Bill Cara: Saturday’s Commentary & Chat, 10/27/2007 8:25 AM ET

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October 27, 2007

Saturday’s Commentary & Chat, 10/27/2007 8:25 AM ET

Last Saturday, I wrote, “I think you have learned a lot. I am speaking to the right audience, now. The Cara community is building”. Today, I will use the word “we” because I too am learning. There is not a day go by when I don’t learn something from you.

The Cara community is evolving. It was just a few months ago, many of you were commenting -- a statement, a fact, an opinion, here and there. But, that once relatively direct level of communication has now been elevated to a sophisticated discourse among people from many countries. You are teachers, students, engineers, lawyers, accountants, bankers, business owners and employees, full-time traders and portfolio managers, investment advisors, steelworkers, authors, cab drivers, farmers, foresters, doctors... I know who you are because many of you write me.

Nothing makes me happier than when you tell me that you feel comfortable here -- whether you live in a $200,000 house or a $20 million mansion, whether your car is seven years old like mine or seven days old, whether you are 20 or 80, man or woman, white, black or yellow, Arab, Jew or whatever.

It is safe to say that nobody here has anything to prove -- except to themselves -- and that we have nothing to lose and everything to gain by sharing our strengths, exposing our weaknesses, providing insights, testing ideas.

We are growing intellectually, socially and financially, which is a blessing to us all, including me. You write me all day, every day, to thank me for providing this free blog and leadership to this community, but I want you to know how thankful I am for the privilege.

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

XLU 41.54 0.56 1.37% 4.85% 0.36% 4.03% 12.82% 7.34% -1.47% 15.58%

XLE 76.95 1.02 1.34% 3.36% -0.29% 2.68% 36.00% 9.09% 19.97% 35.88%

XLF 33.69 0.99 3.03% 3.22% -5.07% -1.49% -8.75% -0.56% -9.80% -5.76%

XLB 43.21 0.71 1.67% 2.64% -0.30% 2.59% 24.85% 8.49% 9.75% 29.72%

XLP 28.34 0.19 0.67% 2.20% 0.21% 1.43% 7.84% 5.75% 2.83% 8.79%

XLI 40.30 0.03 0.07% 1.51% -2.35% -1.71% 14.39% 1.13% 8.30% 16.81%

IYH 71.31 0.02 0.03% 1.28% -1.38% 0.73% 7.30% 3.84% -0.74% 6.67%

XLY 36.44 0.31 0.86% 1.22% -4.05% -0.79% -5.40% -3.16% -8.19% -2.64%

IYZ 32.41 0.26 0.81% -1.04% -4.25% -4.25% 9.27% -3.71% 1.03% 10.88%

SMH 33.79 -0.06 -0.18% -5.16% -7.02% -11.78% 0.66% -12.05% -9.94% -1.74%

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

PBR 91.58 3.80 4.33% 13.47% 8.92% 21.30% 83.78% 42.01% 76.76% 103.78%

CEO 197.80 4.89 2.53% 10.81% 11.09% 18.85% 109.82% 73.62% 126.63% 133.81%

IMO 51.80 1.38 2.74% 5.35% 6.13% 4.52% 45.26% 10.45% 35.07% 42.31%

STO 34.15 0.53 1.58% 3.86% 0.98% 0.68% 32.93% 15.57% 21.31% 31.96%

ECA 66.97 0.38 0.57% 2.79% 3.14% 8.28% 47.71% 11.47% 25.55% 39.43%

CVX 91.65 0.42 0.46% 2.67% 0.26% -2.06% 29.14% 4.79% 17.23% 35.78%

SU 106.48 0.33 0.31% 2.17% 7.46% 12.31% 44.07% 17.39% 31.68% 36.88%

TOT 80.44 2.47 3.17% 1.64% 1.82% -0.73% 13.34% 2.35% 8.97% 16.90%

XOM 92.21 0.64 0.70% 0.08% -1.36% -0.38% 24.42% 4.51% 14.48% 28.75%

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

PKX 185.18 10.40 5.95% 16.21% -0.57% 3.59% 133.14% 32.37% 73.75% 162.67%

RTP 368.00 16.48 4.69% 7.87% -1.18% 7.16% 80.30% 32.07% 49.50% 69.91%

GGB 30.37 1.22 4.19% 7.31% 1.23% 15.83% 84.96% 19.33% 50.72% 98.76%

NUE 63.42 1.15 1.85% 7.26% 12.83% 6.64% 16.37% 20.87% -4.17% 6.36%

RIO 35.50 2.01 6.00% 6.73% -1.17% 4.63% 23.18% -25.18% -14.44% 37.76%

TS 54.08 2.61 5.07% 5.81% 1.62% 2.77% 11.46% 13.95% 16.35% 38.88%

AA 39.35 0.96 2.50% 5.10% 3.20% 0.59% 34.16% 3.55% 9.89% 42.52%

MT 81.57 2.63 3.33% 5.08% 4.03% 4.10% 99.93% 32.96% 52.18% 88.51%

BHP 86.16 3.76 4.56% 4.26% 1.66% 9.62% 121.66% 36.22% 75.02% 100.75%

TCK 49.64 0.55 1.12% 2.88% -5.65% 4.05% -28.32% 12.16% -34.96% -34.43%

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 29.67 0.63 2.17% 9.32% 6.46% 13.11% 66.50% 30.88% 46.16% 99.80%

BA 96.02 0.02 0.02% 2.26% -0.69% -8.54% 7.68% -7.41% 1.87% 21.33%

CAT 75.04 0.37 0.50% 2.00% -6.55% -4.32% 22.69% -4.15% 2.79% 20.35%

HON 59.44 0.31 0.52% 1.92% -3.68% -0.05% 31.80% 0.03% 10.71% 38.81%

GE 40.38 0.22 0.55% 0.85% -1.58% -2.46% 6.35% 2.15% 12.67% 13.46%

FDX 103.94 0.64 0.62% 0.60% -3.32% -0.77% -5.31% -6.28% -4.00% -9.97%

ERJ 47.95 -0.05 -0.10% 0.02% -2.52% 9.18% 17.58% 7.66% 1.89% 13.95%

MMM 86.13 0.04 0.05% -0.57% -8.54% -7.96% 10.06% -4.35% 7.06% 8.70%

UTX 75.44 -0.28 -0.37% -0.74% -6.08% -6.26% 20.11% 1.33% 11.52% 15.63%

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

BC 21.86 1.66 8.22% 9.30% -2.24% -4.37% -31.52% -23.41% -35.21% -33.76%

TM 109.73 3.98 3.76% 3.13% -2.57% -6.10% -18.90% -7.94% -10.31% -8.57%

NKE 64.61 0.77 1.21% 2.02% 2.31% 10.14% 32.32% 13.55% 20.00% 37.97%

DIS 34.38 -0.07 -0.20% 1.69% -3.07% -0.03% 0.53% 0.88% -2.25% 7.50%

JCP 56.01 0.68 1.23% 1.19% -10.08% -11.61% -28.25% -19.58% -31.96% -27.20%

CCL 47.67 0.24 0.51% 0.89% -5.10% -1.57% -6.44% 5.82% -1.65% -3.62%

SBUX 26.17 0.00 0.00% 0.27% -0.65% -0.11% -25.76% -4.59% -17.76% -32.67%

EBAY 36.64 1.39 3.94% -0.22% -8.17% -6.10% 21.45% 10.93% 7.07% 11.71%

WHR 83.57 -0.38 -0.45% -2.98% -6.39% -6.21% -1.29% -20.19% -21.93% -3.59%

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

WAG 40.18 0.20 0.50% 6.16% 3.50% -14.94% -12.78% -11.11% -12.33% -7.29%

KO 61.57 0.27 0.44% 4.78% 6.52% 7.13% 26.74% 16.21% 18.22% 30.61%

ABV 79.07 1.72 2.22% 4.12% 0.16% 8.12% 61.04% 13.17% 33.27% 82.36%

MO 72.97 0.71 0.98% 3.50% 4.15% 4.95% 12.40% 9.24% 5.25% 19.19%

PEP 72.34 0.36 0.50% 2.76% 0.78% -1.26% 15.34% 8.23% 8.93% 13.35%

PG 71.75 0.40 0.56% 1.34% 0.07% 2.00% 11.17% 14.69% 13.91% 12.99%

BUD 51.80 -0.47 -0.90% 0.95% -2.02% 3.62% 5.24% 6.78% 2.37% 7.42%

WFMI 47.70 0.09 0.19% 0.95% -7.38% -2.57% 4.88% 30.86% 0.61% -27.06%

DEO 90.62 0.18 0.20% 0.35% 0.77% 3.29% 13.94% 11.93% 8.33% 21.20%

WMT 44.64 0.76 1.73% -0.76% -5.14% 2.27% -6.12% -4.66% -8.34% -13.74%

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 55.88 -0.11 -0.20% 5.73% 5.16% 2.97% 30.32% 12.10% 18.34% 35.01%

AMGN 57.18 -0.13 -0.23% 2.20% -1.70% 1.08% -16.40% 1.82% -8.59% -24.72%

BMY 29.75 0.39 1.33% 1.47% -0.07% 3.23% 12.77% -0.34% 1.78% 21.28%

UNH 47.99 -0.54 -1.11% 1.14% -3.42% -0.91% -8.71% -4.42% -8.95% -2.80%

PFE 24.31 0.02 0.08% 1.00% -3.76% -0.49% -7.53% 0.66% -9.02% -10.89%

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

JNJ 64.30 0.35 0.55% 0.11% -2.49% -2.13% -3.16% 5.48% 0.09% -6.57%

GSK 50.52 -0.23 -0.45% -0.47% -3.26% -5.04% -6.11% -1.39% -13.52% -7.89%

NVS 52.14 0.46 0.89% -0.86% -2.58% -5.13% -10.32% -2.56% -11.27% -14.22%

DNA 74.14 -0.54 -0.72% -1.15% -4.03% -4.97% -9.36% -2.95% -8.49% -12.28%

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 235.92 9.26 4.09% 8.37% 1.01% 8.85% 17.54% 20.91% 4.94% 22.00%

LEH 60.42 3.50 6.15% 5.59% -6.51% -2.12% -23.16% -6.33% -21.21% -22.94%

JPM 47.32 1.27 2.76% 5.11% 1.07% 3.27% -1.56% 7.35% -10.62% -0.94%

MS 64.78 2.78 4.48% 4.57% -3.67% 2.83% -20.63% 0.43% -23.23% -16.54%

HBC 95.85 3.25 3.51% 2.08% -1.05% 3.51% 3.10% 6.62% 3.36% 0.09%

DB 127.05 2.75 2.21% 1.64% -3.31% -1.04% -6.13% -4.67% -17.90% 1.03%

C 42.63 1.40 3.40% 0.64% -10.95% -8.66% -22.84% -10.83% -20.41% -16.13%

CS 66.15 1.75 2.72% 0.53% -3.96% -0.27% -5.65% 3.02% -15.85% 8.11%

MER 66.09 5.19 8.52% -0.26% -12.10% -7.28% -29.40% -12.90% -27.37% -24.30%

UBS 53.83 0.88 1.66% -1.27% -6.06% 1.09% -12.31% -1.01% -18.62% -14.83%

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 21.35 0.35 1.67% 2.89% -4.86% -1.39% 21.93% 6.70% 12.66% 13.99%

QCOM 41.33 0.54 1.32% 2.53% -1.97% -2.20% 10.33% -1.78% -8.76% 8.79%

ADBE 47.00 -0.20 -0.42% 1.58% 1.91% 7.65% 17.74% 14.11% 8.65% 19.17%

ADSK 47.65 0.40 0.85% 1.47% -6.20% -4.64% 17.48% 9.21% 14.10% 27.82%

CSCO 31.90 0.72 2.31% 1.27% -3.10% -3.71% 15.00% 7.52% 20.15% 31.82%

INFY 49.22 0.64 1.32% 1.03% -4.78% 1.72% -11.82% -3.30% -7.31% -5.74%

SAP 53.70 0.34 0.64% 0.26% -3.85% -8.47% 0.94% 0.02% 9.70% 7.29%

CTSH 39.94 0.74 1.89% -0.20% -2.39% 0.10% 2.73% -2.18% -10.41% 0.63%

INTC 25.94 0.05 0.19% -1.37% 1.53% 0.31% 27.47% 7.77% 17.43% 19.10%

SNDK 41.02 0.90 2.24% -3.96% -13.46% -25.55% -1.68% -27.54% -9.25% -18.19%

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 3.80 3.79 3.63 3.57

6 Month 3.87 3.86 3.89 3.88

2 Year 3.76 3.77 3.77 3.98

3 Year 3.77 3.76 3.78 4.03

5 Year 4.05 4.02 4.02 4.26

10 Year 4.40 4.38 4.39 4.62

30 Year 4.70 4.68 4.68 4.89

Municipal Bonds
Maturity Yield Yesterday Last Week Last Month

2yr AA 3.26 3.32 3.34 3.40

2yr AAA 3.35 3.34 3.37 3.42

2yr A 3.39 3.36 3.47 3.40

5yr AAA 3.42 3.42 3.46 3.49

5yr AA 3.36 3.38 3.43 3.49

5yr A 3.59 3.59 3.71 3.72

10yr AAA 3.74 3.72 3.76 3.77

10yr AA 3.70 3.68 3.67 3.83

10yr A 3.87 3.85 3.89 3.90

20yr AAA 4.37 4.36 4.40 4.42

20yr AA 4.56 4.55 4.60 4.82

20yr A 4.38 4.37 4.41 4.42

Corporate Bonds
Maturity Yield Yesterday Last Week Last Month

2yr AA 4.57 4.56 4.52 4.84

2yr A 4.67 4.71 4.68 4.89

5yr AAA 4.80 4.77 4.79 4.99

5yr AA 5.01 4.98 4.95 5.16

5yr A 5.00 4.97 4.98 5.22

10yr AAA 5.27 5.21 5.30 5.45

10yr AA 5.58 5.50 5.59 5.79

10yr A 5.68 5.62 5.59 5.84

20yr AAA 5.71 5.65 5.68 6.01

20yr AA 5.88 5.85 5.87 6.37

20yr A 6.05 5.98 6.01 6.35

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

CFC 17.30 4.23 32.36% 13.59% -7.68% -9.00% -58.92% -40.85% -55.55% -55.09%

FNM 60.03 2.77 4.84% 2.01% -9.10% -1.28% 0.28% -1.75% 1.57% 0.23%

TIP 103.35 -0.09 -0.09% 0.37% 2.43% 1.29% 4.15% 3.08% 2.55% 3.32%

SHY 81.49 0.01 0.01% 0.07% 0.83% 0.28% 1.81% 1.28% 1.46% 1.60%

TLT 90.50 -0.21 -0.23% 0.04% 3.28% 2.01% 1.61% 3.99% 3.02% 2.31%

AGG 100.76 -0.09 -0.09% 0.03% 1.32% 0.74% 0.85% 1.95% 0.62% 0.92%

IEF 84.88 -0.21 -0.25% -0.04% 2.20% 1.19% 2.66% 3.12% 2.38% 2.77%

FRE 52.69 2.10 4.15% -0.68% -13.10% -10.71% -22.39% -11.28% -19.56% -23.80%

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

KGC 18.40 0.90 5.14% 8.75% 12.40% 22.83% 61.12% 37.21% 38.76% 46.96%

GG 33.41 1.11 3.44% 4.73% 2.71% 9.33% 22.20% 30.92% 36.31% 35.87%

NEM 47.57 1.40 3.03% 4.18% 0.00% 6.35% 7.62% 14.57% 10.17% 6.54%

AUY 14.42 0.51 3.67% 3.52% 5.87% 22.41% 16.95% 27.16% 1.98% 48.35%

ABX 43.05 0.78 1.85% 3.49% 1.82% 6.88% 44.32% 31.93% 51.74% 41.29%

MDG 39.43 1.08 2.82% 2.47% 6.37% 19.12% 49.98% 38.98% 54.57% 61.00%

AEM 54.90 2.45 4.67% 2.25% 0.40% 10.24% 41.06% 32.64% 55.74% 55.52%

GFI 18.15 0.25 1.40% 1.91% -3.46% 0.33% -0.98% 8.55% -1.04% 3.66%

BVN 52.84 1.27 2.46% 0.74% -0.62% 10.59% 91.38% 28.82% 60.71% 102.61%

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

IFN 57.80 2.55 4.62% 11.80% 0.56% 6.45% 27.48% 27.45% 36.93% 20.95%

EWZ 82.40 2.92 3.67% 8.98% 3.49% 11.22% 76.45% 32.37% 53.82% 94.71%

FXI 209.50 2.00 0.96% 5.12% 3.58% 16.39% 79.98% 54.16% 91.88% 143.04%

TRF 72.50 2.23 3.17% 4.54% 2.14% 5.58% -18.13% 6.71% 0.49% 4.32%

EWU 26.81 0.45 1.71% 3.59% 0.45% 3.91% 13.84% 9.29% 7.67% 16.26%

IEV 122.94 1.78 1.47% 3.22% 0.49% 3.49% 16.42% 9.12% 6.61% 21.87%

EWC 34.54 0.64 1.89% 2.92% 0.91% 5.53% 39.84% 14.52% 24.92% 37.61%

QQQQ 53.93 0.88 1.66% 2.84% 0.75% 4.90% 24.72% 10.11% 15.85% 25.95%

SPY 153.62 1.78 1.17% 2.64% -1.75% 0.68% 8.67% 3.78% 2.65% 10.69%

EWJ 14.14 0.24 1.73% 1.80% -2.75% -1.26% -0.42% -1.81% -2.28% 0.43%

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

MSFT 35.03 3.04 9.50% 16.11% 16.11% 18.91% 17.31% 16.84% 20.38% 23.56%

MRK 57.58 0.52 0.91% 8.42% 7.61% 11.39% 30.80% 10.79% 9.82% 24.61%

AXP 60.67 0.91 1.52% 6.23% -4.05% 2.19% 0.51% 0.68% -2.37% 4.93%

JPM 47.32 1.27 2.76% 5.11% 1.07% 3.27% -1.56% 7.35% -10.62% -0.94%

AA 39.35 0.96 2.50% 5.10% 3.20% 0.59% 34.16% 3.55% 9.89% 42.52%

KO 61.57 0.27 0.44% 4.78% 6.52% 7.13% 26.74% 16.21% 18.22% 30.61%

MCD 58.47 0.40 0.69% 3.63% 2.54% 7.34% 33.28% 18.12% 18.77% 38.85%

MO 72.97 0.71 0.98% 3.50% 4.15% 4.95% 12.40% 9.24% 5.25% 19.19%

DD 48.37 0.03 0.06% 3.20% -1.41% -2.40% -1.37% 1.30% -2.44% 5.77%

VZ 45.60 0.69 1.54% 3.00% 0.15% 2.98% 20.57% 7.55% 20.09% 17.71%

BA 96.02 0.02 0.02% 2.26% -0.69% -8.54% 7.68% -7.41% 1.87% 21.33%

HPQ 52.47 1.08 2.10% 2.08% 1.78% 5.38% 26.07% 11.40% 24.81% 33.95%

CAT 75.04 0.37 0.50% 2.00% -6.55% -4.32% 22.69% -4.15% 2.79% 20.35%

HON 59.44 0.31 0.52% 1.92% -3.68% -0.05% 31.80% 0.03% 10.71% 38.81%

HD 31.35 0.65 2.12% 1.92% -6.25% -3.36% -23.67% -15.95% -19.59% -16.13%

DIS 34.38 -0.07 -0.20% 1.69% -3.07% -0.03% 0.53% 0.88% -2.25% 7.50%

PG 71.75 0.40 0.56% 1.34% 0.07% 2.00% 11.17% 14.69% 13.91% 12.99%

IBM 113.73 0.92 0.82% 1.29% -3.46% -3.46% 16.92% -2.40% 12.72% 24.24%

PFE 24.31 0.02 0.08% 1.00% -3.76% -0.49% -7.53% 0.66% -9.02% -10.89%

GE 40.38 0.22 0.55% 0.85% -1.58% -2.46% 6.35% 2.15% 12.67% 13.46%

C 42.63 1.40 3.40% 0.64% -10.95% -8.66% -22.84% -10.83% -20.41% -16.13%

GM 37.77 0.08 0.21% 0.45% -11.42% 2.92% 28.25% 17.30% 16.39% 9.92%

T 41.46 0.46 1.12% 0.22% -1.96% -2.01% 18.63% 3.73% 6.42% 20.52%

JNJ 64.30 0.35 0.55% 0.11% -2.49% -2.13% -3.16% 5.48% 0.09% -6.57%

XOM 92.21 0.64 0.70% 0.08% -1.36% -0.38% 24.42% 4.51% 14.48% 28.75%

MMM 86.13 0.04 0.05% -0.57% -8.54% -7.96% 10.06% -4.35% 7.06% 8.70%

UTX 75.44 -0.28 -0.37% -0.74% -6.08% -6.26% 20.11% 1.33% 11.52% 15.63%

WMT 44.64 0.76 1.73% -0.76% -5.14% 2.27% -6.12% -4.66% -8.34% -13.74%

INTC 25.94 0.05 0.19% -1.37% 1.53% 0.31% 27.47% 7.77% 17.43% 19.10%

AIG 62.15 0.36 0.58% -1.77% -8.72% -8.13% -13.86% -6.71% -10.95% -8.31%

Posted by Posted by Bill Cara on October 27, 2007 08:25:41 AM | Category: Saturday Report

Discourse

Bless you mate. You ever get over to Oz, I'll buy a beer.

Posted by: Rafish at October 27, 2007 8:57 AM [link]

Cheers Bill!

Have a great weekend.

Posted by: maromatics at October 27, 2007 9:05 AM [link]

The pleasure is all ours, Bill.

Thanks for all you do!

Posted by: Bull Hunter at October 27, 2007 9:46 AM [link]

Bill,
You deserve a lot of credit for this learning.

I can't resist the temptation to show you a chart that I posted, showing Durable Goods and Core Capital Equipment decreasing at an alarming rate yr/yr. This is the worse drop in 25 years, excluding the 20001 recession.
The ratio of both variable tracked the investment boom/bust of the 1990's and is near its low.

Posted by: Will Rahal at October 27, 2007 9:47 AM [link]

maromatics, and where are you located?

btw, I cleaned up some broken or outdated html links today in the goldminers charts. I also discovered a mistake in the bond yield table (and text) from last week, which I fixed.

Today I am going to be downloading MAC OS Leopard and also OpenSource Office for the Windows machines that I picked up (unfixed) after almost two weeks at the computer repair store. Canadians ought to realize there is an inverse relationship between the massive advertising done by "Canada's biggest computer seller" and the quality of their product and service. Here I was about to buy my third system from them in 15 months and they treated me like dirt. I watched an older man agree to a $400 service contract on a system that wasn't worth $200, and a monitor he couldn't sell for $25, say to the techie, "Go ahead and do the same service you did a year ago plus install the new Windows." It is a matter of when people don't know better, they get ripped off, and when they do know better (like me), they still get ripped off.

I have come to the conclusion that it is best to (i) max out the memory and the quality of the disk drive, (ii) have your data backed up daily and remotely, (iii) use open source if its a Windows machine, and (iv) when it breaks, don't repair it, but sell it to people who buy those things and buy yourself a new system.

If, every three years, I buy one iMac, one Windows PC and one laptop (meaning one new system per year), I'll be a happy camper. Unfortunately I am running at half that pace, and also paying the equivalent of a 4th machine in repairs and a 5th machine in redundant software. That's unacceptable.

And why buy a repair and maintenance contract? Our time is too valuable to be taking systems to and from the repair shop. In the past ten days I was there four times -- one hour return trip 26 km each way on a busy highway. Totally senseless. And why would I buy 50 hours a year of Apple Genius time when to visit the Apple store it takes 60 minutes to drive, park and return?

But, if the MAC OS Leopard is as good as it's cracked up to be, then I think I will be spending more time on it.

Next week, I intend to start work with a MAC/Adobe expert to make some changes in how I present information using the Internet. Should be fun.

Posted by: Bill Cara at October 27, 2007 10:19 AM [link]

Next week I am going to be meeting a securities lawyer to discuss how to take myself public. A blogger has never done this to my knowledge. But yesterday I met a couple experienced investment bankers and reviewed the business model, and the answer I got was "you should go for it".

Over the years, I have taken companies public many times for other people, and since somebody planted the seed this week, I have been mulling this over. Just think, my own computer dept! (LOL)

The issue really is a simple one. It's fun being a one-man band, talking about all the stuff that people do and all, but it would not be responsible for me to take on advisory clients without having a support team. Providing financial services (which I have decided to do) is a business, and I'm only going to do it in a business-like fashion.

So, in addition to books, reports, advertising, and training, I wish to offer personal advisory, Funds management, offshore brokerage, a Swiss bullion vault, and corporate finance. That is a business.

Now, I am not going to threaten the market share of Merrill Lynch (or should I say Wachovia --LOL) any time, but having a team of five, six or ten will certainly allow me to do what I do best, which doesn't include car trips up and down the highway to get computers repaired (possibly).

Other than warming up to the idea of doing a Bill Cara IPO, I have an open mind. Maybe some of you have ideas you'd like to share. If so, either do it in the discourse or (as many of you like to write me personally) via mail to bcara@ billcara.com.

Posted by: Bill Cara at October 27, 2007 10:28 AM [link]

I learn something every day here. Hope you can get something out of my occasional contribution, too. Best to all...

Ron

http://ronsen.blogspot.com/2007/10/saturday-morning-coffee-fraudulent.html

Posted by: Ron at October 27, 2007 10:32 AM [link]

Dear Bill,

Pity I'm located too far away to usefully volunteer keeping your machines a-ok -virtualization can only go that far, although it's getting there- but I am sure there are many others nearby that will jump at the opportunity of offering a hand, wherever your nearby of the moment is. So there you go, guys and gals, offer up.

Posted by: Case at October 27, 2007 10:45 AM [link]

what size and kind of accounts/clients do you plan to take on?

Posted by: jk at October 27, 2007 10:54 AM [link]

Sounds like an awesome idea Bill. A mid-long term fund for tiny investors would be really nice, say in minimum $1k increments (I do mean small, larger clients have plenty of options elsewhere). One that rotates funds from sector to sector according to the economy cycle. Could invest in ETFs or stocks, long or short. My mutual fund company won't do that because they say "market timing doesn't work". :-)

Posted by: SiO2 at October 27, 2007 11:02 AM [link]

Bill,
It is truly amazing to witness the development of this blog! You and all your contributors have grown something very organically, and I am proud to feel a part of it. I have learned so much...and made money! I say go for it! Cheers

Posted by: yaba at October 27, 2007 11:06 AM [link]

Hoosier,,,you earlier said,"I hold UXG because I think it's worth a small portion of my portfolio to invest my money with a man who has proven himself in the past... time and time again. From my research, he's looking in the right place".

Same reason I bought in.

If Rob does manage to find a mother lode and with the PPG where it is today, I wouldn't wanna be short, not that there is a large short now.

Dab

Posted by: dabonenose at October 27, 2007 11:31 AM [link]

Of possible interest to long term trend and infrastructure investors:

http://ap.google.com/article/ALeqM5gsBhi0vfVCHr-E0eSckT5ZnADWxwD8SH50DO0

Posted by: Bull Hunter at October 27, 2007 11:39 AM [link]

Bill, good luck with you new business and your new Mac operating system. I hear Time Machine is excellent for making backups easy and there is a huge amount of other features in Leopard.

Posted by: Denny Phelps at October 27, 2007 11:50 AM [link]

just wanted to thank everyone for the conversation yesterday about these etf's based on derivatives. It's really got me questioning the whole idea about playing around with them, since derivatives have got us into this whole mess in the first place.

Posted by: Denny Phelps at October 27, 2007 12:05 PM [link]

Bull Hunter -

Interesting piece on water usage. SO, interesting I had a glass and savored the flavor.

Posted by: Jock at October 27, 2007 12:17 PM [link]

Bill,
Two of Dell's XPS laptops support dual drives. If I were laptop shopping and I could afford it, this is the ONLY way I would go. I've had too many drives fail at this point to trust one, even with a backup. Restoration is no picnic and has risks. You never know if your backup was good until you restore, and then it's too late. Backup operations fail, too. And you still lose the data that changed between backups. With mirrored drives (RAID 1) if one drive goes the other is in sync and you don't miss a beat.

As I rebuild my desktop at home, this is the way I am going. RAID 1 on the boot disk and RAID 5 on the data drive(s) I've had it with drive failures.

Anybody with a single drive machine not backing it up is asking for it, big time. I was one of those guys for years and then I had three drives fail in less than a year. Not fun.

Laptops with mirrored drives still seem kind of rare. I guess Alienware has one, too, but I don't see you as an Alienware kind of guy.

Dell has taken huge, deservedly so, knocks for service the past few years. It's one of the reasons Michael Dell stepped back in to take charge. I think it may be improving.

Good luck.

Posted by: MikeNYC at October 27, 2007 12:21 PM [link]

re FXP (ultrashort FXI)-

seamus- thanks for the link to the profunds prospectus...you may be right in saying it will be the "mother of all ultrashorts," but after superimposing 6 month charts of RIMM, AAPL and GOOG over that of the FXI->i don't see much of a difference! so whether you're short the QQQQ or FXI may (at least initially) end up not making much of a difference ;)

Posted by: 2nd_ave at October 27, 2007 12:28 PM [link]

Can I buy MAC Leopard at the store and get it today or must I wait a week or whatever for shipping (and pay the $10 or $13 or whatever?

Posted by: Bill Cara at October 27, 2007 12:36 PM [link]

Denny,

"Inverse ETFs; they are mostly invested in T-bills which is where the interest comes from. The funds use derivatives to create the effect of being short or double short. Given the leverage the funds need only a small fraction of the assets to create the short exposure."

http://randomroger.blogspot.com/2007/06/big-picture-for-week-of-july-1-2007.html

Posted by: Bull Hunter at October 27, 2007 12:45 PM [link]

I wish to re-iterate my comment that its generally not adviseable to attempt load your windows frustrations into a Mac.

Also? Make sure to purchase Apple Care Protection for your Mac.

Posted by: FranSix at October 27, 2007 12:49 PM [link]

I think Leopard is available in all Apple stores. It's $129 and free shipping at the online Apple store.

http://store.apple.com/1-800-MY-APPLE/WebObjects/AppleStore

Posted by: Denny Phelps at October 27, 2007 12:55 PM [link]

Jock,

I'm mostly short the markets right now, but when the time is right, I'll be looking to purchase shares of VE.

Me thinks their stock price is quite lofty right now but they should make tons of money over the coming years, barring a complete global collapse.

Posted by: Bull Hunter at October 27, 2007 1:03 PM [link]

As usual: http://www.tradersquest.de/cara100.html

Posted by: TradersQuest at October 27, 2007 1:58 PM [link]

Bill, if you bought your iMac recently, you should be eligible for a few upgrade from apple for $10. I think the dates are from 1 Oct, but I'm not really sure.

The link for this upgrade is:

www.apple.com/macosx/uptodate

The whole process takes about five minutes.

Posted by: Telestar3d at October 27, 2007 1:58 PM [link]

The link:

http://www.apple.com/macosx/uptodate

Posted by: Telestar3d at October 27, 2007 2:00 PM [link]

Why I think Gold prices are set to continue higher.

I use the following chart to assess whether seaasonal trading in Gold can tell me whether prices are set to advance. Notably, there has been a reduction in COT shorts (along with a reduction in longs.) This is very similar to Oct. 2005.

Weekly Gold Chart(large jpg)

http://farm3.static.flickr.com/2385/1777138381_c9ab4b058f_o.jpg

The same source has the dollar going into a seasonal low, as the Yen goes into a seasonal high. If you don't believe me, then its very easy to find out, just make a weekly chart with the same indicators:

http://www.timingcharts.com/index.php

The Now And Futures gold prediction is really not that bad:

http://www.nowandfutures.com/images/predict_gold.png

Notice the small bump in the yield curve at the short end:

http://bonds.yahoo.com/bonds_big.png

This is similar to short term yield curve surges in the Euro, Pound, and Loonie.

So when these rates decline, this means that pouring endless quantities of short term treasuries does not improve the situation, and that an interval of 60 - 90 days will ensue where people will decide whether they are revulsed or continue trading.

If the large bailout conduit of $100b. of junk bonds is not accepted by all players, and the deal falls through, then this is the scenario I imagine will cause great alarm in the financial sector.

Posted by: FranSix at October 27, 2007 2:01 PM [link]

Can ayone who's up on gold stocks evaluate the integrity of these holdings for me? They're the top 10 in the fund I'm in, because that's how I do gold. I would just like an experienced eye cast over them. The top ten make up 40% or assets and the overall market cap is 2,886 million. I guess I'll just add that it's the Tocqueville Fund. Thanks.

Gold Coin 6%
Goldcorp 5.87%
Ivanhoe Mines 5.14%
Randgold Resources 4.9%
Zijin Mining Grp 4.13%
Gold Fields 3.79%
Polyus Gold 3.28%
Buenaventura Mining 2.39%
SXR Uranium One 2.11%
Silver Wheaton 2.09%

Posted by: Denny Phelps at October 27, 2007 2:52 PM [link]

Great quote Colin Twiggs had in his Trading Diary:

I have two great enemies, the southern army in front of me and the financial institutions, in the rear. Of the two, the one in the rear is the greatest enemy.....

"I see in the future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until wealth is aggregated in a few hands and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of the war."

~ Abraham Lincoln

Posted by: Hoosier at October 27, 2007 2:57 PM [link]

I bought the iMac on the 16th and will have the Leopard OS picked up this afternoon. I'll work on it tomorrow, along with a download of the Windows OpenSource Office. Maybe by the end of the month, I'll be back to normal.

Posted by: Bill Cara at October 27, 2007 3:03 PM [link]

Bill--going public? I cannot help but think that this is a bad idea. Do you really need all of that overhang that will suck you dry of your energy and enthusiasm? I cannot help but think not. Plus, I sense in you a fiercely independent streak--you will want to build your business your way without having to kow tow to meddling shareholders and directors.

Just my two cents.

Posted by: Leisa at October 27, 2007 3:51 PM [link]

Community,
Read an interesting article in Barron's (The Striking Price) its the last paragraph that makes me concerned about the 130/30 money.

In the past, when the market made new highs, the VIX trended lower. Today, the S&P 500 is up 6.5% on the year and the VIX is up 80%, and the newest user hasn't even shown up to the party yet. That user is the 130/30 money (a type of leveraged long-short investment strategy), which now stands at $100 billion and is projected to grow to $1.5 to $2 trillion over the next three years. With these new entrants using derivatives to hedge their portfolios, option-buying is sure to take a jump.

Posted by: trader at October 27, 2007 4:07 PM [link]

Interesting article:

MARKET INTERVENTION, DATA MANIPULATION - -
CONSEQUENCES FOR GOLD, EQUITIES & CRUDE OIL,
& THE CARTEL END GAME
http://www.financialsense.com/fsu/editorials/deepcaster/2007/1026.html

Posted by: JogyP at October 27, 2007 4:29 PM [link]

Hi Bill.

I think the best needs the best. So, you should apply for Microsoft Office 2007 Ultimate Edition. If you lived near me I would offer one for you. But as we have an ocean between us, I would have to pay more on taxes and shipping than I would do it for the Office 2007 itself.

By the way, take a look on SyncToy (http://www.microsoft.com/windowsxp/using/digitalphotography/prophoto/synctoy.mspx). It's from Microsoft and it's free.

Cheers,
Luís

Posted by: Lugopt at October 27, 2007 4:46 PM [link]

It would sure be interesting a Cara IPO...

Price would triple first day...

Bill, would love to get my hands on that IPO.

Could you put the Cara Community down as insiders and let us get some Pre IPO Prices?

Posted by: basketguy at October 27, 2007 4:51 PM [link]

2nd, You’ve got a point (in today’s time), however I expect FXI to increase exponentially more than the QQQQ setting up a bigger one. No one really knows and only time will tell. The inclination is to think post Olympics for a decline in China, but that seems to be the overwhelming consensus which makes me dubious. Also, FXI companies may be more susceptible to more of a decline than some of the Fortune 500 NASDAQ companies. More speculation IMO. Interesting nonetheless and something to watch.

Bull Hunter, thx for the article. . . . water is something I follow closely including VE (no position) which is positioned for opportunities throughout the world including China where there’s great need. In an IRA and other managed accounts, I actually have CGW, a global water ETF (no known derivatives, but I’ll be checking) which as I recall has VE as the largest portfolio holding. Jasper and I have communicated here before on water ETFs, both domestic U.S. & global.

Bill, many thanks again for your continued efforts in managing the site despite your recent IT frustrations.

With all the recent talk of computer challenges, I finally ran out about a week ago, mid-market no less, and purchased a portable back up hard drive (something I had been planning to do, but had put on the back burner). Works well & effortlessly. Thanks to all.

Posted by: Seamus at October 27, 2007 4:51 PM [link]

Question for veteran option traders -
I've been using options for many years mostly for hedging and occasionally for trading. Yet there is one thing I do not understand - how do you evaluate systemic counterparty failure risk ? There is nothing in the option contract that tells you about option writer identity and its credit rating.

Posted by: occam_razor at October 27, 2007 4:57 PM [link]

Hi Bill,

I am a little confused by this past post:

"My key on the silver market is the share price and the PE multiple of SLW as this company is not a miner, but is a banker of silver production. Whenever I think silver prices have topped in a cycle, and about to fall, I switch from SLW to go long silver futures positions. At the bottom of the cycle, I switch back into the SLW".

Wouldn't you be going long silver futures at what would be the top?

Sorry if I missed something here, but couldn't see the reasoning behind it.

Thank you. jfs

Posted by: jfs at October 27, 2007 5:16 PM [link]

Bill, in order to get the $10 Leopard upgrade you have to use the link I provided earlier. Offer is only available online.

Also, if you purchase Microsoft Office 2004 for Mac, between 25 SEP 07 and 15 MAR 08, you can purchase Microsoft Office 2008 for Mac for $15 CDN. Something to think about.

Posted by: Telestar3d at October 27, 2007 5:19 PM [link]

occam_razor re options counterparty risk -

I'm no expert, but I understand the counter-party risk is much less with listed options, cleared through a clearinging house, than with over-the-counter derivatives, where you depend directly upon a single counter-party.

I imagine the Options Clearing Corp. website would have more to say, and hope that other readers will too.

Posted by: Jock at October 27, 2007 5:35 PM [link]

Bill - if anybody in your family has MS Office "home and student edition" that package can legally be installed on up to 4 computers, although for "non-commercial use". That might tide you over till you get back to your own install disks.

Posted by: Jock at October 27, 2007 5:39 PM [link]

Bull Hunter -

Is VE "the artist formerly known as" Vivendi? - with that dopey CEO? If so, I wonder if they have overcome his sins.

Posted by: Jock at October 27, 2007 5:44 PM [link]

Jock,

Veolia Environnement is now an independent company. Vivendi owns less than 5% of Veolia.

Don't let the past keep you from checking out this dynamic performer.

Good luck.

Posted by: Bull Hunter at October 27, 2007 6:02 PM [link]

ALOHA !!

Bill ... Yep, we are all learning here!! I am grateful for the experience and your major contribution as well as others here.

In terms of a Bill Cara IPO I have to agree with Leisa in the sense of added stress. Is Warren Buffet public or is Berkshire? You want a legal buffer between you and your companies ... I personally would not want much in the way of liabilities and government regulation and accountability hanging over mny head every day.

I would create a holding company like Buffet's Berkshire and then from time to time spin off the companies into IPOs once they're established and profitable. Perhaps you can strike a balance by hiring and training competent managers to run the separate businesses, but you'd have to give up control to a degree. Is that possible and could you sleep at night?

Lots of tenuous issues to consider ... Only you know whats best for you at this time in your life ... Good luck!!!!

Posted by: kaimu at October 27, 2007 6:26 PM [link]

Cara 100 IBN closed up 11% Friday at $64.64.
Looking at Hoosier's spreadsheet RSI(M-W-D) values are 82.87 - 84.84 - 78.70

Is IBN a short candidate at these levels?

Posted by: JogyP at October 27, 2007 7:33 PM [link]

Hey..Bill;

Just back from the Red Lake area....a little Huntin' n fishin'...The smell of Gold still permeates the air.....But.. alas I must agree
with Kaimu and Leisa that an IPO on the the blog
will certainly change things and increase stress
.....However;....watching you operate over the past year or so on the blog I think you can probably cope with the stress......I
guess what we are worried about is whether or not you want to take all of US "groupies" along for the ride......

Cheers....Bick

Posted by: DB at October 27, 2007 7:41 PM [link]

Instead of consulting with bankers about an internet IPO, why not consult with anyone who had a successful IPO or sold their business to internet companies?

Posted by: FranSix at October 27, 2007 8:13 PM [link]

I have a question for Apple computer traders. I use Quicken on a PC to track my trades, but only the premium version is able to track the large number of trades I make. Quicken feeds the stock trades to Turbotax for relatively painless tax preparation at the end of the year. I am thinking about making the switch to Apple. There is a Quicken version available for Apple, but it is a scaled down version and I am concerned that it will not be able to handle the load. What software works for active traders like your readers?

Posted by: sailtrader at October 27, 2007 10:30 PM [link]

Bill, how is the symbol registration process undertaken for IPOs? I hear the IPO process is time-consuming and the legal costs expensive. Which exchange would you list on? Aren't many companies turning back to becoming private due to the costs of regulation & SOX?

Could you back the blog shares with Gold? :)

Here's your blog valuation on Blogshares.
http://tinyurl.com/2em44r

How about just selling a 1% ownership in the blog to Microsoft, Google, or the Wall St Journal?

My comments on the MS-Facebook deal...
http://tinyurl.com/29mwv9

The symbol BC is already taken unfortunately...

Interesting article JogyP. For those interested in the subject of market manipulation & securities fraud, Crazy Eddie's cousin has a blog and speaks at events for free.

http://tinyurl.com/25wqtb

I'm going to see Robbins, Trump and Alan Greenspan speak at the next Learning Annex seminar in New York in November. Hopefully I'll get to check out Eddie's hometown of Brooklyn & Wall St.

Posted by: wavesmash at October 28, 2007 12:23 AM [link]

Hi,

What if the FED cuts rates as the market expects?

What will happen to everyone that is currently short? Short squeeze?

Posted by: maromatics at October 28, 2007 6:32 AM [link]

Calculated Risk has done a terrific job staying on top of all of the credit ugliness. They posted a link for the Joint Economic Committee on subprime. I think that the report is well done, and you might find it worth your time glancing over if you have the stomach for it! http://jec.senate.gov/Documents/Reports/10.25.07OctoberSubprimeReport.pdf

Posted by: Leisa at October 28, 2007 8:15 AM [link]

Seems like Paulson is intent on getting some kind of taxpayer bailout:

"Henry Paulson, the US Treasury Secretary, is seeking to persuade the White House to offer financial compensation to American mortgage lenders that try to help troubled homeowners by renegotiating the terms of their loans."

"The Times has learnt that Mr Paulson is lobbying President Bush to provide funds so that mortgage lenders can reduce the loss that they would incur from either reducing the rate of an adjustable home loan or extending the life of the mortgage to make it cheaper for the property owner."

http://tinyurl.com/38c3hu

Maybe this accounts for the 32% increase in Countrywide's stock price on Friday.

Posted by: JIM at October 28, 2007 9:42 AM [link]

I've always been intrigued by Crazy Eddie. Once many years ago I applied for a job at their Trumbull CT store part time floor sales. They game me a test that asked the same 5 questions over and over in different forms and asked ridiculous things such as "If you found out your manager was stealing from the storewould you

A) do nothing
b) talk to the manager about it
c) ask him if you can have some of the booty in exchange for silence
d) call the FBI

Anyway, it was complicated because it kept asking questions that veered between the dual ideals of loyalty as an employee versus honesty to some greater external perogative, interspersed with questions about marujuana usage that left me with the distinct impression that a blanket denial of having at least tried the stuff would be unbelievable. Ok, I was young and stupid, but that was why I was interested in working there. As you can imagine, I failed the test and didn't get the job, a blessing in hindsight.

Suffice to say that when, a few months later the founder himself, Crazy Eddie Antar absconded to Israel with the 50 some odd million dollars he had stolen from the store I had such a hoot over it that I immediately lit up and smiled to myself about what a goshdarn hypocritical world it is and always will be.

Posted by: shark_attack at October 28, 2007 10:12 AM [link]

maromatics,

I'd guess that the short squeeze will be on. I'm steeling my nerves for the coming week, looking to add to SKF as the HB&B lead the lemmings further into the abyss.

Leisa,

Thanks for the link. The taxpayers money was actually deployed for something useful? :^)

All,

"I will tell you that the best advice I can give you, the best advice I can give you of any kind, is to teach your children and your grandchildren Chinese."

Jim Rogers on China, commodities and the U.S. Dollar:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a7Yy4VHfagTQ

Posted by: Bull Hunter at October 28, 2007 10:32 AM [link]

Actually Jim, I think what accounts more for Countrywide's move yesterday was short covering resulting from their patently and demonstrably false prognostication about the future of their business. I have never in my life heard such an insane assertion as that made by countrywide last week about a better (and more to the point, an actually robust) future. The shorts headed for the hills anyway which was the designated purpose of the announcement, so that Angelo Mozilo can dump more stock prior to their bankruptcy. And as far as the mortgage lenders are concerned, they are already getting bailed out by the fed. Make no mistake though. Housing as an asset class is cooked, it's over, done, stick a fork in it. Anyone who bought after 2003 or whatever will never see that money again.

Posted by: shark_attack at October 28, 2007 10:39 AM [link]

Thinking of long term trends. Access to oil will not be the harbinger for future conflicts and wars later in this century. It will be water.

The Middle East faces some serious shortages, China struggles for clean water throughout the provinces, and the list goes on and on.

And just this week in the U.S., Atlanta is down to an 80 day supply due to drought and environmental diversion by the Army Corps.
Georgia, Alabama and Florida are grappling with the problem. The Southwest U.S dwindling supply from the Colorado River as well as diminished snowcap in the Sierra are well documented. (Sounds like water and environmental law opportunities for graduating law students).

Came across the following water article about the Great Lakes in the morning reads. Time for two provinces and eight states to solidify commitments.

http://tinyurl.com/2merdr

Posted by: Seamus at October 28, 2007 10:54 AM [link]

Bull Hunter,

Thanks. Of course I have to agree.

The problem will be to determine the new SKF entry point.

Posted by: maromatics at October 28, 2007 10:55 AM [link]

Thanks for the water story, Seamus.

Agreed. Someday, water will become the new oil

Posted by: Bull Hunter at October 28, 2007 10:58 AM [link]

Re: "I will tell you that the best advice I can give you, the best advice I can give you of any kind, is to teach your children and your grandchildren Chinese."

I can't help but to recall that I was supposed to learn Japanese not that long ago.

I hope everyone is having a great Sunday.

Posted by: Hoosier at October 28, 2007 11:03 AM [link]

Here's an interesting article on quants in relation to what happened in August.

http://www.technologyreview.com/Biztech/19529/?a=f

Posted by: darkcorners at October 28, 2007 11:04 AM [link]

Leisa thx for the document link. Can’t help but to think the up to now secure muni bond area will have some rating changes!

Sharkie-- remember that con Crazy Eddie also. Although he wasn’t the first one ordered extradited from Israel, he was the first one actually returned after all the years. The feds nailed him although it wasn’t the FBI. Complex fraud bust out scams are not their expertise If memory serves me correctly, Guiliani as the US Atty and the Postal Inspectors wrapped him up for the prison stint.

Posted by: Seamus at October 28, 2007 11:11 AM [link]

Maybe it's because I'm from Indiana... which is a Great Lake state, that I find this so disturbing.

"New Mexico Gov. Bill Richardson, a Democratic candidate for president, gave voice to his water lust early this month by suggesting that water from the Great Lakes could be piped to the rapidly growing -- and increasingly dry -- Southwestern states."

Excuse me? Great Lake states have been in population decline and called the "Rust Belt" for some time. And now we are supposed to ship the water that serves to water the world's bread basket to people who willingly decide to live in the DESERT?

Hahaha... come live in the Midwest, we may not have many jobs, but we have plenty of water!

Posted by: Hoosier at October 28, 2007 11:12 AM [link]

Regarding SKF (double short financial ETF): It would seem to me that in the even to of a rate cut--and even more so in the event of a surprisingly generous cut, if that were to come to pass--SKF would be a pretty painful place to be. Perhaps UYG might be a better place.

I certainly do not know, but when betting on outcomes that are uncertain (if and to what extent there will be a rate cut) one does not really have an edge. That's not to say you don't take a position with your speculative money--for it would be, IMV, a speculation.

Posted by: Leisa at October 28, 2007 11:14 AM [link]

Re the Jim Rogers speech on China (and his advice to shift your dollars into the yuan and/or commodities):

Many good sound-bites, from one who is obviously quite passionate about his outlook:

"The official policy of the central bank of the United States is to debase the currency. The head of the central bank of America is on official record as saying, if I have to get in the helicopters and fly around the world and drop out dollar bills in order to drive down the value of the money, I will do so."

"The same head of the central bank in another official statement said, you've got to understand that we control the printing presses and we'll run the printing presses as fast as we have to. We're going to get the value of the currency down. The secretary of the Treasury is right now in China saying he's doing his best to get the dollar - to drive the dollar down further."

"Who knows about the present one, but I do know that the longest bull market in commodities I could find lasted 23 years. The shortest lasted 15 years. So this is not a prediction, but if history is any guide, the current bull market is going to last sometime between 2014 and 2022."

"If I were buying currencies, and I am, probably the best currency to buy right now, in my view, is the renminbi, the Chinese currency. The other two currencies, which I would buy now, are the Yen and the Swiss franc. Both of those currencies get pounded down because of the carry trade, especially the yen."

"The 19th century was the century of the U.K. The 20thcentury was the century of the U.S. The 21st century is going to be the century of China. They've got a long and glorious history with many, many horrible periods, but also many, many great periods and recurring periods of success."

Assume this is the same Jim Rogers who founded Quantum with George Soros, so his view certainly warrants more than glancing attention.

The community I live in on the Peninsula recently added Mandarin to its list of grade school immersion programs. "Bilingual" no longer connotes Spanish, now it's Chinese- that happened fast. The world changes every day, and our parents seem more prescient every day. Mom insisted on my brother and I speaking only Mandarin until we started school- and then I almost flunked kindergarten (in Pittsburgh) lol... Payoff came when we both breezed through the foreign language requirement at Michigan (and has also served him well career-wise as an investment banker in Asia). (Actually, speaking Chinese is one thing...reading and writing can be difficult even for natives.)

on another topic- M-Genie, I would pay attention to leisa's earlier post today...QID is more or less at your basis right now, and I would hesitate to advise holding it into the FOMC meeting unless you're willing to trade quickly going into the announcement/during/after...I'm still betting the trend will be down for the next several months, but further gains cannot be ruled out and I feel compelled to caution you...I take outsized positions at times, but I can also decide to trade in and out of them at a moment's notice to capitalize on ST moves without changing my LT bias...

Posted by: 2nd_ave at October 28, 2007 1:21 PM [link]

Hoosier, there was an article in my local (northern Indiana) newspaper recently saying the Great Lake states should band together to prevent other states from using their water.

Also, here's a blog from IL GOP Network regarding the Great Lakes water supply:

Gov. Bill Richardson (D-NM), a presidential candidate, made some waves when he suggested that the water of the Great Lakes should be diverted to the dry Southwest.

Richardson, a long shot to win his party's nomination for president but someone who could end up as running mate for whomever wins, made a speech in Las Vegas about that city's water shortages, "Wisconsin is awash in water" were among the things he said.

Illinois, although it has a relatively small Lake Michigan coastline, is also "awash in water" compared to New Mexico.

The governor's comments didn't play well in Wisconsin--or Michigan, and now Richardson, through his press secretary, with presumably a deep swallow, is taking it all back.

From the Detroit Free Press:

"Richardson in no way proposes federal transfers of water from one region of the nation to the other," said a statement by his press secretary Tom Reynolds. "Richardson believes firmly in keeping water in its basin of origin and of the rights of states to oversee water distribution."

The statement, issued Saturday, noted that in New Mexico he has started initiatives on water conservation and investments in water production.

Posted by: NT at October 28, 2007 1:33 PM [link]

NT,

A fellow Bill Cara devote from the "Region", or from Michiana?

Posted by: Hoosier at October 28, 2007 1:49 PM [link]

Bill,

I think you should franchise yourself! Just think, Mom and Pop franchisees using your methods and macro commentary to give people the tools to grow their own investment portfolio. Never mind, it would never happen. The financial powers that be would pass a law prohibiting you from “taking advantage” or the little people.

Thanks for all you do!

Miggs

Posted by: Miggs at October 28, 2007 2:06 PM [link]

Hi!

One way of trading this market and the coming FOMC meeting is the following:

1. Go 90% or more in cash, thereby reducing your VaR ratio (Value at Risk).

2. Buy a call option / warrant (in or out of the money depends on your risk apetite) which matures no later than the end of December.

If the FED cuts, let the option fly untill the market stops pumping up and then be fast to cash out.

If the FED does not cut, leave the option open because if the FED does not cut now, they will probably cut on December 11th, and that will, along with the christmas rally, help you recover some of the loss.

Then, after the decision comes out, if you want to expand your risk, you can go long on selected cara 100 companies (if the FED cuts), or go short on the broad market (if the FED does not cut).

Beware that any climbing in prices that may result of a potential rate cut will be short lived, and therefore be careful are keep your calue at risk at low levels.

This is how I am planning to trade this.

Posted by: maromatics at October 28, 2007 4:03 PM [link]

maromatics,

That is excellent advice. I see we have another pro in our midst. Thank you.

Posted by: Bill Cara at October 28, 2007 5:47 PM [link]

Thanks Bill!

:-)

Posted by: maromatics at October 28, 2007 6:03 PM [link]

Waterkeeper distributes a good newsletter & podcast for keeping track of issues that affect the Great Lakes, with a focus on Lake Ontario.

http://www.waterkeeper.ca/

An alternative to cash for Canadian TD Bank customers is the 30 day/1 year "wait & see" GIC.

For #2 (buy a call option), what specific call option or warrant would be recommended? Some more posts on how to trade specific calls & puts would be highly useful, to me anyway...

Posted by: wavesmash at October 28, 2007 6:36 PM [link]

Re: Water shortages
Here in Canada a proposal was made many years ago to take the water from rivers flowing into the Pacific from British Columbia and fill the empty oil tankers going back to the Middle East. If I remember correctly the Provincial government agreed, but the Federal Government stepped in and stopped it; water is a provincial resource, but the Federal government controls international trade, so they put a halt to it on that basis. The same thing happened in Newfoundland when Irving Oil wanted to do something similar.
Why they allow water to be wasted by letting it run into the oceans I will never understand. In my view the water crisis is a water distribution problem, and not a water shortage.

Posted by: yaba at October 28, 2007 6:42 PM [link]

Bill,

Leafs in Bahamas now on Slingbox....

http://tinyurl.com/273r3v

Posted by: wavesmash at October 28, 2007 6:47 PM [link]

Wavesmash,

Regarding call options / warrants, feel free to pick your choice of any of the options over the broad indices, depending on your preference, experience, and risk apetite.

In a rate cutting scenario, I would imagine that calls over the NDX would do ok because that is where the pumping has been going on, and also because tech will be somewhat beneficiary from a weak USD, but only in the beginning...

Posted by: maromatics at October 28, 2007 7:11 PM [link]

Bill's status report music to my ears. I'm spread eagle pressing my face against the glass trying to glean details. Probably still too early to have a launch date?

Posted by: jasper at October 28, 2007 8:03 PM [link]

I read the following observation and analysis over at the Market Ticker blog (link below). I'm not sure one or two examples spell doom but it definitely made me feel queasy.

"Last week some $75 million of "fed funds" (that is, interbank overnight credit) was transacted at a rate of 15%, and "a bunch" went through in the low to mid 7s.

No, I didn't mistype that. You can find the actual data at this link.

Originally I, and everyone else, assumed that the "high" was an error. A bad print. That there was no chance this was "real".

It was.

Yes, "EFF" (effective fedfunds) was right where "it should be" according to The Fed - across all transactions.

Now let's think about this one for a minute here folks.

"Someone" transacted a $75 million overnight loan that they needed to meet reserve requirements at an absolutely outrageous interest rate - about what you pay for credit card money. A bunch of "someone else's" transacted a bunch at 7-7.5%.

They had the discount window available to them at 50 bips of penalty to EFF, which is a direct overnight loan from The Fed, but didn't use it.

Are you going to try to tell me that some banks actually paid nearly 10% more as an interest rate than they had to?

On what planet are we having this discussion?

There is only one possible explanation for this particular behavior - The Fed would not take the alleged "collateral" these institutions tried to put up, and the market didn't think it was worth much either, even on an overnight basis, and as such "the market" priced the interest rate similar to how Guido would for your "short-term" loan!

This raises the spectre of something truly terrifying in the credit markets -

The Fed may be inches away from losing control over the FF Rate entirely!"

Here's the link:

http://market-ticker.denninger.net/

Posted by: Simon A at October 28, 2007 8:28 PM [link]

The way I see it, we are in a deflationary boom. Added to it, we have great masses of money being printed to avoid a deflation. So the mistake of central bankers was to provide liquidity when perhaps all they needed to do was allow a good cleanout.

Now, we will see a pretty serious bust which will pare down the economy to its essentials. Anything not producing something or providing a needed service will see significant pain.

Avoid Asian and some emerging market currencies, especially the Yen and the Yuan, as they are subject to hyperinflation. Historically, traditionally, this is the case with them.

The dollar is going to get bid up very hard on the commodities bust, this is certain. Its just a matter of if, but when.

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

Also? There's gold in Saskatchewan which these kooky geologists discovered as of late. I know. I was blown away too.

They flew in some potted tropical plants and placed them around the drill holes, and hired some quirky looking foreigners from Holland with big teeth and floppy ears wearing polyester so's that you would not be uncomfortable with the conventionality of the place. Heck. Its right beside the Trans-Saskatchewan highway. Yup. Park 'n Mine.

Crazy coinkydink that gold is in the same crustal formation in Saskatchewan that form a planet called earth and holds countries like Ecuador and New Guinea and China aloft in space.

What's more, there's a METEOR STRIKE on the property. Saskquatch has been seen around last year. No photo ops as of yet. the U2 landed in on a frozen lake in '62.

Also? They have declared their site a nuclear free zone and sister-site to Nevada, Red Lake, Hemlo, Ghana, Jinshang, Kumtor, Ecuador, and made Rob McEwen an honorary friendster.

There must be something to it.

Posted by: FranSix at October 28, 2007 8:29 PM [link]

FranSix,
You forgot to mention Elvis was spotted there as well.

Posted by: trader at October 28, 2007 8:37 PM [link]

Let me keep this simple.

I agree Bill that we're going to hell in a handbasket but before we do..........

Fed will cut rates

Stocks will go higher probably exceeding all time highs by a good margin.

Oil will go higher on inflation and middle east concerns.

Gold will continue it's push to and through $800 which I predicted here the day it broke $750 and closed.

The Turks will give the Kurdish terrorists grief (hello $100 oil).

Iran will ratchet up the rhetoric now that it knows that Vlad stands at the ready to keep us in check. Russia will give Iran "nukes" and also prevent us from invading them ever and will never allow us to do there what we did in Iraq.

The balance of power in the mideast will paradoxically have shifted by Bush's folly from one in which the Israelis held the cards as our proxy to one in which the Arab nations will, via proxy with Russia be in much stronger shape than they had been in the past.

Posted by: shark_attack at October 28, 2007 8:46 PM [link]

It’s early in Asian trading, but gold is up to $788 and the Euro has a 144 handle. Maybe shark’s 800 prediction will reach fruition this week.
___________________________________________________________
More Water

Yaba, I remember that time period, think it was around the late 80’s. As I recall Southern California was looking at bringing some water from the Columbia River along the Oregon-Washington border after hearing about the Canadian issue. Didn’t go over so well and nothing came of it.

Hoiser & NT What’s with the Indiana Dept. of Environment granting permits to big refiners to increase their sludge disposal in Lake Michigan? It took some media publicity from out of state to get the ball rolling to prevent BP from proceeding with their plans. This is the same BP which earlier this week had 4 of their traders indicted for Enronesque behavior and paid some fines for other violations.

Posted by: Seamus at October 28, 2007 8:49 PM [link]

"FranSix, You forgot to mention Elvis was spotted there as well."

I just got off the phone from talking to Saskatchewan. It seems that there is a Polish Metis named Ron "DoubleMoon" Netolitzky that is running the show. They were in Starbucks. You heard me. Polish Metis that sit in Starbucks in Northern Saskatchewan and plan their gold mine. You can see how global they are by their non chalante attitude.

Posted by: FranSix at October 28, 2007 8:52 PM [link]

I think you people are into the wine tonight. Good stuff.

If there are any writers/editors out there who want to send me a resume, I am going to be looking for someone to co-author a book about one of my well-covered topics here. I have a lot of the research materials done and sources for all that is still needed. I also have the eBook software and an audience of interested readers. And, I have the contacts at the big book publishers who would be interested to publish it.

What I don't have is the time to put it all together. So, if there are members of this community who feel they might be up to spending a couple months as my co-author, please send me a resume. It's a serious book, and I want to do a professional job of it.

From the sounds of FranSix tonight, there must be a few of you who would be up to the challenge.

Posted by: Bill Cara at October 28, 2007 9:06 PM [link]

2nd.

Thank you for caring so much. It warms my heart. I will be vigilant.

Seems like Gold will be @$800 tomorrow if this keeps up!!!

I get a BBC channel so I'm hoping I can see this.I'm curious!

Blair was warned of looming disaster in Iraq
By John Ware. Last Updated: 1:03am GMT 28/10/2007
http://tinyurl.com/2k2cgl

John Ware presents Part One of No Plan, No Peace on BBC1 this Sunday at 10.15pm and Part Two tomorrow at 10.45pm

Dollar weakness not a storm in a tasse de thé

By Liam Halligan, Economics Editor
Last Updated: 11:35pm BST 27/10/2007
http://tinyurl.com/ywwyw7

Posted by: moneygenie at October 28, 2007 9:21 PM [link]

The Hindenburg omen is a relatively uncommon indicator, but it should not be easily dismissed. This indicator is named after the after the German airship and has become synonymous with the word 'crash'. This tool uses market breadth theories to determine when there is a disparity between new highs and lows. A large divergence in highs and lows suggests that conviction of market participants is weakening and that they are unsure of the market's future direction.

This indicator gives a warning when more than 2.2% of the traded issues in the NYSE composite index are creating new highs while a separate 2.2% are creating new lows. On Friday there were 259 new highs, which equates to 7.6% of the traded issues (3,407). Also, there were 99 new lows, which equates to 2.9% of the traded issues. Readings above 2.2%, which occurred on Thursday and Friday, is the first sign of a valid Hindenburg omen, but it should be noted that many short-term traders will wait for a few other confirming indicators before taking a position.

To learn more about this interesting indicator, see Beware of the Hindenburg.
http://tinyurl.com/39vkfr

Posted by: moneygenie at October 28, 2007 9:38 PM [link]

Simon A-

"This raises the spectre of something truly terrifying in the credit markets."

It's no spectre. No one would argue that there have been excesses, at least in the US, that need to be unwound. Some undoubtedly even look forward to an economic upheaval as just what the doctor ordered.

"On what planet are we having this discussion?"

Sometimes I wonder how far corporations or governments are willing to go to keep up appearances. You need not look far to find some strange divergences on this planet. I'm old enough to remember when UNICEF was part of the grade school experience, but now schools (even in affluent neighborhoods) are the ones asking for donations to keep some basic programs intact. What about pharmaceutical CEOs making tens of millions in compensation while tens of millions in Africa die early of AIDS because they can't afford drug therapy that could easily increase their life expectancy? The billions spent in this country litigating truly trivial matters (the entitlement philosophy that has sprung up in this country in the past twenty years really bothers me..I could bring up a dozen examples easily but just as sure I don't need to)?

Not excusing myelf- I could certainly be doing more. I'm all for economic prosperity, both personal and for all, and truly believe that for most of us, it's a necessary prerequisite for "happiness." But as we all know, we can't take it with us, whereas (depending on your spiritual beliefs) what you do with it while you're here matters a great deal.

Hope the credit crisis gets sorted out without a major meltdown...

Posted by: 2nd_ave at October 28, 2007 10:01 PM [link]

yaba,
re: selling water captured from the river as it flows out..

I recall reading something about Canada not selling water because once they start trading in water it becomes subject to some rules of NAFTA, rules that would remove their having complete control of their water. I don't know if it's true and it's one of those things I read a while ago, filed away in my brain and forgot the source. So take it for what it's worth. Sounds reasonable, though, no?

re: the great lakes having PLENTY of water:

NYTimes, last week:

"Inch by Inch, Great Lakes Shrink, and Cargo Carriers Face Losses"

OSWEGO, N.Y. — From his office at the port here, Jonathan Daniels stared at a watermark etched on the rocks that hug one of the commercial piers — a thick dark line several inches above the surface of Lake Ontario — and wondered how much lower the water would dip.

“What we need is some rain,” said Mr. Daniels, director of the Port of Oswego Authority, one of a dozen public port agencies on the United States side of the Great Lakes. “The more we lose water, the less cargo the ships that travel in the Great Lakes can carry, and each time that happens, shipping companies lose money,” he said. “Ultimately, it’s people like you and I who are going to pay the price.”

http://www.nytimes.com/2007/10/22/nyregion/22oswego.html

So, of course, let's pump it to those dry southwestern states. This is a much better use for it:

http://www.abekleinfeld.com/Bellagio%202-03.htm

Posted by: MikeNYC at October 28, 2007 10:29 PM [link]

I'm starting to really think that the consensus of a rate cut is going to be wrong. With gold at 790 as I type, and everyone and their brother thinking the Fed cuts by at least 25 points... one side of the boat is getting a little crowded. Maybe it's my eternal optimism that the Fed does the right thing and lets the banks and wall street take their medicine, but one HAS to think that Mr. Bernanke is watching the same kitco chart that we all are and realizes that foreign central banks aren't providing him with any cover for any more cuts.

Posted by: Hoosier at October 28, 2007 10:59 PM [link]

Hoosier....Michiana. I liked your quotes about Abe Lincoln.

Seamus, I'll have to read about the Indiana Dept. of Environment granting permits to big refiners to increase their sludge disposal in Lake Michigan. I'm certainly not for that.

Posted by: NT at October 28, 2007 11:09 PM [link]

Seamus,

I can't believe that! Don't get me started on Indiana government. Unfortunately, I don't live in flyover country anymore, so it's hard to keep up on the local news and issues. I try to, as my family is still there, and I hope to return someday. Jobs are elsewhere though... especially for someone who works in the maritime industry. Indiana's lake front and the Ohio river just too small of a pie.

Posted by: Hoosier at October 28, 2007 11:13 PM [link]

MikeNYC,
If we in Canada do not wake up and come up with a deal with the US soon, they will end up taking it anyway via the Great Lakes, as they are doing already. Without a proper water management plan and updated treaties, the U.S. will have it for free. Why not sell it to them? Water conservation and management is becoming a very important issue along with fossil fuel consumption. We are paying $1-2 dollars for a bottle of water, double the price of gasoline! Now that's funny!

Posted by: yaba at October 28, 2007 11:14 PM [link]

I was at the Cambridge Gold Show so wanted to give a few of my impressions and have been too tied up to post.

One, Bill is just as free with his time and willing to give you his help in person, as he is in this blog. We met Sunday morning and after introductions Bill basically stated, "I have no agenda for the next two days. I'll be here and we will visit whatever companies you want to talk to, and discuss whatever you are interested in". And that is really how the next two days went. We all know he had computer problems, problems uploading to this blog, etc., but he give his time freely to any of us that were there. Thank you, Bill.

I won't be giving specifics on companies because that is not my expertise. For people that don't know the difference between 43-101 reserves and pie-in-the-sky (like me), these shows can be almost overwhelming with the material. There is virtually nothing printed you will get there that you can't get on the company websites. The major difference is you can talk to the CEO's, geologists, and actually hear things that they definitely wouldn't put in print. You can go to some booths and hear a story and come away and say, "I would never invest in that company no matter how good it sounds". Or visit with a CEO and come away with the opposite feeling. The major advantage of this Show was being at the side of Bill (& Jock) when talking to different CEO's. You suddenly had credibility. The other advantage was that Bill acted as an interpretor. We all have expertise in some field, and when talking to someone else in that field, we can pick up as much by what wasn't said, or how it was said, than by what exactly was said. Bill helped fill in the blanks.

For the show in general, listened to workshops with Jim Willie, Doug Casey, James Turk and others. After those had to make a major decision - either walk next door and visit with companies, or take the easier solution, go out the front door and step in front of a bus! You can only take so much, "the U.S. government is evil, fiat currencies are dead, gold is the only solution". Even if that is the exact future, it gets tiring listening to it. I viewed the solutions given as being, "buy gold bullion (not ETFs), diversify into different currencies and hold those currencies in foreign countries, buy real estate in different countries, and make sure your 'cash' is actually money you can get your hands on." Quite a few of the speakers do not live in the U.S. any longer, are not invested in the U.S., and are not denominated in U.S. dollars.

I was surprised there weren't more people in attendance. I was at both the Calgary show in March, and then the Toronto show, and would think there were more in attendance in Calgary. Neither were overrun with people, so I would say there is still a long ways to go before the general investing public starts believing in gold.

When we as investors wonder why stock prices languish or drop for a period and why companies aren't doing more to promote, it helps to look at their timelines. As an old farmer, I can buy a farm in April, seed the crop in May, and sell the product in October. For some of the miners with proven resources, 2012 is when they foresee the first metal actually being mined. That is a long time to keep investors happy.

There's not a lot in this report to make investing decisions from, but just wanted to say that the time and effort spent to travel to Toronto was well worth it. Meeting Bill, Jock, and the rest of the Bill Cara group, was very interesting. Rubbing shoulders with Rob McEwen, the McKinnon's, Martin Quick and others was really icing on the cake.

Posted by: bobj at October 28, 2007 11:18 PM [link]

Hoosier,

For the sake of the average American consumer, I hope you're right about no rate cut, but can't help but think that Ben is HB&B's lapdog.

IMHO, he's already proved his loyalty to the dirtbags with his 50 point cut last time.

Guess we'll know soon enough.

Good luck.

Posted by: Bull Hunter at October 28, 2007 11:20 PM [link]

http://finance.yahoo.com/intlindices?e=asia

The markets in Asia-Pacific countries are on a tear tonight. This is historic and you ought to be paying attention.

Posted by: Bill Cara at October 28, 2007 11:21 PM [link]

Bernanke has been thrust into an unenviable place. I'd write something else if this weren't a PG rated site! He has a baby with two heads: one head is the economy and one is the USD$. He's donned his KS hat, robes and sword and must lop something off! Either choice is barbaric and unappetizing. Ben B. is dressed up for Halloween as King Solomon. How fitting! I do not envy this man.

I truly wish him strength and courage, for he has much resting on his shoulders.

When I listen to him in his speeches, he sounds like a person who wants to do the right thing. He seems like a person that has a good center and want to be deliberate in his decisions. Unfortunately, he his placed in a situation where the sacrifice of the USD over the economy is not a pleasant choice.

Personally (and as a person whose opinion really holds not credibility!), I do not think that a rate cut will help much. I think that it is pouring money in a hole--that hole being the delta between collateral value and ability to pay v. loan value. It's on the borrower's end. It is also on the speculator end--the credit default swaps and all the other crap that you've still not heard about.

I find it odd that we've not yet seen the floundering of parties who have taken the other side of the counterparty risk (I may be saying that wrong). If you bought a derivative that will ensure that you are protected against credit (or interest rate) risk and that party is underwater, what do you do? I'm sure there are some frantic conversations in process.

Jeffrey Saut (Raymond James) had a wonderful column that said that basically it isn't the snake that you see that bites you. I will posit it is the news that you do not hear that you should fear. And I posit further, that you've not yet heard of failure of CDS guarantors. And....don't think that the credt seizure was just the banks. Hedge funds are funded by these banks, and they were very much into this *stuff*. They made gobbs of money by levering up and "capitalizing" on what used to be small changes between the risk premiums. When those risk premiums blew up...I'll guarantee you that a few hedge funds blew up too. Why then this deafening silence? I find that extraordinarily odd. Don't you?

That my friends, is the snake that bites. Do you not think that HF's matter? --They account for more than 50% of daily stock volume. They matter. And fixed income arbitrage (all the stuff that is in the news) requires high leverage. There's a Chernobyl or two HF melting down. I'm just wondering when it will be reported.

Of course....I might just be full of beans!

Posted by: Leisa at October 28, 2007 11:29 PM [link]

http://quotes.ino.com/chart/?s=FOREX_XAUUSDO

From Wed. morning til tonight on Sunday, spot gold has lifted from 754 to to 793.

I can only imagine how many would have missed this opportunity had you not been tuned into this blog.

Posted by: Bill Cara at October 28, 2007 11:29 PM [link]

Bull Hunter,

Thank you, and I agree with you. Like Bill says, "You and I aren't privy to the early tip off or the meetings..." The only thing I can do is look at reality, and then put on Professor Bernanke's shoes. He may be a lapdog, but he isn't stupid. If I was Uncle Ben right now... I'd have some really sweaty palms. And what this action in Gold would be saying to me is, (a day and a half before the fed meeting) that my HB&B buddies and foreign counterparts are hanging me out to dry. Not only are they not providing me any cover, they are giving me the finger. I know how I would respond to that if I was Ben, but I'm not.

Posted by: Hoosier at October 28, 2007 11:29 PM [link]

Me! But then, it was interest in silver and gold that somehow brought me here, not vice versa. But I'm not capitalized enought to benefit as much as a lot of others.

Here's some news:

Le Metropole is calling a gold short squeeze in Tokyo:

In the October 26 session on the TOCOM Goldman Sachs
COVERED a gob-smacking 1,851 contracts to bring their
net short position to 10,841 contracts. They are within
1,300 contracts of having the lowest net short position
since I have been keeping records (Jan 2006). This is a different GS than the one that previously sold short
into every gold price rise.

I am suspecting they know
the jig is up?that is no big surprise because if I have
figured it out they sure as hell have too! The GS bonus
checks may not be so big this year.

Cheers
Adrian

MIDAS and ADRIAN comment: SHORT SQUEEZE!!!

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Oh, if we cross 800, a pantload of options in the US are about to go ITM. Could we have a short squeeze in the US in the AM? Might be time to dip a toe in the water on the CBOT in preparation for the AM open?

Posted by: MikeNYC at October 29, 2007 12:31 AM [link]

Question for those who have non-FDIC insured funds of any sort in Merill:

How do you feel right now?

Sinclair is publicly calling them broke. That the 8.9B is the beginning, and that the reason O'Neal was in talks with Wachovia was to save the sinking ship.

Sinclair's a one note grouch. But he had the BOS to walk into a roomful of paper pushing bankers a year ago and tell them their credit derivitaves were a time bomb, and got laughed out of the room (which you could tell personally hurt him even as he knew he was right.) And his whacky gold 'angels' have proven to be very accurate resistance/support levels. He's been right about a lot.

I don't know...all things being equal, I'd rather not be trying to get my cash from a NYC bankruptcy trustee 6 months from now. (Too big to fail, blah blah, I know. But why take the risk?)

Just wondering how anyone with accounts there feels.

PS Next season - A-Rod, back at 3rd base. Under the Citgo sign. Go Sox!!!

Posted by: MikeNYC at October 29, 2007 12:49 AM [link]

Leisa,

I agree with you that 'Unfortunately, he (Bernanke) is placed in a situation where the sacrifice of the USD over the economy is not a pleasant choice.'

The FED is indeed in a tight corner with the dollar at historic lows, while the US is vulnerable as OPEC countries threaten to break the dollar peg, and China starts to really play hardball refusing wooden nickels soon after the Beijing olympics.

Here's a potential scenario that offers a short-term fix:

1. US moves against Iran claiming nuclear threat
2. Rumor of war creates instant flight to safety in good 'ole US T-bills
3. US dollar rallies
4. worldwide stock markets tank, taking PM's down with it
5. US defense spending soars, keeping a floor under the economy and domestic spending
6. FED now has plenty of room to ease
7. With interest rates near-zero, high-yield CDO and LBO debt now attractive to investors, avoiding the dreaded 'mark to market'
8. Subprime mess solved
9. US maintains control of mideast oil, locking out China and Russia, and ensuring oil/dollar peg
10. Bush legacy rescued

Here is a (July 4, 2007) quote from Bill that sums up #7 (IMHO):

"As and when rates/yields plunge (following a collapse of the equity market), the value of HPEC's present debt will soar, after which they will securitize it and sell it back (in the form of a debenture) to We The People in America, and (they hope) abroad."
http://www.billcara.com/archives/2007/07/caras_daily_commentary_wed_jul.html

If this scenario is to happen at all, it must happen now, while the Republicans still hold power.

Posted by: French_Canuck at October 29, 2007 1:02 AM [link]

Late last week the 3 and 6 month gold lease rates rose above the 1 year rates. That is NOT the normal situation. In addition, the 3 month has crossed above the 6 month. A 'double inversion.'

Also, all the rates are at least, since last August, roughly, more than double what they have been the for most of the year.

As recently as August, all the rates were below .15%.

The 3 and 6 are roughly .37, and the 1 year is not far behind. So rates, which were roughly stable at or around .15% all year long until August, have more than TRIPLED.

Some people need some gold NOW, and are 'renting' it at higher and higher prices.

Problem is, that lease rate 'inversion' can be a sign of covering, OR, more commonly recently, it seems to preceed what some people regard as a 'takedown.'

So, at the end of last week were the leasers (usually bullion banks) covering, or preparing to try to drop the price by selling into the cash market on Monday morning?

Also, in mid-Oct the Nov-Dec GC spread spiked.

I'm watching the lease rates and more importantly, the basis. But that's just me.

(Still can't find a single site that offers spread charting of contract months over the cash price, just various contract months. Looking.

I'd love to find a way to add lease rates to my charts, but that might involve some custom code to do some HTML scraping from the Kitco site.)

Posted by: MikeNYC at October 29, 2007 2:06 AM [link]

Bill,

I shall be pleased to contribute to your writings, if you wish. You have my e-mail, as I have touched base with you via e-mail yesterday.

Posted by: maromatics at October 29, 2007 3:37 AM [link]

ALOHA !!

MikeNYC ... I will be pulling my funds out of Merrill Lynch tomorrow, Monday, 10/29 ... Does that answer your question?

Please do not stop at Merrill because there are plenty of other BIG US banks in the same boat in terms of large derivatives exposure.

To mention a few ...
- Wells Fargo
- Citibank
- JP Morgan Chase
- Bank America
- Union Bank California

Don't forget all the hedge funds and ETFs these banks fund or hold custody. Every single Ultra Short or Ultra Proshares ETF managed by ProShare Advisors LLC has as custodial bank JP Morgan Chase. All such ETFs utilize derivative swaps to varying degrees and also use extensive asset backed paper when they move to cash.

Just as an aside I read that one of the main managers for Proshares Advisors LLC, Mr. GO Foster holds a degree in mechanical engineering but also an MBA. I guess the mechanical engineering degree is back-up in case things on Wall Street don't work out!

When I have time I plan to do a more in-depth article on these ETFs and see what other "risks" come to the surface. I briefly reviewed the "risk" section of the prospectus and they have every risk listed and then some!!! I think all they left out was RON PAUL getting elected in 2008!

My guess is maybe 10% of investors bother reading the prospectus and the "risk" section before they buy. Most just hear a tip from a friend or a chat room or a broker and off they go!

I recall the construction biz ... It seemed the companies that failed always went down on the small details! Sometimes if you fail to read a footnote on plans or miss an addendum change you lose your ass in a bid! Too many of those and you're in the unemployment line ... shaking hands with the unemployed!!!

Posted by: kaimu at October 29, 2007 5:45 AM [link]

"Question for those who have non-FDIC insured funds of any sort in Merill:"

SIPC should cover accounts up to $500K in the event of institutional failure.

Posted by: Leisa at October 29, 2007 7:05 AM [link]

On water and water wars....one of my favorite quotes of all time:

"Whisky's for drinkin', water's for fightin'"

- Mark Twain

Posted by: reenzo at October 29, 2007 9:55 AM [link]

October 27, 2007

Saturday’s Commentary & Chat, 10/27/2007 8:25 AM ET

Discourse

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