Bill Cara: Saturday’s Commentary & Chat, 09/29/2007 6:50 AM ET

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September 29, 2007

Saturday’s Commentary & Chat, 09/29/2007 6:50 AM ET

What’s wrong with this picture? And, why doesn’t the man have the decency to shut his mouth and let his successor get on with trying to fix the mess his office inherited? Is he another one of these Fed Heads with foot-in-mouth disease?

”Former Federal Reserve Bank Chairman Alan Greenspan has placed some pressure on stocks after commenting today that the odds of a US recession have risen and that housing market troubles have spilled over as a reduction in consumer spending. Greenspan also remarked that hedge funds are "presumably the largest culprit" responsible for the credit crunch.” (Knobias, Friday Sept 28, 2007)

The economy is like a cruise ship at sea. It takes forever to turn around. Moving an economy from growth to recession, ie, from good health to a sickly state, follows conditions set by central banks, finance ministers, and the Sell-side from two to five years prior. Ergo, if Greenspan is pointing us to a US economy moving into recession, he is pointing to his own nose.

Moreover, his remark that hedge funds are “the largest culprit” is almost too funny to come out of the mouth of a central banker and economist. This is like ‘Rodney Dangerfield stlll can't get no respect’ kind of funny. Reminds me of the 2000-2002 market crash that was blamed on – get this – ‘day traders’.

I’d laugh but I have to cry that people so incompetent can be put into positions of such immense responsibility. The ‘Peter Principle’ ought to be renamed the ‘Greenspan Principle’. Others at the Fed are taking his lead.

Following the Greenspan Principle, it’s only a matter of time for Prof. Bernanke to show the world what power can do to a brilliant mind. Turn it to sawdust.

Judging on his remarks and the timing of those remarks (at 2pm Friday in New York, just two hours before the end of the quarter-year), next on the list of Fed idiots to be promoted up the power hierarchy is the St. Louis Fed President Bill Poole. Only a scholarly but absent-minded professor like Poole would fail to understand that making a market-moving remark an hour or two prior to the close of the quarter is the wrong thing to do.

This is the same person who, a month ago, was roundly criticized by CNBC personalities Larry Kudlow and Jim Cramer for making incredibly stupid comments. On behalf of the public, they demanded his resignation.

With leadership by people like Greenspan and Poole, it’s not too difficult to discover why America is in the economic difficulties its in at this point.

Here from the St. Louis Fed’s home page today is the Fed’s highlighted presentation of Poole’s remarks on Friday afternoon. I think that Jon Stewart must have played a key role in the speech writing.

"In a Sept. 28 speech in New York, St. Louis Fed President Bill Poole talked about the differences in thinking between Fed and private sector forecasters. Unlike traders and portfolio managers who make decisions based on up-to-the-minute data, Fed policymakers take a longer view.

He explained the care policymakers must take to avoid creating economic disturbances with the comments they make. "One way to avoid misinformation is to avoid providing any information. Put another way, if my mouth is not open, I cannot put my foot into it, "Poole said. "In my view, however, it is important to try to convey correct information. I do not believe that I would be doing my job if fear of providing misinformation led me to provide no information."

I mean, really. Is this content deserving of front page highlighting by the Fed? Maybe Bill Poole is auditioning for The Daily Show? Who knows?

I do know that Bill Poole can be called an idiot for his Friday afternoon timing in saying, "It would be a mistake to bake in the cake more rate cuts." Jay Leno should have such timing.

Can you tell from this chart the precise moment that Prof. Poole made that comment to a question from the audience?

Yes, 1400 hours is 2:00pm ET.

On another matter, according to the Reuters/University of Michigan index by the same name, consumer sentiment remained unchanged at the end of September. “The 83.4 reading matched the August report but still remains lower than the 90.4 index in July, signalling consumers believe the economic situation has not improved despite fed liquidity injections and rate cuts.” (Knobias)

Here’s the (Bill Cara) Buy-side Index (LOL; it’s the S&P500):
July (1455.27)
Aug (1473.99)
Sept (1526.75)

Traders say thank you, Prof. Bernanke. Consumers, though, are less than impressed, say Reuters/University of Michigan.

And speaking of impression, the ill-timed Bill Poole remark cost traders -0.6 pct of the value of their US portfolio assets in a single hour. Two hours from the end of the quarter-yearly accounting period, Bill Poole, was not the time to opine, “It would be a mistake to bake in the cake more rate cuts". He should have heeded his own words, placed today up in a billboard on the home page of the St. Louis Fed, “If my mouth is not open, I cannot put my foot into it.”

In one hour, portfolios around the world dropped -$100 billion (actually, a little over $97 billion). Thank you, Prof. Poole. What was that you were saying fifteen minutes earlier about your feet and your mouth?

The Cara Global 100 Stockwatch

Here are the Friday session Cara 100 gainers.

Here are Cara 100 losers on Friday.

Here are the Cara 100 stocks that hit 52-week intra-day highs or lows in the Friday session.

The volume is picking up, so traders must now pay more attention to the Daily RSI-7 data. When it rolls over above 70 and 80 and then falls below 70, that is another Sell Alert, especially if happening on rising volume.

Here are the Cara 100 stocks that had extreme volume changes. Many stocks on Friday had an increase of more than +25 pct of the average daily volume. Try to watch the big-volume, declining-price movers in connection to their action with the Daily RSI-7 data.

Key Stocks plus Cara 100 In Focus

The folks at KNOBIAS, Inc provided the Cara 100 watchlists.

Relative Strength Index (RSI) analysis of the Cara 100 company stocks .

Here are the charts of up to a dozen stocks with RSI-7 above 70 and below 30, from Friday. The market has, for a couple days, been over-bought. Traders are anticipating more central bank rate cuts.

RSI > 70 (12 of 35)

RSI < 30 (2)

(When available) Here are the Cara 100 stocks trading with the highest and lowest RSI-7, sorted by (i) daily and (ii) monthly values, for Friday:

“Chris,” used BillCara2.com data that is unsmoothed, unlike the data from Worden used by “David”. That explains the differences in the RSI-7 values.

You can be whip-sawed easier with unsmoothed data, but in any period where volatility is low, the unsmoothed RSI technical indicator system is a more useful one, I find. If I believe in a Buy decision say, then I want to have a reference point continuum that is going to give me a decision support signal just a bit ahead of other traders, which I can do with unsmoothed data.

Industry and Cara 100 “Impulse” Review

Applied weekly to major industry groups, the “impulse system”, based on the excellent work of Dr. Alex Elder, gives a sense of market internals.

“Jock” reports:

Weekly Impulse Report

Alex Elder’s “impulse system” considers both the “inertia” in prices (where prices stand vs. their 26 wk. moving average) and their “momentum” (the rate their 13wk. and 26wk. moving averages are converging or diverging).

When both these indicators (EMA and MACD-H) tick up, the reading is “green”; when both decline, it’s “red”. Applied weekly to major industry groups, indices, and their components, a sense of market internals emerges.

This week saw 24 GREEN industries, and 0 RED (the exact same tally as last week).

Of the Cara 100 components, 67 are green (last week: 68), 5 red - MU (last week: 1). TEK counts as GREEN but does not appear below for lack of historical trading data:

The component stocks of the major indices, on a weekly basis, were (green/red):

ALL the following stock indices were GREEN this week: DJIA, NDX, Nasdaq Comp, S&P 500, Russell 2000, and Wiltshire 4500.

The CRB commodity index stayed GREEN. GOLD & SILVER stocks stayed GREEN.

The US dollar index stayed RED – and hit YET ANOTHER 36-year low!

Bottom line: There was ZERO change in the number of “green” industries or indices. Index components of the NDX strengthened, but weakened in all other stock indices.
Only in the Russell 2000 was the weakening dramatic. The US$ index fell another 1%.

International Economics Review

Econoday Weekly International Report

US Economic Calendar for next week

US Equity Markets Review

DJIA (interactive) chart

Traders are taking note of a possible double top.

On Friday, the DJIA lost -17 points (-0.12 pct) to close at 13895, up +75 points from the previous Friday’s 13820.

The broad market indexes are now well above both the 50-day and 200-day Moving average technical lines of resistance, and the volume is picking up, which means that traders are generally less cautious. The Daily RSI-7 data (see from Chris) shows the market is over-bought. This combo warrants close monitoring.

We have to watch the post-quarter trading for signs of a market sell-off. As I pointed out a week ago, selling into strength the stocks in your portfolio that have already had a Sell Alert and then a subsequent big run-up in price to a second Sell Alert is usually the right decision.

NASDAQ Composite (interactive) chart

On Friday, the Nasdaq Composite had a loss of -8 points (-0.30 pct) to close at 2701, which is a gain on the week of +30 points.

The problem with the tables is not the html code or the MT system. It is with the server for BillCara2.com, which is down. It is a server that basically copies Investertech.com, and is managed by Investertech. Their server is up, but in going down, mine fails to deliver the data I need for tables and charts. If and when it comes up, these tables ought to print, but I will now be away for most of the weekend, which makes it impossible to do a Week In Review for now. Sorry.

The good news is you won't get to hear me crow about the "near record high in the DJIA" or the 750 gold! Besides, my back started flaring up again, I was spending so much time bowing to the mirror. (LOL)

I think you all know that forecasting specific targets is a mug's game. When it comes to price, we have to focus on trend and cycle reversals, and the reasons why, and that is what is important here. That, and building a portfolio around quality companies.

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 42.12 -0.37 -0.87% 1.32% 6.44% 8.70% 21.70% 5.04% 10.64% 32.33%

XLP 27.94 0.05 0.18% 1.01% 2.05% 4.14% 6.32% 3.21% 5.51% 9.53%

XLI 41.00 0.14 0.34% 0.91% 3.69% 5.59% 16.38% 5.18% 14.24% 23.23%

IYH 70.79 -0.29 -0.41% 0.08% 1.64% 3.78% 6.52% 0.91% 5.81% 8.31%

IYZ 33.85 -0.18 -0.53% 0.00% 3.74% 2.76% 14.13% 0.39% 8.77% 22.73%

SMH 38.30 -0.06 -0.16% -0.73% 3.12% 2.41% 14.09% -0.75% 11.86% 12.12%

XLU 39.93 -0.50 -1.24% -0.97% 0.58% 3.34% 8.45% 1.47% -0.08% 15.94%

XLY 36.73 0.08 0.22% -1.00% -0.05% 0.58% -4.65% -6.68% -3.92% 4.50%

XLE 74.94 -0.56 -0.74% -1.00% 3.04% 8.77% 32.45% 9.00% 23.36% 40.34%

XLF 34.20 -0.26 -0.75% -1.16% 0.97% 2.55% -7.37% -6.15% -4.47% -1.16%

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 166.43 3.24 1.99% 7.50% 25.47% 42.13% 76.55% 51.99% 98.39% 101.34%

PBR 75.50 -1.41 -1.83% 3.28% 12.50% 27.34% 51.52% 25.29% 58.98% 84.82%

XOM 92.56 -0.41 -0.44% 0.27% 4.39% 8.38% 24.90% 10.88% 22.26% 37.88%

TOT 81.03 -0.77 -0.94% -0.50% 3.98% 9.93% 14.18% 4.17% 17.78% 23.75%

IMO 49.56 0.45 0.92% -1.16% 4.34% 16.01% 38.98% 8.35% 33.01% 48.61%

SU 94.81 -0.62 -0.65% -1.16% -1.57% 8.73% 28.28% 8.45% 27.72% 32.38%

ECA 61.85 0.51 0.83% -1.21% 0.18% 6.55% 36.41% -0.48% 21.51% 31.96%

CVX 93.58 0.07 0.07% -1.33% 3.23% 7.33% 31.86% 11.55% 26.17% 45.76%

STO 33.92 0.46 1.37% -2.02% 6.47% 20.24% 32.04% 14.75% 26.57% 37.72%

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

RIO 33.93 -0.05 -0.15% 11.43% 24.51% -29.27% 17.73% -23.58% -8.32% 60.73%

BHP 78.60 0.95 1.22% 8.37% 19.20% 27.16% 102.21% 35.85% 62.50% 104.47%

GGB 26.22 0.00 0.00% 4.88% 13.21% 14.40% 59.68% 5.22% 47.14% 96.11%

AA 39.12 0.12 0.31% 4.60% 10.26% 8.22% 33.38% 0.38% 15.06% 40.97%

RTP 343.40 4.80 1.42% 4.51% 14.91% 29.88% 68.25% 14.70% 51.28% 80.08%

MT 78.36 -0.19 -0.24% 2.96% 14.81% 21.58% 92.06% 26.55% 49.43% 131.63%

TS 52.62 -0.26 -0.49% 1.49% 13.72% 12.99% 8.45% 7.83% 19.46% 47.15%

NUE 59.47 -1.07 -1.77% -0.05% 4.21% 14.63% 9.12% 3.09% -9.48% 21.02%

TCK 47.71 0.15 0.32% -0.65% 11.34% 16.28% -31.10% 11.08% -32.91% -24.39%

PKX 178.77 -2.36 -1.30% -1.78% 8.77% 20.72% 125.07% 50.84% 79.27% 176.73%

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 26.23 0.32 1.24% 2.54% 10.21% 9.06% 47.19% 18.15% 51.97% 98.56%

BA 104.99 -0.47 -0.45% 2.34% 5.68% 8.40% 17.74% 10.92% 15.99% 32.21%

MMM 93.58 0.19 0.20% 2.07% 5.12% 4.72% 19.58% 7.40% 21.26% 25.36%

HON 59.47 0.27 0.46% 1.33% 5.37% 5.65% 31.86% 5.61% 27.26% 44.94%

UTX 80.48 -0.21 -0.26% 1.32% 5.70% 8.99% 28.13% 12.56% 21.74% 27.46%

FDX 104.75 0.11 0.11% 0.62% -4.06% -3.87% -4.57% -6.14% -4.82% -4.95%

GE 41.40 0.01 0.02% 0.36% 2.60% 7.81% 9.03% 8.78% 15.67% 17.15%

CAT 78.43 0.96 1.24% 0.35% 7.20% 5.05% 28.24% -1.36% 17.27% 19.41%

ERJ 43.92 -0.05 -0.11% -0.30% 5.05% -0.14% 7.70% -9.80% -1.94% 10.02%

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

NKE 58.66 0.49 0.84% 2.44% 2.50% 5.20% 20.13% 0.63% 10.10% 33.14%

BC 22.86 -0.09 -0.39% 2.19% 3.86% -8.12% -28.38% -30.50% -28.14% -28.38%

TM 116.86 0.98 0.85% 1.56% 3.25% 3.15% -13.63% -5.64% -10.97% 7.61%

EBAY 39.02 -0.25 -0.64% 0.05% 3.20% 16.13% 29.33% 21.63% 17.11% 43.46%

DIS 34.39 0.18 0.53% -0.61% 2.47% 2.75% 0.56% 0.35% -0.78% 10.79%

CCL 48.43 -0.66 -1.34% -1.59% 8.73% 7.62% -4.95% -0.14% 2.22% 4.47%

WHR 89.10 0.83 0.94% -3.37% -2.30% -6.36% 5.24% -20.91% 4.38% 4.52%

SBUX 26.20 -0.77 -2.86% -4.62% -5.21% -4.20% -25.67% 0.27% -17.43% -23.99%

JCP 63.37 -0.44 -0.69% -4.68% -1.32% -3.97% -18.82% -11.68% -22.58% -8.33%

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

WFMI 48.96 0.82 1.70% 8.73% 12.86% 10.89% 7.65% 26.02% 8.87% -20.35%

WAG 47.24 -0.69 -1.44% 4.03% 4.33% 5.87% 2.54% 7.19% 0.64% 4.40%

PEP 73.26 0.64 0.88% 2.55% 5.32% 7.96% 16.80% 12.41% 16.38% 11.15%

KO 57.47 0.14 0.24% 1.63% 1.90% 7.62% 18.30% 9.59% 19.68% 28.54%

MO 69.53 0.05 0.07% 1.44% 3.73% 0.40% 7.10% -0.95% 8.90% 19.88%

PG 70.34 0.24 0.34% 1.37% 3.73% 8.20% 8.99% 14.50% 11.17% 12.13%

DEO 87.73 -0.07 -0.08% 1.15% 4.35% 4.88% 10.31% 3.07% 10.27% 22.29%

ABV 73.13 0.83 1.15% 0.92% 6.03% 8.47% 48.94% 7.06% 37.62% 62.15%

BUD 49.99 -0.27 -0.54% -1.15% -0.38% 3.29% 1.56% -2.89% -0.85% 5.42%

WMT 43.65 0.04 0.09% -1.31% 0.76% 0.76% -8.20% -9.93% -8.09% -11.82%

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

AET 54.27 0.27 0.50% 3.69% 5.42% 7.53% 26.56% 8.32% 21.36% 40.52%

AMGN 56.57 0.01 0.02% 2.08% 0.44% 12.96% -17.30% 1.93% 0.55% -21.58%

JNJ 65.70 0.16 0.24% 0.89% 3.96% 6.66% -1.05% 6.92% 9.45% 1.36%

BMET 45.99 0.06 0.13% 0.24% 0.31% 0.48% 10.90% 1.05% 8.47% 41.68%

NVS 54.96 0.29 0.53% -0.25% 1.14% 5.23% -5.47% -0.94% -2.95% -6.16%

BMY 28.82 -0.19 -0.65% -0.62% 1.55% 0.07% 9.25% -10.08% 3.67% 15.28%

PFE 24.43 -0.32 -1.29% -0.65% 0.58% -0.49% -7.07% -4.61% -4.16% -14.01%

DNA 78.02 -1.05 -1.33% -1.71% -1.23% 6.11% -4.62% 4.95% -5.49% -6.42%

GSK 53.20 0.02 0.04% -1.90% -0.39% 3.87% -1.13% 1.01% -2.62% -1.10%

UNH 48.43 -0.83 -1.68% -2.97% -2.97% -1.26% -7.88% -6.42% -13.29% -1.32%

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 216.74 -0.04 -0.02% 3.22% 13.72% 26.47% 7.98% -1.18% 3.27% 28.25%

HBC 92.60 -0.35 -0.38% 0.04% 2.99% 3.94% -0.40% 0.02% 6.01% 1.07%

CS 66.33 0.36 0.55% -0.09% 2.98% 2.60% -5.39% -6.42% -9.40% 13.58%

DB 128.39 -0.06 -0.05% -0.69% 2.63% 5.58% -5.14% -10.59% -3.29% 6.12%

UBS 53.25 0.14 0.26% -1.48% 2.66% 3.28% -13.26% -11.25% -10.38% -9.94%

LEH 61.73 -0.80 -1.28% -1.55% 3.75% 14.80% -21.49% -18.98% -13.98% -15.86%

C 46.67 -0.21 -0.45% -1.77% 0.06% 0.95% -15.53% -9.92% -8.60% -6.60%

MS 63.00 -1.55 -2.40% -2.23% -4.70% 4.72% -22.81% -26.16% -20.72% -12.97%

JPM 45.82 -0.39 -0.84% -2.78% 0.61% 4.21% -4.68% -6.95% -5.66% -2.18%

MER 71.28 -0.26 -0.36% -4.62% -4.51% -1.25% -23.85% -17.37% -15.08% -9.42%

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

CTSH 79.79 0.05 0.06% 5.17% 10.71% 10.93% 2.61% 4.93% -13.99% 6.30%

ADBE 43.66 0.21 0.48% 4.08% 0.58% 3.41% 9.37% 7.88% 1.80% 14.62%

INFY 48.39 -0.19 -0.39% 3.80% 2.50% 4.20% -13.31% -4.82% -6.33% 0.31%

QCOM 42.26 0.03 0.07% 3.50% 7.18% 8.14% 12.81% -2.67% -0.87% 10.83%

SNDK 55.10 0.32 0.58% 2.88% 7.43% 0.80% 32.07% 13.58% 22.96% 1.72%

CSCO 33.13 -0.10 -0.30% 2.57% 4.97% 5.41% 19.43% 21.49% 27.77% 41.88%

ADSK 49.97 0.17 0.34% 2.57% 5.07% 10.07% 23.20% 4.72% 32.20% 43.96%

SAP 58.67 0.89 1.54% 0.05% 2.05% 11.18% 10.28% 14.26% 29.69% 17.88%

INTC 25.86 0.10 0.39% -0.04% 3.73% 2.29% 27.08% 8.70% 35.68% 26.83%

ORCL 21.65 0.02 0.09% -1.50% 7.87% 7.13% 23.64% 9.95% 17.22% 20.75%

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 3.64 3.56 3.62 3.81

6 Month 3.91 3.87 3.92 4.13

2 Year 3.97 3.94 4.02 4.15

3 Year 4.01 3.98 4.09 4.17

5 Year 4.24 4.21 4.29 4.30

10 Year 4.58 4.57 4.62 4.56

30 Year 4.83 4.83 4.88 4.88

Municipal Bonds
Maturity Yield Yesterday Last Week Last Month

2yr AA 3.40 3.37 3.40 3.64

2yr AAA 3.49 3.45 3.48 3.55

2yr A 3.47 3.43 3.46 3.53

5yr AAA 3.48 3.48 3.53 3.58

5yr AA 3.49 3.52 3.54 3.67

5yr A 3.70 3.70 3.75 3.81

10yr AAA 3.77 3.78 3.78 4.44

10yr AA 3.78 3.87 3.76 4.44

10yr A 3.90 3.91 3.91 4.67

20yr AAA 4.33 4.45 4.48 4.66

20yr AA 4.73 4.85 4.98 4.71

20yr A 4.33 4.46 4.76 4.73

Corporate Bonds
Maturity Yield Yesterday Last Week Last Month

2yr AA 4.81 4.79 4.85 4.90

2yr A 4.89 4.86 5.08 4.92

5yr AAA 5.06 5.03 5.10 5.06

5yr AA 5.14 5.11 5.18 5.32

5yr A 5.21 5.19 5.28 5.27

10yr AAA 5.38 5.37 5.42 5.62

10yr AA 5.79 5.77 5.84 5.75

10yr A 5.78 5.79 5.89 5.80

20yr AAA 5.96 5.97 6.03 6.18

20yr AA 6.33 6.34 5.97 6.30

20yr A 6.29 6.30 6.36 6.32

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

TLT 88.72 0.20 0.23% 0.94% -1.32% -0.08% -0.39% 5.22% -0.03% -1.02%

IEF 83.88 0.03 0.04% 0.54% -0.50% -0.29% 1.45% 3.91% 0.67% 0.68%

TIP 102.03 0.08 0.08% 0.42% -0.17% 0.80% 2.82% 3.53% 0.69% 0.85%

AGG 100.02 0.15 0.15% 0.31% 0.12% 0.26% 0.11% 1.81% -0.35% -0.19%

SHY 81.26 -0.18 -0.22% 0.10% 0.26% 0.17% 1.52% 1.55% 0.99% 1.12%

FRE 59.01 -0.98 -1.63% -2.22% 2.86% -1.76% -13.08% -4.06% -3.20% -9.87%

FNM 60.81 -1.19 -1.92% -3.05% -0.77% -4.09% 1.59% -8.42% 8.47% 10.34%

CFC 19.01 0.14 0.74% -3.06% -2.11% -3.21% -54.86% -47.80% -45.23% -45.40%

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

BVN 47.78 -2.46 -4.90% 4.14% 11.79% 29.80% 73.05% 31.59% 60.39% 69.49%

GG 30.56 0.90 3.03% 1.06% 11.70% 32.24% 11.78% 29.22% 22.78% 28.03%

ABX 40.28 1.10 2.81% 0.55% 8.28% 28.32% 35.03% 40.50% 39.33% 29.89%

GFI 18.09 0.03 0.17% 0.00% 7.81% 21.57% -1.31% 15.00% 0.61% -2.95%

AEM 49.80 1.66 3.45% -0.02% 3.45% 15.71% 27.95% 41.88% 36.51% 53.00%

KGC 14.98 0.03 0.20% -3.23% 7.85% 27.71% 31.17% 28.92% 8.39% 21.20%

MDG 33.10 0.83 2.57% -3.41% 8.81% 20.94% 25.90% 35.66% 31.35% 31.30%

NEM 44.73 0.20 0.45% -5.95% -1.37% 7.73% 1.20% 15.55% 4.63% 3.69%

AUY 11.78 0.24 2.08% -6.58% -0.08% 8.27% -4.46% -2.97% -18.14% 22.84%

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

EWZ 74.09 -0.49 -0.66% 6.88% 15.59% 24.92% 58.65% 21.78% 52.73% 95.59%

FXI 180.00 -2.09 -1.15% 6.84% 15.54% 23.27% 54.64% 39.55% 75.95% 121.54%

IFN 54.30 -0.23 -0.42% 6.76% 9.26% 19.81% 19.76% 27.61% 35.51% 23.41%

TRF 68.67 -0.83 -1.19% 6.19% 11.42% 11.97% -22.45% 2.66% -2.32% 1.78%

EWJ 14.32 -0.03 -0.21% 3.92% 5.45% 3.99% 0.85% -0.56% -2.98% 6.15%

QQQQ 51.41 -0.17 -0.33% 2.08% 4.45% 6.37% 18.89% 8.14% 16.89% 26.25%

EWC 32.73 0.06 0.18% 1.77% 5.28% 11.25% 32.51% 11.21% 25.07% 36.15%

EWU 25.80 0.15 0.57% 1.48% 4.39% 6.68% 9.54% 1.40% 7.17% 17.52%

IEV 118.79 0.14 0.11% 1.18% 4.92% 6.58% 12.49% 2.37% 10.14% 22.71%

SPY 152.58 -0.51 -0.33% 0.40% 2.48% 4.40% 7.93% 1.40% 6.80% 14.09%

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

GM 36.70 0.24 0.66% 5.04% 7.25% 21.00% 24.62% -1.90% 14.05% 13.69%

AA 39.12 0.12 0.31% 4.60% 10.26% 8.22% 33.38% 0.38% 15.06% 40.97%

MSFT 29.46 -0.03 -0.10% 2.83% 1.45% 3.55% -1.34% -1.37% 6.28% 7.28%

BA 104.99 -0.47 -0.45% 2.34% 5.68% 8.40% 17.74% 10.92% 15.99% 32.21%

MMM 93.58 0.19 0.20% 2.07% 5.12% 4.72% 19.58% 7.40% 21.26% 25.36%

KO 57.47 0.14 0.24% 1.63% 1.90% 7.62% 18.30% 9.59% 19.68% 28.54%

MO 69.53 0.05 0.07% 1.44% 3.73% 0.40% 7.10% -0.95% 8.90% 19.88%

PG 70.34 0.24 0.34% 1.37% 3.73% 8.20% 8.99% 14.50% 11.17% 12.13%

HON 59.47 0.27 0.46% 1.33% 5.37% 5.65% 31.86% 5.61% 27.26% 44.94%

UTX 80.48 -0.21 -0.26% 1.32% 5.70% 8.99% 28.13% 12.56% 21.74% 27.46%

JNJ 65.70 0.16 0.24% 0.89% 3.96% 6.66% -1.05% 6.92% 9.45% 1.36%

IBM 117.80 0.09 0.08% 0.87% 2.32% 2.11% 21.11% 11.73% 24.35% 43.50%

AIG 67.65 0.18 0.27% 0.62% 4.14% 3.13% -6.24% -4.18% 0.09% 2.05%

GE 41.40 0.01 0.02% 0.36% 2.60% 7.81% 9.03% 8.78% 15.67% 17.15%

CAT 78.43 0.96 1.24% 0.35% 7.20% 5.05% 28.24% -1.36% 17.27% 19.41%

XOM 92.56 -0.41 -0.44% 0.27% 4.39% 8.38% 24.90% 10.88% 22.26% 37.88%

AXP 59.37 -0.20 -0.34% 0.15% 0.73% 2.86% -1.64% -3.51% 5.21% 5.96%

INTC 25.86 0.10 0.39% -0.04% 3.73% 2.29% 27.08% 8.70% 35.68% 26.83%

VZ 44.28 -0.40 -0.90% -0.23% 4.14% 5.60% 17.08% 8.21% 17.48% 20.39%

MRK 51.69 -0.61 -1.17% -0.25% 4.34% 4.09% 17.42% 2.70% 18.42% 21.91%

DD 49.56 -0.44 -0.88% -0.26% 3.16% 2.31% 1.06% -3.17% -0.50% 15.26%

T 42.31 -0.52 -1.21% -0.52% 4.62% 6.41% 21.06% 5.83% 7.28% 29.90%

MCD 54.47 -0.09 -0.16% -0.60% -1.77% 11.55% 24.16% 6.10% 20.94% 36.89%

DIS 34.39 0.18 0.53% -0.61% 2.47% 2.75% 0.56% 0.35% -0.78% 10.79%

PFE 24.43 -0.32 -1.29% -0.65% 0.58% -0.49% -7.07% -4.61% -4.16% -14.01%

WMT 43.65 0.04 0.09% -1.31% 0.76% 0.76% -8.20% -9.93% -8.09% -11.82%

HPQ 49.79 -0.48 -0.95% -1.46% 2.91% 2.79% 19.63% 10.18% 23.76% 40.69%

C 46.67 -0.21 -0.45% -1.77% 0.06% 0.95% -15.53% -9.92% -8.60% -6.60%

JPM 45.82 -0.39 -0.84% -2.78% 0.61% 4.21% -4.68% -6.95% -5.66% -2.18%

HD 32.44 -0.32 -0.98% -5.89% -9.08% -12.42% -21.01% -18.41% -13.12% -11.03%

I’ll have to defer even a brief Week In Review today. Wedding Day for Will and Fiona.

Posted by Posted by Bill Cara on September 29, 2007 11:38:08 AM | Category: Saturday Report

Discourse

I'll correct the html or do the system updates asap

Posted by: Bill Cara at September 29, 2007 6:53 AM [link]

There is an interesting interview with John Hathaway,(Tocqueville Gold Fund Manager)in Barons
today.

Posted by: BruceThomas at September 29, 2007 7:30 AM [link]

Bill,
I hate to seem so cynical and jaded, but this incredible posture that Greenspan has assumed since his retirement, is just so much revisionist history. I just don't give a whit, what he and the rest of these academics, Wall street HBB types are pumping anymore! I'm thankful for the resources that I have found from your Blog, and this community of folks trying to stay on top of their own life situations as best they can. I thank you for all of your efforts. All the Best!

Posted by: BruceThomas at September 29, 2007 7:50 AM [link]

Bill,
With regard to Poole's comment yesterday, I assume that their impact will have evaporated by lunch-time on monday. However, in the meantime, didn't he just save a investors a nice chunk of performance fees?
John

Posted by: JonEB at September 29, 2007 8:45 AM [link]

Well BruceThomas, I thank you. I am not too happy with the extra spam and virus attacks I got this week after I made some comments about US healthcare. The Investertech.com system is running fine, but my charts come from the sister server in the same office, BillCara2.com, which has been under attack.

With time being an issue for me today (its my son's wedding day), I will probably have to finish the Week In Review on Sunday evening since everybody is off to the church/hotel, followed by parties during the day tomorrow.

Anyway, I do what I can do.

Posted by: Bill Cara at September 29, 2007 8:45 AM [link]

JonEB, I agree that an hour or two later, these exogenous events like a Poole remark will even out in the market. It's just that for a Fed Head to make that remark two hours before the end of the quarter shows his lack of thinking, and his interest in performing. The market will take care of itself; it doesn't need intervention by these people.

Posted by: Bill Cara at September 29, 2007 8:51 AM [link]

Bill,
I have repeatedly posted Durable Goods Consumption expressed as a percentage of PCE.
Guess what? It hit another new low. This level is below the last two major recession.
You can see this graphically on my site.
I truly believe that this number is indicating a change in consumption behavior. Maybe the FED should look at this graph too.

Posted by: Will Rahal at September 29, 2007 9:06 AM [link]

Yamana Gold Inc.

AUY-N, YRI-T
Scotia capital has reduced its yearly target price from $us 14.25 to $us 11.60,with a sector perform rating......one year net return ..minus % 4.4

Full report on scotia capital weekly edge report.

No position

Posted by: Trading My Chips at September 29, 2007 9:15 AM [link]

Mr. Greenspan must believe that he is doting on a society much in need of a sanguine character.

Where the U.S. fed may be wrong, is that they did not anticipate a deflationary boom and have inflated unnecessarily. Our great fortune that then, they did not set immediate, draconian controls on capital. But instead, we are facing a crackup boom of extraordinary proportions in some sectors of the world economy and hyperinflation in others.

Where we may be wrong is that we now fully expect every central banker the world over to overstep their mandate, enter the political arena, demand that immediate, draconian controls on capital are set and save us from our irascible selves. The truly unabashed are just as brusquely calling for more heroin. (I have to wonder in all this if there were as many souls lost in the inquisition as in Iraq, as a by-product of wrong headed foreign policy, which does not bode well for political solutions to economic crises.)

The only people to miss the point by a very large measure are the corporate boardrooms, who believe they are the harbingers of a new world order this time around, in lieu of for instance say, Karl Marx. Deserving champagne socialists, each and every last one of them. There must be at least ONE financier who had clear perception of what they were doing, passing off so much fraudulent paper the world over with no restrictions.

That is the person we should have commenting in the press whether he is lying or not. In order that they are forced to commit words to paper for the record, I recommend to just stop watching television, and re-enact a modern version of Plato's allegory of the cave.

Posted by: FranSix at September 29, 2007 9:35 AM [link]

Some Gold Bars Held By BoE Develop Cracks; Value Threatened

LONDON (AP)--Some of the gold bars kept by the Bank of England to prop up the
pound in times of economic turmoil are showing cracks and fissures, a newspaper
reported Saturday.
Experts say the deterioration could temporarily reduce the value of the
country's 320 metric tons in gold reserves, which the central bank keeps on the
government's behalf, The Times reported.
The complete British reserve is worth around 4 billion pounds.
Bank of England officials were not immediately available for comment.
The bank confirmed the deterioration in response to a Freedom of Information
request by the trade journal Metal Bulletin. The bank said it was working to
establish how much of gold reserves are affect - but believes it is a small
proportion, the report said.
"This is not about purity, this is about physical appearance," the newspaper
quoted the bank as saying.
The deterioration will only be an issue if the central bank needs to sell the
gold. It would then have to be sent off to a refiner so it could be melted down
and turned into new bars, the report said.
The problem is mainly due to the age of the bars, many of which were imported
from U.S. in the 1930s and 1940s, the newspaper said, adding that many other
central bank could face similar problems.

Posted by: DancingWithBulls/Bears at September 29, 2007 10:01 AM [link]

ALOHA !!

Bill ... you make a good case for abolishing the Federal Reserve Bank and all its "capos"! I have stated in the past that the Founding Fathers stopped short in their "seperations". While they got the Seperation of Church and State right they should have added in the Seperation Of Bank and State. I believe they thought they took care of that by stating only gold and silver can be used as money. They never met the founder of the Rothschild banking empire, since he died prior to the American Revolution, but had they have read his words they would have acted more prudently.

“Give me control of a nation's money and I care not who makes it's laws."
- Mayer Amschel Bauer Rothschild

GOVERNMENT IS ONLY AS HONEST AS ITS MONEY ...

Posted by: kaimu at September 29, 2007 10:12 AM [link]

ALOHA !!

HAPPY WEDDING DAY BILL !!

Posted by: kaimu at September 29, 2007 10:14 AM [link]

ALOHA !!

DancingwithBulls/Bears ... ever seen a COMEX bar? What a slag heap! Looks more like a dore bar ...

Posted by: kaimu at September 29, 2007 10:16 AM [link]

LOL! These idiots (Greenspan/Poole) just keep confirming my previous posted view of their ignorance spiced up with dishonesty, manipulation and corruption.

Every time they open their mouths they remove all doubt.

The French invented the Guillotine for this type of circumstance.

Posted by: Craig at September 29, 2007 10:59 AM [link]

Enjoy the wedding Bill.
Congratulations and a lifetime of happiness to Will and Fiona.

Posted by: Craig at September 29, 2007 11:01 AM [link]

Congratulations Bill!

I raise a glass in honor of the new bride and groom. Looking forward to hopefully seeing a few wedding pictures.

Posted by: shark_attack at September 29, 2007 11:41 AM [link]

Cheers Bill! To you and yours on your son's wedding day.

Kaimu ...i have never seen any gold bars in real life. I am quite new to the investing game and had the idea that investing in gold was for experts or dreamers only.Right now my investment portfolio consists of 10 % cash and 90 % gold miners. So far I am pleased with the performance and prospect of the 2 mining companies (Western Goldfields and Sangold Resorces)I own. The one company, Sangold, poured it's first gold bar bar in Aug./06 and had a ceremony to celebrate it. They put pictures of the bar on their site and to be honest it didn't look that great.Sort of a orangy with greyish splotches.I see now that it was what you called a dore bar.

Posted by: DancingWithBulls/Bears at September 29, 2007 11:43 AM [link]

BMD- insider purchases have not been a good indicator of stock price, but fwiw, 45,142 shares were acquired @ 1.50 USD last thursday...

http://tinyurl.com/22pbr7

Posted by: 2nd_ave at September 29, 2007 12:26 PM [link]

...purchaser is listed as a director of BMD + a managing director of lehman brothers...in light of the company's recent announcement re strategic options, may signal something better this time...

Posted by: 2nd_ave at September 29, 2007 12:31 PM [link]

Re. BMD, from fool.com:

"Making matters worse is the company's unwillingness to provide better clarity to already jumpy investors. When an analyst on the call asked a simple question -- what will it take to break even? -- management responded that it had not anticipated such a question."

Posted by: SiO2 at September 29, 2007 12:54 PM [link]

Bill;

I find it interesting that you're unhappy with Bill Poole's comments that "intervened" in the market.....

Uh, how about a 50 bips rate cut into what the economic data suggests was an economic situation that didn't warrant it?

How about the SIX - yes, count 'em - SIX - 23A exemption letters that removed the safety systems put into our banking system after the Depression to prevent another banking system collapse? None of those have been revoked; they are a "who's who" list of big banks with trading affiliates that, presumably, are in trouble.

How about the "surprise" discount window cut THE MORNING OF OPEX IN AUGUST that was intentionally timed to burn anyone who was short SPX options, as they were literally trapped with no way to delta out their position?

Or, on that same cut, the intentional and obvious leaking of the cut to certain "Favored" investment banks and through them to certain other "Favored" parties? I have an email (which I forwawrded to the SEC) where a claim of this "favor" is actually made! How many billions were siphoned off through both of those events?

Fact is, Bill, the rate cuts and 23A letters have been radically contrary to the interests of investors and ordinary people in this country. Have a look at The Dollar lately? I predicted this would happen if rates were cut and it has. Its not going to stop either, other than by taking those cuts back.

That's real inflation that's in your grocery store (Milk has gone from $3.25/gal to well north of $4 in less than three months here) and there's plenty more coming. Taking a couple of percent off everyone's purchasing power in the space of a week - how many billions is that?

"Owners equivalent rent" eh? Explicitly excludes taxes, operating expenses (e.g. electricity) and insurance. What direction have those bills been headed the last few years?

There's only one solution to the housing mess and we're going to get it whether we like it or not. That's big housing price declines - 30-40% peak-to-trough, nationally. The removal of $6.5 trillion in MEWs that have been made over the last 4 years WILL produce a recession - it cannot do otherwise, since that's ~6% of GDP if only half of it goes away.

Yes, I expect "the pigmen" of Wall Street to try to avoid the inevitable. I also expect that if they keep screwing around instead of taking the overdue medicine that we may revisit the 1930s, which will really suck. I don't like the prospect of a return of the 1970s either, but I see the probability of that event to be quite high.

As for a "short and shallow" recession? Good luck on that one. The more tampering that is done the worse this will get; the economic numbers don't lie and destroying the dollar in an attempt to prevent reality from intruding will bring us $10/gallon gasoline, $10/gallon milk, and a destroyed middle class.

There have been people prognosticating a Dollar Index at FORTY for a while now. I've never been that pessimistic (such an event would utterly trash the entire middle class of this nation) but the more tampering I see, the more likely this outcome is.

Posted by: Genesis at September 29, 2007 1:01 PM [link]

I received this mail from Investertech's John Cheng. Maybe one of you sleuth's can get to the bottom of these virus attacks, and contact him. TIA.

-----------------------------

Hi Bill,

The billcara2 .com keeping been attacked from unknown user
it break down the network of billcara2.com server. so the computer
couldn't get information from other computer.
I have restarted the billcara2.com please try it out.
Following IP address are used by the attacker

76.223.24.111 for today and yesterday
76.211.153.97 Sep 27
76.235.160.136 Sep 26
76.237.149.69 Sep 26

May be you can find who is this attacker.
Please send email to notice me if you
experience any down time from billcara2.com
I will restart it as soon as possible.

John Cheng wccheng9 @ hotmail.com
(562) 773-5213

---------------------------

Other than tracing it back to Chicago IL and nearby Kalamazoo MI (probably Western Michigan U), I can't see anything. But we have to catch these people. Maybe you can help?

I'm off now. The server is up, but I can't seem to upload the tables.

Posted by: Bill Cara at September 29, 2007 1:10 PM [link]

Hi Bill.

You probably have the BEST capital markets analysis website on the web and I read it every day for quite some time. This is my first message and the reason for writing it it's because I cannot aggree more with you: What is necessary to Mr. Alan "Ultra-Bear-I-want-a-Recession" Greenspan shut is mouth and enjoy is retirement in a nice beach in Haway, Fiji or Bahamas?

If Mr. Greenspan kept saying everyday US recession is here 100% sure, he can spread the fear and panic and I almost can assure you there will be a recession in US.

If that happen, we should name it the "Greenspan Recession": as Fed chairman he did not do the necessary steps to avoid it; as a former Fed chairman he prophetized it so many times that we should name it after him.

Congratulations and Happy wishes for your family wedding.

Luís (from Lisbon in Portugal).

Posted by: Lugopt at September 29, 2007 1:48 PM [link]

Hello everyone,

In case you were interested in reading NetBank's failure yesterday, on its own website http://www.netbank.com/

Congratulations on the wedding!

Posted by: Novice at September 29, 2007 1:55 PM [link]

I think you're right, Bill, Mr. Greenspan has apparently risen to his level of incompetence (Peter Principle) if he, of all people, can't realize he is hindering the new Fed Chairman by inserting his opinion so freely and so often. He should, with a sense of fair play, keep his opinions to himself now.

Posted by: NT at September 29, 2007 2:26 PM [link]

Regarding recent comments about Canada's healthcare system... and how that caused some spamming of this blogsite... I found your description very enlightening and printed it out. I am for a universal health care system and that may be a political hot potato, but it's time has come for the United States. Our two countries, Canada & USA should share information and take the best from each countries ideas. We've always been good neighbors and should stay that way.

As a child and on into early adulthood, I often went way north of Fort Frances, Ontario, Canada, on fishing trips (from Indiana). That began my love affair with Canada. And, I never lost it!

Posted by: NT at September 29, 2007 2:37 PM [link]

A POTENTIAL DANGER FOR PRECIOUS METALS.

I think g034 has been asking the gold bears for their reasons, and I can respond that the most obvious reasons are the chance of deflation from housing-induced recession and a credit crunch (which increases the value of dollar). Here is a less-known reason I found in John Mauldin’s newsletter from 9/29/07:

"You may not have read about it yet, but there is a tsunami of money getting ready to come from China into the world. And I am not talking about the large government balances or their new sovereign wealth fund.

This week, the Chinese announced they are going to let one of their larger mutual funds invest outside of China. Local Chinese investors will be able to start to diversify and businesses will start to be able to take their capital and employ it abroad. This is just the start of the process. I expect that in just a few years Chinese will be able to buy a wide range of funds and investments.

This will take off a lot of the market pressure for a stronger yuan, as the Chinese will need to buy dollars and euros and other currencies in order to make those investments. Further, those who have invested in China at some point are going to want to take their profits back home."

This means to me that there will be an upward pressure on dollar (as Chinese will be buying it), and it will be difficult to judge the extent of that pressure and hence to estimate its limits.

Can anyone logically show why these upward forces on dollar will be dwarfed by the downward forces?

Posted by: David at September 29, 2007 2:39 PM [link]

Bill, I'm on it. I'll do what I can to track these guys down. It isn't too hard if you know who to talk to. And these guys keep it up. No matter how good they are they will always leave traces.

Also, I might need to reference a little more information from the billcara2.com server. I need info on exact times and if possible copies of the 'packets' they sent. This would help track them down.

-Quentusrex

Posted by: Quentusrex at September 29, 2007 3:07 PM [link]

Greetings,

Having followed this website for some time now, and having found Bill's work and charisma fantastic, I have decided apply for Membership of the community.

Originally a lawyer, I am currently serving as an investment banker in Europe, and I believe that hopefully I can add some value to the discussions here.

So, please all accept my best regards, and with Bill's permission I will step in.

Cheers!

Posted by: maromatics at September 29, 2007 3:45 PM [link]

Dear Bill,

What a wonderful day this is for you and your family!

I'm sure that I speak for all of us in sending best wishes for Will and Fiona for a bright, good future stretching over many decades.

All the best,
GemmaStar

Posted by: GemmaStar at September 29, 2007 4:06 PM [link]

Bill,

I called and traced the ip's as far as I could. Pretty much, here is what you want to do.

Call the FBI.

They have a cybercrimes devision that will be able to trace this a lot further than any one else. While I really hate the Patriot Act, it does give them the power now to easily find who is attacking your server. They are going to want a lot more info though. I called John Cheng, and recommended he call the local branch of the FBI. But somehow I don't think the message got across.

I would recommend the Chicago branch of the FBI. Here is their contact info:
2111 W. Roosevelt Rd., Chicago, IL 60608
(312) 421-6700

Posted by: Quentusrex at September 29, 2007 4:09 PM [link]

David,
Here are some relevant articles about China and gold. The first talks about selling dollars and buying Euros and gold.
http://www.freemarketnews.com/WorldNews.asp?nid=49620
The second is about Chinese institutional and retail investors buying gold futures on the Shanghai Stock Exchange
http://www.china.org.cn/english/business/226035.htm
The third has to do with the retail gold trade in China
http://english.people.com.cn/english/200110/31/eng20011031_83541.html

The point is that the Chinese are great savers, and the opportunity to save gold is extremely attractive. As Chinese wealth increases, so will their investments in gold.
John

Posted by: JonEB at September 29, 2007 5:11 PM [link]

Here is how I see the end game playing out:

Start with daily gold prices:

http://www.gold.org/value/stats/statistics/dailyshort2000.html

Definitely broken out in the Yen, but the Yen has appreciated the most this year. This is something that I was looking for, so we have a confirmation. The rising currency against a backdrop of rising bullion is a signal to deflation. It would become a global signal if it happens in all currencies. But remember, there is a major correction in store as well. Gold will not be immune.

We are truly in the end game, so its time to remain on our toes. The green flag is out, and the checkered flag is a few laps hence.

So what am I looking for next during October?

1. A decline in the gold/silver ratio to 51.33 or thereabouts by mid-Oct. I am expecting gold prices to conform and peak out afterwards, late October, or in November. But it could happen in October as well. So no easy pickins.

2. A gap up in the Silver spot price. If this results in a Gold/Silver ratio weekly close substantially lower than 51.33 before mid-October, then this a hard confirmation. (should look at the weekly Silver chart, haven't looked at it in ages, but will be checking it now.)

3. A rate cut in the EU zone, or Bank Of England. Or perhaps another round of rate cuts with the Fed, while other central banks sit on the sidelines preaching moral hazard. Continued credit crunch, meaning leveraged operations short of gold and silver are less and less viable.

4. A capitulation of the Buck. Very supportive of gold prices in the interim, but note for oil as well as the markets. Relax. The Fed is pimping your ride. That leadfoot accelerator pedal liquifiying the markets is stomping on your nitrous oxide valve. Get my drift?

5. Be wary of the oil prices as any geo-political developments may affect it.

6. Toppy stock market, possibly a major correction somewhere in the emerging markets first. When it comes down, it will all happen very fast.

Repatriation Of Currency

A massive redirection of large amounts of currency may be the result of a correction in the markets. Hard currency. Not just money wired or transferred, I mean hard currency formerly held in banks loaded onto amoured trucks with armed guards and driven to the airport type of repatriation.

Posted by: FranSix at September 29, 2007 6:10 PM [link]

From John Mauldin's weekly letter.More on the china, the elephant in the room. Assuming he is correct I wonder what the impact will be on gold.
"...
But where we should be paying attention is Asia and in particular the Chinese yuan. It also made new highs against the dollar. It has risen almost 10% in a little over two years, bouncing off its 50 day moving average with regularity. And I think it is being set up to rise at a faster pace.....You may not have read about it yet, but there is a tsunami of money getting ready to come from China into the world. And I am not talking about the large government balances or their new sovereign wealth fund. "

Posted by: jasper at September 29, 2007 6:12 PM [link]

Guys:

I'll be glad to share an easy RSI charting tool with the community. It plots one-year historical RSIs with price/volume stats on one chart for a single stock, so it's a little different from the spreadsheet distributed earlier that give you current RSI for multiple stocks. This one, you just type the stock name, and date if you want, the tool will grab data from internet and do all the calculation and charting for you. So just an easy tool to save some of your time. Let me know if you are interested, so I can email you the tool. If there are many interests, I can put it on the web for download.

Posted by: Nonzero at September 29, 2007 6:47 PM [link]

re the end game in metals-

the last scenario bill laid out had gold moving to 750-800 sometime this year > sharp correction > up to 4 figures by 2009-10...

the parabolic moves in gold and the miners in the 30s and again in the 70s tell me the move will be very difficult to play on a buy-and-hold basis unless you zoom out to a relatively long time frame or keep position size in the 5-15% range...it'd be like bronco riding and wreak havoc on your state of mind...on the other hand, it's the kind of opportunity (if you believe in it) that you don't want to miss...haven't gotten around to looking closely at the above charts, but would be willing to bet that if one were to zoom in to the price moves on a daily or weekly basis it would be the rare investor who would be able to withstand the whipsaws..embedded in any substantial price spike would be price corrections of 50-100%..at <5% of the port you could probably maintain your position-any more than that and emotional investment gets in the way...IMHO

Posted by: 2nd_ave at September 29, 2007 7:12 PM [link]

Dear 2nd Ave,

You know from our interactions in the past that I have nothing but a deep, abiding respect for you and for your trading skills and intellectual ruminations.

It is in the spirit of one who seeks to understand and who never truly knows to ask you, in the dollar climate in which we exist coupled with global growth, why on earth should we conclude that now, of all times, is the "end game in metals"?

Just asking for an answer that makes sense.

Posted by: shark_attack at September 29, 2007 7:47 PM [link]

yes, the rum and oj's kicking in...more to follow.

Posted by: shark_attack at September 29, 2007 7:48 PM [link]

Nonzero, would definetly be interested in the RSI charting tool.

Woody

Posted by: Woody at September 29, 2007 7:50 PM [link]

The ‘Peter Principle’ ought to be renamed the ‘Greenspan Principle’.

Brilliant.

Posted by: badius at September 29, 2007 8:11 PM [link]

Nonzero, sign me up for your RSI charting tool.

Posted by: trader at September 29, 2007 8:29 PM [link]

shark- poor choice of words...note that the expectation is still for 4-digit gold prices by 2010 (Rob McEwen's presentation at last year's Denver Forum plays just as well today)...i suppose the end game can reasonably encompass a period of 2-3 years...the real end game will be the final weeks and months, when (if history repeats itself), the bulk of the move will occur > just when you've finished patting yourself on the back for selling at the first high of 2000, it will embark on a violent round-trip to 5000 and back, undoubtedly pulling all of us back in for a nice little ride...far-fetched now, but we have all been through milder versions of this scenario throughout 2005-07..august 16th was actually good practice > reading the real-time posts shows how difficult it can be to maintain composure when you are significantly long and faced with buy or sell decisions...(you've been making some pretty good moves on GSS, also good preparation)...

Posted by: 2nd_ave at September 29, 2007 8:35 PM [link]

Smarmy CEO. Would you buy a used car from this man?

Countrywide CEO sold big as stock dropped

Quick changes in Mozilo's trading plan raise red flags, experts say.

http://tinyurl.com/37rzvb

Posted by: Seamus at September 29, 2007 10:52 PM [link]

Nonzero, I'd be most interested in your RSI tool as well .

Posted by: Jock at September 30, 2007 12:21 AM [link]

For those who are interested in the RSI charting tool, please email me at nonzero_5945@yahoo.com and I'll email you the tool.

Posted by: Nonzero at September 30, 2007 1:09 AM [link]

http://www.abalert.com/Public/MarketPlace/Ranking/index.cfm?files=disp&article_id=1044679138

For those interested, if you are want to look at the players and the $'s in the asset back securities, visit this source. The above reference is for MBS's, but you can see more at that site.

Posted by: Leisa at September 30, 2007 7:20 AM [link]

From the Financial Times: The FDIC said NetBank had approximately $109m in1,500 deposit accounts that exceeded the federal deposit insurance limit. These customers will have access to their insured deposits but will become creditors for the their uninsured funds.
---------------------------
Something to consider. Richard Suttemeier has been an untiring reporter of the exposures of banks to loans. Remember that the capital reserves to loans ratio on banks is quite small--it's leveraged. When one loans indiscriminately, the end result is akin to stepping on the tail of a deadly snake--it bites you. Well for any of you with high concentrations of cash in one bank, please consider the above.

I know that many here have a disdain for the Fed and the government. Personally, I appreciate the fed and I appreciated the role of regulators in the banking system.

Posted by: Leisa at September 30, 2007 7:28 AM [link]

Quentusrex, sll four of those addresses respond to pings and 2 of them are open to http traffic. I'm no security expert, but my guess is these addresses represent hosts that have been compromised by the true source of the attack. They all belong to sbcglobal, so maybe another tack would be to contact their abuse department:

RAbuseHandle: ABUSE6-ARIN
RAbuseName: Abuse - Southwestern Bell Internet
RAbusePhone: 1-800-648-1626
RAbuseEmail: abuse@sbcglobal.net

Posted by: number2son at September 30, 2007 10:09 AM [link]

I started asking about the "whys" of gold shorts about, what, 10% plus ago?

China wants hard assests, mining companies, etc.

"China wants more $usd" - roflol.

A near term sell off in gold from overbought conditions OR rally in $usd from oversold conditions DOES NOT constitute affirmation of Chinese Sovereign Fund buying $usd - IMO.

Posted by: g034 at September 30, 2007 12:28 PM [link]

ALOHA !!

g034 ... Sovereign Funds do not disclose their buys and sells, so how would anyone know? Sovereign Funds are essentially hedge funds run by governments. Nobody knows what they do unless the Funds themselves announce it.

Leisa ... In the US Constitution the only entity that is allowed to "produce money" is the US Treasury. You'd have to explain to me and any other economists why we need a duplicate entity like the Federeal Reserve. Everything the Federal Reserve can do the US Treasury can do. The US Treasury could regulate banks. The US Treasury can hire "experts" and produce bank data and click a $1bil mouse click! The ex-Treasury Secs can write a book and say things are bad! What is it that the FED does that is so important? No the FED is there for one purpose ... TO CONTROL OUR MONEY VIA AN ELITE GROUP OF PRIVATE BANKERS! Who regulates the FED and their many "working groups" of corruption? Leisa you point to the FED regulating banks yet they have not even touched derivatives. There is NO regulated derivatives market and Greenspan was asked numerous times in front of Congress by politicians like RON PAUL to regulate them. Greenspan failed to do so because he knew he would have his ass kicked by the private bankers that control him. Now we can see the fruits of such "wisdom" and the absolutely horrific job of regulating the FED has done. It was just last week that I posted the FED has decided to do "on-site" inspections of FDIC banks once every 18 months instead of every 12 months. I get my orchids inspected "on-site" every 6 months! Seems inspections should get tighter not looser, given the recent bank runs! How is that a good job of regulating? The truth is the FED never has been good at regulating and never has done a good job of being transparent or honest. As proof I offer the new "Mr. Greenspin" ... What will he say next that we should go on a gold standard and dismantle the FED? Thats what he was saying in the 1960s before he was with the FED. I am nowhere convinced the FED is needed at all ... all they do is make "bubbles" for the benefit of brokerages and bankers! Who always gets fleeced by these FED "bubbles"? The taxpayer ... FDIC ... Federal Deposit Insurance Corp ... who is insuring those deposits? Is it the FED? Is it the US government? Neither the FED or the US government produce one single dime. It is the US taxpayer that insures those deposits! Please don't ever lose sight of who actually "produces wealth" in this country. The FED, the banks, the Goldmans, the politicians ... they all make a living off of "OPM" (Other Peoples Money) ... period!!! They are the parasites "We The People" are the host ... Anyone who believes we need a FED has been totally conned ... The FED only protects the elite private bankers that own them.

Constitutionally it is the US TREASURY that is suppose to control and issue the money of "We The People" ... The Federal Reserve Bank is mentioned nowhere in the US Constitution. We were sold out in 1913 by the gutless US Congress.

Posted by: kaimu at September 30, 2007 2:38 PM [link]

Roger Nusbaum this morn:
"John Hathaway, the manager of the Tocqueville
Gold Fund (TGLDX) had a take in Barron's on why gold can move higher that I don't recall hearing before. Perhaps people have been saying essentially the same thing but still I thought this was interesting.

He said "the disparity between the amount of paper that has been created since 1980 and the amount of gold that has been produced since then is just enormous." So we have had a much larger increase in the supply of money compared to the supply of gold. FWIW, Hathaway thinks gold can go quite a bit higher"

I hope that this would carry over to gold miners but after listening to podcast by Don Coxe commodity companies/miners may easily have a negative perception of too much risk. PEs are hard to expand. In the case of miners the country-political risk is obvious; but, the severity of this perception may be underestimated. The junior miners in the western hemisphere could then be that much more valuable.

Posted by: jasper at September 30, 2007 3:01 PM [link]

Starting to see more stories about declining home prices in the Bay Area involving non sub-prime borrowers:

http://tinyurl.com/27vj6w

Only a matter of time before the downturn begins to envelop the inner counties also:

http://tinyurl.com/yww26o

..although my take would be the declines will be contained, as San Francisco and San Mateo counties have no land left to build on.

Posted by: 2nd_ave at September 30, 2007 4:27 PM [link]

Jasper

Somewhere...I read:

"The role of gold's real price and that of the exploration sector is to meet an extrordinary increase in investment demand that typically follows an era of remarkable credit expansion"

Investment demand/price may overcome current cost pressures that miners are experiencing. A slight shift in demand could overwelm supply in short order. A financial implosion or exogenous event leading to a flight to safety would probably create a situation where gold is unavailable...period.

I agree there are concerns over rising costs, production delays, national politics,labor issues,etc. Let's hope investment demand/price takes care of those issues.

Posted by: astral25 at September 30, 2007 4:57 PM [link]

ALOHA !!

2nd_ave ... Back in the early 1980s I used to live in Benicia and used to work for an electrical contractor who built MarineWorld. This same contractor used to have smaller projects all over Napa and I used to go over to the Napa Builders Exchange quite frequently as we were based in Vallejo and were union tied to IBEW Local 180, Solano County. I recall American Canyon quite well. In the contractor bidding circles it was considered the "toxic dump" of Napa in terms of residential, but I guess all that has changed now and any land has value if it is within a 100mile radius of San Francisco! From my outsider perspective I can see the whole Bay Area is so over priced! I don't know about San Francisco because thats where the BIG jobs are and there will always be demand there because of that, but some of these outlying cities there is little to no employment unless you want to work service for Starbucks! Then house prices must come down because who can afford $850k on a service job unless you take out a fixed 100 year loan! I also lived in Walnut Creek and Pleasant Hill and if you don't have a job at Bishop Ranch working for Chevron or out at one of the refineries like Shell in Martinez then in my opinion you don't have job security. Add in the commutes that most people make to earn money. Gas prices are not helping that and when the US Dollar tanks further the gas prices will only get worse along with food prices. I mean at some point even BART will be too pricey! What is it to go from Walnut Creek to SF on BART now? $7 ... $8 ... one way?

When things go bad its a domino effect as the credit bubble implodes. You know once dominos start to fall they build up speed and only stop collapsing when there are no more dominos left!

Posted by: kaimu at September 30, 2007 5:24 PM [link]

Various new reports over the past few years have pointed to the Chinese Government using their surplus to purchase hard assets/mining/oil companies. I stand by my statement.

Posted by: g034 at September 30, 2007 5:32 PM [link]

kaimu-

"Then house prices must come down because who can afford $850k on a service job unless you take out a fixed 100 year loan!"

either that or wages continue to inflate...nurses for the 15 Sutter hospitals in the area are planning to strike October 10 after turning down an offer that pegs their average salary at 142,000 /year at the end of a 4 yr contract:

http://tinyurl.com/2gublh

Posted by: 2nd_ave at September 30, 2007 6:17 PM [link]

From the church ceremony at St. Cecilia's through the reception at Novatel in downtown Toronto, and the parties today, the wedding of Will & Fiona Cara was a smashing success.

Unfortunately, I am just plain whacked out, so I will forego the balance of the Week In Review. I'll put up some photo's in the morning. Good night.

Posted by: Bill Cara at September 30, 2007 8:27 PM [link]

ALOHA !!

2nd_ave ... Just so you know back in 2002(five years ago)my company was paying a journeyman union electrician over $110k($53+/hr) plus full bennies on top! A union electrician only needs a GED or better ... We just marked it up 50% and passed it onto the taxpayers ... Nice to see the nurses are finally keeping up! Are you saying that nurses at 15 hospitals will keep the San Fran Bay Area real estate going? Union wages have always been over inflated otherwise why have unions? I have to say that a union nurse is worth their pay more than a union electrician is ... The trade unions will suffer due to the construction downturn. The healthcare unions will flourish because of the impending baby-boomers unless socialized medical care takes over and salaries are capped! Anyway you look at it all unions are vulnerable to the business cycles and a monetary crisis. Everybody wants their lifeboat to be bigger and better ...

Posted by: kaimu at September 30, 2007 8:34 PM [link]

Here are some REAL price predictions:

http://www.nowandfutures.com/forecast.html

Looks like gold will keep going into December. Dow Jones to hit new highs very early 2008. "Dawdler" to capitulate into October, hitting a low of 68¢.

Posted by: FranSix at September 30, 2007 8:52 PM [link]

I have seen the argument that if a large amount of money was printed in recent years then the price of gold should go up repeated on this blog a number of times. Isn’t it necessary to consider what has been happening to that money? If that money has been leaving circulation and was being invested in some projects that create new goods or services, then that money should have no impact on the price of gold. Only the liquid uninvested cash has the potential of being invested into gold.

Posted by: David at September 30, 2007 9:05 PM [link]

"Are you saying that nurses at 15 hospitals will keep the San Fran Bay Area real estate going? Union wages have always been over inflated otherwise why have unions?"

if we're talking about "service workers," then a large percentage are unionized...apart from nurses and contractors > teachers, police and fire departments, county employees...the entire region is just inflated...would be willing to bet if n2son sold his house here and bought one in "nola," he would be left with at least "7 figures in cash"...only problem is he would need to rent in order to continue working here...and after reading jasper's comments, probably has no desire to retire there...but people have worked out arrangements where they continue to work here while owning homes out of state...

Posted by: 2nd_ave at September 30, 2007 10:17 PM [link]

ALOHA !!

2nd_ave ... government employees all depend on tax revenues. When business cycles and credit bubbles implode tax revenues evaporate. The country, state and feds will be forced to layoff workers. No union is 100% immune, especially government workers! I can't imagine what rents in the Bay Area are like by now ... Maybe you can find a shack in Rio Vista for under $2000USD per month!

All these unions have rested their past, present and future on the back of the US taxpayer, either directly or indirectly. I know that if it were not for public works projects and the infamous "prevailing wage" IBEW would be in a world of hurt! Tony Soprano milked the prevailing wage system! Guess what ... they all do ... even those with no Mafia connections! I used to ... I got fed up with the whole absurd game. After awhile it gets sickening ... Really ... it literally made me sick to be part of such a corrupt system! I walked away from a lot of money in exchange for peace of mind in paradise. I went from hardly ever seeing my wife to seeing her 24/7 now ... I don't know if we would have made it if I was still doing my contracting business in SF. What price can you put on that? For me it was the right thing to do.

Posted by: kaimu at September 30, 2007 10:54 PM [link]

Here is the long term chart of the Bovespa, which has not had time to correct. It clearly shows a three stage bull, with a mania top:

http://investmenttools.com/images/de/worldm/bvspm.gif

close up:

http://finance.yahoo.com/q/bc?s=%5EBVSP&t=3m&l=on&z=m&q=l&c=

Gold is forming a left shoulder not unlike the Bovespa. It's moving from 730 to a new high, probably in the $900 range. The Bovespa moved from 12,798 to 17, 883, after which it declined slowly into a trough, below its initial high, before moving into phase III, a period of 36 months. Of course it declined to a low of 7713 before the run-up. 2000 - 2003 was a major bear market time. The mania has lasted 5 years so far. Notice the Stage II high was January, 2000 right after its move-up.

The housing bubble experienced declines prior to moving in stages, but not the Nasdaq. The housing bubble experienced declines due to the mania in the tech bubble, prior to emerging in a three stage bull, and had a second stage decline to its former stage I high:

http://www.nowandfutures.com/images/real_estate1.jpg

Should the Bovespa, or any other major emerging market experience the onset of a bear market, this would send money into western markets. There are many markets around the world going parabolic right now.

An emerging markets correction would bolster the Gold price, not unlike the Nasdaq correction supporting the Housing bubble, I believe. A correction in the emerging markets would bring a bear market in metals, so I believe this would lead to the trough in gold prices prior to the mania phase.

Taking those numbers for a 4.5X gain from stage I peak to the present top near 60,000, a similar market in Gold would suggest a price of ~$3300+.

The forecast page at Now and Futures.com is very helpful in demonstrating the possiblity for the next month or two, for Gold, Silver and the Dow:

http://www.nowandfutures.com/forecast.html

One thing about Bullion, is that it will never have the same benefits of credit expansion as did your Nasdaq, Housing Index, and Bovespa. Its price will come as a result of the scarcity of hard currency.

Posted by: FranSix at September 30, 2007 11:02 PM [link]

Bill,
In regards to methods of payment for your hard work and others, or at least covering your costs. I am personally willing to begin paying in some form. May I suggest a payment method that is voluntary with maybe 3 different rates $50, 100, 200 or more yearly, based on what someone can afford. This way it is inclusive so no-one is left out and those that wish to make larger contributions may without getting any additional service except for the benefit of the larger profit they have realised from your wealth of knowledge, or their ability to contribute based on their level appreciation. At the same time the service remains free for those that do not have or do not wish to contribute. I know it may be a bit idealistic, but as a study in human nature it may offer some interesting results... measurable by monetary feedback. Anyway just a thought... I have made some money from investing based on insight gained from you and your contributors, and am eager to pass it along. Congrats on the wedding, looking forward to the pictures. Athan

Posted by: yaba at September 30, 2007 11:33 PM [link]

Ouch, this is the first I've heard of Citi cutting their earnings forcast for this quarter by %60 off from 3Q last year. I think this counts as an 'almost' dead body in the water...

Posted by: Quentusrex at October 1, 2007 7:53 AM [link]

Bill,

Greenspan is unbelievable. He dumped such a big mess on the successor, retired just in time, well-knowing about the problems that he created, and still want to change the history texts by pointing all the fingers at other people.

His middle name should be Shame.

Frugal

Posted by: 1stMillionAt33 at October 1, 2007 10:11 AM [link]

NOT.V-

may live to regret this one...purchased at 3.62 near the close as it has now filled in the opening gap from last thursday...we'll see...

Posted by: 2nd_ave at October 1, 2007 8:26 PM [link]

(above incorrectly posted under the september 29 heading..reposted to october 1...)

Posted by: 2nd_ave at October 1, 2007 9:13 PM [link]

September 29, 2007

Saturday’s Commentary & Chat, 09/29/2007 6:50 AM ET

The Cara Global 100 Stockwatch

Industry and Cara 100 “Impulse” Review

International Economics Review

US Equity Markets Review

Discourse

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