Re: Organized Crime

Well, at least agricultural commodities are commanding higher prices, edging out the drug trade. This will have a major impact on the futures markets and money laundering schemes. You have to wonder what price changes in the gold market does to the drug trade, along with declines in the dollar.

Re: Chart Porn

dr. cosa,

I though you might like to read this article in respose to your most recent chart:

http://www.safehaven.com/article-10057.htm

Re: Euro Area Yield Curve

The Euro area yield curve has changed significantly indicating a sell-off in the intermediate euro bonds. This is contributing to a steepening of the yield curve. When the Canadian yield curve did the same, it took at least a couple of months for short term yields to decline, and some time thereafter for BOC rates to be cut. So changes in the weather are forecast. (short term rates have not yet declined in Eurobonds)

http://www.ecb.int/stats/money/yc/html/index.en.html

Morning Bill, here is a link to a short Charles Maxwell interview on April 16 regarding his future oil price estimates.

http://tinyurl.com/6y59wb

Maxwell forecasts $180 oil by 2015, and $300 a barrel by 2020.
Cheers John

Two proposals before the Commodities Futures Trading Commission (CFTC) regarding options trading and delivery of futures contracts of streetTracks Gold Trust Shares:

"The Commodity Futures Trading Commission is proposing to exempt the trading and clearing of
products called options on streetTRACKS Gold Trust Shares ...from the provisions of the Commodity Exchange Act."

http://regulations.justia.com/view/108865/

The second proposal before the CFTC reagarding the physical delivery of gold futures contracts of streetTRACKS Gold Trust Shares.

"The Commodity Futures Trading Commission (Commission) is proposing to exempt certain transactions in physically delivered futures contracts based on streetTRACKS[reg] Gold Trust Shares from those provisions of the Commodity Exchange Act..."

http://regulations.justia.com/view/105224

Does this mean the trading of options and delivery of futures contracts of streetTracks Gold Trust Shares will go "dark", i.e., no clearing house, no audit trail?

sharp drop in jobless claims...

Good morning.

There are NO Cara 100 Ratings Changes to report at this time.

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

Have a great day.

FXP at 62 and change...

Re: Gold Sales

"Gold held in New York-listed StreetTRACKS Gold Shares, the world's largest gold-backed exchange-traded fund, fell to 623.41 metric tons on Tuesday from 641.82 metric tons the previous day."

http://www.reuters.com/article/hotStocksNews/idUSL2392399720080423

Fransix,

that article from safehaven was great,
thanks,

heres my mantra for the next little while:

i have no clue what the fed will do next and
either do the vast majority of anlaysts.

i have no idea at what price point gold will bottom, or if it even will. anything is possible.

even the smartest of men, pure of heart and with exemplary records have faltered.

technical analysis is an obedient slave but a cruel master.

Re: CFTC

Looks like streetTracks gold etf is about to become a dark-side bullion bank.

technical analysis versus sentiment:

if everyone pretty much uses the same methods to trade the same targets, how much of an edge do you have?

whereas with sentiment, trading against the crowd seems to work most of the time...

futures getting bid up...AAPL closing in on 166..

F reports a profit...MSFT after the close...

Q's turning green...

XLF turning green...

2nd,

IMHO.....There's a failing in your analysis. First, many people do not properly use technical analysis. Secondly, of those who apply it, not all do so effectively at all times. Thirdly, it isn't tech VS sentiment, it's tech PLUS sentiment. At the end of the day, we don't trade stocks, we don't trade prices, and we don't trade Llama's in Morocco...What we trade is other traders' psychology, and sometimes, it is them trading ours, plain AND simple my friend. Now what freaking trade is there for me today:)?

By the way, full props to Bill for totally calling the top in gold.

shark- gaming human nature is far more reliable than the relatively mechanical process of watching technical indicators that attempt to translate human behavior into patterns that can be traded...by the time the pattern shows up, it's late in the game...JMHO...

flip side, of course, is that gaming sentiment will always make you early...

An excellent read from an economist at Haverford Group

http://investigatethesec.com/drupal-5.5/node/282

out FXP no gain

FXP- vinod, following you out at 63.89...

2nd
I got in at 63.40
out at 63.60

shark- you're right about the mental part...we are trading the psychology of other traders, and sometimes with/against our own...

(fwiw, back in the eighties, before the '87 crash, i took a couple of courses at michigan in finance and options- the former was all about the efficient market hypothesis, and the latter about pricing theories...we all got to calculate the correlation coefficients underlying beta values by hand/PC, and take apart the black-scholes equation...i can tell you that neither has helped me in any way make money in the market)-> i'd rather give the money to a trader like vadym, who has learned how to actually profit in the real world...(and i prefer listening to musicians who have learned how to play on the streets to those coming out of conservatories)...

profit-taking off the opening gap...

DUG/SMN- taking both off here...

2nd
DUG/SMN I am keeping them untill they hit 40
my cost is around 31 for both

ton of nervous traders at this level...easy trade is to think we go down? we'll see...

Market didn't take a crap on the bad housing news.

QLD @ 78.75

Re: BA buy alert

So I guess it is a buy alert even when the weekly or monthly RSI rises above 30 and the daily RSI has not yet risen above 30. So conversely it is a sell alert even when the weekly or monthly RSI falls under 70 and the daily RSI has not yet fallen under 70.

Dr. Cosa

That was a great post! That's what I've been meaning to say with my posts, in my crude way.
Just remember this though, somebody will always give you something for your gold. Always!

Gus.

All - From the article linked in Bill's comment above regarding the Bear Stearns issue:

"This article is about how Bear Stearns stock was artificially collapsed so that illegal insider traders would make billions and J.P. Morgan would be paid $55 billion of US tax payer money to shore up themselves and buy Bear Stearns at bankruptsy prices."

I recommend that all readers here go to that article. It never ceases to amaze me how this is allowed to go on. Stelco, 9/11 airline shorts, Hillary the master trader, etc. There is absolutely no fear of prosecution.

How can the massive buying of puts that require a drop of 70% in stock value within a week happen as the SEC, the Bear Stearns CEO and Jimmy Cramer state that everything is fine with Bear's liquidity? Someone obviously knew that not to be the case.

In my 20 years in the markets, this has happened before and I virtually guarantee that it will happen again. The funny thing about this is that long time professionals in the market will just shrug their shoulders and say; "yeah, what do you expect" and move on, almost like they have been desensitized to this type of activity because it is so common (for full disclosure, I'm sad to say that I have a bit of that feeling myself). Not on this scale perhaps - well maybe the 9/11 airline shorts. Btw, if you or I were in on this, the authorities would be banging down the door within 24 hours, there is a trail that is easily followed. The questions are; why don't the authorities follow it? Why doesn't the media go nuts over this?

Do you remember the public outcry regarding Exxon revenue? Misdirection in play by those "with the cash, and in the know"?

Bankers rule the world.

At the end of the article -

"This shows, in my view, that J.P. Morgan and the FED were in collusion with the short sellers and put buyers.

John Olagues"

Months back, Bill Cara spent hundreds of hours writing about the Stelco issue in Canada - to no avail. Finally, he threw his hands up in the air and decried; "that's it, I'm done and won't write about this anymore". Can you blame a man for getting tired of banging his head against a brick wall?

Most of us here were drawn by Bill's call for "social equity". Not socialism, but "social equity". This is exactly what he was referring to. IMO, it would be great for the Cara Community in America to follow this story and report on it here. Will anyone listen?

There was an interview on TV recently, sorry can't recall the channel, where organized crime was covered in a documentary. Perhaps some other people saw it? The interviewed quoted someone who had spoke to Swiss bankers. The question was reported as something like this:

Insider: "Since 9-11 and the Patriot Act has there been any changes to your ability to launder money"

Swiss banker:"Yes, we now charge more"

Hmm. Interesting conversation.

I'm currently reading "Capital Ideas Evolving" by Peter L. Bernstein, and it's partly about the intersection (collision?) of the efficient market hypothesis and the behavioral finance theories.

One of the interesting concepts presented is the mechanisms by which the latter actually drive the market towards the former.

That is, as the behavioral market inefficiencies are exploited and arbitraged out of the market, the market actually becomes more and more as the efficient market folks envisage it.

Fascinating, but that's not going to help shark find a trade today.

I told you, man, short the burrito shop!

(NOTE: Put/call ratio on CMG is a bit on the high side, so there is considerable negative sentiment already in the market on this name. My view is negative on the stock, but with a bit caution regarding everyone piling into the same side of the boat.)

adding to USD/ROM on the pullback...

Worsening food situation: See where Brazil has joined other countries in suspending rice exports to protect their supply for domestic demand.

First of all, certainly realizing rice is first and foremost an important food staple for most of the world. But did start musing also about Tsingtao beer which uses hops and barley like other brewers, but also less-expensive rice as an adjunct in the mash. Well the price in that will rise not only because of the stronger Chinese currency! Don't think they'd take it out of the product--maybe when the U.S. suspends the corn ethanol program!

I am new to posting on this site, but not new to following Bill's daily and weekly commentary.

This morning I thought I woke up in the twilight zone. Can someone please help me understand why my AMZN May 70 puts have lost 50% of their value when AMZN is down close to 5%? I understand time decay of options but this seems ridiculous. Any explanation is appreciated!

This proposal to fight organized crime is a fraud.

http://www.dunwalke.com/1_Brady_Bush_Bechtel.htm

Read with an open mind this insiders view of the 30 years it has taken to dismantle the fabric that once was the great American economy, and be afraid, be very afraid.

Disgruntled maybe, who wouldn't be? dishonest I doubt it. The aftermath of the purported charade surfaces a bit more every day.

New home sales hit another multi-decade low.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aDyYp9o4DMGI&refer=home

And Bill "Wrongway" Miller remains positive on these stocks? Now he wouldn't be talking his shrinking book, would he?

The SEC is "vigorously" going after a trader who manipulated a stock for $26k in profits.

Wow! Great job, now I feel better...

opening a position in AUY here

Re: AA

AMR execs sell most of stock awards; Nearly 400,000 shares sold the same day they were given

TERRY MAXON, Staff Writer tmaxon@dallasnews.comTHE DALLAS MORNING NEWS

AMR Corp.'s top five executives sold nearly 400,000 shares of company stock Thursday - most of about 550,000 shares they had just received that day as part of an executive compensation program from the parent of American Airlines.

http://tinyurl.com/3sbw24

Mergers, insider selling, bankruptcies, all you need now is a report on the disappearance of the cash position in order to know which company cannot meet its off balance sheet derivatives obligations and thus head into bankruptcy.

Out of QLD @ 80.04

C-Town,

Option pricing is most heavily dependent on the volatility of the underlying security. When the expected volatility of the underlying security changes (in this case it could be because related companies reported better/worse/in-line earnings or any number of reasons) the price of the option (a deriviative instrument, e.g. something priced based on the price of something else) will change.

So for example if AMZN was thought to move heavily because of some event (say earnings), but several competitors reported in-line earnings that didn't move their stocks much, then the expected price movement that the market expected in AMZN is seen as less likely (less volatility) then the options (especially those that require a large move) will decrease in price.

You could see this by comparing the delta (rate of change of the deriviative compared to a dollar change in the security) and the gamma (rate of change of the delta) before and after some series of events.

Hope that helps,

Karl

NEM's Q1 Results Surge Five-Fold

This should bring some attention to the precious metals sector as earnings for companies in just about every other sector continue to plummet. Unless of course and which is often the case, any good news in the PM sector has already been "priced in".

"Denver-based Newmont Mining Corp. says it earned $370-million (U.S.), or 81 cents per share, up sharply from year-ago profit of $68-million, or 15 cents per share. Earnings from continuing operations totalled 80 cents per share in the latest period.

Revenue climbed to $1.94-billion from $1.22-billion, as the average price per ounce of gold jumped to $933 from $649 a year earlier.

Thomson Financial says analysts expected a profit of 54 cents per share on revenue of $1.66 billion."

http://tinyurl.com/4dk7gk

squeeze is on! taking UYG/USD/ROM off the table for now...

SIGM/UYG - Taking half off.

Karl,

That makes sense, and that is exactly what happened yesterday after the bell. I appreciate your insight, I obviously have some research to do on this before I step back into the water. Thanks for the help.

Corey

vinod- if FXI can't lift off on the rally, going to re-think FXP...

jogyp- nice call on SIGM back when it was 15 and change...

Karl- thanks, that helps to explain why 90% of options expire worthless...

Solar stocks looking weak again.
Adding to CSIQ/ESLR.

re: the Bear options story:

Those who read it may want to revisit it to see the comment by Jonezing. I was going to make the same point here, but he already did it.

Aside from the profit on the puts, the sale of puts can also cause pressure on the price via market markers laying off risk. One way they do it is to go short the shares, and given the situation, that is almost certainly the way they did it.

So the purchase of massive numbers of puts would have almost certainly led to shorting of equal number of shares.

These options weren't purely a profit attempt, but most likely part of the hammering down of Bear in the days leading up to their being absorbed by Morgan.

There's your crime, right there.

DXD @ 51.03

ESLR for a trade around the core position...

Cara Community Poll
Who would buy GDX for 39 today?

Re: Bear Options story.

IBKR reports today after close. It will be intersting to see if the BSC option trades affected them.
I remember last year IBKR suffered 37 million in losses because of manipulative trading activities on the German electronic stock market

http://www.forbes.com/2007/07/06/options-interactive-brokers-biz-wallst-cx_lm_0706options.html

Long IBKR. But worried.

13000 also looks too easy-> if MSFT catalyzes a move, it would have to be >13000...

Re: GDX

Ok, since I'm not day trading or short term trading, I don't want to comment, but my feeling on something like GDX for a short term trade would be to wait until Monday. The $US may have some way to go if it attains the 64-week EMA.

I have a stink bid on my gold junior I wanted to fill this week, but it looks like it may take longer to fill. So in a way its in the same vein.

Gold chart may be showing some bottoming due to the fact we now have a widening gold basis, but there has also been significant institutional selling in bullion.

craig- TLT selling off/TNX up 2.6% ;)

Anyone have an opinion on Valgold resources? I know last year they came out with some decent drilling results and today it looks like they are getting hammered.

SteveC:

re GDX- bill threw out two potential targets for XAU: 129 and 158...XAU currently at 173...i would probably wait for XAU 158 to buy into GDX....

vinod- all three airlines (NWA/DAL/UAUA) up 10% today ;)

Thanks for the response 2nd. Ok some crude math, 158/173 = 91%. 91% of GDX now about 40.50.

So I'm talking about buying GDX today for 39. Are you in? I'm on the verge on doing it.

Not investment advice, do your own diligence or consult your independent investment advisor.

[Bill Cara note: SteveC, earlier you asked about a clearer understanding of the Accumulation and Distribution Zones and the Buy and Sell Alerts. I will write up a Cara Briefing and post it on the sidebar at some point soon.]

SteveC- if GDX takes a 13% before today's close, i'll take it...

13% hit...

brianr,

I don't think you can read too much into large % moves on these penny stocks. Sure it's down 15% today, but in reality it was on a mere $20K of shares changing hands, and it's really only down 0.5 cents from yesterdays low. Probably just stink bids being hit or something...

Frank Barbera:
$XAU: $HUI
The good folks at the Philadelphia Stock Exchange decided awhile back to include Freeport McMoran Copper and Gold (FCX) within the XAU. Their argument was that FCX is a major gold producer, --period. However, FCX also produces a lot more Copper then Gold, with up 85% of the companies revenues coming from sales of Copper. Thus, FCX is more a Base Metal stock, then it is a pure play Precious Metal stock. What’s more, FCX trades precisely along the same lines as other big name Base Metal stocks like BHP Billiton (BHP), RTZ Corp (RTP), Teck Cominco and Rio Dulce (RIO). It trades in a very different pattern then Gold Stocks and as a result, we would argue that it should not be included in the XAU or any other Gold Index. Well, that argument has gotten us no where despite many calls to the PHLX. What is important, is to watch FCX as it presently accounts for 22.34% of the total index, by far and away the heaviest weighted component of the XAU with Barrick Gold currently at 18.29%, Newmont Mining at 9.95% and Goldcorp at 14.05%. Essentially, FCX is worth GG and NEM combined! Since April 1st, ABX is down from $41.92 to today’s close of $40.80, NEM is down from $44.80 to today’s close of $43.85, and GG is up slightly
from $37.46 to today’s close of $38.44.However, since April 1st, FCX is up 25.64 dollars per share, from $97.63 to a high today of $123.27, for a percentage gain of 26.26%. Since every one dollar in FCX stock kicks in 2.85 index points into the XAU, the 25.64 point gain in FCX has added 73.25 index points into the XAU since April 1st. That is huge! And that is why the XAU is holding up much better then other Gold Indices, for the simple reason that since the beginning of April, FCX has skewed the XAU sharply to the upside causing the index not to reflect the real sideways action which has taken place in precious metals mining stocks. We can see all of this graphically on the charts below, with FCX moving to new all time highs and in the process skewing the XAU to the upside, with a super bullish bias.
If instead of the XAU, we use the HUI – Amex Gold Bugs Index, or the GDX ETF, which tracks the MarketVectors Gold Mining Index, we see that both of these other indices are now fully back to the March and April lows .

Bought NSU at 1.37

The American Association of Individual Investors (AAII) released its latest survey today and showed that its members have greatly reduced their caution towards equities. The percentage of respondents with a negative view of the market dropped to 28% this week, the lowest reading since last fall.

GE just broke the $33 barrier.

HE would have been a good play too back when GE crashed.

HA would have been better.

Do 1 and 2-letter stocks perform better than 4-letter stocks with less volatility? Something to think about...

http://tinyurl.com/36buey

For me it's the ones that I can Google without having to put "yahoo finance" in the search.

The ABI Index shows that construction spending is going the way of the dinosaurs...

“We’ve seen an 11-point fall-off in the first quarter of the year and the prognosis for commercial construction later this year is not favorable at this point,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Aside from historically low project demand, all regions are showing very poor business conditions. This is not likely to reverse itself anytime soon.”

http://tinyurl.com/3zey48

Hi Viso

"If instead of the XAU, we use the HUI – Amex Gold Bugs Index, or the GDX ETF, which tracks the MarketVectors Gold Mining Index, we see that both of these other indices are now fully back to the March and April lows ."

The April low was 1st and was 425.91 on the HUI.

We're at least 15 points below that.

If we're just talking HUI lows, next perhaps we need to look at Dec 17, 07 and 374.91 and the trades around Dec 18-20 in the 380 area. A Fib retracement of 62% from Aug 07 to the 514 high March 14 would bring us down to 381.

D

jogyp- screw it...back into UYG/USD at the high->going to run this thing up a little higher...

vinod- i would stay the h--- away from FXP right now...think we might get a shot at it in the fifties...

GDX: why I did it

GDX is trading way under its daily bollinger band after six days of losses. Daily RSI and STO show it is very oversold. I don't know if this is a bottom or there's another 10% drop soon, but I'm prepared to accept it.

I sold/wrote June 40 puts, took in about $1.10 per share, and am ready to have the shares put to me at a cost basis around $38.90. If it's not put to me, I keep the put money or cover when it's much cheaper. Maybe I'll cover tomorrow. Who knows. Also I didn't go crazy to sell 500 contracts.

This is NOT investment advice. Do not rely on this. Do your own due diligence. Consult your independent investment advisor.

SteveC- nicely done...good luck

DJIA/SPY- they're getting ready to run stops at 13000/140-> would think twice about getting in front of that train if i were short...

Stopped out of DXD @ 50.78 - Blew that one.

viso thanks for that article,
i was scratching my head over the difference in the XAU for some time and it all makes sense.

i just posted a 2 year TA of the HUI noting we are just above the May 06 peak,

http://jglobal.blogspot.com/

any comments are welcome.

This is a pretty amazing rally considering Ambac is about to default on all of it's Bond guarantees. I'm just glad oil is coming off it's highs and COF isn't rising as much as the other financials and Gold is still getting pounded. I'm thinking about covering my NEM puts soon as I doubt they can go much lower.

How about MER and LEH, reaching for the sky today. I guess raising capital, even when you said you didn't need to a few days ago, at junk bond rates and diluting current shareholders is great!!

Along with guiding down for the future and getting your margins squeezed by high commodity costs what could be better for stocks?

It's getting harder to understand the anti-logic behind this logic.

Rob.

basketguy- think it was you that hit targets on the last two counter-trend rallies-> do you have a target for this one?

Regarding the Olagues article and outrage. It is just for these instances that the french have that wonderful saying, "Plu cest change, plu cest le meme chose." The more that things change, the more they stay the same. Don't forget the scion of the Kennedy clan was one of the original market riggers, and his son was a [removed] who still resides in the senate. The chinese have another saying, "Steal a hook, hang as a crook. Steal a kingdom, be made a duke." There is always the power pyramid. Belief in social equity, while honorable, is not the way the world works-unfortunately.

[Bill Cara note: slander doesn't work either]

ALOHA !!

F6 ... Of course they are going over to the "dark side", but they started on the dark side when JP MORGAN got involved! If JP MORGAN holds your money or your bullion you have some serious RISK! Knowing what happened to BSC its worse than country risk!

Re: GDX

I can see GDX being good for a short term trade if the price of oil rallies and hits $123.- A takedown of oil prices after that would put some pressure on the gold stocks for sure.

Re: StreetTracks Gold ETF

I can see them potentially running into liquidity problems should there be a major correction in gold prices.

Remember a couple of weeks ago I noticed there were no more 0.0% credit card offers out there. I spoke too soon because we got one from each of: Chase, Capital One, and Citibank this week.

My personal targets for the averages would be at the 200 day moving average. 13078 for the DOW, 2531 for the COMP, and 1437 for the S&P. Mr. Softie could easily push us in that range for tomorrow.

Rob.

I just saw a funny headline on Bloomberg

"Stocks in US Advance, led by financials after Merrill maintains dividend."

The punch-line they forgot to add was:

"with the taxpayer's money."

Rob.

ALOHA !!

nemo ... Just how old are you nemo? How old were you during the Vietnam War? Had those in power at that time like LBJ and NIXON not been pressured by daily anarchy in the streets with riots and protests to end the War we'd still be in Vietnam right now! Why do you think even today some 40+ years later, these cowards in DC avoid mentioning the word "draft" like the unholy plague? What happened in Russia in the 1980s when people took to the streets there in a Communist coup? Then there's Poland ... You so underestimate the power of "pissed off" people who are sick and tired or being sick and tired! Unless you have lived through those times of social unrest and disobedience you cannot understand the power "We The People" have. Certainly the British learned that lesson the hard way back in 1777! Just as our OH SO POWERFUL elite military were taught that same lesson in Vietnam and now Iraq. Could we nuke Iraq back to the stoneage ... YES! So ... why don't we? Our ever so elite leaders fear the consequences of a World loaded to the gills with the same nukes we have! There's always someone richer and someone with more political clout than the average guy, but when the average guys get mad enough and our passions are oozing from ever pore ... WATCH OUT! History is full of supposed "SUPERPOWERS" that crumbled to nothingness under the weight of pissed off "We The Peoples"!! If that were not fact we'd still be paying taxes to the King Of England right now!

Our Founding Fathers have shown us the path to true FREEDOM ... Its up to us "commoners" to chose that path once again. That time will come ... We just have to trust that those in control now will falter and make life so miserable for "We The People" that there will be an epic sized revolution! The signs of "falter" are all around ... Its only a matter of time!

2nd
I just got time to look at market
i do not have any shoer but DUG/SMN
added some ESLR today
and will wait untill market finish going higher

2nd
like to buy QID but will wait untill MSFT earning

The market is a complete joke.

At the risk of looking foolish in a few minutes:

I think MSFT has the ability to come out with impressive earnings at crtitcal times and today they will most likey be impressive.

Added MSFT at 31.66

May calls/puts on softie are going at a rate of nearly 3-1 in today's trading for May expiration. Will the out of the money ones get creamed like Apple holders did?

Is the smart money buying puts or calls?

Rob.

Kudos, Kaimu, on your dissertation re: activism.

I have talked myself blue in the face with our children and grandchildren about the subject and, while their minds are on the right side of the equation, they have ALWAYS had it so easy that they are totally tone-deaf.

...and that, my friend, is why democracy is in great peril. But then, on the other hand, it (democracy) isn't working too well anyway.

Finger, the smart money is selling puts and calls.

Bank Of America Latest In Spate Of Jumbo Hybrid Deals
April 24, 2008 3:20pm ET

By Kellie Geressy

Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Bank of America (BOA) jumped on the supply bandwagon Thursday becoming the latest bank to market a benchmark-sized hybrid deal. Recently, Wall Street banks have been selling a massive amount of preferred securities in an effort to boost their capital ratios.

Bank of America is planning to sell perpetual fixed-to-floating rate Tier I capital securities, also known as hybrid debt. Preliminary price guidance is in the 8.125% area and the issue is expected to price later Thursday.

The Bank of America issue is the latest in a spate of purposefully structured deals.

On Monday, Citigroup (C) sold $6 billion of hybrid securities at an initial 8.40% yield. If the issue isn't redeemed, the coupon will convert to a floating rate of three-month Libor plus 402.85 basis points after the first call date.

The deal was aimed at institutional investors and was structured to meet criteria for partial equity treatment from Moody's Investors Service and full equity treatment from Fitch.

Tuesday, Merrill Lynch (MER) sold $2.55 billion of non-cumulative preferred debt with an 8.625% dividend.

And last week, J.P. Morgan (JPM) raised $6 billion of perpetual fixed-to-floating rate non-cumulative preferred securities with a 7.90% coupon.

Thanks to the credit crunch, battered banks have had to become issuance-savvy in order to reinforce their Tier I capital. Tier I represents a bank's core capital, including equity and disclosed reserves. If the core falls below a required level, regulators can step in and the bank may be vulnerable to downgrades.

"The meaning of 'well capitalized' has shifted," according to one market analyst. He said that most banks' capital reserves target is about 7%, but that "no one is truly operating at that level in these treacherous markets."

-By Kellie Geressy, Dow Jones Newswires; (201) 938-2050; kellie.geressy@dowjones.com

(END) Dow Jones Newswires

04-24-08 1519ET

Copyright (c) 2008 Dow Jones & Company, Inc.

Note: Shouldn't somebody tell the journalist at Dow Jones that banks are borrowing 100% of their reserves?

IBKR earnings looks good:

Earnings per share increased by 112.9% from the year ago quarter and 43.5% sequentially.
70.8% pre-tax margin for this quarter.
Consolidated equity of operating companies surpassed $4 billion.
Market Making pre-tax income grew 108.4% from the year ago quarter.
79.6% Market Making pre-tax margin for this quarter.
Electronic Brokerage pre-tax income up 66.6% from the year ago quarter.
45.1% Electronic Brokerage pre-tax margin for this quarter.
Cleared DARTs increased to 303,000, or 59.5%, from the year ago quarter.

FranSix,
And I still wonder how they can think this is good news for any of these banks. I wouldn't be buying any of these bonds if I had that kind of money. That's for sure.

Rob.

Number2son,
You're right. The people who sold out of the money options on Apple yesterday made tons of money. We'll see how Softie plays out momentarily.

Rob.

People selling calls on CMG made even more tons.

-9.34% today.

Softie out with good earnings but soft on revenue and earnings forecasts.
Down afterhours at around 30.50

That's got to have hurt a lot of people (which is, of course, what the market is supposed to do!)

The Fast Money crew was all about buying MSFT last night. "Trade of the Day" across the board.

ALOHA !!

I bought some of everything today !!!

- Swiss Francs
- Australian Dollars
- Gold
- Silver
- ECU Silver
- Geologix
- MolyCor

YEHAAA!! Part of me feels like SLIM PICKENS riding a nuke in the movie DR STRANGELOVE and part of me feels like I'm stealing candy from a baby! How many times have I been here before feeling like the fool while everyone around me lectures me on my foolishness. Try buying gold back in 2001 at $280USD when all were telling me "YOU'RE MAD!" Then I got the same response when I announced I was buying my Hawaii enclave for cash! "ARE YOU MAD ... FINANCE IT!" Then I got the exact same reply when I announced to friends and business colleagues I would no longer contribute to my SEP-IRA! "YOU'RE AN IDIOT!" was the call! Then I got yet another ration of crap for announcing back in 2004 that the top 25 US Banks would collapse from derivatives exposure! "WHAT'S A DERIVATIVE NUMBNUTS?", was the cry! Just imagine my brokers faces when I told them I was removing all my money from MORGAN STANLEY and MERRILL LYNCH ... oh and by the way "BUY GOLD"! "HA ... HA ... RIGHT-T-T DOOFUS, DON'T LET THE DOOR HIT YOUR ASS ON THE WAY OUT!!!" was the sound of the voices in their heads! My strategy since 2000 has been one big "YOU'RE AN IDIOT!" Even today there are only a handful of people I know who will even entertain talking about owning gold or silver. Mostly they want their 401k fund manager to keep them blissfully ignorant! Mention "fiat" and they say "That's an Italian car!" Yeah, I know I used to have one ...

GOL 14.43 (RSI 7D)29.13 (RSI 7W)19.33 (RSI 7M)22.63 Accumulation Zone (for 1 days)
The government of Brazil may more than double the stake foreign companies can buy in domestic airlines to stimulate investment in the overstretched industry, Defense Minister Nelson Jobim said on Thursday.

Hey, numbnuts, I'm still waiting for that one-month Molycor double you promised back at .22!

(I keed, I keed! I guess it will happen when we get that gold 1250 I promised shark. Patience, sharky, patience.)

Looks like you bought all the right stuff, to me.

Another hijacking in the capital markets. Interesting presentation.

http://www.businessjive.com/

From an article titled "New home sales plunge to lowest level in 16 1/2 years"

http://tinyurl.com/5a3pmf

-The Commerce Department reported Thursday that sales of new homes dropped by 8.5 percent last month to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991.

-The median price of a home sold in March dropped by 13.3 percent compared with March 2007, the biggest year-over-year price decline since a 14.6 percent plunge in July 1970.

***Question: Why would SRS [Pro Share Ultrashort Real Estate Fund] fall 4.19 poits if the news is this bad?

I have same question why SRS fall today
if any onw knows

SRS does not short residential real estate, but the underlying US Real Estate Index is comprosed mostly of commercial real estate companies / investment trusts, and banks.

SRS got hurt today for the same reason as SKF... big movement into financials...

Also, commercial RE is lagging residential, per the blog "Calculated Risk," construction & investment has now finally topped out. So I'm still holding, but getting closer to punching out, there are better places to put the money in the near term, like averaging down on SKF.

As 2nd suggested, holding any of these ultra ETFs over long periods of time won't neccessarily provide the forecasted outcome... It's a glaring issue w/FXP, not so much w/some of the others, yet.

since the Bear Stearns announcement, the market has done nothing but go up.when the 5th largest investment bank fails, isn't that a reason to pull some cash out of the market?
who knows?

I know there are some very smart gold people here. Would love to hear what you think about International Royalty ROY IRC.TO. ROY has existing cash flow with its nickel Voisey's Bay royalty, and it has a royalty on a mine Barrick is building. I have a small position.

FattyArbuckle

Thanks for your post.

Re: Bear Stearns Article

Excuse my naivete about how things operate in the options world, but who would have sold these out of the money puts?

TIA!
Miggs

Microsoft Earnings Decline 11%; Forecast Is Tempered

http://tinyurl.com/5m6l5l

Seabridge Gold CEO - "Man with a Plan"

I was able to spend some time yesterday with Rudi Fronk, CEO of Seabridge Gold,(mkt. cap. $757M). Although now approaching "adolescence", Seabridge began life as a junior-junior! Its shares listed in 1999 have been a 300x. Now, Mr. Fronk is promoting his exit plan.

Seabridge has been driven by an unusually clearly defined strategy:

http://www.seabridgegold.net/CorpStrat.htm

From 1999-2002 (at the depths of the gold bust) they acquired 9 gold properties at $1/oz. targeting only N. America, and only "accretive" buys. This meant always buying more value of "in situ" gold than was expended in dollars.

Previous owners had spent $325M on these properties. Since 2002, Seabridge has spent $20/ acquired oz. upgrading resources on their properties. Drilling programs have taken them from 14M oz. (measured, indicated&inferred)to 50M oz. Today, the market values each ounce at just $15.5.

Mr. Fronk states Seabridge has a steady record of converting inferred oz. to(more reliable and highly valued) measured & indicated status. Their strategy was never to operate, but to JV with senior producers or to sell out. Neither has happened to date.

About 6 months ago, SA stock started to decline vs. the gold price, impacted by the general slide in junior mining stocks, and more directly by the shut-down at Galore Creek.

Seabridge' largest deposite (KSM with 19M oz. M&I, and 14M oz. indicated) is 100 kms. from Galore in N.W. British Columbia. Also low-grade, high-tonnage, it is often compared to Galore. However, KSM revenues will be 75% gold, 25% copper, Mr. Fronk notes, the near inverse of
Galore. KSM's economics, he maintains, are incomparably better.

He also argues that KSM is much closer to existing roads, and involves much lower construction costs (for roads and tailings) than Galore's difficult geography. NovaGold drastically under-estimated road construction costs, he asserts, causing partner Teck Cominco (who was writing the checks) to halt the Galore project.

Last summer, Seabridge hosted 2 senior mining companies on site visits, and visits are now being planned other other potential acquirers this summer (the only season allowing access). Several of the 9 candidate senior producers need urgently to increase the reserves they deplete throuh production. Seabridge offers enough concentrated gold in a safe jurisdiction and in a single transaction to command their attention.

In the meantime, Seabridge will sell off non-core assets, expecting to raise about $120M, to be applied largely to stock buy-backs. (JPM is representing them; the first $40M sale is expected in May.) This will leave their two huge deposits KSM and Courageous Lake (both in mining-friendly BC) for a planned auction.

Strong hands control over 50% of the stock (with Friedberg as largest holder) and can fend off pre-mature, hostile bids. Seabridge would like bidding to start at $40/share and end north of $60. That would be a triple from here by sometime in 2009.

I asked Mr. Fronk about his (and the chairman's) previous experience in Greenstone Resources. He frankly recounted overwhelming problems in production, unwillingness of his board to restructure the balance sheet with plunging gold prices, and nationalizations in Central America.

This, he said, led directly to Seabridge's decision to focus upon N. America, and upon buying and upgrading cheap assets, rather than taking deposits into production. This strategy offered the greatest value-add for the least risk. I prefer CEO's who have failed, grown from the experience, and look you in the eye when asked about it.

I haven't done full due diligence on Seabridge. I don't yet have a position. But, I do think their story is instructive - and their strategy better tuned to today's skittish market than is a team with blue-sky exploration plans spanning several countries.

Mr. Fronk is a man with a plan - setting up his end game!
________________________________

(Not a stock recommendation, just information sharing. There are no certainties, only educated guesses!!!)

Jock

Thanks for the info.

Seabridge has been a very good trade for me. I bought SA in May 2007 for around $15/share and rode it to 33 before selling. Then during the first quarter of this year I would buy the dips in the low 20's and sell in the mid 20's.

Will buy again once the price of gold levels out.

nemo:
Thanks for posting the link explaining the SYSTEMIC threat posed by the FTDs in the system. For the first time I understand. There are some number (large? not so large?) of FTDs that are not merely temporary naked shorts but fraudulent and permanent. These FTDs remain the obligation of the broker dealers long after the crooks in the hedge fund that created them are out of business. And the nightmare is that these have to be marked to market every day.

The threat to the system is a short squeeze in an issue which contains (many?) more fraudulent naked FTDs than there is stock. What would it do to the accounts of all the broker dealers who are liable on these FTDs if such a stock could be squeezed from pennies to $500? I can understand why the SEC and the Courts want to keep the public from acquiring this information.

Patrick Byrne is right to complain about naked shorts. They should never have been allowed. It is nothing less than a major regulatory failure on the part of the SEC.

[Bill Cara note: Yes, thanks nemo and kaimu. Dave Patch says the presentation is "one of several Dr. Patrick Byrne has made. He has used such presentation materials to educate members of congress and other federal individuals." Kudos to Patrick Byrne and others for taking the fight to Wall Street. Ultimately the public will win this fight because the public, as the overwhelming majority of the owners of capital and of the aggregate holding of capital, represents the prime strategic position. Military planners will say that, after we are properly organized, ultimately we must win. I say to you: this fight isn't about beating somebody; it's about regaining control over what is rightfully ours -- our capital. It's about master and servant, and we, as the owner of most of the capital, must be the master.]

Kaimu,
I agree wholeheartedly. When I tell people I don't contribute to our 401K but pay off our house instead, they look at me like I'm an alien or something.

We do have small Roth IRA's but I plan to keep the bulk of our money(when we accumulate it) in hard physical assets.

I'm thinking Gold, Silver, Farmland and if we ever get rich enough I'd love to start a company that would make every kind of Farm Equipment here in the USA. Even John Deere has their farm equipment manufactured overseas now. Reversing that situation would be a huge accomplishment for sure.

Rob.

I've been putting my saved fiat into gold, miners, farmland and equipment for it, but my weakness is horses and boy can they suck it out of you. I sometimes think they are in colusion with the government...give me this...give me that etc. It goes on and on. But at least at the end of the day they truly demonstrate that they appreciate the effort, unlike our well fed politicians.

Kaimu!

I do not consider politicians, as a rule, to be part of the elite-unless they come from the patrician class. Frankly, I'm speaking most specifically about those who control money around the world. I'm old enough to remember the Kennedy's being shot(they shot the wrong ones). Yes, the people rose up against the bankrupt Soviet system. Have you noticed what replaced it? Putin, and now his puppet, runs a politburo of oligarchs. What's the difference? Kennedy started our entry into Vietnam after the French exited, and allegedly under fear of the spread of Communism LBJ expanded the effort. In no way would I have considered LBJ an elite.

Activism is fine, if that's what you want to do. As a later posted stated democracy doesn't work too well and ours is a republic anyway, infected by the bureaucracy about which Tocqueville warned, and controlled by the financial system.

Did you read this article from somebody's earlier post?

http://www.dunwalke.com/1_Brady_Bush_Bechtel.htm

Very interesting.

The people rise up, yes, but they can only rise up against what they see and understand. There is so much they don't, and we must accept that at least 50% of the people reside on the left side of the These elites have been organized for centuries in coherent structures (the Rothschild's go back to when?). Governments come and go. Did you watch the Congressional hearings regarding the Bear Sterns debacle? Most of the committee had no idea what they were talking about. The Wall Street boys must have been pissing their pants to keep from laughing at them. I hear what you say Kaimu, and God bless you. I'm often called a cynic, but frankly, I think I'm just being realistic, and it ain't a pretty sight.

Nemo: Brady, Bush, Bechtel and "the Boys" is written by Catherine Austin Fitts. I have an extremely high regard for her opinions and writing.

GFI
Its price chart is ugly. November highs have not been exceeded. The lows of December and February exceeded August lows, and currently near August lows. Just by looking at the chart, I'd have to assume there's something fundamentally wrong with the company.

The other Cara 100 precious metal stocks look much better. GG retracing about 38.2% from August, SLW 50%, and ABX 61.8%. Looks like GG is the best of the bunch.

Hi,

So this morning PoG continues its move lower, in my opinion on its way to the 770 / 800 area, as we have all been saying around here.

The move appears to be related to the intervention + short squeeze going on at the USD market.

Once that movement is over, it will be time to buy the spring sale in PMs.

Think about it: one month ago, if you asked anyone if they would buy Gold at 770 / 800 they would be thrilled. Now we can do it.

You see, nothing that really matters has changed.

So we wait for the spring sale to reach the best price, then we back up the truck and load it.

Cheers!

MMMMhhh...my previous post became truncated. Regarding the people and their ability to understand: 50% reside on the left side of the IQ bell curve, so they're basically out of the discussion.

Can anybody explain to me why, when long term interest rates were near some of the lowest rates in 20 years, in 2003 to 2005, the Fed didn't issue long bonds? http://tinyurl.com/65h9jo

Nemo....
Took a little effort to tie togther your chain of thought.
But......Boy..... you made my day!

Thanks. And I really mean it.

Good morning.

One Cara 100 Ratings Change to report:

AET - Upgraded to Neutral @ Credit Suisse

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

Have a great day and a better weekend.

How can anyone give any credibility to the ratings agencies when they won't downgrade Ambac until it finally zero's out.

Ambac's CEO is out this morning saying they have no liquidity issues.

http://tinyurl.com/5lcxph

He says the company's credit ratings are solid even though new business is down 87% and the stock is down 96%.

But S&P won't cut it's rating no matter what.

http://tinyurl.com/5kd3kj

Martha Stewart goes to jail, the SEC investigates a trader who made off with 24K but the ratings agencies get away with murder.

And the market cheers!!!

Rob.

Hi,

Just a heads up for US traders: next week most European Countries have a national holiday on may 1st: Worker's day.

Many decision makers are already on their way to their holidays as we speak...so expect some lighter trading from our side of the pond.

Cheers!

Horrific results from small cap tech and distributors last nite. ELX, FDRY, IM, PLXS, BHE. Confirims weakness shown by AVT and ARW, the industrial electronics distribution kingpins.

WFR said semi silicon demand was weakening as well.

Hilarious pump here in tech.

ALOHA !!

nemo ... It is a given that "We The People" do not always chose wisely in terms of who we place into power. The Russians eventually ended up with Putin and the Germans ended up with Hitler after their uprising, but my point is "We The People" at least during critical times like Vietnam saw an issue that prompted us to take to the streets and we won a change in government! The War ended ... the troops came home and now Vietnam is one of our trading partners instead of an enemy! If you ever listened to the LBJ tapes then you would know the truth behind the facade of the Domino Theory.

Take a look at what "We The People" replaced the British with when we kicked them out in 1777! Yes, too bad we have been lazy as voters about the size of the US government. Essentially people will always vote themselves a "free ride" initially until they start seeing the ride is too expensive!

I have read the CA Fitts article prior and read Solari regularly. If you have read my posts obviously there isn't much difference between the US governemnt and any tin horn Third World dictatorship ... its all about profits! Nothing new under the Sun!

I disagree with your views because at some point the "People" will be fed up with a continual decline in lifestyle and rising debt! They will put 2+2 together and actually come up with 4, even if they are public school products! Monetary issues always have risen to the top of crumbling Empires! That's why they crumble! That's why the Bush family has a "retreat" in Paraguay! I am sure many of the US government leaders have exit staretgies for their families as well. Maybe even Bill sees them in Nassau! You can bet their exit strategies are much better than they have for Iraq! Yes the bankers control the money but the politicians control the "redistribtuion" that effects 99% of "We The People's" day-to-day lives and decisions!

I have lived my life as a politician and bankers and Madison Avenues worst nightmare. No debt, no drugs, no movies, no TV and no two party loyalty! If all of America lived like I do then the bankers and politicians, the Columbian drug cartel and US Big Pharma and Hollywood and the Mafia would be out of business! When you are not "dependant" or "addicted to drama" you have few needs ... If you buy into the American Dream and all the other hype that surrounds it then you are enslaved to banks. You can't be addicted to drama and not be addicted to the American Dream. They are one in the same. Try going one month without TV or movies, without drugs like nicotine, caffeine or booze or pot or meth, without using your credit cards and not voting for any of the current 2008 US Presidential front runners on TV(Obama, Clinton or McCain). In other words try living the complete opposite of the way your neighbors live and vote ... The complete opposite of how the "establishment"(an old 1960s word that needs to return to our collective vocabularies) would want you to live! The complete opposite of how TV says you should be in this World. Don't just be a contrarian trader be a totally contrarian American! Can anyone here do that? Try it ... All the simplest things! If you usually go to SafeWay and buy Lean Cuisine or Stoffers stuff DON'T ... go to a Farmers Market and buy fruit and vegetables or grow your own! Do things completely opposite and see how life is for you! DO THE OPPOSITE LIFE! Strip away all the "hype" of consumerism and a dependant lifestyle that results from believing in the American Dream. Am I Satan for not buying into all that? I don't think so ... I have yet to hear anyone mutter, "Boy I'm sure glad I bought a Mercedes and I voted for Obama in 2008!" on their death bed! What do people say on their death beds anyway? Like Jim Morrison said, "No one gets out alive!" So we have to say something profound, don't we?

In 500 years what will the collective legacy of America and Americans be when we go the way of crumbled Empires? Will it be "We The People Spent Well"? Or will it be "We The People ... who hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness." I live my life in such a way as to promote the legacy of Life, Liberty and the pursuit of Happiness without BIG GOVERNMENT and without BIG BANKS! You can never expect your government to ever change if you chose not to! No change comes from staying at home and watching TV and that's what the bankers are banking on ... NO CHANGE!

Hello all, I've been really busy lately with a new project, and I haven't read todays comments, or any from recent days.(Just in case this was pointed out elsewhere)

I am starting to think that Citibank and Merrill Lynch are currently doing two things in their favor by the same single action. Bloomberg has this story: "Citigroup, Merrill Lynch Lead $43.3 Billion of Bond Sales in Record Week". In my opinion doesn't this demonstrate that not only are these two firms increasing their capital, but they are also in a position to greatly profit from the ToG. Short selling bonds. And Citibank is already changing how it works with gold.