Moin from Germany,

i think it is only a matter of days until the flight to real safety is reaching Gold....

This is from 2003 via Barrons/FT

‘Real money’ [U.S. insurance companies, pension funds, etc.] accounts had stopped purchasing mezzanine tranches of U.S. Subprime debt in late 2003 and [Wall Street] needed a mechanism that could enable them to ‘mark up’ these loans, package them opaquely, and EXPORT THE NEWLY PACKAGED RISK TO UNWITTING BUYERS IN ASIA AND CENTRAL EUROPE!!!!

He told me with a straight face that these CDOs were the only way to get rid of the riskiest tranches of subprime debt.

Good morning Bill!

You said...."We know the value of HB&B is mostly goodwill."

Bill, we are one good Wall Street "scandal" (or it's general discovery) away from a full blown crisis of confidence.

Wll street IS laying an egg.

When will our Ivan Boesky moment happen? Scandal on top of scam is usually what brings these 'street booms to an end. How will the American people feel when they realize that the mortage business will be saved but not those with mortgages? That the bathwater will be saved but the baby lost down the drain? At the end of all of this will be the American worker/consumer, a toothless tiger, a fighter whose hands are tied, his back against the ropes.

Here's a link to an investor relations update off Etrade:

E*TRADE FINANCIAL Corporation Issues Supplemental Portfolio Disclosure

http://tinyurl.com/3335x8

From WSJ
Tonight, PBS will air "Gold Futures," a film by Hungary's Tibor Kocsis. The film focuses on residents in Romania's Rosia Montana, a rural Transylvanian town, who are divided over the benefits of a proposed gold mine. It also features Gabriel Resources, the Canadian mining company trying to convince them to relocate so it can dig for a huge gold deposit estimated at 14.6 million ounces, worth almost $10 billion. PBS describes the film as a "David-and-Goliath story."

Anyone know why GFI continues to trade off? I can find a UBS change of rating, but for some reason, on Etrade, I can't see what the change was.

shark_attack,

Re: "Wall street IS laying an egg."

The egg was laid by Richard Nixon in 1971, as discussed by Ron Paul: http://tinyurl.com/2w8eux

And the global economy has been ramping down through a disastrous equation ever since:

CAPITALISM X FIAT = CAPITALISN'T

Bill,

Here is what I find very disturbing. How can the FED cut rates further if they do not want to encourage more debt-driven consumption? OK, they cut discount rates instead to help the banks out of their liquidity problem, but that is a far cry from supporting unearned consumption by already tapped consumers.

The Fed states that risks to growth have increased appreciably and that they will mitigate disruptions in financial markets, but that does NOT mean they will let consumers borrow more (by lowering the fed funds rate).

Lastly, Duetche Bank is now visiting the US discount window, remember that the collateral they are dropping off at the discount window in exchange for cash might be mortgage loans that they don't want anymore. Starting in 2002 Germany open end funds were allowed to increase their investments in US property and I doubt they want them anymore.

Writers block:
It's the GFI premkt sale. 2nd and i wrote about this several times. I buy these premkt sales.
They got an upgrade yesterday.

I must say, I'm having difficulty wrapping my head around Bill's discourse. I'm not sure why I would be looking at any financials right yet if we have impending doom or the possibility of impending doom.

I am thinking a couple of things:
1. A large financial failure will spook the herd.
Big time!
2. If this threatens general psychology, then the fed will cut before the next meeting to protect the big money center banks.

3. Gold is the stable currency in financial crisis.

I'm afraid I'm missing something from Bill's lead.

johojo, thanks for the link to Ron Paul. I really like what I've heard from him, and might vote for him, if I didn't think that doing so might produce another Nader effect, i.e., take votes away from the Democratic candidate, and get another Dubbya clone elected.

Craig, thanks. I've seen you write about them, but since I didn't own them in the past, I guess I didn't pay attention. Just picked up some recently. Long, GFI.

writersblock,

I appreciate the dilemma, but it seems to me that the reason we keep getting Dubbya clones from the 'major' parties is that people keeping 'gaming the system' and don't vote for whom they really prefer. JMHO

UNG now at 37.68 premarket. Out of my character, but picking up some GFI premarket.

writersblock, johojo. . . reference people's mind set on voting, interesting article in New Republic (just emailed to me this a.m.) on psychology of voters. You may have to register, but no cost.

http://tinyurl.com/23jehv

Its because yields on corporate bonds are going through the roof as their prices drop,(much like asset backed securities) somewhat the reverse of short term treasuries.

Yield on short term treasuries drop because of flight to quality:

http://stockcharts.com/h-sc/ui?c=$irx

Borrowing short and lending long isn't possible any more, though this is the way monetization occured towards the end of the bull. This creates a problem when you are dependant on credit expansion for profit.

An interesting jaunt through 'anything with short in the title.'

You have: Short term treasuries, Short term corporates and short funds, all behaving according to the changes in the market:

http://stockcharts.com/symsearch?SHORT

Agreed, johojo - but what might work better would be for voters to throw enough money behind the person whom they really prefer ahead of time, so that the candidate has enough money to gain enough support to be truly viable in the general election.

I've thought about this "Nader" effect a lot lately.

I'm getting to the point where voting for the lesser of evils is pissing me off....and it's clearly not working.

I'm ready to not vote for either major party until they extract their heads from their arses.
The parties at this point ARE the problem.

Party OVER citizenship is ruining our country.
A case of sub-group thinking where Dems or Republicans suddenly become "the base", those people benefit, and the country suffers.
IMO, either serve all the people or get the hell out of town.

In case anyone is in the market for a home, I got this in my email this morning.

http://tinyurl.com/3yoyvq

Be sure to get the Combo Loan!

The analyst at BoA downgraded HOV and TOL (and SPF) today.

The gap selling in GFI is concerning. Seems overdone if it is merely a downgrade. More bad news on the labor front from S.A. pending?

Writersblock, it's more likely Paul would take more votes from the Republican candidate. imho

writersblock, Craig, and others,

I'll quote my own posting of June 19, 2007 regarding an alternative approach to 'breaking up the major party lock' on our elections:

"""
Bill and others seeking change in the political fortunes of our home nations,

A movement is gathering across the Internet to find a way for citizens to more directly influence the course of elections and the leaders we (should) choose to guide our fortunes toward more welcome goals: Unity08. The intent of this movement is to highlight those Democratic and Republican presidential candidates whose motives and agendas augur well for our commonweal.

From the Unity08 web site:

"Unity08 is a diverse group of Americans who believe that neither of today’s parties reflects the aspirations, concerns or will of the majority of Americans. Both parties have polarized and alienated voters. Both are unduly influenced by single-issue groups. Both are excessively dominated by money.

"There is a better way…

"Unity08 is committed to presenting a third presidential ticket and platform – one that addresses the issues and challenges of the 21st Century – to the American voters in 2008.

"We will not waste time pointing fingers. Instead, we will focus on how America can find common ground on critical issues – to give the overlooked moderate majority a voice and a choice in 2008. "

Please check out Unity08 at http://tinyurl.com/38terp

Become an online convention delegate. Spread the word . . . .

Posted by: johojo [TypeKey Profile Page] at June 19, 2007 9:15 AM
"""

Oh, and CFC trading higher in pre-market on Buffet rumor reported in WSJ.

Cameco said it invested $120M of its $332-million investment portfolio in asset-backed commercial paper, including $7.5-million in the Apsley Trust/Metcalf and Mansfield, and $5.5-million in Planet Trust/Coventree. Both matured on Aug. 17, but Cameco has been unable to get paid.

adding to UNG if it in fact drops to a 37 handle, which is likely given the 3% drop in NG futures...

I'm totally perplexed on the UBS "upgrade" of GFI. They raise their price target, but maintain their sell rating. What the heck?? Maybe that's just their way of saying sell into strength. The chart does seem to show a downtrend, but also that it is under accumulation. Long GFI.

BoA also cut targets on PHM, KBH, MDC and LEN. It's probably too obvious that builders will report a sharp decrease in orders next quarter due to the crisis in mortgage lending.

On a side note, I saw a report today that rates on jumbo loans have spiked recently, and MarketWatch reports that foreclosures are up 9% from last month and 93% from last year.

It is no fun whatsoever watching this thing unfold.

Pretty safe 2nd,
UNG's 52 wk low is 37.34

"Because this crisis taps so deeply into the newly devised structures of finance, anyone who says the worst is definitely over is either a fool or someone with a position to protect."

The above quote is from this week's Economist. I adore Rick Santelli on CNBC--he appears to be a pretty straight shooter. I note that there are a parade of TH's on CNBC talking about the worst being over. First, there is no way that any could know that with any credibility. I would want an interview to ask, "What FACTS do you have that give you confidence in your opinion." Second, many of the TH's said that subprime was contained and clearly didn't have a clue of the original scope of the issue.

Now, I'm cognizant that one could use that argument to say, "How do you know the worst is not over?". Fair question. I would point to (1) lack of floaters (which to be honest may serve as a dual purpose to supporting the other side of the argument that "it ain't so bad"; and (2) the huge injections that have been required by all of the central banks. Somebody's bacon is frying to a crisp if not burned already.

MU was upgraded by AG Edwards too.

Uh-oh...I see Hank is out telling everyone the system is okay. That isn't good.

Cheerleading is a sign the team is having issues.

RE: GFI - tomorrow's the ex-dividend day, but just saw a TON of 1000 share orders go by. What's up here? Related? Long GFI.

"The question I have for the Cara Community today is can we participate this week in a search for large financial institutions that are possible bankruptcy candidates? Can we name and shame some of these companies under the HB&B umbrella to come out with news releases of their financial stability? Of the top-tier and mid-tier firms, who do you think might fail first, and why?"

My personal and professional reaction to this is one of caution--one needs more contemporary information than any one of us, regardless of our expertise, has access to.

Leisa,
The burden of proof must be on those saying the situation is safe. This isn't a court where they are innocent until proven guilty.

This is capital markets where we have accounting that is supposed to reveal the truth or in this case, perhaps something entirely different.

I agree the lesser of two evils is, typically, an unelectable equivocator and compromiser of ideals.

Also, Am I the only one here who thinks that Hillary and Obama are two of the most un-electable presidential candidates since Adalai Stevenson? To my simple way of thinking, Obama is an inexperienced young black guy in what is still a deeply racist country, and Hillary is, to me, and always will be, the shrill wife of a former president. I'm sorry, but I don't think either of them has a snowball's chance in hell against a male Republican, and I'm not a hater, I'm just being real.

Anyone here read E.E. Schattschneider's "Semi-Sovereign People?"

It's a historical look at the two party system's divide-and-conquor strategy, and is required reading during an election year.

Have a profitable day!

Oh, and CFC trading higher in pre-market on Buffet rumor reported in WSJ.

I went to yahoo summary, headlines, on this and the link timed at 9:15 is gone

http://tinyurl.com/249qjq

RE: GFI

Mike Prinsloo to Leave Gold Fields Business Leadership Academy
Tuesday August 21, 9:05 am ET

JOHANNESBURG, South Africa, August 21 /PRNewswire-FirstCall/ -- Gold Fields Limited ("Gold Fields") (NYSE: GFI, JSE: GFI, DIFX: GFI) regrets to announce that Mike Prinsloo has resigned as Chief Executive Officer of the Gold Fields Business Leadership Academy. Mike will be joining Banro Corporation as its new Chief Executive Officer with effect from 17 September 2007.

Ian Cockerill thanked Mike for his service to Gold Fields, first as Head of its South African Operations and more recently as the CEO of the Gold Fields Business Leadership Academy: "Mike was instrumental in setting up and launching the Academy as the premier education service provider to the South African Mining Industry. We value the contribution that he has made to Gold Fields and we wish him well in his challenging new position."

Leisa, maybe we can't get all the info, but we can get some. And it seems to me that any action is better than no action, and might, indeed, produce results. Obviously ETrade is feeling some pressure. Here's a letter to current customers off the home page, clearly filled with the "everything is fine" message, but you can see more details in the link to the investor relations page I posted earlier this morning. Here's the letter. Sorry for the long post, but the page opens up to one of those pages that doesn't seem to have a url.

For Further Details
Investor Relations page
Press Releases
Customer Service
1-800-ETRADE-1

AN IMPORTANT MESSAGE TO E*TRADE CUSTOMERS

Dear E*TRADE FINANCIAL customer
August 17, 2007

The last few days have been unlike any that the market has seen in many years. And if you have been watching the financial news, you are undoubtedly hearing rumors circulating about many financial services companies, including E*TRADE FINANCIAL.

I'm here to separate fact from fiction and provide you with reliable — and accountable — information about the strength of E*TRADE's business. I want to assure you that your accounts and your assets are safe with us, and that we put the utmost value on our relationship with you.
E*TRADE is a financially healthy organization. We have disclosed in great detail our limited exposure to credit risk in sub-prime mortgages — less than one fifth of one percent of E*TRADE's overall mortgage portfolio. The vast majority of financial analysts who monitor our business applauded our proactive efforts to add transparency, and are indicating that market concerns about our portfolio are exaggerated.
E*TRADE has ample liquidity to manage its way through the current credit environment. For our customers, this means we are well capitalized, have strong cash flow, high cash reserves and significant excess borrowing capacity. In addition, E*TRADE Securities customers are protected by SIPC coverage, while E*TRADE Bank customers benefit from FDIC coverage, with up to three times the amount of FDIC coverage for sweep deposit accounts.
E*TRADE's business fundamentals are firmly on track. The second quarter ended June 30, 2007 was one of the best quarters in the company's history in terms of revenue, new trading/investing account activity, net new customers and deposit growth. Our July metrics show continued strength and record customer engagement.
E*TRADE continues to adhere to our strict discipline with respect to risk mitigation. For as long as we've run the balance sheet, we've focused on prime and super-prime loans. Our approach is conservative, as reflected in the fact that 97% of the first mortgages we hold have high FICO scores and combined loan-to-value ratios below 80%.

Currently, volatility in the mortgage industry is impacting the entire financial services industry. The E*TRADE franchise is strong and growing, producing new and innovative products and services to best serve you. We will continue to work diligently to prove to you every day that we are deserving of your business.

Thank you for your continued patronage.

Jarrett Lilien
President, COO and Director, E*TRADE FINANCIAL

kaimu-

what i'm reading is that for non-conforming loans "The limit is 50 percent higher - $625,500- in Hawaii, Alaska, Guam and the Virgin Islands because years ago, those outlying areas were considered high cost."

http://tinyurl.com/2es3w7

as you have resided in both the bay area and hawaii, how would you compare the cost of living?

Faz, is it possible the herd misread that GFI announcement to mean the CEO was leaving?

Nothing surprises me anymore.

Those pre-market buyers are looking pretty sharp now.

Writer:
Feeling better about GFI? A little breathing room.

LOL!
Let's not speak too soon!

Craig, yes - and I did pick up some before the bell, thanks. :-)

Here's the earlier info from ETrade about loan exposure, in case you missed the link:

E*TRADE FINANCIAL Corporation Issues Supplemental Portfolio Disclosure

NEW YORK, Aug 16, 2007 (BUSINESS WIRE) --

E*TRADE FINANCIAL Corporation (NASDAQ: ETFC) released supplemental disclosures today related to the composition and funding sources for its balance sheet. The Company provided a presentation containing additional information to its June 30, 2007 quarterly results, including expanded transparency on the credit quality of its mortgage and securities portfolios. This presentation can be found at https://investor.etrade.com. In addition, the Company stated that it has seen no material changes to date with respect to the availability, pricing or margin on its wholesale funding sources, including repurchase agreements. Management maintains that it does not believe that the current market capitalization accurately reflects the financial strength and performance of the business.

Selected highlights from the presentation include:

-- The Company's $15.7 billion first lien mortgage portfolio is supported by high FICO scores, low Loan-to-Value ratios (LTV) and private mortgage insurance

-- All first lien mortgage loans with an 80% or higher LTV are protected by private mortgage insurance

-- $9.2 billion, or 74%, of its home equity portfolio is to borrowers with FICO scores of 700 and higher

-- $12.6 billion, or 99%, of mortgage-backed securities are rated AAA

-- 97% of its Asset-backed Securities portfolio is rated investment grade

-- Consistent and growing base of retail customer cash

-- $10 billion in excess wholesale borrowing capacity from the Federal Home Loan Bank

In my opinion, data such as these from ETrade, are only as good as the "ratings" on their loans, and that, I think, appears to be the crux of the problem.

Sorry it's back, no conspiracy

As my disclosure: I bought more GFI premkt. as well. Also MU.

UNG: bought 1/3 position to lower basis. Missed that 37.11 though....

RE: SOUND MONEY VS FIAT CURRENCY

Guys, a question...wouldn't going from what we have now to a sound money/gold and silver based monetary system like bringing a hardcore millionaire junkie to a detox center and telling him, not asking him to kick a 20 bag-a-day heroin habit?

As you withdrew fiat money from the system, the kind of liquidity crisis we're having now would be a perpetual feature, and think about it; we're having this crisis with fake, monopoly money. Imagine if we only played the game with the real stuff? It would be GAME OVER for most of the American economy, no doubt. Am I wrong? Let me know.

Yes and no. Paying off credit cards (debt) definitely crimps the free wheeling lifestyle, but it leads to longer term fiscal security.

We wouldn't have liquidity problems because the system couldn't leverage it with air like they do now.

War would be interesting as you would have to pay for it as you go. Same for social programs.

Chris, just imagine yourself on a cash budget.
Would that be bad if you made enough cash and all your debt was paid? It might be painful to get there but once there it would be Kaimu Utopia!

Bill I know you didn’t include Fidelity on your list of bankruptcy candidates but I called by investment house anyway to find out more about the MMF (Money Market Fund) that my so called ‘cash’ is automatically deposited in when I sell equities or income from producing investments is received.

The fund is labeled FDRXX and called Fidelity Cash Reserves.

My call this morning revealed the following about this $98 Billion MMF:

Asset backed instruments that contain SUBPRIME=1.7%
of the FDRXX total.

CDO’s=0.380% of the total.

That was the extent of the contamination per the investment broker I spoke with at 9:08AM today.

RE: "Flight to safety", and the next bubble market: The NYTimes is moving to a new building, so they're selling off furniture from the old one. A conference table that was predicted to go for $7,000 went for $4800, but the dealer who bought it plans to polish it up and sell it for $30,000.

Sound money arguments are what passes for fiat nowadays. I would also venture to hazard that there isn't a single sound money pundit out there willing to hand in their offending currency for a utopian ideal.

"We also ought to be discussing news reports of credit ring problems and failures of hedge funds because market risk is one thing, and capital risk quite another."

Then again, its possible that ad hoc cartels of financial concerns were able to arbitrage returns by expanding the money supply through credit tied in to foreign exchange. (or, at least long/short bets on currency crosses.)

http://www.ml-implode.com

With possible failures of major financial institutions, which one is a good one to go with to stash in treasury only money markets? I don't feel good with all mine in Vanguard. Thanks.

Just heard a news item on Bloomberg, characterized as a "rumor," that some Bear funds would file Ch. 11. Did a little digging, but was only able to find this about them filing for Ch. 15, which appears to be an offshore version of Ch. 11, or maybe a way to avoid Ch. 11, or maybe to avoid US claims. The article goes on to explain Ch. 15, but maybe someone who knows something more about these kinds of filings can weigh in.

http://www.mondaq.com/article.asp?articleid=51290\

Here's an excerpt:

Bracewell & Giuliani LLP
United States: Bear Stearns Funds Chapter 15
14 August 2007
Article by Evan D. Flaschen, Kurt A. Mayr and Robert Carey
The latest chapter in the unfolding drama related to the collapse of two Bear Stearns hedge funds has taken the form of provisional liquidation proceedings in the Cayman Islands, followed by Chapter 15 ancillary filings in New York by the Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd. and the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund Ltd. (the "Bear Funds'). The Chapter 15 filings seek injunctions to prevent US investors/creditors from attaching the Bear Funds' assets in the United States. This update is intended to provide some basic background regarding Chapter 15 in the hedge fund context and some of the considerations presented by the Cayman and US filings.

Chapter 15 Overview

In 2005, Congress added Chapter 15 to the Bankruptcy Code to replace the procedure formerly embodied under § 304 of the Bankruptcy Code. Chapter 15 is a specialized cross-border insolvency procedure based on a model law promulgated by the United Nations Commission on International Trade Law. Chapter 15 is designed, among other things, to promote cooperation by US courts with insolvency proceedings commenced in other countries. The typical reason for filing a Chapter 15 petition is to protect the US-based assets of a foreign debtor.

As a follow up to my earlier posting @10:25AM one could conclude that -1.7% & -0.38% = -2.08% so if the worst happened the NAV on your FDRXX could be $0.9792 when you wake up in the morning instead of $1.00.….say it ain’t so.

C.Note

http://tinyurl.com/3cdbwf

U.S. money market funds run by Bank of America Corp., Credit Suisse Group, Fidelity Investments and Morgan Stanley held more than $6 billion of CDOs with subprime debt in June, according to fund managers and filings with the U.S. Securities and Exchange Commission. Money market funds with total assets of $300 billion have invested in subprime debt this year

Novice:
The best I could do at Fidelity is FGRXX which is made up of 80% USGOV stuff the rest is high quality assest paying 4.88% the past 7-days. Check it out and do your own DD.

I'm not sleeping as well as I use to :(

So it looks like Bear Stearns will be the one tied to the whipping post.

Back into the realm of Gold, consider the following. Looking at the decline of short term treasuries yields in the last few days, and anticipating the long term lowering of yields would place Gold in a favourable light compared to short term treasuries. That Gold could be competitive with treasuries in not really a topic that people would readily accept.

Cnote: not that this means anything but I am hearing that Fidelity is committed to the $1 NAV and will infuse it's own capital if ever at risk. I will know more tomorrow as their is a high level Fidelity conference call that is going to be happening. I'll post if I get any crumbs.

Novice
For a long time the only MMF I really trusted was Capital Preservation, run by Benham (now part of American Century, so I don't know if it still operates to its original mandate of 100% treasuries).
C.Note - I switched my Fido MMF to their US Treasury MMF FDLXX simply because I could see the possibility of some slime in FDRXX. That said, I think (hope) that Fido is a well run organisation that is more on top of all this than I am.

Conflict of interest (same link as 10:44AM post above)

"Credit rating companies don't just rate CDOs; they play an active role in assembling them, says Charles Calomiris, the Henry Kaufman professor of financial institutions at Columbia University in New York. Fitch, Moody's and S&P participate in every level of packaging a CDO, says Calomiris, who has worked as a consultant for UBS AG, Bank of America and Citigroup."

In this case the bastards are trying to use CH 15 to protect the assets in Cayman from U.S. citizen investors through U.S. courts as Cayman has favorable legal environment. They would likely not have to pay back investors in Cayman courts. Now I know these are hedge funds and these folks aren't exactly poor, but if they can screw the rich then they can kill me and bury the body in broad daylight without fear.

It does give us an idea of the scale of the problem and who will really pay in the end. If wealthy hedge fund investors are so easily wiped away, the small investor and tax payer (and thus consumer) are next to slaughter.

Seamus:

That seems to be within the range I was writing about for Fidelity, if you split your amount into 3rds.

2.08% of FDRXX's total of $98Billion=$2,038 Billion !!!!!!!!!

So we should be looking for variations of greater than 2%. It seems that people are awfully fast to withdraw their capital on such a small variation?

C.Note . . .old Senator Dirksen saying . . . "a billion here, a billion there, pretty soon you're talking about real money"

Craig . . . these are the same guys who only pay 15% income tax while everyone else (doctors, lawyers, school teachers, firemen, cops, etc.) pays more (% wise) and they complain when an occasional politician talks about leveling the playing field!

Sorry for the lengthy post, there is no hyperlink to the story. Here is a company in the resource sector I've been following with some curiousity for some time:

Pinetree Content to Weather Current Market Storm

August 21, 2007 10:34am ET

By Brian Truscott

Of DOW JONES NEWSWIRES

VANCOUVER (Dow Jones)--Pinetree Capital Ltd. (PNP.T) has been hit more than most companies by the recent credit crunch, in part because it invests in the very companies that investors have been avoiding - small high-risk, high-reward resource stocks.

"Stocks are right now just trying to find a balance; what's happened is that there's been a total shake-up of confidence in the general liquidity markets, which has spilled over to the commodity markets," Pinetree Chairman and Chief Executive Sheldon Inwentash told Dow Jones Newswires.

As one analyst put it: "The lower liquidity offered by small-cap stocks has sellers in the current market hitting the bid and stocks (have been) gapping down."

Although Pinetree has seen some retracement this week, shares are trading hands at just C$4.98, well down from a C$10.90 close a month ago. The shares fell as low as C$3.95 late last week.

And while market volatility goes some way towards explaining this recent weakness, Pinetree's recently announced second-quarter results didn't help.

The company focused heavily on net asset value per-share growth during the three-month period ending June 30, 2007, but the market chose to look at Pinetree's unrealized losses as well as its C$159 million due-to-broker balance, which is margin borrowings collateralized by the company's various market positions. And that generally means margin calls when markets start to slip.

"Yes, there have been some margin calls, but not many and we've covered them all," Inwentash said. "We're continuing to do business. We've rationalized and liquidated some of our positions, a lot of which we bought very well. But we feel comfortable right now and continue to be positive on key areas that we would like to invest in - uranium, oil and gas as well as base and precious metals."

He said hiccups in the market are nothing new.

"We'll weather it; we've been through it before," he said. "The big view is that the emerging countries are growing and consuming all the basic raw materials; the world faces the same supply/demand gaps going forward, although there may be some slowing down in certain economies. But over time there's going to be a need for more and more deposits and discoveries and that's a big focus of where we invest our money."

While precious metals and uranium have certainly been on Pinetree's radar over the past few years, Inwentash said early-stage oil and gas plays - especially in relatively under-explored regions such as South America - are increasingly in favor. For example, he likes Petrolifera Petroleum Ltd. (PDP.T), which has made a number of light oil discoveries in Argentina since 2005.

Company website: http://www.pinetreecapital.com

-Brian Truscott, Dow Jones Newswires; 604-669-1595; brian.truscott@dowjones.com

(END) Dow Jones Newswires

08-21-07 1034ET

Copyright (c) 2007 Dow Jones & Company, Inc.

Re earlier post on GFI. I just sold it out of my Wall Street Survivor portfolio (challenge game) earlier this morning. I'm ranked 28 for the daily rankings but way high on overall ranking. I reached the no. 1 daily ranking already, but how I'll never know. lol. I'm playing a lot of penny stocks I wouldn't touch in my real life portfolio as I see that's what the top players are doing. I am a novice.

cyderman: Am century Cap Preservation is still 100% US Treasuries.

Its a small wonder that funds can be 100% treasuries with the yield curve steepening, since short term treasuries would ostensibly be up in price while the yields drop.

From a source at Schwab

"MMs only invested in Tier 1 assets, NO sub prime"

Schwab Bank makes NO sub prime or ALT-A loans. Nada, zip, zilch.

BNN just reported rumours that the FED would cut rates today. Just rumours, but a little gold won't hurt.

Seamus:
And they sic their "news" organizations, think tanks and political assasins to attack anyone or thing that may support them paying ther fair share. See Kudlow and all of FOX "news" and "financial" shows. They make up new language like "death tax" and then convince the 95% who will never pay it that it will somehow apply to them or limit them 'when they are wealthy', like that will happen.

I can hardly wait for the changes to the fair and balanced Wall Street Journal. If you thought they leaned before, just imagine to possibilities! The mind boggles.

FranSix,
I was wondering whether Pinetree (PNP) would be divesting some of their investments due to the huge drop in the PNP market cap. Now my question has been answered. "We've rationalized and liquidated some of our positions, a lot of which we bought very well." Disclosure: I hold shares in three companies in which I know that Pinetree has also invested (VAL,CNU,WHY).

geckojb:

I’m going to chance it and stay with FDRXX into Sept. and will be all eyes for your crumbs from the conference call.

Seamus:

I’m not use to these quick responses and see that in my haste my posting above at 10:56AM is a tad wrong since I only used three (3) instead of four (4) firms you listed to divide the $6 billion by but as you can see, $2.038 billion for Fidelity‘s part would by far give them more exposure in some ways and still upset me to know I might have to multiply what I thought was the amount of cash in my account by .9792 instead of 1.0 !!!!!!!!!!!

Fred, I think Pinetree will probably see a lower share price after they divest most of their base metals and uraniums and have little else left but precious metals.

For those looking for a pure treasury money market fund, Federated offers one ...Federated #125 symbol UTIXX. You can view details at the Federated website.

On the debate whether the current chaos is behind us, total mortgage resets for Jan-June 2007 were around $130 billion. In the next 12 months almost $900 billion are due. IMO....It has just begun rather than being behind us.

Just out of curiosity, did anyone day-trade KRY yesterday based on the radio broadcast regarding the Las Cristinas mine?

astral, agree with you that it has just begun. Here's a link to a post off Roger Nausbaum's site, that I came to from seekingalpha. In it, he references a post from Gary Kaultbaum's site, containing a table with mortgage resets, in Billions, for the next year and a half. I don't know the original source. astral, is this where you got your numbers? Here's the link:

http://tinyurl.com/22pnhh

Just food for thought on a trade. In Bill's list of companies that had been oversold he mention Symantec (SYMC) at 16-17 range. I decided to play with call options with this stock. Instead of playing the stock I bought call options, since they give you the most leveraged gains (as bill suggested). A look at the option market revealed a nice call option the Oct 20 or (SYQJD.X). I liked this option because it has high volume, and a low call price. Yesterday, the option was price at 0.35, so I put in a bid of 0.35 with a limit buy order. The bid was taken. Today the option price is .10 higher, and I place a limit sell order for .45 on part of the position. This order was taken. The following position I have in the the option is the gain I made. I have a limit buy on this remaining amount for .60.
Thought I would share a strategy I used with the help of Bill's advice.
Thanks, Bill

Here is a chart of mortgage resets, original source being Credit Suisse:
http://bigpicture.typepad.com/comments/2007/05/some_more_housi.html

It is only just beginning to start. Watch consumer spending.

Seamus,

My 'foods' Yahoo portfolio has 28 names, they are ALL green today. I cashed in some SDA, but just to raise cash for some gold.

moab, great chart, thanks for the link. A picture really is worth a thousand Prime mortgages. I guess the thing to remember in thinking about the resets is that not all of them will go into default, and, one hopes, not even a large percentage. I guess it's that unknown figure that is so worrisome. Of course, as you point out, it's the impact of those resets on spending that will be equally, if not more, important.

I know some others on this board follow IBKR. With all of the options talk lately, I thought I'd chime in. IBKR has been steadying lately and while it fell quite a ways from the IPO price, it actually completed its bottoming out process prior to worst part of the market correction the last two weeks. IBKR has slowly been trending up and I believe it will test its 200 DMA at 25.88 fairly soon if current conditions prevail. In addition, IBKR is currently enjoying a high options premium environment which could serve as a catalyst.

I am interested in the IBKR Sept 30 dollar call. Currently (as of a few minutes ago) the ask was at $0.10 so risk premium is very low. If IBKR can test its 200 DMA on decent volume, I think we might see some of the premium return quickly. Considering the relative infancy of this stock, I am surprised premiums are not higher.

ALOHA !!

TOP 25 US BANKS WITH LARGEST DERIVATIVES EXPOSURE

Last update: 3/31/2007


# ... NAME ......DERIVATIVES($bil)

1 JPMorgan Chase $70,817,300,000
2 Citibank $30,070,000,000
3 Bank of America $28,535,900,000
4 HSBC Bank $5,649,200,000
5 Wachovia Bank $5,454,900,000
6 Bank Of New York $959,700,000
7 Wells Fargo Bank $879,800,000
8 State Street Bank & Trust Co. $588,200,000
9 PNC Bank National $244,900,000
10 Sun Trust Bank $204,200,000
11 Mellon Bank $133,300,000
12 National City Bank $133,200,000
13 Northern Trust Company $112,000,000
14 KeyBank $96,900,000
15 LaSalle Bank National $76,600,000
16 U.S. Bank $74,800,000
17 Merrill Lynch Bank $72,400,000
18 Branch Banking & Trust Co. $43,700,000
19 Regions Bank $40,900,000
20 Fifth Third Bank $35,400,000
21 First Tennessee Bank $31,600,000
22 Deutsche Bank Trust Co. $26,900,000
23 Union Bank of California $24,200,000
24 Capital One Bank $23,500,000
25 Lehman Brothers Bank $23,500,000

I would not have a lot of cash in any of these banks going forward. Isn't it amazing that these HB&B bought up all the smaller independent banks so that now the US public has hardly any choice but to put all their funds into HB&B, whether investing or saving...

Bank Of Hawaii is not on this list. Look to smaller banks ...

UNG -- Continuing to accumulate on weakness (-12% yesterday, -3% today); new 6-month low of 38.11 reached @ 9:32 this morning. Seems to be support now @ 37.26. There will be more hurricanes this season, and some of them will be worrisome.

Fazeli,

I bought KRY yesterday for the first time in a month, not because of a radio broadcast, but because KRY was breaking up on an hourly chart. I searched news and found nothing about a radio broadcast. Do you know what the broadcast was about?

I do know it sounds like the permit could actually happen soon.

I am worried about the resets since many of the people who took out these loans were not credit-worthy and did not understand the terms. These resets will significantly add to the monthly payment for these people. Consumer spending will take a hit, delinquencies will rise, layoffs will rise, and the cycle will feed on itself. And if the bank forgives any part of the loan, taxes must be paid on the amount forgiven as it is treated as income. New bankruptcy law make it very hard to walk away from debts. Credit card spending has unexpectedly jumped as people try to make ends meet on more credit - see Target's results. Many people will be financially crushed. At least that is my fear.

Debt is an albatross around your neck. Current generations need to learn this lesson just like their great-grandparents did.

On KRY, the news from this broadcast station is that the permit has been forwarded to Chavez for final approval because of allegations of impropriety by opposition politicians. I'm still holding my position.

Re: KRY

The radio broadcast was last Wednesday. You can listen to it at:

http://www.vheadline.com/audio/070815-vhnh.mp3

It sounded promising but didn't do much to move the price. The movement yesterday was mainly caused by KRY's press release saying they have no idea why the stock is tanking. They quote the broadcast as well. Kinda funny if you ask me.

Re: mortgage resets and housing bust.

I think the most important thing to keep in mind is that this housing boom was unprecedented in US history, so trying to predict how steep or protracted the downturn is is indeed impossible. Because it was a classic financial bubble the possibilities of a more rapid and violent downturn than previous RE busts (which took 5-7 yrs to run their course), followed by government intervention and bailouts, cannot be discounted.

Some other things to keep in mind are 1) a massive portion of those subprime mortgage resets peaking in a couple months were outright fraud where the borrower has no intention of repaying the loan and will default immediately when they realize they cannot flip the place for a profit and 2) many of those ARM's peaking next year were subprime in nature even though they are not labeled as such as the people cannot afford them, echoing moab above.

I do think we won't know the nadir of the housing bust is approaching until one or more major builders goes bankrupt. We have already seen some smaller, regional builders go under.

UNG - Clearly defined support is @ 37.26 and resistance at 37.97; Jesse Livermore would now sit and wait for the line of least resistance to show itself.

Aurelian reported some more outstanding drill holes that expand the known mineralization and the stock barely moves, although a large number of shares have traded.

43-101 reserve calculation in a few weeks.

KRY baby no more ..... I'm buying GRZ !

They already HAVE the bloody permit (and trade way below their post-permit price) and will get a bump if KRY gets theirs. Plus, they're near the bottom of their downward regression line channel. I'm bidding to buy at 4.17, stop at 4.08 - If I'm stopped out for the Nth time on VZ gold prospectors, no biggie ... KRY no more, SMILE with GRZ!

MOAB - I think drill results don't move ARU price because Pres. Correa is beginning his "bolivarian revolution" which threatens to tax 80% of mining profits !

Isn'that why ARU.TO is down 24% since the 7/19 peak ! -

Aurelian moved on the last drill results six weeks ago.

The new mining minister is a moderate. The political risk in Ecuador is overstated, as with Venezuela, in my opinion.

GRZ is a decent buy here, but they are still negotiating for financing to build the mine, which will likely dilute shareholders a significant, unknown amount.

Bill,

Thanks for posting the Bernstein articles. They are some of the smartest people on the street and it's good a broader perspective on things that they really aren't that bad.

GRZ is a totally different risk/reward equation. In my opinion, the more speculative of the two (KRY) is the better bet, emphasis on the "bet" part. GRZ has all of the country risk with less of the permit-pop left in the cake. Though perhaps the action in GRZ post-permit should give potential KRY purchasers pause, fact is, I do expect this stock to double from here upon receipt. The low risk part is, Chavez has already declared himself fearless leader of all that lives and breathes into foreseeable perpetuity. The fact is, this wasn't really news. But now the negatives are all on the table, and this thing's ready to rally to $3.50 with or without a permit.

The whole arguement rests on the quality of asset backed commercial paper. Really, what's in those papers, and are they about to be downgraded?

One point all of us should understand: subprime is not the whole problem. Alt-A mortgages are defaulting as well, sometimes at higher rates than subprime.

Capital One's Greenpoint Mortgage, which they are closing nine months after acquiring, does not do subprime mortgages. They are, however, the innovator behind many of the creative Alt-A mortgages, like no-doc, 100% loans. These are the 'liar loans'.

I see a lot of companies claiming they have no exposure to subprime to reassure investors. MBIA claims they have 2% exposure but wouldn't take questions on a conference call. These companies may be trying to hide Alt-A exposure.

The Alliance research that Bill kindly posted talks about subprime and prime, but not Alt-A. Perhaps they are lumping Alt-A under subprime? Or are they ignoring it?

Bought some Cara-100 Wamart today (half position) and and closed out my puts on MFX (Mortgage Finance Index).

Believe that we will move up from here, but downside is limited as we have already taken a big hit and now stablizing (unless some really bad news comes out). The problem with Put Options here is that they are quite expensive due to high recent volatility and you need big moves in stocks to make them pay off.

Received responses from PMI Gold (PMV) and KRY. PMV uses short term GICs with a major Canadian bank, KRY has its cash with CIBC on a 30 day roll over basis invested in GE Capital Corp commercial paper rated A1.

bb wrote: . . . "problem with Put Options here is that they are quite expensive" . . .

That's why it's better to write the puts than buy them in this market if you feel confident. Bill mentioned this in the past. Of course, I wouldn't write them on MFX, but I did on BSC. Still holding (up 59%)and thinking to hold to Sept. expiration.

Call me crazy but now that the financial markets have momentarily stabilized, I think there may be a short covering wave in the ratings agencies MHP (S&P)and MCO (Moody's).

It seems the first instinct from the markets when a downturn occurs is to point fingers. Naturally, it is the rating agencies that are shouldering the blame for the collapse of the CDO markets, just as they took blame when Enron hit and so on and so forth. Every few years some discussion originates in the senate to review ratings agencies and the reviews always end with no real detriment to the agencies. And then the process repeats itself. Will this time be any different?

Excuse my simplistic approach here - opinions and insight are appreciated.

SiO2 ... was at the gymn earlier, but see your reference to Agriculture/Food market. Some definite strength. Only weakness in the area on my list are some of the farm machinery companies and a Russian diary.

SDA was good to both of us. (exited @47.60 a few weeks back and also sold my IRA position in the high 44 area) We'll have to watch the next earnings period. I think it's susceptible to unwinding by the hedgies since Brazil is a "crowded" trade, although fundamentals look good.

re: Fidelity money market funds - two of them (FGRXX, FDLXX) say that they "normally" invest 80% in gov and the other 20 in "other stuff"

For instance, FGRXX: "Normally investing at least 80% of assets in U.S. Government securities and repurchase agreements for those securities. Potentially entering into reverse repurchase agreements. Investing in compliance with industry-standard requirements for money market funds for the quality, maturity, and diversification of investments. Investing in U.S. Government Securities issued by entities that are chartered or sponsored by Congress but whose securities are neither issued nor guaranteed by the U.S. Treasury."

If you look at the quarterly holdings, 89% of their repurchase agreements are collateralized by US debt obligations.

Then, look at FDRXX: If you wade through their quarterly holdings, you find that 23.2% of their holdings are repurchase agreements, BUT the majority are collateralized by Mortgage Loan Obligations. I don't have the time, ability, or frankly, the faith to find out what's good and what's not.

That's enough for me - I swapped out of FDRXX and into FGRXX - I have a large chunk of change in there because I sold my house and have been waiting this housing bust out. I can't afford to screw around on a teacher's salary and my wife is currently at home with my son.

Safety first.

Good idea on selling the Puts Seamus. Did you go naked on BSC or sell a spread?

From crane data...fwiw

8/20/07

Fidelity Will Be "​Proactive in Keeping Our Money Market Funds Safe". Fidelity Investments released a statement to its money fund investors addressing recent market concerns. The company says, "​Despite the recent volatility we'​ve experienced in the credit markets, we are very comfortable with all our holdings in the money market funds.... Importantly, we have been -- and will continue to be -- proactive in keeping our money market funds safe and protecting the $​1.​00 net asset value (​NAV), which has always been our objective when it comes to managing money market funds." It adds, "​Fidelity'​s taxable money market funds do not own any subprime mortgage securities.... Given the rigors of SEC requirements for money market funds and our own process for evaluating credit risk, we do not feel that the turbulence in the market for subprime mortgage debt is placing any of our money market fund holdings at risk."

Evidence favoring the existence of the Plunge Protection Team (August 2005 Sprott report), courtesy of Todd Harrison:

http://tinyurl.com/ajggt

bb . . . I'm naked, Sept. strike 95. If it gets put to me, cost will be @90. Bill had listed it (as well as 40 others) as a S/T opportunity last week (Wed?) at a price of 100.

Of course these are the markets and things can change quickly, but I like the position at this time.

2nd Ave,

It's more than evidence of their existence (the PPT) but more darkly, it points to a criminal conspiracy.

I used to think the PPT was a cabal of Ray Ban wearing uber-traders and master manipulators who worked in darkened rooms, using black-budget tax sloff (Kaimu's money) to play with the market. The suggestion that this racketeering occurs at some of the biggest HBB trading desks, sadly, rings true.

jasper, thanks for that note, but i am wondering why i never received it or why it is not on the front page of their site? If I were them I would be going out of my way to reassure people their funds were OK, especially after being singled out in the financial media. Furthermore, the fact that they have no investments in subprime does not comfort me. What about Alt-A, Jumbo, and other mortgage related "financial innovations?" Much of FDRXX is also commercial paper. Backed by what?

Furthermore, the 5 and 10 year avg yields for FDRXX and FGRXX are the same. FDRXX currently yields 5.02 while FGRXX yields 4.88. the difference in expense ratios is .44 to .37. so, overall for 7bps now, and virtually nothing in the future (if the past is any indication), you get to worry about your MONEY MARKET FUND.

I realize it is alot of wasted type for a stupid money market fund, but it just goes to show you that NOTHING is safe right now.

Although breadth has improved volume has dropped off significantly as traders await information. My belief is that the information is dichotomous hence the reluctance to move the averages.

Model says that the market lacks leadership and distribution continues underneath.

The market wants a rate cut and it wants it RIGHT NOW so anything less will weigh on the averages. Technically, the averages sit by support. Fundamentally, we have months and months of housing pain ahead of us and it will take more than 4 days to work through the problems in the credit markets. That's it in a nutshell.

The edginess has worn off and bad news is being treated less harshly. That's what Friday's little gift from the Fed has done.

Still a dangerous market but for now we are in muted bounce mode as we await more information.

We take it one day at a time.

M-thanks

Bank of America to invest $2 bln In Countrywide: WSJ

CFC up 17% at 25.