Good morning

Welcome to Wall Street, Barack Obama. His victory signaled a change in US political direction, but the biggest election day rally ever – a surge of 4.1% in the S&P 500 Index on Tuesday – was quickly overshadowed by the grim realities of the worsening economic and earnings picture, resulting on Wednesday and Thursday in the S&P 500’s biggest two-day loss (-10.0%) since 1987.

The stock market is likely to see a lot of back-and-forth churning as it tries to map out a bottom. A 90% down-day is normally followed by a rally of two to seven days. In this instance we are dealing with two consecutive 90% down-days that occurred last week. For a year-end rally to materialize, it is essential that the recent lows (8,176 on the Dow Jones Industrial Index and 849 on the S&P 500 Index) not be taken out and that credit spreads continue to contract. But for confidence to return, sustained moves above 10,000 for the Dow and 1,000 for the S&P 500 are required.

Read all about this in my weekly “Words from the Wise” review: http://tinyurl.com/57vr4p

That’s the way it looks from Cape Town. How do you see the outlook for the stock market?

A message to all the tin-foil hatters:

I just want to mention that the man with 2 first names, Ron Paul, received approximately 20,000 votes for president a week ago. To put this in perspective, Ralph Nader, with ZERO media support received 642,000 votes, Bob Barr got nearly half a million and even someone named Chuch Baldwin, whom I've genuinely never heard of received over 170,000 votes. Keep the faith!

I mean, Mike could have theorhetically run on a platform of legalizing crack, outlawing guns and for a foreign policy, nuking Austria, and still won way more than 20k votes.

Good morning.

Here are your Cara 100 Ratings Changes:

AMAT - Downgraded to Perform @ Oppenheimer

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

Today's Market Music:

http://tinyurl.com/62q3sz

Re: China bailout

4tr. Yuan for so-called infrastructural projects is probably jawboning. Its intended that the money should go in that direction, but will most probably be used to prop up the banks.

And it's a hard *reign* gonna fall.....

AUY, SLW up 7% pre-market. In fact, base metals, tech, oil, all looking to be up pretty strongly.

Everything's up pre-market

Re: Yield Curves

Euro area yield curve continues to steepen:

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

US short term yields still very low:

http://finance.yahoo.com/bonds

Canadian rates have dropped somewhat as well:

http://www.tmxmoney.com/HttpController?GetPage=BondsAndRates&Language=en

Rates have more or less followed the 2yr yields in the U.S. and lagged in the Euro zone. Still some room to cut rates again in the EU.

It looks like the oil price will continue to reflect movements in both the Yen and $US, as oil price trades are long and hedged short against Yen and Dollars. I think the same will probably be in store for bullion, should these currencies sell off in coming days. So, if the oil price drops once again, then a rally in these currencies will set back bullion prices.

"Well, if one approaches investing like playing blackjack...if the player loses a set % of his poke, he gets up and leaves that table, either waiting till the cards get better at that table or another, assuming his basic play is good. If his basic play is not good, it doesn't matter - he'll continue to lose, no matter what the cards are.."

bsi87- the vast majority of investors are not playing blackjack, so their "basic play" (or really, their basic "being played") would be buy-and-hold...if they leave the table now, what happens? are you advocating they all learn to trade, or is there another alternative?

craig- i like that- "hard reign falling" would make a good book title...;)

Cara 100 Update:

Price Targets Lowered @ Barclays

GOOG - from $542 to $490
GS - from $170 to $135

bull in a china shop fits too...

"bull in a china shop" speaking of good book titles....nice.

2nd,

Yes, the next 10 years IMO will be like the 70's. Flat markets overall with sharp bear rallies.

1982-2000, it was buy and hold and buy the dips. Now they have to unlearn what worked for roughly 20 years.

"Basic play" includes cutting your losses early.

AIG has had a monster morning. After this sucker retraces some of those pre-market gains, it should have a monster day.

The important story this week will be the beginning, starting today, of the new major supply of US guvm'nt bonds hitting the market.

Is there a coincidence that China announced their infrastructure investment plans today?
I think not.
That money could have gone to buy more US bonds, and help support US infrastructure refurbishment.

The Latvian takeover of the second biggest bank has made international headlines for some reason.
Parex has less than 10% of the bank market in Latvia, is owned by local Russian business men (my wife has some interesting background on where their capital originally came from), and had very large deposits from Russian nationals.
It is apparently the massive withdrawals of these deposits (because of the cash/credit crunch in the Russian Federation) in a short time which has pushed the bank to the edge, not anything that has happened in Latvia itself.

bsi87- OK, I like that scenario...my "advice" to anyone currently holding would be to start the game by deciding whether they're willing to accept responsibility for timing the market(s)...if not, they need to ask themselves whether they want to be in the game, and/or whether it is in fact a game...reminds me of the corporate game-> many people just don't want to accept the fact that simply working harder does not translate into either job security or moving up the ladder...

2nd,

A much easier way would be to go with GSP/VT/BND and just rebalance annually if one of them has moved say 10% higher, recognizing that they will likely not outperform the broad indices.

bsi- continuing the thought, my advice to anyone who elects not to play would have to be (a) mark it all to market and start the game as if you're holding cash, (b) decide whether you want to play, (c) decide whether you want to be a player, and (d) if not, find a good player and transfer your funds there...finally, there's nothing wrong with electing not to play at all, in which case you retreat to low-risk strategies and forego the rewards (as well as the potential losses) of the game...

trying to stick in stink bids for BGZ/TNA. Can't do it pre open

make that "my advice to any investor would have to be..."

When you say "start the game" by "anyone currently holding" - if you're currently holding, aren't you already well in "the game"?

gb58- yes...so it's more of an awakening to the fact that you have been playing a game, and now you need to decide what to do about it; there's always a starting point..

..isn't it true that awareness occurs in life usually when one is faced with life-altering events? a steep loss in the market would be one of them...

"usually ONLY when one is faced..."

2nd,

We're on the same page. It would be a great chapter or two for Bill's book about what to do if u've already got an upside down portfolio.

One would have to look at each position and decide at the current price and potential whether u'd buy it. And whether the alternate is more attractive than the current holding.

Then the active vs passive investing. Lots to consider.

ALOHA !!

It never fails that the powerful entities who created the global financial crisis (PLANNED CHAOS)now want to be not just a part of a ONE WORLD government but they want to be on top! They feel they deserve to continually hold the reigns of power from one catastrophe to another.

The gist of what UK's PM says is this ...
"... so that 2008 is remembered not just for the failure of a financial crash that engulfed the world but for the resilience and optimism with which we faced the storm, endured it and prevailed ..."

HA!! HA!!
So some how spending the British taxpayers money is viewed by this man as "resilience and optimism"? Yeah, I would be optimistic if I was spending OPM to bail myself out! Yep, "resilience", I'd have a ton of it if I had a printing press like he does! Just keep my finger on the 9 key!!! PRESS AND HOLD ... CLICK ... CLICK!!! All the employees over at the Ex-Chequer Offices in London are all doing finger exercises to keep their fingers in tip-top shape, just like the US FED does!!!

First of all a ONE WORLD government is absurd, since none of the World's governments can barely stay solvent much less please their own citizens. Look how low the US CONgress and President's approval ratings are at 10%, which is an all time record low! In May it was at 18% ...

This from the man who sold Britain's gold off for $300USD ... Now he wants the entire World to "unify as one"! OH PLEASE-E-E ... now he sounds like a Miss America contestant!

READ ON:
"UK's Brown: Now is the time to build global society

LONDON (Reuters) - The international financial crisis has given world leaders a unique opportunity to create a truly global society, Britain's Prime Minister Gordon Brown will say in a keynote foreign policy speech on Monday.

"Uniquely in this global age, it is now in our power to come together so that 2008 is remembered not just for the failure of a financial crash that engulfed the world but for the resilience and optimism with which we faced the storm, endured it and prevailed," Brown will say in his speech on Monday evening.

"...And if we learn from our experience of turning unity of purpose into unity of action, we can together seize this moment of change in our world to create a truly global society."..."END

Where is your money?

Bloomberg: "The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn't require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return. "

[Bill Cara note:

http://tinyurl.com/6dufc7

It is completely unacceptable that Pres-elect Obama would even consider the Fed's Tim Geithner for a senior role in his Administration.

http://tinyurl.com/6efpda

Geithner, Paulson and Jamie Dimon have been the architects of this theft. Without the US Treasury, the Fed was technically insolvent. They had no $2 trillion to lend. Now they fail to identify to Congress where these monies went? That is unconscionable.]

well, I guess we're all participating in billion-dollar poker, then...I agree with you that Dow 10K is the stronger "magnet"...I still believe so...this is the starting point, maybe - but what happens between here and Dow 10K, that is anyone's guess...work your positions smartly, look at what youre in that has good value (in terms of P/E and cash-flow), look for new entries...that's all a trader can do, yeah?

"GS chopping staff, looking like a bank"

Well, maybe they have seen the writing on the wall.
Taleb is smart - banks to be regulated like utilities?
Actually the Swedish Financial Inspection has had a similar idea.

Nassim Nicholas Taleb
http://tinyurl.com/6peuu4

" . . .
So do you feel vindicated by this current crisis?
I feel angry. Very, very angry. I described the way it happened, I described the mistakes, and I see all these people explaining it backwards. Let me make another metaphor: you have a hundred people playing Russian roulette, and one of them killed themselves, and economists are theorizing that he killed himself because he held the gun in a certain way. You require something vastly more structural. Let's go back to roots. Let's do real things. Let's have more transparency, fewer complicated products we don't understand. Let's generate economic growth by old traditional ways, let's favor technology companies, let's not favor all this financial bulls---. Because it was a Ponzi scheme, I don't know any other way to call it.
So the big question on everybody's mind is, what happens now?
I try not to comment on current events directly. I think that we've got to progressively become a society where banks are deemed to be too precious for us, for our currency, to take too much risk. We need to have a banker who is just as responsible as someone working for the water company. Banks are going to become a utility. And banks probably will not have a lot on their balance sheet, and the risks taken will be borne by individuals like myself who have capital, and who know the risks, with their own money. Otherwise you're going to keep having a cycle that's deeper every time. "

one positive move the Obama administration might make is to open up retirement accounts to long/short strategies, as well as allow individuals unlimited selection of funds...personally, i would seriously consider transferring much of it to CTAB; where else would i know more about the trading philosophy of the company, and how they go about achieving their goals...

Seems the press is catching on to Paulson's abuse of power:

http://tinyurl.com/6qtw8e

Shark_Attack - Ron Paul wasn't on the ballot in many states.

I have a few positions I'm upside down in....
Lot's of variables on each.
I have a couple, like Dell, that I could probably use the funds better elsewhere.
Some pay very good divs in key industries like oil so I'm being patient. I'm sure everyone has their own threshold.

I did use any rallies to get back to about 40% cash.

Those that bought at or near the low like 2nd don't have a lot to worry about, I'm sure some positions are doing much better.
How many have XOM they bought at the low in the upper 50's?

Hmmmm....beware...GS is not looking healthy.
I bought some earlier and took profits premkt.

Average wholesale electricity prices ($/MWh) for the month of October at the Ercot, Texas hub, adjusted for inflation using the BLS Inflation Calculator.

The average October 2008 wholesale electricity price at the Ercot hub of $34.34 per MWh is 36% below October 2007 and 68% below the October 2005 peak.

Bottom Line: Wholesale electricity prices for October 2008, both in nominal and real terms, are the lowest in 7 years, since October of 2001

Data link here: http://tinyurl.com/3yq5st

Any thoughts on how this will impact the utility sector?

GLD is in a triangle, where I was looking for a trading range consolidation to hopefully build a bottom.

A triangle is more bearish, but it could always morph into something else.
GLD would have to break up out of the triangle, currently over 75.35.

SLV & SLW have by now squandered a lot of their bullish potential without getting very far.

Not at a clear sell yet, but not too far away.

the volume is still missing. very concerning after a new president elect by majority vote, and an enormous bailout out by China, we still have anemic volume.

long aig 2.52

Some questions I'm hoping to have answers for:

(1) does the China bailout imply even worse growth than people predicted?
(2) how big of a hole is AIG really in?
(3) what is going on at GS?
(4) how does the market interpret a China bailout over the next 2 years when everyone is concerned about the next 2 months?

XLU utilities & other interest rate sensitives (such as REITS) should be hard hit I'm guessing if the incoming treasury supply drives up real world interest rates significantly.

Big money could be sucked out of the equity markets as a hole if no other "real money" magically appears to buy the bonds.

Just pondering different possible scenarios . . .

NYUGrad, maybe some traders are tired of the overnight gaps, whipsaws, and manifest corruption of the markets?

I just read that Jim Cramer had some flaming comments Friday on the possible appointment of Tim Geithner to be Barack Obama's Treasury Secretary.

He asserted that while Geithner was NY Fed Chairman he was responsible for their lack of regulation of the banks, and that he allowed the decision to let Lehman Brothers to fail. Furthermore, he said that last week Geithner appointed Michael Alex who was the former chief risk officer at Bear Stearns.

Now I know that many on this board don't have a lot of good things to say about him, But you have to give Cramer his due for putting some unpopular opinions out there. He said something like:

"If Tim Geithner, the much-praised and ballyhooed New York Fed Chairman, gets to be Barack Obama's Treasury Secretary, and he looks like a shoe-in for the job... then let me just tell you something... we're done, we're kaput, we're finished... We're completely and royally hosed as a nation." -- Jim Cramer

teamonfuego:

I think GS is turning into a bank. So, all the greedy talent is leaving.

I follow this site regularly but do not post very often since I am an amateur investor. I am currently reading Alice Schroeder's book on the business life of Warrren Buffet titled " The Snowball". Some consider him the most successfull investor ever . I find this book a great read and think perhaps some of you would find it interesting.

Regards

Here is what happened over the weekend:
(1) China bailed out its struggling economy to the tune of $586 Billion
(2) AIG con - vinced the government to rework its loan because (a) they're in a bigger hole than people thought and (b) they can't pay off the loan based on the terms originally given
(3) Circuit City went bankrupt
(4) One large bank (with over $2 Billion in assets) and another smaller bank went bankrupt due to bad commercial and not residential lending.
(5) Market goes up on the above

I think we might see a negative close...

Cara 100 Update:

KSS - Upgraded to Market-weight from Underweight at Thomas Weisel. Price target maintained at $34.

Here is what I did in my upside down position
I was up 70% YTD
And lost all and was down 15% for YTD
Keep selling position that I thought will take time to recover and brought one that may give big return.
Went 50% cash from 0%
Play OEX option and ride the market up and down
Now was up 10%
Sold rest of ETF and brought new ETF BGU and TNA
Sold them this morning now up 25% YTD and 100 in cash
Still way to go to get back to 70%up
No more buy and hold. Will use stop now on.

vinod- that's great, man! sounds like the clambake is still on...

out aig 2.65

long gm

Cara 100 Update (Final):

MFC - Upgraded to Outperform @ RBC

bsi, 2nd,

Or, as I am currently 50% stocks, Ts, and mutuals bought since Sept.
and 50% cash

Eventually we will get a sustained upward move, and great bargains, but before that we may see:

A. high inflation — Bernanke will keep trying
B. deflation — If Ben can't do it. (see pappdjavl 9:06 post today)
C. some new form of Black Swan — continually changing the rules makes me very nervous

For retired guys this is no time to bet the farm on anything, better to wait and see.

score!

Kaimu,

LOL!

The gist of what UK's PM says is this ...
"... so that 2008 is remembered not just for the failure of a financial crash that engulfed the world but for the resilience and optimism with which we faced the storm, endured it and prevailed ..."

A bit like the White Star line saying...
"The important thing to remember is not that the unsinkable ship sank, but how well the band played as she went down."

ALOHA !!

I am puzzled why there is this enthusiasm for the China bailout? We had all this market enthusiasm for the US $700bil BAILOUT and we now find ourselves not even knowing where that money is going to, other than to banks! Recall the original reason for the bailout has been totally reversed. Now we have to sue the US FED to see what they are buying with our own money! YET the bankers want a ONE WORLD CURRENCY and the two biggest debtor Nations want a ONE WORLD GOVERNMENT! We're in 1984!

Now we have China, a Communist country, do we really know where those funds will end up? My guess is to prop up Chinese banks, but it is hard to know exactly how much will end up being spent on infrastructure. I can tell you that NONE of the US $700bil will end up spent on US infrastructure. A lot can change in two years!

I am not getting excited about the China announcement of a "stimulus package". If growth is so great(9% forecast for 2009)then why do they need stimulus! I'll side with Mark Twain on this one .... "Politicians and bankers lie!" It seems to be their nature ...

The crisis is really FIAT based ... You know the reasons by now!

The cure is NOT a ONE WORLD anything it is just plain old HONEST MONEY, but the politicians and bankers will fight tooth and nail to hold onto their corrupt money, because it is the only way they have any power!

Who's money is the Chinese government spending? I am sure they will tell you it is theirs and they "earned" it! No government creates wealth ... they steal it!

QUESTION AUTHORITY ... even if it speaks Chinese!

vinod,
Where did you find info on BGU an TNA

Someone explain to me why the S&P won't be near 600 by next year...Even with governmental reflation attempts.

Earnings from CNBC: The blended earnings growth rate for the S&P 500 for Q3 2008, combining actual numbers for companies that have reported, and estimates for companies yet to report, fell to -13.9% from -13.7%.
On April 1st, the estimated growth rate for Q3 was 17.3%, and by July 1st, the estimated growth rate had fallen to 12.6%.

From WSJ: The S&P trades at about 13 times the top-down forecast for 2009 earnings per share of about $70 for its component companies combined. That is a lower price-to-earnings multiple than after the 1990-91 and 2001-02 earnings downturns, but it still may be too high for some investors.

"I think a multiple above 11 times earnings is silly when you have all of these unknowns and worries about the credit crisis," says Michael Pento, market strategist at Delta Global Advisors. "You can't say these are normal times, so why slap a normal multiple on stocks?"

I completely agree with this guy. What if earnings are worse than expectations and come in around $60.00 and we get below 10 multiple? I can definitely see the "trade" opportunities highlighted on this site, but "investing" opportunities when the government is now a participant in so many industries seems futile at this point.

As an options trader - I sell credit spreads on both sides - so I really don't care where the market goes, just where it doesn't go.

Love the info here Mr. Cara!

vinod,
And what kind of stops you are plannin for ?

Bill,

As you pointed out...
"It is completely unacceptable that Pres-elect Obama would even consider the Fed's Tim Geithner for a senior role in his Administration."

So far I'm afraid my assessment of Obama from my dissatisfaction as one of his previous supporters is unchanged.

This guy is a consummate politician — 140 "Present" votes in one year to avoid alienating anyone who may help his future career.

"Change" so far is reinstalling Clinton people and spending more on stimulus packages.

Will we see Ruben as Sec. of Treasury?

How many Goldman, Fanny and Freddy people were on his large advisor group?

Kaimu,
Thx for the Times link with Nassim's interview. He is spot on

doubling down on FXP after a hefty 15% drop. average is now 74.5

teamonfuego.

China: According to Jim Jubak at MSNBC last week, China is slowing, but must have 7% growth just to maintain the new additions to their work force. He said they would now need to spend internally, not just on infrastructure as they have recently done, but to get their people positioned to buy their own products.

Sold half my SOL position this AM on the strength.

Call me crazy but the inverse head & shoulder is taking form, and the symmetry is almost perfect.

Please correct me if i am wrong.

http://i36.tinypic.com/9uyotd.jpg

I agree with Jubak. I think there is still some decent downside to the China story. I know firsthand through my retailing experience how little companies are buying from China now versus just one year ago. This is crippling their factories...

Re: TNA & BGU

3x Leverage ETF's

http://tinyurl.com/6nh2hz

Its now wonder there is such a consensus amongst the power elite that intervention in Iraq is necessary, because they want to peg the world's top currencies to oil, and can't abide with any opposition to the one world government effort. They may yet be successful at the reflation effort. If they are, then the oil price will probably get to past $200.

Just the same I think Gordon Browne is just a little too taken in by British Airways commercials. A one-world government under the control of the banks won't be able to accomplish much if their power base languishes in perpetual debt and the vast majority of the population struggling to make ends meet. The communists were working very hard to that end and failed. There is essentially no difference to the Big Brother world government proposed by Gordon Browne and the former Soviet Union. It would be a world wracked by corruption and insurrection.

I would relenquish my grip on ephemeral power casting myself as the next Caesar, and strive for the practical purpose of making banking a less frivolous effort and have the gold price float to reflect world money supply.

I remember an interesting comment by Paulson when interviewed for a puff piece. When asked about leaving his money to his kids, he said something to the effect that he couldn't do that because, "He loved them too much." sniff...sniff...what a guy.

So far, it's Donald Coxe day on wall st!

Top 7 sub-industries are metals plus ag. chemicals!

Teamonfuego:

Nice on FXP, glad to know I'm not alone.

sandy
my stop will be 5% lower than price i paid-but
I am not consistant on what i do
just brought 200 FAS at 49.50

Socialism can be WONDERFUL! - Rusoro up 13% LOL

disclosure: I'm a 21st century socialist, and own rusoro. DYODD, KYSOH

(KYSOH = keep your sense of humor!)

Mackinaw - some very good observations, doesn't look too pretty does it? I think we'll close green but we've already seen today's high.

nemo - Looks like Paulson loves America and hates Goldman Sachs too!

Jock
Barron's interviewed Coxe on the weekend and Friday's call was excellent.

here goes bounce of CHINA bailout

i think the following things are VERY troubling as my earlier post suggests:

(1) The AIG loan rework...instills even less confidence in those at work up at the top and suggests they really don't know how to tackle our problems

(2) The China bailout means they are really hurting more than people thought.

(3) GS now has no floor.

This is a Teflon bear market nothing will stick to it

Mama y Papa, tu perdieron el dinero huevos!

Teamonfuego:

I'm not sure what Goldman Sachs means. Since they're becoming a bank, they will no longer be what they were, nor is anybody sure on what they are becoming. Having said that, go to Reggie Middleton's BoomBustBlog. He's done some financial forensic proctology on GS. AlthougH I think his research is now subscription.

On points 1 & 2, can't disagree.

China - High rate of factory closures, Chinese people are finding bargain-basement prices not seen in years.

yvrapx - Agree, Coxe is therapy and macro wisdom!

I didn't see his Barrons interview. Is there anything not in basic points or his audiocasts?

I think all Caristas can benefit from Donald Coxe's friday audiocasts (30 mins his views; 30 mins Q&A) the last of which is always archived here:

http://tinyurl.com/2htvq3

IMO, Coxe is to macro, what Bill is to cycles, trading, and role of HB&B in markets.

Tea - #1) is key, they'll just throw more money at the "problem". They'll go back hat in hand to ask congress, but what I don't understand is why... Treasury owns the printing presses, congress only adds pork. WS/DC Win-Win to push through those last minute projects?

I'll bet Tim Geithner is appointed T.S.

Bankers' tax windfall -

Barry Ritholtz interprets the WAPO article on the tax windfall which bank lobbyists inserted in the bailout bill:

http://tinyurl.com/5fskgv

Do these Government Sachs guys want to be lynched by angry villagers with torches breaking down the doors to the castle ?

re: GS

LT support line at 64-63 bucks.

full disclosure: Long at higher levels.

(1) The AIG loan rework...instills even less confidence in those at work up at the top and suggests they really don't know how to tackle our problems

Any confidence that they do know or ever did? There probably aren't a lot of people in the world who know what is actually going on and how to resolve the issues at hand without the "quick fix" solution of providing "liquidity" or cash that the entities failing are clamouring for. Interest rate cuts and jawboning don't seem to work in a confidence collapse...

(2) The China bailout means they are really hurting more than people thought.

Is it really a bailout or is China just publicizing things they originally kept private? Their lack of social assistance as a safety net compared to the US will be a lot more costly than any US bailout...

http://tinyurl.com/66zvnv

(3) GS now has no floor.
There's always a floor (even if it's zero). :) P&F chart says $70.65 is the floor.

We need another bubble to get us out of this crisis. Where will it be?

sitting till 3pm to make any trades.

Re: Auto Manufacturers

Cerberus Capital tabled Chrysler/GMAC deal with GM when, after Obama won, it realized one-third of bailout dollars for these three manufacturers has far better odds for big payout than consolidating ownership of GMAC, converting to a bank, and getting in at the back of a long queue to beg Paulson for a discretionary handout. Same applies to green funds set aside by Congress for the car makers and therefore will maintain Chrysler ownership.

GM analyst drops share price to zero today knowing a big pop will come on the certain bailout news.

So, do you play against the market intervetionists like Porsche accumulating VW for a short squeeze profit of billions against the hedge funds last week or stick to Bill's big solid plays?

Wave,

re:bubbles

I'm thinking more about selling exhaustion. Sellers sell until they're worn out, stocks rally since the sellers are out/new bulls emerge, rallies until the old trapped bulls decide to give up the ghost, down she goes again.

Rinse, repeat, etc. Keeps going until sellers are finally exhausted. No sellers, we'd get that 1000-1500 pt DJIA day but it could be very difficult inbetween.

Just a premise while I'm waiting.

bsi - with so many people coming out and saying they're buying, i don't think we're anywhere close to the point of sellers being exhausted...

Looks like I bought some GM @ $3.25.

Waiting for my F bid to come through too.

Chery & GW don't sell to the US yet. There's a lot of States who are still going to be buying American, even if most of the parts come from overseas...

The floor on GM is $0 or $3.38 according to P&F chart. Looks suspiciously like GS chart, though GS is smoother since it's a bank and GM is only a wannabe bank. :)

stop out FAS lost 220

I am thinking there will be some sort of a retest of 8100 this week to close out my puts....

team,

It's a hypothesis.

Let's test a bit.

Use DIA. 10/10 volume was 73.5 million
10/27 volume was 37.5 million

Use IWM 10/10 205 million
10/27 99 million

Looks like fewer sellers each time down.

Smash - the only bubbles left? - champagne!

bsi - That's good news! If the champagne's flat, add more ga$.

Government Sachs went below 69! -

AIG loan restructure adding to USD bubble.

bsi87 - I'm using a dry-erase marker for those straight lines, works great!

Feed the World -- and Boost Returns
Donald Coxe, Global Portfolio Strategist, BMO Financial Group
By ROBIN GOLDWYN BLUMENTHAL
AN INTERVIEW WITH DONALD COXE: He's convinced that we are in the midst of the greatest commodities bull market of all time. His hunger: food.

ONCE A WEEK, LOADS OF INSTITUTIONAL INVESTORS DROP whatever they're doing to tune in to Donald Coxe's strategy conference calls. Small wonder. With a keen sense of history and wry sense of humor, Coxe has helped his followers anticipate some of the biggest shifts in markets, be they in stocks or commodities. As global portfolio strategist for BMO Financial Group, a Toronto-based bank that is among Canada's largest, he now sees real hope for two sectors that have been taking poundings: banks and commodities. Though he launched the Coxe Commodity Strategy Fund this past summer, right before commodities took a nose dive, Coxe remains convinced that we are in the midst of the greatest commodities bull market of all time. For his reasons, please read on.

Barron's: What's your take on the monetary scene?

Coxe: The Fed has doubled the debt on its balance sheet in five weeks. We don't know how long they are going to be carrying out these policies, which would send Milton Friedman spinning in his tomb. On the other hand, they had to do it. I challenged groups this week, saying, if I had said to you a year ago things will be so bad that the Fed will double its balance sheet in five weeks, would any of you have ever invited me back to speak to you? And, of course, the reaction was the same: Clearly you are stark raving mad.

Are the economic prospects any better in Europe?

The Europeans had thought it was an American problem, but European banks have lent a vast percentage of their capital to these Slavic countries, with even worse demography than Europe. Emerging markets are such a powerful asset class because each generation is bigger than the next, and there is an increasing middle class and a high savings rate. That's the stuff of real economic power, and a terrific investment concept. By contrast, in the OECD countries, each generation is just 60% of the predecessor generation, there's no growing middle class and there's a zero savings rate. The formula across the OECD is for sluggish growth at best.

How should investors approach today's stock market?

If you aren't deeply in the equity market, this is not a time to be committing large amounts of money. Stocks are cheap but they can get cheaper; we know that. We got back to the Dow having a multiple of 5.9 in December of '74, which was the foundation of Warren Buffett's wealth because he started buying at that level. The Dow isn't anywhere near 5.9 [its multiple last week was 11], but some of my favorite stocks are trading at lower P/Es than that. I can tell you they are the fertilizer, oil and agricultural companies.

Tell us some more about those industries.

The core investment concept of our time is that we are living through the greatest simultaneous effervescence of personal economic liberty in history. When people go from abject poverty to dwellings with indoor plumbing, electricity, basic appliances and access to motorized transportation, they have more economic liberty than 99% of humanity enjoys and we are adding 50 to 150 million people a year to that list. The gigantic investment returns are all going to be tied to companies that meet real human needs and do it better than other companies. What a great time to be an investor, because it is not just about the dwellings and the transportation, it is about the high-protein diet. When I came back from a trip two years ago, I said the biggest commodity story is going to be food, bigger than the other ones. It is high-protein food. The way to play that is through the fertilizer stocks, the genetically modified seed stocks and the farm-equipment stocks. [Coxe would not recommend specific companies, citing his firm's compliance restrictions.]

What are the big trends in food consumption?

If you look at areas under cultivation, wheat has only gone up in hectares a little bit in a decade. Rice is flat in a decade. Meanwhile, our need for protein has gone up dramatically because people are consuming more beef and pork. But more important than oil in this decade is milk. In rural India, the kids are getting animal protein and they are going to be physically stronger than their parents. Their brains are going to be better.

But there's still a serious global food shortage.

Until four months ago, when you Googled "global 'blank' crisis" it was the global food crisis. The global food crisis was our big theme. The global financial crisis has pushed the food crisis off the front page at a time when people are actually getting together to say, "How do we deal with this problem?" We have an enormous challenge, but we also have the technology to increase farm productivity. Investors who invest in this are going to make a lot of money, and they don't have to apologize to anybody for doing it. If it hadn't been for [the development of genetically modified crops], corn would have gone to $10 a bushel [instead of a recent high of $7.50] and we would have had another 100 million people starving. This is a great investment theme.

Which commodity groups do you like best?

Agriculture is first. We will need more fertilizer. There are only three farm-equipment companies of any size in the world. Terms of entry are difficult. You have to have dealerships. CNH Global is one of the top three companies in the world in the field. It's a subsidiary of Fiat and its stock has collapsed, but earnings haven't collapsed. In May it sold for $45 a share. It's $17 now. The next group has to be gold stocks. A period of massive reflation always leads to a good move in gold.

Next?

The third group is energy. Despite Obama's plan to spend $150 billion on alternative energy, each year we still lose 4.5 million barrels of oil a day that we have to replace. Oil is trading now at $61 a barrel, but oil for delivery in 2015 is trading at over $90 a barrel. Those with reserves in politically secure areas of the world will do well. Venezuela could solve a large part of the world's energy needs, but not under the current management.

How about base metals?

Those stocks are selling for pennies on the dollar. Take BHP Billiton. It was $95 in May, it recently fell to $30, but it's back up to nearly $40. This is an unrivaled set of assets, a great balance sheet, top-notch management and no scandals.

Is copper worth a look?

Copper is now at $1.80 per pound, where it was in '05. But as soon as the economy recovers, copper always doubles in price. It's levered to growth in China and India. They have an increasing percentage of well-off people who use energy and metals, and each generation is bigger than the last. Since 1995, China has had a plan to create 200 cities of more than one million people. The investment strategy should be tied to areas of the world that are growing the fastest in the next five years.

As for stocks in general, when will we know that they're ready to rebound?

In every bear market since 1972, when the banks went through a period of at least six weeks where they outperformed the S&P, it was over. But we can't use the rule this time because of the TED spread, which has a 100% forecasting record in all bear markets.

You have our attention.

The TED spread is the spread between the front-month T-bill contract and the front-month Eurodollar contract, because the Eurodollar contract is uninsured deposits in banks around the world in dollars. Therefore it is the measure of risk in the system. It reached a high of 500 after Lehman Brothers collapsed. The highest reading we have ever had up till then was 415 when Continental Illinois bank went bust in 1984 and got saved in order to save the system. The only reason they knew they had to save it was because of the spike in the TED spread. I know that from having interviewed the people involved. I used it to predict the crash in 1987. Then there was a long period where my knowledge of the TED spread was useless.

What does TED tell us now?

The spread has fallen to a little under 200 because of the various bank-rescue programs, and it could easily get to 140-145, which signal that banks are in a position to start lending again.

Does that favor any particular sector?

As they put this money into the banking system, then the oddity is that when the bear market ends, the bank stocks will be among the leaders in the rally that will come. This is based also on the principle of redemption and religion, which holds that when you have redeemed your sin you can come into heaven. When the bankers have stopped sinning and have gone through enough penance, then...

How do we know this will happen?

The TED spread certifies for bankers collectively they are entitled to go to heaven because it indicates they have gotten their balance sheets in order and the system is working again and money is flowing more freely.

Which banks are you buying?

We like those that show that they actually had a pretty good risk culture beforehand, but a couple of mistakes were made. The system is shot through with corrupt practices.

Thank you, Don.

Sorry for the length you need to subscribe to the Barron's Magazine to read this so I couldn't link.

chickie,

re:GS

Nice big Sharpie. Lows date back to the Internet melt down, a 1999 low and a 2002 low.

Fetilizers - How about nitrogen injection which is used for most corn... My play is APD, any other ideas?

read the full Coxe interview online later in the week.

There are some very big disclaimers at the front of the article.

http://online.barrons.com/article/SB122610183521609989.html?mod=b_hpp_9_0002_b_this_weeks_magazine_home_left&page=sp

Sold my FXP for a small loss at $72.40.

Used proceeds and bought MCD at $56.55

GM in the red.

GM opens Russia car plant as crisis hits demand (Nov 6)
http://tinyurl.com/6fwur5

They planned this one a few years ago and "the plan hasn't changed."
http://tinyurl.com/5so3qt

Bigger than GM? Back in 2006, the GM partner in Russia was hit with sanctions.
http://en.wikipedia.org/wiki/Rosoboronexport

"Meanwhile in Washington, U.S. trade officials said that the United States was reviewing whether to withdraw longtime trade benefits for Russia and 12 other advanced developing countries, Reuters reported.

(Say this quote with an Ivan Drago voice)
"You should not turn a blind eye to the possible detriment to U.S. companies," Peskov said. The Kremlin spokesman declined to speculate on the motivation for the sanctions, but added that if they had come in response to Russia's recent $3 billion arms deal with Venezuela, "this would not cast the United States in a good light."

http://tinyurl.com/69dudc

Top 10 GM Markets in Europe (2007)
http://tinyurl.com/65j5tj

"The carmaker boosted sales by about 14 percent from a year earlier in China over the past six months to more than 590,000 vehicles, Joseph Lau, vice president for GM China, said in a telephone interview today, citing preliminary data. That compares with a growth rate of 19 percent last year. "

http://tinyurl.com/68ume3

GM is competing with government-run car companies in China.

Back in 2007.
"China's car market grew 35% last year, making it the fastest growing in the world among major countries. By 2010, the country may surpass the United States to become the world's No. 1 market for cars and trucks. "

http://tinyurl.com/6qtbud

Why buy the bond when you can buy the CDS?

"Fitch case study implies trading volumes highly correlated between CDS and bond
markets. The study entitled, General Motors as a Case Study - CDS versus Bond Liquidity
published February 17th
tracked GM (and GMAC) CDS and bond trading between July 2004 and
January 2005, focusing on the number of trades executed. GM is one of the most prominent
issuers in the corporate bond universe, as well as the second most common name in synthetic
CDOs, behind Ford. The study found that, as might be expected, GM bonds exhibit significant
variability with regard to the number of large trades executed on a daily basis. Yet trading
volume in GM CDS may be even more variable than that of bonds, though both markets were
extremely active. According to the study, the level of GM CDS activity may have reached the
point where trading volume is generally on par with that of GM bond trading activity. Other
factors affecting trade activity included the magnitude and direction of spread changes. Fitch currently rates GM and GMAC at 'BBB' with a negative outlook. "

http://tinyurl.com/5ornpb

What does a CDS do?

"A credit default swap (CDS) is a credit derivative contract between two counterparties. The buyer makes periodic payments to the seller, and in return receives a payoff if an underlying financial instrument defaults."

So is the next big bubble the default payments to holders of CDS instruments?

Hope not... since I just put a couple car payments into GM common equities looking for a down payment return.

bsi87
Re: Coxe
The disclaimers stem from the fact Don is a Strategist and isn't able to provide recommendations per se because of BMO's internal compliance and worries about being sued if someone lost money on something Don recommended.

re:Coxe

Nope.

This disclaimer.
>

How should investors approach today's stock market?

If you aren't deeply in the equity market, this is not a time to be committing large amounts of money. Stocks are cheap but they can get cheaper; we know that. We got back to the Dow having a multiple of 5.9 in December of '74, which was the foundation of Warren Buffett's wealth because he started buying at that level. The Dow isn't anywhere near 5.9 [its multiple last week was 11]

[Bill Cara note:

I disagree. The trading environment today is entirely different from 1974. I was there. Interest rates were much higher then, which has a huge impact on PEs. Interest rates of 10%-15% back then sucked the capital out of equities and put it into bonds. There were no bids for equities, which were considered too risky, and the capital went to safe-haven bonds. Today the interest rates are at historic lows and so capital should not go into bonds except that the banks are in trouble, so traders don't like risk here either, but the hot money will rush in and then out. In 1974, large capital pools basically had to call a board meeting to switch from the safety of bonds to the riskier equities. It's a different market environment. As long as interest rates stay low, the PEs are not too high -- as Kudlow might say, they are just about right! haha. What ever happened to Goldilocks anyway, Larry?]

I got it, the usual caveat emptor, Don's no dummy he is aware of his audience........

Colin Twiggs..

"General Motors, Ford and Chrysler are angling for $50 billion in Federal loans. Congress is finding the appeal of saving jobs hard to resist, but the road to hell is paved with good intentions. I believe that they should not receive a cent of taxpayer money. They were the ones who fiddled while Rome burned: selling Hummers while Toyota and Honda developed hybrids. Congress can help, however, by offering rebates to buyers of fuel efficient or alternative energy vehicles; forcing the big three to compete in the open market. Let the buyer decide whether they are worth saving. "

amen... but if you have already invested untold billions in auto manufacturers and your constituents have their fortunes tied to them, what do you do with your underwater position?

Precedent is a tough thing to fight...

re:Coxe

Evidently the Barrons readers did not.

CNH/DE trading below the open and previous close.

MOS/POT trading below the open

"but if you have already invested untold billions in auto manufacturers and your constituents have their fortunes tied to them, what do you do with your underwater position?"

wavesmash- the beauty of Twiggs' rebate suggestion is that it forces the Big 3 to solve their own problems...I think they can be solved, but at the expense of the old ways of doing things and all that is tied to them (including, in some cases, the UAW)...

EWV/FXP look good with this weak action, no? I'm thinking about going bear for the next few days...

Might make more sense to cut gas taxes instead of sending out rebates to hybrid car buyers. This cut would impact all demographics, and not just those able to afford a new car. This is the "bailout" that is required to kickstart the economy, not just kick the taxpayer to bump start a clunker car.

Rebates would also not be the "quick fix" that is probably required to get automakers going again, or to at least shore up their balance sheets for the next year or two while they continue to offshore jobs and factories.

Either way, directly giving them money is probably not going to help the situation at all. Better to give the money to car dealers to finance incentives like buy 1 get 1 free or a free scooter with every SUV.

If we chopped all the Gov't taxes in gas up here we would have around $0.55/litre gas... about 1/100 of a barrel of oil. Would cost the gov't about $6b/year in revenues which is probably less than what the bailout of auto sector will cost. (at least in the 1st year)

http://tinyurl.com/6xumeb

Not that this would necessarily be spread to the consumer, as the oil companies would probably compensate for any cut in tax. And probably not the most environmentally-friendly approach. :)

If you're going for some government money, wouldn't you want to inflate your problems more than they really are and target the message?

Re: BYD, LVS, MGM, MPEL, WYNN, around 12:15, together and in tandem, volume and prices spiked. No news that I could find. Someone staking a position?

jiggstoo,

lol. that 1 stick looks pretty lonely on that chart. Talk about illiquid!

Market Vectors Gaming ETF (BJK)
http://tinyurl.com/5ek6pd

Day Volume: 300
Avg Vol (3m): 2,480.3

^DJIA, Naz Composite, & SP500 have all already closed their gaps that were created on 10/30.

R2K is hovering just just above the 10/30 gap. Needs to touch 490.88 to close the gap. Currently around 495.

Wavesmash

I take your point. :)

Does anyone have the link to the latest Don Coxe call?

The one Jock posted is dated Sept 26 although the web page says
11/14/08

Thanks

Barron mentioned this company that you can invest physical gold: http://goldmoney.com/
has anyone used this before? or do you have any better choices?
latour

light volume on TCK...bought a bunch down at the 9.15 level.

vix up 10%

long GS at 70.58

do your own homework

long TRA with a small initial position; there may be a better entry point ahead.

I actually made a few schmazoola's today without a lot of effort. Reason is, I had 2 winning trades and then the Dow fell apart. And the clambake is definitely on.

I think someone shot the Monkey.............

China stimulus is like Chinese food...You're hungry an hour later!

My homework said to short GS

shark - good going, I wasn't able to get a feel for today's direction.

nice call on the Goldman buy bsi87.

R2K finally closed that gap a few minutes back - todays low of 490.65 eclipsed the 10/30 close of 490.88.

astral25
re: latest Don Coxe radio show.
I always used to use the link on prieur's blog, but just noticed that it is no longer there.
So I googled "Don Coxe weekly radio show" and eventually found the link, but it now has in bright red letters: "Links to Don Coxe’s conference call webcasts are for the exclusive use of BMO Financial Group clients and are not to be distributed or posted for public access." So altho the broadcast does not require an account and is available to the public, they don't want it generally available, I guess. And I should not list a direct link. But with just a few clicks you should find it. I did, and it works. It just requires a bit more work. And I suspect someday soon it will require an account with BMO.

MSG gives me a headache.

Could have waited until the close to get GM @ $3.25. :)

BRKB is getting whipped today.

TRA - I like it, thanks will examine.

If GM goes back to the drawing board today and puts all of its efforts into getting into the hybrid race competively, a conservative date for production to hit the retail market is 3 to 5 years. Lead time on this kind of initiative is grueling. You cant turn an oceanliner around on a dime. If these guys are going to survive, they will remain wards of the state for some time to come.... dont expect to see any profits until your infant offspring are ready to drive.

what happens to GM pensioners if the company goes bust? are the pensions re-insured somewhere?

there's some others to consider pookster - CF, for example, but I am not following it so have no feel for pricing the shares.

And another oddity regarding the current Don Coxe radio podcast is that the listed date of this podcast is 11/14/2008 at 10 AM. Apparently he is speaking to us from the future. Must be a very special podcast; perhaps that's why they don't want just anybody accessing their website.

dow futures-226

"I just want to mention that the man with 2 first names, Ron Paul, received approximately 20,000 votes for president a week ago. To put this in perspective, Ralph Nader, with ZERO media support received 642,000 votes, Bob Barr got nearly half a million and even someone named Chuch Baldwin, whom I've genuinely never heard of received over 170,000 votes. Keep the faith!"

Shark,
He would have gotten way more votes if he was actually on the ballot. Those 20K people, like me, actually had to write him in.

My take is that most people aren't ready to balance the country's checkbook, that's why they didn't support him. I just wonder what we'll do when the interest on the debt hits 50% of the Federal Budget, which will be soon. Are we going to reverse any of these Wall Street handouts? And what's our plan for when foreigners stop buying our bonds at the rate of 2.5 Billion per day?

I know Obama has tons of plans but I haven't seen any talk of fiscal responsibility yet.

Rob.

They, like so many other pensioners whose pensions have been decimated through loose bets with OPM, will become wards of the state... and their lifestyle expectations will take a drastic restructuring for the worse. But what-the-hey, weve buried our offspring in debt for generations to come. A little more burden aint gonna be noticed... will it?

"General Motors plans to eliminate retiree healthcare coverage for approximately 100,000 white-collar retirees at the end of this year. Former factory workers, however, have union contracts that prevent the company from revoking coverage.

To help these retirees pay for their new coverage, GM is raising monthly pension payments by $300"

http://tinyurl.com/5zaxc6

"The car makers say that bankruptcy is unthinkable and “not an option.” And bankruptcy would certainly be expensive, not least for Washington itself, which could be responsible for 600,000 or so retiree pensions through the Pension Benefit Guaranty Corp"

http://tinyurl.com/6em9xw

So it's always the taxpayer who takes the fall...

GM

Recall GM health benefits negotiated includes 100% payment for drugs including viagra. Reportedly, viagra prescriptions for union members cost GM @ 7 million a year. Perhaps prior to any bailout, the union could get up and volunteer to forgo this bennie. Why should taxpayers subsidize . . . o'well, you get the picture.

At least a man with a woody isnt likely to take part in a riot.

re:GS

Max pain for Nov is 100. One would look to short at resistance, not at 5 year lows...unless u wanna drink the IBD Kool-aid.

The 10 day ATR is about 11 bucks.

GS was down 4 bucks in the first 30 minutes, up 60 cents so it would appear that selling is tailing off.

We'll see what happens in the next couple days.

coxe latest audiocast, always archived here:

http://tinyurl.com/2htvq3

He's off to India to look at ag., so there may be fewer audiocasts for the next few weeks, off schedule (i.e. when he can get a good connection).

BILL: Great response to Coxe on P/E's now vrs. '74. Maybe valuations won't overshoot on the downside this time, since interest rates are so low. Reknowned perma-bear Jeremy Grantham believes the S&P has now reached fair value.

When in doubt, let the charts guide us?

pro bono viagra prescriptions... now that's a good bailout strategy.

Has a union ever volunteered up anything?

Coxe date: the date on the right of his screen is the date for the next planned audiocast.

"Reknowned perma-bear Jeremy Grantham believes the S&P has now reached fair value."

Mark to model or mark to market?

as noted in past posts im hesitant on gold's action as of late. it cant seem to really hold onto gains but it is sitting higher than it was on friday.

the biggest point of interest is the relative out-performance of the gold stocks vs. the broad market. gold stocks did well today considering where the SPY ended. volume was decent on the GDX and the HGU (canadian x2 gold miner etf)

goldcorp and agnico eagle had nice jumps on decent volume compared to the limp volume on the SPY.

again this is only a few sessions of relative strenght that we are observing for the gold miners, but it may be the start of a broader patten that may play out where the golds outperform strongly going forward as gold inches its way above $800. and as with most patterns, it may become self-fullfilling as gold moves higher more people take interest in hopes of putting their cash to good use.

lets see how the week/month plays out.
i wonder if so many people are thinking gold should be blasting higher due to the monetary stimulus that any decent run in gold will prove to be explosive as many hands try to jump on board.

im still hesitant until gold itself can break out of its current pattern.

good luck

Unfortunately, I only recently found the Cara community blog. But better late than never. I have been reading it for about six weeks, and I've learned quite a bit in that time. Bill, you're very kind to do what you do.

The events of the past few months have been incredible and confusing. Bill, when you say "There's a lot going on behind the scenes", are you confident in any insight/theories regarding what specifically is taking place?

I find it very strange that there isn't much talk about the fact that the TARP was sold to us as X and now they're doing Y, with no transparency, despite all the lip service given to the 'openness of the process'. Where is the press? Is investigative journalism THIS dead?

Don Coxe still believes we're at or near bottom and that pension funds, when they jump back in, will fill a huge void, driving the market back up quickly.

If u read Jeremy Grantham, he has said stocks are a great value BUT he probably will buy too soon just as he sold too soon in 1999.

I think one has to look at his indicators and trade on that basis, ignoring "noise."

dr.cosa - "i wonder if so many people are thinking gold should be blasting higher due to the monetary stimulus that any decent run in gold will prove to be explosive as many hands try to jump on board."

This is what I'm anticipating. The peak may even occur in the blink of an eye, but the average price will reflect devaluation of currency accurately in the long term.

Finger Lakes,

"I know Obama has tons of plans but I haven't seen any talk of fiscal responsibility yet."

Obama won't do anything which could jeopardize his reelection. If he stays true to form he's spending most of his time on that by now.

Ron Paul had what appeared to be the best grasp of economics, but IMO, no one who speaks straight on the issues will ever be elected. Goldwater, Anderson, Perot all tried it and got nowhere.
---------
I expect we will continue to see the policies of Paulson and Bernanke to continue well into Obama's tenure. These guys are "too big to be held accountable." A "special entity" was created today to deal with $70B of AIG's CDOs.

Hmmm. Wonder if that would fly — Special Entity (under deductions) on my Form 1040 next spring — I could make it equal the entire amount of my investment gains.

Financial Times today had very interesting article on the arguments for buying today including Grantham:

http://www.ft.com/cms/s/0/58ac99d2-aec9-11dd-b621-000077b07658.html?nclick_check=1

This one is worth your time. I am bearish on the markets but the arguments it presents gave me 'food for thought.'

bsi87, wavesmash - Grantham

He's a value guy. His quarterly letters are always worth a read. Register for free at www.gmo.com

Grantham fears a valuation overshoot on the downside because they "always happen" but Bill is doubting that, based on today's historically low interest rates.

We must live and trade with ambiguity and uncertainty. Conclusions, positions, and trades must, therefore, be tentative, IMO ...

sharkie

20k votes for Paul? That is pretty good considering he wasn't running for president and those were "write INS".

A "monkey" can connect an arrow to fulfill a vote for Barr or Nader who were on ballots but typical monkeys can't spell "Paul" on a ballot.
I would be curious to see the tally for "steam boat willie", chalie brown and optimus prime for president.
At least those that did the protest didn't fall in line with the sheeple.

I checked my note and found last 2 Tuesday we have rally big
Do not know about last 4 or 6 Tuesday
So, will expect to have a big rally tomorrow?

thanx, bbcmoney - FT article "Time to buy?"

A chart in this article shows cyclical P/E's since 1900. Today, cyclical P/E's have touched down at the long-run average (after 18 years above it).

I count 12 times this has happened since 1900. NEVER has the chart failed to overshoot into undervalued territory.

5 times it has corrected deeply below the long-run average.

Does anyone out there know if any previous correction took place during negative real interest rates? Maybe this case IS unique, and Bill's bold prediction will prove correct.

Grym - I once used "Presentation Materials" to write off some gifts given to business associates.

hi jock,

thanks for the link!

I think a valuation overshoot on the downside is possible if it has not already happened in Oct.

Anyone notice Delphi became profitable on paper last quarter?

http://tinyurl.com/5kshb2

There's more feer than greed in these markets...

National Liquidators gets liquidated by GE?
http://tinyurl.com/6ajgbl

GS drops GE analysts?
"Charles Chon, Deane Dray, Ajay Kejriwal, Lawrence Keusch and Peter Wahlstrom also were let go by the firm, according to a note Goldman sent to clients. The companies they covered -- which ranged from General Electric Co. (GE.N: Quote, Profile, Research, Stock Buzz) to Tyco International (TYC.N: Quote, Profile, Research, Stock Buzz) -- are being transferred to another analyst, suspended or dropped."

http://tinyurl.com/5ntr7o

When's revised TOG projected to happen?

http://tinyurl.com/6c79ls

Jock,

You said:
"I count 12 times this has happened since 1900. NEVER has the chart failed to overshoot into undervalued territory.

5 times it has corrected deeply below the long-run average. "

I saw the article but couldn't find the chart. Any idea of what the average overshoot into undervalued territory was?

CP,

Monetary stimulus is going up but is a distant second to the speed of credit contraction.

Cc is similar to "Bolt's" blowout race in china. No contest.

Thank you Bill Cara for all your goodwill toward the investing public and me. Not too many saints in the business of greed but you're getting there.

After hours MSM report GM may let Delphi and GMAC fail. That's one way to tell Cerberus that it was asking too much! I can hear Cerberus (Dan Qualye) getting the wind knocked out of it as I type. In regards to GMAC, GM never should have been in the banking business anyway. Hey GM directors: Focus on your goliath vehicle manufacturing already and leave the money manipulation to Wall St investment banks and Washington lobby machine. You're too DUMB to play that game.

Is it too late to start downsizing GM? I'm in at 50 cents.

Bill - GOL is still one of your picks but I think that last Summer you planned to review its performance. After checking its earnings, I looked around for a possible substitute and found LAN Airlines SA (LFL - NYSE) which is a Chile company. I know nothing other than what is at the link below and have no position in LFL - jttbh (just trying to be helpful).
http://tinyurl.com/5qpgte

Thanks for all that you do.

St Louis FED Adjusted monetary base:

http://research.stlouisfed.org/fred2/series/BASENS

Activity for 2008 is up slightly.

Some vague theory is starting to take shape in my mind but I haven't the experience of enough market-cycle bottoms to know if I'm even in the right ballpark. Maybe some of you grizzled veterans could comment.

Basically, I'm thinking that equities can't break up out of this choppy bottom until all other asset classes of lower-risk have returned enough through their recoveries. What I observed during this Oct. crash was EVERYTHING getting hammered - right down to government-insured municipal bonds! Everything just fell off a cliff. Put yourself into, say, Warren B's shoes: You've got gazzilions of dollars and EVERYTHING on the planet went on sale. Where do you start?

Well, you might start with with some nice AAA rated corporate bonds. After all, corporate cash is owed - first - to bonds. What do we see? Peek at LQD. Any gains to made there after the crash? I'd say so: it fell out of a $97-$107 trading range down to an absurd $76. I can't imagine what the yield was at $76 but I bet it was juicy. How's it done since then? Simply a relentless march on HUGE volume back up to - today - $90.27.

How about following that up with some preffered shares? Any gains to be made there? Peek at PFF. Trading fairly stably at around the $42 level, it fell to...gulp...$18.89. Must have had a juicy yield at that level because it's been onward and upward, again on HUGE volume, ever since, to - today - $29.35.

If those are running out of steam, how about turning next to some junk bonds(i.e. corporate, non-investment grade)? Any gains to be made there in a recovery? Peek at HYG. Traded in a fairly smooth $86-96 range and then the crash took it down to $63.65. How's it been doing? Again strong volume gains up to, now $72.96.

Disclosure: I have some HYG and it paid it's monthly $0.69 distribution like clockwork (~11% annualized yield) this month.

Anyway my point is: Might we have to wait while the smart/big money cycles its way through the asset classes from safest to riskiest extracting capital gains on the recovery of each until lowly common shares are the last invited to dance?

This idea became clearer in my mind today when Bill mentioned that the 70's were different than today because interest rates were higher then. Well, treasuries are certainly lower now but maybe these other credible rate-of-return opportunities are imposing a temporary drag on the equities market?

norm - Credit contraction is currently causing deflation, correct? The inverse is also true. This is a dangerous downward spiral which in a debt-based economy, leads to depression.

The only way to arrest a downward deflationary spiral is by inflating which, by definition: "Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply.", is what the FED is now doing through capital injection. A debt-based society can only function in an inflationary environment.

Is there another way to arrest deflation? What am I overlooking?

Mackinaw - I like your train of thought, keep babbling...

ALOHA !!

Buffet started with GS and in six weeks has lost $2bilUSD so far! Or has he? What none of know is what sort of insider deal was made for that PHOTO OP? Only GS and Buffet know for sure ...

This however is very different from the usual public job layoffs. The US Post Office has lost $2bil and now want to let go of 40,000 workers nationwide! When the US government cannot afford to pay its workers we have a major problem dwelling below the surface!

I reported a few weeks ago that the payroll withholding taxes have fallen off a cliff, down since 2007 by 75%, Y/Y. Now these postal workers will become more liabilities on the US governments books and lets hope the postal workers getting laid off do not go POSTAL on us!!! Perhaps that is why there is a 70% increase in gun sales! How many postal workers voted for OBAMA last week only to find out they get a pink slip this week?

FIRST TIME IN US HISTORY ...

IT ALL WORKS UNTIL IT DOESN'T !!!

READ ON:
Postal Service Looks To Cut 40,000 Jobs In First Layoff In History

SHREVEPORT,LA (KSLA) - "We lost 2 billion dollars and like any other business we have to stay afloat." And to keep from sinking, the United States Postal Service is considering cutting thousands of jobs nationwide. Lavelle Pepper with the post office in Shreveport says they too are feeling the affects of the same disease hitting the country... a struggling economy. "We employ about 685,000 people. If we do layoffs it would include clerks, carriers, mail handlers across all crafts."

Pepper says the postal service is looking to eliminate 40,000 jobs nation wide.There's not an exact number on how many of those could be from the Ark-La-Tex. Pepper says workers who are not part of union with six or less years of service would likely be the first on the chopping block."We've identified 16 thousand people that are not covered under contract. We'll see what those numbers add up to."..END

kaimu - Let's open a chain of shooting ranges strategically targeting post office locals. Postal workers would likely be excellent customers in need of such a service, don't you think?

CP- that would be a business with a short life span...i would look at bidding on a government contract to supply counseling services...

I'm seeing a lot of charts like this over the last month in obscure financial names.

http://stockcharts.com/charts/gallery.html?FULT

(sorry, Tinyurl is down tonight)
That's a pretty incredible $229 million in shares traded today.

Fascinating watching this market repair itself.

Another:

http://stockcharts.com/charts/gallery.html?PBCT

Right on, Bill!
"Geithner, Paulson and Jamie Dimon have been the architects of this theft. Without the US Treasury, the Fed was technically insolvent. They had no $2 trillion to lend. Now they fail to identify to Congress where these monies went? That is unconscionable.]"
-----------
Back in the olden days, when Ike was President, there was more of an uproar over one of his administration having accepted a fake fur coat than this, the biggest fraud in the history of the world.

2nd - excellent idea, the counseling could be done in a separate room at the same facility!

Or, more recently, Grym, more uproar made about some errant Presidential bodily fluids finding their way onto a certain intern's petticoats.

kaimu

Might not be well known, but U.S. Postal Service is NOT funded by the government. They are self sufficent relying upon revenue to fund operations. They go thru up and down years like other businesses. Other than the Defense Department, they spend more on fuel than anyone else so that is an operating expense factor.

USPS can save money by cutting delivery (other than profitable express mail) to 5 days a week instead of 6. However, politicians in the past have vigorously resisted due to constituents' complaints.

CP- LOL...now you've got a vertically integrated business-> anger management and job retraining for those who want it, target practice for those who don't, followed by PTSD and grief counseling for their victims...all you need is a law firm to clean things up...

Tales of olden days have so much more appeal IMO. When I was young, I once argued with my sister about whether the olden days really existed... She won.

Oops, you're right, we'll call it DoWe Cheatem & How...

"Sympathy and callousness: The impact of deliberative thought on donations to identifiable and statistical victims"

http://www.shrunkin.com/12855/

Or in layman's terms...

"Why a fur coat is more important than the global economy."

Bloomberg News sues Federal Reserve.

This is interesting:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aOngFPgq7r3M&refer=home

(again, sorry - tinyurl is down tonight)

wavesmash - Which do you think is more the ethical policy towards the overall well-being of the human race (in a long-term sense)?

1) Rescuing the homeless and starving by teaching them to provide for themselves.

2) Do nothing but look after yourself and your own.

mac - tiny is only necessary for longer url's, as screen size gets goofed up requiring some to scroll back/forth to read text.

I know.

Anyway, can't BOTH 1) and 2) be simultaneously achieved, CP?

Commodities are under pressure again as the dollar rises to 86.15 in Asia.

Grym,
you're right about the straight talkers all getting shot down. I definitely voted for Ross Perot. As goofy as he was, I really though he understood the problems and was trustworthy.

Now, if Obama really screws up enough by naming the current insiders to top positions, we just have to hope enough people wake up to elect Ron Paul or someone like him in 4 years.

Rob.

Well, I mean, can't one teach others to to provide for themselves while looking after yourself and your own? Why do you toss in the "Do nothing" on 2)?

Mackinaw,
Great research on following the money. I'll bet that's where tons of our taxpayer money(that the banks are supposed to be lending us) could be going.

I tried to total up all the money the FED and Treasury have thrown at everything so far and came up with $2.7 Trillion + whatever the FRE, FNM bailout costs. The total also doesn't include the handout to consumers over the summer. Assuming the US population is 300 Million, that $2.7 Trillion if sent to every citizen would be $9000. per person.

Fundamentally, I don't agree with bailing out anyone unless they need food or shelter but I think every family of 4 receiving $36,000. would go further towards fixing the system than just giving it to dead banks who sponsor the politicians.

Rob.

Many years ago I departed a management role at GM Canada because I could see the writing on the wall and because there were no listeners- only tyrants climbing up the ladder. I never thought it would get this bad before solutions were seriously being sought. Here's my $.02 worth.

It's interesting that in the aviation industry the builder doesn't build the engine. Carriers choose the engine from, say, GE, P&W or Rolls Royce. Rather than giving massive handouts to the auto industry the U.S. government should fund American Engine ( AE )- a government sponsored design and manufacturing entity that would be put on a crash program to bring to market alternative engines( electric, hybrid etc ) for the 21st century, drawing from the best engineers the world produces. The assembler/distributors such as GM, Ford, etc. would be mandated to install common engines of specific design based on standardized engine compartments, vehicle weights and fuel economy or mileage requirements. All developments would be "open-source" so entrepreneurs could obtain or create these powerplants for their unique designs or applications and a re-birth of the "auto" industry would be in the making.

As I see it, AE could be exporting state-of-the-art engine modules around the globe within 5-10 years because it would also be mandated that no offshore manufacturing would be allowed - thereby preserving jobs for the domestic economy.

Teamonfuego - FT article

In the paper version of the FT, there was the graph I mentioned. It charted avg. P/E(cyclicaly adjusted P/E = average over 10 years) of the S&P. You saw how this avg moved above and below the average P/E over the entire 108 year period.

It suggested we are only now descending to the average P/E over the 108 year period. Below that is "undervalued". Every time P/E's have "reverted to the mean" they have overshot into undervalued (below avg.) territory. I hope all these words can tell the story of the chart.

Sorry, I didn't realize the online version of the article omitted that chart.

Watch out.

American Express just got approved to convert to a Commercial Bank.

Did they do it because it would open up new markets for them? Did they do it for a competitive advantage?

Kind of for both. They did it so they would qualify for FED funds.

"In an Oct. 6 filing, American Express said that its bank units have access to the Fed's discount window and the company already had enough cash to last more than a year. "

That previous quote sounds a lot like the quotes from LEH and BSC and MER before they failed.

I'm thinking we're going to see a major spike down very soon.

It's a long URL so I won't post it but it's the top story on Bloomberg right now.

Rob.

Macinaw - The question has it's roots in the theories of Captain John Smith, specifically, his prediction that Earth would eventually not be capable of supporting an ever-expanding human population. He predicts horrible consequences from over expansion.

It's interesting to watch and learn from man's struggle to evolve.

"Rescuing the homeless and starving by teaching them to provide for themselves."

this is just a guess, but i think they already know how...they're just unable to, either due to mental illness or to circumstances beyond their control...no one really WANTS to be homeless, and no one starves by choice...

Hell, fingerlakes, I want to convert to a commercial bank too !

Ironical, as Kaimu pointed out, that US gov't offers joe sixpak's money to banks at 1%, which then increase joe's credit card rate >20%.

Where's the "social equity" in that?

here's another guess- is it possible that Barack Obama will ultimately be known as the most intelligent, and potentially most influential, US President ever?

Jock - I take reading this chart concludes high probability of lower lows? (Yes, I came out and said it!)

2nd - Obama - Yes, that is my hope. I'm not holding my breath though, he's not superhuman.

CP says: "Jock - I take reading this chart concludes high probability of lower lows? (Yes, I came out and said it!)"

I doubt it. Ma and Pa have had enough. If these HB&B leaders don't want to face the guillotine, they and their government lackeys better get this bottom right. I think the general investing population is starting to tweak to the origin of this "credit crunch": Years of pumped-up asset values - on paper - cashed-in at near highs, but alas, the cupboard was actually bare - stressing even the Money Markets (e.g. Putnam). Hence the helicopter plan. This may be last time, ever, that Ma and Pa swallow a massive "correction" to resolve the dilemna.

how much deeper does this rabbit hole go?

truth discovery is bringing on fatigue. markets going to zero? fine! lets hit the reset button and climb out. this prolonged bs is killing me.

Anyway. here is another inverse head and shoulders forming on CHL - a Cara Survivor member, http://tinyurl.com/4b6us4

I should have said:

"Years of pumped-up asset values - on paper - UNEXPECTEDLY cashed-in at near highs, but alas, the cupboard was actually bare".

Ma and Pa are getting better at market-timing, thanks to people like Bill.

Mac - I needed to hear that, I suppose we'll have to wait and see.

Hey Pook, to bring this to a lighter level, what do you think of DSX as a swing-trade at this level? I opened a relatively large position with a tight-stop on this today.

Off topic.

HOOOOORAH DEVIL DOGS. Happy 233 Birthday Marines. To celebrate we will sing the Marine Corps Hymn

From the halls of Montezuma,
To the shores of Tripoli;
We fight our country's battles
In the air, on land, and sea;
First to fight for right and freedom
And to keep our honor clean;
We are proud to claim the title
Of United States Marine.
Our flag's unfurled to every breeze
From the dawn to setting sun;
We have fought in every clime and place
Where we could take a gun;
In the snow of far-off northern lands
And in sunny tropic scenes;
You will find us always on the job
The United States Marines.
Here's health to you and to our Corps
Which we are proud to serve;
In many a strife we've fought for life
And have never lost our nerve;
If the Army and the Navy
Ever look on Heaven's scenes;
They will find the streets are guarded
By United States Marines.

To those that have never had the honor of seeing my Silent Drill Team, enjoy the video.
No music, no speaking, pure discipline.
http://tinyurl.com/38zctu

Mac - I like bulk shipping good idea to buy on a downgrade. I quietly bought some oil tanker a few days back. There's a lot of risk if some kind of improvement doesn't materialize... but what choice do we have, I'm not giving up, period.

Good night all!

CP,

You hit the nail on the head. Yes you are correct. About deflation.

Here is the way I see it. NOT THAT BAD, because they will interviene and prevent the money supply from dropping to much.

We won't lose 1/3 of the money supply as Friedman said helped spiral the great depression.

The whole globe got drunk on debt and now is the time to pay, they will print, print and print. Not just the usa but the whole world. Asset prices will go down, commodities will not rebound, look at the baltic index, it is at 5 year lows.... well lets reprice assets to five year ago prices. Credit contraction has just started, shoes will fall, printing presses will run 24/7.

my only concern ( i am no expert), is to think re-flation will just pop is highly mistaken. The world will slowdown, nations will be harmed and basic materials will be cheap.

25 years of credit must unwind, people in china have just had a taste to watch their home values drop 50% in 18 months. They are moving out of the cities, think those skyscrapers will be occupied. They thought they could continually grow their exports, FALSE. Dog, tail, tail dog. Chicken, egg, egg, chicken.

We all need to look at the big picture, inflation won't happen for a while, long time (year, or more, 3, 4? who knows). CNBC keeps calling bottom, and thinks the globe will go to commodity bubble asap. "not so much".

$1.5 91 octane gas anyone? It could happen before $3.00 and it won't snap back because bubbles are gonna hurt and the faster you climb the harder you fall.

those are my two pesos WAIT, WAIT, NOW they are CENTS!

USD might continually to get stronger for the next 6 months, not much though.... my guess... that is all a guess.

One of my favorites:

A Famous poem by a great leader General Douglas McArthur written during a military campaign in the Philippines after watching his son asleep. The words are very moving and perfectly describe an Ideal Human being. Truly words of wisdom.

"Prayer for Arthur"
Build me a son, O Lord, who will be strong enough to know when he is weak, and brave enough to face himself when he is afraid; one who will be proud and unbending in honest defeat, and humble and gentle in victory.
Build me a son whose wishes will not take the place of deeds; a son who will know Thee -- and that to know himself is the foundation stone of knowledge.
Lead him, I pray, not in the path of ease and comfort, but under the stress and spur of difficulties and challenge. Here let him learn to stand up in the storm; here let him learn compassion for those who fail.
Build me a son whose heart will be clear, whose goal will be high; a son who will master himself before he seeks to master other men; one who will reach into the future, yet never forget the past.
And after all these things are his, add, I pray, enough of a sense of humor, so that he may always be serious, yet never take himself too seriously. Give him humility, so that he may always remember the simplicity of true greatness, the open mind of true wisdom, and the weakness of true strength.
Then I, his father, will dare to whisper, "I have not lived in vain"

norm - I see, those are possibilities, yes. Only time will tell us when it's ready.

Once again, a nice bit of wisdom from 2nd. I suspect he is right.

It's been 6 days since the election. Maybe we should wait, I don't know, at least until after January 20th before we make hasty judgements about the performance of the President elect.

So far he's stood in front of a crowd of about twenty influential business, political and economist types, been out to dinner with Mrs. Obama, visited the Bush's at the Whitehouse and set our minds at ease about the family's choice of dog. It sure seems like precious little to judge on since he hasn't served one day of his term yet or named anyone but his Chief of Staff.

I'm pretty sure most of us wouldn't (or couldn't) be held to such job standards with zero time served. I think we have some time....

Pookster:

God as my witness...(well, in my case-that's unlikely)...anyway...I'm standing in Harvard Square at the News Kiosk there...forgot the name...it's famous. I look up facing east, and on an upper floor window, adjacent to the street Jonathan Swift's used to be on, was the sign, "Dewie, Cheatem & Howe."

I filld up today....$2.16 a gal.
Only $65 for a FULL truck tank.

I felt like I had a little more $$$ for a while.

Not long ago it was over $100 easily.

"wavesmash - Which do you think is more the ethical policy towards the overall well-being of the human race (in a long-term sense)?

1) Rescuing the homeless and starving by teaching them to provide for themselves.

2) Do nothing but look after yourself and your own."

trick question? both sound correct, less the "do nothing but."

Not sure what the questions are for?

The link above was more towards the question of why we aren't looking for fraud in the big picture. It was easy to target Enron & Ken Lay for, say, manipulation of energy markets.

Who do we target for the entire world economy getting a 40% haircut?

Which individual caused the problem?

Is the economy just statistics that seem trivial and less emotional to us compared to thinking about the guy who just won the presidency and which individual he is going to choose to solve the problem for us?

"Thus, although victim identification may distort aid allocation somewhat, its impact generates more aid than any other pitch. Charities certainly recognize this, at least implicitly, when they employ a poster child to raise money for a general cause."

Who's the volunteer poster child for the auto bailout?

Or were they voluntold?

Craig,
Who was making hasty judgments about Obama? I can't find it in today's discussion.

What I see is people hoping he actually believes what he campaigned on and actually gets us closer to our constitutional roots by

#1 Dumping all the special interests.

Like Bill says, if he chooses Corzine, Rubin, or Geithner for TS or FED chief, then we'll know what kind of ball game we're in.

I think everyone has been holding their tongue until we see who he chooses.

Rob.

Take it up with Don Coxe, Bill. I'm just quoting the man.

By the way, I was there, too. DJIA hit 589 the month I graduated from college. Another student said we ought to buy stocks. I answered "With what?"

{How should investors approach today's stock market?

If you aren't deeply in the equity market, this is not a time to be committing large amounts of money. Stocks are cheap but they can get cheaper; we know that. We got back to the Dow having a multiple of 5.9 in December of '74, which was the foundation of Warren Buffett's wealth because he started buying at that level. The Dow isn't anywhere near 5.9 [its multiple last week was 11]

[Bill Cara note:

I disagree. The trading environment today is entirely different from 1974. I was there. Interest rates were much higher then, which has a huge impact on PEs. Interest rates of 10%-15% back then sucked the capital out of equities and put it into bonds. There were no bids for equities, which were considered too risky, and the capital went to safe-haven bonds. Today the interest rates are at historic lows and so capital should not go into bonds except that the banks are in trouble, so traders don't like risk here either, but the hot money will rush in and then out. In 1974, large capital pools basically had to call a board meeting to switch from the safety of bonds to the riskier equities. It's a different market environment. As long as interest rates stay low, the PEs are not too high -- as Kudlow might say, they are just about right! haha. What ever happened to Goldilocks anyway, Larry?] }

10 year yield was 7.5% Jan 1, 1975, peaking at 15.84% Sept 1981.

Rob, I'm not telling....
If you want to know you'll have to review all of the posts. I'm not willing to waste any more time on it.

Some observations:

TED spread at 1.81 today.
Never been that low for a while.

November major index max pain:
33 for QQQQ, 1000 for SP-500, 9200 for Dow

December major index max pain:
34 for QQQQ, 1150 for SP-500, 10400 for Dow

These months represent rather "fresh" option writing, as they opened only recently.

Major gold miners holding their own against bullion, USD and the overall market (again a first, in a while)

Goldman Sachs Gold net short open interest on TOCOM down to 100 contracts from 1200 seven days ago - they increased their long positions in all delivery months and slightly trimmed down coming December (which is the heavily net short month). If I see that December index being further trimmed in the next days, I'll bet Gold bottoms here for now.

Large seller selling on precious metals has subsided according to Pascal Willain (http://www.effectivevolume.eu)

G-20 meeting coming on the 15th.

Someone here mentioned that hedge fund redemption selling period ends November 15 (would be enlightening to know where this info comes from, btw).

Earnings season almost over, so there will be two months of lull before the next wave of ugly surprises.

I think the timing is being set up up for a retest of the lows on lower volume, possibly in conjunction with a spike in the USD and then a Santa Claus rally on the excuse of whatever decisions are announced by G-20 by next week.

This would time nicely with "the boys" driving the indexes to November max pain territory (on the 21th).

Let's see.

http://tinyurl.com/6s7lj2

Permabullish?

Goldilocks's virtue was compromised while being blindfolded, handcuffed, driven around East L.A. in a '72 El Camino at gunpoint.

What happened to Larry's coke habit? Oh, he just stopped? Oh, ok...

Didn't AXP spin off Lehman?

American Express Wins Fed Approval to Become Bank
http://tinyurl.com/4au4s7

I always thought AXP was a bank... hmm..

At least I figured out why Buffett's stock is tanking.

Trading dangerously near Oct lows... close to pre-Lehman spinoff prices (mid 90s).

Lots of companies considering going under the Fed umbrella? Isn't this kind of like nationalizing to compete with government-run entities overseas?

Not sure how they can compete with this...

"Imagine there was a law that said if you missed two credit card payments in a row, you had to pay the full balance immediately, with heavy penalties. And if you didn't, your bank would take out an ad in your local newspaper, calling you a deadbeat. Or worse, thugs in suits might show up at your office, haul you down to the bank and keep you there for hours until you signed a promise to pay.

Welcome to the world of plastic -- Chinese style."

http://tinyurl.com/5pyqce

They still have debtors prison.

"Under Chinese law, a credit card user who intentionally defaults on a sum as little as $3,000 can be sentenced to as much as five years in prison."

Anybody want to sign up for a GW card?

Great Wall Card
"Apart from these ten functions, BOC credit card also provides you with emergency card and cash, temporary or permanent line of credit raise, and other professional services. Why not apply now and begin your wonderful credit life?"

http://tinyurl.com/6k8p8g

Interesting quote from Reagan in today's Colin Twigg's report. Think about applying this standard to all government endeavors, including judging the effectiveness of the justice system, corporate welfare, government bail-outs, borrowing and printing money. Clearly Ronnie knew how to measure success or failure with real results and data, not ideology.

"We should measure welfare's success by how many people leave welfare, not by how many are added."

~ Ronald Reagan

Bill, bsi87,

1974? I was there also and your picture is familiar — no one wanting to buy equities, but going for the high rates on bonds.

What concerns me is what if no one wants to buy our bonds today? Now, far more than 1974 we are sinking in debt — the average individual, cities, states and national — all at record highs.

We have no decent jobs, fewer benefits and a tremendous erosion of retirement account balances.

We may eventually get back to manufacturing something to sell, but so far no one is attempting to plan for a long term solution, just handouts — to banks, insurance, autos(?) and citizens.

China's stimulus is money which will not go to our debt purchase. As each country, state, city and person cuts back the picture becomes more like the 1930s.

Just what do I need to do to convert to being a bank? How soon should I expect to begin receiving Fed funds instead of contributing to them?

I think you may have caught on to something with the overall possibility of eventually settling on a revaluation of currencies — sort of a reverse split. At least it would avoid the need to carry our cash in wheelbarrows.

Oh, oh — Will we need to bail out the wheelbarrow companies? Are they small enough to let fail?

Grym: Just thinking the same thing -convert to a bank.

How long until ads on cable offering such conversion to joe sixpak, "take your credit card interest rate from 27% to 1% by becoming a commercial bank!"

Retailers are experiencing difficulty with obtaining inventory through financing. This sounds inflationary to me.

"I also believe the broad market P/Es are right where they should be in a long-term cycle bottom phase. Also, it’s the cash flow per share multiple that is more important today, as cash is king." - Bill Cara

Thank you for pointing this out Bill!!! You are a great source of reason in this storm of panic.

UAW wages of $73.20/hr seem unsustainably high to me. How can this compete in a quality and performance driven market? It doesn't.