BC - re your comments above..... I find you at your best, or more importantly, you are at the best for me and the community in times of financial stress / crisis and extreme uncertainty - so i thank you for telling it the way you see it. rk

Bill:

You write: "So I ask; Who among people with a long-standing track record in the securities industry have been telling the truth through this piece and who have been telling lies?"

The problem is that it is unfortunate that the answer to that could be a lie as well. This is a very difficult time and the US government is not helping provide any confidence...

I see the lips moving, but nothing of substance is coming out of the FED. Good luck with the book! I can't wait to read it....

We have a "Milli Vanilli Government"
Andrew

"I can only imagine the amount of capital I have saved for the people so that they and their children and grandchildren can live a better life."

I'm so Thankful I found you and your blog Bill.
And of course the Caraistas!
The above statement says it all.
I hope you find infinite satisfaction in knowing how much you helped those like myself, the formerly clueless.... Thanks hardly seem like enough.

Top o' the marn, laddies and lassies.

Here are your Cara 100 Ratings Changes:

Downgrade:

GS - to Neutral @ UBS

Price Target Lowered:

CCL - $58 to $50 @ Stifel Nicolaus

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

May the luck of the Irish be with ye.

I have difficulty understanding how a CEO of a major Bank could lie like this and not go to jail!!
IMO
Skylane

BEAR STEARNS DENIES LIQUIDITY RUMORS

NEW YORK – New York – March 10, 2008 — The Bear Stearns Companies Inc. today denied market rumors regarding the firm's liquidity. The company stated that there is absolutely no truth to the rumors of liquidity problems that circulated today in the market.

Alan Schwartz, President and CEO of The Bear Stearns Companies Inc., said, "Bear Stearns' balance sheet, liquidity and capital remain strong."

Here is a monthly chart of Treasury 3mo Yield from 1990. Trend lines indicate a channel that could take us below 0.00% yield in theory (and today’s Yield is yet to be shown). I guess that would mean that the Treasury would be giving Bonds away. Guess Banks would be first in line, as usual. But, isn’t that already happening?

http://tinyurl.com/2g7xrr

Everything that came out of the mouth of Bear Stearns for the last few weeks have been lies.

Can the others be hiding more than anyone can imagine? Is it true the FED only has 800 Billion of assets. What happens when this is gone? JPM has many trillions of stuff also. How can anyone believe they are not hiding bad stuff. How could they have ANY IDEA of what the true value of all the Bear paper is worth if they only had a weekend to review?

I believe the total of all US Mortgages is about 10 trillion, so....even if the homes underlying these are only worth 75% of Mortgage then the max loss should only be 2 1/2 Trillion. Still a way to go!

Too many Q's - no answers. Think I will just turn off the TV and look at this thing later.

Thanks to Bill and others I am not exposed, but also do not want to miss the bottom - wherever that is.

Went long $GOLD at the open and almost immediately reversed. Short. Setting stops for the nerve wracking subway ride to work.

Good morning Bill and community;

I must second Craig's message above; by virtue
of your blog and it's clarity, I'm no longer clueless.

Compassion seems to be the core of your happiness.

Tonight, I'll be at Churchill's in Miami, raising a pint to you and to the community you are energizing.

All the best,

Stu

I heard today
LEH is next like BSC

vinod,
that has been the word for a week or more. you gotta get us some fresher news.

;-)

AGGGH - re my earlier post and chart of the 3mo Yield. Need more coffee.

The reverse of my comment is true. At zero interest, we would be giving Dollars back to the Gov for free. Such a deal!

stopped out for a small gain. time to go to work.

Looking one contract of July 40 put at good price

Not unexpectedly, in an interview on Bloomburg Jim Rogers says the Bear deal is "outrageous". He notes that only six weeks ago Bear executives were paid "billions in bonuses". Those bonuses would have been rescinded had Bear gone into bankruptcy. He says that the Fed has used taxpayer money to preserve those bonuses.

What an awful morning.

I try to get fresh news
But people here has no clue--How thing is going to end up

JPM: you know if BSC is too big to fail, JPM could hire a chimpanzee as CEO and still walk on water. No matter what toxic waste is buried in their basement the Fed is now indicating JPM can have carte blanche isn't it? I saw Dimon on c-span the other day quipping JPM would never ask for a bail out. I don't think they need to ask. I think it's a given. I'm guessing more failures to come, but I'm guessing JPM might be a good bet on the long side. I'm too chicken to to bet either way ...

Whoever came up with XLFUX, I do like the sound of that, phonetically

Vinod, what are you talking about? No one has a crystal ball.

Also, something CNBC has yet to analyze honestly is the unsecured $30B financing provided to JP Morgan from the Fed.

So, like it or not, this is a bailout.

Steve Leisman, promotes the deception by calling it a "backstop".

Indeed, CNBC is selling this Fed move as a good deal. What a crock of crap.

Bill

A sincere Thank You for taking the road less traveled and showing us the way. A salute and toast to you this evening after an anticipated tumultuous day.

Happy St. Patrick's Day to you!

Congratulations on reaching the publishing of your book. Eagerly awaiting its arrival!

Who is that writes here that HB&B and friends and family, "get theirs"? Do they ever.

It's awful for many, but not everyone.
I hope it's a really nice St. Patrick's day in Toronto.....we have a Bahamian in need of some sunshine....

Oh look, GS portfolio group coming out with a mouthful of BS.....no worries, everything will be fine in 09.... which means we interpret anything they say as a lie and double the timeline.

I'm watching for another emergency Fed rate cut.

Excerpt from Nourel
"...The Fed has no idea of which other primary dealers may be insolvent as it does not supervise and regulate those primary dealers that are not banks. But it is treating this crisis – the most severe financial crisis in the US since the Great Depression – as if it was purely a liquidity crisis. By lending massive amounts to potentially insolvent institutions that it does not supervise or regulate and that may be insolvent the Fed is taking serious financial risks and seriously exacerbate moral hazard distortions. Here you have highly leveraged non bank financial institutions that made reckless investments and lending, had extremely poor risk management and altogether disregarded liquidity risks; some may be insolvent but now the Fed is providing them with a blank check for unlimited amounts. This is a most radical action and a signal of how severe the crisis of the banking system and non-bank shadow financial system is. This is the worst US financial crisis since the Great Depression and the Fed is treating it as if it was only a liquidity crisis. But this is not just a liquidity crisis; it is rather a credit and insolvency crisis. And it is not the job of the Fed to bail out insolvent non bank financial institutions. If a bail out should occur this is a fiscal policy action that should be decided by Congress after the relevant equity holders have been wiped out and senior management fired without golden parachutes and huge severance packages."

http://tinyurl.com/yt8w9x

n2s- it's too early to say that BSC will not be looking at bankruptcy...a lot can happen/not happen in 90 days...

Cara 100 Update:

NKE downgraded from Buy to Above Average @ Caris & Co.

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

Bad Joke of the Month Club - Main Selection:

Q: What's Irish and sits on the porch all night?

A: patio furniture

Good morning everybody

Credit and liquidity issues ravaged the financial markets during the past week and resulted in plenty of white knuckles and shaky knees, climaxing on a particularly sour note on Friday with the Bear Stearns bailout.

Read all about this in my regular weekly blog post, highlighting some thought-provoking news items and quotes from market commentators during the past week, and briefly reviewing the week’s market action on the basis of economic statistics and a performance chart.

Here is the link to the “Words from the Wise”: http://tinyurl.com/2k8qcb

Enjoy the read.

Number2son: The world markets sure took it as a positive sign, didn't they? LOL! Too bad they don't have CNBS or they too could watch Bozo the clown. Did Joe or Steve squeak their noses?

"I can only imagine the amount of capital I have saved for the people so that they and their children and grandchildren can live a better life"

Yes, Bill. Thank you SO much for your tireless efforts. I have learned so much from you and the community since I found your site last summer. I have never posted before, but I wanted you and the others to know that your efforts are very much appreciated, and yes, you have saved me and my family significant capital.

According to the European DJStoxx 600 index the DOW is expected to open around 400-500 points lower... Either open lower or 'get' to that point today. Scary... People wake up thinking one week from Easter, and finding financial and economic bodies all round. Scary...

a thought on the WIR: I read Sinclair and Jim Willie and others for their insight, but with a grain of salt. But knowing my own temperament is a tad extreme I read Bill Cara for his well balanced views. When Bill sees things as glumly as I do, I know it's time to get out the umbrella.

President Bush will speak at about 9:45 am eastern time.

Bill- proof of concept is a beauty...wife and i see it played out here all the time...

would also like to thank leisa for her work exactly a year ago on 'hedge funds and systemic risk'- another early warning...

When did Dick Bove become a shill?

He used to have solid analysis. Not anymore.

i guess bush knows the market will be tanking as he speaks

reminds me of movie "Titanic"

may he'll start a new war!

Silver down 2.7%
Platinum down 4.3%
Palladium down 5.7%

hi bill,

i have been visiting your blog regularly since the beginning of this year

i wish i had found your blog earlier and hence limited my losses. nevertheless, i am optimistic that i will learn well here and make better investment and trading decisions in the future. this is a great community and there is a lot to learn from the experts here.

i thank you sincerely for your great blog.

Looks like Schwab is overwhelmed. I can't connect. Figures.

jk484: "may he'll start a new war!" I don't think that's off the table. See recent "retirement" of general who opposed Bush moves, plus unannounced trip to Iraq by Cheney. Wouldn't surprise me to see something happening in Iran, soon.

thanks Bill!! For the best and balanced discussions on the web, we are all here.

N2son re: Schwab

No problems here with Schwab's Streetsmart Pro.

vinod "People here has no clue.." Are you referring to the people here on the blog or at the place where you work? I am sure lots have no clue in either place. I think on the blog however we have been shown some indications of how things may look in the future thanks to some pretty astute commentary.

RH: Vinod works at a financial institution and he talks to the people at work.

I would imagine the PPT will be pulling out all the stops today to start a short-squeeze.

What we need is a two day rally to make the short play less risky.

I don't believe the government has the money to bail out everyone that will need bailing out so I may buy puts on MER or MS.

Rob.

keeping an eye on the markets...going long...

Scwhab back up. Just bought some RJA.

Bush talking, liar in chief.

"Financial markets working effectively."

Good God, what an incompetent fool.

Just sold a tad of FXP short at $116. I think it will make an attempt to close the gap from Friday. It will probably fail for now but I will try to close this out today around $110 or less.

Looks like I didn't speak soon enough. They're already buying.

I can't imagine people are buying the dip this time.

Rob.

market's turning around...

For some reason delayed near futures gold prices available through my webbroker have not changed since Friday.

Using Yahoo! April contract prices and kitco spot prices indicates that despite the sudden sell-off in the London market bullion is opening in backwardation by $7.-

Regarding opening prices: This morning the NYSE has invoked Rule 48, a rarely-used rule that allows the NYSE to suspend the requirement to disseminate price indications at the open. This makes it easier and faster to open stocks.

This was only approved by the SEC on December 6, and was only used once--on December 12, 2007.

picking up a little BSC just for the hell of it...

Held SDS over the weekend. Exited at 70.75

Gold backwardation
No sign of it here through these two sites
Gold spot http://www.kitco.com/market
Gold futures http://tinyurl.com/2fjbkd

3-month T-Bills
Any criticism against buying 3-month T-Bills through http://www.treasurydirect.gov ? I too do not know how to pick the right Swiss bank and open an account, though this seems like the most direct method of buying 3-month T-Bills.

I rarely post quotes from another blog, but here is a quote from the blog of community member, Vad Graifer;

"Being right in a long run will not protect you from the losses today. Being right about the meaning on events does not mean the market hasn't priced those events in yet. Alternatively, market may be preparing to move in your direction, and it's way of preparation is to shake out prematurely taken positions. Market is doing its best to to move having as few participants on board as possible - and it's doing it by means of moving against the obvious. Price action overrides everything. We traders profit from price changes - that's the ultimate market language. This divergence is your friend, not your foe - it allows you to distinguish the Smart Money action from the Crowd actions and position yourself on the right side. This is major difference between the way traders think and the rest of population think."

I recommend reading the entire post at:

http://www.realitytrader.com/blog/

We have been discussing the concept of; it's not the news that matters, but how the market reacts to the news that counts.

Vad, timely blog.

Cara 100 Update:

INFY downgraded from Outperform to Perform @ Oppenheimer

Last night, I saw major losses in global stocks and gold trading at $1030.

This morning, I find it interesting that on the US open, SPY didn't fall below support and somehow, gold gains are muted...oh wait, that is the norm ;-)

Thank you, thank you Bill. You've removed my blinders.
Thanks to all the posters.

Mark Haines on CNBC says the Fed has "Nationalized" Bear Stearns. It's nice to hear a candid assessment.

I mean People at my work not at this blog

g034

Thanks again for the timely advice on this blog.

Here's some more proof of concept for you Bill. Before I found your website I knew next to nothing about investing or the markets. I just had my money sitting in Fidelity mutual funds. Once I found your site and began reading it and developing an understanding of the markets, I promptly dumped all my mutual funds(taking profits and securing my capital). Since then I have been learning how to trade as I go and I am up close to 50% in my Fidelity account. If it wasn't for you and your willingness to share your knowledge, I would still have my capital sitting in mutual funds watching it vanish day after day and hoping every morning when I got up that it had reached the "bottom".

My avoiding of the "bubble pop" and my profits since are directly attributable to you and your blog. You have my whole hearted thanks. :-)

Was just reported that Bear's exposure was:

CMBS: 16 billion
Prime /Alt.-A: 15 billion
Subprime: 2 billion.

exit longs

Why did gold drop from $1030.00 overseas to $1005.00 when New York opened?

Siemens, SI, down 20 pts, 52 wks low

PE - 6.5

BSC- exiting at 4...

Nymex to be bought by CME for $100-share, $9.3 bln

http://tinyurl.com/2nxn6p

that was premature ;)

Rookie - re "nationalized"
I disagree with that notion. They used taxpayers money to make JPM rich in the long run. When a company is nationalized it can be restructured and privatized in appropriate market conditions at a net gain to taxpayer. This is not it.
Thanks God I have no TV to watch CNBC. Based on few clips that I've seen on the internet they sure look like a bunch of ignorant or prostituting comedians.

BSC- re-entering at 4.30

I read that derivatives are exempt from stays on assets under the new bankruptcy law; it was fear that Bear counterparties would seize derivatives from a bankrupt Bear and sell them which forced the FED/JPM to act.

If all those over the counter derivatives start to get market prices, isn't that what would bring on financial armageddon?

JPM is said to have the largest exposure to derivatives of anyone ... Is JPM a short?

Comments, anyone?

"Why did gold drop from $1030.00 overseas to $1005.00 when New York opened?"

Perhaps this was a manufactured event that was designed to show the retail investor that gold can go much higher now that it has penetrated 1000 and the dip back down is their "opportunity" to jump aboard for the run.

I'm personally still expecting a dramatic move up over a week or two before a correction occurs along the lines predicted by Bill. That said, while I'm generally long gold and silver, I'm going to be looking at putting some stops tight beneath some positions.

Fred,

Nobody knows why gold dropped percipituously today.

What everyone knows is that 1000 held as support, and PoG is already now, as I post, at 1011.

You can call it volatility, profit taking, portfolio liquidation, whatever, but regardless of qualifications and justifications, PoG is trading around 1% higher than Friday's close, and the uptrend in this swing remains intact.

Cheers

SRS: Out at $120 premkt.
BSC: Nice trade 2nd! In at 3.79 out at $4.90
Would reload in the 3's again.

Adding: WGW, GSS.

Bill,

Re: "I can only imagine the amount of capital I have saved for the people so that they and their children and grandchildren can live a better life."

Thank you:

- for your mentoring
- for your leadership
- for your time away from your fanily
- for the financial investment you put into this blog
- for your independance.
- for having the courage to open your blog to people you do not know, and giving them a level playing field in which to learn and share knowledge.

God bless you.

Cheers!

Why is BSC trading in high 3s when purchase price was $2?

BSC- out at 4.73...

premature again ;)

magnolia- purchase price was not 2, it was a fractional amount of the price of JPM-> so i think they're betting financials move up from here (at least for today)...

Jock - Bill has the actual work experience to delve into the books at JPM, but I doubt that he could even figure out what is really going on there...mark to market?

Excluding an overnight gap down measured in dozens of dollars, the answer to you question is to simply watch the price movement of JPM. Over the years, I have made mistakes by thinking I had a good grasp of what was going on, but my positions were incorrectly placed in time (see Vad Graifers blog post linked above). That lesson needs to be learned quickly to survive. In the end, it's all in the prices. Maybe a short makes sense, but JPM may be viewed by those "with the money and in the know" as one of the financial survivors and although the short is the "smart play", the shorts get squeezed and after all is washed out, JPM is one of the winners. We should watch the recent support for clues.

So with JPM up 10%, the market must be saying that JPM will save everyone who needs saving with the help of the NY FED.

We'll see how much ammo the manipulators have. I still think they don't have enough but who am I to argue, it's their casino.

Rob.

Covered FXP Short at $111. $5 scalp in 1 hour, woohoo!

BSC at 4.23...(keeping in mind the trade's getting crowded here)...

Those short, watch out for a W bottom on the 5 minute chart if we revisit the days lows.

Thank you for good words g034.

As far as common sense is concerned, these are trying times. Thankfully, being a trader oftentimes means not being overburdened with common sense :)

JPM buys Bear for 240 million but, gets 30 billion from the fed. JPM also highly leveraged, maybe fails and we get stuck with the bill. I just paid more corp taxes, hope I get a personal thank you note from Jaime Dimon.

moab, what would that mean? Time to cover?

careful, sundance..you're starting to sound like a washington mutual billboard...;)

I forgot.

What was the good news today that's stopping the market from going down 500 points??

Rob.

Bear Stearns is a good example of why one does not keep all your monies at one brokerage (firm) account. Who knows what type of access one has today, but if it went under clearly none and your money would be tied up for some time to come.

Clearly funds should be spread along 3 or 4 firms. The risk than becomes one of systemic risk versus company risk.

I think Barron’s recently did a survey of online brokers, I noticed that it showed that Interactive Brokers (IB) did not have telephone brokers available for trading just online. If true that would be a concern for me.

There is no guarantee that one could get through to your broker on the phone, but at least it’s a possibility. If you do decide to keep just one brokerage account, consider having a separate futures account (FC Stone is a good choice), where in an emergency you could hedge your holdings quickly with S&P futures.

By the way, the government is doing one heck of a job holding the market up today. Go team!

BSC- adding at 4.01...

If we revisit the lows, watch very closely because if it reverses the bottom might be in. We saw this behavior before at 1402 and 1270.

Thanks, moab.

thanks, g034 -

I generally stand aside when things are going nuts. I don't have the rapid-fire trading experience to handle major volatility ... bulls, bears, and pigs.

occam_razor :

I understand your position completely. What I liked about Mark's comments was his willingness to invoke the dreaded word "Nationalize".

They usually don't make comments that would allow us to understand that the FED is actually using "our" money without our permission; and like you stated, "to make JPM rich".

The "good" news is the Fed will devalue your USD to ZERO in order to save the financials.

Such a deal!

Same good news as any equity going up when they lay you off. If we didn't know better you would think bad economic news for regular people is good news for the street.....oh wait....

Pres. Bush came on TV, slouched in his chair, thanked Sec. Paulson for working the weekend (?) and expressed confidence that America's financial markets were working efficiently...

Now, we can all relax !!! - and slouch in our chairs.

Ironic that Sandy Weill from Citigroup canned Jamie Dimon. Look whose in the catbird seat now.

Maromatics: I think you also deserve thanks for your contribution to this forum. You have been one of the posters who I give credence to the most.

A question: do you still agree with Bill that a significant drop in gold will occur? Down to the 800 level? And how do you see PoG through the rest of the year?

I'm a newbie here, can you please tell me what HB&B stand for?

If the recent lows in the Dow hold, then the Dow would have dropped "only" 18% off of it's all time highs during a time of a systemic financial crisis.

If it holds, that would be a bigger miracle than the "Miracle on Ice" when the US hockey team won the gold medal in 1980.

Then again, these days liquidity is king...

Turtleman Welcome...

You will have fun here..

HUGE BANK & BROKERAGE

Humungous Bank and Brokerage, HB&B.

g034: "If it holds" it will set up the decline beginning late 2008 as the entry to a depression greater than 1929+, as it will have again rolled forward the recession we need now.

Is today just the latest, most egregious example of the PPT at work. Cannot believe the stock mkt is up, while gold gave up it's gains before rebounding slightly.

thoughts anyone?

dfinvest:

See g034 post at 10:00AM and vadyam's post at 10:50. If you dont understand the post...dont day trade

Question: I'm retired with a defined-benefits pension (one of the lucky few). Pension payments are made through an annuity purchased by my employer ("Firm A") and administered through/paid by another HB&B firm ("Firm B"). What happens to my pension if Firm B goes belly up? Is Firm A still on the hook (assuming it's still in business)? Or do I rely on the Pension Benefits Guarantee Corp. (assuming its meager resources have not long since been exhausted)? Or will I be SOL? Anybody know the answer?

Vadym- just finished reading g034's link to your blog...one of the best explanations i've heard re trading against the crowd- reposting link here, and thank you:

http://tinyurl.com/36vfox

dfinvest,

A few months ago, I wouldn't have believed it myself, but after reading Bill's and other comments, I've come to the realization that are no free markets in the U.S.

Regards

"They've" again notched the Gold and Silver prices, in what looks like an attempt to wreak havoc with options traders and those with stops. There's too much money at stake for this to be a fair game.

Purplejacket,

Thank you for your kind words.

I fully agree with Bill that PoG is set for a pullback.

We just do not know when that will happen.

Therefore, meanwhile, I cautiously remain bull, but am more and more with my finger near the sell button, as PoG approaches my goals. When that happens, I am placing electronic stops into the system.

However, I do not expect that gold will enter a bear market like the one currently developpig in equities.

What I do expect is a significant correction of the last swing, clearing the way for much higher prices later on.

Let me be clearer here: the kind of monetary debasement that is going on in the US will imply much higher gold prices than people are expecting at this point.

But before that happens, some correction is needed for the next upswing to start.

When? Nobody knows.

All I know is that:

- This swing is quite mature.
- TA goals: 1026 (tested today, will probably breakout); 1050; 1156.

As seen today, 1.000 is now support.

Please do not trade based on this. This is just my opinion.

Cheers!

Turtleman - HB&B is commentary on the huge financial conglomerates that are often on all sides of all deals, and reflect Bill's belief that the function of being an agent for investors needs to be separate from the function of being a principal in deals. HB&B ends up trading against its clients, etc. This oversimplifies, but gives you an initial idea. As read more here, you'll get more of the flow.

Starting scaling into short position in long term treasuries. Getting RRPIX (small position for now).

Thank you 2nd_ave. This shift in thinking can be tough to make as it goes against the grain of the whole system of our education and conditioning. Once it's made however, one will never see the market for what it's being sold to masses and will see the reality under the propaganda.

Then again, you know all this - I read your posts for a while :)

once you get started reading vadym's blog-> read it all, full of slick observations...

Bought some Mar 119 DIA puts on that PPT-induced run up this morning designed to frustrated the shorts. Will clear out before the PPT comes back at 2:15PM.

Exited Apr 40 LEH puts for 100%, as I was late.

MF global down 70% on no news! Free markets my ass. Someone knows something. This could be the next financial failure.

There are extraordinary risks for both longs and shorts here.

IBKR just crashed. Any ideas ?

Bill, Many thanks to you and your team. I greatly appreciate your commentary. Very insightful.
While you read the following, please keep in mind the analogy that one must mix sugar with bitter chocolate to ensure that people are buying your work.
About your comment, "I have been asked by industry colleagues why I have been writing such extremely pessimistic, cynical, disparaging commentary lately." Please do not brush such advise aside. You have a very important message to convey but need to ensure that your audience is listening. A little positive commentary mixed in with todays big challenges will ensure that you and your message is not written off.
I cannot get enough of your daily RSS feed. Please keep up the great work.
Nathan Blakley

Does MF Global handle futures or options for IBKR? All the brokers are selling off = systematic risk.

Nathan, what's more positive then telling people where they can safely put their money? I sure as heck hope someone wouldn't water down the bad news to make it more palatable.

watch the charts people......testing the open...

Bill, Your work has saved me and made me more money than I deserve. Thank You for you tireless efforts. Your kindness shines through your words.

Does anyone have an idea why agriculture commodities are tanking today along with the dollar? Buying time for DBA?

I have heard the word "failure" used in context with BSC several times today. I prefer to think they have displayed financial acumen by re-inventing their business model to one where they have become a successful low-priced warrant or option on JPM. :-)

Took tiny positions in MF Global at 4.70 and IBKR at 22.4

The same break of the credit ring that will take down gold will also take down all commodities and related stocks. Be careful with DBA. I have some DBA and MOO puts.

Tigermaple "Does anyone have an idea why agriculture commodities are tanking today along with the dollar? Buying time for DBA?"

Hedge fund margin calls. Baby out with the bathwater thing and it can/will continue with some relief rallies in between. Why not consider selling puts and waiting for the price to come to you?

IBKR: The BSC option trades probably cost them a lot of money.

DUG up 8%.

IBKR - haven't heard anything, but its possible that they are going to take a hit on this BSC. If they extended too much margin to accounts holding BSC on Friday, then they likely now have customers that are in debt to them and IBKR will never be able to collect.

Trade of a Generation (ToG), Long Bond thoughts: While I’m intellectually attracted to this trade, the timing of this trade is going to be a beast. In the mid 1990’s, I thought shorting Japan’s JGB’s would be a clear path to profits. If one would have made that trade one is still waiting.

The crux of the problem as I see it is described in QB’s paper:

“Bond yields in the US are synthetically low because demand for them is not based on the classic theory that their yields should be priced at some positive spread over anticipated inflation. (Again, buyers of bonds - bond and pension funds, foreign central banks and levered global arbitrageurs - don’t care about maintaining their constituents’ future purchasing power. They care about – in order - relative performance, trade policy and generating fees from yield spread differentials.) If US bonds were priced based on true inflation, as we’ve described, we think they would yield between 10% and 15%. We think owning bonds with positive duration is foolish -not out of fear that one day everyone will wake up and realize they need more yield (though that is a definite possibility) - but because bond coupons and yields trade at a deep concession to true inflation.”

I suppose the “Bond Vigilante’s” are all dead or just got run over by the above entities (bond and pension funds, foreign central banks and levered global arbitrageurs). T3d.

re DBA:

There was an article posted here from an ag commodity trader discussing how the wheat and corn markets have been taken over by hedge funds and the price fluctuations make absolutely no sense. These commodities have fundamentals behind them but if the speculators sell we could see some serious downside IMO.

ROTFLMAO!!!!!
Bollmberg:
Goldman Sachs announces Abby Joseph Cohen to STOP making S&P 500 forecasts........sorry...this is killing me.....LOL!

Now if she can get Dick Bove to join her....along with *everyone* at S&P and CNBS.

Telestar3D -

I posted an article on Friday that speculates that the Japanese manipulate the Yen lower against the dollar by buying Treasuries. I think this explains some of the disconnect in yields.

There is a bubble in bonds but picking the top of bubbles is next to impossible.

Still laughing...that's Bloomberg....bollmberg? Now my fingers are dyslexic!
Still doing way better than AJC.

BillySundance -
IBKR does not make margin calls - it liquidates account holdings immediately. However BSC thing happened on sunday so they had limited options. I am worried since I have almost half of my lifetime savings there.

INTC holding up well today->on the watchlist for a buy if/when a rally takes place...

Shorted FXP at $116 again

moab Agree with you. That's exactly why I took my profit in RJA in the IRA account today. May bounce tomorrow, but think there's still a little blood in the streets to come in the commodities. Don't want to fall in love with these themes, but will look to reenter at a later date as the fundamental facts haven't changed.

anyone sensing (short-term) capitulation in the financials-> C down 8%, WM down 14%...

Occam -

When BSC goes from $30 to $2 while exchanges are closed, IBKR cannot properly liquidate the account because there is no exchange to transact on. If you started to overrun your margin, then IBKR would normally start liquidating piece-by-piece during exchange hours.

Say you held a full boat of BSC on 2x margin at the close on Friday. IBKR could not liquidate as BSC dropped from $30 to $4 because the market was closed! That person would then have a negative account balance today. IBKR possibly took risk in allowing that kind of margin. And they won't have much success trying to get this money from people who just went broke.

.......I forgot to give a CAVEAT that it is ENTIRELY MY OWN SPECULATION that IBKR may be suffering from extending too much BSC on margin over the weekend

going long intraday on C, WM, SNDK...

Might be a short-term capitulation with the rate cut tomorrow. I wonder if it will hold the market up until the Visa IPO.

Marketwatch headline: FTSE closes at lowest since 2005.

2-3 years of gains, gone. That's gotta hurt.

they're going to want to close it in the green, take it global overnight, and put in a ST bottom with the
Fed tomorrow...if they can't keep things together now, it's not going to look good, and the panic will begin in earnest....

Moab, thanks. If memory serves me Sinclair thinks that what Japan has done with respect to liquidity injections has no way of being able to be removed from the system. Moab’s link:
Re: negative yields.
Yesterday on minyanville Mr. Practical said that the Japanese manipulate the Yen lower by buying Treasuries, lowering the yield and weakening the dollar. This is indeed setting up the TOG.
http://www.minyanville.com/articles/index.php?a=16268
Posted by: moab at March 14, 2008 2:50 PM
QB’s link, essential for the ToG trade:
Someone mentioned QB/Barron's. An expanded version of their views can be found in this 5/2007 paper-
http://www.gloomboomdoom.com/marketcommentary/download/CONT_USD.pdf
Posted by: Namkcots at March 16, 2008 9:35 AM

Hi,

My intuition tells me that an interim bottom may be forming in equities.

Of course the market will go lower, but maybe not just yet.

Why?

- Sentiment is as bad as can be
- Terrible news already discounted
- PPT was very efficient today

If this bottom forms, it is not a "real bottom", but a "synthetic" one.

But then again, I may be wrong....

:-)

Disclosure: I have been out of equities for quite a while and am not planning to get in.

Cheers!

Thanks Bill, I am very thankful to have found you and your blog.

I sincerely and most openly appreciate everything you have done. You always have a place to stay no matter where I might be!

sincerely

Casey

2nd - I'd just be super careful on entering those banking names. With GS/Lehman reporting earnings tomorrow - there is a possibility of further bad news. I would stay away from the underlying stock of these companies and limit risk with options.

Buying collars may be a good move if you are expecting a violent move one way or the other in these names.

Friends don't let friends buy bank stocks!

sundance- thanks, i should be out by EOD...no changes in my plans to close flat each day right now...

"The same break of the credit ring that will take down gold will also take down all commodities and related stocks. Be careful with DBA. I have some DBA and MOO puts.

Posted by: SteveC at March 17, 2008 12:04 PM"

You are probably correct with regards to all but possibly gold. I thought we would have a larger decline in gold when it hit $1000, but the derivative crisis is the reason why gold is so high now. We could see gold rise without the anticipated decline exactly because of the "break of the credit ring".

We could see a period in gold where technicals matter not, it will trade solely on fundamentals that will pull prices much higher. This is not an easy trade right now. JMHO to wait and see.

2nd - re INTC
I've started adding long positions (albeit very slowly) in the companies that (i) have a product with international appeal (especially in BRIC), and (ii) do not solely rely on IP protection but rather on the complexity of replicating the product. INTC is a perfect example of this and is part of my long term core. BA is another (although I am waiting for better entry point).
The second criteria is the reason I am generally avoiding things like MSFT and pharmaceuticals - too easy to illegally replicate and that is a critical disadvantage in emerging markets.

"Relax, let prices come to you" Thanks ever so much, trigger finger was getting itchy

o_r- good distinction btw INTC and MSFT...

Go34,

Your comments Re Gold are always welcome.

Cheers mate!

Opened puts on C, F, GM, DBA, DIA.
Long SMN.

Thanks for the posts on DBA. This blog has some pull as the negative comments seem to drag DBA down further on very high volume. Selling puts sounds like a good idea to me also. Once the spec dies down, the problems with food supply are still there. However I can see the Gov't possibly capping food prices. Bail out the bankers and stick to the farmers has been the game for quite some time.

Did anyone here get a Merryl Lynch report issued about 2 hours ago? Apparently it mentions that BSC is the first of many, and singles out LEH, which could be self-fulfilling (and cause another run on the bank).

QID approaching 52 week high

Tiger, I'm not sure about DBA. RJA, the Rogers Commodity ETN, is down over 6% today. Of course, this would be the day I decided to go long, early and near the high of the day.

A grade of D for me using the Elder method of rating entries.

Number2son..slow down...slow down....

Looking weak to me. Tick can not get above 0. We may see how many stops are set below 1260.

EEM ?

N2Son..take your time..pick your shots...:)

EEM ... got it. thanks ... my thesis is that the Fed action, which may include a 100bps cut tomorrow, will keep pressure on the dollar and inflation.

FWIW, it's a small position. Not a day trade. And I have a lot of air above my stop loss.

SP seems as much magnetized to the downtrending line that starts 02/27 and rides thru to today as much as 1270.

Gold now falling down?

20 million shares GLD traded today so far.

g52- if TLT remains where it is now, RRPIX should set a new 52-wk low...if the Fed cuts again tomorrow, hard to say whether it's already priced into the long bond now, if long yields continue to drop in tandem with short yields, or if long yields rise in opposition to fed...personally, standing pat with 2/5 of my allocation and planning to add if yields drop/sell if yields rise...

Abby Joseph Cohen kicked to the curb at GS per Bloomberg. Who'da thunk it?

opening a position in WGW...

Gecko,

What I am seeing is a test of 1.000 as support, and so far I am happy to register that it is holding.

I can't shake off the nagging hunch that better-than-expected Lehman results tomorrow have been kept in reserve to give the FED some leeway and surprise the market with 75 bsps instead of the rumored 100 bsps that's being touted by the financial media. This would simultaneously squeeze the equity shorts, reverse the dollar slide, and trigger a sell-off in commodities.

The VISA IPO will further shore up JPM and BAC, while the smart money loads up on puts at the top of a counter-trend rally. The timing of these events just seems too coincidental not to have been scripted in advance.

Bill C,

Regarding your comments on being 90% cash and waiting for spike bottom Dow 10k. Would it be too aggressive to park some cash on SKF and other inverse etf's until the cycle bottom, and then rotating into long equities at the bottom?

snapper in the wings...

N2Son..right on..not doubting your trading thesis...I keep reminding myself its about execution..its a sniper's market....not field artillery..just my own thoughts...:)

French,

If a 75 bp arises, and if the USD appears to reverse, that will be a 1 or 2 day thing, as a 75 bp cut will necessarilly mean a lower usd.

This is not rocket science, regrdless of how much people will want you to think differently.

Macro - re your bottom theory, I beg to differ. The sentiment can't be as bad as it could be if you're thinking this might be the bottom. Please advise when you see no bottom in sight! ...

have to hand it to the bears, they're hanging in there...if i were short, would be inclined to take the hefty profits as opposed to staying short ahead of the Fed...

2nd Ave: Ssssshhhhhh...if the PPT doesnt squeeze the shorts..where would the buyers come from...?:)

I guess the W bottom is in after all. I have to be more patient...

TLT ineligible to be shorted through Schwab. What is that about?

EEMt- OK, man...i've logged about twenty round-trips on BSC and at this point no longer have a take on it ;)

Fidelity: TLT zero shortable shares, as usual. I got 30 once, and never could get any of the Munys. Shortable shares must be allocated to friends and family.

Maromatics: Brilliant! by using an SP 500 index value of 1, thus anytime the market closes above it you automatically feel good.

@nd Ave: see when you made the post and the market turned down...dang...dang..dang...

JRP,

thanks for your comment, it is welcome.

As I keep on saying, a bottom is a process, not an event, so nobody expect that we will have it, say, at 6.30 today or whatever.

Further I also believe that there is plenty more downside to come bwfore this bear market is over.

however,

I am getting a feeling that a short-term respite bottom may be in the cards.

But it is just a feeling.

PLEASE do not trade on it.

Cheers!

Gecko,

:-)

ALOHA !!

From IB today ...
IB Bulletin - March 17, 2008
Dear IB Customer:

During the last few weeks we have been running an advertisement in the Wall Street Journal regarding the safety of moving money to Interactive Brokers. We want all of our customers to know that every word of this advertisement remains true and accurate. We are proud of our prudent and conservative policies that protect our clients' assets.

AD link: http://www.interactivebrokers.com/download/IB08-102.pdf

Like always, perception is what counts.

So, how will the FED change the perception that most financial institutions are untrustworthy and most likely insolvent?

What could they possibly do to make us want to buy stocks and rally them for a few months?

Those are the questions we need to answer as we try to figure out direction for tomorrow.

My answer is that I don't think there's anything the FED can do to stop the credit and derivative unwind currently underway. They can slow it down and keep their precious books hidden but the trash will be thrown out and the solvent will be left standing.

Rob.

Bought Western Gold (WGI), Geologix (GIX) and Evolving Gold (EVG).

TLT - Apparently plenty of shares available to short at IB.

maromatics, re gold, if I was a person wanting to invest in gold right now, I'd be ready to put a gun to my head. The crosscurrents are incredible.

Adding to RRPIX at the close.

Kaimu - What's your point re IB?

That you believe IB or you doubt them? They DO process something like 10% of all options trades in the US. Does that involve any risk for their brokerage customers?

Also adding RRPIX today, maybe 1/3 bite.

UNG and USO getting killed. Might drag Gold with them.

hello all, back after being out for a week+, and glad I've been gone. Still almost 100% cash and patiently waiting for a move.

Here's one that makes me laugh and feel sick simultaneously:
http://calculatedrisk.blogspot.com/2008/03/bear-stearns-building-today.html

Dave

question: there are still a ton of open March puts on LEH, although these shorts have made a killing. If the blood letting was over, wouldn't you think the smart money would get off the table? Belatedly I realized this was true for BSC as well, on Fri. even after I thought the trade was done, lots of open puts suggested otherwise. Somebody sanitize my thinking here before I do something whacky

Regarding Bill's commentary and daily report today, I think he is right on. Bill's views may seem cynical to some, but I think they are based on a rational thought process, not mumbo jumbo, spin, or delusions, and his views don't come from someone with a vested interest in prolonging the current financial insanity.
I look forward to Bill's future discussions of promising areas and sectors of interest to look at when this finally turns around. I'm sure we'll see Bill just as rational when pessimism finally gives way to optimism.

Is there news/rumor on UBS?

The noise is all about LEH but I have not heard anything about UBS?

noticed someone else was playing COF (capital one financial) puts, which i also currently own. Meant to post this earlier, but isn't their 'exciting news' from last week about offering high interest savings accounts a warning sign that they are trying to raise capital?

I believe Mish talked about watching moves such as these as indications that banks are trying to raise ca