Bill Cara: Saturday’s Commentary & Chat, 09/22/2007 8:21 AM ET

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September 22, 2007

Saturday’s Commentary & Chat, 09/22/2007 8:21 AM ET

I have been reading Janet Lowe’s new book, Warren Buffett Speaks… Wit and Wisdom from the World’s Greatest Investor (Wiley 2007). It is an excellent book comprised of what I call the Buffett Rules “About Life, Friends, Family, Work, Running a Business, and Investing.”

In one of the rules, Buffett tells the reader to invest the way an expert plays hockey. “Like Wayne Gretzky says, go where the puck is going not where it is.”

This is a principle used by investors of businesses and traders of securities, and it will be 100 years from now because principles endure. It is also relevant today because inflation in the 4Q07 and 1H08 will be a problem, I think.

John Mauldin has this to say about the Fed and inflation in today’s Thoughts from the Frontline Weekly Newsletter (http://frontlinethoughts.com):

” there may be some concerns that the CPI (Consumer Price Index) number could come under pressure from the housing component. Given that home prices are falling, that may be considered odd by many. But CPI does not measure home prices. It measures something called owner's equivalent rent. And even as house prices rose by 93% in real terms (per Bob Shiller) in the last decade run-up, rent in real terms did not go up all that much, so the cost of a new home was not reflected in the CPI.

Now, we may have the opposite problem. As more and more people cannot get a mortgage coupled with a very precipitous rise in foreclosures, we are seeing more people who need to rent. Rental property availability in many markets is quite tight, which means that rent prices are increasing. If you go to the Bureau of Labor Statistics and look at the housing rent data, it is not too hard to think that the housing component of CPI could easily rise by more than 4% in the fourth quarter given the current trend.

Since the housing component is about 30% of the total CPI, a 4% inflation in housing could be significant. And oil is over $80 and rising. The dollar is falling, meaning that import prices are going to rise. And should we mention that food costs a lot more than this time last year?

Given that the Fed has two mandates, stable prices and full employment, is the Fed abandoning its inflation mandate? Is Bernanke, who argued in academia for explicit inflation targeting, no longer worried about inflation? Is he willing to accept the possibility of 3% inflation? Is inflation getting ready to come back, a la the 1970s? Isn't that what the rise of gold is telling us? And aren't TIPS suggesting the same since the rate cut (a long term 2.64% inflation)?”

Mauldin goes on to argue that “the Fed is concerned about other problems, and specifically heading off a recession.” If that’s the reason why the FOMC moved to cut the Fed Rate and the Discount Rate by -50 basis points to 4.75 pct this week, so be it. That’s the Fed’s job. Our job as traders of prices is to figure that short-term the rate cut(s) would (i) spur a rally, which it did, (ii) only happen when the Fed is worried about the stability of financial markets, which means we keep our finger closer to the Sell button, and (iii) we look forward to what will become the other side of the coin that the FOMC flipped us this week because, surely, there will be another shoe to drop.

So, Mauldin put on his Wayne Gretzky equipment (a la Warren Buffett) and saw the broad picture taking shape, and it spells “inflation”.

About inflation, Buffett’s Rule is (from the new book), “Recognize the Enemy”.

He is quoted by Janet Lowe, as follows, “The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislature. The inflation tax has a fantastic ability to simply consume capital. It makes no difference to a widow with her savings in a 5% passbook account whether she pays 100% income tax on her interest income during a period of zero inflation or pays no income taxes during years of 5% inflation. Either way, she is ‘taxed’ in a manner that leaves her no real income whatsoever. Any money she spends comes right out of capital. She would find outrageous a 120% income tax but doesn't seem to notice that 5% inflation is the economic equivalent.”

I have read from two sources this morning about the deflationary aspect of house prices. Twaddle. Chasing house prices so high the rent from those houses paid a financial return of 2 pct at a time T-Bills were paying 5 pct is only an exercise in bad judgement, as I see it.

Quoting Mauldin today, “(At the recent Fed sponsored conference at Jackson Hole Wyoming) Dr. Robert Shiller of Yale (of Irrational Exuberance fame) said housing prices could fall as much as 50% in some areas given how home prices have diverged relative to rents… Gary Shilling suggests a 25% drop. Dr. Roubini thinks 15-20%. The total housing market value in the US is $20 trillion. Knock of $4 trillion, and you have a serious drop in the wealth of homeowners. For many, that completely wipes out equity built up over the years.”

That is not my definition of deflation; it is simply a reversion to the mean, just like the 2000-2002 Bear market was not deflation.

Now what could become deflation, and certainly will become the cause of recession if one should occur (and I think it will), is the impact on consumers of higher rents, lower USD, higher commodity prices (including food, gasoline and energy), and higher interest rates needed to combat future inflation brought on by the sea change to accommodative central bank policy, not only at the Fed but around the world.

With everybody, including government, with their hands in the pockets of the consumer, they realize it’s a case of getting to the end of the month a dollar short (which is price inflation) or demanding a higher wage (which is wage inflation).

Traders are likely to start selling a couple months before the real bad news hits. During periods of falling house prices in previous decades, equity markets were able to rally because traders saw that real estate investors reached a point where they accepted their losses and resigned themselves to the fact that over the long run the prices would move higher. But, equity markets fell whenever individuals and corporations ran into tight credit and consumers’ disposable incomes for discretionary purchases fell. That leads to slower earnings growth and even falling corporate incomes, and corporate insolvencies.

I think traders are starting to see that happen now, and so will be looking for more short-term help from central bankers, knowing that such help only delays the onset of inflation, and also makes it worse when it comes.

So the bottom line is that traders today ought to be thinking about these economic and market dynamics and looking to sell into the strength of rallies caused by rate cuts.

Obviously, I don’t have all the answers, but I do know that the more we share; the more we learn. Your thoughts would be appreciated.

Table 1: Cara ETF List

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

XLB 41.57 -0.06 -0.14% 5.05% 7.22% 7.97% 20.11% 1.37% 8.71% 33.45%

XLE 75.70 0.25 0.33% 4.08% 7.74% 11.82% 33.79% 7.53% 28.87% 46.85%

SMH 38.58 0.29 0.76% 3.88% 2.04% 3.63% 14.92% -0.69% 11.50% 15.37%

IYZ 33.85 0.21 0.62% 3.74% 4.06% 3.14% 14.13% -0.38% 8.77% 22.07%

XLI 40.63 0.02 0.05% 2.76% 4.96% 4.55% 15.33% 3.17% 12.61% 24.82%

XLF 34.60 -0.04 -0.12% 2.16% 4.85% 0.44% -6.28% -6.49% -4.89% 1.23%

XLU 40.32 -0.27 -0.67% 1.56% 3.33% 2.28% 9.51% 2.18% 1.56% 20.04%

IYH 70.73 0.22 0.31% 1.55% 3.17% 3.82% 6.42% 0.44% 4.66% 7.97%

XLP 27.66 -0.12 -0.43% 1.02% 3.44% 2.90% 5.25% 1.69% 3.98% 8.64%

XLY 37.10 -0.12 -0.32% 0.95% 3.26% 1.84% -3.69% -6.43% -4.26% 7.85%

Table 2: Senior oil & gas equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

CEO 154.82 6.38 4.30% 16.71% 26.77% 34.63% 64.23% 32.38% 86.40% 88.69%

PBR 73.10 2.47 3.50% 8.93% 13.97% 27.42% 46.70% 18.67% 56.67% 89.87%

STO 34.62 0.20 0.58% 8.66% 14.45% 25.43% 34.76% 15.98% 33.26% 44.25%

IMO 50.14 1.01 2.06% 5.56% 11.82% 18.25% 40.61% 7.23% 38.89% 50.16%

CVX 94.84 0.67 0.71% 4.62% 8.20% 10.95% 33.63% 14.47% 32.94% 52.84%

TOT 81.44 -0.59 -0.72% 4.50% 8.15% 12.36% 14.75% 2.63% 20.99% 26.32%

XOM 92.31 0.22 0.24% 4.11% 7.65% 10.22% 24.56% 9.50% 26.05% 42.50%

ECA 62.61 0.19 0.30% 1.41% 6.10% 6.57% 38.09% -4.80% 29.01% 38.52%

SU 95.92 1.72 1.83% -0.42% 5.43% 11.86% 29.78% 6.00% 34.04% 39.83%

Table 3: Senior metals and steel equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

TCK 48.02 -0.10 -0.21% 12.07% 18.13% 13.82% -30.66% 6.31% -28.72% -20.03%

TS 51.85 0.94 1.85% 12.06% 14.76% 10.93% 6.86% 6.89% 17.10% 43.83%

RIO 30.45 0.60 2.01% 11.74% -39.92% -32.36% 5.66% -33.82% -17.95% 50.15%

MT 76.11 2.67 3.64% 11.52% 18.96% 27.70% 86.54% 14.78% 43.36% 125.64%

PKX 182.01 2.98 1.66% 10.74% 20.65% 31.80% 129.15% 45.90% 75.58% 189.00%

BHP 72.53 1.19 1.67% 9.99% 13.01% 18.98% 86.60% 20.10% 53.63% 93.98%

RTP 328.59 5.09 1.57% 9.95% 11.48% 25.61% 60.99% 6.48% 46.73% 77.13%

GGB 25.00 0.07 0.28% 7.94% 6.20% 10.67% 52.25% -2.04% 39.12% 91.86%

AA 37.40 0.12 0.32% 5.41% 7.26% 4.56% 27.51% -7.29% 10.49% 35.16%

NUE 59.50 1.34 2.30% 4.26% 10.45% 15.47% 9.17% -4.43% -9.16% 24.82%

Table 4: Senior capital goods makers and transportation

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

ABB 25.58 0.50 1.99% 7.48% 10.35% 10.98% 43.55% 14.20% 45.34% 92.91%

CAT 78.16 0.79 1.02% 6.83% 6.43% 3.98% 27.80% -4.06% 18.05% 21.10%

ERJ 44.05 0.78 1.80% 5.36% -0.68% 7.26% 8.02% -12.37% -3.93% 10.32%

UTX 79.43 0.70 0.89% 4.32% 7.64% 8.36% 26.46% 10.40% 20.02% 26.28%

HON 58.69 0.52 0.89% 3.99% 7.27% 5.05% 30.13% 4.10% 23.04% 44.77%

BA 102.59 1.34 1.32% 3.26% 8.17% 6.05% 15.05% 5.55% 12.98% 34.79%

MMM 91.68 0.24 0.26% 2.99% 3.10% 3.30% 17.15% 4.89% 19.22% 25.40%

GE 41.25 0.01 0.02% 2.23% 6.45% 5.44% 8.64% 6.31% 16.26% 19.77%

FDX 104.10 -0.35 -0.34% -4.65% -3.80% -5.63% -5.17% -6.15% -6.21% -1.79%

Table 5: Senior consumer discretionary equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

CCL 49.21 0.68 1.40% 10.48% 10.04% 9.02% -3.42% 1.82% 3.38% 9.97%

JCP 66.48 0.05 0.08% 3.52% 2.17% 2.99% -14.83% -9.60% -18.36% -1.35%

EBAY 39.00 0.86 2.25% 3.15% 10.64% 14.03% 29.27% 25.28% 21.27% 49.54%

DIS 34.60 0.56 1.65% 3.10% 3.01% 4.34% 1.17% 1.20% -1.62% 12.67%

TM 115.06 -0.24 -0.21% 1.66% 1.55% -0.22% -14.96% -7.94% -13.83% 6.51%

BC 22.37 0.39 1.77% 1.64% -3.66% -11.69% -29.92% -34.01% -30.44% -28.26%

WHR 92.21 -0.79 -0.85% 1.11% -0.60% -4.90% 8.92% -19.66% 4.46% 5.95%

NKE 57.26 -1.06 -1.82% 0.05% 4.68% 5.98% 17.26% 6.87% 5.22% 38.88%

SBUX 27.47 -0.02 -0.07% -0.62% 1.14% -0.18% -22.07% 4.61% -14.87% -19.23%

Table 6: Senior consumer staples equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

ABV 72.46 1.22 1.71% 5.06% 10.22% 12.03% 47.58% 3.16% 33.69% 70.09%

WFMI 45.03 0.04 0.09% 3.80% 4.41% 3.90% -0.99% 17.42% 1.81% -24.98%

DEO 86.73 0.80 0.93% 3.16% 1.26% 6.07% 9.05% 2.99% 10.44% 20.54%

PEP 71.44 0.41 0.58% 2.70% 5.09% 5.20% 13.90% 8.44% 11.31% 10.57%

PG 69.39 0.41 0.59% 2.33% 5.99% 6.69% 7.51% 12.14% 10.21% 12.39%

MO 68.54 -0.08 -0.12% 2.25% 1.71% -0.13% 5.58% -0.06% 6.07% 11.47%

WMT 44.23 -0.09 -0.20% 2.10% 4.34% 2.46% -6.98% -8.60% -7.41% -8.73%

BUD 50.57 -0.17 -0.34% 0.78% 1.46% 5.35% 2.74% -4.76% -0.37% 6.15%

WAG 45.41 0.06 0.13% 0.29% 2.85% 1.34% -1.43% 1.25% -3.53% -1.88%

KO 56.55 0.24 0.43% 0.27% 3.59% 4.76% 16.41% 8.56% 17.18% 27.94%

Table 7: Senior healthcare equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

JNJ 65.12 0.33 0.51% 3.04% 5.58% 4.85% -1.93% 4.85% 6.37% 1.39%

BMY 29.00 0.46 1.61% 2.18% 4.28% 0.00% 9.93% -9.43% 4.66% 17.36%

AET 52.34 0.06 0.11% 1.67% 4.18% 5.93% 22.06% 6.02% 14.88% 35.46%

GSK 54.23 0.59 1.10% 1.54% 2.19% 5.14% 0.78% 3.79% -3.59% 0.43%

NVS 55.10 -0.56 -1.01% 1.40% 3.18% 4.83% -5.23% -0.11% -4.72% -5.02%

PFE 24.59 0.07 0.29% 1.24% 1.40% -0.12% -6.47% -5.13% -4.87% -12.83%

DNA 79.38 -0.17 -0.21% 0.49% 0.37% 8.27% -2.96% 4.49% -6.50% 1.04%

UNH 49.91 0.10 0.20% 0.00% 1.46% 2.65% -5.06% -3.59% -9.30% -0.76%

BMET 45.89 -0.06 -0.13% -0.04% 0.07% 0.42% 10.66% 0.81% 7.52% 39.61%

AMGN 55.42 0.11 0.20% -1.60% 8.88% 10.29% -18.98% -3.23% -8.55% -23.04%

Table 8: Senior financial company equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

GS 209.98 6.45 3.17% 10.17% 17.32% 18.30% 4.61% -7.46% -0.46% 25.62%

LEH 62.70 0.39 0.63% 5.38% 18.41% 7.77% -20.26% -20.87% -15.50% -11.90%

UBS 54.05 0.08 0.15% 4.20% 3.76% 2.95% -11.96% -12.19% -10.56% -8.17%

JPM 47.13 0.17 0.36% 3.49% 8.30% 3.20% -1.96% -5.44% -3.91% 0.68%

DB 129.28 0.08 0.06% 3.34% 4.27% 4.31% -4.48% -13.65% -2.89% 8.41%

CS 66.39 -0.73 -1.09% 3.07% 2.52% 0.29% -5.31% -9.71% -10.09% 0.00%

HBC 92.56 0.91 0.99% 2.95% 3.98% 2.68% -0.44% -0.90% 5.24% 1.79%

C 47.51 0.31 0.66% 1.87% 4.46% -1.74% -14.01% -11.46% -8.69% -4.50%

MER 74.73 -0.57 -0.76% 0.11% 2.12% -1.53% -20.17% -14.40% -12.49% -4.01%

MS 64.44 -0.19 -0.29% -2.53% 3.10% 0.20% -21.05% -26.18% -20.77% -10.05%

Table 9: Senior technology equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

ORCL 21.98 0.93 4.44% 9.49% 9.00% 13.45% 25.50% 11.66% 20.94% 21.54%

CTSH 75.87 2.46 3.35% 5.27% 6.75% 1.77% -2.43% -0.82% -18.42% 3.41%

SNDK 53.56 0.22 0.41% 4.43% 1.19% 0.83% 28.38% 10.34% 23.18% -7.16%

INTC 25.87 0.06 0.23% 3.77% 1.57% 6.77% 27.13% 6.50% 33.76% 34.60%

QCOM 40.83 0.29 0.72% 3.55% 7.76% 7.84% 9.00% -6.27% -6.63% 6.11%

ADSK 48.72 -0.59 -1.20% 2.44% 7.91% 8.17% 20.12% 3.29% 22.75% 33.37%

CSCO 32.30 0.09 0.28% 2.34% 2.47% 6.71% 16.44% 18.23% 20.57% 40.50%

SAP 58.64 0.61 1.05% 2.00% 5.92% 12.17% 10.23% 14.87% 26.49% 19.62%

INFY 46.62 -0.40 -0.85% -1.25% -2.31% 1.37% -16.48% -9.98% -13.79% -0.38%

ADBE 41.95 -0.85 -1.99% -3.36% -2.35% 3.33% 5.09% 1.01% -3.12% 12.17%

Table 10: Yahoo Finance U.S. Treasury Debt, Municipal and Corporate Bond Yields

US Treasury Bonds
Maturity Yield Yesterday Last Week Last Month

3 Month 3.62 3.66 3.84 3.45

6 Month 3.92 3.95 4.04 3.85

2 Year 4.02 4.10 4.04 4.17

3 Year 4.09 4.17 4.05 4.21

5 Year 4.29 4.36 4.17 4.37

10 Year 4.62 4.70 4.46 4.65

30 Year 4.88 4.96 4.72 4.96

Municipal Bonds
Maturity Yield Yesterday Last Week Last Month

2yr AA 3.40 3.36 3.42 3.61

2yr AAA 3.48 3.47 3.48 3.61

2yr A 3.46 3.45 3.49 3.75

5yr AAA 3.53 3.48 3.51 3.71

5yr AA 3.54 3.52 3.47 3.76

5yr A 3.75 3.70 3.74 3.93

10yr AAA 3.78 3.77 3.74 4.07

10yr AA 3.76 3.74 3.69 4.07

10yr A 3.91 3.90 3.87 4.30

20yr AAA 4.48 4.31 4.24 4.65

20yr AA .5U 4.87 4.68 4.98

20yr A .2 4.60 4.71 4.76

Corporate Bonds
Maturity Yield Yesterday Last Week Last Month

2yr AA 4.85 4.89 4.83 4.83

2yr A 5.08 5.04 5.04 4.90

5yr AAA 5.10 5.17 5.04 5.10

5yr AA 5.18 5.32 5.26 5.32

5yr A 5.28 5.38 5.27 5.31

10yr AAA 5.42 5.42 5.27 5.64

10yr AA 5.84 6.00 5.85 5.83

10yr A 5.89 5.98 5.81 5.83

20yr AAA 6.03 6.05 6.03 6.23

20yr AA 5.97 5.99 6.20 6.34

20yr A 6.36 6.39 6.15 6.37

Table 11: Interest-sensitive securities

Sorted by 1-Week Price Performance.
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

FRE 60.35 0.46 0.77% 5.19% 1.75% -5.76% -11.11% -3.78% -3.76% -6.07%

FNM 62.72 0.20 0.32% 2.35% 0.32% -7.94% 4.78% -6.85% 9.15% 17.26%

CFC 19.61 0.05 0.26% 0.98% 7.69% -10.94% -53.43% -48.29% -46.93% -44.13%

SHY 81.18 0.20 0.25% 0.16% -0.02% 0.26% 1.42% 1.60% 0.84% 1.12%

AGG 99.71 0.29 0.29% -0.19% -0.49% 0.41% -0.20% 1.90% -1.02% -0.29%

TIP 101.60 0.33 0.33% -0.59% -0.62% 0.94% 2.39% 3.60% 0.23% 0.84%

IEF 83.43 0.42 0.51% -1.03% -1.72% 0.13% 0.91% 4.01% -0.30% 0.51%

TLT 87.89 0.74 0.85% -2.25% -2.67% 0.48% -1.32% 5.52% -2.07% -1.51%

Table 12: Senior gold equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

MDG 34.27 -0.24 -0.70% 12.66% 17.12% 35.35% 30.35% 32.06% 34.34% 40.68%

KGC 15.48 0.29 1.91% 11.45% 18.71% 35.08% 35.55% 20.84% 10.73% 31.08%

GG 30.24 -0.09 -0.30% 10.53% 16.35% 31.31% 10.61% 23.93% 23.03% 33.81%

GFI 18.09 0.09 0.50% 7.81% 11.80% 24.07% -1.31% 8.45% -0.71% 3.49%

ABX 40.06 -0.88 -2.15% 7.69% 9.30% 22.77% 34.29% 35.43% 37.00% 37.85%

BVN 45.88 -1.88 -3.94% 7.35% 8.18% 23.20% 66.17% 25.56% 55.10% 66.72%

AUY 12.61 -0.05 -0.39% 6.96% 7.05% 26.10% 2.27% -1.10% -15.20% 37.81%

NEM 47.56 -0.13 -0.27% 4.87% 7.58% 17.35% 7.60% 19.05% 7.75% 8.51%

AEM 49.81 -1.60 -3.11% 3.47% 1.26% 18.68% 27.98% 35.13% 28.97% 67.04%

Table 13: International equities perspective

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

FXI 168.48 4.88 2.98% 8.15% 14.78% 21.95% 44.74% 29.67% 62.92% 108.00%

EWZ 69.32 1.60 2.36% 8.14% 13.56% 20.03% 48.44% 11.20% 41.41% 91.02%

TRF 64.67 0.70 1.09% 4.93% 7.07% 6.23% -26.97% -5.84% -8.18% -0.58%

IEV 117.40 0.75 0.64% 3.69% 5.20% 5.70% 11.17% 0.26% 8.12% 22.48%

EWC 32.16 0.22 0.69% 3.44% 7.31% 9.09% 30.20% 7.02% 23.50% 36.50%

EWU 25.42 0.31 1.23% 2.87% 3.46% 5.26% 7.94% -0.43% 5.04% 16.87%

IFN 50.86 1.46 2.96% 2.33% 10.54% 17.03% 12.17% 18.31% 24.96% 19.59%

QQQQ 50.36 0.33 0.66% 2.32% 4.42% 5.95% 16.47% 5.49% 13.37% 25.34%

SPY 151.97 -0.31 -0.20% 2.07% 3.98% 3.72% 7.50% 0.01% 6.06% 15.24%

EWJ 13.78 0.04 0.29% 1.47% 1.03% -0.86% -2.96% -5.55% -7.27% 2.91%

Table 14: Dow 30 List

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

CAT 78.16 0.79 1.02% 6.83% 6.43% 3.98% 27.80% -4.06% 18.05% 21.10%

AA 37.40 0.12 0.32% 5.41% 7.26% 4.56% 27.51% -7.29% 10.49% 35.16%

T 42.53 0.50 1.19% 5.17% 9.81% 6.06% 21.69% 7.43% 9.44% 31.75%

MRK 51.82 0.44 0.86% 4.60% 4.54% 2.61% 17.72% 5.11% 17.11% 23.53%

HPQ 50.53 0.43 0.86% 4.44% 3.44% 6.04% 21.41% 11.05% 25.73% 44.91%

VZ 44.38 0.58 1.32% 4.37% 7.35% 5.29% 17.35% 4.57% 17.78% 20.27%

UTX 79.43 0.70 0.89% 4.32% 7.64% 8.36% 26.46% 10.40% 20.02% 26.28%

XOM 92.31 0.22 0.24% 4.11% 7.65% 10.22% 24.56% 9.50% 26.05% 42.50%

HON 58.69 0.52 0.89% 3.99% 7.27% 5.05% 30.13% 4.10% 23.04% 44.77%

INTC 25.87 0.06 0.23% 3.77% 1.57% 6.77% 27.13% 6.50% 33.76% 34.60%

AIG 67.23 0.09 0.13% 3.49% 5.79% 0.22% -6.82% -6.69% -2.13% 2.81%

JPM 47.13 0.17 0.36% 3.49% 8.30% 3.20% -1.96% -5.44% -3.91% 0.68%

DD 49.69 -0.21 -0.42% 3.43% 4.61% 1.53% 1.33% -4.90% -3.14% 17.64%

BA 102.59 1.34 1.32% 3.26% 8.17% 6.05% 15.05% 5.55% 12.98% 34.79%

DIS 34.60 0.56 1.65% 3.10% 3.01% 4.34% 1.17% 1.20% -1.62% 12.67%

JNJ 65.12 0.33 0.51% 3.04% 5.58% 4.85% -1.93% 4.85% 6.37% 1.39%

MMM 91.68 0.24 0.26% 2.99% 3.10% 3.30% 17.15% 4.89% 19.22% 25.40%

PG 69.39 0.41 0.59% 2.33% 5.99% 6.69% 7.51% 12.14% 10.21% 12.39%

MO 68.54 -0.08 -0.12% 2.25% 1.71% -0.13% 5.58% -0.06% 6.07% 11.47%

GE 41.25 0.01 0.02% 2.23% 6.45% 5.44% 8.64% 6.31% 16.26% 19.77%

GM 34.94 0.47 1.36% 2.10% 18.24% 13.63% 18.64% -2.84% 16.58% 12.86%

WMT 44.23 -0.09 -0.20% 2.10% 4.34% 2.46% -6.98% -8.60% -7.41% -8.73%

C 47.51 0.31 0.66% 1.87% 4.46% -1.74% -14.01% -11.46% -8.69% -4.50%

IBM 116.78 -0.08 -0.07% 1.43% 1.06% 4.78% 20.06% 9.55% 22.46% 43.10%

PFE 24.59 0.07 0.29% 1.24% 1.40% -0.12% -6.47% -5.13% -4.87% -12.83%

AXP 59.28 -0.84 -1.40% 0.58% 2.65% -1.25% -1.79% -5.39% 3.11% 9.29%

KO 56.55 0.24 0.43% 0.27% 3.59% 4.76% 16.41% 8.56% 17.18% 27.94%

MCD 54.80 -0.07 -0.13% -1.17% 11.29% 9.93% 24.91% 7.30% 22.84% 42.93%

MSFT 28.65 0.23 0.81% -1.34% 0.74% 1.24% -4.05% -5.20% 0.46% 6.58%

HD 34.47 -0.85 -2.41% -3.39% 0.76% 1.32% -16.07% -13.72% -11.02% -3.85%

The Value Line report this week is on (Cara 100) Boeing (BA).

(BA: Value Line Report Sep. 21: next one is due Dec. 21)

Value Line analyst Morton Siegel lowered the Technical rating on BA from a 2 to a 3 on Sept 7, citing “The share price now discounts much of the strong earnings growth we foresee by 2010-2012.” I concur. The stock (102.59) gave us a Sell Alert in late July at about 103-104 before spiking down to about 90, and then recovering.

The recent rally caused by the FOMC rate cut has weakened the USD, causing easier selling conditions for buyers in many countries. The problem there is that the manufacturing slots for the 787 is full up for several years, and the order book early this month reached 706, which is a record for a plane that is still 9 to 10 months from delivery #1.

(BA: Yahoo Finance file)
(BA: StockChart chart)

I emphasize the quality of management in the Cara 100 selections. When Boeing CEO James McNerney was CEO of 3M (MMM) that company was a Cara 100. After McNerney switched employers to Boeing, I switched my Cara 100 selection to follow him. As long-time readers know, there was a time under ex-CEO Harry Stonecipher, I would not go near the company.

For similar reasons, I did not like Crystallex (KRY) until I came into contact with then-CEO Todd Bruce. After Todd was dismissed early this year, I grew impatient as I could see that the new regime was no different than the pre-Todd Bruce era, and finally dropped my interest in the company despite their holding rights to mine what ultimately will become a world-class gold mine.

In any case, McNerney makes things work about as well as anybody can do in such a huge corporation.

I’ll do the Week In Review on Sunday.

Posted by Posted by Bill Cara on September 22, 2007 08:21:21 AM | Category: Saturday Report

Discourse

for intermediate to long term investors. Given Bill's disposition towards an inflation/stag-flationary environment I think it would be worthwhile to discuss investisng ideas that would do better than broad markets.

As long as the global story holds up I would continue to think that agricultural based, physical and other hard assets would continue to do well. For broad based exposure I have been increasing a position in the ETF (MOO) a fund like the Fildeity Select materials, and a Global water ETF and a fund by Credit Suisse that invests in commodity futures contracts based on the DJ commodity index.

Posted by: geckojb at September 22, 2007 9:05 AM [link]

geckojb,
What global water ETF are you investing in? The ticker please. I am looking for something to put in my IRA.

Posted by: stktrader at September 22, 2007 9:18 AM [link]

Bill,
In your opinion, why was Todd Bruce dismissed from KRY? What did he do or not do?

Posted by: stktrader at September 22, 2007 9:41 AM [link]

Hey Bill, from the town of your alma mater....

WHY Resources (which you mentioned a while back, large Nickel resources in BC) has had a very nice little pop in the last few days, 27.5% yesterday. I can't seem to find any news (other than the fact that it was oversold in the last resource selling wave).

Holding on to this one!

Hope you are enjoying the Bahamas.

Posted by: Eric at September 22, 2007 9:42 AM [link]

I posted this late last night, so will post again today.

These are some familiar etf's on the ultra side of things of some popular indices and sectors.

For short/ultra short(2x)

http://www.proshares.com/funds?products=98616&fundType=

For ultra long

http://www.proshares.com/funds?products=98646&fundType=

Good Luck,

Dab

Posted by: dabonenose at September 22, 2007 9:46 AM [link]

stktrader

I'm on the road with my laptop, but if memory serves me right, here are 4 water ETFs to peruse.

CGW, PIO, PHO and FIW. I recollect the first 2 are international, global and the last 2 are domestic U.S.

In the August swoon, I picked up some CGW in a couple of accounts. CGW has more big cap while PIO has more small cap (testing my memory here) You'll have to do your own DD.

I think I suggested some of these back in August(?) in a discourse with jasper or another. Good luck.

Posted by: Seamus at September 22, 2007 10:00 AM [link]

Eric, you may want to lock in your Warren Buffett sized profits with a trailing stop.

To All: Colin Twiggs provides some interesting info in his Saturday TA. He notes how Sept. 30th is the quarter end and fund managers are likely to build/hold profits until then, so we may be wanting to take profits this next week if we haven't already.

His quotes are always fun, but this week is especially enlightening to someone that follows sentiment/herding behavior. Here it is, think about it: "What is the basis of all these forecasts......? The acting principle behind the tabulations is hope. Everybody desires that prosperity should continue and increase..... We are a childish people; we like to be told what we want to believe. But are these forecasts really as searching as they sound? After laboring over a number of them one curious thought emerges and perhaps only in one case is it recognized distinctly by the forecaster. This is that nobody takes a long view."

~ William Peter Hamilton: The Wall Street Journal, January 1929.

Posted by: Craig at September 22, 2007 10:06 AM [link]

Bill - If I remember correctly, you commented on the dubious nature of Gov PPI statistics recently. Those Gov issued stats for PPI seem to most thinking people to be ridiculously low when compared to the actual marketplace as evidenced in part by this quote that’s attributed in MSNBC to Kroger:

“ ... Rodney McMullen, chief financial officer, said that the prices the retailer paid for products increased 21.6 per cent during the second quarter.
"We are experiencing inflation across many core grocery and perishable consumer categories," he said. ...”
http://www.msnbc.msn.com/id/20858020/

and also as evidenced by this “Gallery View” of Agricultural Spot Prices ( $DJAAGS ). The weekly chart appears to show about an annual 80% increase over the last 2 years. The P&F chart is even more interesting.

Who was it who said: “If a tree fell in the middle of Congress, would anyone hear it?”?

Thanks for your commentary!
spot

Posted by: spot at September 22, 2007 10:39 AM [link]

Brazil: the 'B' in the 'R' - word.

Looking at the short term Bovespa chart, the volume of trades on that index has declined significantly:

http://finance.yahoo.com/q/bc?s=%5EBVSP

This is the only exchange to may notice with such a decline. Somebody was mentioning the Real vs. the Buck. It might suit somebody in forex to lay a wager on long Buck/short Real. (I'm not "there" in the forex, so any comments are appreciated.)

The causes of such a decline are probably interbank offering rates, which may impact international settlements eventually. Despite the decline in offering rates the last month, this does not guarantee more lending as the focus had been on Asset Backed paper and derivatives, which had been the source of inflow of capital to the Brazilian exchange.

Deflation

A deflation could only come about with the change in the relationship of the reference currency to all the others.

Short term treasury yields very low to negative. Declining long term yields. However, yield curve remains steep.

Credit offering rates through the roof, creating a cash panic as people attempt to pay off lines of credit and credit cards. (in full opposition to declining fed fund rates.)

Hyperinflation in some emerging markets. Repatriation of currency into those markets, at the same time as an exodus of foreign capital.

Posted by: FranSix at September 22, 2007 10:46 AM [link]

To Continue:

Bullion prices stubbornly resistant to short of gold operations, recovers easily from massive corrections. Reluctance of Central Banks to part with their gold under any circumstances. Gold exploration plays one of the few investment avenues left open.

A severe decline in energy prices.

Checklist incomplete.

Posted by: FranSix at September 22, 2007 11:00 AM [link]

West High Yield put out an operations update on 9/20 in which they say they have stepped up drilling, found more nickel and are drilling for gold:

http://www.kitco.com/pr/2074/article_09202007114653.doc

Posted by: moab at September 22, 2007 11:23 AM [link]

I read Benjamin Graham's Value Investing by Janet Lowe. It is short and good. Mainly a history of his life, it also discusses the evolution of his investing ideas. The last part spells out Graham's ten criteria for deep value plays and research that you will consistently beat the market if you stick to that criteria.

Posted by: moab at September 22, 2007 11:26 AM [link]

over the past 15 years, US has benefited from the globalization, especially the low wages from china, india and developing countries. Now, with those countries become more developed, with the rising wages, wealth, and currency in developing countries, US will have to go through a painful period of depreciating dollars, lower purchasing power, and higher interest rates, just as when Japan, Mideast, and Europe became wealthier in 60s' and 70s'.

In my mind, the lower purchasing power and currency value will happen irrespective fed's policy. It is a macroeconomic trend. The pile of global wealth will be bigger, unfortunately, US and other developed countries' share of the pile will be much smaller in next twenty years. All developed countries' consumers will have to adjust to the reality that more people are become wealthier, hence there will be a competition for resources. Meanwhile, productivity gain will make essential goods cheaper.

Posted by: yc32 at September 22, 2007 11:38 AM [link]

One thing that muddles the energy equation is the emergence of the Indian and Chinese economies and their surging thirst for fuel. Will this keep pressure on demand when the U.S. is officially in recession?

Certainly the U.S. is still enormous in comparison to other economies and the growth in BRIC nations will not offset a contraction at home.

Two small-cap Chinese stocks I follow had interesting action this week (not that others didn't!). PUDC found a bottom and began a solid reversal beginning Wednesday (I'm still wary of this one, though, because their last earnings report was tepid), and CPSL exploded in the last two days. I sold 1/2 my position into the first day's rally (no regrets as I still participated in the 22% rise the next day). They are due to report earnings before the end of September, but no date has yet been announced.

I'm also holding HL, SLW and WGDFF -- though I also took some profits on the rally this week. HL is very interesting technically; if you draw a trendline from its high in April and July, you will find it rests perfectly on its close Friday. Of course, all the oscillators are overbought now, so I'm looking for them to cool off a little next week for an opportunity to add to my position.

Hindsight always being 20-20, August has proven to be one of the best buying opportunities of the year. Particularly for mining companies. But many here recognized that at the time and acted accordingly.

MOO looks very intriguing, geckojb. I'm off to do some DD.

Bill, thanks again for a spectacular blog.

P.S. -- It's raining up and down California this morning. That bodes well for a wet winter.

Posted by: number2son at September 22, 2007 11:51 AM [link]

If we do fall into a deflation, one of the only ways to stimulate the economy to get it out will be to nationalize energy programmes and make energy freely available.

The other option would be to enter into global conflict.

You can only lay so much concrete for hydro dams and freeways and build so many streetcars and invest in so much infrastructure & health care.

Posted by: FranSix at September 22, 2007 12:02 PM [link]

Hi folks, I've been buying and holding stocks since the tech bubble, but only recently have I been

following the market "Bill Cara style."

I've been culling the archives, and clearly any of Bill's blogs are rich with pearls, and he's got the book coming out. But there's so many archives--hours and hours of reading, so here's some choice intro postings which, as a trader new to B.C, I've found helpful:

economic data, the Fed, shell games.....http://www.billcara.com/econ/

dow 30: http://www.billcara.com/us/

value of valueline http://www.billcara.com/archives/2004/12/the_value_of_va.html

analyzing corporate data: http://www.billcara.com/fundamental/

accumulcation/distribution zone: http://www.billcara.com/archives/2005/05/cara_accumulati.html

gold primer: http://www.billcara.com/archives/2004/12/gold_bullion_ex.html

Posted by: yellowman98 at September 22, 2007 12:22 PM [link]

I just read an article talking about the recent strength of the Canadian dollar and how many Canadian consumers plan to visit the U.S. to do their holiday shopping this season. Seems to me that Canadian retailers should be under intense pressure in this case. Does anyone have ideas for Canadian retailers that may make for a good shorting opportunity? I am generally unfamiliar with this sector.

Posted by: BillySundance at September 22, 2007 1:50 PM [link]

stktrader: Seamus listed all the water ETF's I follow. I don't have opinion on which is the better choice. I am in (PHO) but that's more due to it being the first water ETF out a couple years back. I decided to stick with it until all of them had some history.

Posted by: geckojb at September 22, 2007 1:55 PM [link]

geckojb and stktrader: I just took a look at the water ETFs and, all things being equal, I would opt for the one with the most liquidity. A quick glance shows that to be POI.

I also like what I've found about on MOO.

Posted by: number2son at September 22, 2007 2:00 PM [link]

ALOHA !!

Bill ... Thanks for your CPI info today. I sent this out to my e-mail list on 9/13 so the FED is already on it! Notice how the FEDS call it an "improvment" in the way they report the CPI number. PLEASE-E-E ... do they really think we are THAT dumb?

YET ANOTHER MODIFIED CPI NUMBER
By Stephen Wellman

September 13, 2007

Well, back when real estate was on fire from 2000 to 2005 house prices were rising faster than you could say SUCKER! So the US FED decided that using real estate prices for houses were just "too volatile". In other words
"too inflationary" ... So they made a trade with rents. They said using a rent formula was a more stable way to measure the true value of rising real estate market(houses) called "Owner's Equivalent Rent".

Times have changed now and "rents" are now going up faster than house prices are going down. So in their wisdom the US FED is now "discounting rents" and "trimming" the high and lows. How long before they totally eliminate "rents" and go to using "house prices" since prices are "deflating" now and that would make their CPI
number conform to what they want less than 4% inflation rate for the precious CPI. Well, that is fraudulent! They do this so they won't have to pay higher COLA(Cost Of Living Adjustments)on Social Security checks. The less they pay senior citizens the more they can spend on more important "spending projects" like Iraq!

Here it is your first adjustment to the CPI since the housing crash. Mark my words they will dump rents next and use whatever commodity is going "down". In this case house prices or maybe US car prices on SUVs or maybe they
could use the US Dollar!!! I could pick and choose low priced items to dummy up a fake CPI number also.

You get what you vote for in the USA ...

READ ON:
Cleveland Fed revises methodology for CPI measures

WASHINGTON, Sept 12 (Reuters) - The Federal Reserve Bank of Cleveland on Wednesday said it has improved the way it constructs its median and trimmed-mean consumer price index to help reduce distortions caused by the owners' equivalent rent, or OER, component.

The new methodology breaks the OER into four regional subindexes, giving it less influence on the overall CPI figures, the bank said.

To reduce monthly volatility in the CPI, components that show the most extreme monthly prices changes above or below a certain threshold are excluded or "trimmed." ...

Posted by: kaimu at September 22, 2007 2:11 PM [link]

re: MOO and commodity plays...

etftrends.com
is a good site to keep up with new etfs..i saw moo when it first came out and the constant buzz on soft and hard commodities has me timid. There is huge hype and if one looks at many of the underlying indices on these plays, parabolic may be a fair characterization. FXI/china falls into the same camp.

If one started accumulating earlier then there's less risk and a trailing loss stop would be a safety net. (Seamus has posted for quite a while in such plays.)

My style of investing leans toward momentum and my emotions remind me of the late 90's. I was making a huge profit on growth mutual funds/tech. Eventually, longterm charts showed macd's that looked like mountains. I reduced my exposure to half and hated watching continuing momentum. Then came "don't worry, it's a new paradigm"...and I waded back in and the rest is history.

The ole fashion way of finding good companies with intrinsic value could help me to breath easier. Could this be where the microcap companies come into play? Instead of following the herd with MOO et al...which for all I know will jump over the moon and it really might...I would find it interesting to accumulate lesser know microcaps at solid support prices and solid fundamentals and learn the mix of protecting profits and holding for the longer term. Much easier said than done. Some big assumptions here.

Meanwhile, the gold miners provide the juice. This too reminds me of the 90's...going to the techs because that's where the action is but not really understanding them. How many juniors out there are going to explode, and how many other juniors will crash?

Posted by: jasper at September 22, 2007 2:20 PM [link]

Guys, we can either get politically active on this or we can suffer the consequences.

I wrote an extensive piece on this in my weekend blog entry; you might want to take a look

http://market-ticker.denninger.net

Bill is spot-on and the problem with the Fed trying to "inflate" its way out of this is that we're at the maximum debt carrying capacity for the US consumer and housing IS going to correct, inflation or not.

So we either take the medicine or risk a really awful meltdown in the near (perhaps even immediate) future.

It is, quite literally, all up to you.

Posted by: Genesis at September 22, 2007 2:40 PM [link]

Its very unlikely the Fed is able to contain any problem or control it in any way. They can assist in small ways to avert disaster for a few people, much like the flood of New Orleans, but the flood is coming nevertheless.

Posted by: FranSix at September 22, 2007 2:45 PM [link]

KRY:
Gordon Thompson to present slide show at the Denver Gold forum on Monday.
Crude Oil Puts:
March 60 put is $490 usd. 5 months left in option. March Crude last traded at 78.98. I will start accumulating at $450 usd/put. Winter is the seasonal low for oil historicly.
Water ETF's;
Thanks all for the tickers to DD.

Posted by: stktrader at September 22, 2007 2:50 PM [link]

I appreciate Genesis' call to political action, but if by that he means supporting Huckabee that won't cut it.

The rot goes a lot deeper.

“The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is its natural manure.” Thomas Jefferson

Posted by at September 22, 2007 3:23 PM

Posted by: badius at September 22, 2007 3:25 PM [link]

I received this mail from a long time reader:

"Slow month for me and I have more time to write. I now know I can not pick stocks but I can tell you what I see in the field.

Business is very good for quality companies. I am going to have my best year ever (unfortunately I get paid in wooden nickels but then I get paid a lot of them). Companies who skated by when things were good are now struggling a bit. This is based upon my observations of companies involved in pharmaceutical research. Novartis looks strong.

My observations of real-estate in South Florida, Central Florida, and Southern California are as follows. I have great difficulty renting three of my residential properties in South Florida. Two are waterfront. Residential property values including the waterfront have fallen by close to 30%. Properties falling lower than that do tend to sell. Commercial properties in South Florida are still commanding a good price.

I was just in Miami which is beautiful but terribly overbuilt as reported by others. They have a significant problem. The Orlando real estate market is tough. I can not raise rents or I will lose tenants and they will not be easy to replace. Home prices are falling.

In Southern California the less fortunate are hurting. In the wealthy neighborhoods prices are not falling and in fact are rising ever so slightly.

Where I see Los Angeles as differing from Miami is that in LA everyone I know has a pile of cash and stable employment. Everyone is waiting for prices to fall. In South Florida I do not yet see buyers lining up. On the west side in LA it seems everyone has the same plan. Buy as soon as the price drops. However no one wants to buy the homes being foreclosed upon. They want the nice homes in the nice areas. Rents on the west side of LA are rising not falling. The inland empire is a different story.

Commercial rents in LA so far are going up and not down.

That is my report from the field. Can't wait for the book.

Have a great day,

Posted by: Bill Cara at September 22, 2007 4:01 PM [link]

Regarding the Fed's actions . . .

First, sorry but I do not know how to tiny URL. A "how to" would be greatly appreciated.

We Americans don't live in a vacuum but tend to think that way (not bashing, I love my county). Is every nation that way? Anyway, every nation must be considering how the Fed's cut affects them, and how to respond. Unintended consequences--by the Fed and, subsequently, other nations--may be profound.

An interesting debate is raging in India (and everywhere) about how to respond the the Fed. Of course, India has an India centric perspective. For example, see "Should RBI respond to Fed rate cut?" at economictimes.indiatimes.com/Opinion/Debate/Should_RBI_respond_to_Fed_rate_cut/articleshow/msid-2391659,curpg-1.cms

Fed members ought to brush up on economic game theory. Tit for Tat.

Fed members seem to me to be ignoring the international response. They are well educated and experienced in the American centric world, but not the international world, the more interdependent world of today. Maybe because it's only been in the last decade or so that American universities have taught grad-level international economics in any significant way (I think there was only one course offered in my program). Fed bios at http://tinyurl.com/2u5rq4

Posted by: dbajack at September 22, 2007 5:33 PM [link]

Dear Bill,

Thanks for sharing that letter. Encourage the writer to post his observations directly to the board, as they are appreciated.

Here in town it's the same story (an hour above Manhattan a minute from the beach) that your writer describes in L.A. Lots of people want to buy here, they simply can't justify spending crazy money for crappy houses. The really nice ones (good value, not too-big McMansions, good attractive neighborhood, nice flat acre, not in a swamp, etc) haven't hit the market (and rarely do, for the very reason that they are a "bargain") and we were kind of hoping for a total housing meltdown, having sold into the boom in 05.

My take is, and I've said it before, people need to get killed a lot more on housing before this thing is ready to roll again. Until it is, smart money won't buy. Except in a hyper-inflation scenario. And I don't respect what Ben did to rates. A metaphor would be, a junkie shows up in the middle of the night, begging for money to buy drugs. It's so much easier to just give him 20 bucks than to try to change his nature and his past. He goes out, and buys drugs to make himself feel better. The wrong that's been done is, sooner or later, this guy's gonna hit bottom, and maybe you just prevented that from happpening. In this parable Wall Street and the mortgage business is the junkie, and Bernanke is the awakened homeowner.

As much of a "liquidity junkie" as our economy is, we need to recognize that to bring sanity to this thing inflation wise, we're going to see slower growth as a predictable and unavoidable result.

Inflation is the answer to so many of the politician's problems,
(social security, wages, global corporate competitiveness, the debt picture) that it seems naive to think that this policy isn't er, policy.

So the question, finally, is which way do we go? Save the patient but kill the dollar (more) or save the dollar and kill the patient?

When John Doe average-American wakes up and realizes the two-sided assault on his way of life that's taking place, there will be a stiff price to pay politically, by both parties, for 35 years of treasonous monetary policy.

Get ready Canada! You're about to be flooded with American "quarters"!

Posted by: shark_attack at September 22, 2007 5:55 PM [link]

dbajack,

Re: ". . . sorry but I do not know how to tiny URL. A "how to" would be greatly appreciated."

The most direct way to ferret out information on this site is via the billcara.com search widget. Searching on the keywords "tinyurl how to" brings up a number of hits. Near the top of the list is referenced my posting of June 12 responding to the same question previously posed by another:

"""
If you go to http://tinyurl.com/ there is a complete explanation of how to create a tinyurl from even the longest and most awkward url. There's even a widget you can drag onto your browser toolbar that streamlines the process.
"""

Posted by: johojo at September 22, 2007 5:57 PM [link]

Thank you johojo!

Posted by: dbajack at September 22, 2007 6:11 PM [link]

ALOHA !!

You would think that given the current financial chaos surrounding banks and the "bank runs" now happening that the FED and FDIC would tighten "examination cycles". Essential for a bank to be FDIC rated there needs to be an "on-site examination" every 12 months. By this latest ruling the cycle can be pushed out to 18 months on larger banks. A lot can happen in 12 months but in 18 months? As a certified nursery here in the State Of Hawaii I have to have "on-site" examinations every 6 months! I do not hold $500mil of deposits and orchid failures do not make a bank run!

Another question here should be, "Are there any small banks left?" Eh ... $500mil here ... $500mil there ... whats the big deal?

At least the FED and FDIC should tighten examination cycles on the largest banks to 6 months like my orchids!

READ ON:
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency 12 CFR Part 4
Docket ID OCC-2007-00014 RIN 1557-AD02

FEDERAL RESERVE SYSTEM
12 CFR Parts 208 and 211 Docket No. R-1279

FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Parts 337 and 347 RIN 3064-AD17

DEPARTMENT OF THE TREASURY
Office of Thrift Supervision 12 CFR Part 563
Docket ID OTS-2007-0006

Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks AGENCIES: Office of the Comptroller of the Currency (OCC); Board of Governors of the Federal Reserve System (Board); Federal Deposit Insurance Corporation (FDIC); and Office of Thrift Supervision (OTS), Treasury.

ACTION: Final Rules.

SUMMARY: The OCC, Board, FDIC, and OTS (collectively, the Agencies) are jointly adopting as final the interim rules issued on April 10, 2007, that implemented section 605 of the Financial Services Regulatory Relief Act of 2006 FSRRA) and related legislation (collectively the Examination Amendments). The Examination Amendments permit insured depository institutions (institutions) that have up to $500 million in total assets, and that meet certain other criteria, to qualify for an 18-month (rather than 12-month) ...

Posted by: kaimu at September 22, 2007 6:48 PM [link]

I respect Bernanke, he has just repeated history. He is in top form.

Another entry on the list of signs of the times in deflation:

"He goes out, and buys drugs to make himself feel better. The wrong that's been done is, sooner or later, this guy's gonna hit bottom, and maybe you just prevented that from happening. In this parable Wall Street and the mortgage business is the junkie, and Bernanke is the awakened homeowner."

The end of Prohibition (or the drug war). There's a moral question for you.

Posted by: FranSix at September 22, 2007 6:59 PM [link]

Jasper good points on MOO though I am not sure that soft or hard Commodities are showing the same inflated valuations or mania the tech stocks were back in 2000. It's my own belief that the average investor hasn't caught on to commodities and if they have, they wouldn't know how to invest in them yet. There are only a few ways and few funds. Actually they may of found a way but they may not realize it and that's through the commodity producing countries they are chasing in their emerging markets funds.

I would also like to think that most investors are hip to some sort of diversification tactic. In 2000 tech was bought was both fists and then when you lifted the hood of your average mutual fund it was there too!

In summary if soft/hard commodities are held to some reasonable amount of a portfolio (5-15%) it makes it easier to hold through the inevitable corrections. There may be room in a portfolio for both momentum plays and undervalued or underfollowed plays.

Posted by: geckojb at September 22, 2007 8:24 PM [link]

Fransix,

I don't understand your comment.

Posted by: shark_attack at September 22, 2007 11:15 PM [link]

damn itchy clicker finger....

Posted by: shark_attack at September 22, 2007 11:17 PM [link]

Why we all love the FED and carefully crafted economic strategies. . . .

http://tinyurl.com/pp8ys

[I ran across the video on www.ronsen.blogspot ]

Posted by: johojo at September 22, 2007 11:52 PM [link]

johojo:

A request....

There was mention of a search widget function within bill cara's blog. I could not locate it. Wish to use to search for specific mention of some specific junior exploration miners.

Thanks.

Posted by: jasper at September 22, 2007 11:56 PM [link]

jasper,

The search widget is on the main page at www.billcara.com . It's the text box on the right-hand menu, just under the picture of Bill's new book. Just be sure that the 'This Site' radio button is selected, enter your keywords and click 'Google Search'.

Posted by: johojo at September 23, 2007 12:03 AM [link]

From the LA Times 9.23.07:

"Lack of urgency on national debt is a scary stance"
By David Lazarus

"....At a news conference last week, Bush was asked about the state of the economy and whether there was a risk of recession.

"You need to talk to economists," he replied. "I think I got a B in Econ 101. I got an A, however, in keeping taxes low, and being fiscally responsible with the people's money."

A transcript shows Bush got grades of 71 and 72 in economics as a college student. That corresponds with a C-minus.

Posted by: C.Note at September 23, 2007 5:01 AM [link]

Re: Bush's comment (cited above by C.Note) that "I got an A, however, in keeping taxes low, and being fiscally responsible with the people's money."

It is astonishing how politicians of both major parties blithely perpetrate such b***s***t and voters are too dense or apathetic to catch on. The doctored CPI and PPI statistics mask the most horrendous tax hike (confiscation) of all--price inflation expressing the onslaught of money-printing to defray costs of off-budget wars and secret back room deals. Unfortunately, when 'we the people' do finally catch on we tend to rise up in bloody rebellion and then it becomes survival by double-ought buckshot!

Posted by: johojo at September 23, 2007 9:18 AM [link]

I am wondering just how people will react overall to such a blatant lie.

"Fransix,

I don't understand your comment."

Lots has been discussed on the drawbacks of moral hazard, when taking no action at all would assure the immediate destruction of many banks and people's savings. If people have trouble with the actions taken at the discount window and the cut in rates, they're going to have no ability to deal with a real deflation, not just a recession. I don't see anything different than what's been done in the past in central bank activity. So when major changes come about in the economic sphere, they will affect our outlook on just about everything.

Society generally has lots of availability of credit, but when that comes to a halt imagine that one would have to cope with the money you have in the bank or in your wallet. It would underline just how little actual hard currency is in the hands of regular people. It remains to be seen how seriously people the world over will be affected in the immediate short term.

It would impossible then to extend the life of egregiously expensive programmes and moral crusades as such. But as I've said before, military adventurism of the kind displayed in Iraq may be replaced with outright global war, since the powers that be will be relying on military keynesianism in the attempt to continue their terms in office and conform with the need to rely on still more debt. (That's my assumption.)

Posted by: FranSix at September 23, 2007 9:23 AM [link]

Fransix,

I do agree that widening the Middle East war is really the only way out for America.

I actually think that clipping Achminijad while he's in New York and beginning the arial bombing of Iranian hard targets is now the best course of action for this moribund administration.

Unfortunately, Bush should have used 911 to bolster men-under-arms by at least a couple million. He should have asked lots of Americans to join up, everything short of a draft. Now we're short men and our ability to do what I described above is uncertain, to say the least.

I do think this thing won't be over 'till there's a Starbucks on every corner in Bagdhad and the Iranians are either singing "God Bless America" or are out of the way entirely. The Middle East is basically a big gas station, and we need to make sure that the pumps are all working and that the bathrooms are clean.

If you find the above sentiment depressingly realistic, please don't blame me for mentioning what is already the realpolitik truth.

Posted by: shark_attack at September 23, 2007 10:18 AM [link]

Such "realpolitik truth" is depressingly delusional. We wouldn't tolerate such self-aggrandizing hubris; why should anyone else?

Posted by: johojo at September 23, 2007 11:16 AM [link]

Johojo,,,well the U.S. has always been a "do as I say, not as I do" country.

Posted by: dabonenose at September 23, 2007 11:26 AM [link]

The major problem with it is the Russians, who will never sit by and just let that happen without getting at least half. That leaves the Chinese out in the cold, an intolerable notion to them. We have one-too-many superpowers in the world now!

Perhaps as these battles play out and Cold War pawns fall into their rightful spheres of influence, perhaps then, with nothing standing between the superpowers, either outright war or, perhaps, lasting peace will break out finally.

Posted by: shark_attack at September 23, 2007 11:30 AM [link]

Have I got it too simple?

"Do Not Feed the Bears"...along with the earlier Sunday Morning Coffee how Bernanke intends to crush the bejesus out of the bears. Unfortunately, we'll find out who gets hurt the most...via the law of unintended consequences.

http://www.ronsen.blogspot.com

Posted by: Ron at September 23, 2007 11:47 AM [link]

Maybe they should let Ahmidjinidahd visit the two holes left at the site of the World Trade Centers and just have some Muslim extremist, funded by the CIA, grease him there.

Posted by: dabonenose at September 23, 2007 11:54 AM [link]

Excellent thought, Dab....sorry, but it's spot-on.

Muslim extremists...imagine that!

Posted by: shark_attack at September 23, 2007 12:14 PM [link]

dabonenose,

Re: the U.S. as a "do as I say, not as I do" country.

We haven't always claimed to be such. Perhaps Eisenhower's January 17, 1961 warning about the perils of the "military-industrial complex" is the first acknowledgment of our latter-day follies. Ron has a video excerpt of Eisenhower's address posted at http://www.ronsen.blogspot.com

Posted by: johojo at September 23, 2007 12:17 PM [link]

I believe that the current trends are very temporary. Lower interest rates and a less volatile stock market will continue only until the FOMC has satisfied Wall Street's need/greed for liquidity in an amount that Wall Street deems sufficient to enable most on the Street to dispose of unwanted bad debt.

When that it done, the FOMC will suddenly become alarmed about the deflating US dollar and inflating US prices. To my way of thinking the FOMC's primary obstacle is the extent to which foreigners disrespect the dollar. What will the FOMC do as the dollar index approaches the 60s and the dollar faces the prospect of an increasing loss of its reserve currency status? I believe that at that point the FOMC will have to take extraordinary Volker type measures to defend the dollar. However, because of our massive debt, by no means do I believe that interest rates on the long bonds will peak in the teens as they did for Volker. Rather, I expect them to peak in the low 20s with all that implies for inflation.

Posted by: lessmore at September 23, 2007 1:01 PM [link]

Lessmore,

I thought what I said was depressing. And I disagree. The fed will do what anyone would do when caught between a rock and a hard place...They will do whatever they can to increase their breathing room. Which, for now, means easing credit. We are so far away from dollar rate hikes right now it's amazing. Inflation is a global phenomenon, not due to some inherent American demand for anything right now, except exit strategies.

I also want to apologize for my intemperate and frankly genocidal remarks earlier. The world is a mess. I just don't think these problems are solveable, leading to the inevitability of war, which is typically better done on your timeframe than another's. But tell that to the Germans in 1913.

Posted by: shark_attack at September 23, 2007 1:13 PM [link]

Shark -

Any attack on Iran means, for starters, blockade of the Straits of Hormuz, and hundreds of millions of young muslims vowing to dedicate their life to killing Westerners.

Do you REALLY want to encourage President Cheney to do that? Is that really the direction you'd like to see the world take?

And, after 9/11 why put millions of Americans in uniform? Violence doesn't seem to work so well any more for nation states. With weapons getting ever cheaper, and more lethal, violence does much better by the terrorists. If Uncle Sam is the "global sheriff", why does he disdain international law? In civilization, the law is the sheriff's most powerful tool!

After 9/11, I'd hoped to see the toughest (and quietest) globally-coordinated policing and law-enforcement operation ever undertaken.

I'd have liked to see that combined with a european-style gasoline tax to finance the most massive outpouring of American entrepreneurial creativity ever seen to develop biofuels.

THAT would have moved world opinion after 9/11 from sympathy to admiration. And might have generated a win-win vs. global warming too.

Instead, Cheney has taken America to the "heart of darkness" with torture, secret prisons, and war without end. Not the ideals the US was founded upon, which used to motivated Americans to become ever better, and which attracted millions of immigrants seeking a better life.

When all else fails, let's give peace a chance!

Posted by: Jock at September 23, 2007 1:19 PM [link]

Why is there this support for conquering the middle east and making it safe for Starbucks and McDonalds? These nations have been dealing with invasions from Europe and America for five centuries and view the current wars as an extension of this long history.

Many of the current US problems in the middle east are self inflicted. The US armed Saddam and Bin Laden in the 80's when they served US short term interests. American's would not have to deal with Ahminijad if the US had not overthrown the Shah in 1953 or had talked to Iran when they made peaceful overtures in 2003. Bush didn't even respond to their overtures as he thought the Iranian regime was on the verge of collapse(!):
http://www.tpmmuckraker.com/archives/002509.php. The Iranians are just trying to defend themselves from American aggression with the only deterrent that is proven to work, nuclear weapons.

The only way out of this morass is a new manhattan project to develop alternative energy sources that replace middle eastern oil.

Posted by: moab at September 23, 2007 1:37 PM [link]

"I do agree that widening the Middle East war is really the only way out for America."

They're caught in a box, besides those oil reserves are far less than anyone imagines. Remember the overstatement of reserves prior to the stock crash of 2000?

The War Party may be a little out of fashion with the Banking Party, since they're more of a socialist bent than an outright fascist bent these days. And so what if they like to read Karl Marx or Von Mises more than Rand or Nietchze? I am hopeful that the greater control lies in the world of high finance, and that they pull the carpet out from under their feet. Why would they place so much emphasis on "the global economy" umpteen million times a day?

Its no small irony that the fascists lost because they ran out of oil heading for the caucasus at a time when the vast majority of the oil reserves were on the cusp of being found, and that now the War Party is reaching the end of its road in the very same situation, except they're clearly running out of oil.

The emphasis has seen a shift from war production to energy production out of sheer necessity, so when the anachronistic adulation for W has run out, so has the War Party.

Remember the terrorism put to expire on the 21st? Came and gone. Nobody noticed.

Posted by: FranSix at September 23, 2007 1:55 PM [link]

Rather than waste any more time talking about blowing up the world, is anyone interested in figuring out how to make more money? What if on Sundays we were to share with the group one stock that we felt sure would perform in the upcoming week, and discuss the why's and how's of it as well?

After awhile when we knew what each other could do, we could divide the stock universe and analyze segments of it, sharing our results with the others.

Then we could have more stocks to work with that were setting up well, the group could perhaps profit from the results, and the value of Bill's site would surely by increased to a far greater degree than discussing either nuking people or mandating bio-fuels...

I usually concentrate on cheapo's amex stocks, mostly metals and oil/gas. Are any technicians out there interested in maybe partnering up?

I promise not to force you to use biofuels....

Posted by: shark_attack at September 23, 2007 2:04 PM [link]

RE: "Instead, Cheney has taken America to the "heart of darkness" with torture, secret prisons, and war without end."

"HATRED" is a very powerful and volatile emotion, I don't think most Americans realize how much we are hated and why. There is no path to peace now. Our leaders chose, in our names, to pave them all with deceit upon deceit to infinity. As Bush says, is going to be a long war: if enough of us don't die, our children and their children will.

Posted by: moneygenie at September 23, 2007 2:21 PM [link]

geckojb
re commodity investing...good point about the country specific route..

EZA is the commodity rich country I'm riding but there are some problems....seeking alpha comments on this country....

ILF...but the ride is volatile

Any value choices?....would be quite interested to review...I'll be looking on Monday and will share what I find

Posted by: jasper at September 23, 2007 2:25 PM [link]

Hi, anyone wanting to make money in the mining world going forward during the credit crunch should pay attention to where the private placements are occurring.

About Cheney (his name is like something out of a silent horror film and his charicature is rather similar) The thing you have to remember is that the results of 9/11 have largely missed their mark, if the intention was solely to place the world(or America) under authoritarian rule.

The Secret Teamers have run out of steam. While they once commanded the military industrial complex, they lost their prominance once your gap-toothed cousin from Texas and cronies took over. And Greenberg's bubbles get-'em cheap while they last doesn't sit well with the banking elites. So there is more dissension in the top levels than is reported in the press.

I think that's expressed in the departures of "nuclear backpack" Rumsfeld and the "morally immaculate and annointed" Karl Rove.

Posted by: FranSix at September 23, 2007 2:40 PM [link]

Yes, it is time to pull up and cast out the dying/dead garden plants of summer.

I've thanked the Supreme Being many times for their bounty and assisting me in my small fight on inflation this year.

Also, thank you Bill for leading me through the dark valleys of shadows to see our Precious blossom in the gloom of the world and the many things written above.

Posted by: C.Note at September 23, 2007 3:05 PM [link]

Shark-attack:
If the FOMC is caught between a rock and a hard place its their own fault because they chose the interests of Wall Street over the public's interest. There is no way in the world that these interest cuts can save the millions of families that purchased homes on the basis of sub-prime teaser mortgages. With respect to the public at large, you can already see the impact of this first rate reduction on the increasing prices of commodities. It does not serve the interests of the public when they have to pay more for food and fuel to feed Wall Street's greed.
As to your comments about war, you are just plain wrong. War is never good. Its not good for combat soldiers and its worse for civilians caught up in war. If you have ever fought in a war you know it.

Posted by: lessmore at September 23, 2007 3:41 PM [link]

Shark -

I'm interested in working with you. Do the Amex issues have the potential of the Canadian juniors?
Closer to home, more convenient for sure.

Posted by: Jock at September 23, 2007 3:50 PM [link]

Good question Jock...I have trouble with some of the charts for some of the "Canadians", but most of the amex miners are canadian.

Stocks I'm looking at this weekend are pdc, kog, gw, exk, mmg, mgn, urz and aez, sea.....

I will refine this list. Which of the candaian juniors warrant attention this week?

Posted by: shark_attack at September 23, 2007 4:39 PM [link]

Shark -

I'm in the process of setting up with interactive brokers, so I can get real-time quotes on the toronto venture exchange. I haven't yet gotten too deep into my own research on Canadian juniors, so I am interested in those which Bill, Kaimu, and Aussieontop have mentioned.

Bill says the exchange is relatively well-regulated; post-bre-x regulation of drilling reports seems good; and the issues come public with nano-cap valuations, so that if they succeed, it's a long ride upwards.

Details to follow.

Posted by: Jock at September 23, 2007 5:51 PM [link]

I've traded MMG in the past. It seems to have tremendous upside, especially if they find precious metals on the other side of the fault, which is more than likely since silver was mined straight from the ground there in the past. Here is a great article on Metalline Mining Group: http://seekingalpha.com/article/47287-metalline-mining-a-world-class-zinc-company-in-the-making

In terms of juniors I think Valgold is extremely undervalued. Bill says the Guyana shield is the place to find big discoveries. I think NUS.V is also worth looking at. They have found extremely high grade gold/silver/copper/zinc on the ocean floor and are developing a way to mine it (suck it up, as the ore soft). Three majors have invested.

Posted by: moab at September 23, 2007 6:17 PM [link]

Moab,

Two other juniors mentioned by royal bank of canada in a recent report posted here:
Greystar:gsl
Anotolia minerals: ano
Both at tsx.

Any thoughts on these juniors?
Bill has a post on august 30:

http://tinyurl.com/34wbko

When I re-read stuff I'm amazed at either I can miss detail or just be too myopic. The search function here is excellent. Another personal oversite.

Posted by: jasper at September 23, 2007 7:05 PM [link]

Good article in the SF Chron about unregulated diamond mines in Venezuela:

http://tinyurl.com/2dp4oq

It's ironic that Chavez appears to be a match for Bush in incompetence.

Posted by: number2son at September 23, 2007 7:17 PM [link]

Shark -

I've done well with EXK and NAK. I was able to buy them bouncing off their bottoms, and will stick with them. EXK is still within what Alex Elder calls "the value zone"= between the 13 and 26 day moving averages.

I am tempted by VAL.V, which Bill has mentioned. It has just risen to the 200 day moving average. CNU.V looks like it has established a defensible bottom. Both look very cheap, although I have NOT done much due dilligence. CNU trades about 400K shares per day, VAL.V much less. They're both well under $50M in market cap; neither has revenues.

I don't want to buy these juniors when they already sport elevated valuations. Looking for a "margin of safety" although not in the places where Graham&Dodd or Buffett would look ~!

Offered for what it's worth.

Posted by: Jock at September 23, 2007 7:47 PM [link]

I am also kind of waiting for the other shoe to drop, for the "Wil-E. Coyote" effect (he only falls when he realized he's already off the cliff.)

Nothing is more fun than buying when there's blood in the streets. I look at my GSS position and I realize it's probably going higher, but a potential "hanging man" was made friday, we'd wait for a close below the shadow, I guess, for confirmation of that which is unlikely.

But who's to say which side of the bed gold wakes up on tomorrow.

Studying the charts I realize that exk has a bearish gap so it's a no-go, mgn is in too much of a downtrend and is too thin.

So I guess if I had to pick one right now I'd say PDC is interesting.

Posted by: shark_attack at September 23, 2007 7:53 PM [link]

Moab - NUS.V

I bet the majors have invested to see what new undersea technology evolves, and not to make money. New technology often takes more time to gel and pay out than expected. I don't know the particulars in this case, however.

Posted by: Jock at September 23, 2007 8:07 PM [link]

Jock -

NUS is applying deep sea oil and gas technology to undersea mining. There shouldn't (hopefully) be much technological development needed. Their project manager is from an offshore oil background. The assays are unbelievable - 45 dredge samples averaged 10.8% Cu, 3.7% Zn, 224 g/t Ag and 13.7 g/t Au - and they have many hundreds of KM permitted for exploration. Risky but tremendous upside potential. There should be a 43-101 calculation by the end of the year.

I'm going to take a look at Anatolia Minerals this week. I'll let you know what I find out. Greystar I believe has Columbian assets, which I would be wary off.

Posted by: moab at September 23, 2007 8:31 PM [link]

Here's an interesting tiny miner that I'm long a little - Golden Phoenix Mines - bulletin board GPXM - has an interest in and is operator of an incredibly rich moly mine in Nevada - their tailings have richer ore than most majors. Its last quarter was profitable, I don't think its currently overbought, but as always you must do your own DD. Website is
http://www.golden-phoenix.com/

Posted by: cyderman at September 23, 2007 9:39 PM [link]

number2son

Re http://tinyurl.com/2dp4oq

This is an interesting article to those of you who are wondering what I might be up to in Guyana, just a couple hundred miles south. I intend to write about this extensively starting in a month or two.

Posted by: Bill Cara at September 23, 2007 10:00 PM [link]

C.Note,

I am just as impressed as you with the many insightful contributions here. I always knew there was a 'wisdom in crowds' but to experience it in action is awesome.

The harder I work at this, the harder that hundreds of you return the favor, and the more enlightened that thousands become. Peter Simmons says to me every week, "Just do what you do, and the world will follow. Nobody, including the biggest media companies in the world, have any fix on where this blogging phenomenon is going."

It was only a couple weeks ago, that "shark attack" was banned. Today, I have to admit that I can't wait for him/her to make another comment. All of us have the power within us to do so much more. Bill Cara is just one among you. I personally know the guy; and I know he doesn't have all the answers!

What intigues me is that you all have nicknames. Nobody knows or cares if you are male or female, young or old, successful in life or just starting out. We don't care how many academic and professional degrees you hold, or what part of the world you live and work in, or whether you work for HB&B or are served by them.

We are 'the people' -- and the market is 'us'. We can use this website to share!

Posted by: Bill Cara at September 23, 2007 10:14 PM [link]

moab,

I did not know that about NUS.V, but I will look into it tomorrow.

Posted by: Bill Cara at September 23, 2007 10:22 PM [link]

Shark,,,take a look at the MMG chart. Looks like vol is decent and it's trying to break above an ascending triangle.

A pull back to the 10 or 20 day avg.(2.65 area) and voila, you'd have a lil cup-n-handle, then look for a b/o above asc tri.,,,JMHO.

Dab

Posted by: dabonenose at September 23, 2007 11:05 PM [link]

Moab - re NUS - wow! If it's really application of existing techhnology, that changes things. Plus, no worries about where to place the tailings!

Are NUS's stakes in waters recognized by all as international, or does Paupua New Guinea claim sovereignty?

Posted by: Jock at September 23, 2007 11:18 PM [link]

Jock -

If I recall correctly, some of the big finds are in Papua New Guinea's waters and they are applying for permits in international waters. But they have found seven sites so additional exploration is not needed right now. They are concentrating on startup in 2010. They have the discoveries, it is just a matter of mining them.

The other thing that is exciting is that the fixed costs should be much reduced from traditional mining. They can build one mill on a dock to process the ore from dozens of sites. Once done mining one site they just move the boat to the next.

Anglo I believe had a JV with NUS that they traded into an equity stake. I think that shows confidence that it will be mined.

Posted by: moab at September 24, 2007 10:45 AM [link]

September 22, 2007

Saturday’s Commentary & Chat, 09/22/2007 8:21 AM ET

Discourse

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