Monday, December 6, 2010

Market in Process of Forming Top, Deflation Coming (Charles Nenner Video)

Charles Nenner, technical analyst and founder of the Charles Nenner Research Center, is confident the U.S. will experience a deflationary crisis even with strong reflationary policies in place by the Federal Reserve. From Bernanke's speech in Jackson Hole a few months ago: "the FOMC will strongly resist deviations from price stability in the downward direction". Also don't forget the trillions in Fed loan programs, TARP bailouts and securities purchases that helped reflate the economy and asset markets. Watch Bernanke on 60 Minutes last night. He's leaving the option open for additional Treasury purchases.

Nenner believes additional Treasury purchases won't make a difference. So, add Nenner to the deflation camp with Robert Prechter, Gary Shilling, and David Rosenberg. He didn't mention commodities but he sees a stronger Dollar. So I assume commodities would fall with the market. If that's the case, it will be interesting to see how commodities and the Dollar react during a deflationary crisis and forceful policy response.

Nenner mentioned on CNBC last week that the NASA sunspot cycle forecast was predicting another major crisis in 2013. On Tech Ticker, Nenner gave a more detailed outlook on Gold, the U.S. Dollar, Dow, S&P, semiconductors, 10-year Treasury bonds, deflation and geopolitical conflict down the road. Below are important points he made and the embedded videos from 11/30/2010.

Sunday, December 5, 2010

Video: Ben Bernanke on 60 Minutes (12/5/2010)

Full video after the jump courtesy of CBS/60 Minutes.

Video: Facebook's Mark Zuckerberg on 60 Minutes (12/5/2010)

Parts 1 and 2 are after the jump featuring Mark Zuckerberg, Kara Swisher of All Things D, the Winklevoss twins on the lawsuit and a tour of the new Facebook redesign.

Hugh Hendry's December 2010 Report (Eclectica Fund)

The Eclectica Fund, Manager Commentary - December 2010 at Zero Hedge

Saturday, December 4, 2010

Make Free Calls From iPhone Using Viber App (Free SMS Coming Soon)

Check this out. The free, ad-less, Viber application on your iPhone allows you to make free phone calls to other iPhone users with the Viber app installed. Free calls are made using your 3G data plan or Wi-Fi network. You can also make free calls internationally and they say the sound quality is better than your cell service. Android and Blackberry versions are coming soon, as is free SMS (text messaging). Could Viber put a huge dent in phone bills every month? I guess it all depends on data plans. It fuses with your iPhone and contacts perfectly it looks like. How will the whole world not use this? Watch the intro videos below via Youtube.

Chris Whalen on Dylan Ratigan Show (Fed Bailouts, Banks and Spain)

Chris Whalen of Institutional Risk Analytics was featured on Dylan Ratigan's show on MSNBC on 12/3/2010. Here are key quotes by Chris Whalen on the recently released details of the Fed bailouts. The video is after the jump.
"Goldman would've failed"

"The Fed is now there to support the speculators and they let the real economy go to hell, that's the bottom line"

"The impact, the negative effect of the speculation, especially in residential mortgages, was so awful that the Fed had to come to the aid of big corporations too which were cut off from commercial paper"

"Wait til we get to Spain. Spain is worse than Ireland"

Friday, December 3, 2010

Groupon Rejects Google's $6 Billion Bid, Coupon 2.0 Wave is Here

I just read that Groupon rejected Google's $6 billion bid. Read more at ChicagoBreakingBusiness, All Things Digital, BusinessWeek, WSJ, Dealbook, CNNMoney.

Couldn't Google build their own location based coupon service?Coupons would pop-up on your phone if you pass a store or restaurant based on search history, purchase history or personal settings. You'd pay with your e-coupon on your phone (phone = new credit card). Your phone would analyze purchase history to help make coupons more relevant. Also a search algorithm could provide real-time competitive coupon deals when a product, store or restaurant is searched for on Google. Local and nationwide businesses would be forced to provide the best deals. The coupon flood is just getting started in my opinion. Especially with the unemployment rate at 9.8%.

Analysis of November HSBC China PMI, OECD Leading Indicator Trending Down Since February (Charts)

From the November HSBC China Manufacturing PMI release at www.markiteconomics.com (the service sector and composite output PMI declined, see below):

"The Chinese manufacturing sector strengthened further in November, with overall business conditions improving at the strongest pace in eight months. This was signalled by the headline HSBC Purchasing Managers’ IndexTM (PMITM) posting 55.3, up from 54.8 in October. Considerable price pressures were also indicated by November’s survey, with both output and input prices rising at substantial and accelerated rates."

A read above 50 means the Chinese manufacturing sector is growing. Under 50 means contracting. Price pressures were expected as consumer prices in China rose 4.4% in October, a 25 month high. Also read: China 'set to tighten monetary policy' (BBC News 12/3/2010). In a similar fashion, the official China PMI reported by the "China Federation of Logistics & Purchasing and National Bureau of Statistics" hit 55.2 in November, up from 54.7 in October. See the chart and data at Bloomberg.com - CPMINDX.

Wednesday, December 1, 2010

Details of Liquidity Facilities Used By the Fed During Financial Crisis

The Federal Reserve released "detailed information about the liquidity and credit programs and other monetary policy tools that the Federal Reserve used to respond to the financial crisis that emerged in the summer of 2007".Find it all at http://www.federalreserve.gov/newsevents/reform_transaction.htm.

"Facilities and Programs
Agency Mortgage-Backed Securities (MBS) Purchase Program
Term Auction Facility (TAF)
Central Bank Liquidity Swap Lines
Primary Dealer Credit Facility (PDCF)
Term Securities Lending Facility (TSLF) and TSLF Options Program (TOP)
Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF)
Commercial Paper Funding Facility (CPFF)
Term Asset-Backed Securities Loan Facility (TALF)
Money Market Investor Funding Facility (MMIFF)
Bear Stearns, JPMorgan Chase, and Maiden Lane LLC
American International Group (AIG), Maiden Lane II and III
Bank of America
Citigroup"

And check this out... "@WSJ: We've created a searchable database of the Fed's emergency lending data. Every loan: http://on.wsj.com/geMgP4"

Tuesday, November 30, 2010

Bank of America Broke Support, CDS Up, Wikileaks? [BAC Charts]

BAC closed at $10.95, -3.95% and just below support. BAC 5Y CDS (credit default swap) was up 7.21% at 214.338 basis points (+114% YTD).

Is Bank Of America WikiLeaks’ Next Target? (Forbes)

Bank's Stock Declines on WikiLeaks Anticipation (WSJ)

BofA Mortgage Morass Deepens After Employee Says Trustee Didn't Get Notes (Bloomberg)

WikiLeaks Says It Holds Documents From Bank of America Executive - (Bloomberg)

Wikileaks: 5GB of Dirt on Bank of America - (The Big Picture)

Wikileaks chief said he has 5GB of secret docs on Bank of America - exclusive - (Raw Story)



BofA CDS 5Y - CBAC1U5 (Bloomberg)


Charles Nenner: Next Crisis Hits in 2013 When Sunspot Cycle Peaks, Predicts Dow 5,000 (Video)

Did you know sunspot cycles move in tandem with the stock market? You learn something new every day. Charles Nenner of Charles Nenner Research believes the market will "muddle through" until 2013 when the sunspot cycle peaks. He then predicts the Dow will drop to 5,000 (break the March low).

The less sunspots there are, the more depressed people are, and that in turn affects the economy. Was there a Sunspot/Dow divergence from 2002-2007? Here's the actual prediction by NASA/Marshall Solar Physics which was updated on 11/3/2010:

"Current prediction for the next sunspot cycle maximum gives a smoothed sunspot number maximum of about 66 in June of 2013."

Click on the chart for a closer view of the sunspot forecast. In the first segment, Nenner said EUR/USD will move lower as the U.S. economy grows faster than Europe. Watch the CNBC video after the jump.

Monday, November 29, 2010

George Bush Talks His Book at Facebook HQ With Zuckerberg (Video)

I'm watching former President George W. Bush shamelessly promote his new book, "Decision Points", with Mark Zuckerberg at Facebook headquarters. Good marketing move. Video after the jump.

WikiLeaks' Next Target is a Major Bank!

Prepare yourselves... From Forbes.
"In a rare, two-hour interview conducted in London on November 11, Assange said that he’s still sitting on a trove of secret documents, about half of which relate to the private sector. And WikiLeaks’ next target will be a major American bank." (full story)

Spain Government Bond Yields Spike, 10-Year at 5.42%, EUR/USD at 200DMA

The European debt crisis is hitting Spain. Spain Government Bond yields and credit default swaps made new highs today. Spain's 10-year bond yields 5.427%, which is up 122 basis points or 29% in a month. Spain's 5-year bond yields 4.81%, up 168 basis points or 53.6% in a month. Data and snapshots are courtesy of Bloomberg.com. I added news links at the end of the post. EUR/USD (Euro/US Dollar) is currently testing the 200 day moving average and Dennis Gartman told CNBC today that any Euro rallies should be sold (video after the jump).

Spain 5y Bond Yield (GSPG5YR:IND)


Spain 10y Yield (GSPG10YR:IND)


EUR/USD (Euro/US Dollar)


Sunday, November 28, 2010

Reads: Sheila Bair's Warning, Russell on Equities, Ireland Gets Bailout, Korea Conflict, AAII Elevated

Continued from the 11/24/2010 powerlinks fest.

Will the next fiscal crisis start in Washington? by Sheila Bair (FDIC Chairman) - Washington Post

Lee Myung Bak (South Korea President) Vows to Make North Korea Pay for Attack as China Urges Talks - Bloomberg

Richard Russell - Stocks Repeating 1930, Gold Building Base (Dow Theory Newsletter) - King World News

Ireland gets a $113 Billion bailout; Germany Drops Threat on Bonds - Bloomberg

Irish to Pay 5.8% for Bailout as Taxes, Senior Debt Protected - Bloomberg

Following Hungary And Ireland, France Is Next To Seize Pension Funds - Zero Hedge

Robust Sales for Holiday Weekend - NYT

AAII Bullish sentiment rebounded to 47.4% (remains elevated) - PragCap

Saturday, November 27, 2010

The Day the Dollar Died (Video by NAI), Bernanke Beware of This Hyperinflation Scenario!

Watch this fictional yet horrifying video made by the National Inflation Association (inflation.us) depicting a hyper-inflationary Dollar collapse. It is titled: "The Day the Dollar Died: The first 12 hours of a U.S. dollar collapse". The NAI believes there's a serious risk of hyperinflation in the U.S if the Fed keeps pumping trillions in excess reserves into the banking system (we're at QE4 in the video). Watch it after the jump. They did another video in August on the similarities and differences between Japan in 1990 (beginning of Japan's lost deflationary decade) and the U.S. today. Some economists, like David Rosenberg, believe ongoing debt de-leveraging will outweigh reflationary policies for many years, which will force price stability. Bernanke has everything under control, right?

Protests Against Austerity in UK, Austria and Ireland (Videos, 11.27.2010)

On Friday, in the UK, there were violent student protests against the proposed tuition hike that would triple fees. People then took to the streets in Ireland and Austria protesting against tax hikes and budget cuts (protest reflexivity). See videos after the jump. People protested against bailouts as well (related: Ireland Bank CDS widened on Friday). So, when does the austerity party and protests start in the U.S.? On a currency note, BlackRock's Larry Fink thinks the Euro (EUR/USD) could hit 1.20 as a result of the EU debt crisis and contagion (Telegraph.co.uk). Watching Portugal and España.

1) Students in UK rioting proposed tuition hike (courtesy of RussiaToday)
2) 50,000 people march through Dublin protesting austerity measures (speeches)
3) Thousands protest proposed budget cuts in Vienna, Austria (courtesy of Press.tv)

Friday, November 26, 2010

Ireland Credit Default Swaps Widening (Bank of Ireland, Allied Irish Banks, Irish Life and Permanent)

Snapshots from CMA Datavision's largest widening spreads from today (11/26/2010). Charts after the jump. Junior bondholders at Anglo Irish Bank "already have been forced to accept losses of 80%-95%" (AP link).

Related news:

"Allied Irish, Bank of Ireland May Buy Back Subordinated Bonds" - Bloomberg.com

"S&P cuts ratings on Irish banks; Anglo deemed junk"- AP

"Claims Allowed on Anglo Irish Default Insurance" - WSJ (11/24/2010)

Wednesday, November 24, 2010

Projections for 2011: Dennis Gartman, Jim Rogers, Gary Shilling (Videos)

Macro views and projections for 2011 - 11/24/2010

Dennis Gartman's top trades for 2011. He likes Gold in Euros (XAU/EUR), Australian Dollar in Euros (AUD/EUR), corn and soybeans.

Reads: Soros Gold Holdings, Louise Yamada on Technicals, Eurozone Crises, Jim Rogers (11.23.2010)

Powerlinks for 11/24/2010

Louise Yamada (technical analyst) - Caution on the Stock Market - KingWorldNews (11/23/2010)

Howard Lindzon and Jim Rogers on StockTwits.tv

Poverty Soars in California - Gregor.us

Soros says conditions "pretty perfect" for gold - Reuters (11/16/2010)

Tuesday, November 23, 2010

Text of FOMC Minutes; GDP, Unemployment, PCE Projections (11/3/2010)

Below is an excerpt from the Federal Open Market Committee (FOMC) Minutes on 11/2/2010 and 11/3/2010. The quoted text does not include staff reviews. Here is the FOMC Statement.


"Participants' Views on Current Conditions and the Economic Outlook
In conjunction with this FOMC meeting, all meeting participants--the six members of the Board of Governors and the heads of the 12 Federal Reserve Banks--provided projections of output growth, the unemployment rate, and inflation for each year from 2010 through 2013 and over the longer run. Longer-run projections represent each participant's assessment of the rate to which each variable would be expected to converge, over time, under appropriate monetary policy and in the absence of further shocks. Participants' forecasts are described in the Summary of Economic Projections, which is attached as an addendum to these minutes.

XRT/HYG (Retail Index/High Yield Bond ETF) Testing April High - Chart

XRT/HYG, what do you think y'all. Can the ratio pry through April, 2010 resistance? Or will retail sales disappoint and stocks fall faster (or rise slower) than high yield bonds.

Futures Down, Dollar Up on South Korea Attack (ES, USDJPY, EURUSD, EURJPY - Charts)

S&P futures are down and the US Dollar is up on Korea tensions. EUR/JPY is testing the downtrend line. See charts after the jump (ESZ10 -0.73% at 1,189.25). Will provide an update after the close.

North Korea Fires at South Korean Island (Video and Links)

Update: North Korea attacked a South Korean Island. Below are links and a video clips after the jump (added a live MBC News stream).


N. Korean attack sets S. Korean island ablaze, at least 1 dead - BNO News
S. Korea Scrambles Jets, Returns Fire After North Shells Island - Bloomberg
Marines killed one person, injured 13 people.. army on alert - YTN.ko.kr (title translated)
NK Fires Coastal Artillery at S.Korean Island (Yeonpyeong) - KBS World (kbs.co.kr)
North Korea fires on South Korea – live coverage - Guardian
North and South Korea Exchange Dozens of Artillery Shells - New York Times
North Korea and South Korea exchange fire, raising tensions - FT/BeyondBrics Blog
North Korea bombs South Korean island - The Telegraph
North Korea Fires Rockets at Island - WSJ
Two Koreas exchange fire across maritime border - Reuters
'Artillery firing' on Korea border - Al Jazeera English

Analyst Mary Meeker on Internet Trends at 2010 Web 2.0 Summit (Video/Slides)

The Web 2.0 Summit is great. See web venture capitalists Fred Wilson and John Doerr battle it out in my previous post. Mary Meeker, an technology analyst at Morgan Stanley, did a presentation on "internet trends" (globality, mobile, social ecosystem, advertising, commerce, media, pace of change etc). I embedded the video and presentation slides after the jump. Mobile is blowing up..


"Global Unit Shipments of Smartphones > Desktop/Notebook PCs by 2012". Also, internet ad spending is "out of whack" with consumption, using TV, print and radio as comparables (chart in the report).

Other interviews at the Web 2.0 Summit include Eric Schmidt (CEO of Google) and Mark Zuckerberg (Facebook).

Monday, November 22, 2010

Gregor Macdonald on IEA's Oil Projection (65% of Future Supply Coming From Fields Not Yet Discovered)

Gregor Macdonald of Gregor.us and Macrotwits Hour was on Max Keiser's show on 11/20/2010 talking about the IEA's recent world oil production projection (w/ chart) out to 2035. I embedded Part 1 after the jump, see parts 2 and 3 at MaxKeiser.com. IEA = International Energy Agency.
"The IEA very surprisingly and I must say rather strangely, has forecasted that the bulk of future oil supply will come from fields not yet discovered or developed" (65% of that future oil)

Has The Market Been Rigged For Decades? (Hedge Fund Raids/Tech Ticker Video)

"The most valuable commodity I know of is information" -Gordon Gekko. Nothing new going on here people.

1) U.S. in Vast Insider Trading Probe

2) FBI Visit Exposes Trade-Probe Tactics

3) FBI Raids Two Hedge Funds (Diamondback Capital Management LLC and Level Global Investors LP) Amid Insider-Trading Case.

4) FBI raids Loch Capital

5) SAC Capital, Janus, Wellington Receive Inquiries on Insider Trading, SAC Discloses Government Subpoena

6) Citadel Receives Subpoena

Expert Networks:

1) Expert-Broker Chu Steered Hedge Fund to Asia, U.S. Says
"Don Ching Trang Chu, the “expert- network” executive arrested yesterday on insider-trading charges, had a roster of Asia-based employees of North American technology companies to feed information to clients, according to court documents."

2) U.S. Trading Probe Puts Research, Expert Networks in Spotlight

3) Consultant of 'Expert Network' Gerson Lehrman Group May Be Drawn Into Insider-Trading Probe (*update 11/30/2010)

Tech ticker video talking about it after the jump.

Sunday, November 21, 2010

Energy Tells Tale of Fading West, Booming East - Guest Post

Guest post courtesy of OilPrice.com

Energy Tells Tale of Fading West, Booming East

The patient is the United States and the diagnosis is "Asia shock."

It is a psychological disease with physical symptoms and no known cure. However there are therapies, therapies of trade, diplomacy and fiscal restraint at home.

As President Barack Obama jetted around Asia, he may have pondered not so much the economic power that waits East of Suez, but why it took so long to emerge. And why the patient is in denial.

In the 18th and 19th centuries, Asia was for the taking by the European colonialists; and take they did.

Bernanke's ECB Speech: Global Imbalances, Unemployment Pose Risk to Recovery, Defends Policy (11/19/2010)

Bernanke gave an interesting speech at an ECB conference on Friday. He mentioned a few things that could "undermine" the global recovery: global trade imbalances, currency undervaluation, temporary cyclical unemployment turning into long-term structural unemployment and further disinflationary pressures (source: federalreserve.gov). I also embedded a video clip from EUX.tv.

Chairman Ben S. Bernanke
At the Sixth European Central Bank Central Banking Conference, Frankfurt, Germany

November 19, 2010

Rebalancing the Global Recovery

The global economy is now well into its second year of recovery from the deep recession triggered by the most devastating financial crisis since the Great Depression. In the most intense phase of the crisis, as a financial conflagration threatened to engulf the global economy, policymakers in both advanced and emerging market economies found themselves confronting common challenges. Amid this shared sense of urgency, national policy responses were forceful, timely, and mutually reinforcing. This policy collaboration was essential in averting a much deeper global economic contraction and providing a foundation for renewed stability and growth.

In recent months, however, that sense of common purpose has waned. Tensions among nations over economic policies have emerged and intensified, potentially threatening our ability to find global solutions to global problems. One source of these tensions has been the bifurcated nature of the global economic recovery: Some economies have fully recouped their losses while others have lagged behind. But at a deeper level, the tensions arise from the lack of an agreed-upon framework to ensure that national policies take appropriate account of interdependencies across countries and the interests of the international system as a whole. Accordingly, the essential challenge for policymakers around the world is to work together to achieve a mutually beneficial outcome--namely, a robust global economic expansion that is balanced, sustainable, and less prone to crises.

Friday, November 19, 2010

Fred Wilson vs. John Doerr at 2010 Web 2.0 Summit, sFund Announcement Video

The E-mini Nasdaq, S&P and Dow futures are unchanged tonight. Here's an update on the 15-min $SPY chart. I will report on the market tomorrow after travels. For now, watch this clip from the 2010 Web 2.0 Summit featuring venture capitalists' Fred Wilson (Union Square Ventures) and John Doerr (Kleiner Perkins Caufield & Byers - KPCB). They are early stage venture capital funds that invest in internet companies. For example, Union Square funded Twitter and Zynga and KPCB funded Google, Zynga and the sFund (Facebook is a partner, see KPCB video). Watch both videos for a good perspective on what's going on in web finance.

Both Fred and John think the web market is overvalued (volatility coming?). Fred dissed Apple's mobile platform (vs. Android), Google and Facebook as well! John Heilemann brought up that Fred said "Facebook is a photo sharing site with some chat attached". Fred responded:

Thursday, November 18, 2010

Jim Chanos on China; It Is Using Price Controls to Tame Inflation (11/17/2010) FXI, SSEC)

Jim Chanos, who runs hedge fund Kynikos Associates and is openly bearish China, was on Fortune TV on 11/12/2010. He's been bearish on China for a while now. See his presentation from last year. China is enacting price controls to tame inflation (CPI +4.4% in October). $SSEC, the Shanghai Composite Index, is right above the 50 and 200 day moving average (chart). Video after the jump.

China to auction state sugar reserves to curb price rises - Gov.cn (Chinese Government website)
Chinese government announces guidelines to tame price rises - Gov.cn
China targets liquidity to cool inflation - Gov.cn
China imposes price controls to stave off inflation - CNN Money
Chinese consumers blame US as prices spiral up - AFP
Related: Cotton ETN $BAL Up 63% in 3 Mos, Cotton Price Inflation Hits China - Post, 10/15/2010


EIA: Crude Oil Inventories Declined By 7.3 Million Barrels, 1.2 Million Rise Expected, Still Above Average Range (11/12/2010 Report)

Below is an excerpt from the 11/12/2010 Weekly Petroleum Report via the Energy Information Administration (EIA). I noted the drop in oil imports and inventories. U.S. crude oil stocks (inventories) were down on the week but remained above the average range.

"U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 7.3 million barrels from the previous week (Analysts polled by Platts expected a 1.2 million barrel increase). At 357.6 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 2.7 million barrels last week and are in the upper half of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 1.1 million barrels and are above the upper boundary of the average range for this time of year. Propane/propylene inventories increased by 0.9 million barrels last week and are in the lower half of the average range. Total commercial petroleum inventories decreased by 9.1 million barrels last week."

"U.S. crude oil imports averaged 7.9 million barrels per day last week, down by 225 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.5 million barrels per day, 64 thousand barrels per day below the same four-week period last year."

Read the full report with data tables and charts at EIA.gov

More Analysis:
UPDATE 2-US crude stocks plunge most in over 14 months-EIA - Reuters
EIA ANALYSIS: Product stocks drop on abnormally low imports - Platts.com

Michael Steinhardt: Debt Markets Are Overvalued (2-year Treasury Price Chart)

Yesterday on CNBC (11/16/2010) former hedge fund manager, Michael Steinhardt, discussed QE2, inflation, GDP, municipalities and the overall run in commodities, stocks and bonds. He is currently short the 2-year Treasury Note and believes debt markets are overvalued.

In the second video, David Faber and Gary Kaminsky asked Steinhardt what he'd do if his firm was allocated GM shares in the IPO. He said, "(I'd sell out) as quickly as I can. Well, I don't think one should be a long term holder in Government securities, particularly Government equity securities". Ouch.

*Larry McDonald talked about GM convertible bonds in the second video

Wednesday, November 17, 2010

Reading Reports by Knight Research, Hussman and Albert Edwards

"The Game Is Over" by Knight Strategic Research @ zerohedge.com
"The Cliff" by John Hussman @ hussmanfunds.com
China/U.S's global game of chicken by SocGen's Albert Edwards @ zerohedge.com

$SPY Trading Channels to Watch on 15-Min Chart (11/17/2010)

If interested, below is the $SPY (SPDRs S&P 500 ETF) 15-min chart from 11/8/2010-11/17/2010 courtesy of freestockcharts.com. SPY is at the channel inflection point in the immediate term. Here is a link to the layout: http://www.freestockcharts.com?emailChartID=4c7efba9-e30e-40b7-8681-28dfbd8894d7

$SPY Click for larger view

Chris Whalen: California Will Default On Its Debt, Eventually They'll Have to Restructure, CA$ (Pension Funds Hold California Debt)

First read California's Fiscal Outlook (2011/12 Budget). LAO expects a $20 billion deficit through 2015/2016 (operating shortfall). Chris Whalen of Institutional Risk Analytics was on Tech Ticker yesterday and said California will default on its debt and "force their creditors to come to the table and talk". Or they will issue their own currency again like they did in the 1840s! Cali-bucks. CA$/IL$ coming soon? Whalen said "I think eventually the debt will have to be haircut and pension obligations are going to have to be repudiated". "If there's even a hint of a bailout, you're going to have Illinois, New York, several other states right behind California". The "IOU game" will continue until people don't take the "funny money" anymore. Crazy times. Video after the jump.

Nikkei/S&P Ratio Technical Analysis ($NIKK/$SPX), Nikkei Outperformed S&P and Shanghai Since 11/1/2010 - Charts

Ratio Technical Analysis for 11/17/2010: Anyone watching the Nikkei/S&P ratio? $NIKK:$SPX broke above the 50DMA, a descending channel and pierced ceiling resistance from November, 2009. Is NIKK/SPX positioning to test that ultimate downtrend? If so, i'm thinking it would coincide with USD/JPY strength. But would the S&P correct further and Nikkei rally? For NIKK/SPX to test that uptrend, the Nikkei must either rise faster than the S&P or fall slower from here. Interesting, I'll be watching this.

Since 11/1/2010, the Nikkei has outperformed both the S&P and Shanghai Index. However, on a longer term basis $NIKK has underperformed. We shall see how the gap closes. The Nikkei recently gathered strength after putting in an inverse head and shoulders pattern. It hasn't participated in the recent sell off. See both charts after the jump. Thoughts?

California's $20 Billion Annual Operating Shortfall Through 2015/2016 (Fiscal Outlook, 2011/2012 Budget Report) CMF, CXA, BFZ, PCQ, PCK

LAO just released California's Fiscal Outlook, 2011/2012 Budget, and the State has a "$25 billion budget problem that needs to be addressed in the coming months". The California Legislative Analyst Office, who released the report, also forecasts a $20 billion annual operating shortfall in their General Fund through 2015/2016 (chart below). Cali should have legalized it. Also, these forecasts don't include underfunded pension liabilities.

California municipal bond ETFs (CMF) sold off last week, as did the National muni-bond ETF (MUB). Muni-bond credit risk and perhaps interest rate risk is being re-priced. This action wasn't a surprise (tax-base/pension fund update 10/26, California Comptroller on 8/20 and Meredith Whitney said States may need a Federal bailout in 12-months on 9/30/2010). California is in process of selling $10 billion of short-term notes.

Tuesday, November 16, 2010

Cameron Hanover Daily Oil Recap (11/16/2010)

Cameron Hanover Daily Oil Recap (courtesy of www.fmxconnect.com)

Oil prices were significantly lower on Tuesday as a tidal wave of asset liquidation hit the markets. It started with a stronger US dollar, which poured cold water on commodities, and it spread into equities, which were down substantially on Tuesday. The DJIA ended the day down 178.47 to 11,023.50. The two “back” stories were the possibility of a eurozone bailout of Ireland, which was in ongoing negotiations, and the very real likelihood of Chinese monetary tightening. The first feature, the concerns over an Irish bailout, helped boost the US dollar. The fear of Chinese tightening helped raise worries over the world’s economic locomotive.

Turkey Deepens Strategic Relationship with China (Guest Post)

Submitted by Global Intelligence Report (11/16/2010)

Turkey Deepens Strategic Relationship with China

INCIDENT: The visit by Turkey's Foreign Minister Ahmet Davutoglu to Beijing a week ago, follows by a scant three weeks the visit by China's Prime Minister Wen Jiabao to Ankara on 78 October as part of the latter's European diplomatic tour also including Belgium, Germany, Greece, and Italy in the margin of his participation in an EU-China summit.

SIGNIFICANCE: The reciprocal visits become, in context, a sign not just of increasing economic ties between the two countries but moreover their foreign policy and strategic cooperation.

BACKGROUND ANALYSIS: The modern Turkish and Chinese states established diplomatic relations only in 1971 but these remained unimportant to both sides side during most of the Cold War. By the turn of the millennium, however, the Kurdish insurgency had sensitized Ankara to Chinese concerns about Uyghur separatism, notwithstanding the latters' cultural community with Anatolian Turks. The Turkish government progressively narrowed the margin of maneuver open to Uyghurs and Uyghur sympathizers in Turkey.

SPY Approaching 50 Day Moving Average 116.7, Trading at 118.23 -1.5% (11/16/2010)

Yesterday Jim Iuorio and Katie Stockton said on CNBC that the S&P correction would continue towards the 50 day moving average (116.7). With the S&P 500 ETF ($SPY) down 1.5% right now at 118.23, 50DMA/SPY convergence could come in a matter of days (or hours, who knows). The Ireland debt-crisis (bailout rumors), Greece aid (Austria holding out?), China inflation controls, Fed comments and muni-bond madness are dominating my Twitter news stream. Crazy day today. I'm going to dissect what's going on and put up a links post, chart out ETFs and currencies, and then do a long post on the municipal bond market (California, MUB, GO Bond 20 Index, Muni-Treasury spread etc). For now here is a chart of $SPY showing 50DMA support and the ascending channel it just broke. Hopefully you have puts riding the volatility. Last time I checked the volatility index ($VIX) was up 13% at 22.86.

*See an index of $SPY posts since 10/21/2010 to see the action and analysis that led up to today.

Cameron Hanover Daily Oil Recap (11/15/2010)

Cameron Hanover Daily Oil Recap (courtesy of www.fmxconnect.com)

Crude oil prices ended mixed, with the first two months lower and the deferred months higher. Heating oil prices were higher and gasoline prices were lower. Traders and investors were trying to figure out which factors were important to the oil markets, even as those “leader” markets or “bellwethers” struggled to figure out what factors would make them rise and fall. The US dollar had not been a major bellwether for oil in more than a week and yet we feel obliged to start there. Concerns over Ireland’s sovereign debt were paramount in investors’ thinking on Monday and these investors were buying US dollars and avoiding riskier asset plays.

Congressional Oversight Panel Examination of Foreclosure Crisis (11/15/2010 Report, Video)

The Congressional Oversight Panel released a report (pdf) on 11/15/2010 titled: Examining the Consequences of Mortgage Irregularities for Financial Stability and Foreclosure Mitigation (hat tip Housing Wire). Below is an excerpt from the executive summary and a video with Senator Ted Kaufman giving an introduction.

"Executive Summary*

In the fall of 2010, reports began to surface alleging that companies servicing $6.4 trillion in American mortgages may have bypassed legally required steps to foreclose on a home. Employees or contractors of Bank of America, GMAC Mortgage, and other major loan servicers testified that they signed, and in some cases backdated, thousands of documents claiming personal knowledge of facts about mortgages that they did not actually know to be true.

Monday, November 15, 2010

Spot Gold Technical Update, Consolidation? (XAU/USD Video)

Adam Hewison over at MarketClub did a video on spot gold and I embedded it below. Are we seeing consolidation in an overall uptrend? He shows you the MACD momentum indicator below XAU/USD price action and divergences. Video after the jump.

Gary Shilling on Deleveraging, 30Y Bond, Stocks and EUR/USD (Tech Ticker/Bloomberg Video Links)

Below are links to Tech Ticker videos and a Bloomberg video featuring Gary Shilling who runs economic consulting firm A. Gary Shilling & Co. He still likes the 30y Treasury Bond for appreciation not yield and sees EUR/USD and stocks lower from here.

Sovereign Debt Crisis Redux? "Tough Medicine" Isn't Curing Europe's PIIGS, Shilling Says - Tech Ticker

Of Course The Fed's Latest Plan Won't Work, Says Gary Shilling--We're Still Deleveraging! - Tech Ticker

Middle Class in Crisis: America Needs a Reality Check, Gary Shilling Say - Tech Ticker

Gary Shilling: Fed "Losing Credibility" as It Becomes "an Arm of the Administration" - Tech Ticker

Gary Shilling Sees `Significant' Stock Selloff Within 12 Months (11/12/2010) - Bloomberg.com 

Facebook's New Messaging System (Zuckerberg Presentation, 11/15/2010) $FBOOK

Here is Mark Zuckerberg presenting Facebook's new messaging system [1) Seamless messaging 2) Conversation history 3) Social Inbox] via FacebookLive.



S&P Correction Could Hit 1,155-1,160 (Jim Iuorio on Options, Katie Stockton on Technicals - CNBC Video)

11/15/2010: Jim Iuorio of TJM Institutional Services and Katie Stockton of MKM Partners believe the S&P could correct to 1,155-1,160, which is around the 50 day moving average. Iuorio is basing his case on the options market, mainly the reaction in the VIX (volatility index) last Friday, and Stockton on technicals. Iuorio correctly called for a U.S. Dollar spike in November 2009 and was bullish on Silver in May 2010 before its massive move. They both think this pullback is a buying opportunity (Jim mentioned Fed support). Interest rates vs. dividend plays, utilities, oil and tech are also mentioned during the segment. For more potential support levels see my previous post. The CNBC video clip is after the jump and the S&P is at 1,199.80 (+0.05%).

Leveraged Loan Market Update (S&P LCD Analysis, 11/5/2010)

Below is an update on the leveraged loan market by S&P LCD for November. It was posted on 11/5/2010. The S&P/LSTA U.S. Leveraged Loan 100 index is around the April high (92.39), new-issue clearing yields were at a 5-month low in October (6.7%) and the default rate was at a 22-month low (2.3%). Loan players expect new-issue yields to "grind tighter" but "accounts are eyeing 2012-2013 with caution". View the video and chart after the jump.

Chesapeake Energy CEO on Shale Gas in U.S. (60 Minutes), Pros/Cons CHK

Chesapeake Energy's CEO Aubrey McClendon was featured 60 Minutes last night. He said the U.S. has two Saudi Arabia's worth of natural gas. Chesapeake Energy (CHK) is the biggest independent natural gas producer in the U.S.. Natural gas extracted from shale rock is making millionaires all over the country (shaleionaires). They extract gas by fracking the rock (hydraulic fracturing). There are cons to this practice though, like when gas leaks into the water supply. Related news: (Chevron bets on shale gas with $3.2 billion Atlas buy 11/9/2010).

Sunday, November 14, 2010

Technical Update: S&P Back Under 50 Month Moving Average (GLD, FXY, UUP, EUR/USD Charts) 11/14/2010

Technical market update for 11/14/2010 by dvolatility: The S&P 500 is back under its 50 month moving average after selling off at the 61.8% retracement level and ceiling resistance from the April high. GLD (chart 5) is riding an uptrend from the beginning of 2009 and close to testing multi-year ascending channel resistance (if you have a better GLD chart post it in the comments).

The first chart is of the S&P 500 (monthly) which features the $1,000 support level where $12B hedge fund manager David Tepper told CNBC he'd be long 100% equities hedged with the "Bernanke Put". The S&P closed at 1,199 on Friday. I'm reading headlines that Tepper sold some financials and bought tech in his Q3 13F filing. I'll look into that further. I also added Jeremy Grantham's fair value target on the S&P which is $900 (cnbc video). The blue line is the 50 month moving average.

Cameron Hanover Daily Oil Recap (11/12/2010)

Cameron Hanover Daily Oil Recap (courtesy of www.fmxconnect.com)

We should almost start handicapping this market by starting each week with a number of unlikely scenarios, and examine their most likely responses, followed by a comparison with that week’s most likely scenarios, with an analysis of their least likely responses or reactions. We should then mix these together and construct an imaginary committee’s most implausible combination, from which we would choose the least desirable from both bullish and bearish perspectives. Where they intersect is what we should expect to see. And, no, we are not just trying to vaporize in an amusing way. We will actually go through it to show how we got the week that has just concluded.

Inflation vs. Deflation Debates (Shilling vs. Pento, Prechter vs. Schiff)

Links to Schiff Radio.
Gary Shilling vs. Michael Pento (11/10/2010)
Robert Prechter vs. Peter Schiff (11/8/2010)

Pento: Japan is Next Sovereign Debt Crisis (Savings, JGB Yields), U.S. is Next, Gold vs. Real Rates - Tech Ticker, 11/12/2010

Michael Pento (Euro Pacific Capital) thinks Japan is the next sovereign debt crisis after Ireland. And then the United States. Here are a few important points he made on Tech Ticker with Aaron Task.

Japan: "I think Japan because their savings rate has plummeted from 15% to 2%. Very soon they're going to have to tap the outside sources other than the Japanese to finance their debt. And that's when interest rates soar and that's when they become insolvent." [Related: Hedge fund manager Kyle Bass is short Japanese Bonds (CNBC video, 8/18/2010), see Japanese Government Bond quotes/charts]

Saturday, November 13, 2010

Quantitative Easing Explained, "The Deflation is Very Bad"

Here's a funny Xtra Normal cartoon floating around about quantitative easing. I'd like to see one on robo-signing.

Janet Tavakoli: Banks Underestimating Foreclosure Fraud Issue (Video) - JPM, BAC, WFC

Janet Tavakoli (Tavakoli Structured Finance) was interviewed by David Fry of etfdigest.com. She's an expert in structured finance (securitization/credit derivatives) and warned about the financial crisis.

Bernanke on Housing and Economy From 2005-2007 (CNBC Videos), Clearly Underestimated Risks

Nassim Taleb was right. The Chairman of the Federal Reserve, Ben Bernanke, clearly didn't see the "accumulation of hidden risk in the system" before the financial crisis (see clip of Taleb on BloombergTV on 11/11/2010). I found a video on Youtube with various clips of Bernanke on CNBC from 2005-2007. In July 2005, when Bernanke was Chairman of the Council of Economic Advisers, Bernanke told CNBC:
"I'm hopeful that, I'm confident in fact, that the bank regulators will pay close attention to the kinds of loans being made and making sure that underwriting is done right [whoops]. But I do think that this is just a localized problem and not something that will affect the national economy."

Who was the regulator again? When Bernanke became Fed Chairman in February 2006, he was clearly wrong on the economy and misled the public. During all of his speeches in the video below, Bernanke never mentioned any risks inherent in the banking system. I recommend you see the movie "Inside Job" where it looks at not only the usual suspects involved in the financial crisis (Federal Reserve, Alan Greenspan, credit rating agencies, politicians, derivatives, Bank CEO's and predatory lenders) but economics professors that got paid to consult and direct the big banks and AIG into the ground (see the trailer). Something doesn't make sense. Is there a Keyser Söze? See the "Bernanke was wrong" video after the jump.

Friday, November 12, 2010

Nassim Taleb: The Fed Doesn't Understand Risk! (Video)

Nassim Taleb, author of The "Black Swan: Fooled by Randomness", NYU Professor and advisor at Universa Investments, told Eric Shatzker on BloombergTV that Ben Bernanke doesn't understand risk and "he reminds me of LTCM people" (Long Term Capital Management was a hedge fund that blew up in 1998). Video after the jump.

Meredith Whitney: Regional Bank Stocks Overvalued, New Jersey Debt/GDP (CNBC Video 11/11/2010)

Meredith Whitney was on CNBC yesterday (11/11/2010). The video is after the jump but here is a summary of what she said:

*Regional bank stocks are overvalued
*Expects 5,000 branch cuts on profit squeeze from new banking regulations (Reg-E)
*Big banks aren't fabulously attractive buys here, people won't care about banks for a while
*Sees legal overhang from ongoing mortgage fraud / misrepresentation lawsuits (read Matt Taibbi, Washington's Blog)
*Expects another leg down in housing this year and continuing into next year 2011
*Higher unemployment could increase credit losses
*New Jersey has worst Debt/GDP and highest tax burden (California, Illinois have issues)
*Sees 2 million State and local Government job losses on Government program cuts

Everything is Down on Quote Widget, Rare Occurrence (11/12/2010)

You don't see this every day.

Matt Taibbi on the Foreclosure Crisis

This is a quote from Matt Taibbi's new article in Rolling Stone Magazine on the foreclosure crisis.
"For most people, the former bit about homeowners not paying their damn bills is the important part, while the latter, about the sudden and strange inability of the world's biggest and wealthiest banks to keep proper records, is incidental. Just a little office sloppiness, and who cares?

But in reality, it's the unpaid bills that are incidental and the lost paperwork that matters. It turns out that underneath that little iceberg tip of exposed evidence lies a fraud so gigantic that it literally cannot be contemplated by our leaders, for fear of admitting that our entire financial system is corrupted to its core......" [full article at RollingStone.com]

And read this funny post at Zero Hedge... 1,125,000,300 = The Number Of Pages Needed To Be Read For Every CDO Squared Purchase. How does all of this BS end?

Overnight Futures Update 11/12/2010: Nikkei, E-mini S&P, Dollar Index (Flight From Risk)

Overnight futures technical update: The December Nikkei 225 Future pierced the September shelf (9,730, -1.22%, Chart 1), December E-Mini S&P Future is testing ascending channel support with potential breakdown risk (1,196.75, -1.18%, Chart 2) and the December Dollar Index Future is heading towards downtrend resistance from June (78.53 +0.22%, Chart 3). Cotton is down for the third day in a row after putting in that blow off top (151.95) on 11/10. The March Cotton Future is trading at 134.3, -3.51%. It doubled in 4 months. See charts and news driving the flight from "risk" after the jump.

Thursday, November 11, 2010

Growing Space Focus in Sino-Indian Rivalry - Guest Post (Geopolitics)

Interesting analysis courtesy of Global Intelligence Report (11/11/2010)

Growing Space Focus in Sino-Indian Rivalry

SITUATION: China has directed a $13 million loan to Pakistan toward a joint communications satellite project, while space cooperation between America and India reaches new levels of sophistication.

ANALYSIS: Pakistan's Ambassador to China, Masood Khan, signed a loan agreement with the government-owned Export-Import Bank of China on 9 October to finance the ground control apparatus for a new 'Paksat-1R' communications satellite, to be launched on 14 August 2011. This bilateral effort to ensure technical interchange illustrates space as a growing area of contestation in regional strategic developments.

Cameron Hanover Daily Oil Recap (11/11/2010)

Cameron Hanover Daily Oil Recap (courtesy of www.fmxconnect.com)

Oil prices were mixed on Thursday as traders took a brief time-out from pushing quotes higher after crude oil and gasoline joined heating oil with decisive technical breakouts to the upside. All three major oil contracts are in clear trends higher, with or without help from currencies or equities. Crude oil prices ended the day in fractionally lower territory, along with heating oil, while gasoline prices ended slightly higher on the day. Traders were impressed by early news from China, which showed refinery throughput at a new record high. Trading volume was on the light side on Thursday, with a number of businesses closed for Veterans’ Day.

EEM/SPY Testing 50DMA Support, Goldman Note (EEM, EWH Puts Were Active Yesterday) - Chart

Interesting, there was an out-of-the-money EEM March 2011 put spread yesterday ($46-$41) which appears to be active again today. And there is activity in EEM December 2010 puts today less than open interest (10,000+ contracts moved on both the $46 and $44 puts in the morning). Not sure about the ticks. EWH (Hong Kong ETF) puts were active yesterday as well.

Goldman Sachs told investors in a note to close out long China and EEM/SPX trades. I see that the EEM/SPY ratio (iShares MSCI Emerging Markets Index ETF/S&P 500 Index ETF) is right on the 50 day moving average (0.390) and pierced through October, 2009 support (0.3925). EEM/SPY is currently trading at 0.391.

Jeremy Grantham: Fed Driving S&P to Dangerously Overpriced Levels, Bonds are Worse Than Stocks! (Must See CNBC Interview)

Jeremy Grantham, co-founder of GMO LLC which has $104 billion under management, was on CNBC talking with Maria Bartiromo about the economy, S&P fair value, QE2, commodities, emerging markets and currencies. It was a warning call. Watch the must see interview after the jump. Notable quotes:
"The Fed has spent most of the last 15 to 20 years manipulating the stock market whenever they feel the economy needs a bit of a kick. I think they know very well that what they do has no direct effect on the economy. The only weapon they have is the so called wealth effect"

"What are they going to use as ammunition if they (the Fed) cause another bubble and it breaks, let's say, in a couple of years? Then we might have some real Japanese type experiences"

"We don't like to play games with overpriced assets and that's the world that we're in now. The Fed is driving the S&P, which is overpriced— the Standard & Poor's 500— a broad measure of the U.S. market, is driving it from already substantially overpriced into what I would call dangerously overpriced. This is about the boundary line. We expect on a seven-year horizon one percent only plus inflation from the U.S. market. And now, as you push it up another 20 percent perhaps in the next year, it becomes dangerously overpriced."

Reads: China Inflation +4.4%, Goldman Pulling Funds From Falcone, New Zealand Farm Prices, Ireland Bank CDS, Alan Greenspan on US/China Protectionism, Seth Klarman..

Global PowerLinks for 11/10/2010 (follow me on Twitter @dvolatility, I tweet news links daily)

China’s Inflation Rises at Fastest Pace in Two Years - Bloomberg

Rising food costs boost China's inflation rate to 25-month high - Xinhuanet (China)

China Wants World To Believe Inflation Jumped By 4.4%, In Line With Shadow Expectations, Fastest Fake Price Growth In Two Years - Zero Hedge

Goldman Sachs Said to Pull $120 Million From Falcone Hedge Fund - Bloomberg

Wednesday, November 10, 2010

S&P Future on April Support, EEM Put Trade, CSCO Disappoints - Chart

E-mini S&P December Future (ESZ10) is walking on April support (1,208). It is also testing that steep uptrend from September in a wedge for the third time. Will the recent breakout be confirmed or fail? Watch the chart with a 10-minute delay at INO.com. ESZ10 is currently trading at 1,210.25 -3.75 (-0.31%) tonight.  Cisco ($CSCO) was down 12% in after hours trading after "forecasts fall short of estimates" [Bloomberg.com].

Also, an interesting trade occurred in the iShares MSCI Emerging Markets Index ETF ($EEM). It closed at $48.03 and traders bought a March 2011 46-41 put spread. According to Crimson Mind, investors bought 43,500 March 2011 $46 puts for $2.44 (avg) and sold 43,500 March 2011 $41 puts for $1.08. Andrew Wilkinson, senior market analyst at Interactive Brokers Group, mentioned this as well at Seeking Alpha (21,700 on each side). This insurance (or spec) would make the most money if EEM fell to $41 by March 2011 expiration. Also there were put trades in the Hong Kong ETF (EWH), read at Optionmonster. The S&P hasn't broken down yet, but hedging a potential downside catalyst makes sense.

Risk Management 900 Feet in the Air - Video

I had to embed this video I saw at BusinessInsider.com. Watch kids in Russia walk on steel beams 900 feet in the air.

Video: Riots at Tory HQ on £6,000 Tuition Hike (London, 11/10/2010)

Interesting day today in London. Students invaded the Tory HQ / Millbank Tower to protest against the proposed tuition hike set for 2012. Fees would triple to 9,000 pounds a year. 50,000 people protested on the streets. Tuition hikes are part of the UK's "dramatic" austerity measures or budget cuts [Finanical Times]. Videos courtesy of TelegraphTV and Russia Today.

IEA World Energy Outlook 2010 (11/9/2010)

The International Energy Agency (IEA) released its 2010 World Energy Outlook on 11/9/2010. Find the *Presentation to the press and Executive Summary (PDFs) at worldenergyoutlook.org. IEA also has an archived webcast from the launch in London. Key points from the presentation below each chart (projections out to 2035):

"*The age of cheap oil is over, though policy action could bring lower international prices than would otherwise be the case

*Global energy use grows by 36%, with non-OECD countries – led by China, where demand surges by 75% – accounting for almost all of the increase

*Demand for all types of energy increases in non-OECD countries, while demand for coal & oil declines in the OECD


Ireland 10yr Gov Bond Yields 8.64%, EUR/USD at 50DMA, Ashraf Laidi's Take on BloombergTV

Ireland's 10-Year Government Bond yield hit a new high of 8.64% after clearing house LCH Clearnet upped the margin requirement on Irish Government bonds (read more at WSJ.com). EUR/USD is sitting on 50-day moving average support.

Ashraf Laidi of CMC Markets on BloombergTV said Ireland budget cuts could boost the Euro, but in the long term the affect on GDP could put downside pressure on the Euro against the Canadian Dollar and Swiss Franc. Goldman Sachs thinks an IMF/EFSF bailout would "resolve current market tension and not lead to contagion" (read at Bloomberg.com). Video and charts after the jump.

U.S. vs. China Currency Rap Battle (US Dollar/Chinese Yuan)

US-Sino Currency Rap Battle courtesy of NMA.tv (Next Media Animation). Featuring U.S. President Obama, Treasury Secretary "Timmy-G" (Geithner) and Chinese president Hu Jintao. Things are getting serious.

Home Prices Are Falling Again (Clear Capital/Zillow) 11/9/2010

Home Prices Continue Plunge Across Much of U.S. - read full report at Clear Capital

"National/Four Region Overview: National home prices have changed -5.0% quarter-over-quarter. In fact, looking at national home prices since their mid- August peak, price declines are even more dramatic, changing -6.8%.

It’s Going to Be Another Long, Hard Winter in Housing - read full report at Zillow Real Estate Research

"According to the third quarter Zillow Real Estate Market Reports, home value depreciation began to accelerate again in September, fueled by lower transactional volumes and increased inventory levels. Home values dropped 0.4% from August to September and 4.3% from September 2009 (see Figure 1 below)."

Tuesday, November 9, 2010

Cameron Hanover Daily Oil Recap (11/9/2010)

Cameron Hanover Daily Oil Recap (courtesy of www.fmxconnect.com)

The oil complex was completely mixed on Tuesday, with crude oil prices lower and the front months of both heating oil and gasoline higher. Deferred months in refined products were both higher and lower. Traders wanted to push quotes higher, and they traded on both sides of unchanged during the day, but by the final bell the biggest factor was the US dollar, which advanced through Tuesday’s session, starting at about 7 AM. It continued to rally into the afternoon and early evening, and it was enough to bring selling into the market. Crude oil prices traded up to $87.63 and they tried to finish above $87.15, but the dollar’s strength was just too much.

50% Tariffs on Chinese Imports? Didn't This Fuel the Great Depression?

Alan Tonelson, a fellow at the United States Business and Industry, was on Tech Ticker the other day saying the U.S. needs to put a 50% tariff on all Chinese Imports. Smoot Hawley Tariff Part II? Any thoughts on the trade deficit? Why not focus on the currency peg?

Higher Yields Hurt SPY and GLD But Boost Dollar Crosses - Market Update 11/9/2010

Market technical update by @Dvolatility for 11/9/2010

I'm only looking at equities, Treasury yields, gold and some Dollar crosses in this post. As you can see in the chart below, $SPY, $GLD and $EUR/USD (Euro/Dollar) fell as the 30-year Treasury Bond and 10-year Treasury Note yields rose more than 3%. You don't see it on this chart but the yield on the 10-year note broke above the 50-day moving average and the 30-year bond yield broke above the 200-day moving average. Both major technical levels in my opinion. See this post from earlier with $TNX and $TYX charts.

$SPY sold off at the 61.8% retracement level and broke through the April high. SPY is still above the 50-month moving average 120.58, I'm watching that MA. SPY closed at $121.61. I reported earlier that USD/JPY broke a minor symmetrical triangle and downtrend and could test the major downtrend line and 50DMA. Yields will be interesting to watch. By the way Ireland credits were top wideners on CMA's most active credit default swaps. Chart after the jump.

Shady XLF Black Box Quote Stuffing

See an XLF black box get sent to the ETF pit (courtesy of optionmonstertv). How does all of this stuff work? Related: XLF Sets World Record In Quote Stuffing With 23.3 Quotes Per Millisecond.

USDJPY (Dollar/Yen) Chart Update +0.91% to 81.68 (FXY, UUP)

USD/JPY (Dollar/Yen) broke a few resistance levels. Watch USD fight JPY on the shelf going forward. The 50DMA is at 82.50. The downtrend line is right around the 50DMA but moving lower. USD/JPY took out a minor symmetrical triangle.

Doug Kass: "Cash for Stock Market Gains" Market Has Peaked, Watching Interest Rates (CNBC Video, $TYX, $TNX, $SPX)

Doug Kass of Seabreaze remains skeptical of QE2 and believes the S&P has topped out, but admits he believed it topped out 50-60 points ago. "We had cash for clunkers and now we have cash for stock market gains". Kass said he's also watching Treasury yields and risk premiums.

I see that the 30-year Treasury Bond Yield is testing the 200 day moving average at 4.195% (+1.3%) and the 10-year note yield is above the 50DMA at 2.587% (+0.94%). The S&P is down 0.28% at 1,219.88. Below are charts of $TNX, $TYX, $SPX and the Fast Money video. Kass is at 7:50.

Marc Faber on U.S. Exports, Emerging Market Growth via U.S. Monetary Policy (CNBC 11/9/2010)

Marc Faber (Dr. Doom) was on CNBC's Squawk Box on 11/9/2010. He thinks emerging economies should send Ben Bernanke a thank you card since U.S. monetary policy "fostered industrial production growth in China, employment growth, wage increases, domestic consumption, increased demand for raw materials, that then lifted commodity prices"..... "I think it's a dream to think that the U.S. can double its exports in the manufacturing sector but I think that the U.S. can export more in the agricultural sector and that the revenues from agricultural exports can go up because of higher prices for agricultural commodities". He also thinks a new asset bubble is forming.

Frank Berlage of Multilateral Partners Global Advisory Group mentioned industrial production data: China industrial production is about 49% of GDP, Japan is 24%, Germany is 29% (excluding agricultural products) and U.S. industrial production/GDP is 10%, which is mostly the assembly of foreign components. Watch the CNBC video after the jump.

$UUP (Dollar ETF) and $WTIC (Crude Oil) at Support/Resistance - Charts

$UUP (US Dollar Index Bullish ETF) is testing $22 support for the third time and oil is testing the April high. The actual US Dollar Index is testing support in a multi-year symmetrical triangle. If UUP can't hold triple support it would make fresh new lows. After the jump are charts of $UUP and $WTIC on 11/8/2010 with technical indicators. $WTIC must take out $87 to break the sideways channel. For more information on the oil market read yesterday's Cameron Hanover report. Tonight the US Dollar is falling against the Yen but gaining against the Euro. Watch that USD/JPY downtrend line from September. News: Dollar Falls on New China Rules - WSJ.

John Hussman's Thoughts on S&P Valuation and Effective Duration

Read John Hussman's new weekly market comment titled "Bubble, Crash, Bubble, Crash, Bubble...". 

On valuation.

"Even though the S&P 500 is substantially below its 2007 peak, it is also strenuously overvalued once again"

This part was interesting on effective duration.

"Keep in mind that the effective duration of the S&P 500 is now over 50, which implies two things. First, the sensitivity of stock prices to any rise in yield will be exaggerated here. Every 10 basis points of increase in yield (say, from the current 1.89% to 1.99%) implies a price decline of over 5%. Given that the historical norm of the S&P 500 yield is about twice the present level, it is clear that a significant reversion of expected returns from presently depressed levels would require a massive price adjustment."

He also talked about QE2, monetary policy, employment, market correlations, momentum indicators and market climate. Read the report at HussmanFunds.com (direct link).

Monday, November 8, 2010

Inside Job (Official Trailer) - Movie About the 2008 Financial Crisis

I saw Inside Job today and it was good. Remember the global financial system collapsed 2 years ago? It was produced, written and directed by Charles Ferguson. Get more info at the Inside Job website (Sony Pictures). Hat tip to everyone reminding me to see this. The official trailer is after the jump in HD.

Cameron Hanover Daily Oil Recap (11/8/2010)

Cameron Hanover Daily Oil Recap (courtesy of www.fmxconnect.com)

The oil complex was mixed to higher on Monday, with crude oil and heating oil prices higher and gasoline prices lower. Crude oil prices broke Friday’s high of $87.22 with a surge up to $87.49 before the stronger dollar pressed oil traders to take profits. Crude oil settled over $87.00, but came nine cents shy of settled at $87.15, which is the number on the charts worth watching. It was a new two-year high, but prices just could not hold the day’s highs. Nonetheless, it was a strong close and if and when the dollar weakens again, we would expect to see prices able to sustain one of their next moves higher. Crude is on the doorstep of finishing over $87.15, which would be unequivocally bullish.

Dennis Gartman: Gold is Overbought (Upper Bound of GLD Price Channel Hits 148-154 - Chart)

Dennis Gartman (Gartman Letter) was interviewed at HardAssetsInvestor.com:
"My bet is that we get another washout, which will make the market healthy again. And we will go to even higher levels a year from now. But is gold, in the short term, preposterously, egregiously, exaggeratedly, shockingly, surprisingly over-bought? Oh, you bet it is." [read the full interview at HAI]
I'm looking for TV interviews. Also check out the rising GLD channel from Feburary 2009. The upper-bound of the price channel hits between $148-154 on the chart if strength continues. Watch that uptrend line from August for any failures.

$SPY (S&P ETF) at 61.8% Fibonacci Retracement Level Again, Above 50-Month Moving Average, Pierced April High (Charts)

SPY technical update: The S&P ETF is at the 61.8% retracement level, broke above the 50 month moving average and pierced the April high. Charts after jump.

Michael Burry Warns of Another Fed Failure

Must read from 11/5/2010: Bernanke Will Fail in Bid to Use `Poison as Cure,' Ex-Fund Head Michael Burry Says - Bloomberg.com. Burry ran hedge fund Scion Capital from 2000-2009. He was the one who sold short billions of subprime mortgage CDOs using credit default swaps at his home office in California. He was featured on 60 Minutes in March. He is long gold and farmland. Read the article.

BAL, JJC, GLD, SLV Are Down 38%+ Priced in Netflix Since March 2009 (Cotton, Copper, Gold, Silver), NFLX Price/Book Ratio

Is Netflix (NFLX) the "realest" asset out there? Also look at NFLX's price/book ratio (net asset value) since 2002. WOW.

S&P Priced in the Commodities Index is Down 70% Since 2000 ($SPX:$CCI)

I did a post about this a few days ago but this chart is way better (from Gregor Macdonald via Stockcharts.com). It shows how the value of the S&P 500 since 2000 is down 70% priced in the Reuters-CRB Continuous Commodities Index (CCI). Since the March 2009 low the market has only increased in "nominal" terms not "real" terms (adjusted for commodity inflation). Look how S&P:Commodities ($SPX:$CCI) vs. S&P are diverging. A lower Dollar is pushing up the S&P. However, a lower US Dollar, QE liquidity and global supply constraints are pushing up commodities more than the S&P. $SPX:$CCI is trending towards the March 2009 low (top chart) while $SPX pierced through the April high (bottom chart). It is interesting and people should know about this since higher commodity prices could increase food and energy costs. Fed Governor Kevin Warsh is monitoring this.

Side note: The S&P is at the 61.8% Fibonacci retracement level again

Sunday, November 7, 2010

Fed Governor Kevin Warsh on Commodity Prices, Pass-Through Risk and Future Policy (11/8/2010)

I've been posting a lot about the Federal Reserve recently as quantitative easing II, combined with supply/demand issues around the world, spike commodities and Fed Chairman Ben Bernanke doesn't seem to think it will affect consumer prices (see Bernanke speak to students at Jacksonville University). However, Fed Governor Kevin Warsh addressed the concern in a WSJ op-ed.
"Lower risk-free rates and higher equity prices—if sustained—could strengthen household and business balance sheets, and raise confidence in the strength of the economy. But if the recent weakness in the dollar, run-up in commodity prices, and other forward-looking indicators are sustained and passed along into final prices, the Fed's price stability objective might no longer be a compelling policy rationale. In such a case—even with the unemployment rate still high—we would have cause to consider the path of policy. This is truer still if inflation expectations increase materially." [read full article at WSJ.com]
Hat tip Zero Hedge

David Rosenberg on S&P's QE2 Bet, Thomas Lee Sees 1,300 on S&P By Year End (Video)

David Rosenberg, Chief Economist at Gluskin Sheff, said on BloombergTV that the stock market is betting that QE2 (quantitative easing) will reflate the economy, prevent wage deflation, lower the unemployment rate and betting on Bush tax cut extensions. Rosenberg still sees structural headwinds during this "balance sheet recession" with "chronic excess capacity". So... all clear for Thomas Lee's S&P 1,300 target by year end? Fed Asset Purchases Could Spark 10% Rally in S&P 500, JPMorgan's Lee Says (Bloomberg.com). If so, JP Morgan's Chief U.S. Equity Strategist has made unbelievable calls during the past two years. See the index of blog posts from June 2009. The David Rosenberg clip is at Bloomberg.com or after the jump. Are there any bears left?