Good morning

Financial markets witnessed another roller-coaster week as renewed concerns about the global economy and the health of the financial sector surfaced, resulting in a mixed week for world stock and bond markets, an improved US dollar and continued weakness in oil and commodities.

This is how I see it: Key to mapping out the intermediate stock market cycle is whether the July 15 levels for the S&P 500 Index (1,215) and Dow Jones Industrial Index (10,963) will hold. Specifically, the extent to which bank shares can sustain their moves above recent lows will be a vital determinant as to how well stock markets in general can rally from these levels. Short-term movements aside, do not expect a quick convalescence period.

Read all about this in my weekly review, highlighting some thought-provoking news items and quotes from market commentators during the past week. The link is: http://tinyurl.com/6dgz3z

That’s the way it looks from Cape Town.

Good Morning.

There are no Cara 100 Changes at this time.

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

Have a great day.

into the discomfort zone-> back aboard UAUA at 7.40...

real discomfort-> anyone looking at CALM at 40+? if i had to guess, it goes way up today...

anyone for CALM at 39+?

OK- trying a little CALM at 39.75...if i get egg on my face-> hey, it's an egg company, man...

scaling into IBN at 31.15...

One of the indicators I follow is the Core Capital Equipment as % Durable Goods Orders.
CCE is considered a proxy for Business Investment and tracked the investment Boom/Bust of the 1990's.
It has approach a level that will probably be a peak for a while.
This signals that the Business Investment will weaken in the future and contribute to a decline in the stock market as the business sectors has hel up better than the consumer.See
www.wrahal.blogspot.com

bill,

are you getting long gold?

[Bill Cara note: Jeremy, with respect, why would you ask me that? Didn't you read the WIR? Have you not been following this blog? I re-read some of your comments, which show me you are pumping miners and gold. You wanted people to buy SLW at 18+ in March, then 16.50 in April, on its way to 13. I mean, you are free to come and go here as you please, but sometimes this gets embarrassing to me, and I wonder why I even make an effort. Why don't you try telling people what your ideas are, and why, and when they prove out or otherwise, try telling us what you learned. I will have a lot of time for that, but frankly I don't need Discourse like yours today. It adds zero value and is upsetting me.]

I am sorry,
the link is
http://wrahal.blogspot.com/2008/07/as-good-as-it-gets.html

GLW- scaling in at 20.85...

CALM-> to 40% at 37.85...

IBN-> out at 32...

CALM-> looks like profit-taking trumps short-squeeze...

TTM-> back in at 9.92...

IBN-> round 2 at 31.35...

India's given back all gains from last week...

airlines on the move..

Bill,
Please don't be discouraged by some of the discourse just because a few folks haven't been paying attention. I'm quite confident these are a minority that will continue to dwindle.

On the behalf of the rest of us, thank you for taking the time to impart your wisdom.

..Simply put.

Just putting this here so 2nd won't think he's talking to himself....

GLW earning is on 7/30/2008 before open

Jay- i was thinking the same thing, man...;)

Any comments on why SIRI is not moving on the deal? Now at 2.10.

Took a nice ride in AMR to the longside...which is funny I had been looking at it short but it made an up-target and I bought and sold. Made enough to pay for several horseradish-encrusted swordfish with garlic beurre-blanc sauce.

looking hard at WYE-> in the age of monoclonal antibodies, who has the edge in research on Alzheimer's?

2nd...nice to see you're quite active...How did last week go for you?

Bill, I for one absolutely love your “WIR”s.”

I think I learn something every week from them/you. The fact that you are willing to share your knowledge and let us get inside your head is a true gift you give to us all.

Thank you.

GLW - looking good today, wonder if GM earnings might knock the flames down... Might be worth riding out anyway.

IBN- adding at 30.26...

shark- wasn't the same without you, man..

Gold & gold stocks buy signal.
According to the gold:xau ratio, the time is right for scaling in. Could there be more downside? Sure, but that's why one scales in. See my charts at:
http://tinyurl.com/traders-talk

2nd -

I am with you on CALM. Their earnings today were phenomenal.

Anybody have a view on TCK?

-OEBHP will buy 2 at 9.20

moab- let's see, the company has pricing power, 33% insider ownership, doubled profits this quarter, and >90% of the float is short...wasn't it kaimu who said "what's not to like about this company?"

Buy to Open Call 2 Contracts of -OEBHP
Details Filled at $9.20

It killed me sitting around eating fried fish wanting to get long some airlines but we all need a vacation. Now actually the stock
I was looking at short but played long today AMR did actually turn into a phenomenal short trade just after I sold it at 8.81. It's funny how often when you sell well as a daytrader you should flip to short, but that takes some steel ones.

DPP - Up 3000%?

SKF ripping higher.

BA - Stink bid @62.12

RE: Price of Gold and Inflation

I hear many goldbugs state that, at some point in every market crash, the Dow / Gold ratio reaches one to one (1:1).

I believe that inflation has given us a "silent crash" over the last 8 or 9 years.

Is it possible that gold already reached a 1:1 ratio with the Dow and that any upside to gold will be playing a pyschological buying panic and not speculating based on a hidden / fundamental value of the yellow metal?

MT - down 7, 19.34

Putin - the company selling its products to its foreign offshore subsidiaries at the price of RUB 1,100 (approx. USD 47.09) per tonne, nearly four times as cheap as the products are available domestically; a scheme to avoid taxes in Russia

sorry that is MTL not MT

Gold & gold stocks buy signal:
http://tinyurl.com/5hba3s

-OEBHP, opening at 8.80...

ALOHA!!

Here I go again ...

I read Mr. Bootle's analysis of the "oil bubble slash commodity bubble" and as usual the role of money never enters the picture. So when the commodity bubble vanishes what will be the next short term bubble? Tech again? More real estate? Tulips? I am hoping for "orchids" and Hawaii real estate ... Did you hear that Ben and Hank? Lots of birds over here Hank and it looks like you could use a nice quiet beach over in North Kohala Ben! Where will all this gigantic excess of HOT MONEY flow to next? Instead Mr. Bootle why don't you consider that what we have been seeing since we have all been alive is a FIAT BUBBLE. We have labeled BUBBLES everything but THAT! When that BUBBLE pops there goes the World Reserve Currency and all the rest of paper money and false wealth assets(?) ...

Look at this chart from 1861 to 2002. This chart was produced by an oil company by the name of BP. Mr. Bootle being a Brit and cautioning BP in his article should have called BP charts division and asked for the 1861 chart so that he could better understand oil/commodity bubbles in relation to war and money. It would have been a local call!

We are in WW3, which he never mentions in his supply/demand analysis. Anyone here know about oil demand during Wars? Yeah, it goes up and supply goes down, unless we find a few more Saudi Arabias in Manhattan. Has anyone ever drilled at the US Federal Reserve Bank of New York building? They could put up an oil rig on the roof and drill right through Ben's office!

Just last week I posted a chart showing M3 and WTIC which look really similar. It does not take a genius to look at this 1861 chart and extrapolate out past 2002, since no extrapolation is needed now that it is 2008 and we can clearly see where oil and commodities went to after we invaded the Middle East. HA!! Hummmmm, oil prices went up after we invaded the Middle East ... who'd a thunk it? Problem is, can we extrapolate past 2008? Will WTIC increase with M3 growth? I guarantee you the US FED did not quit publishing M3 for nothing! In other words since you have been alive has prices in anything gone down other than buggy whips and slide rules? Is it in the nature of any government to NOT spend? To not build up militaries? To not buy votes? To not bailout banks? TO NOT QUELL THE MASSES IN SOME MANNER? The old Communist regimes now realize it is a lot easier and safer to quell the masses with money rather than gulags ... In fact the old Communist regimes aren't even as Imperialistic as America is. I mean who has Russia or China invaded and occupied lately that is half a globe away? Long distant occupation ... yeah, that's for the birds! No offense Hank!

I just read that the Iraq adventure has now surpassed the Vietnam War as the second most costliest War America has ever fought. Second only after WW2 ... So by financial standards it is appropriate to call this IRAQ THING WW3. Look what happened to oil and commodities after Vietnam. Look what happened to the US Dollar and gold and silver then. Somehow oil/commodity prices went up even as I was paying off a 1980 Chevy truck at a 17% interest rate!

OIL/COMMODITY PRICES ARE NOT GOING UP THE PURCHASING POWER OF GLOBAL FIAT IS GOING DOWN!

Its the FIAT BUBBLE STUPID! And it almost went KAPOW in 1980 ...

1861 CHART LINK: http://tinyurl.com/6dztzm

Now look at this chart and it will show you where oil prices would have been had we stayed on a gold standard. Thats the line at the bottom of the chart priced in 1861 dollars. The other line at the top is priced in 2002 dollars. yes, believe it or not inflation is a factor in prices ... ECON 101 anyone? Remember as you look at this chart recall that Nixon removed the World from the gold standard in 1971 because he realized the USA would be bankrupt if we used all our gold to pay for the Vietnam War, so he closed the gold window for good. That in itself was reneging on US DEBT, but since the US Dollar was the Worlds Reserve Currency, what choice did other countries have ... WW3? Its WW3 anyway only 40 years later. That's what fiat governments do they push the liabilities into the future for other less fortunate generations of US TAXPAYERS to deal with. Remember ... four year olds can't vote?

I thought, with the drop off in oil prices, that we would be seeing a bigger increase in refiners and XLE in general. Is this case similar to the junior miners in that the drillers are going to an empty well for capital? Could someone explain why this is not the case?

Has anyone even touched REIT's in a while? Has anyone had any success with short plays? Or is it difficult because of the dividends? Has anyone seen better returns through RWX? Just curious.

Jeremy Grantham thinks the next bubble will be in emerging markets. This actually makes sense in a weak dollar sense.

+ "short plays on RWX"

ALOHA !!

This lady was an assistant director of HUD under the first Bush administration(Papa Bush). I think she knows something about the mortgage game and perhaps a little more.

READ ON:
Mortgage Market Musing

Catherine Austin Fitts

Sometimes, it helps to step back and see the big picture.

Let’s say that I serve as the depository for a large government and I also own the central bank. I get my partners appointed to run the government’s treasury and key funds on a regular basis so I can also control financial system policies and regulation that help me finance what I want to do and mess up my competitors. Even that is getting cumbersome so I am arranging to move most of the regulatory control over to my central bank because I can control all of it privately.

Frustrated with having to deal with democratic processes, I decide to move a significant amount of money out of the government between 1997 and 2001 for reinvestment abroad. I and my partners and our syndicates engineer a serious of steps to bubble the economy so that when I move the money out the currency is high and because everyone was making money they did not notice that lots of capital was leaving. To ensure no one notices, I suppress the gold price which turns off the financial burglar alarm and shifts gold out of the government into my private control at below market prices.

Normally moving money out of a government in excess of the total taxes that year would be hard to do. However, I could use securities fraud. I could issue a lot more government securities and government agency (like mortgage agencies) securities than I recorded on the government books and sell them abroad. I would have to make sure not to publish audited financial statements as that would increase the liabilities of engaging in this kind of fraud. It would help a lot if I could pool mortgages and sell government agency securities to finance those mortgages in a process where the same mortgage could be sold many times into the same pool. Investors would not notice or care because the securities were government guaranteed.

I also engineer an internet and telecom stock bubble, and move trillions more out through that mechanism.

OK, so as I move the money out of the country at a high price because my currency is high, what do I invest? Well if places like Asia, Latin America and Russia experience economic crashes as a result of credit crunches that result as my cutting off credit, then their currencies will be low and they will welcome investment. Or if they don’t welcome investment, I can make sure that the IMF and World Bank can strong arm.
So I can buy in really really cheap. Meantime, these currencies rise as I move manufacturing and jobs into the places where I now have big investment positions. So my investments go up.

Well, back in the U.S. the bubble bursts, and the institutions like Fannie and Freddie that financed the housing bubble experience significant losses. Their stocks drop by a lot. That hits the pension funds, 401ks, IRAs and other savings of the people who have lost money on their homes. It’s a double whammy. A lot of them also lose their jobs. Triple whammy.

The currency drops in value a lot. This means that the dollar I pulled out and put into other currency that has been going up, up, up, is now worth multiple dollars. As asset values drop, each remaining dollar can buy things cheaply.

Indeed, with Fannie and Freddie’s stock dropping like a stone, I could have one or more of my offshore investment vehicles fund a recapitalization plan and buy control of the senior positions directly or indirectly controlling 50% of the residential mortgages in the country with my profits — that is for a small portion of that which I shifted out of the government.

Think of it. The housing bubble has reached it’s logical conclusion. If you can get enough people to buy a home for no money down, you can buy their country for no money down.END

Solari Group Link: http://www.solari.com/

ALOHA !!

I think the next bubble is the gigantic excess of HOT MONEY! HA!!

Not good for Canadians: Canada just got holes punched in its (relative) national financial levees (currency, central bank, banking system etc). Canada's central bank will now give emergency loans to institutions backed by any old junk, same as the US.

http://www.globeinvestor.com/servlet/story/RTGAM.20080726.wrboc26/GIStory/

Central bank to take riskier assets as collateral
KEVIN CARMICHAEL
Saturday, July 26, 2008

"At emergency auctions for short-term loans, the central bank said it will now accept collateral commercial paper, including asset-backed commercial paper, with a term of maturity of no more than 365 days, and other Canadian-dollar, asset-backed securities. The central bank also will accept securities issued or guaranteed by the federal government; provincial governments; the U.S. government; and any state in the Organization for Economic Co-operation and Development.

The list of assets also includes Canadian-dollar corporate and municipal bonds, Canadian-dollar bankers' acceptances with maturities of no more than 365 days and Canadian-dollar promissory notes with a term to maturity of no more than 365 days."

This article is linked to from Mish's blog; some of the comments from readers are interesting.

Russia cuts U.S. losses...

Russia has approximately halved to less than $50 billion its exposure to U.S. mortgage lenders Fannie Mae and Freddie Mac, a senior central bank official told Reuters on Monday. "It's now less than $50 billion," central bank first deputy chairman Alexei Ulyukayev said, when asked about Russia's investments in the agencies.

Russia held about $100 billion at the start of 2008.

http://tinyurl.com/5z8ayx

bought to cover MER, for now, at 25 thinking someone or somebody might do something to intervene again or manipulate in the next day or two...

Kaimu - Is your chart normalized to household income? To be accurate, both sides should be depicted. Doesn't income follow the inflation trend? So a house now costs $250k where back in 1800 it might have cost $500, how about basing this comparison on percent of earned income? It would give the argument more validity.

Everything of value must have a solid foundation. The argumentative process must exhibit verifiable platform as well.

One might include opportunity costs:

How about the relationship between inflation, American family structure and crime rates?

Or how economies of scale relate to governmental efficiency?

2nd_ave: what's you take on the market now? Does it look like the summer rally is over and this is an early chance to sell at the beginning of the next leg down, or is it a great chance to buy ahead of the rally?

What do others think? Vad: what does the price action tell a professional trader now?

Thanks,

DavidV

SSO - Considering a position following GM earnings...

Or perhaps a stink bid for GM?

This might work out better....

David- not sure, man...but i'm thinking of changing my handle from 2nd_ave -> 2_early...

SLW - huge volume in Aug 08 15 calls. They report earnings tomorrow.

CP - I would prefer TM @ 88 right now

David,

two things I can say here.

First, Thu and Fri of the last week is a first time in this summer that felt like typical summer trading. I have to say I've never experienced such active trading during this time of the year. However, last days of last week and today feel much more like summer trading, with lighter volume and l,ong periods of inactivity. In practice it means any pattern becomes less reliable as there are fewer participants to create the pattern and to see it through. It makes read less reliable.

Second, market as I see it became almost solely about oil. Even financials took backburner to oil movements. I see almost perfect correlation (inverted of course)between USO and NQ, almost tick in tick. See this very minute as I type this, 14:17 EST, USO spiking, NASDAQ dowticking... soooo... whatever oil does, market will react to (unless and until some new worry overtakes this relation).

jk484 -
I too am waiting on that TM to drop a bit more before getting in ... I just hope I don't wait too long.
Unless Ford and GM come up with something big, they'll be in museum along with American Motors, Studebaker-Packard, Desota and the likes. Toyota and Honda are the wave of the future!

PIN-> opening a position at 20.57...

Hello All,

In following Bill’s advice on this blog and in his book, I’m attempting to focus my energies in the next few months to that portion of my portfolio of “Graham’esque” stocks – the big, stable, salt of the earth kind of companies with stable revenue growth, earnings growth and importantly dividend growth; stocks such as GE, IBM, UTX, ATT, etc.

My question to the community: is there any searchable database with more than 10 years of company history out there such as the Yahoo Stock Screener? The yahoo free screener service is great, but I want to trend further into the past and look at different key performance indicators than what is currently offered. I’d like to hear what you use even if the service is not free, as it is very valuable.

Bill, thanks for letting me learn from your WIR and Daily reports. The small portion of my portfolio that I deem ‘play around money’ was a great foray into WGI and ARU. I’m getting clobbered on my FOS.V, but I will bring that up with Jim. ;-)

Bill, did the book get there yet?

Cheers

Shannon

vinod- jumping into CAF at 37...no clue whether the SSEC is even on beijing's radar right now, but the olympics ARE-> it's a trade with good odds...scaling in at 30% of allocation...

2nd - may I ask why are getting in PIN? IBN is under 30 now

David/vinod-> CAF/PIN/TTM/IBN/UAUA-> these are trades, but these are trades where the price of each one is at a level i'd be happy to have as an ultimate (long-term) basis...that's what makes some of these trades relatively easy to enter...

Total unemployment in the U.S. is now over 10 percent. This statistic [U6] is reported by the Bureau of Labor Statistics:

http://tinyurl.com/BLS062008

In U6 column, check “Not Seasonally Adjusted” then click “Retrieve Data”

jk484- that's why trades are called trades...

Thanks, Vadym, for your take on this market -- now I feel better, knowing that there are no major chart patterns that I am missing. :) Well, let's see what oil does this week -- I still have a feeling that it should go down.

2nd_ave, thanks for your take on UAUA -- I now feel a little better holding it, and VLO for that matter.

DavidV

anyone have access to the latest NYSE bullish percent reading?

There is a huge open interest in the December 2008 GOLD 1200 contract:
http://www.nymex.com/gol_opt_cso.aspx

By the way, about UAUA... this one can totally be played (on intraday basis at least) off USO movements. Almost perfect correlaation of going up when USO drops and retreating when USO surges

2nd - Is this what you're looking for?
http://tinyurl.com/5ugwbc

2nd
Buy 200 Shares of IBN
Details Filled at $29.94
Buy 1,000 Shares of BONT
Details Filled at $4.8499 this BONT is giving me between 300 to 400 every week, last 4 week
it biunce around 4.90 tp 5.40
Buy 200 Shares of IBN
Details Filled at $30.02
Buy 300 Shares of TBT
Details Open
Buy 200 Shares of TTM
Details Filled at $9.57
Buy 200 Shares of TER
Details Filled at $8.9994
will buy ESLR/CAF when it hit my price
was 100% in cash

NYSE Bullish percent:

http://tinyurl.com/5nxymn

With the SEC rule on enforcing NSS rules on financial stocks expected to expire tomorrow (right?) does anyone else think the SEC/HBB are already busy with plans to:

1) extend duration of NSS rule enforcement on selected financials

or

2) extend NSS rule enforcement to a broader selection/all stocks

I am guessing that both of these ideas have already received approval and are being placed up the SEC/HBB sleeve so they can use the wildcards as they see most timely/fit.

Absent a continuation of the commodities decline (will oil continue the decline immediately? retrace higher before another decline? ) it seems that these wildcards may be the only thing left in the FED/SEC arsenal to provide a market kickstart if the commodity decline does not continue.

Isn't it crazy that the SEC may have to resort to enforcing rules to make the market regain its ability to properly value companies? Who'da thunk?

JK484 - TM - Great suggestion, I might wait till after GM forms a new jowl. Double-chin bounce, or bankruptcy. I doubt GM goes belly up this week as much as I doubt they'll see their 52wk high before the new pres. takes office.

Not trying to catch falling knives, but I like primary harmonics (to a fault?).

disclosure: No GM positions (yet).

thank you, JIM..(OG- link not working?)...

Billys - "Isn't it crazy that the SEC may have to resort to enforcing rules to make the market regain its ability to properly value companies?"

If they had done their job to eliminate conflict of interest, this mess wouldn't exist and they wouldn't be playing firetrucks... Wonder how Captain America enjoys firefighting?

I am trying to find the information on FDIC.gov regarding how much FDIC insures?

I got the information from Jim Sinclair web site about 13.4 trillion and 8,500 institutions. I decide to verify it by myself.

But I could not find it. Can anyone help me to point the link?

Thanks.

CP, watermelon -

Buy quality as Bill has mentioned many times here. the other thing is I've missed so many opportunities trying to buy at the very bottom. I would start a small position here. please, not a recomm, do your own dilg

URRE - Still can't figure out the drivers for Uranian.

2nd - Sorry 'bout that. Link works fine when I enter it as a full URL from one of my bookmarks; the link from tinyurl is apparently problematic. In any event, the chart was similar to the one JIM gave you--same ticker ($BPNYA) and same charting URL (stockcharts.com).

I expect a symphony of sympathy when GM reports.

All right, let me press the UAUA trade -- increasing my position by 25%. The market looks to be a little oversold short term, and there is no reason for oil to reverse its downtrend.

DavidV

I expect a symphony of sympathy when GM reports.

Posted by: Chickenpookie at July 28, 2008 3:48 PM [link
It is not Earning but spin media gave to earing is
important?

GLD - Is that potentially a "falling three methods" bearish candlestick pattern in the making on the daily chart? If so, tomorrow could be a big down day. Not sayin', just askin'. DYODD.

2nd
added 2 more at 6.20

small position

TM - @ 88.32
IBN- @ 29.06
TTM -@ 9.42

Okay, I found it.

If anyone is interested in, please go here.
http://www4.fdic.gov/qbp/2008mar/all4a2.html

all insured institutions number is 8,534.
all insured assets is $13,034billion.
as of 12/31/2007.

FDIC total assets are $53billion.

Does it make you nervous?

SBUX and WFMI are dogs when consumers are tapped out. Longs need meat and potatoes for this market...

Re: Short Term Loans By Canadian Central Bank

I hope Canadians recognize that taxpayer dollars are being pumped into brokerages like Cannacord that sold billions of worthless ABCP to retirees with a AAA credit rating and are now being bailed out.

We have no idea of the extent of collatoralized debt obligations in the Canadian system, and the media in Canada has been totally silent, or totally supportive of the Central Bank.

re URRE - uranium is a boom & bust business. remember Westinghouse, back in 80's, almost went bankrupt. too much opposition to new new reactor and it takes about 15 years to build one.

David

RE: UAUA

I gotta be honest, the move from $3 to $9 took me as a huge surprise, but I don't see much preventing this one from revisiting $5 again.

Oil may be down, but it was the speed of last weeks downward momentum in oil that seemed to take UAUA to the stratosphere, IMHO. If oil continues to drift downward over the next couple weeks (which I am uncertain of), will the downward momentum be strong/fast enough to garner a strong upward move in UAUA again soon? Also, couldn't oil move upwards without necessarily "reversing" its current downtrend?

Not trying to knock the trade - just seems hard to swallow pressing a buy that is trading at 250% of its 2 week low.......

I'm still be guarded against the likely possibility that last weeks rally was a technically incited short squeeze/commodity selloff than a fundamental market change.

Nuclear power has come a long way since the 70s and early 80s. There are self-contained nuclear "batteries" for powering remote locations that are virtually "plug and play."

I'm with France on nuclear power. Nuclear doesn't contribute to Greenhouse gasses and is more dependable than Solar or Wind. If I were King for a day, I'd put more nuclear powerplants in the North American energy arsenal.

David- i always try to practice the art of seeing the other side of the trade...when starting from 100% cash, the other side becomes taking a position, long or short...as soon as i take a position (long/short), it then becomes the opposite trade...when a trade moves against me, it then becomes seeing it moving in the right direction...helps to balance any emotional investment in whatever you're holding at the moment...can you see VLO at 80/UAUA at 50? how about CALM at 70? CAF at 120? TTM at 30/IBN over 100? these are all reasonable targets under certain scenarios...about as reasonable as seeing C/WM/FRE at 20/5/10 from their 2007 vantage points...

I am infuriated that The Bank Of Canada is following the U.S. Fed and accepting junk paper as collateral when making loans to Canadian financial institutions.
Does anyone know who is responsible for this ridiculous decision. I would like to contact them and suggest that many of our group may want to do the same.

Cheers

[Bill Cara note: If you are correct here, Bob, I do agree we ought to start a groundswell against Canada's own version of Mr. Moral Hazard, the ex-Goldman man who is the new Gov. of the Bank of Canada.

Btw, the last couple days trading in the Cdn Loonie futures markets look suspiciously like they're being run by the FOMC in the US. Anybody else notice this? If this is going to go on, the Prime Minister ought to be put on notice.]

vinod - I'll go along with that usually. Now it seems like any excuse if enough excuse to sell while oil's trend remains so unclear.

RE: UAUA

On the other hand - the trade sure does make me feel uncomfortable as possible - so maybe you are on to something.

B-P, agree. try to sell that to the public.

"batteries" are you talking about RTG's?

2nd
Most of name you mention in your 4.24 p.m post are Quality Company
And we may be early. But I feel good about our pick

sundance- many facets to looking at the same thing...250% off the low, 90% off the high...took a nosedive on talk of (another) chapter 11, took off on upgrades/cash infusion...what if it starts to look as if they turn a profit-> what's a leaner company worth? what's a leaner company worth if oil drops beyond what it takes to make a profit? no one really knows, which is why it hits these prices to begin with...

vinod- obviously, you're not referring to C, WM and FRE...;)

We need nuclear powered SUV's. A thimble full of Ur would push it 100k miles.

2nd
we did not pick C,WM or FRE
I hope that is not a mistake!!!!!!!

jk84,

I was rambling but in my mind I was seeing this:

http://tinyurl.com/6yzuor

As for the public, we will never sell it to OUR (U.S., Canadian, etc.) public . . .

but what about the developing world? Where is their place at the Petroleum Supper Table, already filled by hungry Americans, Chinese, Europeans, etc.?

I think the developing world will see an opportunity to lock down reactors and uranium while the U.S.A. et al fiddle-around debating Three Mile Island, Chernobyl, etc. The question is -- HOW LONG WILL THAT TAKE? I have no idea.

But I would want to be in Uranium companies when it happens.

Nuc-Powered SUV - possible, but will weigh about a few hundred tons. try to drive that over the well maintained US bridges & highways.

vinod- LOL...

B-P, It is a small reactor, definitely not a battery

Here is a great song by a great Canadian band, Honeymoon Suite's "Feel It Again".

http://www.youtube.com/watch?v=FvjBx0om2H4

Re: Nuclear Science

Keep in mind that nuclear science has long since surpassed fission as a method of producing energy. Its a science that's well over sixty years old.

The next step in nuclear science may not require any uranium or fissile materials at all.

What the whole Uranium thing is about is providing enough fissile material through the markets to renew the fleet of some aging cold war era equipment.

The whole thing is about keeping up with the arms race and fleet renewal requirements, not painting a bright future with a nuclear renaissance.

But that's just my opinion.

BillySundance: thanks for the alternate view of the UAUA trade. My main assumption is that oil keeps going down, and I think that those who have been looking at it for a while know that corrections in oil (and commodities in general) are always very swift. So I don't think the speed of the recent decline took anyone by surprise. The BIG players who are setting the UAUA price, I am sure, are trying to predict its future earnings, which depend on the average future oil price. So the real question is: has the oil correction ended or does it still have a long way to go? I think the latter is the case, and the oil will resume its long-term uptrend only when most people will give up on it in the short term, as it happened when oil fell from $78 to $52 in 2006. The peak oil theory was just as valid then as it is now, but the price still fell. Now, I don't think oil will resume its uptrend until the Congress votes on the bill to allow the offshore drilling. Don Coxe said in his weekly commentary on Friday that polls overwhelmingly support this bill, but the Democrats might postpone the voting until the new president takes office. Incidentally, even if this bill gets approved, it might not end the multi-year bull market in oil, since declining oil production all over the world might trump the incremental increase from the extra production we might get in the currently forbidden US areas. However, I think the oil price will need to decline first in response to all this activity before realizing that it doesn't do as much as it promised and starting a new ascent.

As for the recent action in UAUA, I am pretty sure it shook out most of the weak hands already. So the case for buying it is becoming stronger and stronger. I took a gamble today in increasing my position, as UAUA is now about 8% of my portfolio, which is more than the 5% recommended by 2nd_ave. I have been punished for adding too early on declines many times. I may very well get punished again.

DavidV

Merrill Lynch says it plans to issue $8.5 billion in stock. Dilution anyone.

BTW, aren't these the guys who said they did not need anymore capital.

A prudent decision put this one in mothballs...

The NB-36 bomber made 47 recorded flights between the summer of 1955 and the fall of 1957. All these tests were made operating the NB-36 with conventional chemical power. The R-1 reactor was turned-on on many of these flights, not to actually power the aircraft, but to test and collect data on the feasibility of a sustained nuclear reaction on a moving platform. All the data collected by these tests showed the program managers that the possibility of using a nuclear power plant to provide an aircraft with unlimited operational range was indeed at their disposal at this time. Impressive as the taxi and flight testing were for the NB-36, the complete concept of a nuclear powered aircraft was made irrelevant by advances in conventional aircraft and engine design and the public concern about the dangers of flying a nuclear reactor over their homeland.

Congrats to today's SKF holders!!!

David - thanks for your follow up.

I hope the UAUA trade works out well (I have some frequent flier miles that hopes it does too :-)

With a clear view of your expectations (for oil and how it will affect UAUA) it should give you a good sense as to if the trade is going as planned .............in the event of stormy whether, just remember to hit the eject button before the pilot turns on the p.a........

On MER,

It went down 10% and recovered. Short covering?

I wonder if the market would translate MER problem "not" to be company specific and start play down LEH, MS and the like all over again?

I see MER getting hammered after hours. They're up for another set of write downs and investors are getting wise this may not bottom out but just go out. I had to wait out that rally to have my new set of MER puts go into the green (not fun, but worth it).

CALM- no analysts consider an egg producer worthy of their time? LOL...8% dividend yield, ROE 69%, P/S 1, P/E 6, earnings growth in three figures? just asked my wife if she's cut back on eggs-> NO! it's a staple-> CALM might as well be MSFT, but with more kindling than TASR had at peak fire season...if anything, when food prices really start to take off, i plan to substitute omelets for steaks...unless CALM hits three figures, in which case we'll keep eating steaks...

XLF, SKF -

Financial looks capitulated today, technical speaking. I wonder if MER's after-hour annoucement marks "a" short-term bottom for the financial since they were off more than 10% in a few days. MER recovered its 10%+ lost after and is now trading slightly higher than the closing price.

Old Goat, slapped around in gold (or worse, the miners) is getting to be a regular habit. I thought we might see a breakout a couple of weeks ago and was wrong. So, with US deficits as far as the eye can see, strategy has become just picking up at the lows and riding out the turbulence. Can't say it's been fun though, and I envy the ones on the board who are more diversified.

MER- maybe i'm missing something, but i see shares getting bid up after hours?

Me thinks the XLF/UYG crowd will respond positively tomorrow if OIL & GM don't throw a greasy wrench into the mess.

MER- thain made good moves, and post-announcement his gamble seems to be paying off-> some shareholders are upset, but it's not as if they didn't expect to be upset at some point...

the fact that MER executives will be buying 750 mln shares doesn't hurt either...of course, after selling at 80, why wouldn't they buy them back at 20?

Not a frequent poster but the MER news is a death nell for them IMO. They had a poison pill on their last financing (we in the trade call it a Death Spiral) they are going to have to issue at least another 2.5B in stock and 2.5B in perferred dividend just to offset this new financing... MER mkt cap as reported by Google finance is 24B at todays close... The new financing will be very dilutive but the EXTRA 5B in death spiral payola should put a pretty big dent in any opportunity to make money here.. http://tinyurl.com/5t42yy

2nd, my father in law retired from Beijing University 2 years ago. He may know your mom's relatives. I spend a couple of weeks on campus each year with relatives. Have you visited BeDa?

ALOHA !!

Here we go again ...

WHO iS THE COUNTERPARTY? So we haven't even finished cleaning up the mess from one mortgage crisis and we're onto another. Would anyone here buy covered bonds issued by WaMu?

Look its the same criminals who defrauded us with CDOs and ABCP who now want to shake the "Etch-A-Sketch" screen clean and start over with a new con game ... These guys are never ending!!

WHO IS THE COUNTERPARTY? Its the same old fool who signs up every year with his 1040 form ... THE US TAXPAYER! The ink hasn't even dried on the FNM and FRE bailout ...

Only a fool would buy this ... BATTER UP!

READ ON:

Banks Throw Weight Behind Paulson Covered-Bond Plan (Update4)

By Rebecca Christie and Jody Shenn

July 28 (Bloomberg) -- Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. threw their support behind Treasury Secretary Henry Paulson's effort to spur covered bonds as a new source of mortgage financing.

``We look forward to being leading issuers as the U.S. covered bond market develops,'' the banks said in a joint statement in Washington. They applauded Paulson's release today of guidelines for issuers of covered bonds, which detail the types of loans that should go into the securities and how their payments ought to be made.

`Ready to Go'

Paulson said the four U.S. banks are ``ready to go'' and that sales by the largest banks can help encourage smaller mortgage lenders to proceed. ``Covered bonds have the potential to increase mortgage financing, improve underwriting standards and strengthen U.S. financial institutions,'' he said.

Covered bonds offer greater protection to investors because banks keep the home loans on their books, and must make up shortfalls if homeowners fail to pay.

The Treasury's guidelines exclude riskier types of mortgages that contributed to the crisis of the past year, including loans made without documenting the borrower's income and those involving higher debt compared with property value.

Bank of America, based in Charlotte, North Carolina, and Seattle-based Washington Mutual Inc. are the two U.S. issuers of covered bonds so far.

Take Time

``We will look to amend our program to make sure it's fully compliant'' with the guidelines, Paul Baalman, a structured finance executive at Bank of America, told reporters at the Treasury in Washington today. He declined to comment on when the bank may next sell the bonds, adding that it will take some time to adapt to the new regulations.

Shannon Bell, a Citigroup spokeswoman, and Melissa Murray, a Wells Fargo spokeswoman, declined to comment beyond the statement. Joseph Evangelisti, a JPMorgan spokesman, didn't return a call for comment.

Paulson said covered bonds will help provide financing to a U.S. mortgage market that now depends on Fannie Mae and Freddie Mac and other government-linked institutions for more than 70 percent of funds.

Fannie and Freddie slid to their lowest levels in more than 17 years this month on concern they lacked sufficient capital to offset losses and writedowns. Fannie Mae and Freddie Mac buy mortgages and package them into securities sold to other investors. They also borrow to invest in home-loan debt.

Higher Ratings

Covered bonds achieve higher ratings than regular notes by augmenting the issuer's pledge to pay with a group of assets such as mortgages that can be sold in a default. The extra security allows lenders to pay less interest.

While the securities are backed by loans and bank assets to get AAA ratings, most are valued, on average, as if they were three levels lower.

The Treasury's guidelines spell out a formal definition for covered bonds. The bonds should have maturities of at least one year and no more than 30 years. Home loans in covered-bond pools would have a maximum loan-to-value ratio of 80 percent.

Today's announcement is part of Paulson's strategy of pushing banks to proceed with sales without waiting for legislation to be enacted by Congress. In Europe, which has a covered-bond market of more than $3 trillion, many countries have laws spelling out the ground-rules for issuance.

Collateral at Fed

Federal Reserve Governor Kevin Warsh backed Paulson's plan to support covered bonds, highlighting that the central bank would accept them as collateral at the discount window for direct loans to commercial banks.

``Highly rated, high-quality covered bonds would generally fall within that broad range as eligible collateral,'' Warsh said in a statement.

The Federal Deposit Insurance Corp. already has issued new regulations on how covered bonds would be handled in the event of a bank failure. FDIC Chairman Sheila Bair said Paulson's best practices augment the FDIC's efforts to lay out clear guidance for the industry.

``Covered bonds can be a useful tool to help restore confidence and stability to the housing industry, as well as to the mortgage finance system,'' Bair said today.

The success of Paulson's strategy of pursuing issuance without legislation depends on how well the guidelines prove to have been written, said former FDIC general counsel John Douglas, now with the law firm Paul Hastings in Atlanta.

`Plenty of Comfort'

``Certainly a law is better than a regulation, but regulation seems to be plenty of comfort in a lot of areas,'' Douglas said. ``The real issue is if it's substantive enough for the market, not the form in which it comes.''

Treasury officials held discussions with almost 60 market participants, including investors such as Pacific Investment Management Co., Blackrock Inc. and TIAA-CREF, the retirement annuity provider.

In Britain, Prime Minister Gordon Brown's government this year put in place legislation on covered bonds, joining Germany, France and Spain among European countries setting rules on how the securities are issued.

``It needs a very strict and very clear legislation. Otherwise I don't think the investors will buy it,'' said Louis Hagen, executive director of the Berlin-based Association of German Pfandbrief Banks. Covered bonds are known as pfandbrief in Germany.

Europe's covered market was started by King Frederick the Great of Prussia in the 18th century to help rebuild after the Seven Years War, according to the Web site of the German association of pfandbrief banks. Rules for the securities differ by country, including the amount of capital required to back the bonds. END

Jticks- so you're not impressed with the fact that they're cutting exposure to the trash on their balance sheet? for any of these companies to recover, that's step one, right...any possibility it comes closer to an amputation than a death knell?

2nd ave -- if you look closely at the cut in exposure it really didn't happen... They had marked their 30B portfolio down to 11.4B and now they just marked it down another 4B+ .. so 30B is on the books for roughly 7B. They just announced they are selling that 7B and financing 75% of it. I am sure non recourse. So someone put up 2B to take 30B off their hands and if it works out for the Texas buyer then MER gets their 5B back and if it doesn't work out then they have to write off another 5b.... Thane sounds Brilliant to me!

ALOHA !!

Jticks ... You are spot on the money mate! Do you work for Sprott Management?

I posted this from master Eric Sprott himself a few weeks ago and he even mentions Merrill Lynch and Temasek ...

Known as "look back" provisions and "full ratchet" compensation aka ... DEATH SPIRAL!

BEWARE OF THE FINANCIAL SECTOR ... It looks like they are unleashing the every dog con game they can drum up to keep paper assets floating ...

READ ON:
The list is growing shorter. But there were at least some smart investors who noted the downward trend and successfully negotiated for downside protection. We know of at least two cases (though there are doubtless others); namely, Merrill Lynch’s $12.8 billion investment from Temasek (the Singapore sovereign wealth fund) and Washington Mutual’s $7 billion raise from TPG (a private equity firm). Quite unbeknownst to the general public at the time, downside protection was built into these equity raises to protect these investors.

They are called “look back” provisions or “full ratchet” compensation. We believe it is more accurate to call them “death spiral” securities. They work as follows. The investors in the
equity raise would have their investment “protected” by a provision which states that should the bank afterwards raise money at a lower price than what they paid, these investors would
be compensated retroactively by having their initial investment priced at this lower price,
thereby being issued new shares for free. It doesn’t take a mathematician to see how these
provisions can result in massive dilution should the bank subsequently raise even a paltry amount of capital. A new offering will trigger a lower price because of the dilution it would cause, which would trigger even more dilution because of the lower price, which would then trigger an even lower price because of the even higher dilution, etc. This is why we call such securities a death spiral. They hurt the price of any and all future equity offerings and open the door for potentially limitless dilution of existing shareholders if and when the bank goes to the markets for more capital at ever-lower prices.

However, unless the bank goes bankrupt, these investors can’t lose. And we already know to what lengths the Fed will go to prevent a banking bankruptcy. It’s heads I win, tails I win. They can even short the stock in the expectation that it will go down and still not lose. At the next financing, which is sure to come, they will be made whole... even making money on the short! It’s a perverse situation. Even if they don’t short (or aren’t allowed to short) they still can’t lose. It’s like being given a free put option written by existing shareholders. They get all the upside and existing shareholders (insult to injury) pay them on the downside! It’s the worst way to raise equity. We wouldn’t even call it equity. It comes at a tremendous cost to the already beaten up shareholders of these financial institutions. How did this happen?

Because these are “private” transactions, and thus no prospectus was required at the time of the offering. The banks disclosed only what they wanted to disclose. It is only after the fact, in the footnotes of subsequent 10-Q’s, that shareholders (if they dig deep enough) will
realize that they got nailed/ratcheted/screwed. How many other financings were done on this basis? Only time will tell.

In the meantime, it is little wonder that banking indices are in freefall and the demand for new bank equity is becoming increasingly muted. Investors are finally beginning to say: no
mas! When regulators have to get involved in order to push financings through (for instance, Bradford and Bingley in the UK), it is a signal for ordinary investors to steer clear of the
financial sector. It’s a misallocation of capital… good money chasing bad… that can ultimately only be resolved by a massive central bank bailout. You don’t want to be a shareholder when this happens… and in the interim be subjected to an unacceptable lack of transparency. Financial shares, if they weren’t already, are now toxic. They will become
only more so with each equity offering.END

allen- i visited the campus in 1984...the older uncle lived nearby, he was an engineering professor...can't recall which department the younger uncle was with, maybe physics...also visited my Mom's uncle at Beijing Hospital (#2 or #3, something like that), who allowed me to watch the surgical resection of a thyroid tumor in a patient anesthetized only by a Valium injection + acupuncture...(Mom's uncle was allowed to resume his medical career only after spending many years mopping floors and emptying trash during the Cultural Revolution-> Mao may have been a genius in the eyes of the peasants he led in battle, but he totally f***ed up two generations of the best and the brightest)...

ALOHA !!

Except with any coin toss with the likes of the US FED it is "heads I win, tales you lose"! HA!!

Jticks/kaimu- OK, thanks for the reverse spin...obviously, the media is spinning it every which way but yours-> MER even getting a pat on the back from Moody's (but then, Moody's has their own problems right now)...

today's blog is full of great names for retail stores:

"stormy whether"-> pawn shop

"tales you lose"-> used book store

LOL...

ALOHA !!

2nd_ave ... "Mom's uncle was allowed to resume his medical career only after spending many years mopping floors and emptying trash during the Cultural Revolution ..."

My best friend's wife had both her parents serve for over ten years in a Mao labor camp making mud bricks. Prior to Mao they were both doctors ... Yes, what genius Mao was? They are now retired but resumed their medical careers. Now they both live in Concord, CA near the BART station and they have apartments in both Beijing and Macau, where they spend six months in California and six months in China every year. My friend's wife is a regional sales director for Bristol Myers.

Options Update: Tesoro (TSO) & Valero Energy (VLO)
Posted on 7/28/2008 in Trading & Technology by Paul Foster

Tesoro (TSO)
TSO Volatility Elevated At 96 As Shares At Three-Year Low; Oil Below $124
TSO is recently down $.27 to $15.20.

TSO August option implied volatility is at 96, September is at 83. This is above its 6-month average of 63, suggesting larger price fluctuations.

(VLO)
VLO Volatility Elevated Into EPS
VLO is recently trading down $.60 to $32.48.
VLO plans to report Q2 EPS on July 29.

VLO call option volume of 39,710 contracts compares to put volume of 15,313 contracts.

VLO August option implied volatility of 78 is above its 26-week average of 46, suggesting larger price movement.

Kaimu-- thanks for the paste from Sprott...
no, I don't work for them. Just day trade the ES for a few accounts... this MER news is significant in that the dilution is beyond belief and the junk they are getting off the books they really aren't getting off the books b/c they are paying someone .75 cents on the dollar to take it from them at a fire sale price of 20% of face. Lovely!

kaimu- that's great to hear...Mom's uncle didn't do so well-> after retiring, needed sedatives to get to sleep at night...he visited the family in Ann Arbor shortly before he passed away...i could tell he wasn't happy...years of taking orders from people he despised ate him up...

ALOHA !!

So when MER goes to the US FED discount window this is why ... " ... these investors would
be compensated retroactively by having their initial investment priced at this lower price." Where does MER get the funds to compensate Temasek? It seems US TAXPAYERS will pay for the likes of MER even when they raise capital from Temasek, but it pushes the liability further in the future, but we are now in the future and MER needs more "private funding" ... NOT! What US TAXPAYERS and MER shareholders don't know won't hurt them!

ALOHA !!

2nd_ave ... Life is suffering ... What a tragic end to your Mother's Uncle life. My friend's wife's parents used to tell me about people in the camps committing suicide, so many did not even make it out at all! That would have been a nightmare ... Let's hope China does not fall backwards into another era of Mao!

Kaimu... this is all equity... they issue more stock. It will not effect the US taxpayers in that all the last 2 raises have been selling pieces of the enterprise/equity.... the bottom line is that Temasek will probably own close to 40% of MER on a really reduced basis.
Translation to the nickle shooter is GET OUT. Immediately... do not pass go.

MER - that price protection was apparently at $48/share according the WSJ, about double today's closing price.

vinod

I have no experience with options. Your post in regards to TSO......

"Tesoro (TSO)
TSO Volatility Elevated At 96 As Shares At Three-Year Low; Oil Below $124
TSO is recently down $.27 to $15.20.

TSO August option implied volatility is at 96, September is at 83. This is above its 6-month average of 63, suggesting larger price fluctuations."

What does that exactly tell you about the TSO?

Thank you
Kim

Here is the Sprott piece referenced by Kaimu: http://www.sprott.com/pdf/marketsataglance/MAAG.pdf

Sure enough, it's dated from June. Note to self: read Kaimu's posts twice evry day.

Here is further commentary on Death-Spiral Financing by Mish Shedlock: http://globaleconomicanalysis.blogspot.com/2008/07/death-spiral-financing-at-wamu-merrill.html

Fascinating peek into the dirty dealings of HB&B.

thanks for the links French Canuck! this should cause a bit of chaos in the am if I am reading it correctly..

Kim:

Volatility is annualized [ see http://en.wikipedia.org/wiki/Volatility_(finance) ].

If TSO's IV (implied volatility) is 0.96 annualized, its daily stock price is expected to fluctuate by 0.96 / sqrt(356) = +/-5.1% .

Teich

Teich

Thank you for the explanation.

the number is HUGE... here is the MER press release from the DEC,2007 equity raise:
------------------------------------------
NEW YORK, December 24, 2007 — Merrill Lynch (NYSE: MER) today announced it has enhanced its capital position by reaching agreements to raise up to $6.2 billion of newly issued common stock in a private placement with Temasek Holdings and Davis Selected Advisors. Merrill Lynch expects these transactions to close by mid-January 2008.
--------------------------------------------------

$6.2Billion of common stock at $48! GETS REPRICED at the CURRENT RAISE LEVEL of less than $20!

they go from 135 Million shares to over 325 Million shares if the deal goes through at $20... an extra 190 Million shares and that is just the Dec financing.. they did another round in Jan! What if MER is priced at $15!!!
YIKES!!!

[Bill Cara note: This article tonight from Reuters shows that Merrill's John Thain is a thug who through his continued lies and misrepresentations has cost shareholders, pensions (including Mom & Pop's), and employees billions of dollars.
http://tinyurl.com/6yb8b5
Thain ought to be the poster boy for white collar crime in America. When you consider the prison time done by "our" Martha for screwing shareholders out of less than $100,000, we all know what the comparable penalty should be for Thain. Even a Presidential pardon couldn't help him come back from that one.]

Several months ago Bill discussed bullish percentage index. Since I am no expert, it has taken me some time to incorporate it into my system, and I wish I had done it much sooner. I am amazed how accurately it caught the March rally and May sell off. Though recent price action makes me want to short a large amount again, the technical indicators I track including bullish percentage index are telling me to wait, until I get proper set ups. For now, I have my eye on the S&P 500 weekly chart, and it is showing me some bullish divergences. Over time I will definitely miss some moves while waiting for set ups, but set ups and stops should prevent me from taking giant losses in any single trade.

Stockcharts has several bullish percentage indices you can track, such as $BPSPX for the S&P 500.

"What if MER is priced at $15!"

does temasek not have every reason to short the stock down to a point just north of triggering an irreversible situation? maximum dilution + proceeds from short sales-> can you blame private and sovereign wealth funds for enjoying the MER/C/WM card game while it lasts...

Bob,

Re: "I am infuriated that The Bank Of Canada is following the U.S. Fed and accepting junk paper as collateral when making loans to Canadian financial institutions. ... I would like to contact them and suggest that many of our group may want to do the same."

I'm with you. My member of parliament is the place to start.

Bill wrote: "Btw, the last couple days trading in the Cdn Loonie futures markets look suspiciously like they're being run by the FOMC in the US."

Indeed, $CAD has recently fallen quickly against $USD. http://preview.tinyurl.com/5hk4sx

I'm sure the Cdn gov't is cheering this on, as exports are stagnant in eastern Canada.

Kaimu - wamu (WM) has mortgage based revenue stream and greater mortgage exposure ratio than BAC, WFC, STI, WB which all have better balance sheets and retail revenue stream that will float their survival.

IMO anything mortgage heavy = high failure risk.

Thain's comments:

"One of my first priorities at Merrill Lynch was to strengthen the firm's balance sheet, and today we have made great progress towards that by bolstering our capital position through these investments and our announced sale of Merrill Lynch Capital." (December 24, 2007 -- Thain in a statement when Merrill announced a $6.2 billion capital raising)

"...These transactions make certain that Merrill is well-capitalized." (January 15, 2008 -- Thain in a statement after selling $6.6 billion of preferred shares to a group that included Japanese and Kuwaiti investors)

"We're very confident that we have the capital base now that we need to go forward in 2008." (January 18, 2008 -- Thain as quoted by the New York Times).

"...Today I can say that we will not need additional funds. These problems are behind us. We will not return to the market." (March 8, 2008 -- Thain in an interview with France's Le Figaro newspaper)

"We have more capital than we need, so we can say to the market that we don't need more injections. We can confirm that we have tackled the problem." (March 16, 2008 -- Thain in an interview with Spain's El Pais newspaper)

"In 2007, we lost 8.6 billion dollars after tax, but we raised 12.8 billion dollars in new capital. We raised significantly more capital than we lost. And we did that on purpose so that we could say to the marketplace that we raised more than enough capital. We replaced all the capital we lost. We have plenty of capital going forward, and we don't need to come back into the equity market. The goal is to maintain our current ratings. No more capital raising; I'm sure we have enough capital." (April 4, 2008 -- Thain in an interview with Japan's Nihon Keizai Shimbun)

"We deliberately raised more capital than we lost last year ... we believe that will allow us to not have to go back to the equity market in the foreseeable future." (April 8, 2008 -- Thain to reporters in Tokyo, as reported by Reuters)

"John Thain has been very clear that we have sufficient capital and don't have a need to raise additional common equity for the foreseeable future. When we raised this capital in January, we had a lot of demand so we went beyond what we needed." (May 12, 2008 -- Merrill President Greg Fleming in an interview with the Times of London)

How can anyone possibly trust a single word this man has to say?

ALOHA !!

Jticks ... Its not all equity! MER has to give Temasek $2.5bil which Temasek promised to used that to buy $3.5bil worth of shares, so MER has to come up with $2.5bil cash. From where? The US FED discount window or perhaps their sale of assets ... which? Nobody really knows ...

What I am saying is that eventually MER will run out of marketable assets to sell off(what's left except their building?), then where will they get cash to make these bogus DEATH SPIRAL deals? Or even cash to keep their doors open? I will bet they will be in the back pockets of US TAXPAYERS when this is all over!

READ ON:
UPDATE 4-Merrill to sell $8.5 bln stock after big write-down

Link: http://tinyurl.com/6nuga5

That meant that in this offering, more than half the shares or share proceeds will go to prior investors, with $2.5 billion paid to compensate Temasek, and another $2.4 billion paid as additional dividends to investors in convertible securities.

Temasek agreed to invest the $2.5 billion in the new offering, as a large part of its purchase of $3.4 billion of common stock in this deal.(more)

ALOHA!!

Well, across the pond the UK is also following the US FED's lead, so it isn't just the Canadians any more!

READ ON:
By Edmund Conway
The Telegraph, London
Sunday, July 27, 2008

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/27/cnplan127.xml

The Treasury is preparing a radical rescue plan for the housing market which may involve pumping billions of pounds into the stricken mortgage markets.

Alistair Darling, the Chancellor, has asked his leading advisers to investigate a plan to provide government support for lenders until the financial crisis has abated. The proposal is being investigated ahead of the completion of Sir James Crosby's report into the funding struggles faced by UK banks.

Crosby, the former HBOS chief executive, will present his interim report to the Treasury on Tuesday, and is expected to warn that banks are facing a massive "funding gap" caused by the collapse of the securitisation markets which previously provided around 40 per cent of backing for home loans. Experts think the gap to be filled by the Treasury could amount to L40 billion to L50 billion a year.

Sir James will warn that the mortgage famine, which is pushing prices up significantly for both buyers and homeowners who are renewing their deals, could persist for years, with painful consequences for the housing market. Although he will not provide cast-iron recommendations until his final report in October, he is expected to warn the Government that some form of intervention is necessary to lessen the eventual economic pain.(more)

Bill,