Scotia Capital OCT 03/08

AGU-t;POT-t

We cut P/E multiples in line with the 2x TSX loss since early September. Our new target
prices are $80 for AGU $150 for POT. We raised AGU to 1-SO due to its excessive stock
slaughter as we believe its more stable U.S. agriculture retail business (50% of EBIT) is not
worth 23% less in one day.

Started 25 % positions in ECA,SU,COS.un. yesterday.

Also picked up full quota of IVN.to and S.to....for trading purposes

what is happening to gold here?

[Bill Cara note at 9:25am ET

Spot is down to 822. I can only think this is orced selling by the banks and hedge funds as the $USD strengthens -- now up to 81.14. This could be the Fed putting on the squeeze. They might be thinking that after the bail-out bill passes (whenever), there will be a drop in the $USD, which they want to head off at the pass.]

I was very impressed with Palin last night. To think she learned all that in three or four weeks! She obviously had first-rate coaching. You got to give credit to the republicans for knowing how to run a campaign.

From Rob Hannahs excellent quantitative analysis blog:

"Including Thursday there have been 18 days since 1960 where the S&P 500 has closed down 4% or more. Four of them have come in the last 3 weeks. The only other period to come close was the Crash of ’87 when it occurred on 10/16, 10/19, and 10/26. Of the previous 17 instances, the market finished higher the next day 14 times."

He goes on to say that trading days like today can be so volatile that many precautions must be added to the normal trading plan, because massive moves against one may occur at any time, orders may not get filled, etc.

bill- enjoyed reading the letter from your associate...i would have changed "unfertilized" to "fertilized," though (LOL)...

I brought this over from the end of Thursday's discourse. I'd like some opinions if you're interested.

Craig- Ever bought anything direct from the U.S. Mint? Lots of people have, so they know where some pm went. I have a copy of Presidential Executive Order 6102 from FDR dated 4/5/1933 in front of me. First line starts "Forbidding the Hoarding of Gold Coin, Gold Bullion...," etc. Why couldn't it happen again?

It's over! Even the Terminator... can't hold off credit striff! What's the world coming too! WHERE IS SARA CONNER when you need her!!

_____________________________

Schwarzenegger Asked Paulson for $7 Billion Loan, Treasury Says

By John Brinsley

Oct. 3 (Bloomberg) -- California Governor Arnold Schwarzenegger sent a letter to U.S. Treasury Secretary Henry Paulson asking for an emergency federal loan for his state of as much as $7 billion, a Treasury spokeswoman said.

Schwarzenegger e-mailed the letter last night, Treasury spokeswoman Jennifer Zuccarelli said. She declined to give further details.

California may need the loan within weeks as the state is having increasing difficulty funding day-to-day operations and accessing short-term loans, the Los Angeles Times reported earlier, citing a copy of the letter.

To contact the reporters on this story: John Brinsley in Washington at jbrinsley@bloomberg.net

Last Updated: October 3, 2008 08:57 EDT

[Bill Cara note:

Muni debt is the next crisis.]

You took the question right out of mouth, dr.cosa.

I don't get it. Could someone kindly give a DENSA Approved explanation of what's going on with the price of gold?

Thanks.

I don't believe that a prohibition of stocking up on gold will occur, simply because it won't be seen as the root cause of banking failures. Everybody's awareness of the issue is focussed on Credit Derivative Swaps as the root cause.

'morning Bill,

Your vision and leadership in this crisis has been more substantive than all the financial entertainment media and politicos combined. I do believe that much of what you demand will come to be - but it will be a slow and painful process of getting there. In the meantime, we must be prudent in assessing real value and must protect our core net worth from the market by paying down debt and building cash for the opportunities to come with the next bull. Thanks again for all that you do and stand for.

Re: Price Of Gold

If seasonality is finally kicking in after an unseasonable peak and unseasonable trough, then we should be seeing a little weakness in the price of gold for the beginning of October. This has occurred for the last four years in the gold price, only the fundamentals are so exceptionally in favour of bullion, that the price is remaining firm, especially in light of the renewal of sudden investor demand in the U.S. I hadn't looked at this weekly chart for quite some time, but I believe it would be a valid indicator. Watch for the options expiry date of Oct. 17.

http://www.flickr.com/photos/11747277@N07/2909823982/sizes/o/in/dateposted/

Out of NCC @ 4.17....basis of 2.95. Finally a green trade.

With......

-unwinding of the credit default swap market

-Muni debt is the next crisis [Bill Cara note:]

How can we have a bull market? Help out this
"DENSA Wantabe" see the light or bull in this case.

FranSix- I hope you are right. It would be the opposite of Bill's point 1 today- the sale of all gold the gov't holds to the private sector.

[Bill Cara note:

Maybe I missed something? I don't see anything FranSix wrote that is counter to my point that gold should be entirely privatized. If government and central banks do no transactions in gold, and there is no gold backing of fiat money, they should not be holding it. They only hold it to manipulate prices, which they call stabilization, but it is flat-out manipulation. By having the private sector own 100% of the gold (which they would buy in a heartbeat if they believed it was a free market), we the people would have the ultimate check and balance on government overspending. That's the problem in the eyes of politicos. They want to be able to spend our money to assist their corporate patrons. If we can cut their ability to get pay-offs from people who didn't vote them into office, many of them would quit politics. That problem could be rectified by paying more employment compensation and expense money to our elected representatives, which if they are doing the crucially important tasks we need done and not work in the interests of other people against us, would be worth every dollar. With the system the way it is today, people in influential positions, like Bill O'Reilly (Fox network commentator I really don't care for), will just increasingly scream while on air at politicos like Barney Frank (or is that Barney Fidelity or Barney State St or whomever he works for). I would like someone to post a youtube video link of that screaming episode from last evening. CNN's Lou Dobbs and Jack Cafferty are also on the screaming bandwagon these days, and rightly so. Americans are sick of what's been done to the working people. If the current crop of politicos won't bring real change -- not Obama's idea of change [or is that Barack Berkshire Hathaway] -- then they have to be routed out of their holes and caves.]

MOS - remove 1/2 OCT 40 put for small gain. this leaves me naked OCT 35 short puts again. I'll restore the cover if the rally fails (probably will) but if volatility continues to fall should be OK anyway

Selling central bank gold is an egregious error.

[Bill Cara note:

Why? We'd like to know your reasons for that statement. When I make a statement, I try to explain my thinking, and I invite discussion. A discourse here is meaningful, but shouted opinions that are unsupported fall on deaf ears.]

bought some aig at 4.44.

Bought back mos puts for even money. If I had bought the shares outright I'd be deep underwater. I'm holding tight otherwise. Has anybody here seen a crazier market?

what's up with AAPL? Anyone see any news?

MGA capitulation.

If anything, something that might restore confidence would be the bullion trade, with a greater number of participants than ever thought possible.

A gold price determined against the free exchange with currency and not penalties such as royalty taxes. That it be given the status of currency finally.

AAPL - this is all I can find -

"Nokia Takes On Apple With Touch and Tunes...

The world's largest handset maker looks to out-buzz the iPhone and iTunes with its own rival offerings...

According to Nokia 180 million S60 devices have been shipped as of the end of this June.

http://tinyurl.com/4towbl

The same news came on today on Reuter just before market opens.

Rumor of heart atttack steve jobs, just rumor

Re: POG Legal naked shorts in the commodities market plays into favor with the government while naked longs works against its interest in most circumstances.

Another possible reason for the divergence between the field and paper market may be found in the US Mint annual report: http://tinyurl.com/4sf442

According to the mint, demand for gold bullion products dropped off last year. In anticipation,, they may have reduced their production for this year which may be one of the reasons we are seeing shortages at dealers on the retail level.

Cara 100 Update:

ADBE - Coverage Initiated @ Wunderlich with a Buy - Price Target $50

JPMorgan on the Federal Reserve Balance Sheet Expansion

Here is the JPMorgan take on the Fed balance sheet:

"Assets on the Fed balance sheet increased $285 billion last week to $1.498 trillion, the biggest one-week increase ever. In fact, many features of this week’s report were superlative, as there were staggering increases in the usage of several facilities. Discount window borrowing increased $10.2 billion to $49.5 billion (all figures are outstanding as of yesterday); the Primary Dealer Credit Facility, including the facility for three London subsidiaries of broker-dealers, increased $40.9 billion to $146.6 billion; the ABCP facility rose $79.4 billion to $152.1 billion; the AIG loan increased $16.7 billion to $61.3 billion; and the “other” category, which is mostly swap lines with foreign central banks, increased $136.6 billion to $320.5 billion. Much of the increase in the balance sheet was financed by a $184.7 billion increase in the Treasury’s supplementary financing account, though some of the extra reserves created by the expansion of the Fed’s balance sheet apparently ended up in excess reserves of depository institutions. Contrary to some reports, the revaluation of assets in Maiden Lane LLC was not presented in this week’s report; the Fed intends to report that on October 23."

http://www.federalreserve.gov/releases/h41/Current/

Hulgar:
Nope. I buy retail for that reason.

I'm not hoarding, I'm collecting.

If you want any more info you'll have to talk to my lawyer and you'll have to be terminated. LOL!

No, seriously, the reason they seized gold previously was our money was based on gold and silver. Richard Nixon changed that. There isn't ralyl a good reason to seize gold unless they plan on going back to pegged currency.

This market is completely insane. I couldn't imagine trying to play intra-day with this craziness. I tried to get some GDX on this morning's dip but it never made it to my 28.20 limit. Maybe this afternoon if we get an initial surge in the dollar after the house passes the pig masquerading as a panacea, it will hit my bid then.

Rob.

Thank you c3 & chendr. I figured it was a rumor, but couldn't find anything.

Besides, they've already seized all of the taxpayer's money and assets they could possibly lay their hands on.

MOS - recover OCT 35 short puts with NOV 30 puts

St Louis Fed chart of monetary base: http://research.stlouisfed.org/fred2/fredgraph?chart_type=line&s[1][id]=BASE&s[1][range]=5yrs
According to Dennis Gartman it should grow by 2-3 Billion weekly not the 75 Billion it has shot.
INFLATION anyone????

So far F6, don't underestimate.

I can't help it, I'm an Eagle Scout....I'm prepared.

Its open-ended, right?

re: AAPL - how do people get away with these rumors? Shouldn't they be prosecuted? Where is the SEC?

Commercial Paper declines as per the Federal Reserve over the last three weeks:

"Domestic financial paper is down by $93 billion ($590 billion to $497 billion); foreign financial paper fell $40 billion ($225 billion to $185 billion, down 20%!); asset-backed paper is off $55 billion ($780 billion to $725 billion)."

http://www.federalreserve.gov/releases/cp/outstandings.htm

Yep...looks like everything rocketed and will now mill around until the vote, or until the vote is called off...

Good morning from Cape Town

I've put together a table outlining three possible outcomes of the US bail-out plan and its effect on the global economy, financial markets and currencies.

Here is the link: http://tinyurl.com/3qp26r

This is not easy! I'd like to hear your comments.

Thank-you, Prieur!

Finally, an article discussing the rate cut scenario matter of factly:
Reuters http://tinyurl.com/4v3h2x

[Bill Cara note:

Wow. Exclamation mark included after promoting a blogger who linked to a Reuters article. Sometimes I don't get it. I'm trying to encourage discourse here, not promotion of other bloggers.]

"But I place my confidence in the monetary authorities of the G-8 (plus China) to stabilize this mess caused by the major banks." And where have they been all along while this was unfolding?

RIMM RSI 7 day 28.35.

Long, will add if it breaks above 30.

From what I been reading it looks like they will have the votes today to pass it. Even the "black reps" are on board now.

"Black lawmakers said personal calls from Democratic presidential nominee Barack Obama helped switch them from "no" to "yes,".... "

http://tinyurl.com/4rt9jy

Pretty much, I haven't found many exceptions.
All they have to do is say "it's for the good of the country" and that's about all she wrote, you know?
Next thing you know they're listening to everyone's phone calls, adjusting the value of everyone's money and all kinds of mean, nasty, ugly things.

AAPL & Steve Job -

Here is a detailed report on the rumor -

http://tinyurl.com/4xx26d

LONG AIG

The Volume of the CDS market decreased from 62.2 trillion to 54.6 trillion in Q2 according to the International Swaps and Derivatives Association, Inc. (see chart at http://tinyurl.com/4q2q6p)

So it's not that bad. ;-)

F6-Craig- you've put my mind at ease. I can go back to hoarding. Got to go and get my shovel and start digging up my backyard.

The SEC only prosecutes people like Martha Stewart remember?

Rob.

shark - i'm long as well. any truth to the rumor that if they pay back their loan within the time limits set by the treasury then they don't get diluted? that could be a major call option on the company, which i believe is worth $16 with dilution and the ability of the company to unload it's crappy assets on the treasury...

MS turned around.

Nice to see the miners up even with the price of Gold down. Goes to show they may be able to control the POG but they have a harder time controlling the mining stocks.

Long GG and GDX just like Goldman Sachs.

Rob.

One thing about central bank gold is that you can always stamp it into dime size coins and put it all into circulation, it would all flow back into the treasury eventually.

The obstacle to doing so is the wide disparity of interest rates in the world. It was the disparity of interest rates between France and the U.S. that caused the seizure of gold. Indeed, there is a wide disparity of rates between the U.S. and Europe.

Since the gold in America already 'seized' and sitting in federal coffers, then there's no need to act against gold in circulation.

But it would help immensely to allow freer circulation of gold in the economy, because it would do its work, setting up discipline.

Rather than circulate pm coin it would be better for the US Treasury to just issue new coin/certificates backed by metals held in the treasury.

These Wachovia stories are changing by the minute out there.

First it was Wells Fargo trumps Citi's offer and is buying WB.

Then the FDIC assured everyonit would be a seamless transition backing Wells Fargo.

Now Citi complains and the FDIC says it backs Citi's original offer to WB.

Am I dreaming or is this some sick soap opera? Are they actually fighting over an insolvent bank, that most sane people have already withdrawn from anyway?

Maybe whoever gets WB is second in line at the TARP party right behind JPM.

Rob.

Latest News Headlines for Silver Wheaton Corp
Silver Wheaton Tgt Cut to C$10 From C$12 By BMO >SLW 57 minutes ago - T

I think the markets are doing a little bit of cheering at the Wells Fargo bid for Wachovia today.

WFC is viewed as a strong entity and I think the previous bid by Citigroup for Wachovia was being met with some serious skepticism.

Whereas CitiGroup's (goverment assisted) bid was viewed as a defensive move to keep up with JPM and BAC, WFC's bid can be viewed as an offensive move to gain market share.

In a broader sense I think it is a bit of reassurance to the broader markets that some of the "cosmic debris" floating around in the markets IS being undervalued. WFC is saying "We want the funk, gotta have that funk."

I'm also optimistic to see the POS jumping back up today as it is a good sign that some liquidity is still in the market. I think the fact that the "rescue" legislation has been slow going is accelerating the bottoming process and giving a chance for the oven to do a bit of self cleaning.

If PMs can bottom here, a lot of the PM miners could but in nice HnS chart patterns as well which might give some confidence to money that is waiting on the sidelines.

Ramble on

Okay, so what do I see this week but lower lows and lower highs... Sigh, this is only what, the third round of rescue packages (which predictably keep getting larger) and the trend continues... with more rescues on the horizon. European banks failing...

Crude bouncing, gold bouncing, Miners trading with the DOW?

still trying to find the details on if AIG can avoid the serious dilution by paying back their loan early...

I am outraged that Sarah Palin is being considered. She did not answer any of the questions and when cornered, she simply changed the subject.

Palin does not have the level of education that is needed to help lead our country out of the financial crisis of the century. She can't discuss complex issues. She is uneducated, inexperienced, has zero experience dealing with other cultures. She can't even speak another language. Has she studied religion or economics ever? Just what we need! More Imcompetence!

Palin would make a Good Puppet since she learns canned responses fast. The question is, who is telling her what to say.

Did anyone hear her say that she thinks the VP authority should be increased?

SCARY STUFF

I will probably be going to all cash today. I do not feel safe with the decisions being made in Washington.

This just in on Khan Resources--apparently good news regarding the political situation in Mongolia.

http://tinyurl.com/3f5zuz

With the mkt up 175+ I have a feeling that the passing of the bailout is being priced in and that we will have a sell the news response instead of a spike up.

I also believe that there is a pretty good chance of a reduction in the Fed rate over the weekend or very early next week. I can even imagine a coordinated worldwide move by central banks. A final stroke to try and get credit moving again.

When is the house vote today. I need to pretend to work today, but want to babysit my stocks through the vote.

bought some RIMM. Long UTX, Triple RSI buy.

Guys,

I did quite well with that AIG trade which I'm out of for a while, will buy during the noon dip.

[Bill Cara note:

My banker sent me this note:

If you had purchased $1,000 of Delta Air Lines stock one year ago, you would have $49 left. With Fannie Mae, you would have $2.50 left of the original $1,000. With AIG, you would have less than $15 left. But, if you had purchased $1,000 worth of beer one year ago, drunk all of the beer, then turned in the cans for the aluminum recycling REFUND, you would have $214 cash. Based on the above, the best current investment advice is to drink heavily and recycle.

I say that would have been the best investment advice a year ago, which you recall I was doing and saying from my perch in the marina of the Nassau Harbour Club. Today, however, I am saying it is time to buy. Tomorrow will be time to bring about the political revolution needed to bring about legislation that meets the needs of the voters and taxpayers.]

vote is scheduled for around 12:30pm est. I concur with Joseph's analysis.

[Bill Cara note:

I did say this vote would occur AFTER European markets were closed. That's a protection in case HB&B's manipulative practices didn't work out in Washington.]

Vanillabean - VP Sarah

She knows enough to appear smart and confident on TV, even when she knows nothing! How dare we ask more of our leaders .....

When I hear a politico speak, I don't even focus on my own reaction. I just try to imagine whether it will fool joe sixpack. HE is the one they are talking to.

Bill's 5 miners are up 7% today: http://nexalogic.com/5miners.html

Bloomberg reports that 12 people in congress have switched their votes. Meet 12 new company Board directors or govnt. appointees (assuming you will boot them out of office :-) )

vanilla - i agree completely with you...

Jock,

I believe that due to apathy by the people, we have elected incompetents into office.

I am being verbal now because it is all that I can do besides not voting for McCain.

I am also offended when sexist remarks are made about her body parts -

I did not vote for Bush. I listened for the last 4 years hear everyone complain about his bad choices. The complainers elected him.

My 2 cents.

re:MGA

I think they're trying to stoke it too soon.

dipped a couple toes back in the AIG water against my better judgement

Palin - Look at it this way: If she weren't under control of special interests, that might make her by far the best choice. But we know the truth, don't we?

A basic stock 101 question. What the heck does a price target mean when an analysis sets it? does it mean in one year from the time they say it? By the end of the year or just-maybe-hopefully someday in the future?

QQQQ broke down through the 37.38 fib yesterday for the second time on a daily basis, broke back up again today.

Now it looks to have about topped out intraday, and should go back down again for another test. (This could go on for weeks.)

A lot of other stuff seems to be doing the same.

Weakest are XLY and IYR(!), two of my biggest put positions. IYR finally seem to be getting some religion.

XLB I missed buying puts on (should have, as a hedge if nothing else). Iy doesd not look so strong - gapped down through a major fib 31.50 yesterday. made a weak retest from below now.

SLW indecisive.

Ha! With the big fight over Wachovia; that just makes me want to jump head first back into financials since they obviously think they're so worthy of ownership!!! NOT!

Bill

I didn't know you were a fan of Catherine Fitts,
I had posted on this board about the relevence of her commentary.

http://www.billcara.com/archives/2008/04/bill_caras_community_chat_thur.html

For readers interested in her story

http://www.dunwalke.com

Very revealing insiders look from a very connected hot money high finance player, who realized the scope of carnage being wrought by the power elite.

Sorry if this is off topic. At the time I recommmended the site this would have been considered tin.

I actually am impressed by Palin last night. I guess simply her disastrous interview has lower my expectation.

Her are some of my thoughts.
1. Climate change. Palin stated Climate change. But Binden actually confirms the global warming and continues to promote Al Gore's stuff. I happen to think the earth becomes cooler.

2. Binden is a very skillful politician. He is so good at finger pointing. which makes me more leaning on Palin. I would like some unbalance activities.

3. I think Palin has improved a lot. I was so worried that she was beaten up by Binden. The outcome is better than I expect.

4. I like Palin to promote some personal responsibility. But Binden takes aim at corporation / banks. That is a cheap shot.

Financials - actually, I think this may be the sector that just might have bottomed and is good for a move up that will last for more than a day because every move being made by G8 countries is intended to keep them going.

Someone here, I think, commented yesterday that he/she believed there are a handful of moneycenters that feds worldwide have decided form a critical mass that must continue to exist in order to restart banking in the event of a worldwide collapse.

XLF just happens to hold all of the likely suspects, at least as far as US banks are concerned. I'm planning on selling OCT 17 or 18 puts either at close of day today or Monday. If I am assigned, I'm pretty sure that will be close to a bottom. If not, the premiums are sweet.

If this is even a little true then going long financials is a must.

Palin:
I give her an A for presentation: public speaking and looking into the camera. She spoke to the people, unfortunately it was either rote, or gibberish.
I give her a D- for content and for not answering the questions. Declaring what or what you won't answer and girlish games while playing "Truth or Dare" with your girlfriends might be fine, but when you are running for the real thing you have to take the questions seriously and answer them.

All one has to do is picture her debating Putin and the answer becomes painfully clear.

I hope the House members (ie, the lawmakers) who switch their votes today ponder the law, which says that any specific inducement to change a vote is illegal -- both for the payer and the payee. More corruption in politics we don't need.
But, Bill, they're doing it for us, the US taxpayers. (Uh-huh)

[Bill Cara note:
Muni debt is the next crisis.]
Bill,
What will this mean for my 90 year-old neighbor who is heavily into munis? He's living on the dividends and even though they have been dropping keeps saying, "They still pay me the same dividend."
I'm pretty sure they must already have fallen quite a bit.

Palin was better because there were no follow-up questions. She could just repeat her talking points and evade questions for which she was not prepared. For instance, she talked about regulating Wall St, but last week Katie Couric followed up asking when John McCain has ever been for regulation and Palin didn't have an answer.

If you let politicians spew their talking points, they sound decent. Wake me when she is allowed to give a press conference and can handle the questions. Maybe she can? But we won't find out until we (potentially) elect her. Isn't that insane?

On another note, Jesse's Crossroads Cafe has an interesting article: settlement of CDS for Lehman, Fannie, Freddie and WaMu are scheduled for this month. This may be the impetus for the bailout as perhaps some actors won't be able to pay up:

http://tinyurl.com/4qoh6c

I like Palin also but in the only package were being sold it's difficult to discern reality from theatrics at this juncture. One thing we do know is that McCain is the principle and he is "extremely" sympatheic to HB&B doesn't Keating 5 ring any bells. We have a corperate fascist monetary system not capitalism. The Socialism that the Dem's offer is probably the only mean reverting agent left to keep the middle class in the game. I'm a registered Republican, but it is beginning to look like we're needing a little wealth re-re-distribution here to keep the actual producers solvent while the paper pushers are forced to get their houses in order.

Bill said (referring to O'Reilly/Frank "discussion" last night) "I would like someone to post a Youtube video link of that screaming episode from last evening". Well, this link is from Fox News, not Youtube, so you can get it directly from the source. Not for the faint of heart, it will increase your blood pressure by at least 50 mm Hg; I am not responsible for any adverse health effects from watching this clip. I had difficulty watching it.

http://tinyurl.com/4lhvqm

It is considered the "top video" and is also featured on the upper right hand side of the Fox News home page: http://www.foxnews.com/

Imagine Palin accross from Putin. The spider and the butterfly.

Has anyone noticed UUP has begun falling?

Today the house will vote.... YES OR NO VOTE????

Any perdictions on the end of day price of the TSX and the DOW

Let the game begin

SV

Bill, I saw the O'Reilly rant last night. That was even over the top for him. The funniest part was at the end when he saiid, "Nothing personal against Frank."
If anyone called me a liar, even at a less offensive volume, I would likely consider it a bit personal :-)
Some of the stuff O'Reilly, Dobbs, Cafferty say needs saying, since the other "news" programs ignore the realities, but it is pretty clear none of it has changed anything so far.
The FNM pay modifications for the management and directors (based $% on loans made) pointed out by Dick Morris, is the topic he should have questioned Frank about. This is just what I saw among the local CEOs and their director beginning in the early 1990s.
This is the crux of the whole mortgage fraud from the agent you dealt with to the very top.

I can't understand the fixation of the left with Palin? You would think they would be pushing their surrogate son of the messiah prince? You hear nothing about Obama any more.

Come on folks lets talk investing and trades. The political world will take care of itself.

Palin: Being coached for a week straight to dodge questions and give sound bites and hammer away on 3 points (cut taxes, drill at home, we must win in Iraq or the world will come to an end) just doesn't cut it for me.

Biden wasn't perfect, but I respect him for not having totally lost it on her with certain comments. How many times did this silly woman repeat "the Democrats want to raise your taxes and that means losing jobs?"

Sarah Palin: I'd give you $1000 if you could make a convincing detailed argument for that statement.

She knows less than nothing, and all her soccer mom banter is plainly useless. Americans may want to be able to relate to their leaders, but they should never want a plain Jane (or Joe) VP. I'd want someone commanding, masterful, and far better educated, versed, and experienced than 95% of the voting populace.

Full disclosure: I'm not American and don't live in America, but I have family that do.

I know inverse ETFs can sometime be a bit out of synch, but right now HGU.TO is flat at about $11.50, while HGD.TO is down 12% to about $11.80. Anyone else notice this?

Since everyone seems so upset with the front-running candidates, I was wondering if anyone regretted not nominating Ron Paul?

I regret not registering Republican(I'm Independent) and doing so here in NY.

Rob.

RDR,

Thanks for the Billo the Clown/Barney Frank link.

I can't stomach O'Reilly but love seeing Congressmen being drilled new ones. Once in very blue moon, even Billo gets it right.

Regards

how long until they actually tally up the votes and make an annoucement?

I'm still holding tight to everything. If the House does pass it don't panic if the dollar takes off and commodities tank.

This perception could last a couple of days after the bill passes but will soon fade when the reality of the bill and how much our debt will grow is fully absorbed by traders. Then the natural progression of the dollar will resume.

Rob.

Sounding like the bill will pass in the House.

Looks like rich people are starting to hurt too.

http://tinyurl.com/3oz3ho

"Below are selected hedge-fund returns for September and the year-to-date.

Fund Sept. (%) YTD (%)

Maverick -19.5 -21.2
TCI -15 -26
Greenlight Capital -12.8 -16.4
Lone Cyprus -14.7 -26.5
Third Point -11 -18.4
Atticus European -15.8 -43.5
Atticus Global - 2.8 -27.2"

Rob.

I have BA up 2.11 right now. Did anyone see news the strike has ended?

[Bill Cara note:
Muni debt is the next crisis.]

This wouldn't be good for the bond insurers, would it? ABK is up 30% strangely. But, surely they get bailed too?. What's your take?

DaveM you are correct re,. the HGs. I have flagged this to Horizons twice already in thew past few months, but I get no response. What is worse is that both started training at $20 and now both are around $11.

If I have lots of call option on OEX or stock
I want bailout to be passed
If I have lots of option on OEX put or stock put. I want bailout to be failed
This how the whole things comes down to

BA Triple RSI buy. Long at higher levels. Do ur own homework and don't forget stops of some sort.

ABK must be in the AIG club of must save.

Bill has opined that financials will immediately benefit from the passing of the bailout, and also that the rally is likely to be be short-lived (to paraphrase).

[Bill Cara note:

I did say that the rally would continue past the initial burst in the Financials and Consumer Discretionary. Money would later flow out of those two sectors and pile into most of the other sectors, some to a greater degree than the rest, helping power the new Bull market, which is in the process of starting. Moreover, I did say that the Bail-out bill will be sufficient to change attitudes among traders, but is not a panacea. This bill is an attempt by the Fed and HB&B to stay in control of the capital market system as well as the credit system, and that result (status quo with the same criminals in charge) would be bad for traders and taxpayers alike. Finally, I'd lie to see a close examination of those lawmakers who changed their vote today to see if the law was broken by way of people outside the House providing them direct financial incentives to induce them to change a law.]

bsi87 - I have 60 Jan calls, sure hope things improve.

Long sovereign (sov) as well as AIG

why do i feel as if gold is on edge at the moment ready to explode upwards or crash hard on the news?

You've heard of Freddie Mac and Fannie Mae. How about Farmer Mac! I kid you not.

AGM Not the same volume of a FRE or Fannie. Rural loans, farmers.

Fundamentally good with very low delinquencies. However, had some preferred FRE or Fannie for @ 44 mil loss and little more than 1% with LEH exposure; thus will report a loss this qtr. doydd.

But it is a financial and very risky. Not recommended especially after move

Nevertheless, scaled in within the last week to play bailout.

I wonder about where gold shares fit into the bailout pass/fail.

Isn't this whole bailout dependent on people taking out more debt? If the banks can lend at market rates but no one wants it aren't they just as screwed?

I know I'm not taking any more debt whether it passes or not. I'm actually increasing my savings.

Rob.

"If I have lots of call option on OEX or stock
I want bailout to be passed
If I have lots of option on OEX put or stock put. I want bailout to be failed
This how the whole things comes down to"

Tell me Goldman position, and you will tell me the winning position.

If 14 members do switch to pass the bill I can only hope at least one is from NY. Kind of slim odds though as only 3 or 4 opposed it originally here.

Oh, did I mention NY loves handouts.

Rob.

BA - now $55.85 +$2.27 pe9.6, bv11.56, roe 58.03, div2.83%, rev/shr 88.83. ern/shr 5.58
DYODD

Own jan calls

Chickenpookie-Obama knows where to cash his FNMA checks...it goes both ways, my friend. Take off the blinders.
Question for all-do you really think Biden wasn't coached as Palin was? remove the blinders, please. You are outraged because she performed well, as Bill stated last evening.
Zeto-I agree with you...why the fixation by the left on Palin?

Mr Cara

Assume this bill passes..the market then rallies.... how long do you see this rally lasting? Would you advise selling into it and then buy back on any major pull back?

"All one has to do is picture her debating Putin and the answer becomes painfully clear."

I for one have absolutely no idea how this is relevant. Debate what exactly? Present our argument that giving Iran nookular info is bad?
First it was what newspapers Palin did or did not read, now it's the specter of the evil ex-KGB villain taking advantage of her. Next I'm sure we'll be hearing that her shoes didn't match her outfit and that's a clear sign she's not ready for primetime.
Criticize Palin all you want but at least stick with her fully announced views and policy decisions.

In other topics, IMO, the bailout bill is a done deal and it will be only the first bite of the apple. Once they get the hooks in it'll be very much like Iraq spending - subsequent requests for more spending or the "troops" will die. (In this case "troops" is a metaphor for whatever horrible thing we can't let happen. Plug in your own scenario to fit.)

gold falling.

sold a bit just to have cash on hand in case we plunge on news of this bailout.

im not liking the price action at this point, looks like its just waiting to fall off a mini cliff here. ugh.

Finally debate time has expired. Let's get this over with.

Qt From Thinkorswim post this morning "Commodities: Commodity prices (oil, industrial metals and platinum) could recover somewhat if the bail-out plan is approved, but would probably start falling again in the absence of monetary stimulus. On the other hand, commodity prices could strengthen if the accepted bail-out is followed by lower interest rates.

"

Shoulda sold gold back in the +$900 range and re-loaded upon passing of the bill, but I still think we'll be surprised by the gain in price by year end. If it weren't for intervention, for sure we'll see an average price over $900 by then...

Interesting that on Monday's vote the market tanked into the vote then crashed.

For today's vote the market has been strong and rising into the vote.

Smells like inside information to me.

Rob.

[Bill Cara note:

It is insider information. I think the FBI should seize their cell phone records. How many calls to brokers do you think were made? I'd say plenty.]

GDX and GG charts are hard to tell apart

Not inside info...

You could tell from the speeches... This vote will pass.

I expect the bill to pass...of course i expected the mkt to be up 300 after last vote and was only off by 1,077....

Not looking good for the "nays" down 2-1

Stands at 122 yay, 58 nay, 254 to go

I don't understand why people outside the two presential campaigns focus so much on the qualificaiton of Palin lately. Yes she became instant celebrity and is rejuvenating McCain's compaign, but is her qualification really matter that much?

Which one of the Vice Presidents in the last 50 years really made an impact on policies? Are we so sure McCain will die on the job? Shouldn't we worry more about the qualification of the people that is on top of the ticket?

Let's assume the worst that McCain/Palin were elected, and McCain dies on the 1st day .. Palin can always get a new, experienced Vice President and become a replica of Obama/Biden ticket, now can't she?

JohnE

Thanks.... there is now talk on bubble financial tv that the Feds are planning a 50 basis pt rate cute after the bill is passed. That will send things soaring.

babybear:

look up dick cheney to find out how he has become one of the most elusive and powerful VP's in this century.

They are now voting on amendments not the final bill

babybear - Palin is only one cerebral hemorage/ heart attack, fall away from the presidency.

when will final bill actually be voted upon then?
after market close no?

Qt - I expect a rate cut in next two weeks.

What would be the point of voting for the amendments if you're just going to shoot down the bill?

[Bill Cara note:

I expected the bill would pass. Now watch all those other cowards vote against it to try to save their election campaigns!]

JIM

This is the bill

202 yay 118 nay

So much for the will of the people...

you are correct

CNBC corrects : This is the vote.

PASSED!

Anyone looking at pharmaceuticals--supposedly, if this bill passes, then mental health will be placed on parity with physical health w/ regards to government treatment / funding.

Lots of Prosac etc. to be government funded with your tax dollars . . .

Wow, bill passes, market falls... DOW down 50 points, NASDAQ down 12 in a few seconds, no maybe going up a bit?

Looks like a large number changed their votes.....pathetic.

Hehehe, sittin' there with the trigger finger...had a funny feeling....everything I'm watching backtracked.

Blowout Preventer - thanks for the info/reminder.

House Passes Rescue Bill 263-177.

Fazeli: market has been fluctuating between 2%-3% today, well before vote was passed. Someone knew something going into today's trading day.

Oil slightly up about half a %, but Gold down about the same.

Bill said Financials probably going up, then funds cycling out of financials into broader market, let us hope so.

ALOHA !!

ON CONFISCATION
Lots of talk here about fear of the US government confiscating your assets ... gold, but unless I am crazy here, I have been witnessing the US government confiscating your assets all my life! What is a 1040? Is it voluntary? What is payroll tax? Estate tax? Whats imminent domain? What's an executive order? What's an FRN? So while you guys are worried about a few bars of gold the US government is already vacuuming up more than half(54%)of your earning every year! SPEAK TO THAT CONFISCATION! Or is that NOT confiscation?

Besides why should the US government bother taking Joe Blow's gold when they can confiscate those greedy speculators gold and silver in one fell swoop over at GLD and SLV! Look who is guarding all that gold and silver ... hummmmm ... its none other than JP MORGAN! I'll bet JP will put up a real BIG fight protecting all that gold for you! HA!! Now GLD has the 8th largest deposit of gold in the World! GAME OVER? Not so fast buddy ... its just a REPLAY ... free ball! HA!!

I would be more fearful of a FDR move to price fix gold. Essentially that's what they are doing via the futures markets anyway ... price fixing! Isn't there an ANTI-TRUST law against that in the "real world"? The World where government is not immune and is actually accountable to its citizens? What ever happened to that World? That World died in 1913 ...

Carry on bravely!!

No honest money ... no honest government!

Sell the news! Wow. This market just wants to stab everyone in the back.

Jeff Cooper has an excellent trading article here:
http://tinyurl.com/4cbkzo

uh-oh

Looks like nobody wants to go long into the weekend

DE. Now trading below the 10 AM price.

They got Ma and Pa's egg money.

see how it closes.

No position.

Bill:

You should collect all of Kaimu's posts, categorizes them and publish them under the title:

KAIMU SPEAKS! HA!

Haven't figured out the sub-title...

QQQQ broke back down again below the major 50% fib @ 37.38.

Looks like a lot of folks were hoping for a better rally to gradually sell into.
When it didn't materialize, they dumped.

There looks to be a fight around this level.

MOS - covered the OCT 35 put cover pre-vote for decent gain and rolled it to a 1/2 cover to NOV 35 on the post-vote downturn.

All this churning is basically a daytrade that I screwed up yesterday but, at this point, I have realized enough gains and collected enough premium to almost turn it into a can't-lose. As far as this position is concerned I'd like to see it sell off so I can get out altogether

moab - Thanks for that 1:30pm post. I found it to be excellent.

What about the bill saving the market? Last time I checked Joe Blow was still down 30-40%

Market isn't looking too saved currently.

You mean we just handed over the whole financial system to the government and we still get to lose 10-20% more.

Bankers sure don't know how to take good news do they?

Rob.

I was thinking Kaimu should write a book. Could be a huge bestseller soon.

Of note, word is China will be relaxing interest rates and/or bank reserve requirements on Monday (latest sometime next week) after the long holiday the past week. This may boost Hong Kong H and A shares. Doubt it will affect USA/intl shares much as China citizens are restricted from investing overseas.

Regarding bailout: Heard a talking head on Bloomberg say it make take weeks to months for the "rescue package" to work it's way into the financial system.

If this is not so much a "bailout", but more a boost-of-confidence package, then why aren't the markets reflecting this much quicker? It should not take weeks-months for confidence-boosting package to start showing.

In Hong Kong, BEA (Bank of East Asia) had a bank run when someone started circulating SMS texts that said the bank was suffering huge Lehman's related losses, and to get money out. As soon as big figureheads started saying it was stable, and Li Ka Shing (local billionaire) bought into the bank, the bank run basically ended within a day.

Presuming confidence can be switched that quickly, and this bill has not had the desired effect of boosting confidence, doesn't that mean it has basically failed and we're heading down from here?

Note, I'm long now, so I hope for an upturn, but it's not showing... yet.

Implied Volatility declined as expected but then went right back - not a good sign going forward. Markets' big hope now is a coordinated european-american fed lowering

IYR made a new low for the week, nothing else has yet as far as i can see.

Added 2 ITM Nov. URE puts.
this is speclative short term, not a longterm position.
URE is the ultralong realestate

added back a few other puts that I sold yesterday, not much change in overall positioning.

It's Friday and after the last buildup and letdown perhaps there is some lag time expected here.

stopped out of the RIMM position opened this AM at 63. Dang.

What Paulson says after the market drops 500 points today.

Uh, uh, uh, how 'bout them Cowboys??

Rob.

The greatest swindle in US history (to date) has just been passed.

Hope the various friendly nations around the Caribbean will welcome what will become a flood of America's best, brightest, and most productive ex-pats fleeing the onerous taxation of the Welfare State.

buy limit SSRI at 14.26

OK - no use hanging around any longer. Have a good weekend all.

oops! that went fast - I was expecting more of a fight.

"this sucker is going down" might be the motto for today afterall, unless they can wangle a magical late afternoon rally.

what might the rumour be?

"Buffett buys the FED?"

QQQQ, XLY have made new lows for the week, were then bought back up just as fast, lookl to be selling off again.

Kaimu / Bill:

I would expect the government to seize Gold assets as possible action...

But your statement earlier rocked me..

Set price limits to Gold...

Could that happen and if so what would the effect be...

Its mind boggling becuase its so extreme and to me unexpected of an action... it might just happen...

Nah I cant see it happening... but just the thought of that ruins my day strangely, not sure why even.

rayg - Please name for me one mainstream politician involved (besides perhaps Ron Paul) who isn't under the thumb of special interests.

This is what concerns me above anything, and if you weren't drinking the wrong kool-aid yourself, you would be acknowledging my point rather then arguing about superficial qualities. Some of the brightest high IQ people I know couldn't possibly debate a city slicker politician.

If you cannot, then don't waste your time telling me to "remove my blinders".

Casey:

They would have to be able to coordinate that world-wide.

Paulson doesn't have to say anything: he is now King.

Must read from Roubini: financial system in cardiac arrest.

http://tinyurl.com/43lehu

Google stinks! All I get from today is constant drivel about who's taking over Wachovia....

roubini's article is great.
thx

chickenpookie-agreed. but your post only implicated Palin, thus the reason for my post. Its just that everyone is piling on Palin today....for what? she is no different than most politicians. Give it a rest.

The credit spreads seem to validate Bill's call of a major bottom.
The TED spread is also record high.
The sentiments are as bad as they can.
The short positions are record high.
We are waiting for a big spark. Today's action was not enough apparently. Some of the damping effects could be margin calls (I got one too).

Linky for the credit spreads:
http://tinyurl.com/3vxyj3

rayg,

Palin is different. She does not believe in evolution, states that dinosaurs and humans once walked the earth together, and has carefully worded a statement regarding her sceptical stance on the contribution of human activities to global warming versus natural climate cycles.

Those beliefs are in the minority in today's politics.

one bright note, $USD index about to go below 80.
gold isnt exactly reacting to this.

redclaydawg,

good luck leaving and becoming an ex-pat. I guess one can retain US Citizenship and fudge their tax numbers, but anyone renouncing US Citizenship to join another country has all assets taxed as if they were sold on the day of leaving.

nemo:

you are right, its just such an extreme action that the idea of it disturbs me.

As A Taoist I have been trained to examine anything that disturbs me, to embrace it, understand it, accept it... in order to accept myself more fully, and discover new truths.

Anything that ripples against your soul and spirit... can teach you much.

And in all the readings on this blog... the only statement that ever ever disturbed me, was Kaimu's statement today about price fixing gold.

I mean I had a guttural reaction. I wonder why.

Still pondering this one, will take a few days to let it sit and see where it takes me.

Fazeli,

Just because saying global warming is caused by man is 'politically correct" doesn't mean the assertion is correct...does it?

nemo and Casey - Are you telling me the POG isn't being controlled as we speak? REALLY?

Chickenpookie-so what? people can have differing opinions on things, no?

Everything man does affects his environment. Man evolves externally.

XLY next target 24.85 fib

IYR next target 49.00 fib
realestate may be the best short sector just now - overowned, large potential downside.

Mkt tanking - I guess Paulson did not save the markets once again...

Chicken - doesnt the weather cycles have influence as well?

When I saw transports get whacked 12% yesterday (initiating Dow theory sell) and R2K set a new low, it was time to get out of Dodge. Not that we can't rally but risk is way too high short term for me.

rayg - So let's be clear; is the differing opinion that you believe catering to special interests is an acceptable practice? I'm confused about what you're attempting to say...

Physical gold probably isn't, Pookster. GLD-that's another story.

chicken-I did not say that....you start talking about her differing views on evolution, dinosaurs and global warming as reasons why Palin is different. To that I say...so what. she is not different, she just has a differing opinion. why bash her b/c she has a diff opinion than yourself.
you bash Palin, yet Obama does the same thing...caters to special interests...all policitians do.

Rob G,

This has nothing to do with "Political Correctness". If it's a matter of not having seen enough data to be convinced, I recommend either speaking with scientists at your nearest University, subscribing to the major science journals on the subject, and subscribing to the blogs of the well regarded publications on science (i.e., Nature, New Scientist, etc.)

I have done all of the above. I had the benefit of having easier access to these things when I was in research not too long ago. The data is so clear and overwhelming that I cannot take seriously anyone who wants to attribute Global Warming with natural climate cycles.

Still, that doesn't mean that we understand everything on this planet, nor can we accurately state the consequences of what we observe. That's why scientific research is never-ending.

Palin was in fact VERY "politically correct" in her answer last night. I suspect that for someone who's mindset is that evolution is a farce, and that man once walked the planet with dinosaurs, it is more likely to attribute Global Warming with an explanation rooted in faith and not science.

The vote on the bill is too tight.

Dr cosa - UUP looks like it was thrown out with the bath water. auy, slw, gg showing some small inclination to not follow.

RobG - Absolutely! It amazes me that Man doesn't expect the global environment might change over time... Do you remember in the seventies all the concern about global cooling? Now it's opposite... I fully expect man will evolve to the point where he will be capable of controlling global temperatures to some degree(sorry, couldn't resist), but let's hope his first experiments prove successful.

Fazeli,

So there is no scientific research that shows that global warming is attributed to both climate cycles and man?

Pookie - I think what humans have been doing is the experiment

Craig and Hulgar,

(re: yesterday's comment) "...they know where some pm went"

I think they have a direct line to Santa Claus —

"He knows when you are sleeping, he knows when you're a wake. He knows when you've been bad or good..."

I over contributed to my Roth IRA in 2006 and withdrew it. This was reported (damn those computers) to the IRS and I've been hassled for the past four months by their anonymous sleuths. Never mind it was tax paid dollars all around.

The year before after receiving a "Our figures don't match with your numbers" letter, I had to file a return to prove I had no need to file a return that year. The fact that I had filed every year since 1954 probably worked against me.

"They" probably see this site as prime prospecting territory. If nothing else we often say a lot of anti-government things here. Bill may be pulled out of the boarding line as a foreign subversive one day soon.

This market meltdown HAS to be contributing to global warming! And it's certainly "man-made"! LOL

Hey Dudes/Dudettes - Iz anyone catching any SKF waves?

As to the future V.P. - Can we do any worse than what we currently have?

WAG is continuing its daily plunge...

This has meltdown written all over it: TICK = -1000. Monday will be interesting.

100% cash.

Good stuff Jock!

rayg "why bash her b/c she has a diff opinion than yourself."

Hmmm, well, I don't remember criticizing Palin based upon her opinions. I've done a good job of defining my criticisms. Perhaps a reading comprehension test is in order for one of us.... go back and re-read my words carefully and point out where I used any references to dinosaurs, evolution, or global warming in reference to my evaluation of Palin...

It's funny. At 1-minute level, almost every stock I care to look at, plus all the index ETFs move in unison. Even the miners.

I guess now that the world is saved everybody's exhausted and they are off for the weekend leaving the computers alone.

Let's see the close...

Palin is yet another embodiment of the Gump-ification of America. A movement I thought had reached it's apex in the election of a shrub to the White House.

"Stupid is as stupid does"

I used to take issue with those glib 'Americans are dumb' comments. Now I know - any country electing shrub twice and possessing a huge contingent lining up behind a deeply unqualified candidate for major office because she sounds like someone's idea of a suburban mom....'dumb' doesn't even come close.

and

"That's all I know about that"

"Life is a box of chocolates. You never know what you're going to get."

So let's all just roll the dice and just hope she's not one of those gooey-centered gross ones...

Hey, she's just like me, and I'd make a gosh darn fine president, gosh-darn it!!! Let me just get out my giant lipstick and wave it around, because, you know, stuff like that is what people should be thinking about and exactly how our leaders SHOULD be chosen.

Recruit Officer: Have you given any thought to your future, son?
Gump: "Thought"?

Gotta stop watching so much "24" Grym! LOL!

I think the dow is leveling off here

Chickenpookie: there is control and then there is control and then there is folly... :)

Good morning! The market tanking after the vote and coming back into the green now looks very much like the 3-phase action after an FOMC announcement. The common people can't understand right away all the implications of a big announcement (an FOMC decision or of such a bill passing), and hence the manipulators are jerking the market up and down, shaking out both the longs and the shorts. Even if the market ends up down today, I think there would be a good chance of it rallying on Monday, since it would "surprise" the common people the most.

Case - It could just be "going to cash for the weekend". The suspense is over and exhaustion has setin.

I sure wish it was 4pm

David - I'm a common people

the question with Palin and McCain:

Will Joe & Jane Sixpack confront reality, realize that slick talking can't counter "the facts" any more? or will they "have faith" one more time.

Our nation's fate depends upon Joe and Jane's judgment, not upon ours ....

(IMHO, not looking for a fight, just expressing my opinion)

TED spread 3.86, new record.

I have been cash all week long, I bought EOD yesterday for the big rally. I was up over $2000 earlier, now I am up a big $100! I don't know if I should sell out for the weekend, and be happy that I missed out on big losses this week. Or just get ready for the bull run.

90% cash for the weekend.
-----------------------------------------------
BenHenry Capital Management is Open!!!

Market: $.22
Bid: $.55

Any takers?

Ok, $.75 for junk???

Bought 250 QLD shares now at $46.83. Since I am already deep in my margin, I was determined to stop buying and wait for the market to rise (and hope that it doesn't drop too much first, so as to force me to sell some positions in margin calls). But then, I figured that I'll take a gamble with this particular QLD purchase: if it goes down and I do get a margin call, it will be the first position I sell. However, I think the chances are higher now that it will rise by $2 before dropping by $2. So the mathematical expected value of this particular trading decision, I think, is positive. :)

On Palin and global warming - YOu guys missed the boat. Go back and listen again. Every time She started a PC comment about "warming", she finished it with a push for "Carbon Credits" which she called a "cap".

The sale of "Carbon Credits" on the exchanges will likely be the next balloon. Go back and listen again - this is all about brokers being able to sell billions of carbon credits to dirty industries.

Joe and Jane have some tough choices to make soon and they're pissed about the messed up economy. Whichever party pulls the rabbit out of their hat will win, but right now I think Joe and Jane are pretty damn mad at the GOP.

So far financials aren't trading like this is good for them. Interesting how muted today's reaction is compared to the violent swings on rumor and failure earlier in the week.

Looks like the market movers have already made their point, done their business, and now they're going elsewhere.

Rob.

Vix still over 43. If it was lower there should be a strangle here with a good chance of paying off.

Craig- "24" is the best reality show out there! It ain't paranoia if everybody is out to get you.

Why is the Market going down? Cynical old me thinks that the "Financial Terrorism" pattern continues. The Market falls. Next week, we get talking heads, you know who, telling us "the sky is falling" and we need a rate cut.

Then California and NY will say that munis are no good and the Gov will have to do another bailout to give them lots of money. Oh, they are already saying that now?

Wash, rinse, and repeat.

Forget stock fundamentals. Trade Market Patterns of "wash, rinse, and repeat". Simple, hunh?

Casey,

I wonder if what you are feeling in your gut is, that with the inevitable collapse of the debt based monetary system even owning gold will not preserve your assets. The "dark side" will somehow render this approach ineffective. That is something I have begun to feel recently.

Just closed my October $19 puts on XHB, which have doubled since I bought them. I am expecting the market to take off next week...

"Vix still over 43. If it was lower there should be a strangle here with a good chance of paying off. "

how about a strangle + VIX puts?

stopped out of TCK.

Joe&Jane Sixpack -

My ultimate fear, voiced here before, is that Cheney OK's an Israeli airstrike against Iran, or that swiftboaters "hit" Obama.

I hope I'm wrong ...

(Just cuz you're paranoid doesn't mean they aren't out to get you!)

I'm curious....what has to happen for the market to turn bullish now?

The bailout package has been passed [funny how we got more of a jump on the rumor of it than the actual passing of it].

A rate cut?

Earnings are coming up and from what I read it will not be pretty.

So what will it take? I'm curious!

I think the credit markets need to free up for equities to rise. Even the state of California can't borrow $7 billion for short term needs and is begging for help from King Paulson! Debt markets are not functioning.

bought 1k auy@6.94

spot - I've been looking for a way to trade cc's and thought I found a lead but got side tracked... can't find it now...

Just saw this on another blog:

"Ed Rollins just said that Sarah Palin is now the front runner for the GOP nomination in 2012."

I am speechless.

[Bill Cara note:

The constitution states that the qualifications for VP must be the same as for President. In Gov. Palin's case, even after the debate in which she acquitted herself well, in my view, the majority of those who were polled, including many Republicans, say she is not so qualified. I think across the broad spectrum of US media, I think there would be a consensus she is not qualified. If your views are strongly held and your vote is affected by that, the Republicans will lose. We will just have to wait to see.

Interesting that on CNN presently are two young ladies (students?) speaking at the anchor desk -- one in support of Gov. Palin and one in support of Sen. Biden. One of these young people is a blonde and the other is a brunette. Can you figure who they selected to support Gov. Palin? Go figure. At least the blonde did as well as Gov. Palin did last night. The people are not stupid. Increasingly they see how media acts. They are becoming more interested in listening to the principals, and making up their own mind without the spin and special effects.]

SiO2,

Thanks for the Horizons info - you're right. I did some research and determined that HGD.TO and HGU.TO, using yesterdays close, are down 33% and 41% respectively since they began trading on June 26, 2007. That is not an inverse relationship. XGD.TO is down about 13.5% in that same period, so one could infer that HGD should be up approximately 27% in that time period, with a current price over $25, while HGU should be down roughly 27%, to a price of about $14, which would be more of an inverse relationship. I think I will forward this info to the TSE.

Jay- I think the Dow could be 1000 points from here in a week. If it was down I wouldn't want VIX puts. I have heard bad things about trading the VIX. Haven't done it myself. I already have some DIA Nov 108 puts that I'm ahead on. I may just add some OTM calls for cover.

Rob G,

There most definitely IS research that discusses global climate phenomenon and cycles. There is no doubt that many factors play a role in the heating and cooling of the planet leading to millenia of cold or warm spells.

However, what we refer to as Global Warming is a rapid, sudden, and quantitatively surprising and alarming increase in global temperatures (on average) since roughly the late 60s and early 70s. There are very strong correlations between these dates and the rapid expansions of Africa, China, India, the Middle East, and S.E. Asia. It is probabilistically highly unlikely to be, as Palin would like to suggest, a natural occurance.

The "faith first" mentality of Bush and his administration have delayed the massive task of addressing human consumption and pollution on many fronts (not just Global Warming). Now, Palin demonstrates a similar mindset, which I find difficult to connect with.

Rob G,

Please forgive the typos (millennia, occurrence)! I'll try harder to catch my mistakes in the future.

Dave,

Horizon states that near the close of trading yesterday there were dramatic swings in the S&P/TSX Global Gold Index. Also near the close of trading yesterday, a market order for HGU was placed and filled at a premium to fair value.
"The HBP ETFs have multiple committed market-makers however, during the last few minutes of the trading day, they are not as readily present as during the majority of the trading day." They recommend that investors that they refrain from placing market orders close to market close. According to them today, HGU is trading lower than 2x the percent change in the underlying index by this amount to make up for yesterday's discrepancy. They say that from Wednesday's close to tonight's close investors should see a 2x correlation to the index as the price of HGU trues down.

We shall see. As for the price issue since conception, I am waiting for an answer.

chicken-my apologies. I was responding to Fazelli's comments.

Hulgar - trading VIX vrs. trading index options

I've had bad experience trading the VIX. It's a European option, only saleable at expiration, if I remember correctly. A better way seems to be trading index options. Captures more of the volatility. i.e. VIX is a good indicator but not a good trade. Just my experience.

QT - While you're at it, also ask why Au isn't on the moon...

Jobs - ugly picture.

"...like Bill O'Reilly........ Barney Frank .....
I would like someone to post a youtube video link of that screaming episode from last evening. "
[Mr Cara]

http://tinyurl.com/4z6x7m

>

My curiosity about O'Reilly rant is definitely up! But, I can't stomache his bullying tactics so will pass. I have thought he's done much better this year, probably because CNN ratings are starting to beat FOX & MSNBC together. lol

Jeeze. Great bailout.

Now ya gotta be worried about monday

So they pass the bailout America was against and then still tank the market.

Talk about double whammy!!

Rob.

Jock- thanks for the warning. I knew there was something out of the ordinary but I didn't know what it was.

Congressman speaks of threats received to vote for the bailout bill.
He mentions threats of martial law being declared. Check out the
video

http://tinyurl.com/4k23gc

Just saw this on another blog:

"Ed Rollins just said that Sarah Palin is now the front runner for the GOP nomination in 2012."

I am speechless.

Posted by: moab at October 3, 2008 3:23 PM" [link]

Re above post: OMG

Just what we (longs) do not need S&P cash breaking to new lows.

"Intervention (Economic Stabilization) Approval" vs. Au & stock market movement --- Just like when the Fed drops the inter-bank rate usually mortgage rates (read pricing) get better on the hype and then after the Fed announcement mortgage rate pricing tanks - go figure

I've been coming across quite a few articles written about a list Goldman and other banks have concerning stocks to short. On the list is the miners and industrials. I think with the Hedge Fund redemptions taking place, now will be HB&B's opportunity to drive the market down by shorting stocks. After they take it down, they'll turn around and buy the stock. THEN the big rate cut will happen. October will be very interesting.

[Bill Cara note:

I don't know about a list, but the same thought occurred to me when I watched RIMM and GE and a few others really tank this week. I figured that somebody must be amassing a huge call position in these stocks.

If, as and the moment when a rocket sets off with the market, please don't submit limit orders. Use market orders. You may never get a limit order exercised in a fast market and the volumes will be so huge that it may be some time before you get notice.

The market sell-off as soon as the vote started may just be a deceitful message from Wall Street that this bill was not a Wall Street bail-out package. But we know better. This bill and other similar ones abroad will relieve the pressure on the credit system -- but only when the banks decide it's in their interest to do that. That timing will coincide with the market rocket moonshot that will be discussed in HB&B boardrooms this weekend, at least as I see it.]

spot -
On the cynical side - there are many, many residents of Houston, TX who believe with all their heart that CenterPoint Energy allowed their infrastructure to be so vulnerable to an event like Ike so the next time they came back asking for a raise in rates, more latitude, etc., the people would say, "Well, heck, the last time something bad happened I was without power for two weeks. Can't go through that again. Give it to them."
IMO, this lies along the same vein as disaster capitalism, Shock Doctrine, etc. Push people as hard as you can then when they come up gasping for air tell 'em what you need to make them all comfortable again, safe, secure, etc.

Looking at market reaction, 2 things come to mind

First: we were just rescued, weren't we??

Second: if we were, may we please never ever be rescued again?

Great. Let's allocate another 700B and suck a few more trillion out of the market. The next 700B ought to be good for another 2-300 point drop. It might even get us down below 10K.

What incredibly lousy law will we be harangued into next voting for without proper debate and consideration?

BTW, everyone catch the story about GGP? The second they got put onto the no short list the guys who run the show sold $40 million worth of shares into the market. And pundits wonder why main street stands with two fingers firmly extended, one to Washington and one to Wall Steet?

vad - I second the motion.

ALOHA !!

ON VOTE SWITCHERS
Rep. John Lewis, D-Ga., another convert, said, "I have decided that the cost of doing nothing is greater than the cost of doing something."

Sorry Rep Lewis, but you have been doing nothing as long as you have been office and that is precisely why we are where we are today! YOU DID NOTHING! YOU WILL CONTINUE TO DO NOTHING UNTIL "NOTHING" IS WHAT WE HAVE LEFT OF OUR COUNTRY!

Why is it politicians believe "doing something" is noble or even needed? Attention politicians!!! PLEASE-E-E do not feel you need to earn your keep by "doing something"! You can a train a CHIMP to "do something" ... like voting for $700bil bailouts!

I used to have an inspector on my San Jose Unified school projects that we would leave little things undone so he could catch them and feel good about his "inspecting skills" so that he wouldn't hassle us on the BIGGER issues he always missed! To code YES, but via a circuitous journey! HA!! Engineers and Architects draw lines but contractors engineer the lines and make them actually work ... to the US TAXPAYERS detriment! As usual ...

Re: Barney Frank

I assumed at the outset of troubles, they would merely beat up on Greenspan on the simple fact that he wears glasses, but I guess they found somebody else.

rayg - Hey, no problemo. I never hold meaningless grudges, those efforts are reserved for well deserved prospects.

re: Posted by: rayg at October 3, 2008 1:00 PM [link]

Biden was probably coached on style not substance. He's very smart on most issues, but coached perhaps on no inadvertant sexist remarks, no (misperceived) harsh attacks on Gov. Palin, etc.

Palin was most likely coached on substance, not style.

Guys,

Why is "CNBC showing "DOW" up 224 points?

There was nothing about today that didn't seem kosher to me. Runup in anticipation, sell on the news. You've got to remember, this is a game, nothing more, a game of pass-the-shares around. Once you realize this is a total game having only one foot at best in reality, the sooner you can .....

Having been recently rolled by a Harvard Law graduate to the tune of $50K in a ponzi scheme I will stick to candidates from "flyover" land / well away from the wisdom of the the coastal elites. Seems her qualities more address my preferences than B. Hussein Obama. Her heritage reminds me of another great presidential/v.p. candidate derided by the elites (A. Lincoln) as both grew up in one room cabins in the hinterland.

After reading Luggie's post, I feel compelled to apologize for having participated in political talk here. As QT pointed out, this is a financial blog. The political talk actually makes it harder to follow financial discussion.

Rule 004 states "Do not flood the Discourse with trivial chat." Some my posts might have been quite trivial today. I'll just harangue Palin elsewhere!

Didn't Bill all a day or two ago that we all refrain from personal attacks?

[Bill Cara note:

Let's say my time is worth $1,000/hour. It has just cost me $1,000 to delete about 6 or 8 messages from Chicken and QT. Guys, I am not pleased. Btw, my time is worth more than $1,000/hour.]

Jessie:

when you say

I wonder if what you are feeling in your gut is, that with the inevitable collapse of the debt based monetary system even owning gold will not preserve your assets. The "dark side" will somehow render this approach ineffective.

Thats not the reason I feel discomfort at the idea. IN fact what you say rolls in with expectations pretty well. Gold is just shiny metal after all.. no true meaning than what any one person puts value into it... It's value is no more special than what we use it for... On the tides of human needs it will rise and fall.

No what bothers me is something else.

Earlier this week I felt something different, almost like a new player was entering the stage. Now this statement of price fixing gold, hitting some nerve.

It bothers me becuase it makes absolutely no sense, except in a ego / dictatorship manner...But at the same time in my mind, I saw Kaimu's statement hitting me as being wrong and right at the same time... I just don't know. I will let this one sit for a while.

It just echos in my gut...

I can't speculate here, since the gut doesn't use words to tell the story.

Kids, *we're* deriding her.
Are you calling US elites, or are you just throwing buzzwords around without a clue?

I think we all know Abraham Lincoln's accomplishments and history.
Let's not ignorantly denigrate perhaps our greatest President with senseless comparisons to Mrs. Palin.

500 pt Dow drop after the vote. Amazing.

NYSE is amending NYSE Rule 48

"Based on what the markets have experienced in the past month, and in particular, at the close on September 29, 2008, the Exchange believes that in addition to the open, an extreme market volatility condition can also impact the close at the Exchange. In particular, the Exchange believes that in an extreme market volatility condition at the close, the Exchange should be able to permit orders to be entered after 4:00 p.m. for the purpose of offsetting an imbalance that may exist as of that time and to cancel or reduce a market-on-close or limit-on-close order that is a legitimate error and would cause significant price dislocation at the close."

With respect to O'reilly and Barney Frank, I think O'reilly comes across as the back end of a donkey.

If I did not know better, I would swear that Billy Bob had invested in Fannie based on Franks statement. Yeah, now that's an idea, investment advice/insight from my/your senator.

O'reilly should apologize for his rudeness on TV and a personal letter to Barney Frank for being so un-professional.

Vadym:

we were rescued, today, by throwing us a rope tied to the safe!

Ha!

such comedy , you cant pay for this stuff... wait I think we just paid 900 billon for that joke of mine.

Ah, I get it! The market is still behaving according to the "bailout" model Vadym has described: Monday through Thursday we had the sell-off on deliberation, this morning we had the rally when it became obvious that the bill will pass, after that we had the shakeout of those who bought too early, and on Monday we should have the fast and furious rally.

Everyone seemed to agree with this model when Vadym described it last week -- did everyone buy on the shakeout today?

David,

i did buy some calls right at the close. Remembering this discussion. We will see what will happen. What have you done?

David,

I had to overcome a lot of resistence when I pressed the buy button. I have made the experience that the more hesitance I feel the better the trade turns out to be. We will see on Monday...

Just bought 500 shares of SWC after hours at $4.55 and placed a sell limit order at $5.25. Betting on a rally next week.

David - Bill also mentioned similarly in one of his posts above.

David,

So far I have bought all the dips, only to find more dips. I'm now substantially in the red on the actions of the past 7 trading sessions, even though I was in cash for the past 11 months.

Still, I believe that we are at an inflection point here. The world isn't coming to an end. A lot of the larger tech companies are trading at good valuations on forward PE, on forward revenue, cash flow, and have had buy signals on RSI(7) d/w/m!

I'm 50% invested, 50% cash. I bought into high tech in the US and sold some puts on the same stocks. I've also tapped into various TSX funds (XIU, XDV, XGD, PGF.UN) which provides a large commodity play. I've also been practicing Bill's well described put option selling technique to position myself for a few other stocks (PFE, GE, SBUX, TWX)

Now I wait and see if Monday brings better fortunes. Just in case I'm wrong about all this, I'm going to keep the other 50% cash for some definitive clue to our direction over the next few weeks. I did not like the 400 point DOW sell off after the vote.

Interesting, that comment about nauseating trades being the best trades. I've heard it a lot here and it makes sense.

However, a topic I have wanted to bring up for a while and will come back to another day is this:

For me, sometimes, and rarely, I find a trade and as I look at it, it's like I'm queuing up a jump shot and the basketball hoop suddenly stretches to five feet wide. Like I'm putting into a swimming pool.

The problems are: 1) Not being capitalized enough to jump on these rare trades in size or sometimes at all

and

2) Waiting between "five foot hoop" trades and wasting my time and tiny capital on trades about which I feel less certain.

Some commentators speculating coordinated central bank interest rate cuts are coming soon (next week?) to further lubricate the credit system. Will that be the fuel for a reversal
and big rise in the market? ( and Bill's call for a beginning bull market ???").

Earnings will be coming out soon and could be be full of negative surprises. Volatility will probably continue to remain at high levels.

Off topic. The Mavericks John and Sarah

Watching Mrs Palin last night, she seemed like one of the Fox girls in Rupert's stable, reading the talking points from a TelePrompTer.

Someone else in our group who watched the debate mentioned it was as if McCain nominated his youthful, attractive administrative assistant to be Vice President. We await the next debate for more entertainment.

Honorable Mr. Frank

What O'Reilly did may or may not of been nice.
Granted if un-savvy investor took the congress person's advice and bought of continued to hold fannie/freddie it is their own fault because a congress person isn't one to take advice from.

NOW if you are a part of a security team and there is a breach that causes a MASSive failure. You were the supervisor and it was your watch. You are responsible and should admit responsibility. Don't point the finger to the chairman who is on vacation in either Camp David or Crawford Texas. We know it is fault too. That is obvious. You the supervisor and the manager who allowed you to lead the shift, the chairman are all responsible. You all are wrong, admit it.

I think UN-honorable mr. frank should admit wrong. Instead of blame. Your watch your problem. We face the music in times of mistakes.

More media pundits should hold the cowards responsible.

If not that has to be the best dream job, all the clout and no responsibility.

I say for the next 6 years, we do the following. Clean up Washington.
Leave your party lines. Leave them.
Vote out all incumbants, all of them. Job security will come at the price of humility and being humble to those you represent.

It will throw the lobbiests off for a few months as they need to update their payrolls but most definately send a message.

We don't need no stinking "change"r or "reform"r to make no stinking change/reform. We do it by voting them out until they are humble!

Thoughts?

"There was nothing about today that didn't seem kosher to me. Runup in anticipation, sell on the news."

In normal circumstances, I would add.

I mentioned a while back (as I began to contribute to the discourse) that in the past 14 months I'd weeded out just 2 economists whose analyses and predictions had shown them to be consistently correct, Roubini an Faber. And I would just like to encourage everyone to read and discuss Roubini's discourse which moab referenced earlier, as it could make this board rethink what might be in store for Monday and next week.

http://tinyurl.com/43lehu

Roubini sums up a situation - despite the bail out passing - which suggests to me that a resurgent stock market is impossible for the time being:

"So we are now facing:

- a silent run on the huge mass of uninsured deposits of the banking system and even a run on some insured deposits are small depositors are scared;

- a run on most of the shadow banking system: over 300 non bank mortgage lenders are now bust; the SIVs and conduits are now all bust; the five major brokers dealers are now bust (Bear and Lehman) or still under severe stress even after they have been converted into banks (Merrill, Morgan, Goldman); a run on money market funds; a serious run on hedge funds; a looming refinancing crisis for private equity firms and LBOs);

- a run on the short term liabilities of the corporate sector as the commercial paper market has totally frozen (and experiencing a roll-off) while access to medium terms and long term financings for corporations is frozen at a time when hundreds of billions of dollars of maturing debts need to be rolled over;

- a total seizure of the interbank and money markets.

This is indeed a cardiac arrest for the shadow and non-shadow banking system and for the system of financing of the corporate sector. The shutdown of financing for the corporate system is particularly scary: solvent but illiquid corporations that cannot roll over their maturing debt may now face massive defaults due to this illiquidity. And if the financing of the corporate sectors shuts down and remains shut down the risk of an economic collapse similar to the Great Depression becomes highly likely."

Roubini continues with his prescription for resolving the situation. My wonder is why this fellow is (apparently) not consulted by Congress? As many on this board, and the public at large, have noted, there is little sense in looking to those who caused the problem for a solution. Roubini seems like the ideal candidate for Bill's Resolution Trust II commission. Forget Buffett, even he is "conflicted", in Bill's words.

Just bought 100 shares of GS after hours at $128. Placed a sell limit order for $138.

Mike,

I haven't found that nauseating trades make for the best trades, I've found that good trades are accompanied by a profound sense of well being in an exciting, low key kind of sense. It never comes near your price again, the only question being, "When do I cash in this sucker?" I had a couple of those today.

It's bad trades are nauseating.

David

Thanks for reminding me of Vadym Graifer's scenario. Looks like he is on the $$$.

~~~~~~~~~~~~~~~~~~~~~~~~~

"bottom-no bottom"

1. While the rescue plan is being discussed, retreat and plant as much doubt as possible
2. When the plan is adopted, spike briefly luring "reflexive players" in
3. Drop sharply, possible making new low, shake out hopefuls as violently and rudely as possible
4. Rally from there as fast as posssible, leaving new believers minimal chance for entry and make them chase.
5. Now that credit crisis ceased to be THE worry, start looking for new worries or recycling old ones (USD, oil etc), but do it in a context of new bull market.

Vadym Graifer September 23, 2008 8:29 AM

[Bill Cara note:

Thank you for your comments here. There were a few exchanges with Chicken that I had to delete -- on both sides. People are not getting the message that I have no time to baby-sit adults. Something people should know about me is that when I have limited time and have to focus hard to get through my day, I have no patience. I have been told I get rude at such times. We all have our issues. The point is that it is easier for me to ban people than have to read letters of complaint and then scan through this discourse for gratuitous insults so I can delete them.]

so given the Vad plan, what's the plan? trailing buy stops just above the highs on 60 minute candles of the indexes?

Well, so much for today. Wrote off some more TSX stuff. Only down 97pts...but CNR was a train wreck.

Up $42 today in BRKB so Warren loaned me the money for his book.

Maybe China wants their money back? Can't be good for shipping that fertilizer overseas via rail car.

http://tinyurl.com/4z2tw4

Oh well, it's not like they just got a cheque today and were going to spend it all in one place... treasury has gotta let the prices come to them too.

How else is the American taxpayer going to make the big return on their investment and pay off that debt?

Don't they have "only" up to $50 billion to spend per month?

If this doesn't work, what's the backup plan?

Maverick: Requesting permission for flyby.
Air Boss Johnson: That's a negative Ghostrider, the pattern is full.
Goose: No. No, Mav, this is not a good idea.
Maverick: Sorry Goose, but it's time to buzz the tower.

Remember, Palin's not running for President... it's Maverick.

Did anyone watch the Canadian debates last night?

Everyman: don't forget that statistics is a funny thing. Roubini and Faber were consistently correct for the past 14 months because they were in the bear camp during the bear market. Statistically, there must be some economists in the bear camp, and Roubini&Faber simply happen to be the big ones we hear about. I'll have a great respect for them if they become optimistic close to the bottom of this bear market, but somehow I think they will keep being pessemistic for the first year of the bull market.

We had several decent rallies in this bear market so far, and neither Roubini nor Faber have anticipated them or "endorsed" them while they were happening. They are not traders, and hence their opinion should have very little relevance in predicting short or medium-term market moves.

The top story in Yahoo news says that we just had the worst week in the market in seven years. This may really signal that today was THE bottom of this bear market. I don't want to bet on this, however, and instead I will act as if we will see next week another month long-rally that will eventually fail. That is, I will sell my positions as soon as I see some decent profit in them, up until the point when I'll be 50% in cash.

So which one is it now? A new bull market, or severe recession/depression? Can't have both.
Sounds easier to take everything off the market, pack and go home (maybe buy some physical gold
or go to Hawaii, oops, forgot, can't buy physical gold anywhere :-)).

DaveM, Horizon states that the ETFs are supposed to track daily performance only, etc, etc. If this is the case, then those funds cannot and should not be used for any long term investors (actually by any investors, since that is the definition of investing). However nowhere in their TV ads they mention this, quite on the contrary. Anyone who bought HGD or HGU at inception has suffered a significant loss.

Any lawyers around?

I remember seeing an interview with Faber last week where he thought a bottom in October and a rally into Q1. An interview a few days later he said sell all the rallies.

Roubini is looking from a economic view. The market may rally before the credit markets recover. But if even the state of California is in trouble... Or maybe that is a great excuse to kick off the Bull and leave most participants behind.

David, I appreciate your take on the topic. However, when I say that Roubini and Faber have been consistently correct for the past year, I don't mean to say simply that they have been consistently in the bear camp. Each laid out very precise scenarios for what they judged to be coming. For example, in February, Roubini published his paper regarding 12 steps to a financial disaster; the link is at the top of the referenced article.

Today he writes that we are at the final 12th step.

The stock market conclusion I mentioned was mine. But I can assure you that Faber has indeed anticipated decent rallies in this bear market. In fact, although not a trader, I think his readings have been pretty consistent with Bill's; the latest dollar surge and commodities collapse being recent examples. But it is not my aim to hold economists Roubini or Faber up as market sages. I look to Bill and this board for insight about the market while I look to those two economists for insight about their particular expertise, of course! It's just that market health is related to that of the economy, so if it turns out that the market is "whistling past the graveyard" just now, then of course we ought to be discussing it intelligently, which I think means learning from these 2 economists who've been spot on for many months.

[Bill Cara note:

I like Roubini and Faber a lot. They add value to the understanding of financial systems and capital markets. I happen to have changed my view from theirs, and time will tell whether it was a good call. We read about a high level person in Malaysia (I think) this week who said that, in his view, America has just reached the top of a hill and is staring ahead at the Himalayas. I don't think there are many people in Congress today who don't see the same picture, and that's why I think there has been an attitude adjustment in the extreme occur in the past two weeks. I think these politicos have never before in their lives heard the vitriol from their supporters as they have this past month, and they are scared their political career might be over. I believe Speaker Pelosi when she told Wall Street the party is over. Yes, the stupid bill was enacted because people panicked and others seized the opportunity for pork, but there is an election coming up soon. If there are not many changes I will be surprised. And, in two years I expect many more changes. And if the next President tries to install another Trojan Horse for Wall Street as Treasury Secretary, I think Congress will reject the nomination. I think media and the TV comedians will be all over these issues. So, I do see change coming. Significant change. The people are demanding it. Then, when we get to the Himalayas sometime in a couple years, we just might be ready for the challenge. A month ago I would not have said so. But I have confidence in America. I may be a perpetual gripe about its problems, but it is the best country in the world. It's onwards and upwards from here, I think.]

Moab,

Interesting comments on Brit Hume's program tonight listing about a half dozen of the emphatic points Biden made which are simply not true. If Sarah Palin had been a long time member of the D.C. community, she may have been able to all him on them.

I guess it's a case of the old technique — if you can't dazzle them with brilliance, baffle them with B___ S___.

Is it better to take a pass or just fake it?

We are, once again, making a choice from what we see — which is what we will get. I'll hope for a winner who will be a quick learner from OJT.

Good evening,

Every month, I like to look at the CFTC website for information Re the bank's position in several futures and options markets.

http://www.cftc.gov/marketreports/bankparticipation/index.htm

Since we are all into gold at this point, you may be interested in noting that the Bank's positions in gold futures contracts was:

August:
- Long: 24.384
- Short: 140.665

September:
- Long: 57.640
- Short: 100.128

Your comments are welcome.

Enjoy your weekend, I know I will.

Cheers!

SiO2,

I received a couple of email responses from Horizons ETF, and was provided with the following explanation on the longer term performance. "It is possible for both ETF's to be trading below it's launch price of $20. The BetaPro ETF's track its underlying index 2X on a daily basis, but over a longer term, there will be a deviation. The reason for this is because of the compounding and delevering effect. I have attached a PDF to help you understand. If you still have any questions, please feel free to call me at the number below." I responded back: "I reviewed the PDF and understand the logic, but it still doesn't inspire much confidence in your product. Your own ads state that you are "Canada’s sole provider of investment tools allowing investors to profit when the market is rising or falling". If you invested in either HGD or HGU at inception you would be down a significant amount of money on both (-33% and -41%), so you lose when the market is rising and you lose when the market is gaining. May be okay for daytrading but certainly not for investing, so I think the company ads are misleading.

Bill-my apologies if I contributed to the deleted messages.
As for the market, it appears Vadym was spot on with his call on the markets reaction to the bailout passage.
I read another blog and he is getting ready to get long the banks and homies, as well as emerging markets....not sure when...but it could be in due time...maybe when we get the rate cut...that we could get by Monday morning.
I bot some GG today, along with JPM, SKF as a hedge...added to my PCK and SLW yesterday. They should fly should we get a surprise rate cut.

Ray

Bill:

On baby sitting adults

As we get older, isn't it amazing to discover how people use being an adult as a boundary to stop growing?

It's even more amazing how many people seem to pick such a young age to get stuck at. (No references being made... just a general comment)

On a serious note, I find it amazing how politics seems to bring out the child in everyone.

It seems that many of us here might have chosen you to be the Adult Father. Heee! How does it feel to have a family of ten thousand to watch over? Bet you never expected this side of the equation when you began this all.

Actually I find you quite patient with everyone.

Best of the evening towards Ya!

Apollo,

When Biden came on so strong re global warming, "I know it is human caused!" (paraphrased) I wanted her to ask on what he based his knowlege. As far as I know he is not a climatologist, so he could be expected to lean on Gore's claim of "most" scientist's view it as such.

There was a time when the learned majority were sure the earth was flat — now there's just Thomas Friedman.

Fazeli,
Biden wasn't perfect, but I respect him for not having totally lost it on her with certain comments. How many times did this silly woman repeat "the Democrats want to raise your taxes and that means losing jobs?"
Sarah Palin: I'd give you $1000 if you could make a convincing detailed argument for that statement.
Well, she did mention one thing which makes sense. If small businesses' taxes are going to be taxed higher for income over $250,000 it could mean a lot of jobs.
In another post I mentioned how Biden boldly stated a number of untruths — mostly about the Middle East. Sarah didn't know enough to challenge him.
I am sort of tired with statistics, votes (did not, did too) being rehashed. I want solid statements, backed by specifics, on all this "change" both sides talk about so generally.
For example: How are they going to clean up Wall St.?
I am not much impressed by anyone after putting up with this marathon campaigning.

You have to believe. Without confidence or swagger we have nothing.

I appreciate the comments from Bill's post above. This is a great country but our citizens must be reminded of the. Forget the corruption it will always be there.

Story quick one. Google if you don't believe it.
in the Korean war.

The frozen chosen. Usmc division fought through 9 Chinese regiments (3 divisions in one regiment). It was sub zero temps, the grunts had to literally urinate on each others hands to prevent frost bite. As they fought through the Chinese they also were able to pick up a division of Army heavy equipment tanks and such. Through impossible times and insurmountable odds they fought through with more equipment. No one should of made it but they did.
Would you believe me that the top general of the army called the top general of the army and asked for the equipment/tanks back (even though they abandoned it)
Answer. What equipment are you talking about?
Imagine that. Always looking for the freebee.

Get swagger, chin up. Life will be great.

No spell check from cell "fone"

"I'm curious....what has to happen for the market to turn bullish now?"

nothing-> i think we're being set up for one...with a 300 point rally going into the vote, a rally on the vote was not going to happen; a sell-off was in the cards...

the real play here, however, is to take the two-year horizon...trade the swings, but i wouldn't be caught on the sidelines for any length of time-> the rallies will not come when you're expecting them; keep in mind the adage that the bulk of gains will occur on just a few days, and we have no way of knowing ahead of time which few days..

if you want the chance to double/triple your portfolio in a two years, stay in...that's my opinion...

Bill said: "But I have confidence in America. I may be a perpetual gripe about its problems, but it is the best country in the world. It's onwards and upwards from here, I think.]"

"in a two years" that's-a-italian for shark...

Great story Norm. Those Korean vets of the Chosin and the Battle of the Bulge vets from WWII perservered in unimaginable circumstances.

Regarding 2nd Ave's thoughtful post...

Not disagreeing one iota with your conclusion, but also the question...

What does today's events mean for the financials?

My conclusion differs somewhat from yours, as my gut tells me that in the absence of housing improvements and BELIEVE ME, there 'aint gonna be those in the next few months, all the sharks teeth are baked into THAT cake, (that's bound for Chickenpookie so he can make his great escape from Bill's doghouse), it seems like the future for the financials is iffy still. And how long does this bailout money last? What happens if they come back for more? Bailout aside, as long as Johnny-401-K is struggling at work, fighting with his wife and subtley abusing his kids, this thing isn't getting better. There will be an evil santa Clause rally of some proportion that will, as most rallys do, fool the uninformed into surrendering their hard earned money to trading pros like our friend Vad (DabrO PazhAlavat’ Friend!)<Russian for Aloha

Also don't rule out the seasonal tendency for armageddon.

Bill may be absolutely right that a new bull market is starting. Someone, however, forgot to tell the stock market:)

У меня плохо с русским

sorry....hit the post key too early....

Bill-your words give us comfort....thank you.

2nd ave-great point....we all must keep that in mind.

All the exciting trading action this week was in financials. Specifically, preferred shares of FNM, FRE, Wachovia, and even AGM (Farmer Mac - which I threw a low limit buy for this morning and missed narrowly only to miss a +45% move before 1pm). Bill's right. Market orders!! I've been chasing stuff for two weeks now and have only picked up some shaky stuff (ABB especially).

Has anyone here been profiting from these wild moves moves in certain financials? Is it just madness to be chase these? I know shark_attack has been hitting on all cylinders in AIG and stuff. Anyone else?

shark- i would stick with Cara 100 financials..i think the survivors do quite well...WFC, for example, is a SF institution that my wife knows a little about-> they would not have bid for WB unless it made strategic sense...GS into commercial banking? HBC, DB, IBN-> when the global economy heats up again, which it will, all four will be positioned to profit enormously, and you should be looking at taking positions now...

take the long view- i can remember posts along the lines of 'i'm waiting for SLW to hit a 7-handle, then i'm backing up the truck' (when SLW was at 12, of course..now it sports a 7-handle; and it will return to the teens again...

you can substitute almost any Cara 100 for this exercise, as they are all in AZ territory...

are you buying/have you bought? there are no guarantees, but if you're sticking with high-quality companies that have dropped into the AZ, furthermore generated a buy alert, and you believe there will be another DZ, then what's holding you back?

У меня плохо с русским- nice one, shark...you could also lianxi ni de zhongwen..

Chickenpookie - re Carbon Credits

One aspect of Carbon Trading, or Emissions Trading, is fairly respectiable. In some states, one can sell their home-produced electricity back to a Grid. However, most references to Carbon "Cap" Trading has to do with controlling CO2 emissions of corporations.
Great read at:
http://tinyurl.com/3syl4x

This aspect, Emmision-Carbon-Cap Trading, as covered in the Kyota Treaty, would have the Government (omg!!) issue "cap" allowances to each company who could then trade those allowances, or whatever part is not needed.

In theory, it might work, but in reality Brokers would be just be moving all the unneeded carbon (emission) "allowances) from those who don't need them to those who do - net effect is none except for the bonuses in the pockets of Humongous Brokers. Guess why Palin is pushing this idea of "caps" for McCain (and his backers).

Another, more heinous aspect, imo, is that which is called "Personal Carbon Trading" (a misdirectional term) in which the Gov allocates to individuals the amount of electricty, gas, oil, gasoline that the Gov thinks that individual needs for their personal lives. Use more and one would have to buy the additional allowance from someone else; use less and one could sell some of their allowance (less brokerage fees and taxes, of course). Big Brother? "You betcha" (as Palin would say).

Here is a quote from Wikipedia:
"Personal carbon trading refers to proposed emissions trading schemes under which emissions credits are allocated to adult individuals on a (broadly) equal per capita basis, within national carbon budgets. Individuals then surrender these credits when buying fuel or electricity. Individuals wanting or needing to emit at a level above that permitted by their initial allocation would be able to engage in emissions trading and purchase additional credits. Conversely, those individuals who emit at a level below that permitted by their initial allocation have the opportunity to sell their surplus credits. Thus, individual trading under Personal Carbon Trading is similar to the trading of companies under EU ETS."
http://tinyurl.com/4azuyq

david- "..and on Monday we should have the fast and furious rally."

i like your faith in 'the model,' and in this case i share your sentiments...i have no idea when it happens, or whether it happens only after more declines, but unless you're at least partly long, it will be difficult to chase the rallies...it's been a bear market, so it's easy to forget the late nineties, when investors waiting for pull backs on YHOO, EBAY, and JDSU finally gave up and hit the buy buttons to get in at any price...for the sake of argument, if one is on the sidelines and wakes up one day next week to a 400 point gap-up in the DJIA, does he get in then? don't think so...what about 600 points up? 900 points? what if it gaps up again the following morning? when it pulls back 300 points from a 1200 point rally? he may have to give in at 11,900, only to get shaken out with a 600 point drop...point is, this a pretty good buy range, and you're buying when everyone is selling...i just don't want to be buying when everyone is buying...

Mr. Cara

[Bill Cara note:

Let's say my time is worth $1,000/hour. It has just cost me $1,000 to delete about 6 or 8 messages from Chicken and QT. Guys, I am not pleased. Btw, my time is worth more than $1,000/hour.]

I apologize for my earlier exchange with Chickenpookie. I should of just walked away. It will never happen again.

[Bill Cara note:

We are all human. No saints here. But, we have to remember that a lot of people are following this discourse and my point was really not about me but about the total waste of everybody's time -- when I wrote that remark I knew that many of you would be saying, what about my time? That's the point. Time is so precious -- we shouldn't waste it on useless things. As for me, it drives me nuts to have to moderate comments made by people who I know have made so many good ones in the past.]

Chickenpookie

Please accept my apologies also for my previous posts.

I also enjoy listening to Faber and Nouriel Roubini.
I listened to his Bloomberg interview at work the other day, and also there is a great discussion with Roubini, Brad Setser and a couple others on the Council on Foreign Relations website (If you google it, you can go to the site and stream the mp3). its kind of funny because whenever the 'host' starts to talk after Roubini, everyone sort of laughs in disbelief at the dismal picture he paints.
Opened a position in slw.to last week at 9.40.
deeply underwater in everything for over a year now.

re passage of the bailout bill- there has to be at least one enterprising journalist in the process of chronicling the story in book form...hoping it's one of the more knowledgeable/seasoned ones with the ability to put a good story together..

Work was harder today than the usual ""early Friday" my employees and I always take. Looks like the "angry democrats" took over the blog for awhile.

Eric- most 'processes' in life don't happen in a day, a month, or a year; they generally take years (getting through college, dating, getting married, having kids, watching them grow/mature, buying a home, paying it off, getting the kids through college, growing your retirement portfolio)...i started to lose interest in day trading a few weeks ago (which really only started around May of 2007), and am now at the point where i'm more inclined to walk away and let the portfolio grow...

2nd
Here is result of september
also so far this month down 12k

May have to rethink strategy/tactic this weekend
Value Beginning mkt value as of Sep 1 $204,086.39
Transaction costs, loads and fees -$2,120.58
Change in investment value $26,263.52
Change in debit balance $346.87
Ending mkt value as of Sep 30 $228,576.20
Debit balance -$346.87
Ending Net Value $228,229.33

vinod- "May have to rethink strategy/tactic this weekend"

what's wrong with pulling off the freeway for a year or two, cutting the transactions costs to zero, and watching your month-end market value work its own way up to 500k?

2nd, I am kind of cyclical with my attitude towards trading. I listened to Elder's trading for a living (I'm sure it was abbreviated) and took some lessons, and have read my homepage (Bill's blog) avidly for a long time. Made many mistakes along the way and have for the past 6 weeks or so done well at distancing myself from the day to days in the market. Then I get sucked back in and stress about my trades, but slowly will be back to the point of having patience. I'd like to think I am making very small steps and learning, but I still have such a long way to go, in terms of protecting my trades, having the patience to let a few indicators confirm my trade, etc. I'll admit that most of my miners are too far gone now to even bother selling. I made the error in thinking that the casino would pay off because I was listening to the right people. Controlling my emotions and admitting when I'm wrong (early!) in a losing trade are things I'm working on.
Cheers, best of trading.

2nd
advise /opinion you have mention is what I have in mind.
I have most of cara 100 stock that came in buy list and some ETF like UYG/QLD/SSO/USD
still has 35% cash and will keep that way
thanks for good and sound advise

Eric- can't recall if i've shared this strategy for distancing myself from the market...for LT positions, i ask myself which ones i would have no problem holding were i to embark on a year or more in the county jail (and presumably unable to trade)...last year it would have been mainly shorts; right now they're all longs...

vinod- that sounds good...today's market is the exact mirror image of last october, when the market just would NOT go down...every time we tried to short, we would get taken out by yet another reason for them to take it up (abby joseph cohen's call for 15000 was the last straw, right)...if you have the same faith in QLD now that Bull Hunter had in QID last October, then you should be in great shape October of 2009...

jasper- if you're reading, here's a SF victim of the violence in NOLA:

http://tinyurl.com/4o47pp

2nd
Short term there are many view that we are going up and bull market will start soon.
But can not find any sector that will lead
Auto/finance/housing/airlines/commodity… all took bad
Unemployment is raising and Christmas is coming which is 2/3 of profit for retailer and consumer spending is 2/3 of us economy. So, does not look good here.
In short term I do not see any reason for market to go up.
Only hope is tech spending may due to go up. It has been long time since Y2K
And may lead the market.
Strong export has been a help but now strong dollar and slow down around world will not be good for export
Also multinational earning may heart because of strong dollar
Let see what happens

Dow +313 points to its intraday high just after voting in the Senate began on the $700 billion rescue bill. So the downtrend continues with the Dow then declining 486 points to close -157 points.

Our previous post outlined the view that next week the market could really come unglued. Expect the market panic and fear to reach a climax in the middle to latter part of the week. The catalyst for the decline will most likely be a major company failure or bankruptcy annoucement that surprises the market. On a big move down in stocks, we will become bullish and begin selling cash and buying equities.

We have been bearish on the market and parked in cash since January 2008. Why will we finally become bullish? Because the market (e.g., S&P 500) has moved down 30% from its peak and our indicators will turn bullish next week on a major sell-off. Our indicators turning bullish will signal that the overwhelming selling of stocks will be close to exhaustion and a massive rally in share prices historically follows. A coordinated easing of policy rates by central banks around the world in response to the market decline could be the upside catalyst that terminates the bear market.

Stay tuned...next week's market moves will be very large, down first, then up!

JWibbs
http://www.2globalmarkets.com

http://tinyurl.com/4jfr4k

Above is an IShares link that allows one to type in a stock symbol and see which ETFs hold the stock. Plus a couple of other search tools for the kitbag.

gee just like this week

2nd

".... SF victim of the violence in NOLA"

"Two days later, her body was found on a sidewalk in a tough section of the Ninth Ward of New Orleans, about 3 miles northeast of the French Quarter."

I lived in New Orleans for several years. That part of town I wouldn't even consider driving throught with my car doors locked in day light. She never had a chance especially at night on a bike.

Bill:

>$1000 an hour. But, what's a grand worth these days :)!!

More news from hell.

Those vermin from AIG have already burned through over 60 billion of the 85 billion OUR govt handed them

I really think there needs to be some criminal action taken against all these crooks. If not now, then asap.

Hi Bill,

Figure I owe you about $2.2 million dollars then for all the commentary. thanks! Will see if I can find an earmark for that one since that kind of cash is hard to come by for me. Especially after last 2 weeks.

Seriously though, when is the eBook coming out? Would be much easier to click on the links in your book instead of typing them in. I will probably get to reading it the 4th time after I finish Buffett's book. You were discussing PDF & multimedia last time we talked?

I do resent your comment about America being the best country in the world, though. That should be reserved for her colder, northerly neighbour, eh? Did you get rid of your passport already?

So much for bi-partisan diplomacy. :)

Did anyone watch the Canadian debate yesterday? (crickets chirping)

Canada doesn't need votes to get it's money into the hands of its banks and business.

http://tinyurl.com/53q698

"In a statement, the nation's central bank said that beginning Sept 19 it has extended $8 billion to provide liquidity to term lending markets. "

"``We are in a good position as we enter this time of international financial market turbulence,'' said Flaherty, speaking at the University of Western Ontario. "

There's a $75/plate breakfast possibly worth going to Monday if you're in Toronto.

The Economic Crisis: What Happened, Why and What's Next?
Join DON DRUMMOND, Chief Economist, TD Bank Financial Group; WARREN JESTIN, Chief Economist, Scotiabank; DOUGLAS PORTER, Deputy Chief Economist, BMO Capital Markets; AVERY SHENFELD, Senior Economist, CIBC World Markets; and CRAIG WRIGHT, Chief Economist, RBC Financial Group.

http://tinyurl.com/522ln4

Probably beats asking your soccer friends what they think of the economy...

Or just skip the breakfast.

Don's forecast.
http://www.td.com/economics/qef/qefsep08.jsp

Warren's forecast. (and podcast, no less.)
http://tinyurl.com/4papur

Doug (and others) from BMO
http://tinyurl.com/3hjp9g

Avery (and others) from CIBC
http://tinyurl.com/4aqb7v

Craig (and others) from RBC
http://www.rbc.com/economics/market/

Some weekend reading... or come back next year and skip to the ending.

Is anyone else tired of the all the political dribble here? I can't remember the last time I "voted". Like it makes a difference. The real owners of this country control both "parties." Let's keep the focus on making money. We'll need to make more and more just to stay afloat with taxes and inflation...

Just started looking over the damage to the oil & gas stocks, which is significant.

Just for fun, take a look at the longterm charts of the Canroys PGH & PWE (PGF & PWT in Canada).

Now, pretend that these are not oil companies with significant debt leverage, but financial companies with significant debt leverage.

Then note that their dividends are approaching 20%, while anything over say 15% is usually a big warning sign.

Would you buy these now?

Some thoughts on timing the gold and silver trades:

Considering that:

(a) there is ongoing demand for physical

(b) physical is getting harder to get by,

(c) street ("retail?") price for gold the physical is in the $900-$1000 now, as mentioned by a few posters here,

(d) there is price suppression combined with market dynamics trying to keep the price down (for simply obtaining a better price)

it is natural to expect that the futures price to converge to the physical price close to the expiration of the most recent contract.

Coversely, the most opportune moment to begin shorting the futures in order to create downward pressure is right after the futures contract expiration date, with the selling trough forming between two consecutive expiration days.

This pattern has been showcasing in August and September if one considers the $900-$1000 street price as accurate.

If these hold true, we should be witnessing downwards pressure in the following week which is bound to recover again towards futures expiration.

Opinions?

Had a chance to read thru the blog on a Saturday morning before my kids got up.

I agree with 2nd's view of the market right now, but also am being a little more selective and patient.

There ARE a lot of buys out there at the moment, but some of the blue-chips (JNJ, KO, IBM) have really not moved down much from their trading ranges.
(I find this curious - are these the truly "quality" companies that would be sold-off last in a panic).

I may have jumped in too soon with Deere (DE) after watching it sit in low 60s for what seemed like forever (well it is a cylical and very economy-sensitive but I believe a good company that I'd own long-term). Did the same with Alcoa (AA) - but still see 20 as an attractive price for them.

So I watch from here and plan to back up (on dips)the positions I have opened for the long-term...

Good weekend all...

2nd, I agree with your 9.48 pm comment:
"i started to lose interest in day trading a few weeks ago (which really only started around May of 2007), and am now at the point where i'm more inclined to walk away and let the portfolio grow..."

I was 100% in cash in January 2007. My first big position was RRPIX and TBT in March. This has been a big looser because I was way to early in TOG. I've lost about 20% on this position. I also have a position in NOT.V and GXEXF, both of which are major losers. I hold all of these because I think they will recover due to their resources. Then I bought GG and GFI while they were falling. I also bought some AIG at $5 thinking a company like AIG can't drop below this level....I also have some SU, AES and DAI, all purchased in the past week. I increased my GG position during this past week. Overall I'm down about 20% in the past 5 months. But at this point, I can't figure out how to day trade because of the unpredictability, and so I feel like holding and watching. I'm probably 75% in stocks at this point.

Re: Bond Markets vs. All

Here is a repost of the 'pyramids at Giza' chart that was posted to this blog sometime ago. I use the Bovespa as the latest bubble to pop in a series of bubbles that arose, starting with the Nasdaq. Further to the discussion at Jesse Cafe Americain, that the bond markets collapsed prior to the 1929 collapse, you will notice a retracement in bond price prior to the pop of each bubble. Now, the jury is out whether the commodites bubble has had it. But with the retracement of the bond market and the subsequent collapse of the Bovespa, I would figure that this one has had it. Note that you can use various stocks in the same guise, such as Apple, Rim, Potash and others or, in effect, the oil pirce in its place:

http://www.flickr.com/photos/11747277@N07/2911885120/sizes/l/

Because the world's central bankers had opted for an inflationary recession rather than a short-lived depression in 2001, it meant a chronically firm bond market with lower overall yields. One could surmise that each lowering of the key interest rate in the U.S. results in greater pressure on the short end of the yield curve. This will eventually reverse itself, as we see the bond yields steadying this week after the 'great emergency' in the markets which was an obvious cash grab.

"RIX" is Sweden's interbank payment system, run by the Riksbank. If it stops working - Sweden most likely stops working in short order.

The Riksbank yesterday:

"The payment system did not fail

As certain media today has stated that the payment system RIX failed yesterday, the Riksbank wants to clarify that this was not the case.

The payment system RIX was held open an extra couple of hours yesterday as there had been large payment flows during the day. At the end of the day, the transactions were not completed in the ordinary way. It has taken longer time than normal for banks to complete the transactions ever since the international financial turmoil began.
The Riksbank has been in contact with the banks regarding this matter and there seem to have occurred some confusions and misunderstandings among the banks. But the situation yesterday was cleared by the banks themselves and the RIX system was closed at 7.15 pm last night.

It should be stressed that there were no technical disturbances, nor did the Riksbank lend money to any of its counterparts."

http://tinyurl.com/3ep6pg

In Sweden, if a bank fails, depositors will recieve compensation in "not longer than 3 months".

got some cash at home?

Reuters
SEC short-selling ban to expire Wednesday night
Fri Oct 3, 2008 5:34pm EDT

WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission announced on Friday its ban on financial stock short-selling will expire at 11:59 p.m. ET on Wednesday, October 8.

Earlier in the week, the SEC said the ban would expire three business days after a $700 billion federal bailout bill was enacted by Congress. The emergency ban was part of a series of government measures designed to restore confidence in battered markets and the ailing financial system.

Jesse's Café Américain

Right, I'm with Vinod on this one. It won't be the financials leading the way, or they would have rallied on the bailout bill. So where's that leave the market?

Won't believe in the bull until I'm seeing higher lows and higher highs in the major indexes. Or unless Chickenpookie is gonna slow smoke some Texas brisket for the group:)

F6 & others: http://tinyurl.com/3tb4bv "People are failing to take into consideration why M3 is soaring. And right now the why is extremely important. The answer is businesses are tapping credit lines for fear they cannot tap them later. They are parking that money in institutional money market accounts and in response M3 and MZM have been soaring. These certainly are not inflationary conditions." Bill had mentioned a lot of money on the sidelines.

If we are heading into a deflationary era as I have read here and elsewhere, would that not argue for lower PM prices except for the fear factor slowing PM's slide?

How psyched is Ron Goldman's father today?

note: Followup to previous post. Mike Mish takes a dim view of M3 but still mentions deflation on the way. July 14, 2008
"Judging from collapsing real estate, people walking away from homes, risk aversion sinking in, and banks unwillingness to lend, together with the idea that credit that should be marked to market isn't, I believe we are in deflation, right here right now. Those focused on M3 or energy and food prices are truly missing the boat. Trillions of dollars of destruction in housing wealth (with much more coming) and another trillion markdown in bank credit coming (on top of what we have already seen) are far more important and far more representative of the state of affairs than is M3, or any other monetary aggregate for that matter."

GWB/Paulson's use of a "Shock and Awe" package accomplished the Shock part with a flagrant disregard for the will of the People and the Awe part of his willingness to give away 700 Billion dollrs, plus the Senates own pork package, but did it accomplish anything else?

This clip is a couple of days old and may have already been posted here, but it is worth re-reading as prep for the week to come. Good luck!

"Next: The Mother Of All Bank Runs?
Nouriel Roubini 10.02.08, 12:01 AM ET
... When investors don't trust even venerable institutions like Morgan Stanley and Goldman Sachs, you know that the financial crisis is as severe as ever. When a nuclear option of a monster $700 billion rescue plan is not even able to rally stock markets, you know this is a global crisis of confidence in the financial system.

The next step of this panic could be the mother of all bank runs, i.e. a run on the trillion dollar-plus of the cross-border short-term interbank liabilities of the U.S. banking and financial system, as foreign banks start to worry about the safety of their liquid exposures to U.S. financial institutions. A silent cross-border bank run has already started, as foreign banks are worried about the solvency of U.S. banks and are starting to reduce their exposure. And if this run accelerates--as it may now--a total meltdown of the U.S. financial system could occur. ..."

Sorry, I can't get a tiny URL; so, go to the link by putting the two parts below back together on your address line without any spaces:

http://www.forbes.com/opinions/2008/10/01
/goldman-morgan-run-oped-cx_nr_1002roubini.html

Humor http://tinyurl.com/4j5nqc. I had almost forgotten what that was.

From Wikipedia, the free encyclopedia

A maverick is an unbranded range animal, especially a motherless calf; it can also mean a person who thinks independently; a lone dissenter; a non-conformist or rebel. The word first arose in mid-19th century America from Samuel Augustus Maverick, a Texas politician with a large ranch full of unbranded cattle.[1]

People:
Samuel Augustus Maverick (1803–1870), Texas cattleman from whom the term maverick originated

Samuel Maverick (colonist) (1602–1670), English colonist in Massachusetts

Maury Maverick (1895–1954), US congressman from Texas, coined the word "gobbledygook"

Maury Maverick, Jr. (1921–2003), Texas politician, activist and columnist

Maverick Matt, ring name of Matt Bentley, American professional wrestler
-----------------------------------------
Hmmm....running as a "maverick"? Is that good?
Sounds like gobbledygook to me. :>)

Bill and Moab,

I don't recall who first said it, but...

"Truman proved anyone can be elected President. Eisenhower proved we don't need a president."

To this I will add, based on Clinton, W and whoever "wins" this round...

"Some prove we may be better off without a President."

We only get to pick from those who are allowed run. Some, if they look dangerous to the status quo, are soon discredited.

Bill said, "The people are not stupid."

In my view — most of the time the people are no longer interested. They are systematically saturated until they become news immune. This time they were outraged (I was encouraged.), but overpowered and overruled. Now it's back to American Idol by the American Idle.

"But at this point, I can't figure out how to day trade because of the unpredictability"

Allen... but day trading is not based on predictability, and the market is never predictable in a sense that you can foretell what is going to happen. It's based on odds, and odds are based on patterns that you observed earlier and recognize now. Thus, seeing familiar pattern emerging, you engage pre-canned set of IF-THEN scenarios and take the trade as it's triggered. Then market tells you whether your trade works or not; you take stop or profit qithout thinking or second-guessing, simp[ly going with your scenarios, and moving on to the next trade. You win some, lose some, and, providing your observations and patterns are correct, odds are in your favor and you make money - not necessary on any given trade but over statistically valid sample. This is ultimate "Trade what you see, not what you think" approach with which you'll never find yourself in unfortunate situation like AIG where as you say thinking that it could never go below certain price caused losses.

Am not trying to get you into day trading of course, simply deascribing my approach which helps remove an obstacle you mention. IMO, it's not about time frame - it's about general trading philosophy if you will. "Market isn't right or wrong, it simply does what it does and my task is to be in tune with it, not to try to prove anything to it" is mine; my old motto "Trade what you see, not what you think" reflected just that. "Market is wrong, I am right, I will persevere and victory will be mine" leads a trader in the land where no risk control is applied.

Bill,

Your optimism about the US is something I need to hear right now and I hope you are right. I keep thinking of how much better my generation has had it.

• Born pre-WW2 and never turned down for any job I applied for.
• First became self-employed at age 19. (Due to a completely unjustifed self confidence :-)

Life was easy and good for so many of us, including those minorities who got good manufacturing jobs and boosted their kids.

We have been in a down spiral about 15 years around here. (Illinois)

I hear time and again they're not making any more land to pump up the real estate. We'll to my last recollection they haven't stopped making people. Intel is going to sell more not less processors. The food companies are going to need to make more and more and the oil companies need to keep getting more and more to market. We may be at a bump in the road but I don't believe we're going back to the stone ages yet. This market is at 10000, a point which it reached in 1999. Inflation alone should have it substantially higher. I'm ready for the next leg up.

Sentiment: JustMyNotes (not recommendations):

Bullish%-SPX wk: Falling Dagger in DnTrend with poss/doubtful extreme but double bottom breakdown - wklyRsi= = ~25 (newly AZ).-
act: None

NYSE %>MA(50) wk - Definite extreme down to past turning points level but still negative candle -
act: Wait for turn confirming positve candle

NASD %>MA(50) wk - Definite extreme down to past turning points level but still negative candle -
act: Wait for turn confirming positve candle

VIX wk - Definite (record) extreme levels reflecting Paulson's Shock and Awe but at turning point??
act: Wait for a Strong or a Gap change in Markt direction?? FOMC rate cut??

PutCall Equity - Very strange chart movement when compared to VIX extremes - looks very negative to me for Markets, but ??
act: Follow VIX act above and consider strong Buys if confirmed by price chart for at least short term treades.

Overall: Watchful but not there yet. Any trades should have both targets and bails.

ALOHA !!

The ease with which the elite bankers of the World have duped the masses is astounding! We can all keep this money based on DEBT and pretend life is great, but at some point it all fails ...

This is what we see ... the purchasing power of the dollar going down.

Go here to see where the next leg up in the DOW is coming from. Its going to be the same leg up as the past leg ups! INFLATION ...

Its all a monetary illusion! We are in essence "living a lie"!

Link: http://tinyurl.com/43wo7j

Maladjustments and redirection of money flow from "real wealth" to "false wealth" just got a $700bil boost! Instead of $700bil going to infrastructure(like roads, airports, railroads, etc) and commodities that people need and use on a daily basis(real wealth) this $700bil has been directed towards "saving Hank's friends". This is how a THIRD WORLD country operates. The dictator thug and his family and friends get all the "foreign aid" while the rest of the country gets black outs, disease and starvation ... which in turn rots the economic viability and future of the entire country. This is what our elected leaders have just handed us ... "economic rot"! I have toyed with the idea of applying for citizenship in Australia as an American Economic Refugee! HA!! Isn't that what happens to the most productive people of THIRD WORLD countries ... they leave?

I am a small business owner and have been since 1990 and I can tell you this, PANAMA and GHANA offer me more incentive than my own country! Here in the USA I run a gauntlet of government regulation and taxation that depletes my resources and causes stagnate growth. American voters have just voted that they would rather have fraudulent banks survive instead of small businesses. Mark my words, and I sent very stern e-mails to my reps warning of this, that the death of small business in America is the death of the EMPIRE. That is where we are headed.

Just because the DOW goes up means nothing to me as a small business owner. We focus on a lot of crap that produces not one bit of "real wealth"! We spend trillions shuffling paper ... That is a travesty for WE THE PEOPLE ...

Its simple ... in 1908 you could buy a new house for $1,800USD.

QUESTION AUTHORITY ...

Vadym, thanks for your comments. I don't have any sense as to the distribution of probabilities with any of the stocks that I follow. This is an asset bubble deflating, and the derivatives, financials, and housing are taking everything with them. Bill and Mark Faber say this looks like a bottom, and Bill has suggested in the past that DOW 10,000 is a bottom, so maybe this is a bottom. But the deleveraging continues, while lots of cash continues to either sit on or head for the sidelines. This would indicate an overall continuing bearish trend. A few months ago, stocks that I was following for day trading - HOV, C, AIG, FRP, DAI, SLW, F, WYNN, FXP, EEV - had patterns of several percent up or down on many days. My view was that we were in a declining market, with frequent bear market rallys. In terms of probabilities, I figured I needed to buy after dips and (a) wait for a rally, and (b) hope that I didn't catch the next leg down. It worked with surprising consistency for several months, including my larger FXP position, which I eventually sold after several weeks underwater for about an 8% gain. When AIG hit $5, I thought it might be a bottom, but of course this was a guess, given that I didn't know the real situation with their cash flow and balance sheet. My TBT position was the big loser overall, accounting for half of my losses. Last week, when gold miners fell by 15%, I bought several big positions (maybe 15% of total portfolio) because it seemed like an overreaction given the POG and trend in POG, as well as trends with fuel costs.

But overall, I don't have any idea what direction any stock or fund that I follow will go now on any given day or for the near future. Since I've only lost 20% this year, after years of gaining at least that, I don't feel bad, and am just sitting on a fence to see what happens next. I don't have the sense of the pattern of prices anymore, so I'll sit on my $5 AIG, $8.50 GFI, $27 GG, $70 TBT, and $11 AES for a while and see what happens.

Excellent Ron Paul commentary in the video square at bottom right of page linked here:
http://finance.yahoo.com/q?s=spy

Anyone else having trouble with TinyURL today?

IT is official.

High School Seniors are more prepared verbally than our two vice presidential candidates.

http://tinyurl.com/4phs4b

Cnn's website.
"Debate analysis: Palin spoke at 10th-grade level, Biden at eighth"

If you put makeup on two clowns, they are still two clowns...
??? right....

[Bill Cara note:

I think you are being a little harsh and let me tell you why. About 32 years ago, I was asked by the Canadian Doctor publication to join as a contributing editor (monthly column) of technology, and later (after I moved into the financial world) of capital markets. I was writing for 50,000 doctors -- a very well educated group I am sure you agree. This was my first experience in being widely published and I was a mental wreck until after the first eight monthly columns when the Cdn Business Press Association gave me an award. Then and there I knew I was going to be a writer (among other things), so I sat with the publisher and editor one day and asked how I could improve my writing. What a shock. I had to get down from my high horse when they explained I had a writing style suitable only for graduate work and they wanted Grade 10. They explained that all of my readers had post-grad degrees, but none of them had the time to think deeply on what I was trying to communicate. They said that publishers know that to connect to an audience you have to position yourself in a non-threatening way, and Grade 10 -- good enough for medical doctors -- is the magic answer. So I think Gov. Palin was bang on, and with his decades of experience in the Senate, so too was Sen. Biden. In fact, with the Grade 8 communications level, Biden was appealing to Joe Sixpack, which was the space Gov. Palin had tried to grab. Not bad. His only mistake I could see is that he ought to have referred to them as Joe & Jane Threepack, which is what they are until significant change comes to the White House and Congress.]

Allen,

there is absolutely nothing wrong with your analysis, IMO. The only addition to your approach that, in my view, will radically improve the performance is a timing tool. See, fundamental analysis while provide yopu with general picture do not serve as timing instrument. Prices tend to make movements, sometimes very wide movements, within unchanged framework of fundamentals. There is a good reason why Bill, along with all the analysis of big picture, of market interrelationships, sectors and companies, applies technical analysis to time his entries and to control risk.

General ideas come from big picture; timing and risk control come from price and volume action analysis.

In line with earlier comments, allow me to add this post to discussion:

http://www.realitytrader.com/blog/2008/10/information-price-divergence.html

Bill,

Or anyone who can answer this question if Bill has answered. It tough keeping up with the blog on my schedule and would appreciate a reply.

At what point is your opinion that we are in the beginnings of a bull market abandoned? Just curious what series of events (and/or market TA) have to take place for you to abandon your market sentiment.

[Bill Cara note:

If I ever get to the WIR, I intend to explain it. This morning after 45 minutes with a podcast interview, I decided to finally hit the beach. Oh, if life were only a beach!

With respect to my new Bullish mind-set on all but Financial and Consumer Discretionary sectors of international equity markets, I will stay bullish probably for three years. With Friday afternoon's action, and the impact that will have on Europe on Monday, I expect more selling unless the UK and European government's come through this weekend with a financial aid package similar to the US. But it will happen soon in any case. Maybe the DJIA hits 9800 on the downside, which was a target of mine back a couple years ago. Equity prices, however, will benefit from reflation. As several trillion new Dollars, Euros, Pounds, Yen, Yuan, Loonies, etc, are poured into markets -- on top of the $4 trillion cash in the accounts today -- there is way more than enough to power the rocket to the moon. In a couple months, the serious problems with houses, jobs, bank lending, bad paper on the books of the big banks, etc, will start to get cleared out and that will bring the initial rally back to earth because people will be listening to all the negatives. But as problems get cleaned up, the market will give us in return a series of higher highs and higher lows. There will be concerns and disruptions as more banks and retailers bite the dust -- but just think of it as a screwing of the shareholders and bondholders of those companies (which hopefully you avoided). Other and more financially sound service companies will step up and grab the business and the good assets, and life will move on. At the end of the day, the only financial issue to be resolved is how much impact on commodity prices will reflation (ie, a devaluation of fiat money) have on real assets. In time we will adjust to $2000 or $3000 gold and $200 or $300 oil, just like my parents house went from under $14,000 to over $300,000 in stable markets over time, and why the coca-cola I bought for 6 cents as a pre-teen now costs me sometimes $2 in a machine. Life moves on. We all adjust. The point is that you need to hedge fiat money (not just $USD fiat money but all of it) with gold. Right now I'm at 20%, thinking of going to 25% -- if Europe really caves in on the Euro/Pound support, and the Fed starts chopping rates as well. Think of gold as a permanent option on that $14,000 house or that 6 cent bottle of coke. As long as you have no debt against your gold or your financial assets, you are self-insured. Brother, any insurance written by HB&B isn't worth the paper it's written on. Finally, to really answer your question, I would go to more than 50% gold if there were to be a World War III or even another event in the US like 9/11. You see, there is no way the monetary authorities of the G-20 nations are going to lose. They will print $10 trillion if that's what it takes to stabilize markets, including international trade markets. Don't bet against them. Just, if you see them loading up the printing presses, take out more self-insurance.]

Bill - And for gold, you mean the metal, not gold stocks? And for holding gold, do you recommend going to the lengths that Kaimu does: holding in a mint outside the US/Canada assigned directly to you?

If credit stays super tight, perhaps even established miners will not be able to finance new production? And could that not mean higher prices for the metal, yet lower prices even for the senior miners (until credit flows again)?

Bill,

With respect to your bullishness, how does the real estate market play in? Prices have roughly reverted back to 2004. If they smash thru 2000 would that change your outlook?

A stock I will be watching is Home Depot. Not to buy now, but for maybe about 6 months out. It reached a high of around $68 during the dot.com boom and is under $24 now. A great number of homes were built that are considered spec homes. People will have to replace a lot of the spec materials such as carpet, lino and a whole other plethora of items. Instead of upgrading to a newer home, they are going to upgrade what they have. I think they will be shopping at Home Depot since the local hardware store no longer exists. Nardenelli is gone and I wish the self checkout would also take a hike. I like the personal help I get at the register and am willing to pay for it. They've been and are going through some tough times. With the material prices falling back, I have noticed prices coming down at both Home Depot and Lowes. They're a big outfit and I don't think they are going away. It's interesting using Google and checking the volume all the way back to 99.

If anyone has the link to Don Coxe's latest Basic Points, could you please post it .

Thanks much

stories about the ripple effect starting to trickle in:

http://tinyurl.com/3e8cd7

"Last year, Law and her retired civil servant husband bought something called an equity-linked note issued by Lehman through Citibank (Hong Kong) Ltd, she said.

But two things went wrong.

The note's value was linked to the performance of two major Chinese banks in the Hong Kong stock market. Those banks' stocks have tanked, diminishing the value of the investment.

Then Lehman crashed, and now Law is unsure whether she can recuperate what money remains when the note reaches maturity next month.

"We've already started to buy and eat cheap," Law lamented. Her husband cannot work because of chronic illnesses. "How are we going to save up that money again?"Last year, Law and her retired civil servant husband bought something called an equity-linked note issued by Lehman through Citibank (Hong Kong) Ltd, she said.

But two things went wrong.

The note's value was linked to the performance of two major Chinese banks in the Hong Kong stock market. Those banks' stocks have tanked, diminishing the value of the investment.

Then Lehman crashed, and now Law is unsure whether she can recuperate what money remains when the note reaches maturity next month.

"We've already started to buy and eat cheap," Law lamented. Her husband cannot work because of chronic illnesses. "How are we going to save up that money again?"

Brown-Cal- prices have already hit 2000 levels in many parts of the country (san diego, for example, where my brother purchased a new home earlier this year for roughly half the 2007 listing price)...prices in the outlying counties of the Bay Area (Contra Costa, for one) have already been cut in half...however, there are many micro-economies in the Bay Area, and in SF and on the Peninsula, prices have not and will not come down-> the demand for good schools, safe neighborhoods/good neighbors, and proximity to the technology and biotechnology companies in the area, will not change; the sophistication and (relative) affluence of the population here also insulates them to a degree-> high equity percentages in homes and 15-30 year fixed rates around 5.5% provides stability...i don't see housing getting much better for another year, but neither do i see it getting much worse...is it armageddon, or just another economic downturn similar to the seventies, 1990-1995, and 2000-2003?

2nd_ave,

I eye-balled the 5 year chart here:

http://www.bloomberg.com/apps/cbuilder?ticker1=SPCSUSA%3AIND

and it looked like we're back to 2004. So I'm thinking that credit conditions and supply overhang are nothing like 2004 so we are going much lower. If real estate goes back to 2000, then for sure the credit problems go beyond subprime and I would think that would effect Bill's bullishness, no?

Anyone interested in going on a real estate roller coaster ride check out http://www.speculativebubble.com/videos/real-estate-roller-coaster.php

it's a lot of fun. It only goes up to 2007 so obviously in needs updating. Anyone care to write the ending?

U.S. Government debt now OVER $10 TRILLION!!

Boy, I thought they'd be able to delay that till next spring....

Its over $10,148 BILLION as of 10/2/08. Quite an amazing accomplishment to waste that much money in so short a time.

http://www.treasurydirect.gov

Obviously it can NEVER be repaid. It would take 100 years of $100 billion per year surpluses to repay it. A century of pain.

stockman, g034, ClaudeG, Chief Falling Knives, All old friends-

I am sitting in cash, hedged equities, some foreign currencies and some distressed situations. I am anticipating that the stream of bad 3rd Q earnings will make for a rough go. I also believe that this recession will be long and relatively deep. I do not expect the true turn to come for awhile. And then I anticipate a slow recovery. With my little black box I have weathered this storm quite well and am up on the year (4.3%). I am one lucky bastard. ;)

I hope all of you are doing well.

MarkM

Kaimu: when you say
The ease with which the elite bankers of the World have duped the masses is astounding!

It hasn't been "easy" its a process that has unfolded over decades. It hasn't been easy at all. The difference is the mass public has no long term memory versus the elite bankers having had decades of focused leadership to shape policies to these end effects.

They have had time to test, retry and hone done policies and tools to become very effective to run what is shaping up to be a new type of governing body, a new government not like any seen before.. and without history to help the masses judge form, the masses have no social immunity built up to respond to these changes.

Like it or not, we are seeing the rise of a new power elite and for the first time: a world governing body.

After they secure power absolutely you will see abuses of power like you never would guess. What we are seeing right now is nothing. If they follow the typical pattern of rulers of old.

This is part of the reason the UN has come under attack so much from the Bush admin and others backing this group. The UN represents the only other world governing body in town... As a result we will also see continued attacks against the UN from various fronts... Until they figure a way to subvert that body also... which I think is the more likely candidate. After all if the Banking elite can so successfully take control of US congress/Senate and make them sock Puppets... The UN will be next.

Bill:I had the same experience as a writer / Engineer. When I did work for Boeing we had to write everything to 6th grade level English.

Communication needs to be kept simple when being projected to larger audiences for best effect... Smart rarely translates well to the masses.

Kaimu - I read your 12:53pm post and looked at the charts. Your position is at once logical and professional. I don't know if you were replying to my 9:37am/9:58am posts.

But like Vad wrote 11:10am, "Trade what you see not what you think" and i see bonds up and gold/pm down or not rising. That see fear and deflation worry. I don't know where Mish gets M3 I thought it was dropped prior to July.

note: 9:58am post followup to 9:37am post. Mish takes a dim view of M3 but still mentions deflation on the way. July 14, 2008
"Judging from collapsing real estate, people walking away from homes, risk aversion sinking in, and banks unwillingness to lend, together with the idea that credit that should be marked to market isn't, I believe we are in deflation, right here right now. Those focused on M3 or energy and food prices are truly missing the boat. Trillions of dollars of destruction in housing wealth (with much more coming) and another trillion markdown in bank credit coming (on top of what we have already seen) are far more important and far more representative of the state of affairs than is M3, or any other monetary aggregate for that matter."

Posted by: JohnE at October 4, 2008 9:58 AM [link]

I've been a lurker on the site for a while and find the discourse generally very insightful. Thought I'd break the ice today by posing a question to the board and Mr. Cara.

I'd like to believe in Mr. Cara's new bullish outlook -- however, it seems to me that, before a bottom can get put in, the market still has to absorb and discount the downward revisions to current and future earnings which will come flooding in the next month of so. Maybe this is naive but it's the earnings or expectations thereof which ultimately determines stock price appreciation, no?

[Bill Cara note:

Great question. Traders often look beyond what they already expect, and for the most part have priced into the market. Also, fundamentals may look good and share prices sell off for other concerns. Look at the China equity market for instance. The Shanghai Composite hit a high in Oct 2007 and the economy boomed through the Olympic Summer Games almost a year later, but the index collapsed through the year from a high of 6124.04 to a low this week of 1802.33. Traders in China knew that their economic success could not last if the US economy was going to fall apart because the US consumer is the economic engine of China. Moreover, as the US banks went into their Bear in June-July 2007, the Chinese traders knew that at some point the flood tide of US capital into China would stop, and could even ebb. So, there was a bigger picture view taken in China, which worked out. Share prices there today are believed by many, including me, to represent good long-term values. I think Americans too have to long further out. The Administration and Congress have not been shy to tell you about the problems and they were able to take drastic action that will likely turn around the ship. In macro-economic terms, the data may not show a recovery for a year or more, but share prices could begin to rally soon because there are values out there. Prices of excellent quality companies that are well financed are trading at discounts of -30% to -60% or more from a year or so back. Share prices move with bids, and bids require fresh capital. In addition to the trillions of dollars of fresh capital that has been legislated into existence this month, there are some $4 trillion in cash on the sidelines, waiting for a signal flare to start buying. These are my views. I recognize that most people hold the opposite view. That's what makes markets. For every share that has been sold in the past two weeks, somebody was a buyer. Warren Buffett and several Sovereign Wealth Funds were buyers. Values are out there. Where you may get a boost of confidence will be when those bad earnings do arrive and the share prices fail to fall any further. We won't have long to wait to see the outcome.]

Bill,

I follow your reasoning but what if your 1987 playbook does not work this time? If real estate is at the core of our credit problems and it is far from turning the corner then what makes you think that money will come off the sidelines? Lets say that real estate prices need to come down as much as they have ytd. Does that not force further deleveraging?

Also, the bailout will focus on solvency issues (and likely not succeed) so how does this compare to 1987?

Thanks,
Barry

Brown-Cal- can't speak for Bill, but i still have vivid memories of the 1990-98 housing recession in california, along with the 1994-2000 bull market in technology and the dot.com bubble...all the doubts about a bottom are appropriate, and at least to me, signs that one is forming...i purchased one property on the peninsula in 1993 at a 36% discount to its 1990 peak value, and for 5 years watched prices drift lower and stagnate; my wife also owned income property in SF against which she had to borrow from her family for remodeling work when no bank would believe in it-> so i agree that it may take years for housing to return to the robust market it was... you have to be buying when no one believes it makes sense-> in just 2 years (2000) investors/home buyers/businesses were snapping up anything in the Bay Area at any price, we unloaded at prices we couldn't have imagined 5 years earlier, and moved to a better area...this time, i think the global economy takes off again, and we soon return to the boom cycle; maybe it's a little early, maybe it's not; but equity prices are attractive...if i'm buying stocks at the equivalent of 1993 home prices, i'm OK with that-> i'll admit this week's down draft was swift and caught me off guard; exactly one week ago, our portfolio was at an all time high, now it's 18% off the high; we are, however, still squarely in positive territory for the year...

Barry,

I've got to say that I'm with you. I think housing is in the process of busting enough so that further damage is inevitable. The market for housing has really broken, totally apart from credit crisis issues. Believe me, all the folks that pony'd up for houses in the early 00's, the participation rate, the average purchase prices, that alone augered for a serious decline.

In short, I think housing has quite an adjustment yet ahead of it, and I think that until such time that houses are freely transacting at significant discounts to even today's "bargains" (and I for one think housing hasn't come down nearly enuff price wise yet) the great Sharkmeister says there's more trouble in housing to come. It's just that now it's you and me on the line for it instead of Lehamn Brothers.

Bill,

WoW. Thank for your detail reply.
Did that ever clarify things for me.

here is how I see things unfolding near term:

you said, "unless the UK and European government's come through this weekend with a financial aid package similar to the US."

well it looks like they won't, at least not yet...
http://www.bloomberg.com/apps/news?pid=20601087&sid=aDwkb9TlGOiE&refer=home

and euro banks are even more leveraged relative to the US (and therefore not willing to lend in the above case) can only make short term prospects more uncertain...take a look at this:
http://paul.kedrosky.com/archives/2008/09/30/how_the_us_save.html

this won't help much either...
http://www.ft.com/cms/s/0/6beabcdc-8f51-11dd-946c-0000779fd18c.html

also the TED spread (LIBOR vs FED Funds Rate) looks to be more of a euro$ squeeze courtesy of USD$

Elevator down on Monday.

My first target is for ESZ08 to 1070. I'll begin accumulating partial positions in cara 100s at that point.

2nd_ave,

Thanks for your perspective. I took most of my chips off last Oct. It was hard for me to do as I've always been a buy-and-holder. So after the counter trend failed last Spring, I started DCA'ing back in. My feeling was that I'm not smart enough to know when to jump in, and I know that if you miss the big up days your in no-mans-land. So I'm planning on being all-in by the middle of next year (hopefully within the next bull). I know I saved myself a bundle by getting out when I did, and my hope is that I'll end up with better than the avg peak-to-trough price. But its been tough lately as every buy has been down 10% or more within weeks (if not days).

I have no idea if my strategy is any good, but I know that it has taken most of the emotion out of it which is good for me.

share_attack,

I know that a lot of equity traders are not particulary well school in the credit market and yet it is called the "back bone" of the equity markets. Could it also be that a lot of debt traders are not well schooled in the real estate markets (perhaps it should be called the "back bone" of the credit market).

My other thought is that as bad as the decline in real estate feels so far, it is pretty symmetrical to the previous rise. What happens if asymmetry kicks in? After all, credit conditions and psychology are way different than they were during the bubble's creation.

2nd_ave's experience in the 90's might turn out to be applicable, but perhaps we're talking about 10 or 20 years before we've completed the reversion to the mean (coming back up from the downside - we're still way above the mean).

I live in San Francisco, and the thinking here is that they are impervious to the surrounding markets. That may mean we have a very long way to go.

Brown-Cal- at least take a look at china...was it only a year ago China mutual funds were topping performance lists, and it was almost axiomatic that China's GDP would overtake that of the US within 20 years (i don't believe that, btw)...one of the Cara China posters, whose Dad lives in Shanghai, was already reporting that Chinese investors had pretty much given up in July...now it's October, the index is down by 2/3, and no one's interested in buying...one could do worse than start scaling in now...

Brown-Cal

Can't wait for the 2008 data to come in so they can finish it. That will be some drop. Thanks for the link. [The Utube link allows you to see the year in the lower right better]

Note to all: I ramble in the first half, but the important point does happen in the 2nd half of post.

Since we are talking about how housing plays into this market

http://tinyurl.com/3ja9sk

A little story about buying homes on ebay for 1.75

the point being, the housing market is a way from a bottom yet. I know in Hawaii the housing prices are still high are relative to 2003 prices right now and still shaking out.

The housing markets will lag behind everything else, it has to since as a normal people we have less and less to work with and as the dollar shrinks due to current policies and jobs go away etc this implosion is a slow painful process still unfolding.

We talk about basing our guesses on past examples... but our larger set of conditions are like none ever seen before.

We talk about when is the bottom going to be here.

etc.

I think Bill is right to say in the new conditions that the current players impose will inflate the market to prevent collapse at the moment. The current set of jokers in power have shown their amazing ability to control and manipulate the current reality to their set of gamed rules. For now the "crisis" is adverted with many repeated mini crisis's engineered to cow other governments and entities into line.

But that doesn't mean we are at a true bottom right now either beyond the 2-3 year time frame.

The current crisis is a example of a economic war won and played out in manners never before seen. We the people have been conquered... I tip my jester cap to the new powers to be.

To experience change, to transform is become something new. Once the economics are locked down we are locked in...

or so it seems

Doors out still exist... Just be open to figure out this.

My one plead is don't base life on the bottoms... Base life on what is meaningful to you...Using bottoms only as means to leverage your true goals, rather than chasing the shifting numbers, riggered and jiggered to keep people dancing.

Basing life to the bottom, just ties one into the current rigged game and you will never get free of that game since the rules are jiggered to tying one to following their droppings...

NOW the Important part:

This new economic system is based upon crisis!!!

To follow it means to base your own life upon crisis.

IS that really a way to live in a way that is healthful and meaningful.

Seriously think about this point for a moment!

I try not to spin too much hot air here out of respect to everyone here.

But this is the true point I am making, take a few seconds to ponder this one new truth:

This new economic system is based upon crisis!!!

After you ponder that, ponder how it effect/affects your life to follow such a system.

Do you see the difference? I am speaking from personal experience since I am already moving again elsewhere and this no longer concerns me... I personally have de-couple my life from crisis based lifestyle. I just wanted to share some perspective since I found it interesting in retrospect looking back and seeing that truth and realizing how successfully the new economics are tied into the business of crisis and by default how that ripples into so many lives, which I have been helping pick up of late.

Peace

Brown-Cal (graduate of both schools?)- since you live in SF, you're familiar with the immigration pattern...cash is king, and many of the properties that sold in the past few years and still selling now are paid for in cash by wealthy families from Asia (with or without an eye towards the exchange rate)...these families are here to educate their kids, start a business, and/or relocate to a place with far less/fewer pollution/politics/police...any priced drops are usually met with bids...

Interesting article on CEO Prem Watsa of Fairfax Financial (FFH, FFH.TO) on upcoming economic storm. This property/insurance company has been profiting because it anticipated the financial meltdown and acted accordingly, with its stock up over 50% since summer.

http://tinyurl.com/3goowm

$48bn Hypo Real Estate bailout deal collapses
BERLIN: German bank Hypo Real Estate (HRE) announced yesterday that a planned 35bn euro ($48bn) rescue had collapsed after the banking consortium involved pulled out of the deal.

http://tinyurl.com/3sp3jb

I was even last week too. I'm not bothering to figure out how much I'm down from Fri. Prices will come back for one last dance.

Though I think we're in for some incredible cuts in prices before the year is out. Hopefully World Space Week brings us some relief.

"UK increased its deposit insurance coverage to £50,000 after Ireland guaranteed all deposits at six of its largest lenders. Stocks in London rose, after falling for three days ahead of the U.S. House vote on the bank bailout bill. Libor rate remains at elevated level."

http://tinyurl.com/3pldn4

FTSE down 23% this year? Should be easy to beat the indexes in markets like these.

Just stay in cash. $4T can't be wrong.

Metlife sure had a haircut last week.

http://tinyurl.com/3n8hu8

Also, the hedge fund country isn't feeling too well.

"Icelandic bank with British savers' money enters crisis talks

Most of the British depositors in Kaupthing are safe - savings in the bank of up to £50,000 are guaranteed by the UK Government. But in Iceland, the population - known for their resilience and stoicism - are panicking. They are rushing to the banks in their snow-topped 4x4s to check that their savings are still there and stockpiling provisions in case the country's rampant inflation heads further out of control. "

http://tinyurl.com/5ys75b

I think we just hit the tip of the iceberg. Icebergs are much larger under the water. Iceland is one big country hedge fund that was supposedly being shorted to death in April. Is it dead yet?

Anyone think ETFs could be to blame for the boom-busts recently? I know Kaimu's stand on this one. Think GLD, USO, country ETFs, financial ETFs, REITs, etc. etc. Aren't they all just leveraged using futures and options & other derivatives to mimick certain indices?

World’s Hottest Market Gets First ETF
Written by Matthew Hougan
Wednesday, 05 January 2005 00:00
Cool Iceland is one of the world's hottest stock markets, and has been for the past few years. Its benchmark index, the ICEX-15, rose a staggering 56% in 2003, only to surpass that gain in 2004 with a 60% rise. Imagine the Dow rising to 26,000 by the end of 2006 - that's what's happened in this tiny Nordic island since the start of 2003.

http://tinyurl.com/3tw3pt

Bigger they are...

Mutual funds offered lots of gravy to financial institutes with high MERs and hidden fees. They were tougher to get in and out of. So the charts and volatility would be much smoother in the short term.

ETFs are basically speculative instruments designed for rapid entry & exit. The more ETFs out there, the more volatile the market. They're great for short-term traders, not so great for stability in markets. Can they be shorted? Can mutual funds be shorted?

Another interesting post regarding leveraged ETFs/ETNs... could explain SLW weakness last week.

http://tinyurl.com/4afp8r

QT- that was a pretty slick ride...try it with SF prices, and it won't be as exciting...if you further enhance the experience with (let's call it) the psychic rewards of living in the Bay Area with a combination of weather/neighbors/colleagues/companies/careers/high schools and colleges/cultural events/sophistication difficult to reproduce anywhere else, then it's no longer a roller coaster, it's a hot air balloon...

..left out the restaurants...

2nd_ave,

Actually I'm an east-coaster(NY) SUNY grad, though I wouldn't mind if my kids ended up Brown-Cal.

I hear what your saying about forces that support the market. But just as in NY, there will be unemployed investment bankers and such that will be needing to down size. I wasn't aware specifically of the Asian put, but at some point they cannot represent all of the buying on the margin (even the Japanese receded from Hawaii and Rockefeller Center type properties at some point of pain).

The appreciation that has taken place here since 2000 has been unreal. I can't blame people for wanting to live here but if homes are truly worth 2x what they were 6 or 8 years ago then why were they so underpriced back then?

2nd_ave,

One other San Francisco phenomenon I wanted to mention was the home-improvement madness that has gone on here. Every block has construction crews on it. And this one is the most incredible: people dig holes under their homes to add a one car garage - at the cost of $250,000. There was the assumption that this added 2x to the value of your home (not to mention a place to park).

Now tell me that these people aren't beginning to wonder if more than just their garage is going to be underwater sometime soon.

B-C- the homes were not underpriced..what happened was interest rates dropped low enough/borrowing terms almost 'suspended' to the point that i posted a story about strawberry pickers in watsonville qualifying for a no-down 750k loan to buy a new home...when buyers 'price' a home, they don't look so much at the listing price, they look at monthly payments-> if you drop the interest low enough, even a strawberry picker can make the monthly payment...now that interest rates are up again, affordability has disappeared...however, for those us prudent enough to lock in 2006 interest rates with a 15-30 fixed mortgage, affordability has not changed...

B-C- with the cost of a monthly parking garages in SF (i know one garage in the downtown area leased by 4-5 partners in their early thirties; they sit in the office and play cards/watch TV/surf, empty the trash once a day, and spend the remainder of their time springing the exit arm after collecting 7-20 in cash from each driver) and the hassle of finding a space at home, these homeowners will recoup the cost of their underground garages within 10-15 years (LOL)...

what that really tells me, though, is that you live in a neighborhood where people have 50%+ equity in their homes, they're paying interest rates you may not see again in our lifetime, and no one is about to sell their home at a loss...ergo, home prices are not about to come down there...

SEC short-selling ban ends thursday...good news, IMO...

http://tinyurl.com/52n9rn

I've been so stressed wondering about whether my 403b is safe,whether social security will disappear for all intents and purposes even if is nominally still there, and whether my bloodied portfolio of PM stocks will even allow me to break even at some point. I can hardly think straight, so I read this blog and Roubini hoping for some insight and some reassurance. On the inflation/deflation question, didn't the government of Japan try to stave off their deflation by printing lots of money and throwing it at banks? Yet in spite of the printing press, they still had deflation. It would seem that printing money in a deflating economy is just pushing on a rope. Isn't that where we are now? If not, why is our situation different from Japan, aside from the fact that the Japanese were ants rather than grasshoppers like us and therefore suffered less than we are likely to suffer?

On a side note, I find the idea of raising deposit insurance to stave off bank runs a little strange. In the first place, the FDIC is completely undercaptialized. In the second place, you would probably have to wait until hell freezes over to get back your money if your bank fails. Some reassurance for Joe threepack! No, I would rather hide my money in a mattress at this point, leaving just enough in the bank to write checks to pay bills.

One last point about de-coupling your life / Investing into crisis

It doesn't have to be hard. While it might consist of many different steps, many steps can be deceptively simple.

Here is an example. Bill tells us not to invest in risky stocks. Rather he shows us how to invest in strong companies at the right times when they are Low.

This isn't buying into crisis, it's buying into strong companies with proven track records, which weather the storms.

The manner in which we switch out of crisis can be very simple. Keep that in mind also, but it can make all the difference in one's larger life also.

aucourant- what if i told you by the summer of 2011 the DJIA will be at 17000, gold will be at 2000, and if Social Security wants to do the right thing it would actually allow all of us to put our (deferred) balances into the stock market right now? i believe in all three of those assertions, although it's kind of like telling my (youngest) son that he'll find a great job someday, that i'll be around to watch him graduate, and that putting all of his money into stocks right now is the right thing to do...there are no guarantees, and for someone who's stressed it can be difficult to see beyond the present, but personally i can attest to the saying that "95% of the things we worry about never happen, and the other 5% is out of our control"...

2nd: I want to vote for you as president!!!

Casey- LOL...i need to be nominated by a DENSA majority to make the ticket...

Positive response just announced from PBOC in a news conference (10/4 morning Beijing time) to the passage of US 700B Bailout. http://www.pbc.gov.cn/detail.asp?col=100&id=2862 (unfortunately it is in Chinese; don't see English version on PBOC's English sites. ???)

Also read from a Chinese news site www.backchina.com, saying on the news conference China promised to buy 200B of the 700B; 70~80B of the first 250B. However, I don't see those numbers in the announcement on the PBOC website.

2nd, I agree with you wholeheartedly that "95% of the things we worry about never happen, and the other 5% is out of our control"...although I subscribe to the theory that if you are lucky enough to find a space for your car in front of your apartment building in New York, something is undoubtedly gaining on you.

I think with position sizing and iron-clad mental stops, there is little risk in putting money into the market at this point. I have a lot of confidence in Bill's take on things, and using sound money management would at least protect on the downside.

However, I have discovered that, in spite of knowing this, I have been a disaster in actually following through with the required discipline and have lost a lot of money as a result. Part of this has been due to confusion about how much of a loss I am willing to take before bailing out. I have loaded my IRA up with PM penny stocks and the commissions are such that I have been unwilling to sell when they go down. This is obviously wrong-headed from the point of view of elementary arithmetic. Trying to limit losses on individual stocks to 10% doesn't work too well with these types of stocks. It is just too easy to fall into the trap of hoping they will turn around, rather than selling. All the books I read, such as Alexander Elder's, about trading don't seem to address the needs of the intermediate term trader. (Unfortunately, I accidently left Bill's book in Europe before I got a chance to read it.) I am beginning to think that, given that price series are fractal, as explained by Mandelbrot, I should be using Elder's ideas on weekly and monthly charts to time my trades and determine selling points. At the same time, perhaps less volatile stocks trading above $5 would be necessary for this approach to work. More learning needs to take place but the tuition has been high. Thanks for your kind words.

Great post 2nd. You must be a true optimist. :)

I believe in the Pareto principle (80/20 rule).

http://en.wikipedia.org/wiki/80-20_rule

I worry a bit more.

So my guess it might be 2013 or 2014 before we see your prediction of DJ17000 (after London Olympics). No reason why it wouldn't happen though.

Coincidence that we are experiencing this economic warfare right after the end of Beijing Olympics?

Candidates for 2016 Olympics (picked next year).

Chicago, Madrid, Rio de Janeiro, and Tokyo.

Anyone betting on Chicago? Illinois is home state of Paulson.

"I do want to talk about keeping our economy growing and creating jobs for our citizens. I had a New Year's resolution, and it was to make sure that Congress keeps the taxes low and to make sure that when we spend your money, we do it wisely or not at all. And it's a resolution I intend to keep. (Applause.) " - George Bush

http://tinyurl.com/2ovnpq

This article is interesting (from feer.com, Far Eastern Economic Review)

The Great Crash of China
by Brian Klein
Posted October 1, 2008

http://tinyurl.com/3m4wl7

"Paulson said he appreciates the SED mechanism in helping solve long-term and sensitive issues of mutual concern.

He stopped short of predicting when the US economy will step out of recession, but believed US has a "resilient and diverse" economy that will help long-term fundamentals. "I'm an optimist ... We are making process and working our way through it (the recession)."

http://tinyurl.com/3k53vr

After the Olympics being the economic driver of the last few years for China, I think there needs to be another focal point. I think currency changes alone could cause some dramatic happenings in world markets and on corporate balance sheets over the next few months and years, as USD competes with other "baskets" of currencies as world reserve currency.

http://tinyurl.com/4td9zg

There must be a reason why Paulson wants a weak Yuan.

More on the 95/5/0.5 rule, some really interesting stats.
http://tinyurl.com/3l9yk3

If all the lurkers here decided to post, we would probably crash the blog, or at least make Bill's dial up really slow. :)

Nonzero- i asked my Dad to look over that announcement- it's pretty standard bureaucratic stuff, applauding the bailout plan and pledging to do its part in maintaining confidence in world financial markets...nothing about China buying 200B of the assets...

Some sabre-rattling going on again.

"The US plans to sell $6.5bn in weapons to Taiwan as part of a long-awaited package intended to boost the island’s ability to defend itself.

The Bush administration on Friday notified Congress of the proposed sale, which includes Patriot missiles, Apache helicopters, submarine-launched Harpoon missiles, Javelin anti-tank missiles and spare parts for F-16 fighter jets."

,,,
"One former US official said the slimmer package adhered to the “Goldilocks theory” of being “not too hard, not too soft to try to preserve things with Beijing”. A senior US official said the White House believed it could proceed with the sales now because Washington had restored a “very solid, very productive and positive relationship” with Taipei."

http://tinyurl.com/3ugfaf

China's response?

"China on Saturday denounced the US government's decision to sell arms worth of about US $6.5 billion dollars to Taiwan.

Foreign Ministry spokesman Liu Jianchao said the Chinese government and people firmly opposed this action which seriously damaged China's interests and the Sino-US relations."

...
"Defense Ministry spokesman Hu Changming said the US decision has ruined the good atmosphere of cooperation that had existed between the two armed forces over recent years.

The statement also warned China reserves the right of making further reactions."

http://tinyurl.com/43ts4l

What happened to Goldilocks in the end anyway?
http://tinyurl.com/3gye6h

Couldn't find any info on Chinese investments or affects of bailout yet...

Blue Horse Shoe Loves Anacot Steel.

Blackstone has been busy.

"Oct. 3 (Bloomberg) -- Blackstone Group LP completed its first Chinese acquisition, paying as much as $600 million for a stake in specialty chemicals maker China National BlueStar Group Corp., three people familiar with the plan said. "

http://tinyurl.com/3tofa8

"Blackstone(BX Quote - Cramer on BX - Stock Picks) and JPMorgan Chase (JPM Quote - Cramer on JPM - Stock Picks) plan to raise more than $1 billion to fund the conversion of up to 20,000 U.S. cinema screens to digital projection systems, in a deal to be announced on Wednesday, the Financial Times reports on its Web site. "

http://tinyurl.com/4bt4kl

"The Blackstone Group and JP Morgan will be AIG's global coordinators for the divestiture program, AIG said, adding that its "property and casualty businesses generated approximately 40 billion dollars in revenues in 2007. "
http://tinyurl.com/3tx9uz

Blackstone is down 47% this year, up 5% Friday.

Did the US just open a Sovereign Wealth Fund Friday to compete with their Alaska Permanent Fund?

"The Funds' ultimate uses were never clearly spelled out at its inception, leaving no current consensus over what role Fund earning should play in the current and expected state budget shortfalls." - Wikipedia on Alaska Permanent Fund

Sound familiar?

http://tinyurl.com/5u949p

2nd, Can you explain what you think will push the DOW to 17,000, and what will push gold to $2000 in the next few years?

Right now, I see people forecasting 8700 for the DOW and $600 gold, and to be honest, if the asset deflation and deleveraging continues I can imagine they could be correct.

Me, I expect some major stimulus very soon.

ALOHA !!

John E: "If we are heading into a deflationary era as I have read here and elsewhere, would that not argue for lower PM prices except for the fear factor slowing PM's slide?"

What is a mortgage? A mortgage is paper backed by real property. What is a bond? A bond is paper backed by government promises to pay. What is a stock certificate? A stock certificate is paper backed by PP&E and other assets of the company(hopefully the assets are worth more than the liabilities). What is a US dollar? It is paper backed by the "faith and credit" of the US government. What is gold ... gold is money with no liabilities to any government and therefore not dependent on "promises" or "faith"! Where you and Mish error is lumping gold as a commodity. Who owns most of the gold and who owns the futures markets that FIX prices of commodities? Who has by far the LARGEST vested interest in PAPER MONEY succeeding?

Like I said before OPRAH could corner the silver market and OPRAH, BILL GATES, BUFFET and CARLOS SLIM could corner gold! Or just CHINA could corner gold! So the markets for gold and silver(monetary metals)are easily manipulated, especially if you own the futures markets and the printing press!

M1, MZM, M3, M Prime, TMS ... money supply is expanding. At what rate and by how much? I can't believe everyone like Mish thinks the US FED in sync with the US TREASURY is all done inflating! These guys can shift into overdrive on a dime, or rather a mouse click! They just threw $630bil into the fire and now they have reloaded with $700bil in less than two weeks, that's $1.33tril! So inflationists are not suppose to count food and gas prices going up, but somehow deflationists get to count falling house prices and stock prices! Hummmm, maybe we should just look at unemployment levels and call it a day! After all if you are unemployed then you cannot afford anything can you?

Where does Mish stand on the unfunded liabilities the US government has stacked up for decades in Social Security and Medicare? Will the US government just announce one day ... "HEY... 50 million old people we're out of money so your last social security check is tomorrow and forget about Medicare you're on your own! Pay your own damn medical bills for a change!" The GAO head, the US Comptroller General, David Walker, quit because he doesn't see a way around default of entitlements. Without entitlements why would anyone vote for Reps or Dems and more to the point, why would anyone keep paying payroll taxes? With no payroll taxes coming in the US government losses about 40% of tax revenues! I can tell you what would happen if my small business lost 40% of revenues! Lets not forget the "entitlements" to the States and local governments! Even Arnold has his hand out this weekend! We are headed for a severe tax revenue crash. Deflation also means NO TAX REVENUES!! Will these politicos who grew up in the lap of privilege and power just roll over? Or will they "click" their way out? It remains to be seen but up until today and over the past few decades the choice has always been to CLICK! Those screaming DEFLATION remind me of falling knife catchers! Instead of reacting now to the future I prefer to wait and see what our government and Treasury will do under perceived deflation pressures. The past two weeks says "inflate"!

Gold is AC/DC on the money supply end game issue. Really the question is about a monetary crisis brought on by deflation and depression events and gold weathered the Great Depression better than most stocks and money. Imagine just how well the "faith and credit" monetary model will hold up in a Greater Depression era? Its all about CONFIDENCE ... The more liabilities the US government acquires the less CONFIDENCE there will be in the printed dollar. The only ASSET the US government has is the US TAXPAYER and the US government treats us with contempt and disdain. So there ya go ... more biting the hand that feeds you! China knows all too well how that works! BUYING TIME !!!

As John Connally(D), Nixon era Paulson said, "Its our dollar, but its your problem"!! Isn't that just the epitome of World Reserve Currency arrogance?

DISHONEST MONEY BUYS DISHONEST GOVERNMENT!

http://tinyurl.com/3v48cv

Wouldn't it be nice?

thriftybob- let's say we woke up tomorrow and everything got magically marked to market, and the entire chain of events linked to that event were to unfold accurately and instantaneously...i don't pretend to know what the consequences would be, but for the sake of argument let's say all bank accounts get cut in half and all home values get cut in half, and the DJIA gets 're-sized' to 8700...would life end at that point? of course not; the US population would carry on and prosper...i don't think this financial crisis is as bad as WWI or WWII-> individual households as well as entire nations pick up the pieces, rebuild, and once more strive to achieve and excel...lives went on after the Holocaust, after Nanking, and after Hiroshima...lives will go on after foreclosures, bankruptcies, and bank failures...'forecasting' numbers, as we all know, is pointless, but 17000 and 2000 seemed like good targets because buying QQQQ at the bottom of the dot.com bust or EWH at the height of SARS in 2003 would have in general given you a two-fold return over the next 3 years...

Has mediocre PM prices been the result of intl margin calls? It seems the speed of all w/w events are sureal. Bill's vision seems spot on however, the speed of the events could be much faster. Why would the miners not explode with the metals taking off. I remember metal prices during the Carter days (when things were in slow motion) SILVER AT 50 anyone---- 2 nuts in Texas no DSL nointernet no cable business news no Fox cleavage in HD. What will happen to the miners in a full scale panic with events occurring at lightning speed. On nat radio program Fri- Glenn Beck-- -he stated a full U.S. Army division has been deployed in the domestic U.S.for coming social unrest. Is unrest the right word? I love Ron and Manny Ramirez!!!!!!!!!!!

Nonzero - on PBOC,

From what I can gather, there is not such thing as China committed to any figure in our bailout plan. They merely said that they are glad the bill was passed. They urge American to stablized its financial condition asap, and the world central banks to work together to restore confidence. They are very confidence in their own credit system and that they will continue to monitor the crisis here in America. They will continue to stimulate their own economy and will increase oversight and inject cash into "their" system if need be. Typical political statement.

NEW YORK (Fortune) -- Back in May, when oil was at $129 per barrel and rising, billionaire investor Richard Rainwater did something as prescient as it was shocking: He sold off all the energy stocks he owned. Now he's making another bold move: He's betting on oil again.

Rainwater has been right on oil for quite some time. which will lead...oil or gold?? I think we all have an idea.

Rig at 94.55------Su at 33.71 Mr. Rainwater what am I doing Monday?

rainwater article:

http://tinyurl.com/4cvpvz

Bean-I was thinking about SU also....we'll see what Monday brings.

SU: Chris Martenson author of the crash course in segment 17b talks about a concept called net energy.

If you believe in the validity of net energy then SU has about a 3:1 return. This concept calls into question of how good an investment tar sands really is. For instance corn ethanol has about 1:1 or in some cases <1.

Wind and solar have much better net energy values.

STO may be a interesting alternative.

California's Dilemma
Inflate or deregulate?

http://tinyurl.com/4zjysj

Through all of the discourse, I encourage readers to remind themselves of the difference between real versus nominal returns.

If the market zooms 50% in three years but the actual, honest-to-goodness inflation rate to accomplish this is 16% (which will never be honestly reported by governments), then where are we?

Gold?

ALOHA !!

Japan vs USA ... Who pegs their currency to the yen? I did not know the yen was the World's Reserve Currency ... when did that happen?

ALOHA !!

"Glenn Beck-- -he stated a full U.S. Army division has been deployed in the domestic U.S.for coming social unrest. Is unrest the right word?"

Yes, whats new? They did that in the 1960s and 1970s to quell the Vietnam War riots. Look what happened at Chicago and Kent State. Also don't forget the Watts riots in California back then as well. Social unrest in the USA has been around for a long time! It is typical for the US government to deploy the military for such purposes. What about all those Haliburton jails? For the younger readers here GOOGLE IT! We had plenty of SOCIAL UNREST in the USA back then ...

I believe the next riots in the USA will not be about the "draft" or "racial" but economical, which is really monetary based. So, if the US government has been deploying troops and building jails around the country then that tells me they have been planning on this for a long time and knew there would be harsh financial realities in the future. This is why I say there will be NO WARNING! Just one day we will wake up and WHAM BAM ... Yet we are getting warnings now in the form of bank bailouts! We had the first US President in histroy go on national TV to say we are facing financial catastrophe if we do not pump $700bil into saving US banks. I believe that is about as close to warning of DEFAULT as you can get these days! So in a few months time can BUSH come back on TV and ask for another bank bailout for $1.5tril or $2tril? Absolutely NOT! After the Vietnam War can any US President come on TV and ask for the "draft" to be re-instated? NO ... So they won't come on TV asking for another bank bailout but they will take alternate routes just like they did to avoid reinstating the draft for IRAQ. There are alternate routes because they are already in use. The "temporary" loans at the US FED discount window that will just keep getting rolled over! This last $700bil bank bailout bill was not so much about $700bil as it was for broader Wall Street bank control of the money supply without involving Presidential begging and US CONgress pre-approval. They got it! When the Communist Party(USSR) collapsed it happened one day on TV! No warning ...

Nobody here expects the US government to give a two week notice prior to an actual for real DEFAULT do they? What else can they do but LIE?

TRUTH IS NOT AN OPTION BECAUSE ... "YOU CAN'T HANDLE THE TRUTH"!!! Where have I heard that before?

ALOHA !!

Federal debt per fiscal year ...

2005 - $553.7 bil
2006 - $574.3 bil
2007 - $500.7 bil
2008 - $1,017.1bil

The debt for the first day of FY 2009 starting October 1 was $99.5bil ...

ALOHA !!

ON WHO TO TRUST?
"We are grateful to the Washington Post, the New York Times, Time Magazine, and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subjected to the bright lights of publicity during those years. But, the work is now much more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national autodetermination practiced in past centuries."

This quote is by David Rockefeller, founder of the Trilateral Commission, in an address to a meeting of the Trilateral Commission in June 1991.

Did anyone here attend that Rockefeller speech at the Trilateral Commission in June 1991? I was too busy building the new Martinez City Hall building back then so I missed out ... Hummmmm?? Yes, that's right ... I was actually producing something tangible instead of shuffling paper!

In March 1998 S&P closed at 1099 and it closed this Friday at 1099
We are same placed after 10 year
So, buying a market where it was a 10 year ago is rare thing and opportunity like this may not happen again.

Kaimu,

I totally agreed with nearly everything in you commentary (10-4-08. 12:53) except..."American voters have just voted that they would rather have fraudulent banks survive instead of small businesses."

Those opposed far outweighed the ones in favor. Although it was reported that after the DOW down day's affect on their investments changed the flavor of the calls to congress, I have not heard the shift went positive.

Our news is either managed or incompetent, or a mix of both.

I had my own business too — for most of my life. Except my military time and summer and after school jobs, I only worked three years for a company at wages. You don't need a degree in economics, just common sense to see what has been happening to us.

This "solution" has the seeds of a whole new crop of control from the top and favors for the elite.

Question for the board: Thoughts on the VIX as indicator for timing market entries?

Todd Harrison (Minyanville) ruminated last week about VXO of 70 as a short-term/intermediate-term capitulation low. I didn't want to miss the boat so I'm 50% in at this point but leaving 25% for a substantial drop and the last 25% tranche for that possibly fabled VXO 70+.

BC: Appreciate the reply to yesterday's query. The actual reaction to the "news" of poorer earnings and guidance will be very instructive...

http://tinyurl.com/4m9mo8

The United States of Bernanke and Paulson

$USD has been going up for the past coupla weeks inspite of bad news every day. Here is an explanation from Pfenning that seems to make sense.

If so, then a significant drop in the $USD might be an indicator of the "Bailout" working, that LIBOR will be falling, and Bill Cara's LIBOR call will come true. Comment?

" ... One of the things we've learned this week is that the European banks are not getting to go Ollie, Ollie Oxen Free, on the holding of toxic waste debt... And since they are U.S. issued mortgage bonds, the trader that called tells me that they need to have capital reserved in U.S. dollars. Well, usually, these banks use LIBOR for this funding... But with the credit crunch going on all over, LIBOR rates have gone through the roof. So... Looking for alternative means of raising capital, the European banks have turned to the euro / dollar swap market... Selling their euro reserves and buying dollars.

SLAP! I could have had a V-8! Now why didn't I think of that? Anyway... This is what's going on... One would logically think that when LIBOR gets back to normal, these euro / dollar swaps would be reversed. Now... The next question is... What will it take to get the LIBOR rates to normalize? Well, that would be an unlocking of the credit crunch. And according to our Fed Chairman, U.S. Treasury Sec. and President, the way to unlock the credit crunch is to pass the Bailout Package! Dang it! I knew it would all get back to that darn Bailout Package! "
http://www.dailypfennig.com/

Re: ¥/€

Interesting monthly chart on the ¥/€ cross:

stockcharts.com

http://tinyurl.com/4659v2

For SIPC coverage are John Doe and John Doe IRA and John Doe Roth IRA separate customers? This question is posed and unanswered by Wikipedia. http://tinyurl.com/4bn3wg

Kaimu,

I find your quote from David Rockefeller extremely incendiary (in a general sense, not personally). I presume DR would deny that he ever said such a thing. Can you give us more background on this quote, such as the exact date and source, given the gravity of the implied accusation?

Regarding Japan, I was only making the point that they printed money and threw it at their banks, which didn't succeed in stemming deflation. I was trying to pose the question as to whether we could have deflation here in spite of money printing. I'm not sure what that has to do with the dollar being a reserve currency. In any case, is it possible that the dollar as the world's reserve currency could be replaced with a basket of currencies, such as the Euro, the Yen, and the Remnibi? If things get bad enough here, perhaps other countries will just try to surgically remove the dollar from having reserve status, if that is possible, thus attempting to shield their own economies from the US.

By the way, I always enjoy your posts and admire your far-reaching grasp of these questions. I'm not arguing these points, just trying to gain understanding in this very confusing crisis.

Incidently, are you hanging on to your PM stocks such as GIX and ECU in spite of how their prices have collapsed?

have to love bill's WIR this morning- here's your opportunity to accumulate wealth, why the negativity in the discourse? even Cramer was fortunate enough to be in cash on Black Monday (thanks to his wife), and then made his name and fortune buying the aftermath-> why not you?

THE WORST OF ALL WORLDS

We live in a nation where profit is privatized and loss is socialized. Slicksters from Darien and Greenwich make crazy insane money, and when they screw the pooch the bill comes to us. I think we've reached the point where notions such as "best and brightest", "risk takers being rewarded for their entrepreneurial spirit", and even such basic ideas as success and failure can't be taken literally as they once were.

Welcome to the U.S.S.R.

Land of the unfree
Home of the sheep

shark- true..but the risk-takers among the best and brightest can in fact use what entrepreneurial spirit they have to be buying right now, no?

Emmylou Harris and Robert Plant (among others) on a saturday afternoon in SF:

http://tinyurl.com/3fhs5l

Remember the one salient feature of the Soviet regime which was reviled and earned Stalinist tin pot dictators infamy was the mass killing and jailing of dissidents. Does anyone here see the possibility that this kind of regime may become established in the U.S.?

The stocks of a lot of "very good" companies have reached successive RSI7 accumulation zones, have successively rallied a little and then successively plunged further. I can think of only one reason: These are the stocks that the hedge funds own and are still in the process of selling to meet redemptions. They pause their selling (as if on command) to encourage private buyers to produce short price rallies for them and then they resume their selling into the rallies and get somewhat better prices. I for one am not smart enough to know when their need to sell to meet redemptions has ended.

This is a bear market. Stocks will continue this process until it ends. Attempts to anticipate the end may work, but not for me. I am willing to wait for evidence that it is over. Averaging down is a poor strategy that results in an underwater portfolio.

Frequent references to USSR withintention to show how USA becomes the same make me cringe. Come on guys, while you can pick some superficial parallels here and there (which is probably possible with any pair of countries), there is not much in common between two systems.

Tell me you live in new USSR when you are:

- arrested and put in mental institution for saying "Our leader is no good";
- arrested, tried and jailed for starting private enterprise;
- arrested for possessing or reading the book authority deemed inappropriate;
- arrested simply because your neighbor said you did any of above, because he, neighbor, wants your apartment, your wife or simply doesn't like you.

I can continue the list for many pages but examples above should be sufficient... those who never lived in USSR, trust me... living in USA, you are NOT in anything even close to Soviet regime.

Well, I had my a-- handed to me several times this week with stocks that I thought had bottomed based on Triple RSI buy signals.

I plan to sit on my hands this next week and potentially the following week.

I might miss the bottom but I'm tired of having my fingers chopped off. I'd like to see capitulation in the SPX/COMPQ (RSI 7 day<10) and perhaps the MACD turn on the weekly charts.

Hi Vad,

Thanks for reminding us that we still have a system of government that is far better than many.

Many of us in here appreciate your contributions to Caraistaville. I'm sorry if you take offense to some comparisons between the US and USSR.

To many of us who believe in free market capitalism:

The socialization of corporate debt, suspension of short selling in certain stocks, and HB&B control of the financial markets in general, is a sore point and a direct threat to liberty.

I doubt that many Americans actually believe that the US has the same degree of repression that occurs in USSR.

On the other hand, we'd like to keep it that way.

Regards

"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." -- Benjamin Franklin

http://de.reuters.com/article/topNews/idDEBEE49408O20081005

I translated this article as follows (using Google translator)

The German government wants to respond to the crisis in the financial sector, private deposits with banks generally guarantee.

"The State guarantees private deposits in Germany," said the spokesman of the Finance Ministry, Torsten Albig, on Sunday in Berlin. In government circles, it was a complement, this guarantee applies indefinitely. Finance Minister Peer Steinbrueck had previously said that the German savers need to not a single euro fear of their deposits. Even Chancellor Angela Merkel had assured the government will for the safety of deposits provide.

Vad,

My reference was intended in the following manner. We live in a nation that venerates, glorifies and figuratively offers flowers at the feet of (historically) several notions which recent events either illustrate too well or make a mockery of:

1) The correctness of the private pursuit of power and wealth at the expense of the general polulace.

2) The virtue of the "unfettered", unregulated free market.

It is in fact argued fairly vociferously that the free market itself is a sort of a "self-regulating mechanism" that "knows", much better than government or even a business "Tsar", if you will, what is good economically and what is not.

Ok. So they busted out their system like Tony Soprano. They ruined their own game, potted where they lived, whatever expression you care to invoke. And those of us who stand by the sidelines waiting for their capitalist system to crumble so that I can buy my neighbors million dollar house for a tenth that value merely by virtue of being patient and waiting for the right moment, we welcome a free unfettered capitalist market. THE SAME ONE MY NEIGHBOR INVOKED WHEN HE MADE THE MILLION DOLLARS IN THE FIRST PLACE. I seek to advantage myself by having been prudent and let's say for argument, piling my money into rent instead of bogus mortgage payments waiting for calamity, the same calamity that occurred 15 years prior when house values dropped by about half, if you looked hard enough for the desperate seeking to sell.

So here we are, Wall Street's thrown about 100 150 thousand people out of work; free market should be in full effect, people should be losing their stock, losing their homes, MAKING WAY FOR THE NEXT GENERATION OF PLAYERS WHO WILL PICK UP THESE ASSETS ON THE CHEAP AND HARVEST FOR OURSELVES WHAT SHOULD BE RIGHTFULLY OURS.

Regarding the bailout, I am a citizen first, a "Wall Streeter" of a most remote kind 2nd, and a taxpayer 3rd, but even I, in a position better than most to make meaningful advance on the back of the bailout abhor it's far-right totalitarian nature, even as it's wrongly described as being a salve of the left. It isn't about Main Street this thing, it's all about stockholders in major financial corporations and making sure that they stay where they are economically and that Chris and Vad don't displace them, living side by side in beachfront mansions in greenwich getting together on the lawn for cigars, cognac and to discuss the market in the late afternoons.

I'm not certain that I've adequately expressed my feelings, but know that if my feelings are this strong it is because there is something important to express at the very least.

And I mean in no way to invoke visions of Stalin, collectivization, forced industrialization, the purges, Siberian exile and all the rest of that system in order to compare what we have to that.

I read Koestler's Darkness at Noon. Actually did my senior honors thesis on it, as well as Orwell's 1984 and a Camus novel so when it comes to history stuff, I am less badly informed than many.

Thee's just a feeling I have that our system went totally off the rails last week, and that everything we are experiencing here is reinforcing existing status quo's and retarding the good and useful hand of the so-called free market. And know that Russia isn't the only country where they have deep political thoughts, expressions and occasionally, misgivings.

Since Ireland and now Germany are fully guaranteeing bank deposits, doesn't this mean that money will be leaving the US?

bSI87, when you say "triple rsi buy signals what do you mean? A buy alert is triggered when the daily moves back up over 30, is this what you mean?

Vad

- arrested and put in mental institution for saying "Our leader is no good";
- arrested, tried and jailed for starting private enterprise;
- arrested for possessing or reading the book authority deemed inappropriate;
- arrested simply because your neighbor said you did any of above, because he, neighbor, wants your apartment, your wife or simply doesn't like you.

Actually those do happen here too ;) just not as in public or as often yet.

People are people no matter what system of government they are under.. never forget that for both good and bad

BH,

not taking offense... just, having direct experience with both systems, want to keep records straight.

I understand and share the worry about this drastic deviation from principles of capitalism. As a trader, I view capital markets as last pillar of "raw" capitalism, where one's responsibility for the outcome of one's own action is as absolute as it gets; where the reward for getting it right is immediate and punishment for being wrong is inevitable. This is an ultimate "fair game" for me - nothing but my own skill or lack of such will define whether I succeed or not. So you can see how it's especially painful for me to see the interventions of "no shorting allowed" kind that start erecting barriers in front of free markets. I don't like any co-efficients applied to my effectiveness as a trader.

ALOHA !!

DAVID ROCKEFELLER'S OWN WORDS ...

"In 2002 Rockefeller authored his autobiography “Memoirs” wherein, on page 405," Mr. Rockefeller writes: “For more than a century ideological extremists at either end of the political spectrum have seized upon well-publicized incidents such as my encounter with Castro to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as "internationalists" and of conspiring with others around the world to build a more integrated global political and economic structure - one world, if you will. If that's the charge, I stand guilty, and I am proud of it."END

I second 2nd and Bill.
I watch a few of the canroys and they were hammered down to the lowest levels since the Alberta tax snafu and oil was much lower. The divs remained untouched and have been for some time on most. Volume on this sell off was pathetic. Same chart for all the oils including those on the buy list. I think these are great opportunities for cap gains and div. income.

My only worry...from Bill...
"If there is a hint that Paulson returns to work in the next Administration, then clearly I will have to re-think my strategy of over-weighting US equities."

God forbid.

There were refuseniks in the USSR they were unable to reform, or justify their extermination, but these were few.

Nowadays, you can become a refusenik in western democracies through unemployment, illness or arrest and have no hope of advancing your life in a hopeful manner because you have become an outsider and must live in the Siberia of the underclass.

Bill,
Good WIR; interesting commentary. And it's FREE!

ALOHA !!

I would urge people to go look and see what the elites like David Rockefeller have in store for us. I find the arrogance of the elites simply astounding, but I guess for them, being brought up in TOTAL POWER, it must be "normal" to want to control the entire World! Of course the Rockefeller's are not the only elites in this World, because each continent has its own powerful elite banking and industrial dynasty's that also collaborate among themselves. For what? Just to play dominoes or twister or maybe they all enjoy a really rousing game of "Battleship" or "Monopoly"!

Just start with only one of the global elites. Here is a link to David Rockefeller who is now in his 90s. Look at all the global contacts and power brokering he has been involved with both in the USA and across the World.

Link: http://en.wikipedia.org/wiki/David_Rockefeller

I send flowers to members of various elite organizations like the Rockefeller Foundation and Carnegie Peace Foundation. One of my customers I sent flowers to earlier this year received an award from David Rockefeller personally at some gala NYC event. No details as I am sworn to secrecy!

These people exist and they have long had the money and power to influence the people we elect to lead our country. What are the chances that these people really have the interests of WE THE PEOPLE at heart? What better way to consolidate power but from the ruins of a crisis? Look what just transpired on national TV ... Now the US FED is even more powerful than ever and that power was derived from the HINT of a crisis! What do you suppose these elites will propose our elected leaders do when the REAL crisis hits?

How does it go? Beware of Greeks bearing gifts!

"Its our money, but its your problem" ...

GOVERNMENT KEEPS GETTING BIGGER AND BIGGER and who controls government? You just saw the House cave in to bankers on the second attempt. It only took two tries and one week of "crisis design" to completely cower practically ever member of the US CONgress into total capitulation ... Amazing!!

"Planned Chaos" by Ludwig Von Mises

On a lighter note, from e-mail I just got:

If you had purchased $1,000 of shares in Delta Airlines one year ago, you will have $49.00 today.
If you had purchased $1,000 of shares in AIG one year ago, you will have $33.00 today.
If you had purchased $1,000 of shares in Lehman Brothers one year ago, you will have $0.00 today.

But, if you had purchased $1,000 worth of beer one year ago, drank all the beer, then turned in the aluminum cans for recycling refund, you will have received a $214.00.

Based on the above, the best current investment plan is to drink heavily & recycle. We can call it the 401-Keg.

Sorry Barry Ritholz, sorry Boston Globe but in my very, very humble opion here is the BIG PICTURE. Bill, extra thanks for the insight on the Home Depot info in the WIR. Have a GREAT swim.

bsi87 -

re RSI & other momentum indicators (macd, etc. - there are many), imho they simply do not work dependably. I do not even look at any, have not for years.

ALOHA !!

I compare the USSA to the USSR from a failed SuperPower perspective as essentially copying the failed policies of the former USSR.

HUGE MILITARY
POLICING THE WORLD
OCCUPYING MIDDLE EAST COUNTRIES
ECONOMIC SOCIALISM
CORPORATE WELFARE AND CRONYISM

Then on the personal level I compare the USSA to THIRD WORLD countries. Those at the top get the "loot" and the economic trickle down is what us peasants fight over. Where are all the small business incentives? Panama and Ghana have plenty ... I can call and speak with the Ghana Minister Of Agriculture directly but I can't even get the mayor of Hilo on the phone if my life depended on it! I couldn't even get one nano second of time with my US Rep, Neil Abercrombie, even last year before all this "crisis stuff" hit! Face time? Forget it ...

I have absolutely no access to government ... just like a THIRD WORLD country!

Should we wait and complain to the equivalent of the US KGB after we have lost all our rights? Our US CONSTITUTION, which the USSR never had, gives us the right to SOCIAL UNREST and it not only gives us that right but, it demands we take that right if that right is ever diminished or abrogated? It is a soldiers "duty" to not follow orders if those orders violate the US CONSTITUTION. In practice though, how many soldiers would actually do that? How many US soldiers have even read the US CONSTITUTION in its entirety? How many US citizens have?

It is the soldier and citizen's US Constitutional "duty" that they voluntarily abandon I fear most about America's destiny ... That abandonment of "duty" was glaringly evident this past week on US national TV! Come on people ... show me in the US CONSTITUION where a PRIVATE central bank is even legally allowed to exist in the USA? A group of PRIVATE banking cartels control the issuance of US money. It is their money not ours! That is blatantly illegal and unconstitutional! Yet every time I turn on a TV(rarely)I see Ben's face!! Whats that about? Our Founding Fathers would have shot and hung the traitors of 1913 and the traitors now on TV today! I don't see a whole lot of anyone who cares. Our elected leaders spend a vast majority of their time either stomping out financial fires they themselves helped create or working frantically on getting re-elected ... So, what next will get abandoned?

OUR RIGHTS ARE ONLY AS SAFE AS THE LAST EXECUTIVE ORDER ...

IT ALL WORKS UNTIL IT DOESN'T !!

I am done today ... I have to go out and actually produce a product ... I have to go out and farm the land. Its the Aina in me ...

Vacation was great; i went into it thinking the bailout would be passed on the 1st try and i might miss the biggest 1 week gain. i guess it went the other way to say the least. when i saw from seaworld that the market tanked 778pts i reconed that would be the bottom, when we rallied the next day.

I am going to start watching for entries, however i will not forget to vote out any representative who voted for the bailout. i am sick the hb&b buddy network. If you are interested in how your representative voted, bookmark or print this page and save for voting time.
http://tinyurl.com/48uxa5

RIMM seems to have fallen too much. GOOG also seems interesting. contimplating the strategy of selling puts and buying calls. I am afraid of gold due to forced selling we have seen which can occur anytime "they" press the button.

Also created a Cara 36 on my chart software. Watching RIMM, GOOG, BIDU, X, ibkr and a few others. tracking rsi, stoch, volume.

Quick question. what about solars? they are making new lows. and have typically tracked the price of oil. with so much cash on sidelines, can alternative energy be the next mini bull?

The NAVs of the senior bank loan CEFs I monitor continued on down on Friday, as dependable an indicator as any to watch for a trend change.

In any beginning bull market in equities, these would also be a sceaming buy at current levels - who could resist money at a 40% discount?

The leveraged debt debacle shows no signs of righting itself, rather the opposite.

Too many are looking for a "V" bottom in a quick washout, with a big rally to start upp immediately. I'll beleive it when I see it.

2nd
. I went through my holding and compare to list Bill gave us on last Wednesday.
I may have to make some change in it. Intention is to pick a stock from Cara 100 which is down more than 2/3 of it peak. So, if it double still it will be down 1/3 from its peak and it is possible that in given time they will double
Any suggestion will be appreciated
Sector 10: Energy
• ECA/IMO/SU/XOM
• I have SU/VLO/TSO/TGP
Sector 15: Basic Materials
• ABX/DOW/GG/SLW
I have GG/SLW
Sector 20: Industrials and Transports
• ABB/BA/GE
• I have BA/GE/UAUA/EXM
Sector 25: Consumer Discretionary Spending
•CCL/TTM/BC Bill does not have any listed here. So, I may have to make some change here
Sector 30: Consumer Staples
• DEO/KO/MCD/PG/WAG/WMT
I have WFMI/SBUX
Sector 35: Consumer Healthcare
• PFE this is defensive sector and in bull market I may not add any
Sector 40: Financial
• HBC/IKBR/OXPS/RY
• I have IBN/UYG
Sector 45: Technology
• CSCO/DELL/GOOG/IBM/INTC/ORCL
• I have CIEN/INTC/DELL/RIMM/VMW/QLD/USD
Sector 50: Telecom
• MICC/NOK/TEF
• I have NOK/MBT/VZ
Sector 55: Utilities
• CCJ /EXC
I have CCJ
Beside this I have GOL/BONT/ESLR/GLW/SSO

Re: Mine Finance And Investment

The emphasis will be on growth, as dividends fall, and share prices suffer. And quite frankly, an investor has no way of knowing a companies' exposure to secondary lien type financings and how dependant they are on these kinds of instruments. They are prevalent in the banking sector, but they also may be prevalent in the mining world.

This quote is music to my ears:

"The toxic debt situation which has created the current severe downturn, in which many undercapitalised mining and exploration companies may well not survive will not go away quickly and there is likely further grief to be face in the investment sector, but, Kernot averred, "Growth will return". We will face short term price declines still, but industrial prices will improve. He picked gold as the safest investment choice pointing out that London's influential Financial Times which is not known for its support of the yellow metal, seems to have recently "grudgingly accepted" this position too."

Mine Web

http://tinyurl.com/3r9f7s

vinod- IMO, it really won't matter much which specific stocks you're holding in a given sector as long as they're solid companies...i don't have much time to do my own fundamental analyses, so why not rely on the Cara 100 or any other list compiled by what you consider a reputable source? if everything doubles in the next 2-3 years (and we're able to capture most of it), i'll fly my family to boston for a vacation and buy you a double whatever you're having ;)

passing on sort of a from-the-front-lines comment-> my brother reported that he had multiple deals in asia on hold for the past two weeks pending passage of the bailout plan, which should now free up enough credit/capital to ensure things move forward from here...

Disposition: I am in complete agreement with Bill's bullish sentiment. It's just the timing of it all...

I am very short term (meaning day trading) bearish and long term (meaning IRA ) bullish.

The events in Europe are not positive so far in my view. There is indecision and the lack of a systemic solution to Europe's systemic problems right now.

http://news.ino.com/headlines/?newsid=68937569787400

Re: Saskatchewan Coal Rush

Since the coal rush in Saskatchewan ran down a bit prior to market foibles, we are now getting an idea of the coal seam that was discovered recently:

http://goldsourcemines.com/investors/news_releases/index.php?&content_id=58

stockcharts.com

http://tinyurl.com/4urzvb

Re: Junior Mining Speciality Website

Anyone needfully curious about the junior mining sector seeking a good website with lots of research and just about any company you can think of can always go to Kaiser Bottom Fish. The only drawback is that it will cost $100 for a short term peek. But given the market conditions if investor gold demand were to remain strong, bond yields low, and markets in turmoil, then you really would only need a short time to identify the appropriate companies and then conduct due dilligence:

http://www.kaiserbottomfish.com/s/Home.asp

It may be a worthwhile effort if the idea was to obtain a position. Warning: buying a gold company means just that. A "basket" of commodities is probably a losing proposition for the immediate future.

Re: The Moons Are Lining Up

According to the analysis of Francis Bussiere, the 'moons are lining up' for a turn date based on analogies with the cycles of the moon. (I just love this stuff)

http://www.safehaven.com/article-11461.htm

Kaimu,

I understand the inflation argument,... believe me I have been on that side of the coin for 3 years now, but have been playing devil's advocate on both sides for the purposes of discussion.

The problem is the mechanics of reinflating in a credit destructive environment. You cannot simply inject money and make everything better. You must recapitalize the banking system to the point where it instills confidence and the system can function normally.

If the magnitude of bad assets / amount of recapitalization required is too large, then you have a serious problem. The issue I see right now is that if the CDS market fails to function and it is completely untested in the form today, then we are talking about perhaps a $10 trillion problem instead of a $5 trillion problem (which is what I believe we currently are looking at).

Where do you get that kind of capital? Central banks you say. Sure, but if the magnitude of the problem is that large then surely the most important ingredient - "confidence" will not be instantly re-instated. Even if say $10 trillion were injected in a smart way (bond) to major banks to shore up the equity side of the balance sheet, you are still looking at a minimum of 2-3 years (optimistic considering mortgage resets coming up even if they are artificially frozen) of economic pain before the banks can work their way through losses and emerge in a somewhat 'normal' state.

At this point a bull run does appear more like a hail mary which would be based solely on market psychology because the fundamentals are nowhere near where they need to be. It is going to get a lot worse, before it gets worse. Let us hope that the market is too dumb to understand and we have a bull run before then because when/if it occurs it will almost certainly be a selling opportunity for most assets.

Futures opened down over 13 points for ESZ8

Bill,

I agree that some equity prices are coming in to the point where they will seem like great values.

I would also ask anyone interested in gold to pay careful attention to the gold charts you've supplied in the WIR. I'm no Louise Yamada but I do use charts to trade and the gold charts do seem like they're going down. It aint a question of what something SHOULD do, it's a question of what something IS doing.

Finally, if you should prove to be a week or 2 or a month late on your "new bull market" call, I don't think anyone here will hold it against you. To have that belief and to NOT mention it would be the far greater sin than being wrong. In this game we are all wrong, plenty of times. The key is being wrong less often than one is right and, hopefully, with smaller size. But as far as having a band come down my street playing "Happy Days are Here Again" in my humble and less informed opinion than yours, it doesn't quite feel like it's time. I actually think this week could be the week of the multi-thousand point death dive I referred to last week which would, paradoxically coincide wih the start of the new bull market:)

I guess Denis Gartmann must be questioning his sanity right now.

Here's the futures page from Yahoo:

http://finance.yahoo.com/indices?e=futures

"Since Ireland and now Germany are fully guaranteeing bank deposits, doesn't this mean that money will be leaving the US?"

And the $USD will be sold?

Re: Forex

Not so sure about the dollar, but the Yen vs. the Euro aught to make for a ride when co-ordinated rate cuts are announced.

I would have put up a chart of the Yen vs. the Brazillian Real, but I can't seem to find a source for that which is more than just a scribble.

Re: Markets

Its going to be a very serious challenge to find a growth stock in the middle of all this mess, concerning tax loss selling season and earnings downgrades from Q2.

I just looked at the 15-year palladium chart -- what a chart! Should have looked at it first before investing into SWC (which closely follows palladium)... Well, at this point, we seem to be very close to the long-term bottom in palladium, so for those willing to hold SWC for a year, the downside risk is minimal while the upside potential seems to be huge now. I bought 500 shares of SWC on Friday after-hours at $4.55 and will keep buying 500 shares for each 50 cents drop from here, if I won't reach my margin limit before that. :)

Platinum and palladium were destroyed in the past few months because of the fears that the global slowdown will diminish the number of new cars produced (the catalytic converters require both platinum and palladium). However, I doubt that this will be the case, and as soon as traders start looking past their noses (which may happen this week) they will realize that the growing middle class in the BRIC countries will keep demanding new cars (and anyone who is driving now is not about to switch back to being a pedestrian unless oil rises above $300, in which case precious metals will rise on inflation concerns).

Does a hybrid use a catalytic converter? (ya, I know. Dumb question, but its gotta be asked.)

What Kaimu says about the agendas going on behind the scenes in international forums is valid, and as he certainly knows, he has outlined the "kiddie version". The full version is progressively more painful to wrap one's mind around; it takes a long time to do so, because it is so emotionally difficult to make the adjustment to such a different paradigm. Think of explaining to a friend of yours who still believes in "buy & hold", how they can do much better with some trading tools, and how much opportunity they have missed up to now. Think of Neo unplugging from the Matrix and adjusting to a much more hostile environment... There is no Santa Claus, Easter bunny, nor guaranteed sovereignty for individual citizens. If there were, there would be no such thing as a draft for an unpopular war, or eminent domain. Just as the market flows in cycles up and down, so does respect/need for the rights of the worker/middle class in societies. Technology has decreased the need for having so many workers, and the carrying capacity of the planet, with current (regulated) technologies, is finite. As respect/need for the worker/productive class decreases, so there is less motivation in the political upper management of the planet in supplying workers with affordable food, fuel, and consumables, when, given these things, workers will simply consume more and reproduce more. The prices of consumable inputs have a strong political component in addition to market factors (e.g. gas taxes, sales taxes, food tariffs, etc). Hence we currently have higher costs of fuel/consumables, plus stories of Peak Oil, Human-caused Global Warming, all converging to try to limit energy inputs (and therefore the sovereignty and power) of the middle class. I believe true independence involved being aware of this, and making plans for alternative sources of personal income/savings or energy/consumables if political winds blow ill as they have many times before in the history of the world.

Bill's WIR at Seekingalpha

FranSix, re catalytic converters..

"Does a hybrid use a catalytic converter? (ya, I know. Dumb question, but its gotta be asked.)"

Well if it’s a combo unit with both a combustion engine and battery electric drive, then yes the small engine would have a small catalytic converter. If its totally electric, then no, the batteries would probably be lithium ion types, thus no palladium or platinum just lithium etc.

Now if it was an all electric running off a hydrogen fuel cell, then yes there would be platinum or palladium in the fuel cell stack.

I've been in and out of palladium "PAL" in the last few years and still own a little, will add back when things start turning around, watching closely.

Quasi

DJI future Down 174 points, 9:04EDT 10/5.
SPX future -15.20

VIX is more likely to be a measure of uncertainty/risk
Put/Call ratio is more likely to be a gauge of fear
question is: which one, uncertainty(risk) or investor fear, usually marks the bottom of market?

re catalytic converters:

In addition new EPA regulations go in place starting 2009 and accelerating to 2011 to decrease pollution from diesel engines which will now require gas clean-up systems using platinum and/or palladium. That will include everything from an 18 wheeler truck to a CAT backhoe. This should help support the platinum market.

Worth a read.

Dug this up from Fransix's posting on Cardinal Moon.

pay attention or pay the offer
thoughts on markets & cetera - christopher carolan
http://tinyurl.com/4b3cwr

His take on the markets pretty much sums up what Bill, 2nd, etc seem to see.

In addition, he also talks about the "path to least resistance" which I also believe as a partner to 80/20 rule.

80% of the time you're going to go down the shortest (20%) path. :)

So is it shorter to go down or up from these levels?

One thing that caught my eye on his blog...

" there are plenty of scary stories coming from people who follow credit closely. These folks are genuinely scared about what they are witnessing unfold."

Whatever's going on, it's definately a once-in-a-generation kind of thing.

P&F chart for QQQQ points to 14% down from Friday's levels?

Want to see some crazy P&F charts.

DOG
http://tinyurl.com/3mpxfo

FXP
http://tinyurl.com/4eo9rb

and a fork in the road for
XLF?
http://tinyurl.com/4qabhl

Path to least resistance for XOM?
http://tinyurl.com/3umnay

Barrick?
http://tinyurl.com/4t9r8c

GE
http://tinyurl.com/3gp4va

WMT (look out below?)
http://tinyurl.com/4ukjzu

JNJ (Cramer's buying at these levels? Gimme what he's smoking)
http://tinyurl.com/4rmvy4

IBKR (some upside? was considering switching after TD Waterhouse crashed on me a bunch of times last week)
http://tinyurl.com/48fad7

DELL (zoomafloom!)
http://tinyurl.com/44qvh7

RIMM (freakin' incredible chart, condolences to those that own above $100)
http://tinyurl.com/4m97d2

NOK (almost in the zone?)
http://tinyurl.com/47up5z

CCJ (what's not to like except underwater mine.)
http://tinyurl.com/3vwbxc

Those are some of the stocks I would consider from Bill's picks, since I have been tracking them over the last couple of years.

I feel like the "wait and see" attitude is worth considering right now, as does CCO CEO.

Cameco Corp (CCO.TO: Quote, Profile, Research, Stock Buzz) will likely slow down some of its smaller projects to control costs and preserve capital to get through the current financial market crisis, the uranium producer's chief executive said on Thursday.

Citing credit markets that have become "almost unavailable", CEO Jerry Grandey said the world's top uranium producer would instead focus on progressing key projects, such as Inkai in Kazakhstan, Cigar Lake in Canada and Kintyre in Australia, and a plan to raise U.S. production.

http://tinyurl.com/4b4hky

With RIMM, I recall trying to sell all my mutual funds to buy Nortel at $62/share back in the days when I was buying stock on my credit card. Doubling your money in the .com days was really easy.... what's 18% a year when you're getting 20% a day? (Anybody remember Bid.com?)

The Waterhouse rep I was dealing with suggested I take my $10k (lol) and put it in a few nice index funds instead.

I took his advice this time too. Instead of dumping money in CCO, POT & CDN Banks I put it into XIU.

I'm down so far, as I was with his high MER capital-eating mutual fund picks, though not as much as if I'd have bought Nortel.

I'm just happy I didn't go all-in on GE. :)

Maybe someone can help an option newbie - If you were going to sell some puts like Bill mentioned in the hopes of getting some shares put to you - how far out would you want the expiration to be? TIA for any help or insight

Hi,
I came across this link to Panic of 1873. Awfully sounds like now. Anyone cares to comment? Sounds scary to me, even though I subscribed to Bill's bottom call.
Linky:
http://tinyurl.com/3el9oz

Tim Hortons as a predictor of future market trends.

http://tinyurl.com/4odz2s

If we see a drop through support to low of $24 it will be an 11% drop from these levels?

I would recommend Tim Hortons over SBUX in Cara 100.

http://tinyurl.com/4obntu

Much friendlier brand and CEO (new role as of March 2008) has $1.5M listed in compensation.

SBUX CEO has $10.7M listed in compensation... not to mention his big apartment in NY.
http://tinyurl.com/3mdyzx

They're also getting into "banking" with their TimCard.

Of course, THI the stock was supposed to be the ugly duckling spinoff of parent corp. WEN.

WEN just merged last week with Arby's.
http://tinyurl.com/3n7kpb

I had Arby's today. We were the only customers in there at 12:30pm. Not sure that I would buy WEN, though they could turn that chain around.

I think Tulip Mania fits this bubble better.

"The high prices may also have been driven by expectations of a parliamentary decree that contracts could be voided for a small cost—thus lowering the risk to buyers"

Sounds like CDS instruments to me...

http://en.wikipedia.org/wiki/Tulip_mania

" However, naming could be haphazard and varieties highly variable in quality Most of these varieties have now died out, though similar "broken" tulips continue in the trade."

Sounds like securitized mortgages.

"Short selling was banned by an edict of 1610, which was reiterated or strengthened in 1621 and 1630, and again in 1636."

lol. this can't get any stranger.

"Traders met in "colleges" at taverns and buyers were required to pay a 2.5% "wine money" fee, up to a maximum of three florins, per trade. Neither party paid an initial margin nor a mark-to-market margin, and all contracts were with the individual counterparties rather than with the exchange. No deliveries were ever made to fulfill these contracts because of the market collapse in February 1637."

History repeats itself.

"Although prices had risen, money had not exchanged hands between buyers and sellers. Thus profits were never realized for sellers; unless sellers had made other purchases on credit in expectation of the profits, the collapse in prices did not cause anyone to lose money"

Same thing happened here? Difference being that accounting rules, reserve regulations, short sellers, media-hyped bank runs, and insiders caused these holders of fake assets to go bankrupt rather than just default on their paper wealth.

Will the subprime crisis of 2007/2008 (2009?) be the morality tale for future generations?

How the bailout bill reads like a hedge fund prospectus.

http://tinyurl.com/4zqnoq

How the financial markets fell for a 400-year-old sucker bet.
http://tinyurl.com/4k68pq

35 years old and look at the power he is about to wield:

WASHINGTON -- Treasury Secretary Henry Paulson is expected to tap Neel Kashkari, a key adviser on whom he has come to rely heavily during the financial crisis, to oversee Treasury's $700 billion program to buy distressed assets from financial institutions, according to people familiar with the matter.

Mr. Kashkari, 35 years old, a Treasury assistant secretary for international affairs and a former Goldman Sachs Group Inc. banker, is expected to be named interim head of Treasury's new Office of Financial Stability as early as Monday. The position confers substantial power on Mr. Kashkari, who will oversee Treasury's effort to buy bad loans and other distressed securities clogging the books of financial institutions and making them reluctant to lend.

http://tinyurl.com/3hf3c7

Anybody caught up in the markets and believing that socialism is taking control should watch the Jean Luc Goddard science fiction film: "Alphaville"

http://www.imdb.com/title/tt0058898/

ALOHA !!

Back to the CUBAN MISSILE CRISIS that defined COLD WAR 1 ... Honestly I did not know that Venezuela even had a navy! What is it WW2 PT boats?

COLD WAR 2 is off and running only this one will have China playing a much BIGGER role while they financially handcuff us!

READ ON:
October 6, 2008
Russia's warships head for exercise with Venezuelan navy

Michael Evans, Defence Editor

Russia displayed its military strength in the Mediterranean yesterday after warships heading to Venezuela passed through the Strait of Gibraltar in the second deployment of Russian naval vessels in the waterway since the Cold War.

The nuclear-powered missile cruiser Peter the Great, accompanied by the Admiral Chabanenko, an anti-submarine destroyer, as well as a reconnaissance vessel and a support ship, are destined for a maritime exercise with the Venezuelan navy.

En route, however, the aim appears to be to demonstrate to the West and Nato that Russia is once again back in business as a blue-water power.

“It's all about strutting your stuff and cocking a snook at the West, in the same way that the Bears [Russian strategic bombers] have been doing since they began patrolling again,” said Andrew Brookes, of the London-based International Institute for Strategic Studies. (more)

ALOHA !!

Look what President Bush was saying back in 2003 about OWNERSHIP SOCIETY and the AMERICAN DREAM ... If you read my posts all that is code words for DEBT and MORE DEBT! Who owns your home as long as you have a mortgage? The BANK! You are NOT a homeowner you are a DEBT OWNER! That's the CON game they play to make you feel like times are great and you are wealthy. It all works until you lose your job or get sick or the real estate bubble crumbles! Who's feeling wealthy now?

BUSH SPEECH 2003:
"Low interest rates has helped the American citizens. It's helped them buy a home. It's helped them refinance if they own a home. It's put more money in circulation, which is good for job creation. Low interest rates makes it easier to buy a home. And home ownership is at near-record highs -- and that's good because we need to be an ownership society in America. We want people owning their own home. If you own your own home, you have a vital stake in the future of this country."

"And even though home ownership is at near-record highs, we've got too many of our fellow citizens who happen to be minorities who don't own a home -- 75 percent of the Anglos in America own a home; the minority home ownership in America is below 50 percent. And it seems like to me we've got to do something about it. If it's good for America that people own a home, we want people from all walks of life owning their own home. And so I let out a goal. I said over the next decade, we want there to be 5.5 million new minority home owners."

"But here are some of the things that we intend to do and we discussed today earlier. Sometimes people have trouble finding the down payment for a home. It makes them nervous when they hear the down payment. We need to have a down payment fund to help people with down payments if they qualify."

"And so we've doubled the amount of money available for community-based programs, faith-based programs -- (applause) -- to be able to brief their parishioners and/or their fellow citizens about the opportunities and the hope and what it takes to be able to purchase a home."

Where are all these happy "home owners" now?

From OWNERSHIP SOCIETY to JINGLE MAIL SOCIETY in less than five years!

Thank God and all other faiths Gods that we have a benevolent HUMONGOUS CENTRALIZED BANKING AND GOVERNMENT to take care of us all!!! (cue in Mr Rogers theme song)!

Hummmmm???? Will Bill O'Reilly yell at Bush as well? Hey, Obama and McCain were not exactly poster boys for the JUST SAY NO CLUB either ... I think if Bill O'Reilly had to yell at all those responsible then he'd need at least two vocal chord transplant surgeries! Either that or loop the Barney Frank yell-fest and add a bullhorn for the entire US CONgress and the entire Executive Branch!

Now that's leadership we can count on ... Keep voting the same DC Mafia into power!

"Its our dollar, but its your problem ..." Hows that again?

At the Friday close I bought some Freeport McMoran Gold and Copper. Reasons I bought it was
1. 4.5% dividend
2. Debt of 7.4 bil vs Equity of 20 bil so it has a very strong balance sheet.
3. Selling at 1.1 times book value.
4. Sells copper, gold, and molybdenum
5. I look at it as having a floor price very close because if it gets much cheaper the Chinese will buy it. They are into having indoor plumbing and electricity lately.
6. While I disagree with Bill about the economy, I respect Bill too much to not do as he recommends.

L2

ALOHA !!

Look who Alan Greenspan is in bed with ... Why are these guys allowed to exist?

Old news to some but here is Alan Greenspan profiting off his own failed policy of low interest rates and no regulation of derivatives or sub-prime! The financial psychopaths abound at the US FED ... The US TAXPAYERS get hit for $700bil worth of bad debt and Greenspan is making 410%! At what point do we all agree to give the exclusive private banking cartel known as the US FED the boot?

The fund Greenspan was involved with was PAULSON CREDIT OPPORTUNITY FUND up 410% in August 2008, probably up another 410% since then!

GOOD JOB GREENIE!!!!!

Is John Paulson any relation to Hank?

READ ON:
Alan Greenspan, the former chairman of the US Federal Reserve, is to become an adviser to Paulson & Co, the $28bn New York-based hedge fund company that achieved spectacular investment returns at the height of the credit squeeze last year.

Mr Greenspan will join the advisory board of the credit specialist investment house. Paulson will be the only hedge fund that Mr Greenspan will work with under the terms of the agreement.

Paulson was propelled into the spotlight last year as perhaps the biggest known winner in making aggressive bets against US subprime home loans. Investors estimate that its funds racked up profits of $12bn.

Mr Greenspan already holds separate advisory roles with Deutsche Bank and Pimco, the asset management firm. The financial terms of the arrangement were not disclosed.

John Paulson, president of the hedge fund, said: “Few people, if any in the world, have the experience with, and depth of understanding of, global financial markets [of Mr] Greenspan.”

It's almost painful to see the Asian market down so hard today, and also the European markets down as well. Asia is down between 4-5 percent, and at the open Europe is down between 5-6 percent.

Will this large drop lead to a rise in the $USD?

(I'm trying to test my knowledge of market reactions and interactions) So, I'll see in the next 24 hours if the USD gets stronger. If it does, then I would assume the next few days would be a great time to sell puts/ buy calls in gold/silver related stocks because the USD will fall as Europe and other central banks announce their plans to reflate. This reflation will lead to a reversal of the recent drop in precious metals, and would lead to a spike in the miners stocks.

Is my logic accurate? or flawed?(if flawed, then where and why)

STO is down 10% just now on the Norwegian bourse.

It seems like my long position in energy trusts hedged by XLE puts has turned into a major position in deeply ITM XLE puts hedged by now largely OTM energy trusty calls.

Just checked - of course STO (STL in Norway) was upp nearly 10% yesterday in Norway, just looked at the chart & it is down just above Friday's low - so far has not made a lower low.

FRO & Seadrill have however put in slightly lower intraday lows than Friday's.

In Sweden banks & basic materials are down the most (everything is down).

All Icelandic banks have been stopped from trading in Sweden as they have been moved to the "observation list" on the Icelandic bourse.

"There are difficulties in pricing the stocks." "No-one knows when they might start trading again."

(Recall that the population of Iceland is what, c.a. 300 thousand?")

Kosmo is telling everyone to sell...now. Now? Where was he six months ago?

Norm and Bill,

re: communication levels

About ten years ago we were developing new packaging for hardware items such as hinges. I submitted installation instructions and drawings.

One of several changes the client submitted was to substitute "nail" for "awl" in the line — before drilling make a starter hole with an "awl". His reason: People will confuse awl with what they put into their car "ingine". This is not a joke!