According to this 'consensus' opinion as polled by Bloomberg says that in 2007, Zinc & Nickel will DECLINE in price by 30%-38%! See
http://tickersense.typepad.com/ticker_sense/2006/12/2007_expected_c.html

Is anyone else puzzled and surprised by the spike in retail sales? Indications of a strong consumer or a nation hellbent on spending itself into bankruptcy?

I also noted that mortgage activity continues to show an big increase in refi's. Is this prudent home owners moving out of existing toxic ARMs or consumers extracting even more equity from their homes?

I also see an upturn in new home applications. Again, is this really the result of incrased home buying, or the hidden effect of new lending guidelines that have been pressing the sub-prime lending industry? In other words, are people having to file more applications in order to get approved?

In any case, the "housing market has bottomed" media campaign continues apace.

Re Homebuilders:

The Wall Street Journal had an interesting piece about the Toll Brothers. The insights of Robert Toll exlpain why the company is creating so much buzz, why the stock recovered so strongly from its lows and why it's a Top Cara 100, IMHO.

Toll confirms BTW what is more and more evident: The quality of products made in China even for the domestic market is far better than the American stuff.

Excerpts from the WSJ:

«WSJ: Why is Toll Brothers, a suburban home builder, making significant developments in New York City?

Mr. Toll: We are following our people. We have been a builder to the baby boom since we began. First that took us into the move-up luxury-home business, then into golf-course resort communities. It has also taken us into the active-adult communities. The city is a combination resort community, but the resort is New York City -- or Chicago or L.A. or Miami.

WSJ: What does this shift say about baby boomers?

Mr. Toll: It says we are not as our parents were. The baby boomer always wanted more. We are more hip-hop and happening than our parents. We want the sophistication and joy of culture and music that comes with city dwelling -- and doesn't come with sitting in the big home in the burbs watching the day go by while puttering, painting, reading, writing, making flies for fishing, customizing your own golf clubs, stringing your own tennis racket, tending your tropical fish.

It was a rarity 20 years ago to find hedge-fund Johnny making a decision to stay in the city. Home buyers went up to Westchester and out to New Jersey -- back to wherever they came from. It was a rarity to see kids in the city. Now it's not.

What do kids do in the burbs? You ride your bike until you can get your car. You've done the three movies at the plex. Now what? Having had five kids, I'm not sure that it's not more dangerous in the burbs than it is in the city because you are riding your bike in traffic. Or you are driving your car, which is even worse. You go down to the [convenience store] and smoke cigarettes, and the parents sit up with their arms wrapped around their knees, hoping that you come home.

WSJ: Just 10 or 15 years ago, everyone thought cities were dying, and no one wanted to live in them.

Mr. Toll: Absolutely right. But [affluent home buyers] weren't there. We hadn't demanded the services, and we weren't there with the willingness to pay for the services that make that city what it is today. People have come in and insisted, 'I don't want the bum on the sidewalk.' Now, there is no committee meeting. The cops go out and chase him off.

WSJ: Is it easier to build in the suburbs versus the city?

Mr. Toll: It's easier in the city. The approval process is more professional in the city. The experts that you deal with are pretty much doing the assigned job, as opposed to the secret unassigned job to stop the growth, stop sprawl [in the suburbs].

WSJ: How long will it take for this housing slowdown to work itself out?

Mr. Toll: We are bouncing along the bottom. I would expect the inventory overhang, which is what is killing the confidence level, to be absorbed during the first several months of the next buying season. If that inventory is eaten up, and I expect it will be, then I think you will see an alarming rate of change in the supply-demand equation in house pricing. I think what we are in right now is an artificial inversion. To a large extent, it all depends on our perception of ourselves. It has a lot to do with politics.

I think that the country went into a funk after Katrina when we looked like Bangladesh in a storm -- bodies floating upside down, the government seemingly unable to do anything about it. That was the turning point from those glorious days of yesterday when we said we can't go wrong buying this house with 5% down and selling it for $100,000 more in six months. I think with Katrina, we lost confidence in ourselves and said maybe we should take our chips off the table and sell now, and everybody went to the window at the same time.

WSJ: But the stock market didn't suffer as a result of Katrina or the Iraq war, so what is different about homes?

Mr. Toll: I don't know. It's a different kind of investment. Historically it's been [someone's] largest investment.

WSJ: How have American home buying habits changed in the time that you've been building and selling homes.

Mr. Toll: Much larger homes are being purchased for much more money. There was a reticence in the '60s and '70s to display wealth. Today, no one thinks it's a negative. No one says, 'Should I be a little bit embarrassed about buying what the custom-home builders are building?' I think that has to do with an acceptance in society of separation of the very wealthy and the not-so-wealthy. As a country, we used to think, 'If we all get better, we all get better,' as opposed to 'Let's give it to the top 1%, and it will trickle down.' The me-first aspect of society represents a change in America.

WSJ: Given the emerging sense of wealth and status in China, would a luxury, brand-name home builder like Toll do well there?

Mr. Toll: Yes, it would. They are 100 times more brand conscious than we are, to the point of silliness. The Chinese have to buy the brand.

Their kitchens, by the way, are better looking than ours. Don't think 'made in China' is like we used to think. The kitchen cabinets are phenomenal -- the hardware, the doors, the floors. 'Where did you get this floor,' says I. Says he back to me: 'Oh, we import this from Germany.' 'Really, you go to Germany to get floors?' 'It's a white oak from Germany.'

The Chinese sales people are coming to us and trying to sell us, 'Don't buy Kohler. Don't buy GE. We can get this stuff made in China and ship it to you for half the price.' Now I know the nail is in the coffin for that [made-in-China] industry, because they aren't selling it to themselves.«

RBC today raised its medium term price targets for Yamana, Goldcorp, Pan American Silver, and AEM due to increased base metal prices. In the case of AEM's LaRonde mine cash costs for gold production are projected in 2007 to be negative $837/oz and are projected to stay negative until 2010 due to zinc by-product production!

Spitzer Sues UBS
Liz Moyer, 12.12.06, 6:58 PM ET

http://tinyurl.com/yxt9c5

On any given trading day anyone can be seduced by the "dark sides" (i.e greed, ethical lapses). If the stories are true, UBS' conduct is morally reprehensible, particularly concerning their behavior toward their 91-year old client.

"In a statement Tuesday, UBS said it "categorically denies that the program was part of a scheme to disadvantage clients, and intends to defend itself vigorously in this matter."

Finance-speak translated into: "we are guilty as hell!"

HD: For some reason this just doesn't sound or read right. Bill and all, what is your take on this. I guess I'd borrow $ on a sure thing but how can you tell with the HB situation like it is?

By Kellie Geressy
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Home Depot Inc. (HD) is selling $5 billion of investment-grade bonds Wednesday, and the deal is seeing solid demand from investors, despite the company's intended use of the proceeds.

The home improvement retailer, the latest company to tap the credit markets to fund a stock repurchase program, will use the cash from its sale to buy back up to $4 billion of shares.

The deal is said to be several times oversubscribed, according to syndicate sources familiar with the deal, and pricing is expected later Wednesday via joint lead managers Lehman Brothers Inc. and Merrill Lynch & Co.

Bondholders typically frown on share repurchase programs since they do little to improve cash flow, and can pressure the company's credit standing when debt is used to finance them.

The home improvement retailer plans to sell its debt in three parts: a $3 billion of 30-year notes, $1.25 billion of seven-year notes and $750 million of three-year floating-rate notes.

UBS and fee-based brokerage accounts. Only the tip of the iceberg:

http://www.investopedia.com/articles/05/feebasedregs.asp

Re: "Only the tip of the iceberg"

Great segue Tinman. Your linked article and others on the same subject should be required reading for any investor or trader.

A portion follows...
"According to the regulators, investors in fee-based brokerage accounts are paying for trading, not advice. From a regulatory standpoint, products that do not come coupled with advice receive less scrutiny. Less regulation would seem like a good thing from an investment advisor's point of view, but it doesn't quite work out that way in practice. With regulators viewing commission-free trading as the primary component of the product, and advice as a minor issue for which advisors are not being paid, advisors no longer have any incentive to invest the time and effort required to help clients explore their financial needs, create an appropriate asset allocation strategy, design a portfolio, or provide ongoing oversight. As a result, most investors may be better off putting their assets into a discount brokerage account and paying for each trade as it is made - often at a cost of less than $10 per trade, versus up to 1% of assets in a fee-based brokerage account"

Congress Demands Explanation From HP CEO

He exercised $1.37 million worth of options just before the boardroom spying scandal became public, two congressmen said Wednesday.

http://www.forbes.com/technology/feeds/ap/2006/12/13/ap3252875.html

No position.