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May 6, 2008
Bill Cara's Community Chat, Tues., May 6, 2008, 8:48am ET
You know the expression “B.S. baffles brains”? When behavior and mind head off in different directions -- when the B.S. becomes overwhelming -- we get stressed out. I feel that way at present. You may laugh but a large part of it comes from bankers and I have zero debt.
Today for instance, one of the world’s largest commercial and investment banks UBS has just reported:
UBS Posts Loss, to Slash 5,500 Jobs:UBS plans to cut 5,500 jobs by the middle of next year, an effort meant to restructure its troubled investment bank as the Swiss giant recorded a net loss of nearly $11 billion.
Do you recall what I wrote about UBS on April 22?
What everybody must recognize is that there is a cycle to every natural thing in life. The problems with banking industry credit come and go. The credit contraction phase we are in since early 3Q2007 will be a bad one because (this one has been and will be) so extreme. This is nothing new to you, so why fight it?Telling, really, was a UBS admission to shareholders in a pdf that I received. On pages 40-41 of “Shareholder Report on UBS’s write-downs” this text is an admission by the leading wealth manager in the world that management failed their stakeholders abysmally. Particularly revolting is the admission regarding staff compensation.
6.3.6.6 Infrastructure Investment
Inadequate systems: The existing risk management, finance and risk control systems were not sufficiently robust with respect to risk monitoring in relation to complex products. This led to an inability to obtain a portfolio view in certain products. These infrastructure issues had been raised but no substantial actions appear to have been taken to address concerns. Infrastructure limitations became even more problematic with the business growth into more complex, higher margin products.6.3.6.7 Silos
Lack of strategic coordination: The risk functions (Market, Credit and Finance) operate as independent units, brought together to assess individual transactions. It does not appear that these functions sought systematically to operate in a strategically connected manner.6.3.6.8 NBI / TRPA Processes
Shortcomings in approach: There was no NBI process for the CDO structuring business or for the AMPS business. AMPS trades were subject to repeated TRPA approvals – with the effect that whilst trade-by-trade approvals were obtained, substantively the depth and breadth of assessment was probably not at the same level that would have been applied if an NBI case had been submitted. Additionally, TRPAs for CDOs appear often to have been presented to the control functions for approval only at a relatively late stage, when the majority of the assets backing and to be transferred to the CDO special purpose vehicle had already been warehoused and the consequences of declining the proposal would have entailed costly unwinding of the warehouse.
Focus on speed: The NBI and TRPA processes were also seen by some IB business areas, including Fixed Income, as bureaucratic and slow. The IB's NBI and TRPA processes weresubject to a number of reviews and recommendations for improvement, over a period of several months – but the emphasis was generally on speeding up approvals as opposed to ensuring that the process achieved the goal of delivering substantive and holistic risk assessment of the proposals presented.6.3.7 Finance Oversight
The basis of accounting for, and the valuations applied to, securities and synthetic positions was significant to the economic performance of the businesses with Subprime exposure and to the financial incentives for the staff involved in these businesses. In particular it was important to the timing and levels of profit recorded by the ABS / MBS and CDO desks in the Rates area that their strategies (for example the AMPS trades) were eligible for Day 1 P&L treatment. BUC operated as an independent control unit in confirming the determinations made by the ABS / MBS and CDO desks. UBS considered the approach to valuations and reporting taken by BUC in relation to the positions over the period and identified the following as a factor in UBS's lack of an effective response to the market dislocation:
Inability to accurately assess valuation risk on a timely basis: A number of key indicators in relation to valuation issues over structured Fixed Income products were identified and reported in the period prior to Q3 2007. These included a reduced ability to source external prices to verify trader marks and general increases in the value of untested positions. Due to limitations in data, BUC were not in a position to challenge on a timely basis the assertion for valuation purposes of the flat or low risk nature of the retained Super Senior positions. BUC reported (as have other independent internal control units) that there were examples where significant manual intervention and reconciliation was required to assess the relevant risk nature, or where data was fragmented or insufficiently granular. These conditions existed for some time and represented latent and significant risks that were not reported by BUC as being of the highest priority until Q3 2007, after the impact of the Subprime crisis had become apparent.6.3.8 Compensation
UBS has identified the following contributory factors related to compensation and incentives:
Structural incentives to implement carry trades: The UBS compensation and incentivisation structure did not effectively differentiate between the creation of alpha (i.e., return in excess of a defined expectation) versus the creation of return based on a low cost of funding. In other words, employee incentivisation arrangements did not differentiate between return generated by skill in creating additional returns versus returns made from exploiting UBS's comparatively low cost of funding in what were essentially carry trades. There are no findings that special arrangements were made for employees in the businesses holding Subprime positions. However, the relatively high yield attributable to Subprime made this asset class an attractive long position for carry trades. Further, the UBS funding framework amplified the incentives to pursue compensation through profitable carry trades. For example, several Super Senior trades had relatively thin overall positive carry.
Asymmetric risk / reward compensation: The compensation structure generally made little recognition of risk issues or adjustment for risk / other qualitative indicators (e.g. for Group Internal Audit ratings, operational risk indicators, compliance issues, etc.). For example, there were incentives for the CDO structuring desk to pursue concentrations in Mezzanine CDOs, which had a significantly higher fee structure (approximately 125-150 bp) than High-Grade CDOs (approximately 30-50 bp). Similarly, the CDO desk had an incentive to pursue AMPS trades, as they provided, compared to NegBasis trades, a less expensive (and therefore higher return) form of hedging. Also, Day1 P&L treatment of many of the transactions meant that employee remuneration (including bonuses) was not directly impacted by the longer term development of positions created. The reluctance to allow variations between financial reporting and management accounting made it less likely that options to vary the revenue attributed to traders for compensation purposes would be considered.
Insufficient incentives to protect the UBS franchise long-term: Under UBS’s principles for compensation, deferred equity forms a component of compensation that generally increases with seniority. Although incentivisation of employees broadly builds in increasing levels of deferred equity for increasingly senior people, it remains the case that bonus payments for successful and senior IB Fixed Income traders, including those in the businesses holding Subprime positions were significant. Essentially, bonuses were measured against gross revenue after personnel costs, with no formal account taken of the quality or sustainability of those earnings.I frankly don’t know how any disgraced management such as UBS’s can remain in place other than they admit the problem is systemic and other bankers just haven’t yet come clean on the issue.
I suppose credibility doesn’t mean much to a banker these days.
My brain told me UBS is in a world of hurt right now. But, from bankers who are obligated to tell us the truth, even when they do it doesn’t seem to matter.
At least I am not fighting it. I understand what’s going on. From my April 21 blog:
Apparently at the G-7 meeting, there was agreement by the world’s central bankers to “temporarily” create more fiat money in an attempt to stop prices from falling in capital markets and real estate markets. Economics 101 taught us that more debt does not create wealth, just inflation in the form of non-economic, ie, non-sustainable, higher prices.
On April 21, UBS closed at $35.84. After their mea culpa (above) on April 22, the stock hit a high on April 25 of $36.03, and is still $34.31. But UBS traded as low as $22.19 on March 17, just 22 trading sessions earlier. Yet, despite an incredibly bad situation in the bank, the stock price increased almost +63% in that brief span, and now another shoe has dropped: $11 billion losses this quarter; 5500 jobs cut. Does anybody really care at this point or are they all just chasing prices?
So my question is: How bad can things get and share prices continue to rise because of central bank pumping liquidity into the system before traders wise up to the risks they are taking? Just to save banks from their own bankruptcy, fiat money is being printed faster now than at any time in history, and, as a direct consequence, the prices of food and energy have soared to record highs, unable to be afforded by probably two billion people. This is a travesty.
I cannot recall a time when the issues were so clear: Save the banks or save the People. The shame of it.
As a trader, I am a mechanic. A brain without a soul. I trade prices. But as a human being, I find it pretty hard to take watching greedy bankers snuff out the lives of hundreds of millions, and steal from the future of our children and their children. I believe these bankers and central bankers should be criminally prosecuted for crimes against humanity.
Do you think that the UBS board of directors cares a whit about the lives of the 5500 staff destined to be unemployed, or their families, or the tens of thousands they already cut, or the hundreds of thousands of bank jobs their colleagues have cut? Do you think they care about Oil at $121 or the price of corn or rice? No, they care only about the opportunity as decision-makers to take for themselves and their masters as many billions in bonuses as possible before they all retire.
And just think; UBS, as a banker, is the cream of the crop. No wonder I feel so out of sorts.
One final point; I have been getting many complaint letters regarding delivery of the book “Lessons”. Of course I apologize and I am embarrassed. But that is not my doing. I only wrote the book; I am not the publisher, and I have no control over the business end. I do have an associate working extremely hard to resolve the matter because I am professionally embarrassed. It’s Tuesday; I hope to have an answer by Friday.
Just more reason for me feeling stressed.
Posted by Posted by Bill Cara on May 6, 2008 08:48:33 AM | Category: Community Chat
Discourse
The draining national prosperity
Relief engendered by the latest US GDP figures is misplaced, given recent monetary and fiscal inputs. Gradually increasing output and the optimistic stock market will sooner or later be confronted by consumer price figures. At that point, the US will suffer a monetary and political crisis. Awkwardly, that is more likely to occur before November's US presidential election. -
Posted by: jk484 ![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
May 6, 2008 8:58 AM [link]
Speculators knock OPEC off price perch
The bulk of price gains in oil is attributable not to supply problems but to speculative activity by hedge funds and others with no direct use for the fuel beyond profiting from its changing value. The door to much of this unregulated trade was opened by the US energy futures regulator under the George W Bush administration.
Posted by: jk484 at
May 6, 2008 8:59 AM [link]
Good morning from Cape Town
“The world's favorite season is the spring. All things seem possible in May,” said Edwin Way Teal. And so it seemed during the past week as we witnessed a further improvement in investor sentiment and risk appetite, supported by the viewpoint that the worst of the credit crisis might be behind us.
Read all about this in my weekly review, highlighting some thought-provoking news items and quotes from market commentators during the past week.
Follow the link to “Words from the Wise”: http://tinyurl.com/4e4tfe
Enjoy the read.
Regarding book delivery: One quick call to the publisher cleared it up for me. They called back, and gave me an estimated delivery date, and the book showed up, right on schedule.
Posted by: writersblock at
May 6, 2008 9:05 AM [link]
Is anyone else having problems with the rsi app. this morning?
Posted by: writersblock at
May 6, 2008 9:06 AM [link]
Frank Holmes on gold:
http://tinyurl.com/6nbxau
Posted by: cyderman at
May 6, 2008 9:14 AM [link]
writersblock - me too.
Posted by: cyderman at
May 6, 2008 9:15 AM [link]
Gold price suppression scheme
How long the present relatively low price of gold will stay that way may depend on whether the US Federal Reserve has sold half the country's gold and if it is prepared to stop at half. At least that would give us the opportunity to buy more gold cheaply for a while longer yet.
Posted by: jk484 at
May 6, 2008 9:21 AM [link]
I've been trying to get the RIS7 (D/W/M) readings for the stocks in my watchlist.
But the website return zero readings.
http://rsi.korvus.net/RSIApp/RSIApp.html
Any one able to get the RSI7 readings?
I recall there was an Excel file that enabled RSI7 readings. But have been unable to locate it in Mr Cara's previous blog postings.
Appreciate if someone can re-load it up for sharing. Tks.
Posted by: Vorlon at
May 6, 2008 9:23 AM [link]
"Speculators knock OPEC off price perch"
60% of oil price is due to speculation?
Oil demand in the US and OECD countries may be falling, but the strong demand from China and India is more than making up the differnce.
Posted by: Vorlon at
May 6, 2008 9:28 AM [link]
I ordered the book last September '07. I received it at the beginning of April '08. Right on schedule, I believe.
Of course, now, my wife is pissed that I take Bill to bed with me each night. :-)
Posted by: rgr at
May 6, 2008 9:32 AM [link]
From Bubble Vision's Bob Pisani:
The report from UBS was "a tad disappointing".
ROTFLMAO !
Posted by: Bull Hunter at
May 6, 2008 9:32 AM [link]
May 6 (Bloomberg)
Shareholder equity, which measures how much money would be left to stockholders after Fannie Mae pays all its bills, dropped to less than zero for common stockholders for the first time in at least 15 years from $20.5 billion in the fourth quarter
and still stock is around $25?
Posted by: vinod at
May 6, 2008 9:33 AM [link]
"Gold price suppression scheme"
Every time gold falls, the gold bugs scream its due to sinister manipulation. If true, then why has gold gone all the way up till near $1050? If there is manipulation, then that is piss poor performance by the anti-gold cartel. If there really is manipulation, then we should be grateful as it allows us to buy gold at lower entry-points.
Why don't we think that there are perfectly "reasonable" reasons why the gold price can correct itself? First, the spike up was way overbrought techically. Second, POG was driven partly by fears of the credit crunch. Now that such fears appear to be diminishing, rotation to financials.
Third, look at the mirror. Gold-bugs and weak-hands who bought near the top and got shaken out. In fact gold-bugs are they own worse enemies. Over-bullish when POG goes up, and gloom-doom when it falls.
Moral: Stop blaming shadows...
Posted by: Vorlon at
May 6, 2008 9:37 AM [link]
The rise in price of financial stocks including Fannie and Freddy appears to be orchestrated by the Fed. The apparent purpose is to give these bankrupt companies an opportunity to recapitalize by selling stock & bonds. Schwab just sent me an email offering of 8 1/2% Citicorp bonds, callable in 5 years, duration perpetual. Haha.
Fannie and Freddy are playing hardball by refusing to use the higher price opportunity to issue more stock. Their reason: greedy/stupid? management refuses to dilute the stock. This fact has been made public (NYTimes). I guess Fannie and Freddie are not only too big to fail with 4 trillion in mortgages between them but also too big for the US Govt to manage.
Posted by: lessmore at
May 6, 2008 9:37 AM [link]
I just paid $4 US per gallon dollars to fill my car with gas. And my wife said she wouldn't buy blueberries because they are now $6 for a small carton.
So isn't pleasant to know that I'm seeing these rising prices because wall street bankers need to recover from their mistakes?
Posted by: number2son at
May 6, 2008 9:40 AM [link]
Bill,
I appreciate your morning commentary. Think about this folks. Wall Street has bit the big one this time. Wall Street laid an egg. They've killed the American economy, but did they suffer at bonus time this past Christmas? Of course not. They are used taxpayer money to pay themselves bonuses which, on average, are TEN TIMES BIGGER than the pay of the average American worker. And why are they getting bailed out? Because they are useful? Because they produce? No. Wall Street has killed America with their phony mortgage scam and more generally, the fact that their mere presence in New York has turned the city into an unaffordable playground for the rich. Working people really can't live in a city like New York anymore. But the chickenshits are coming home to roost. As Bill suggests in his above commenatary, when the big boys need a bailout they get it by throwing the bodies of their employees over the transom. And unlike previous screwups by the Street, because of the enduring nature of the housing bust, this time it's for good. These leeches are going to have to find some new blood to drink, because the American corpse is dry and stiff.
Posted by: shark_attack at
May 6, 2008 9:42 AM [link]
Hey....Bill;
I ordered The WIZ last fall and the book arrived
in April....So what's everyone crying about....
It was certainly worth the wait....
Thanks again for everything Bill... from one of
your faithful lurkers.........;=)
Cheers.......DB
Posted by: DB at
May 6, 2008 9:50 AM [link]
Clinton boldly claims she will "go after" OPEC? Gimme a break!
Posted by: number2son at
May 6, 2008 9:50 AM [link]
Vorlon,
Here are two spreadsheets I use. Cara 100 and all the sectors with the top weighted stocks. These excel files need to add ons to work, if you recall:
http://www.mediafire.com/?j1xjr2yomtj
http://www.mediafire.com/?f1y99dbbdqp
These two files are PDF's of the latest numbers:
http://www.mediafire.com/?cpcbxbyuddl
http://www.mediafire.com/?3gt2mmgm5x1
Posted by: Hoosier at
May 6, 2008 9:56 AM [link]
The Nature of the Current Gold Correction
The latest bull run in gold, which started in August 2007, was not due to the fears of inflation but due to a panic related to a financial crisis. Gold bull markets that are based on inflation occur during the rising long-term yield environment, similar to the 1970s and early 1980s. But that was not the case in the past nine months. Yields have been falling, but yield spreads have been rising, indicating increasing risk aversion among investors. Gold, like the T-Bills, was playing the role of a safe-haven during the times of great uncertainty.
When the Fed bailed out Bear Stearns, thus showing its strong resolve to do whatever it takes to ease the financial sector woes, the “Credit Crunch Gold Run” came to an end.
The "Inflationary Gold Run" is still ahead. Monetary inflation, which is the basis of today’s financial system, takes time to transform to price inflation evident in the CPI or PCE figures, often several years. This is one of the reasons why we remain convinced that the precious metals bull market has a long way to go. Gold is yet to hit its all-time highs when adjusted for inflation (around $2,500/oz). When fears of inflation hit the Street, gold will easily reach or even surpass its inflation adjusted highs.
Additionally, gold bull markets, which tend to occur at the same time as the commodity bull markets, typically last an average of 20 years. This means that by even the most conservative estimates, there is 5-7 years left in this bull market (more optimistically, still 12 -15 years to go).
http://tinyurl.com/542xne
Hoosier, tks for sharing the RSI spreadsheets.
Posted by: Vorlon at
May 6, 2008 10:03 AM [link]
Here's a good one,
Someone very close to me is in a fairly high place on The Street. When I finally graduated college a few years ago all I wanted to do was to be a prop trader, which is, it turns out, the hardest job to get. Anyway, my friend hooked me up with the head of the trading dept at UBS and we had a few discussions on the phone. Guess what he told me?
"we recruit off of ivy league campuses mostly, and you spend an entire summer interning. IF we decide to hire someone, they are rotated throughout all the department of the firm so that they can learn a little bit about everything, (because as we all know, a little knowledge IS NOT a dangerous thing, right?) Then, we pretty much put you in whatever department WE DECIDE is best for you and for us." My friend was close enuff to this guy, (and my candidacy remote enuff) so he felt he could be fairly honest about the fact that, if you didn't go to an ivy, or you don't have an uncle Sid on Wall Street, or are not a coveted minority hire useful for fulfilling quota, you aint gettin' in.
Now the funny thing is, their very hiring practices were the recipe for the disaster we are now experiencing. When you take a bunch of sociologically advantaged know-it-alls and give them the economic equivalent of a flame-thrower, no kidding a few villages are going to get scorched. Let's hear it for "the best and the brightest"!
Posted by: shark_attack at
May 6, 2008 10:07 AM [link]
No problem Vorlon. This site has always been about sharing for me.
I use both excel files daily. The Cara 100 to monitor the Cara 100 (of course), and the sector's with their top ten stock components I developed to not only watch the sector ETF's but to gauge the highest weighted stocks within those ETF's as well. It takes a little configuring to get the excel files to work, but the two pdf's should open right up for those just interested in both sheet's latest numbers.
Thanks Bill for everything. I've got my book... and I can't wait to finish it.
Posted by: Hoosier at
May 6, 2008 10:15 AM [link]
To those having trouble with the RSI page, it seems to be working...but the server is pretty overloaded right now. Give it some more time than usual. At some point I'll move that code over to a Cara server, but it's going to be a while.
"Let's hear it for 'the best and the brightest'!"
Rather, let's hear it for the most over-privileged! This is the story of George Bush writ large.
Posted by: number2son at
May 6, 2008 10:30 AM [link]
SMN at 31.03...CAF at 48.59...
TBT- bid/ask ranges are too wide...has anyone taken a position?
ESLR- pleasant surprise (for a change)...
still leaning towards a bear trap, but not advising anyone to trade on that thesis...
(nice to see you posting again, MarkM ;)
Posted by: 2nd_ave at
May 6, 2008 10:33 AM [link]
One of the best financial investigators out there today is Rob Kirby. In his latest article issued today, he sheds some light on JPM and the supposed "flight to quality".
"From the chart above, we can see that there never was a flight to quality. In fact, investors were exiting dollars, as evidenced by the collapse of the US Dollar Index [counter-intuitively] at the very same time as dollar denominated debt instruments were going up in price [yields going lower].
So what really happened?
If we take a look at the short term interest rate component of J.P. Morgan’s derivatives book – from data supplied by J.P. Morgan to the Office of the Comptroller of the Currency – we can see how the “less than one year” component bloated by 7.5 TRILLION of notional in Q3/07. In Q4/07 this same component contracted by roughly the same 7.5 TRILLION."
Posted by: fireworks at
May 6, 2008 10:35 AM [link]
Bought my V May 90 calls back this morning (+50%)as V continues to show strength even as the market is down. So what happens when the market is going up? Plan was to let them expire, if applicable, or have my shares called @ 92.25.
Thinking is the institutionals are picking it up as part of its financial component as the rest of financials . . Citi, LEH, MER, CFC, UBS, etc., etc., . . . speaks for itself.
So FWIW, going to hold remaining V position a little longer.
Posted by: Seamus at
May 6, 2008 10:45 AM [link]
WTF happened to XLF @ 10:23 AM? Fat finger error?
Posted by: FattyArbuckle at
May 6, 2008 10:46 AM [link]
Adding to the new solar ETF - TAN at 26
Almost every major holdings of TAN are up 4-5%.
TAN is only up 1.8%.
Posted by: JogyP at
May 6, 2008 10:50 AM [link]
From my comment yesterday - "On the indexes lookin for first test of supports in SP500 at approx 1398 and DJ30 at 12,890 ... depending on action at these levels may be a good place to start accumulating longs again, we'll be watching breadth behavior closely there..."
SP500 bouncing off 1397.10
DJ30 bouncing off 12863.20
It's better to be lucky than good.... of course this may not hold, next bounce level I'm watching for is
DJ30 - 12835
SP500 - 1388
I mentioned many months ago that monetary inflation leads to price inflation, regardless of government statistics and what the media was telling us. Obvious now isn't it?
A few weeks ago, I mentioned that inflation typically has negative consequences for the prices of stocks, BUT that the current monetary inflation schemes COULD lead to money flow into stocks, surprising many traders. Is this happening now? Could we see stocks move much higher? Sure, but right now, money flows from those "with the cash, and in the know" (big players) is not moving into the stock market leading one to think this is a bear market rally.
Time will tell.
Posted by: g034 at
May 6, 2008 11:06 AM [link]
I posted the Lehman's outlook for May and also Jim Rogers latest summary of his interview with Maria.
http://wallastoninvestments.com/
Posted by: Rob Wallaston at
May 6, 2008 11:10 AM [link]
Fannie Mae's federal regulator, the Office of Federal Housing Enterprise Oversight, announced Tuesday that following the stock sale, it will CUT THE CAPITAL SURPLUS CUSHION THE COMPANY HAS TO MAINTAIN BY 5 PERCENTAGE POINTS TO 15 PERCENT. Another five-point cut will come in September, provided there is "no material adverse change" in the company's regulatory compliance.
The agency's director, James B. Lockhart, said capital requirements were eased because Fannie Mae has IMPROVED INTERNAL CONTROLS following a multibillion-dollar accounting scandal in 2004.
The company's estimated fair value of net assets as of March 31 was $12.2 billion, down 66 percent from $35.8 billion at the end of December. The huge decline was attributed to falling home prices and changes made to reflect new accounting methods. The assets are not counted toward the overall loss.
If this doesn't speak volumns to the pitful state of affairs in this country.....please lend me a map I wamt out.
Posted by: maggy at
May 6, 2008 11:13 AM [link]
SIGM: up 7% to $21.7
Short squeez/covering in progress..
Posted by: JogyP at
May 6, 2008 11:15 AM [link]
I was thinking about a QQQQ put spread heading into tonight's report from CSCO. It would pay off nicely if CSCO gives negative forward guidance, which is now the accepted wisdom.
But then I thought again ... why gamble here. The market is not moving rationally and the contrary trade has been the winning gamble lately.
Better to wait for better risk/reward.
That said, I reserve the right to come back here tomorrow and gloat/complain about this "almost" trade. ;)
Posted by: number2son at
May 6, 2008 11:32 AM [link]
Hillary says her version of a 'gas tax vacation' taxes the oil co's and Obama is against it and wants the people to pay it.
This is why I won't vote for Clinton.
she plays the same shell game to dupe the voters as Bush.
Who here thinks the oil co's pay ANY tax? How foolish.
WE the people, who buy oil, pay all oil co. taxes. Period.
Hillary takes us all for idiots.
Posted by: Craig at
May 6, 2008 11:36 AM [link]
Fannie Mae was down 7% in premarket but is now up 3%. This is not a market that makes any sense. I half expect to see bankrupt companies trading at $15 a share soon.
Anyone have a view on whether the gold correction is over? I am thinking that the dollar will rally back to the 20 week MA (74), as it has done routinely in the past, and that will likely correlate with a low in gold.
Posted by: moab at
May 6, 2008 11:43 AM [link]
ALOHA !!
Yesterday, I bought 2 kilos Au and 2-1000oz Ag bars yesterday for my sock drawer!
Everything on this blog even the commentary by Bill Cara screams "DUMP RISK"! That means one must seek out and buy only entities without any financial liabilities that can never file bankruptcy. That does not leave a lot of choices! That leaves the two most barbarous relics on Earth and producing farmland!
Now in Zimbabwe and even back in the 1920s Germany stock markets soared as money supply rocketed, but the banking components did not. The most valued stocks were companies whose paper certificates were backed by commodities and monetary metals. Backed by something "real and tangible" ... The entire World is fiat based now and even the World's Reserve Currency is fiat based, so this is a FIRST for all of human monetary history. We are in never before charted waters on a global scale. There is no net!
Yesterday I was in Hilo, Hawaii and I stopped to get gas. Regular gas was $3.78USD and premium was $4.03USD. Still not even close to near $6USD per gallon I was paying in Australia back in Jan. Back in the 1970s when gas prices got high I was living just outside New Orleans,LA. I would drive to work in my VW bug and pass by big huge Cadillacs(gas guzzlers) sitting on the side of the road that ran out of gas. What happened to a car that ran out of gas back then in the New Orleans area? It was stripped and then torched and it all happened very fast! Make sure you can afford to keep your SUVs gassed up! Of course back then there was the double trouble of high gas prices and rationing! We have yet to see the rationing in the USA yet, but if we keep on our current path of pissing off US PESO holders we may not have long to wait! Are we as a Nation so arrogant that we believe the old saying "don't bite the hand that feeds you" does not apply to us?
For those here that placed flower orders ... Thanks! We are now SOLD OUT!
HAPPY MOTHER'S DAY to all the Mothers out there!
ON THE BIGGEST MOTHER OF ALL
No matter how sophisticated and "above it all" us humans think we are there have always been historical precedence where Mother Nature puts us back in our rightful place! We are all dependant on Mother Earth here no matter how much ADM or how much XOM or how much AU that we may possess!
Re: Price Fixing In Gold
Price fixing is an established fact in gold. But it requires money theory to explain why bullion acts the way it does and the effect it has on a dizzying array of values in currency and a knock on credit. And why, for example none of the price fixing in recent years has had much of an effect. But still bullion is trading very much behind the other commodities in terms of inflation adjusted prices.
Posted by: FranSix at
May 6, 2008 11:55 AM [link]
ALOHA !!
F6 ... Totally agree! The FED and their boyz have done a superb job of capping the monetary metals over the years! Yet they are still generous enough to allow an annual return that tops even "REAL" inflation!
kaimu
Where do you buy your gold?
Posted by: Zeto at
May 6, 2008 12:03 PM [link]
Don't stress Bill, Or don't let the chaos creep in. You have done more than all of the big banks combined to help make a difference. :)
Catch your breath and Be good to yourself before the bigger wave comes along. The first rule of kindness (that I was mentioning yesterday) is to remember to be kind to yourself. That's why people often mistake kindness for being selfish. If you can't help yourself, then you can't help others The two activities are interconnected and related.
Posted by: Casey Kochmer at
May 6, 2008 12:09 PM [link]
aucourant -
Thanks for posting about the Kursk yesterday. Very interesting... That picture of it with a round hole in its side that is pushed in (!) is very telling. It seems to have been torpedoed.
Posted by: moab at
May 6, 2008 12:23 PM [link]
Hey Kaimu!
You busted my stones about activism once. I saw your comment about nature, which brings me to:
Kinda sounds like what you said about nature
"Nature is unkind:
It treats the creation like sacrificial straw-dogs.
The sage is unkind:
He treats the people like sacrificial straw-dogs."
Kinda' your point I think. I get my opinion on activism, given where the money and power lies, from the same stuff.
Maybe we're not that far off from each other.
Oh,and Bill, I second Casey, "illegitimi non carborundum" dude. Look, you're fighting against the grain, frustration is inevitable. Do your best, that's all you can do. Your worst is better than most (Hope that came out right) Oh, aucorant, I did some snooping from a past career. The quote I got basically ran like this, "sometimes we get them, sometimes they get us." I didn't see the post yesterday, but there's satellite photos of one of our subs in Norway with the nose and rescue buoy hatch shrowded. THeory goes American's thought they were going to get one of those Shkvaals up their stern. 200 knots against a 60 knot MKIV is no contest. Another comment from my past, "There's a lot more to the story, than published in the news."
Posted by: nemo at
May 6, 2008 12:34 PM [link]
Russian submarine K-141 movie:
MERRILL LEVEL 3 ASSETS SURGE NEARLY 70% TO $82.4 BILLION IN Q1...
"Merrill is getting very good at the number one game on Wall Street, ‘Hide the Mortgages’. When worthless mortgage paper is presenting a problem to your financial sitaution, move them to your Level 3 books, mark them at par or better and put out a press release saying ‘we don’t need to raise anymore capital’. Merrill’s top competitors in this game are Goldman, Lehman, Citi, Chase, Morgan, Bear etc. The usual suspects…the ones (other than Citi) that posted ‘really great earnings’ last quarter.
Merrill says it’s most difficult to value ‘assets’ jumped big-time in Q1. It’s ratio of Level 3 to total assets rose to 8 percent from 5 percent. Good de-leveraging job guys! But, what about your $770 BILLION in Level 2 ‘assts’ John? Maybe they are not all ’illiquid’ as are the Level 3 assets, but are they really worth par?"
Posted by: fireworks at
May 6, 2008 12:43 PM [link]
So my question:
Please have patience and read the whole post before replying.
My gut feeling is this current small rally will play out for a month or two. Originally I was expecting it to let go in the fall before the elections. I am now expecting it to let go in several stages. The first stage will be in July /August timeframe. I think July /August will appear as a correction rather than as a Panic.
However I also believe in the autumn before the elections anything is possible, including a panic. I have been tracking this since 1992. Everything is going along predictably until July 2007 when all the timelines sped up due to the housing bubble re-actions. Now I know I can't trust any of my personal charts (based on human behavior and historical trends) any more since the actually financial manipulation overrides normal behavior. Which means and here is my question: when do the big brother banks and other powers let it go?
Make no mistake: the markets have been manipulated and rigged very professionally so I don’t think the opposite side of this mess will by chance at this stage.
So my gut feeling is a few credit bubbles will get burst on purpose. AKA as a 9/11 style event.
I am curious what others think? The problem of course is why would the bubbles get burst and for what purpose. I can think of many reasons, but anything I could speculate upon would just rank as conspiracy theory and does no good and in fact feeds the actual problem.
So I don’t what to stir up any conspiracy theories. That does none of us any good! In fact it can distract us from dealing with the Now appropriately, causing us to miss our timings.
Here are the facts which everyone here would agree as facts:
1) We are sitting on several huge credit bubbles, that if released set the world up for a plunge.
2) The markets and credit bubbles are being artificially manipulated
3) The majority of the public are just re-acting pretty much to script by what the mass media provides them
4) At some point something has to give
5) Several conflicting parties are involved which introduces the element of chance to this mess.
Ok now here is the reaction part. We as people have a huge power and capacity to predict patterns. Not only by logic but rather by integrated sense of presence. Logic won’t work in this case since the rules are being artificially manipulated. Unless you have inside information, logic fails in this instance. But our mind and emotions and gut feelings all interconnect as an antenna to pick up on the larger patterns.
So what is your gut reaction: without thinking write down when you think this will burst? Not causes or effects, just when it pops.
I would be curious to see what approximate time line pops up from this group.
Thanks for your patience.
Posted by: Casey Kochmer at
May 6, 2008 12:48 PM [link]
I think there is a good chance the bubble pops in September/October. There is a reason why those months have the worst performance record.
Posted by: moab at
May 6, 2008 12:53 PM [link]
many of you may have seen this a week ago but it deserves repeating.
The gist of it is AAA will be worth about 60% of face and AA or lower may get 0-5%
Posted by: yvrapx at
May 6, 2008 1:06 PM [link]
As long as you just want my gut feeling, its this: The big pop will occur on Monday, Oct 19th, 2008.
Posted by: lessmore at
May 6, 2008 1:18 PM [link]
I don't expect any sudden, dramatic break ala '87.
I expect that as the American wageslave (not judging, I was one and may be again) comes under further price pressure from inflation and bad employment trends, retirement fund outflows will increase, houses will fail to sell in great enough numbers/prices for the boomers to cash out, and I imagine equities may mirror the malaise.
Posted by: shark_attack at
May 6, 2008 1:32 PM [link]
Hoosier
Downloaded the xl spreadsheets but couldn't get them to work.
What is the secret?
Posted by: maggy at
May 6, 2008 1:35 PM [link]
"I don't expect any sudden, dramatic break ala '87.
I expect that as the American wageslave (not judging, I was one and may be again) comes under further price pressure from inflation and bad employment trends, retirement fund outflows will increase, houses will fail to sell in great enough numbers/prices for the boomers to cash out, and I imagine equities may mirror the malaise."
And the frog in the pot succumbs to a slow simmer.......
Posted by: maggy at
May 6, 2008 1:43 PM [link]
ALOHA !!
Zeto ... Perth Mint!
nemo ... All I point out is "literally" ... DON'T BET THE FARM!
Kind of like Jack N' The Beanstalk where he trades the cow for a handfull of beans. The beans grow to the sky and he is enamured with the beanstalk ... climbs it and finds a great BIG Monster! A metaphor for the pie-in-the-sky promises of irredeemable fiat-based debt! All we will find at the end of all this fiat is a BIG Monster!
Oil $ 200/pb -- we may get it a lot sooner . . if
Former UN weapons inspector says attack on Iran 'virtual guarantee'
Posted by: jk484 at
May 6, 2008 2:03 PM [link]
I prefer lobster, but ok. Ribit!
Posted by: shark_attack at
May 6, 2008 2:21 PM [link]
Former UN weapons inspector Scott Ritter
The source said Ritter had arranged in an Internet chat room to meet with the girl at a Burger King in Colonie, a suburb of Albany, so she could witness him masturbating. The source said Ritter was charged with "attempted endangerment of the welfare of a child," a Class B misdemeanor.
The source also said Ritter was confronted by police in April 2001 after communicating with an undercover officer posing as a 14-year-old.
Ritter declined comment on those claims.
Posted by: Zeto at
May 6, 2008 2:43 PM [link]
"war on iran" has been repeated almost as much as "iran to stop accepting US dollars for oil"
both lack credibility in how they are presented as absolute facts.
theres no hard data to support anything more than a desire and ideological bent towards a war w/ iran by the more Hawkish US leaders.
statments from the Iranian government regarding their oil and currency transactions cant be trusted any more than any other totalitarian state's PR. (and this includes most western states too!!)
i say this not because i am against iran in any way, im not, i just want more credible evidence before thinking somethign as serious as either scenario becomes a full blown reality.
dr.cosa
Pentagon Targeted Iran for Regime Change After 9/11
Three weeks after the 9/11 terror attacks, former U.S. Defense Secretary Donald Rumsfeld established an official military objective of not only removing the Saddam Hussein regime by force but overturning the regimes in Iran, Syria, and four other countries in the Middle East, according to a document quoted extensively in then Undersecretary of Defense for Policy Douglas Feith's recently published account of the Iraq war decisions.
Posted by: jk484 at
May 6, 2008 2:56 PM [link]
...who else was with me getting long at 1398 SP500? :)
"Pity" Bank of America?
Countrywide did not return calls seeking comment on May 5. A spokesman for Bank of America says the merger deal is still on, and declined to discuss the analyst's report. The giant bank, however, is distancing itself from the Countrywide name. At its annual meeting Apr. 22, Bank of America Chief Kenneth Lewis said the Countrywide brand would disappear after the acquisition, which is still scheduled for midsummer. At the meeting, Lewis had to listen to a string of comments from shareholders unhappy about the merger.
Kathleen Shanley, an analyst for the research firm Gimme Credit, wrote in a note to investors last week that it's not unusual for financial firms to make acquisitions and not guarantee the debt of subsidiary companies. HSBC (HBC) did so when it acquired Household Finance, and American International Group (AIG) did so with American General, Shanley said. In those cases, subsidiaries exist as separate legal entities and continue to make payments on their debts.
Still, Shanley said Bank of America executives must be having second thoughts on the Countrywide acquisition given the government-backed financing that rival JPMorgan Chase (JPM) was able to negotiate for its acquisition of Bear Stearns (BSC). "Pity Bank of America," she wrote. "We can only imagine how the bank's senior executives are gnashing their teeth."
jk484,
thx for the link,
this is not new news, as i mentioned these ideas have been in neo-con's heads for some time, well before 9/11. but it does nothing to support the stance that war with iran is imminent.
these guys wnat to essentially take over the world and believe a whole host of other more esoteric ideas related to post-modern christian evangelical/fundamentalist theology.
thats a whole different gong show.
i dont want to see a war w/ iran,
and i dont think most americans want to see it either, even if their only reason is because they know it will skyrocket gas prices.
a skirmish in the gulf could provoke a reaction that may escalate, but consider the iranaian capture of royal marines which failed to ignite a war of any kind. not that i think the US would act the same, but the idea of a war spreading to Iran just isnt anything more than "top calling" for the past 3 years.
eventually you may be right.... eventually...
Posted by: Hoosier at
May 6, 2008 3:28 PM [link]
Hey 2nd_ave, it's good to see you back in the action -- it's hard to leave the market game copmletely, isn't it? :) What does your intuition tell you about the latest market action? Does it feel like a double top forming for DOW in the 13000-13100 range or does it feel like a final break through 13000 on its way to 14000?
What do others think? RalphSE -- what do you think will happen next?
DavidV
Posted by: David at
May 6, 2008 3:34 PM [link]
Fannie Mae
PPT must be active today...Fannie reports 2.5 billion loss and as of 3pm...stock up almost 6%. Same with Freddie.
Bill is right....BS baffles the brain.
Posted by: astral25 at
May 6, 2008 3:35 PM [link]
ALOHA !!
Here we go ... Elect GOD in 2008!
READ ON:
Faith-Based Fill-Ups
AFP:
At a Shell gas station in Washington, Rocky Twyman and an unusual group of activists were mad as hell about soaring fuel prices.
"Last week, this station was 3.51 dollars. Now it's practically 3.60. So it's gone up nine cents in one week," Twyman said as he pumped five dollars' worth of gas into his thirsty American car.
"Someone's making a lot of money and it's really, really wrong," added Twyman, who founded the Prayer at the Pump movement last week to seek help from a higher power to bring down fuel prices, because the powers in Washington haven't.
The half-dozen activists -- Twyman, a former Miss Washington DC, the owner of a small construction company and two volunteers at a local soup kitchen -- joined hands, bowed their heads and intoned a heartfelt prayer.
"Lord, come down in a mighty way and strengthen us so that we can bring down these high gas prices," Twyman said to a chorus of "amens".
"Prayer is the answer to every problem in life... We call on God to intervene in the lives of the selfish, greedy people who are keeping these prices high," Twyman said on the gas station forecourt in a neighborhood of Washington that, like many of its residents, has seen better days.
"Lord, the prices at this pump have gone up since last week. We know that you are able, that you have all the power in the world," he prayed, before former beauty queen Rashida Jolley led the group in a modified version of the spiritual, "We Shall Overcome".
"We'll have lower gas prices, we'll have lower gas prices..." they sang.
At the weekend, Twyman had led a group of around 200 people in prayer at pumps in San Francisco, where gas is touching the four-dollars-a-gallon mark. ...
Americans have turned to prayer because the earthly powers-that-be don't seem to give a hoot, said Judy Dugan, a research director at Consumer Watchdog, a non-profit group based in California.
She described Prayer at the Pump as "the ultimate Hail Mary."
"It's what you do when you feel you have no one on your side, and they certainly don't have the US government on their side on this," Dugan said.
At the Shell station, Twyman had dire words of warning for those who are raking in profits from high gas prices.
"Woe be unto those people that are really greedy and taking advantage of American families," he proclaimed from his pump pulpit.
"These prices will come down, just like the walls of Jericho came down in the Bible," he said, as another chorus of amens punctuated the sound of cash flowing out of the gas pumps.
A nation in debt, foreclosed on, and armed to the teeth with nuclear weapons gets Biblical at the pump. Meanwhile, as I predicted at the top of this post a month ago, the Federal Reserve has just expanded the scope of what was already the largest monetary stimulus in the history of financial markets.
If you feel like someone's watching you, it's probably the rest of the world's wary eyes.
posted by The Cunning Realist at Tuesday, May 06, 2008
ALOHA !!
Matthew Robinson is is trouble over at Reuters! HE ACCIDENTALLY TOLD THE TRUTH ...
Matthew say "Hello!" to the unemployment line!!
READ ON:
Oil jumps $4 to record over $120 on WEAK DOLLAR
Mon May 5, 2008
By Matthew Robinson
NEW YORK (Reuters) - Oil jumped more than $4 to a record high over $120 a barrel on Monday on the weaker U.S. dollar and supply concerns from OPEC members Nigeria and Iran.
U.S. crude settled up $3.65 at $119.97 after surging as high as $120.36. London Brent crude rose $3.43 to $117.99 in light trade due to a bank holiday in Britain, after hitting $118.58 a barrel.
"People are piling back up on crude oil due to the weakness of the dollar and production issues in Nigeria," said Phil Flynn, analyst at Alaron Trading in Chicago. "But it also looks like momentum play after Friday's positive reaction to the unemployment report."(more)
This might be a stupid question, but can Level III assets, such as those that comprise more than Merrill Lynch's market cap, be exchanged at the Fed for treasuries?
I'm becoming more and more fearful of the markets inflating up, up, and up on injected cash.
Posted by: FattyArbuckle at
May 6, 2008 4:15 PM [link]
QT: per your request, I have been trying to move UXG price up, and today I have finally succeeded. :)
Actually, it looks like many people were scared of getting into gold once it got above $800/oz, and they were even more scared of what will happen to junior explorers when the gold price will experience its inevitable correction. Since we had to wait for this correction longer than expected, there were few bids for gold juniors in the past months, and their price continued to decline. Now some people are starting to believe that the correction in POG is over, and hence it is finally safe to buy gold juniors...
DavidV
Posted by: David at
May 6, 2008 4:25 PM [link]
Joke of the Day from the WSJ...
"Fannie Mae said it lost more than $2 billion in the first quarter. It says it will continue to lose money, and needs more money to fund operations as it continues to lose money.
The market’s response? It’s all good.
Shares of the beleaguered buyer of U.S. loans advanced smartly in trading Tuesday, gaining 5.5% after the company announced a loss of $2.57 a share, and added that the fair value of its net assets fell by nearly $24 billion to $12.2 billion. It also cut its dividend to boot, to 25 cents a share, beginning in the third quarter; it paid out 35 cents a share in the first quarter.
“We’re losing money, cutting the dividend, and raising capital, so buy this stock,” said Bill Schultz, chief investment officer at McQueen, Ball & Associates in Bethlehem, Pa., surmising how Fannie might pitch itself to stock investors. His firm does not own the stock."
Posted by: fireworks at
May 6, 2008 4:36 PM [link]
Hoosier:
Can your 2 spreadsheets work with Excel 2002?
I've followed the steps in your Word document, and tried the spreadsheets with .xlsx and as .xls. Only the "Industry" on the Main page fills in.
What do I have to do to have then work in Excel 2002?
Thanks.
Posted by: Dick_Y at
May 6, 2008 5:06 PM [link]
jk484--two years ago about this time, I heard Ritter say we were definitely going to attack Iran, I believe it was in the Summer of '06. He's lives near my area so I've heard a lot from him. He was right about what an awful mess Iraq would turn out to be, but his predictions about Iran have not panned out. And I hope to any diety you worship, they don't.
Posted by: Denny at
May 6, 2008 5:20 PM [link]
Gasoline prices are not high in CHINA (TIANJIN $1.54; SHANGHAI $1.48), RUSSIA (MOSCOW $1.45)
KAZAKHSTAN (ALMATY $1.36, ATYRAU $1.35),
TAJIKISTAN (DUSHANBE $1.32), AZERBAIJAN (BAKU $1.15) and VENEZUELA (CARACAS $0.14). The high pump prices in the US have no effect in those countries. That is probably the reason slackening US demand has no effect on gasoline prices YET.
It will have an effect eventually when their economies, especially China's, feel the impact of much less US consumer demand for the products they have come to expect us to always buy.
Posted by: lessmore at
May 6, 2008 5:32 PM [link]
I just got a response (after market) from Rob McEwen himself regarding prospects of US Gold:
*****
Hi David,
The share performance of US Gold is like most of the other public exploration companies - it has moved in the opposite direction to gold - why, the large credit problems within the global financial markets has resulted in a sharp shift in asset allocation - out of speculative, negative cash flow exploration companies into senior producers with strong positive cashflow - its all about investors wanting less risk - the performance gap is very today, and I continue to expect the juniors to perform later this year.
We are looking at the costs, timing and size of a possible restart of production in Mexico and also is there a chance to do so in Nevada - we do not have any indication of financial implications at this time - will
do in 3rd & 4th Q, hopefully. We have about $25 million in cash which is sufficient to fund
exploration this year - if we don't find anything? Which I think is unlikely - we will be like every other exploration company - we will
have to raise additional equity to continue exploring - this expectation would be another reason why the entire sector is performing poorly - I like our prospects
Rob
******
Interesting coincidence: the last time UXG had a 15% rise to $3.80 was on the day that Rob sent his previous e-mail to me (which I also received after market). It is as if the insiders knew that he is composing a positive e-mail and started buying the stock before it hit the masses. I should ask him for his views more often. :))
DavidV
Posted by: David at
May 6, 2008 6:06 PM [link]
SNCR: down 48% after hours
"We have materially lowered our growth expectations for 2008 due in large part to reduced revenues associated with the iPhone, which masks the underlying growth and momentum of the rest of our business," said Stephen G. Waldis, president and chief executive, in a statement.
I think the after hour price is an over reaction. Adding more at 12.55
Posted by: JogyP at
May 6, 2008 6:10 PM [link]
Dick_Y,
It sounds like you have one add in working. I'd be happy to troubleshoot with you, and/or send you the spreadsheet as excel 2002. If you want, you can shoot me an email at googlemail.com with tpwilliamson+excel as the email name. It'll prevent the board with getting cluttered up with some back and forth troubleshooting.
Posted by: Hoosier at
May 6, 2008 6:10 PM [link]
Wonder what this will do for the oil markets??
REUTERS NYMEX to raise margins for crude, related futures [HTJNWDM]
NEW YORK, May 6 (Reuters) - The New York Mercantile
Exchange said on Tuesday it will increase margins for its crude
oil and related futures contracts, beginning at the close of
business on Wednesday.
Margins for the crude oil, crude oil calendar swap, and
crude oil financial futures contracts will go up to $7,250 from
$6,500 for clearing members, to $7,975 from $7,150 for members
and to $9,788 from $8,775 for customers, NYMEX said in a
release.
Margins for the NYMEX miNY crude oil futures contract will
rise to $3,625 from $3,250 for clearing members, to $3,988 from
$3,575 for members and to $4,894 from $4,388 for customers.
Margins for the NYMEX MACI index futures contract will
increase to $1,450 from $1,300 for clearing members, to $1,595
from $1,430 for members and to $1,958 from $1,755 for
customers.
06May08 21:25 GMT
Posted by: HNCadet at
May 6, 2008 6:21 PM [link]
JogyP -
That kind of SCNR news would have sent financials up 8%
Posted by: gdiman at
May 6, 2008 7:04 PM [link]
lessmore - Gasoline prices are not high in CHINA.
The reason being is that the Chinese subsidize the fuel costs. I keep watching for the Chinese to start dumping our bonds so that they can continue this practice. If the average Chinese worker had to pay full price for their fuel, the economy over there would tank in an instant. Also, the reason the European prices are so high is because of the amount of taxes that are collected at the pump. Anyone care to share any other opinions?
Posted by: RosevilleBill at
May 6, 2008 7:07 PM [link]
David- yes, it's hard to stay away completely...in answer to your question, i just take it day by day-> the market always moves in the direction that hurts the majority, so for now, i still think it goes up...
since you're taking requests, can you move ESLR up around 10? TIA ;)
Posted by: 2nd_ave at
May 6, 2008 7:12 PM [link]
Hoosier:
Thanks. I sent you an email requesting both files in Excel 2002 format.
Posted by: Dick_Y at
May 6, 2008 7:20 PM [link]
Posted by 2nd_ave: "since you're taking requests, can you move ESLR up around 10? TIA ;)"
I'll work on that, 2nd_ave. :) But to make my job easier, can you please tell me what make you so optimistic about it as to take a longer-term position in it? If your response will convince me and other readers of this blog, then ESLR will naturally move up tomorrow. :))
DavidV
Posted by: David at
May 6, 2008 7:24 PM [link]
**********Wall Street Layoff Alert*******
The last time I issued one of these Lehman Bros announced 5% cuts within a week of my announcement (half of their intended target with the rest to follow).
Today, I am sorry to report that, according to one of my golf buddies who is in management at Neuberger Berman, their wholly-owned subsidiary, Neuberger, a much smaller firm, is planning to chop heads almost indiscriminately. He doesn't have an exact figure but you can count on a "buttload" (a cleaned up version of his term) of layoffs coming later in the year as well as further writedowns due to a hedge fund that's lost and is losing a massive amount of money for which the firm must make good. They are, according to him, doing so by slashing the workforce, and as I said, further writedowns are imminent pretty much across the industry. Stay the hell away from financials folks.
Posted by: shark_attack at
May 6, 2008 8:46 PM [link]
War with Iran? Who knows for sure, but there is apparentlyh a new factor (monkey wrench?) in the situation. The Saudi Crown Prince Sultan who is in charge of Saudi defense, and who is also the strongest ally of the US, has cancer and is possibly in failing health, possibly dying according to one source. (Sorry, I can't get any links tonight for some reason, but just Google "News" for Saudi Crown Prince ill.)
One news analysis states that there could be some power conflicts arising in Saudi Arabia if this Prince does die. Not a good situation for any US commander with the "Go" button, so, maybe it will be a "No Go". jmho and something to keep alert to for many reasons.
Posted by: spot at
May 6, 2008 8:48 PM [link]
spot,
thx for the piece of news regarding saudi arabia.
to put things in perspective:
most sr. government posts are populated by members of the royal house of Saud. there is a crown prince at each of these posts who serve more as figure heads than anything else.
imho i would compare it to our Govenor General in Canada who is by right the head of state, but in reality has symbolic powers along side her pronvincial counter parts at the provincial level (lieutenant govenors)
any time a Sr. figure within a ruling body faces death there is an inevitable destabilizing effect and ensuing power struggle to varying degree's.
but the house of Saud for all its corruption and other problems hasnt shown any instability in the face of other members passing away. (at least not the kind of instability from that threatened mid-east stability)
they have provoked situations and caused unrest historically but not recently over the shifting of family members to Sr. positions from what i can see.
i think it boils down to the idea that saudi arabia isnt really in control of anything. they serve at the pleasure of the US and the military might parked on their shores.
but this doesnt rule out the possibility of a revolution ever happening there. osama bin laden has often spoke of overthrowing the ruling family. its not out of the realm of possibility.
Posted by: dr.cosa at
May 6, 2008 9:14 PM [link]
Not the layoffs I was talking about but:
ZURICH, Switzerland (AP) -- Swiss bank UBS, hard hit by the U.S. subprime crisis, reported a first-quarter loss of $10.97 billion and said Tuesday it will slash almost 7 percent of its work force.
What do these scoundrels know that we don't?
Posted by: shark_attack at
May 6, 2008 9:29 PM [link]
sorry regarding my post,
sr. positions are occupied by princes, not crown princes as the crown prince is considered heir to the throne. but the idea is the same. a new head will sprout in his place if he passes away with no marked change to defense policy considering the depth of US entrenchment in their regime.
As central banks attempt to bail-out a few ultra-rich bankers, the poorest nations are paying the grave consequences. These major food riots will only escalate with time...
"Tens of thousands of people rioted over high food prices in Somalia's capital on Monday, hurling stones that smashed car windows and prompted hundreds of shops to close.
Witnesses said Somali soldiers opened fire during the protests in Mogadishu, killing at least two people.
Dr. Dahir Dhere said a man wounded in today's protests died on the way to an operating room at the capital's main hospital."
Posted by: fireworks at
May 6, 2008 9:40 PM [link]
cb-
Now that Obama has decimated Clinton in NC and narrowly lost in IN does that change your opinion?
Posted by: MarkM at
May 7, 2008 5:53 AM [link]
ALOHA !!
My God ... How many times a day and how long does the IMF have to keep announcing their plans to sell gold? I have been hearing this for six years now ... Even if they did sell 12% or 12 kilos or whatever amount, the stuff will never even hit the streets! Where can I buy IMF gold? At my local mall at the IMF store? Does the IMF have an EBay Store? Shut up and sell it already!!!!
Decision zones, China ADR stochastics, Cara 100 stocks, and headlines...why Bernanke contributes to food riots and starvation deaths.
A good article on the ABCP mess here in Canada.
Posted by: Canadiansailor at
May 7, 2008 7:59 AM [link]
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and where are the regulators?
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at
May 6, 2008 8:57 AM [link]