link: http://www.cfr.org/publication/22947/conversation_with_alan_greenspan_video.html
He discussed the future of the housing market, prospects for recovery, how raising taxes would decrease the deficit and how "stimulus is crowding out private investment".
Link: http://www.cfr.org/publication/22947/conversation_with_alan_greenspan_video.html
Nouriel Roubini at Google Zeitgeist 2010 (Video)
Dr. Realist, Nouriel Roubini, spoke at the 2010 American Google Zeitgeist conference. Nouriel starts at 19:50. The video includes:
Chrystia Freeland Global Editor-at-large, Reuters
James Wolfensohn Chairman, Wolfensohn & Company, LLC
Nouriel Roubini Chairman & Co-founder, Roubini Global Economics
Ted Turner Chairman, United Nations Foundation
Tom Brokaw Special Correspondent, NBC News
Mikkel Vestergaard CEO, Vestergaard Frandsen Group
Chrystia Freeland Global Editor-at-large, Reuters
James Wolfensohn Chairman, Wolfensohn & Company, LLC
Nouriel Roubini Chairman & Co-founder, Roubini Global Economics
Ted Turner Chairman, United Nations Foundation
Tom Brokaw Special Correspondent, NBC News
Mikkel Vestergaard CEO, Vestergaard Frandsen Group
Links: LA Port Traffic, Pimco's Deflation Bet, China CDS, TARP Deadbeats, Yen Intervention (USD/JPY, Nikkei Charts)
Pimco Makes $8.1 Billion Bet Against `Lost Decade' of Deflation - Bloomberg (h/t Morgan_03)
LA Port Traffic in August: Imports Surge, Exports down year-over-year - Calculated Risk (h/t credittrader)
China to Allow Credit-Default Swaps With Restrictions - BusinessWeek
Flagstar ($FBC) seeking $600 million share sale: report - Reuters
TARP Deadbeat Bank List Tops 120 in August - SeekingAlpha
Japan Intervenes for First Time Since 2004 to Rein in Yen - Bloomberg
LA Port Traffic in August: Imports Surge, Exports down year-over-year - Calculated Risk (h/t credittrader)
China to Allow Credit-Default Swaps With Restrictions - BusinessWeek
Flagstar ($FBC) seeking $600 million share sale: report - Reuters
TARP Deadbeat Bank List Tops 120 in August - SeekingAlpha
Japan Intervenes for First Time Since 2004 to Rein in Yen - Bloomberg
$SPY at Apex Point in Symmetrical Triangle (Weekly Chart) 9/14/2010
*$SPY (S&P 500 ETF) symmetrical triangle inflection point alert on the weekly chart. Omfg. Directional judgment day is near for $SPY. The downtrend line from 2007 is closing in on the uptrend line from 2009, near the apex point (where the trends cross). Watch for a strong catalyst that breaks a trend. All I can say is, hedge accordingly.
$SPY price position:
> 50 Week Moving Average
< 200 Week Moving Average
< January 2010 High (potential left shoulder)
Continued from: $SPX Trend Line From 1974 Hits 650-800 Until 2015 ($SPY, S&P 500)
$SPY price position:
> 50 Week Moving Average
< 200 Week Moving Average
< January 2010 High (potential left shoulder)
SPY chart courtesy of freestockcharts.com
Continued from: $SPX Trend Line From 1974 Hits 650-800 Until 2015 ($SPY, S&P 500)
Tuesday, September 14, 2010
$SPX Trend Line From 1974 Hits 650-800 Until 2015 ($SPY, S&P 500)
*Writeup 9/14/2010: On the first $SPX log chart, I drew a trend line that hit the 1974 low, 1982 recession low and almost the March 2009 low. The S&P/Trend Line spread widened significantly during the late eighties and early nineties, but tightened when the tech bubble burst. Today, after rallying 80% from the March 2009 low and correcting a bit, market participants have to decide if we're experiencing a 2004 redux (see chart 2) or in a 100 year structural change. If we're in a 2004 redux, the S&P must break above the 50 month moving average. All throughout 2004, $SPX was above and below that level and eventually found support.
As you can see from chart 1, the S&P is trading above the 200 month moving average and below the 50 month moving average. What we don't want to see is the 50 month cross the 200 month to the downside. It would either put overhead pressure on the S&P or aggressively price it in before it occurred (imho). You can't see it, but I bet the 50 month crossed the 200 month to the upside in the early eighties, which sparked the 20-25 year rally. I'm saying this now because the moving averages haven't been this close since that time period.
Monday, September 13, 2010
Links: Jim Simons on CNBC, Warren Buffett (No Double Dip), Albert Edwards, Pento on Interest Rates, BofA (9/13/2010)
Banks Rise as Basel Gives Firms Eight Years to Comply - BusinessWeek
The graphs indicate bonds are at inflection point - Citywire
Microsoft Said to Plan Debt Sale to Pay for Dividends, Buybacks - Bloomberg
Chart of the Day: Beware Downward Adjustments to Earnings Estimates (by David Rosenberg) - Credit Writedowns
Hussman: Watch the lagging indicators - Credit Writedowns
Jim Simons (Renaissance Technologies): Market 'Resilient,' Not Going Much Lower - CNBC [3 part video - Market Outlook, Flash Crash, Future of Renaissance and Math for America]
The graphs indicate bonds are at inflection point - Citywire
Microsoft Said to Plan Debt Sale to Pay for Dividends, Buybacks - Bloomberg
Chart of the Day: Beware Downward Adjustments to Earnings Estimates (by David Rosenberg) - Credit Writedowns
Hussman: Watch the lagging indicators - Credit Writedowns
Jim Simons (Renaissance Technologies): Market 'Resilient,' Not Going Much Lower - CNBC [3 part video - Market Outlook, Flash Crash, Future of Renaissance and Math for America]
Goldman's Hatzius Sees 25-30% Chance of Recession, Tax Expiration Risks, Quantitative Easing on 10% Unemployment (CNBC Video)
Jan Hatzius, Chief US Economist at Goldman Sachs, was on CNBC today. Here's a summary of what he said and the video.
Karl Denninger Interviewed By Max Keiser (9/10/2010)
Karl Denninger who writes the Market Ticker blog was interviewed by Max Keiser. Real talk.
Link: http://maxkeiser.com/watch/on-the-edge/episode-70-10-september-2010-guest-karl-denninger/
Link: http://maxkeiser.com/watch/on-the-edge/episode-70-10-september-2010-guest-karl-denninger/
Signs of Financial Stress First Appeared in Credit Default Swaps (CDS)
"This year's fiscal turmoil in Europe and the market slump of 2008 have something in common: Both had their roots in debt. Be it Greece in 2010 or Lehman Brothers Holdings Inc. and General Motors Co. two years ago, some of the earliest signs of financial stress first appeared in the credit markets--specifically, credit-default swaps--before spreading to other asset classes such as equities." (from the October issue)
Credit default swaps are insurance contracts on a company's bonds that trade over-the-counter between banks, institutional investors and hedge funds. There has to be a way for smaller "accredited" players to get involved in a liquid and more transparent CDS market, since "too big to fail" obviously didn't work. How about a revolution in securitization as well? I'll give more thoughts on this later.
Price moves in credit default swaps provide "material" (in my opinion) information on underlying credits and have more credibility than the actual credit rating. If CDS prices spike dramatically, either a bank or hedge fund is speculating on higher default risk, nervously hedging underlying long exposure, or as billionaire hedgie George Soros put it,
Thursday, September 9, 2010
Michael Burry Bets On Farmland, Gold, Small Tech and "Special Situations" in Distressed Real Estate
Dr. Michael Burry, former hedge fund manager and main character in Michael Lewis's book, "The Big Short", thinks farmland (with water on site), gold, small tech companies in Asia and "special situations" in distressed real estate (raw land cheapest) are attractive investments. He doesn't see a robust recovery ahead and prefers alternative investments that are uncorrelated with the overall market (see video #1). You know who else likes gold and farmland? Marc Faber.
Live Video of San Bruno Fire, CBS Coverage via Livestream
San Bruno, California is on fire from a huge natural gas explosion. Hope everyone is alright.
Links: Albert Edwards, Kyle Bass, Michael Burry, Whitney Tilson, The Fly, David Rosenberg, Goldman FX
Albert Edwards: "Equity Investors Are In A Vulcan Death Grip And Are About To Fall Unconscious" - Zero Hedge
Kyle Bass Expects Radical Government Intervention in Japan - Absolute Return + Alpha
Goldman Continues Bashing The USD, Sees Short-Term Dollar Strength Followed By QE And A Plunge - Zero Hedge
Chart Patterns That Mark Twain Would Give A Second LOOK $SPX $SPY - Hedge Analyst (theback9)
David Rosenberg: Here Are 13 Signs That We're Actually In A Depression Right Now - Business Insider
Kyle Bass Expects Radical Government Intervention in Japan - Absolute Return + Alpha
Goldman Continues Bashing The USD, Sees Short-Term Dollar Strength Followed By QE And A Plunge - Zero Hedge
Chart Patterns That Mark Twain Would Give A Second LOOK $SPX $SPY - Hedge Analyst (theback9)
David Rosenberg: Here Are 13 Signs That We're Actually In A Depression Right Now - Business Insider
Wednesday, September 8, 2010
Wall Street Journal vs. New York Times (Animated Video by Next Media)
I'm starting to really like this news organization. Watch "Wall Street Journal Takes On New York Times" by Next Media Animation. Find more videos at their website http://www.nma.tv or on Youtube. This network broke news on the Jay Leno/Conan/NBC debacle, Tiger Woods, Taliban monkey fighters and more. View the video after the jump.
SPX November 675 Puts Opened (S&P Futures, $SPY)
According to Brenna at OptionMonster TV (video at Dr. Js Blog), 25,000 SPX November 675 Puts opened yesterday (September 7). The trade was 38% out of the money and $2.7 billion in notional value! See the video here. Is someone protecting against market turbulence going into the mid-term elections? I wrote yesterday that SPY (S&P 500 ETF) was preparing to make a big move out of that symmetrical triangle. She also talked about option activity in $FXI (China ETF). *Also check out this Mr. Top Step vs. Top Notch video from the CME today.
USD/JPY Weekly Chart Broke Below November Support (84.74), Trading at 83.76 (FXY)
Nothing new here, just showing that USD/JPY (US Dollar/Japanese Yen) broke the critical 84.74 support level from last November. On August 30, the Bank of Japan's emergency meeting and Yen intervention rumors attempted to save that level, but failed. I don't see any support on USD/JPY going back 2.5 years, so who knows if the BoJ intervenes to save Japanese exports (Japan machinery orders up 8.8 percent in July - AP) or not.
The descending channel and 84.74 ceiling resistance are major structures to break in order to get long in size (in my opinion). 400x leverage? Patience might be required. If USD/JPY doesn't break descending channel resistance by year end, it could trade as low as 78. Check out the weekly chart of USD/JPY. Unfortunately I could only go back to mid-2008 on this chart but it still works. Oh and watch JGBs (Japanese Government Bonds).
The descending channel and 84.74 ceiling resistance are major structures to break in order to get long in size (in my opinion). 400x leverage? Patience might be required. If USD/JPY doesn't break descending channel resistance by year end, it could trade as low as 78. Check out the weekly chart of USD/JPY. Unfortunately I could only go back to mid-2008 on this chart but it still works. Oh and watch JGBs (Japanese Government Bonds).
Sideways Action Won't Last Forever, Prepare For Catalysts (SPY, VIX)
For the meltdown camp, if SPY's 50 day moving average gets taken out *again* I'd say it's a decent short (hedged with calls) to the uptrend line and, if all runs smoothly, 95 on SPY or 950 on the S&P. That level corresponds to the mid-2009 plateau and Blue Marble Research's SPX target by the end of 2010. The VIX (Volatility Index) is glued at the 200 day moving average (23). Also, the Investor Intelligence Bearish Percentage is diverging with the Volatility Index (read John Hussman's weekly comment from 9/6). See charts after the jump.
Investors Intelligence Bearish Percentage vs. VIX (Hussman)
John Hussman, in his most recent weekly market comment titled "the recognition window", made an interesting observation that the Investors Intelligence Bearish Percentage was diverging with the Volatility Index (VIX), or as he put it "bearishness without nervousness". Here's a quote.
He also charted out the historical relationship between the ECRI Weekly Leading Index (3 Month Lead), Philadelphia Fed Index (1-Month Lead) and ISM Purchasing Managers Index (manufacturing). I recommend you read Hussman's weekly comments, they are packed with information.
Hat tip Pragmatic Capitalism
An important part of last week's advance appeared to be a simple "clearing" of the a short-term oversold condition in prices and bearish sentiment. While the recent increase in bearish sentiment might have deserved something of a "clearing rally," it is notable that we're observing what might be called bearishness without nervousness. The chart below presents the Investors Intelligence bearish percentage versus the CBOE volatility index (VIX), which is often viewed as a "fear gauge" for the stock market. Historically, increases in the level of bearishness early in a market downturn are often both accurate and persistent, as we observed all through 2008 and in many past market cycles. It's difficult to look at the evidence and conclude that investors are excessively bearish, much less terrified here. " (read full note with charts at http://www.hussmanfunds.com/wmc/wmc100906.htm)
He also charted out the historical relationship between the ECRI Weekly Leading Index (3 Month Lead), Philadelphia Fed Index (1-Month Lead) and ISM Purchasing Managers Index (manufacturing). I recommend you read Hussman's weekly comments, they are packed with information.
Hat tip Pragmatic Capitalism
Tuesday, September 7, 2010
Steel Price Charts, Futures (Scrap Iron, Hot Rolled Coils, Rebar, Plate)
(1) Scrap Iron #1 Dealer/Bundles (Chicago Mill) (2) Scrap Iron HMS (Chicago Mill) (3) Cold Rolled Coils (East of Mississippi) (4) Hot Rolled Coils (East of Mississippi) (5) Rebar (EoM) and (6) Standard Plate (EoM). They offer other metals as well, check out the site.
It appears that the prices lag, I'm not sure why. The data ends on July 13 for scrap iron and July 26 for steel. Today is September 7. It could be related to steel price reporting as other commodities show various end dates as well. Either way, check out the 6-month and 3-year charts for Scrap Iron #1 Bundles, Hot Rolled Coils and Rebar. Find more at the site. You can also chart out U.S. Midwest Domestic Hot-Rolled Coil Steel Index Futures at CME.com which trades everyday and the Steel Stock Index ETF (SLX). The steel price benchmarks look similar to the S&P.
Vinny Catalano's S&P Targets: 950 End of 2010, 750 in 2011 (Blue Marble Research) S&P Chart
Vinny Catalano, of Blue of Marble Research, on Tech Ticker six days ago (9/1/2010) said the S&P 500 was in a trading range between 1020 and 1150 and to watch support/resistance levels. Ultimately, Vinny believes the S&P will break to the downside and hit 950 by year end and 750 in 2011. He believes a political gridlock will not be good for the stock market and sees negative catalysts ahead. See the Tech Ticker video after the jump and S&P chart. I think the summer 2009 chop fest highs get tested around 950.
Let Housing Fall, Jim Rickards Interview, Strike in France
Omnis, Inc's Jim Rickards Interview, Says Sell Stocks - King World News
Unemployment in U.S. May Rise Toward 10%, `Feeble' Growth (BofA, Morgan Stanley) - Bloomberg
Housing Woes Bring a New Cry: Let the Market Fall - New York Times
BHP, Rio Tinto to Pay Mining Tax as Gillard Wins Support for Government - Bloomberg
Unemployment in U.S. May Rise Toward 10%, `Feeble' Growth (BofA, Morgan Stanley) - Bloomberg
Housing Woes Bring a New Cry: Let the Market Fall - New York Times
BHP, Rio Tinto to Pay Mining Tax as Gillard Wins Support for Government - Bloomberg
Monday, September 6, 2010
10-Year JGB Yield Spikes 25bps (27%) in 12 Days (Japanese Bonds)
If you didn't notice, Japanese Government Bonds (JGBs) had a wild August. They reversed course abruptly starting on August 18. I told you to keep your eye on JGBs on August 9 and gave links to charts of various Japanese Government Bond yields at Bloomberg.com. Then on August 18 Kyle Bass (one of the few hedge fund managers who made bank shorting subprime mortgages using CDS) came on CNBC and said JGBs were a great short (lower price/higher yield). The market listened to him, 10-Year JGBs sold off hard and yields ran up to 1.15% from 0.90% in 12 sessions. (+25 basis points or 27%). They were overbought.
10Y Greek Bond Yield/Bund Spread Elevated, CDS 894bps, 3M Yield Plummets
Sunday, September 5, 2010
Pento on Inflation, Gold, Housing, Consequences of Monetary Stimulus (Inflation)
Mike Pento, Senior Economist at Euro Pacific Capital, was interviewed by King World News last week. He's a specialist in "Austrian Economics". Here are a few points he made (full interview).
Hear the full interview at King World News
- Bernanke promises "unconventional" methods to combat deflation. (read Jackson Hole speech)
- "He (Bernanke) already purchased longer dated Treasuries and he's already purchased mortgage-backed securities, I can only assume he's ready to buy stocks and real estate...." (increase Fed Balance sheet)
- "Monetary base has gone from $800 billion to just under $2 trillion...."
- "(Gold) is absolutely, 100%, an inflation hedge"
- "We've had decades of a massive increase in the money supply, a massive increase in lending and a massive increase in asset price inflation (Nasdaq stocks, real estate prices). When that ends the natural occurrence for healing would be for a deflationary depression"
- Money supply has to shrink, consumers have to deleverage (pay down debt/sell off assets)
- "You might get a nominal increase in the major averages, you might stop the hemorrhaging that's in the housing market, but at what cost?"
- "When you increase the supply of currency it is never EVER evenly distributed"
Hear the full interview at King World News
Friday, September 3, 2010
Roubini at Ambrosetti Forum Italy (Video), Sees Stall Speed Growth
Today, the Labor Department reported that the economy lost 54,000 jobs, better than the 120,000 (economists) or 90,000 (wall street) loss expected. The unemployment rate rose to 9.6% (Aljazeera, Forbes). Also, Royal Bank of Scotland Plans to Cut 3,500 Jobs. Happy Labor Day people. Nice short covering today, $SPY closed at 110.91 +1.30%, see previous post for long and short term charts with moving averages. I parsed a few things from the video.
*Growth in the second half of the year will be worse than the first half, we'll reach a stall speed for the economy less than 1%.
S&P-Nikkei Performance Spread Wide, Nikkei >9000, E-mini S&P Future at Inflection Point (ES, NK, SPY, EWJ, Japan)
Right now I'm watching Nikkei 225 Index Futures (September/December), the ES-NK performance spread and E-mini S&P December Future. Starting in July, the performance spread between the E-mini S&P and Nikkei 225 Index widened dramatically. I wonder when and how the gap closes, or if Japan and U.S. growth rates (or prices) diverge from here. These are financial futures in case you are lost.
Nikkei 225 Index Futures are still trading in a descending channels but could be forming a falling wedge reversal pattern. You can see the downtrend and apex point to break.
Nikkei (NK) vs. E-mini S&P (ES) - December Future (courtesy of optionsXpress)
Nikkei 225 Index Futures are still trading in a descending channels but could be forming a falling wedge reversal pattern. You can see the downtrend and apex point to break.
Ben Bernanke, Sheila Bair at 2008 Financial Crisis Hearing (9/2/2010)
Federal Reserve Chairman Ben Bernanke and FDIC (Federal Deposit Insurance Corporation) Chair Sheila Bair testified before the Financial Crisis Inquiry Commission about the actions of the Fed during the 2008 financial crisis.
2008 Financial Crisis and Systemic Risk, Sheila Bair Testimony (Cspan.org, 9/2/2010)
2008 Financial Crisis and Systemic Risk, Ben Bernanke Testimony (Cspan.org, 9/2/2010)
2008 Financial Crisis and Systemic Risk, Ben Bernanke Testimony (Cspan.org, 9/2/2010)
Thursday, September 2, 2010
U.S. Faces Deflation Risk Due to Indebtedness (Linda Yueh/Oxford Economist - Video)
"I think there is a real (deflation) danger for the United States. It's less of a danger for Europe even though this was the big thing at Jackson Hole. Trichet is very worried about Europe going into a 1990s style Japanese deflationary trap because of all this debt de-leveraging which can cause a deflationary price spiral. As debt gets shed, prices fall, output falls, and then it's reinforcing. However, in the U.S. where this is more likely to be the case because of the scale of the financial crisis and the scale of indebtedness, Bernanke wasn't worried about deflation and he's really viewing the U.S. more as a slow growth story".
Former Lehman CEO Dick Fuld Testified Before FCIC (9/1/2010) $LEH
Dick Fuld testified before the Financial Crisis Inquiry Commission yesterday. Click the link to see the video at Cspan.org.
2008 Financial Crisis and Systemic Risk, Lehman Brothers Hearing (cspan.org)
"Thomas C. Baxter, Jr., General Counsel and Executive Vice President Federal Reserve Bank of New York Richard S. "Dick" Fuld, Jr., Former Chairman and Chief Executive Officer Lehman Brothers Harvey R. Miller, Business Finance & Restructuring Partner Weil, Gotshal & Manges, LLP Barry L. Zubrow, Chief Risk Officer JPMorgan Chase & Co."
2008 Financial Crisis and Systemic Risk, Lehman Brothers Hearing (cspan.org)
"Thomas C. Baxter, Jr., General Counsel and Executive Vice President Federal Reserve Bank of New York Richard S. "Dick" Fuld, Jr., Former Chairman and Chief Executive Officer Lehman Brothers Harvey R. Miller, Business Finance & Restructuring Partner Weil, Gotshal & Manges, LLP Barry L. Zubrow, Chief Risk Officer JPMorgan Chase & Co."
SPY Pierces 50-Day Moving Average, Holds 200-Month But Growth Recession Upon Us
Today SPY pierced the 50 Day Moving Average and held the 50 Month moving average but still needs to conquer the 200 Day Moving Average, 50 Week Moving Average, 200 Week Moving Average and 50 Month Moving average. We'll see how the HFT bots trade the market between now and the elections. Bank of America/Merrill Lynch forecasts a "Growth Recession" ahead (From LA Times).
"Bank of America Merrill Lynch on Wednesday downgraded its forecast for the economy, calling for a “growth recession.”
What’s that? As BofA Merrill economists describe it, the U.S. would continue to grow in the fourth quarter and in 2011, but not fast enough to generate significant employment gains." (read article for more numbers)
Speaking of HFT, I think CNBC's Fast Money needs to hire an HFT Robot correspondent to tell people what's really going on in the market. Zero Hedge is the only site out there talking about it in depth.
Wednesday, September 1, 2010
Dan Rather Interviews SecondMarket CEO Barry Silbert, Revolutionizing Markets
Watch Dan Rather interview SecondMarket CEO, Barry Silbert - SecondMarket
Gunman James Lee In DiscoveryTV Building Holding Hostages (Video, Links)
This hostage situation in the Discovery Channel building (Maryland) has been going on for hours now. James Lee is holding a "small" number of people hostage. Watch the live video stream below for real-time information via WashingtonPost.com. First, read the initial incident.
"Money-throwing protester gets probation, fine
California man would face jail if he comes within 500 feet of Discovery building" (Gazette.net).
VIDEO: James Lee Throwing Cash In The Air During Earlier Stunt At Discovery Channel (BusinessInsider.com)
That was "Wave 1", now for "Wave 3"..
"Money-throwing protester gets probation, fine
California man would face jail if he comes within 500 feet of Discovery building" (Gazette.net).
VIDEO: James Lee Throwing Cash In The Air During Earlier Stunt At Discovery Channel (BusinessInsider.com)
That was "Wave 1", now for "Wave 3"..
Jim Rogers Q&A, Gold Should Be >2,000, Prefers Silver (GLD, SLV)
Jim Rogers prefers Silver over Gold here but owns both in his portfolio. He made his case on CNBC on August 29.
Today I charted out $GLD and $SLV (Gold and Silver ETFs) and both are testing ceiling resistance levels. SLV is plotting a 2008 ceiling breakout which Gold took out 10 months ago (November, 2009). $SLV needs to rush the opposition (sellers) successfully at $19.50 resistance to run free (imo, mid-20s, top of ascending channel, see chart update link).
GLD, SLV Approaching Highs From May, June (Charts) - August 31, 2010
Chart Update, Ratio Analysis: GLD, SPY, SLV, IWM, TLT, UUP, GDX, GDXJ, SP-500 Index - August 25
- Gold should be greater than $2,000/ounce if you adjust it for the 1980 high
- If there's a currency crisis both gold and silver will rise
- Prefers Silver over Gold because (a) it's so depressed (b) potential for more gains on a percentage basis
Today I charted out $GLD and $SLV (Gold and Silver ETFs) and both are testing ceiling resistance levels. SLV is plotting a 2008 ceiling breakout which Gold took out 10 months ago (November, 2009). $SLV needs to rush the opposition (sellers) successfully at $19.50 resistance to run free (imo, mid-20s, top of ascending channel, see chart update link).
GLD, SLV Approaching Highs From May, June (Charts) - August 31, 2010
Chart Update, Ratio Analysis: GLD, SPY, SLV, IWM, TLT, UUP, GDX, GDXJ, SP-500 Index - August 25
Tuesday, August 31, 2010
FOMC Minutes From 8/10/2010
Fed Allows CIC (China) to Acquire 10% of Morgan Stanley Voting Shares (MS)
I was looking for the FOMC Minutes PDF and found another interesting release. First off, CIC (China Investment Corporation) owns MS convertable notes from 2007:
CIC Sells Another 1.6M Morgan Stanley Shares--Filing (WSJ)
From the Fed release:
Also read: CIC's bitter payoff for Morgan Stanley stake (8/8) (MarketWatch.com)
CIC Sells Another 1.6M Morgan Stanley Shares--Filing (WSJ)
"CIC now owns 150.8 million shares of Morgan Stanley and will take possession of about 116.1 million of those shares when the roughly $5.6 billion in principal of mandatory convertible notes yielding 9%--bought in late 2007--convert into common stock, a conversion set to happen on Aug. 17."
From the Fed release:
"FEDERAL RESERVE SYSTEM
China Investment Corporation Beijing, People’s Republic of China
Order Approving Acquisition of an Interest in a Bank Holding Company
China Investment Corporation (“CIC”), Beijing, People’s Republic of China, has requested the Board’s approval under section 3 of the Bank Holding Company Act of 1956, as amended (“BHC Act”),1 to acquire indirectly up to 10 percent of the voting shares of Morgan Stanley, New York, New York. (read full PDF at Federal Reserve here).
Also read: CIC's bitter payoff for Morgan Stanley stake (8/8) (MarketWatch.com)
GMO's Q2 Letter
Read "Seven lean years: No recovery till 2016: 10 reasons Jeremy Grantham's betting $100 billion on historic game-changer" at MarketWatch.com.
Here is GMO's Q2 letter (from July)
Here is GMO's Q2 letter (from July)
GLD, SLV Approaching Highs From May, June (Charts)
GLD (SPDR Gold Trust) - FreeStockCharts.com (Gold ETF)
SLV (iShares Silver Trust ETF) - FreeStockCharts.com (Silver ETF)
*See previous post for more thoughts on this: Chart Update, Ratio Analysis: GLD, SPY, SLV, IWM, TLT, UUP, GDX, GDXJ, SP-500 Index (8/25/2010)
Nikkei Back Below 9,000 (-3.55%, 8,824), Nikkei Futures Charts (NKY, EWJ, NK_U, NK_Z)
If I were forced to be a perma-Nikkei 225 bull, I'd watch for a downtrend breakout and of course a break above 9,000. Until then, like I said on 8/24, the Nikkei could swim in the 8000's for a bit and perhaps test the 2008/9 lows if Japan double dips. I'm watching to see what happens with the S&P at neckline support. U.S. E-Mini futures are currently unchanged to slightly lower at 5:02/6:02am. Below is the 1-day Nikkei Index move and the September (NKU10), December (NKZ10) Nikkei futures.
Read: Canada Housing Market, Zhou Xiaochuan (PBoC), Oil, Gary Shilling on 3% 30y-Treasury Bonds
Gary Shilling (A. Gary Shilling & Co.) on Fast Money said the 30-Y Treasury Yield will hit 3% (you'd make 15% from here, or 28% on a 30-Year Zero Coupon Bond) (CNBC Video)
Why Canada's housing market may be heading for a correction - The Globe and Mail (h/t @FLYir)
Peter Beutel (Cameron Hanover) told CNBC Monday that oil should be at $10 (CNBC Video)
J.P. Morgan cuts 3rd-quarter oil price forecast to $75 a barrel (MarketWatch) (predicts $65 by October, Nymex Crude is at $73.59)
*Top China bank official's defection rumors quashed (Zhou Xiaochuan) - (Washington Post)
*Japan Confirms Meeting With Zhou Amid Speculation He Left China (Bloomberg)
Read the articles and watch a video from Stratfor.com today (found originally by Zero Hedge). The rumor was he lost $430 Billion holding U.S. Treasury bonds and would be punished by the Chinese Government, so he fled to the U.S. It's funny because the value of Treasury bonds are testing their all time highs and Gary Shilling (see first article) thinks they are going higher. The original thought from my Twitter stream was that maybe Treasury derivatives blew up in his face, or the losses were from GSE securities.
Why Canada's housing market may be heading for a correction - The Globe and Mail (h/t @FLYir)
Peter Beutel (Cameron Hanover) told CNBC Monday that oil should be at $10 (CNBC Video)
J.P. Morgan cuts 3rd-quarter oil price forecast to $75 a barrel (MarketWatch) (predicts $65 by October, Nymex Crude is at $73.59)
*Top China bank official's defection rumors quashed (Zhou Xiaochuan) - (Washington Post)
*Japan Confirms Meeting With Zhou Amid Speculation He Left China (Bloomberg)
Read the articles and watch a video from Stratfor.com today (found originally by Zero Hedge). The rumor was he lost $430 Billion holding U.S. Treasury bonds and would be punished by the Chinese Government, so he fled to the U.S. It's funny because the value of Treasury bonds are testing their all time highs and Gary Shilling (see first article) thinks they are going higher. The original thought from my Twitter stream was that maybe Treasury derivatives blew up in his face, or the losses were from GSE securities.
Monday, August 30, 2010
Dow Industrials P&F Chart Targets: 9750 (Daily), 9150 (Weekly) $INDU $DIA
The Dow closed at 10,009 today, so the daily sees -2.5% downside from here and the weekly sees -8.5% downside. Keep in mind that big price movement tomorrow could change the P&F's mind. Below are the daily and weekly $INDU P&F charts and the wider versions.
President Obama Update On Economy (Video, 8/30/2010), Alaska Protester Wants Free Speech
"The President talks about his Administration’s focus on moving the economy forward and urges Congress to pass legislation that will benefit small businesses in remarks to the press after meeting with his economic team at the White House." (Whitehouse.gov) #Obama
Hurricane Earl and Tropical Storms Danielle, Fiona in Atlantic (Radar)
$SPY Symmetrical Triangle Approaching Vertex Point, Hedge Risk (S&P 500)
SPY is approaching the vertex point in the symmetrical triangle. If I was long I'd hedge downside risk. Below is the weekly chart. SPY is still below the 50 week and 200 week moving average resistance levels. The MACD (momentum) indicator is below the midline (-0.98).
SPY (SPDRs S&P 500 ETF) via FreeStockCharts.com
When Do Treasury Bonds Officially Breakdown (Schiff, Faber on CNBC, TLT)
Peter Schiff is also concerned about interest payments.
"What I'm afraid of is that when people realize that we can't pay this money back, we're not going to be able to roll over all this short term debt, and so it's not just paying the interest, we're going to have to start retiring the principal, and that is just impossible, so there's going to be massive inflation".
Schiff thinks the bond market is the mother of all bubbles: "when it bursts the losses will dwarf the combined losses of the stock market bubble and real estate bubble".
"This decade is going to be the worst decade for bonds in U.S. history. Bond holders are going to get wiped out, because either the Government's going to default or they're going to inflate, but either way the people holding the bonds are left holding the bag."
USD/JPY Volatility, Yen Intervention Rumor Was Sold, Dilute The SOB BoJ
"The BOJ will boost the amount of funds in the facility by 10 trillion yen ($116 billion) to a total of 30 trillion, the bank said in a statement after an emergency meeting in Tokyo. Governor Masaaki Shirakawa led the gathering after cutting short a U.S. trip in the wake of increasing calls from politicians for the BOJ to help stem a surge in the yen to a 15-year high." (read full article at Bloomberg.com)
USD/JPY swung between 85 and 86 and the Nikkei closed +1.76%. Also read: Yen Erases Loss on Concern BOJ's Steps Not Enough to Curb Gains (Bloomberg.com). USD/JPY would be a decent long if it broke through that downtrend line. It is testing critical support from December (chart after the jump). Dilute the SOB BoJ!
Sunday, August 29, 2010
Bernanke Pledge on Economy Gives Some Relief to Oil Prices - Guest Post
Guest post by OilPrice.com
Bernanke Pledge on Economy Gives Some Relief to Oil Prices
Oil Market Summary for 08/23/2010 to 08/27/2010
Oil prices recovered some lost ground Friday after Federal Reserve chairman Ben Bernanke said the Fed stands ready to do whatever it takes to support economic recovery.
Bernanke Pledge on Economy Gives Some Relief to Oil Prices
Oil Market Summary for 08/23/2010 to 08/27/2010
Oil prices recovered some lost ground Friday after Federal Reserve chairman Ben Bernanke said the Fed stands ready to do whatever it takes to support economic recovery.
USD/JPY Spikes on BoJ "Monetary Control" Meeting, Nikkei Up 3% (FXY, NKY)
USD/JPY spiked on this news and Tokyo's Nikkei 225 Index was up 3%. Traders last week were already gaming the Nikkei to the upside. S&P and Nasdaq E-Mini futures are up 0.80%. Recently the U.S. markets have been following the Nikkei. Check out the charts below and the BoJ release.
Quantitative Easing Will Resume (Zandi), Dollar Could Collapse (Hussman) USDX DXY
Moody's Analytics President, Mark Zandi, told Bloomberg on 8/26 that quantitative easing would resume when the unemployment rate picks back up again in the next few months. He also increased the odds of a double dip recession to 1/3 from 1/4.
"I do think that the Federal Reserve will restart quantitative easing over the next few months. I think the economy's going to be at best very weak, so weak that unemployment will begin to rise again and I think that will be the signal for the Fed to resume quantitative easing".
"It could be for example if angst about the European debt situation were to flare up again and we'd see the equity markets, stock prices fall another 5-10-15%, I think that would qualify and certainly push us back into recession".
Bill Ackman Bought BP CDS In May (280bps), Short BP Debt
Back in June I reported that BP CDS spiked to 382 bps (+128% in 7 days) and BP bond yields hit 7.82% (chart) when oil was flowing like mad and killing birds. Ackman's letter stated that BP CDS peaked at 600bps. So if another event threatens BP's financial condition, even if nothing happens to the company, BP credit traders could buy BP protection again and run the CDS up to 600bps (test the top). The value of Ackman's CDS holding would rise 114%.
