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:

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

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.

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.

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).

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]