Smart Money Tracker
- MAJOR LONG-TERM BOTTOMS FORMING IN GOLD AND COMMODITIES Once every year gold and stocks form a major yearly cycle low. Commodities form a major cycle bottom every 2 1/2 to 3 years. Every once in a while all three of those major cycles hit at the same time. I'm pretty sure that's what is happening right now.The implications are that once the CRB has completed this major cycle bottom that we should see generally higher prices over the next year and a half to two years, presumably topping during a major currency crisis as the dollar drops into its next three year cycle low in the fall of 2014.I think the 30 point rally in gold today is signaling that gold has put in its yearly cycle bottom. Since gold did not break below the December low of $1523 I think we can assume that this is a B-Wave bottom and should be followed by the consolidation phase of a new C wave that should breakout to new highs either later in the fall or next spring. The next two years should generate an even more impressive advance then the 2009-2011 rally, possibly even generating the bubble phase of the bull market in late 2014 or early 2015 as the dollar crisis reaches a crescendo.As gold usually leads the stock market by a few days, we should see the stock market put in its yearly cycle low sometime in the next several days. However the outlook for stocks is not as bright as the commodity sector. While I do think continued currency debasement will probably drive the stock market to at least marginal new highs I also think an increasing inflationary environment is going to compress profit margins and constrict consumer spending. After a long topping process the stock market and economy will probably roll over and follow the dollar down into that 2014 bottom.While I'm not ruling out one more quick dip below $1523 to wash out stops below that technical level, I think gold is in the initial stages of the next leg of the secular bull market. This last C-wave from 2009 - 2011 was the C-wave of silver with a 400%+ gain at the parabola top in May of last year. This next C-wave will be the C-wave of the mining stocks. During the irrational selling over the last eight months mining stocks have reached levels of undervaluation that have only been seen one other time in history. That drove a 300% rally over the next two years.I suspect we will see something similar or even larger as the market gets busy correcting this irrational undervaluation.I think we are at, or very close to what is likely to be a once or twice a decade opportunity in the metals sector, especially the mining stocks.
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- GOLD IS AT OR NEARING A BOTTOM. I am making Monday's premium report available to the public. I think we are at or very close to what is likely to be a once or twice a decade opportunity in the metals sector, especially the mining stocks. If you like today's report the $10 one week trial is still available. That includes the archives, cycle counts, COT reports, and model portfolio. I strongly suggest one read the last several weeks of reports so they understand how we got here and what is unfolding. Now on to Monday's report.I doubt anyone is surprised by the reversal in the dollar index today. It’s been made painfully clear that Bernanke is not going to tolerate a rising dollar, at least not for very long. Cycles are still working, and still generating bounces out of daily cycle lows, but they are never allowed to get any traction before the next beat down starts.I would say there’s a pretty good chance that today’s reversal is signaling that the current daily cycle topped on day four, and the pattern of lower lows and lower highs is still intact.Presumably the dollar will now start to decline and penetrate the May 1st intraday low before the next significant bounce. The daily cycle timing bands have adhered pretty closely to standard durations in the dollar index. I don’t see any indication that has changed, so we can probably expect the next significant bounce sometime around the last week of May.Stocks:If the dollar cycle has topped then the half cycle low scenario is still on the table. In this scenario the stock market is on day 19 of its daily cycle and due to form a half cycle low at any time. As most of you probably remember, I’ve been expecting an extended consolidation in the general stock market. A dollar cycle topping on day 4 and a half cycle low on day 19 would be consistent with that theory.If by some chance the dollar can recover and continue to rally for a few more days it could force stocks to penetrate the April 10th low. In that scenario I would re-phase the daily and intermediate cycles as shown in the chart below. At the moment I have no idea which scenario has a greater odds of playing out, although I must admit the reversal today does not look good for the dollar.Gold:In my opinion gold is trying to move down into one more failed and left translated daily cycle, which I’m pretty confident would mark an intermediate degree bottom. However, as you can see from the chart below, as soon as Bernanke broke the dollar rally gold lost all of its downside momentum. This has turned gold’s B-Wave decline into a mostly sideways consolidation for the last two months. If the dollar has indeed topped then I have my doubts that gold will be able to finish its intermediate decline and penetrate the April 4 low. The fact that the current daily cycle is running out of time may indicate that we are going to have to leave the April 4 low as an early intermediate bottom. I would prefer to see gold drop down and penetrate $1612 as it would make the intermediate cycle count “fit” better. I know that’s not what most of you would like to see. Most of you probably just want the draw down to end as quickly as possible. I on the other hand understand that this is a secular bull market and that this is going to be a winning trade. (Well unless the bull market has ended ). So I’m not overly worried about a draw down. In a bull market timing mistakes get corrected.To me a move below $1612 means that we didn’t waste an entire daily cycle on a sideways consolidation and that we have all of a new intermediate cycle still ahead of us. That’s why I would prefer to see gold poke through the April 4 low. It would signal that we have more time to rally, an entire daily cycle more.So even though we weren’t able to time a perfect bottom, I’m confident that we have entered “close enough” and when the regression to the mean occurs, and it always eventually does, our mining positions are going to deliver a very hefty profit.Heck, if one was willing to just turn their computer off and wait for the bubble phase of the bull market, our current positions are probably set up to deliver a 500-1000 percent gain. Of course the cost is that you have to ignore the market and go on with your life for the next several years. When you think about it, that’s a pretty good bargain. Do absolutely nothing, and get rich doing it.
- NEW INTERVIEW Interview with Tekoa Da Silva of bull market thinking.com.
- THE INFLATION TRADE IS ON: BERNANKE HAS BROKEN THE DOLLAR... It may not seem like much happened yesterday, but a very important event occurred. Yesterday the dollar index breached 78.65. The reason that is significant is because 78.65 marked the intraday low of the prior daily cycle. A penetration of that level indicates that the current daily cycle has now topped in a left translated manner and a new pattern of lower lows and lower highs has begun. Any time a daily cycle tops in a left translated manner it almost always indicates that the intermediate cycle has also topped.In this case it would indicate that the intermediate dollar cycle topped on week two and should now move generally lower for the next 10-12 weeks, bottoming sometime in late June or early July, about the time Operation Twist endsNow that we have confirmation that Bernanke has broken the dollar rally I'm confident in calling April 4th an intermediate bottom (B-Wave bottom) in the gold market. Gold should now be entering the consolidation phase of the next C-wave. I expect a test of the all-time highs sometime this summer as the dollar moves down into its intermediate bottom. That being said I have no interest in a 15% rally in gold. The real money will be made as the mining stocks exit their bear market, re-enter the consolidation zone between 500 and 600, and move up to retest the old highs. It's not inconceivable that we could see a 30-45% gain in mining stocks over the next 2 1/2 months.Sentiment in the mining index has reached the same levels of bearishness that were seen in the fall of 2008. That black pessimism drove a 300+ percent rally over the next two years. I have little doubt this time will be any different.Now what we need to see is a change in character. We need the mining stocks to stop generating these sharp bear market rallies and transition into the wall of worry type rally that characterizes a bull market. So far that is exactly what is happening. The miners are rallying very hesitantly, and as long as this continues it will camouflage the move and keep sentiment depressed. That's exactly what we need to happen to drive a long sustained rally back up to the old highs. The problem with the rocket launch type rallies we've seen over the last year and a half is that they swing sentiment very quickly to the bullish side and we run out of buyers.As long as the bottoming process proceeds gradually I think there's a very good chance the HUI could break back above the 200 day moving average, and possibly test the 600 level by mid-July.So far all of the pieces are starting to fall in place to initiate the very early stages of what I think will eventually become another huge momentum move similar to what happened in silver and gold last year. Ultimately culminating in a parabolic blowoff top sometime in late 2014 as the dollar moves down into its next three year cycle low.Now is the time to invest in this sector as it struggles to transition from a bear market back to the secular bull trend. The time to enter is at the very beginning when no one believes. This is when the really big money is made. If you wait till your emotions give you the all clear, half the move will be over.Most traders are going to jump back into the general stock market, or tech stocks. You have to be smarter than that. The stock market, including tech, have already generated a massive move out of the October bottom. That kind of move usually leads to a multiweek, or month, consolidation. The odds of another 20 to 30% rally in the stock market are very slim.The odds of a 20 to 30% rally as the mining stocks resume the secular bull trend are extremely high.The combination of extreme downside momentum, and irrational human nature has created the kind of oversold conditions and extreme undervaluation that generates an opportunity that only comes around once or twice a decade.The $10 one-week trial for the premium newsletter will be available for the rest of the week. Click on the subscribe link on the right hand side of the homepage.
- B-WAVE BOTTOM Over the last several days volatility in the gold market has collapsed forming what is known as a coil. I think the Fed announcement tomorrow will probably break gold out of this holding pattern. But contrary to popular belief about 70% of the time the initial move out of a coil ends up being a false move that is reversed by a more powerful and durable move in the opposite direction.In this case if gold breaks lower out of the coil it is late enough in the intermediate cycle that the move would be unlikely to last more than a few days before forming what would presumably be an intermediate cycle and B-Wave bottom.I suspect many gold bugs are going to get knocked out of their position if this scenario plays out tomorrow. However if this does turn out to be a B-Wave bottom like I think it will, the next couple of days are going to be the single best buying opportunity for the rest of this secular bull market.That doesn't mean that gold will reverse and head straight up immediately. I expect we will probably see a volatile consolidation with several tests of the all-time highs above $1900 but no breakout for the rest of the summer. Traders are going to be looking for the next trend once the stock market bottoms. I doubt that tech stocks are going to resume the leading role that they've enjoyed since last October. More likely liquidity will find its way into a beaten up sector. Like I always say, liquidity will eventually flow into undervalued assets. There is no sector as undervalued and as unloved as the mining stocks right now. Sentiment in this sector has reached levels of pessimism capable of generating triple digit returns over the next couple of years, and I wouldn't even be surprised to see a 25 - 50% gain during the next intermediate cycle alone.I think the next momentum move is about to begin in the sector most overlooked and least expected by investors, the mining stocks.
- POSSIBLE PORTFOLIO CHANGE A potential portfolio change has been posted to the website.
- PORTFOLIO CHANGE A portfolio change is been posted to the website.
- PORTFOLIO CHANGE A portfolio change has been posted to the website
Market Skeptics
- Why Romney Lost South Carolina: His Past At Bain Capital Ignoring for the moment the issue of voter fraud, I want to explain why Romney lost South Carolina: the documentory "When Mitt Romney Came to Town" released by Newt Gingrich's "Super PAC". It is an utterly devastating depiction of Romney’s past. (This documentary is not a criticism of capitalism. What Romney and Bain were doing wasn’t capitalism. It was unprosecuted fraud.) When Mitt Romney Came To Town — Full, complete version Below is an example of what Romney and Bain were involved in. The facts about Bain and KB Toys, much worse than 'Vulture' Capitalism Democratic Underground reports that here are the facts about Bain and KB Toys, much worse than 'Vulture' Capitalism. Here are the facts about Bain and KB Toys, much worse than 'Vulture' Capitalism There is good private equity and there is bad private equity firms. … Here are the facts about KB Toys. 1. At the time it was purchased KB Toys was an industry leader, it was not in trouble. http://www.fundinguniverse.com/company-histories/KB-Toys-Company-History.html In 1999, KBkids.com received top points from an e-commerce market research firm, the Gomez Advisors, in the categories of customer confidence, overall cost, and bargain shopping. Softletter named the site one of the 'Ten Best Online Software Stores of 1999' in its October 15th issue. Even the Wall Street Journal dubbed the site the 'best overall' online toy retailer. In a little more than four months online, KBkids.com increased its business more than 400 percent and twice ranked among the five biggest gainers on the NextCard eCommerce Movers index. It seemed nothing could stop KB Toys from challenging its rivals in the toy industry. Operating profit for 1999 was up 51 percent from 1998. The company, seeking to capitalize on its growth, decided to hold an initial public offering in the spring of 2000, then postponed trading due to unfavorable market conditions. Notwithstanding this delay, KB was more focused than ever on fine-tuning its position in the very fashion-forward toy industry. With relatively small stores and a knack for innovation and creativity in marketing, KB was ready as ever to make quick adjustments to changing customer and merchandise trends. 2. KB Toys was a company that made money and exercised social responsibility After a 13 year old boy in NYC was shot and killed while holding a realistic toy gun (not from KB Toys) KB Toys destroyed 300,000 toys in inventory and never again carried realistic toy guns. They also gave toys for guns. The company also participated in New York's 'Goods for Guns' program, which offered gift certificates to people who surrendered real firearms. Although Ann Iverson left as chairman in 1994, her policy of not selling look-alike guns was continued by her successor, Alan Fine, who had been senior vice-president before becoming president and CEO. 3. Bain Capital 'purchased' KB for the respectable price of $ 305 million dollars on December 8, 2000. http://en.wikipedia.org/wiki/KB_Toys 4. Bain Capital only offered $ 18 million in cash, the rest was leaveraged debt put on the company. 5. "Sixteen months after the buyout, Bain Capital paid itself $85 million in dividends in early 2002." 6. "January 14, 2004, K·B Toys filed for Chapter 11 bankruptcy protection and closed 365 stores." 7. Three years latter the rest of the 156 stores were closed down. But there is a little more to the story. KB Stores had already gone through a tough restructuring in 1996. At that time a private equity bought the company, closed unprofitable stores, and increased profits. SO HERE IS THE OBJECTIVE REALITY OF WHAT BAIN DID. Bain engineered a private equity purchase of a profitable company that had already gone through 'creative destruction' eliminating unprofitable legacy operations and saddled the company with hundreds of millions of dollars of debt. The company was not just profitable but an example of the kind of companies that demonstrate a wider social conscious for its customers and the larger community. SIXTEEN MONTHS AFTER PURCHASING THE COMPANY WITH ONLY 6% CASH OF THE VALUE BAIN TAKES OUT DIVIDENDS AT OVER 400% OF THEIR INVESTMENT. Significantly this was done during the time of the attacks on 9/11 when the country as a whole was undergoing a hightened sense of patriotism, sacrifice and social duty. Less than 2 years after saddling KB Toys with massive debt and taking out astronomical dividends, K-B Toys faces Chapter 11 bankruptcy and closes 354 previously profitable stores. Vultures take meat that is already dead and complete the final loop in the cycle of life. Bain took a company that had already been restructured and was surging in profits and cash. There was never any interest by Bain to restructure KB Toys, that had already been done. BAIN PURCHASED KB TOYS SIMPLY TO RAID ITS CASH, and they did so during a time when the rest of the country was undergoing a period of reviewing the founding principles of the country. To call what Bain did to KB Toys as 'Vulture' Capitalism is an insult to Vultures. They were pirates and this is why there is so much interest to change the subject and not let the real facts of Bain Capital come to the surface during the Republican Primary. My reaction: The key points to take away from this are: 1) Newt Gingrich didn’t win South Carolina. Romney lost (crushed by his past). 2) Romney’s now public experience at Bain makes him unelectable. If Romney was the nominee, Obama would have a field day with this stuff come November. Romney would get crushed. 3) This drastically improves Ron Paul’s chances of being the republican nominee. Take Virginia, where only Ron Paul and Mitt Romney are on the ballot. How do you think Romney will fair in a one-on-one match against Paul as the video above spreads through the American electorate? Conclusion: With Mitt Romney taking this devastating hit, killing Ron Paul’s candidacy became infinitely more complicated, if not impossible.
- Market Skeptics Goes Dark Tomorrow – Wednesday January ... Market Skeptics will be joining the SOPA Strike and going dark on Wednesday January 18 to protest the US Government efforts to censor the Internet. Daily Paul explains what is going on. Daily Paul Goes Dark - Wednesday January 18 - SOPA/PIPA Strike Submitted by Michael Nystrom on Tue, 01/17/2012 - 12:19 * * S P R E A D T H E M E S S A G E : S O P A S T R I K E * * On January 18, The Daily Paul will join Wikipedia, Reddit, Twitter, BoingBoing, MoveOn.org, The Free Software Foundation, and tens of thousands of other websites around the Internet in going dark to oppose SOPA and PIPA, the looming US legislation that would create an impossible Internet censorship regime and export it to the rest of the world. In a post-SOPA world, out-links from the Daily Paul to any other website would be prohibited unless I was completely, 100% positive that there was no copyright infringing content on those websites. This means no more linking to YouTube, Twitter, TVPC, WordPress, Blogger, or any other user-content generated website -- including your personal blog -- lest I personally face the pain of being shut down, my finances frozen, the DailyPaul.com domain confiscated, having my IP address blacklisted, and eventually -- who knows -- probably being put into a cage for the protection of there rest of society. In other words, if SOPA passes, say goodbye to our little community here at the Daily Paul. This website would go dark for good. Such a bleak future is corporatism at its worst, and is what Dr. Paul has warned us against: Big Business getting into bed with Big Government to force submission to their goal of controlling every last aspect of our lives, including what we are able to read and speak here on this last bastion of freedom - the Internet. … the beauty of the internet is freedom. Is it any wonder that The Powers That Be want to put an end to it? The time to make the stand is now. Please help spread the word about the SOPA Strike. Encourage other websites you frequent to participate in the strike. And by all means, call and write your representatives to let them know where you stand on the issue of Internet censorship. This must not stand. The future is in your hands. My reaction: Please help spread the word about the SOPA Strike! Call and write your representatives to oppose this Internet censorship!
- The History Of Vote Fraud In The United States With tomorrow's Iowa caucuses, I thought it was time for an entry on the history of vote fraud in the united states. What Really Happened reports about vote fraud and the bankruptcy of the United States. (emphasis mine) [my comment] VOTE FRAUD AND THE BANKRUPTCY OF THE UNITED STATES April Friday 8 2005: … A search through the news reports of elections around the world shows that a truly fair and honest election is indeed a rarity. IT IS THEREFORE NAIVE (NOT TO MENTION RACIST) TO START OUT ASSUMING AMERICAN ELECTIONS ARE HONEST SIMPLY BECAUSE WE ARE AMERICANS. Are the elections in the United States fair and honest? A review of the facts is far less than reassuring. SINCE 1964, right after John F. Kennedy was assassinated [See Video 4 in my entry *****What I have been afraid to blog about: THE ESF AND ITS HISTORY***** for more on JFK’s assassination], VOTE TABULATION FOR NATIONAL ELECTIONS HAS BEEN HANDLED NOT BY THE GOVERNMENT, BUT BY A PRIVATE COMPANY LACKING ANY OFFICIAL OVERSIGHT AT ALL. This company, which changes its name on a regular basis, is currently called "Voters News Service" and is located in New York City. THIS COMPANY IS OWNED BY A CONSORTIUM OF TV NETWORKS AND WIRE SERVICES, which ARE IN TURN CONTROLLED BY THE CIA through its Operation MOCKINGBIRD. The TV networks will make a great show of being "first with the election results", but in reality all of them rely on the numbers sent to them by VNS, while seldom acknowledging its existence during the election coverage. This is the voting process most in use in America today. A voter punches a card in the voting booth. That card is run through a computer at the local voting center, then that computer contacts computers at Voters News Service, or the precinct official telephones the numbers the computer shows him to Voters News Service, which then announces the results via the networks. POLL WATCHERS ARE ALLOWED TO WATCH THE VOTING BOOTHS, to guard against polling place electioneering, but IN MOST PRECINCTS, THE ACTUAL COUNTING OF THE BALLOTS IS CONCEALED FROM THE PUBLIC, and nobody is allowed to see inside the voting machines, or review the computer software that counts the ballots. 70% of all votes in America are counted by machine, and nobody, not private citizen, not local election official, nobody, is allowed to examine how it all works. The accuracy tests conducted on the voting machines before and after the actual election are utterly worthless, as they cannot detect fraud designed to fool the accuracy test itself. In 1988, when voting machines in Illinois were tested with tens of thousands of ballots instead of the few dozen normally used for the accuracy test, over 1/4 of the machines which had passed the standard accuracy test were found to have mistabulated the larger test vote results! While researching the book, "VOTESCAM", the Collier brothers actually managed to VIDEOTAPE MEMBERS OF THE LEAGUE OF WOMEN VOTERS FORGING BALLOTS, and found hard evidence that Shouptronics and Printomatic vote machines were rigged in the Dade County Elections. In the Shouptronics, the wheels of the mechanical counters were shaved to cause miscounts. In the Printomatic machines, a malfunction revealed that the paper tape with the voting results had been pre-printed before the voting even started! The Colliers, along with attorney Ellis Rubin, handed the evidence to the assistant State Attorney for Florida. Sadly, that assistant State Attorney was Janet Reno, who in a pattern we have all become too familier with, killed the investigation. 60 Minutes taped a segment on the Dade County Vote Fraud, BUT NEVER AIRED IT. Mandatory voter registration laws, such as "Motor voter" have been a boon to election fraud, generating registered voters who don’t vote and whose names may be used to obtain absentee ballots. In the California election that unseated Bob Dornan following his efforts to investigate the Clinton White House, canvassers discovered that NEARLY HALF OF THE NAMES REGISTERED TO VOTE IN THE GOP ELECTION FROM 7 PRECINCTS SIMPLY DID NOT EXIST. The California Attorney General’s office was informed by the precinct worker, but again nothing was done. In 1998, almost 20,000 fraudulent voter registrations were discovered on the voting rolls, but were allowed to remain on the excuse that their removal in time for the election would cost too much! The evidence for MASSIVE VOTE FRAUD IN THE UNITED STATES uncovered by the Voting Integrity Project and organizations like it are ignored by the government, which has obviously been the beneficiary of such chicanery, and by the media, which is complicit in the fraud. When vote fraud was suspected in the 1996 Arizona Primary (the one that ended Pat Buchanon’s winning streak after New Hampshire), the Arizona legislature passed a special law forbidding a recount for that one primary election only! When the Miami Magazine ran a story on the Dade County Vote Fraud, the magazine was purchased just one month later by the editor of the Miami News, Sylvan Meyer, who ordered that no further stories on vote fraud be published. When precinct workers in the 1974 Dade County elections discovered that the voting machines they were using were rigged, they walked off the job and refused to certify the election process. Police and fire fighters took over the polling duties. The next day, the Miami Herald reported the walk out, but not the reason. When the precinct workers went to the media to report the election rigging, the media ignored them. So did the local attorney general. So did the FBI. Citizens who tried to observe the next election were arrested. [With tomorrow’s Iowa caucuses, the vote-fraud story below is especially important to note] Typical of the horror stories associated with the media-owned Voters News Service is what happened in Dubuque County Iowa during the 1996 Caucuses. The county’s 41 precincts met in 41 classrooms at two high schools and voted on old fashioned paper ballots, which were then counted in full view of all present (including representatives of the candidates), and the results posted for all to see and verify. The vote totals were then phoned directly into Voters News Service by the county chairman, again in full view of all participants that night. Buchanon won the county by a wide margin, garnering 870 votes. By next morning, Voters News Service had dropped Buchanon’s vote total for that county down to 757 votes, a 13% drop. Buchanon lost Iowa by a much smaller margin than 13%. The Iowa state GOP claimed it could do nothing about the problem; they were "in VNS’ hands". VNS, DESPITE THE PAPER BALLOTS PROVING BUCHANON'S 870 VOTES, refused to admit error and refused to change the results for the county. Needless to say, the question of whether Buchanon had had 13% of his votes shaved off in other Iowa counties, ones in which computerized vote machines meant there was no audit trail to check, was ignored. The fact that AN OBVIOUSLY FRAUDULENT VOTE had made it all the way through the system to be reported on national television was also ignored by the media. (Iowa is the state, it should be noted, where a columnist for Salon magazine was charged with vote fraud.) The complicity by the law enforcement machinery of this nation is astounding. In one election in Boston, a judge declared 968 ballots which had been declared "blank" due to multiple punches to be valid, arbitrarily assigning most of the disputed votes to the incumbent candidate, thereby reversing his defeat. In a computer vote fraud case in West Virginia, an expert witness testifying for the plaintiff sat down at a CES voting machine provided by the defendants, studied it for a while, then with a single ballot card added 10,000 votes to one of the fictional candidates. The judge refused to allow the jury to see the demonstration and the charges were eventually dropped. Only three states, California, Florida, and Michigan, have laws requiring that the voting machine source code be placed in escrow should it need to be examined after an election. None of those states have any means to verify that the source code placed in escrow is in fact the origin of the compiled code running on the machines election night, and in Michigan, the escrow is simply handled by the voting machine company itself with no overview by a state agency or public interest group. All the voting machines used in the United States come from just three companies. THE PRESIDENTS OF TWO OF THEM HAVE BEEN CONVICTED OF VOTE FRAUD and yet all state governments continue to do business (at very steep fees) with just these three companies. The largest of the three companies has direct access to 50% of the nation’s votes. Nobody is allowed to inspect the machines, or watch as the vote totals are accumulated and counted, and there is no audit trail anywhere along the path from the voting machine to Voter’s News Service, the private media-owned company that without any official oversight, tells us all what the election results are. Most states have now passed laws requiring a challenge to election results to be filed within a few weeks of the election, far too short a time for anyone to properly determine if such a challenge is warranted. Despite such an obvious inhibition, a Democrat who lost a legislative seat in the 1998 Hawaiian election did file a challenge, claiming there was vote fraud. A quick audit showed that vote fraud involving absentee ballots had indeed occurred, but mostly by the Democrat; who had cheated, but not enough to win. This scandal triggered public questions about several races, including that of the Democratic Governor, Ben Cayutano, who had been trailing his Republican challenger all during the election night, only to have a sudden surge of votes at the last second push him over the top. The governor offered to over-ride the state’s two week filing deadline for election challenges and allow a full recount, then back-pedaled and made a full recount contingent on a "pre-audit". The "pre-audit" was assigned to the company which had run the election, along with a warning that if it turned out the election was flawed, their final payment would be withheld by the State of Hawaii. Needless to say the pre-audit found no errors in the election, and despite the urging of the Voter Integrity Project (which was conducting its own investigation) the full recount was canceled. The voting company, ES&S was again been awarded the voting contract for the 2000, 2002, and 2004 elections, without any open bidding. Who chooses what government we live under? Those who cast the votes, or as Stalin observed, those who count them? Do We The People pick those who govern us, or does a private company, owned by the CIA controlled media, and operating without any public oversight? … Just think about all it really means if the elections are being rigged on a massive scale. It means that the contract between ruler and ruled is broken. The government does not govern with the consent of the governed, it rules by treachery and deception. … … In light of the numerous incidents of vote fraud uncovered through the years and the quite obvious stonewall on the subject by the officials who benefit from rigged elections and the media that at least helps in the rigging, IT IS DANGEROUS TO ASSUME THAT AMERICAN ELECTIONS ARE HONEST. The burden of proof must lie with VNS and the voting machine companies to prove their honesty. In an atmosphere of doubt about the validity of the voting process, it appears that the entire voting process is a sham, a trick to fool the American people into accepting whatever is done to them by creating the illusion that the people somehow voted for and approved of whatever is being done. That’s how Batista fooled the Cuban people. That’s how the USSR fooled the Soviet citizens. And that’s how the American government fools us. … The Landes Report reports on US Election Fraud and Irregularities. Election Fraud and Irregularities Is there any evidence that voting machines have been rigged or malfunctioned? Yes. Lots of it. Read on. (Also check out the complicity in vote fraud by the following organizations and companies: DOJ & FBI, NEWS NETWORKS' EXIT POLL AND VOTING MACHINE COMPANIES • Voters Unite, 2004 to 2008 - http://www.votersunite.org/electionproblems & http://www.votersunite.org/news.asp • ALSO: search news.google.com and yahoo.com/news for "voting" & "problems" Noteworthy reports and landmark articles: Also check out books and videos • 2003: Black Box Voting, Ballot-Tampering in the 21st Century (Chapter II) by Bev Harris (2003) • 2000: Vote Fraud and the Bankruptcy of the United States • 1996: Pandora's Black Box by Philip M. O’Halloran of Relevance (good summary to that point in history) • 1988: Annals Of Democracy - Counting Votes by Ronnie Dugger for The New Yorker • 1988: Roy Saltman's 1988 full report / Chapter 4 only - Voting machine irregularities (also see http://www.itl.nist.gov/lab/specpubs/500-158.htm • 1987: The Cincinnati Bell-FBI scandal -- See http://www.thelandesreport.com/Donsanto.htm • 1985: Computerized Systems for Voting Seen as Vulnerable to Tampering by David Burnham of New York Times 2004-2006 elections: • Jan 2007: http://www.bradblog.com/?p=4071 CLEVELAND, OH — Two election workers in the state's most populous county were convicted Wednesday of illegally rigging the 2004 presidential election recount so they could avoid a more thorough review of the votes. • 2006 election: E-Voting Failures in the 2006 Mid-Term Elections A sampling of problems across the nation http://www.votersunite.org/info/E-VotingIn2006Mid-Term.pdf • Jan 6, 05: The Conyers Report(summary), http://www.truthout.org/Conyersreport.pdf (full report) Read Excerpts (Triad advised election officials how to manipulate voting machinery to ensure that a preliminary hand recount matched the machine count.) • ON VIDEO Congressman Peter King's (R-New York) pre-2004 election quote: "We already won....It's all over but the counting ....and we'll take care of the counting" (please copy and save to your websites) • Feb 4, 05: Prominent Statisticians Refute 'Explanation' of 2004 U.S. Exit Poll Discrepancies in New Edison/Mitofsky Report and Urge Investigation of U.S. Presidential Election Results REPORT • 2004/2005: Election Incident Reporting System (click onto "download incidents" for entire report) • Patterns of Touchscreen Voting Machine Vote Fraud Identified and Documented in Florida, Ohio, New Mexico and Elsewhere • StolenElection2004.com • http://www.bradblog.com/?p=4220 • http://election.solarbus.org/ • 2004: http://www.wanttoknow.info/electionsproblems • 2004: http://www.scoop.co.nz/stories/HL0706/S00165.htm • Brandon Adams charts on non-votes for president in Florida, etc. - http://electionexamination.blogspot.com/ Here is Lynn Landes's chart on the Florida 2004 election http://www.thelandesreport.com/Florida2004.htm. -------------------------------- Lynn's list (1968-2003) 1) 1968 - Following widely publicized problems with punch cards in the 1968 election, IBM withdrew from the election machine business. http://www.vote.caltech.edu/Reports/july01/July01_VTP_%20Voting_Report_Entire.pdf (Unfortunately, there's no documentation in this report. We'll keep searching.) 2) 1970s-1980s Ohio - The Cincinnati Bell-FBI scandal: Leonard Gates, a Cincinnati Bell employee for 23 years, testified that in the late 1970's and 80's, that the FBI assisted telephone companies with hacking into mainframe election computers in cities across the country. See: http://www.thelandesreport.com/Donsanto.htm … [In the interest of brevity, 90 examples of US vote fraud omitted] … 92) 2003 Special Report - Dan Spillane, a voting machine test engineer, has filed a lawsuit against his former employer, DRE touch-screen voting machine manufacturer VoteHere. Spillane's lawsuit charges wrongful and retaliatory termination; he contends he was removed so that he could not blow the whistle to certification labs and pass critical information to the US General Accounting Office. He says he has evidence which shows voting systems are certified despite known flaws, demonstrating a weakness in both the NASED and the ITA system for certifying machines. http://www.blackboxvoting.com/votehere-lawsuit-1.html 93) Jun 26, 03 Johns Hopkins Report: Numerous security flaws are identified in a newly published paper entitled 'Analysis of an Electronic Voting System' by Tadayoshi Kohno (JHU), Adam Stubblefield (JHU), Aviel Rubin (JHU), and Dan Wallach (Rice University). http://www.jhuisi.jhu.edu Read about it: The Baltimore Sun (Front Page), MSNBC News, CNN, New York Times, The Washington Post, Reuters, CNET News, Scoop, and Headlines@Hopkins. Orlando Sentinel (blog) reports about the fear of voter fraud in Iowa. Whom do you trust to report election results – if you support Ron Paul? posted by Scott Powers on December, 23 2011 2:00 PM A pro-Ron Paul blog called “The Daily Paul” is promoting an effort to independently document caucus votes in Iowa and primary vote totals in New Hampshire, South Carolina and Florida — out of fear that, through the Main Stream Media, the announced tallies could be fraudulent. The Daily Paul is trying to organize support for something called the “TransparentVote.net” project which intends to use volunteers with cameras to make photocopies of all the results, “to provide a check and balance to the Main Stream Media’s (MSM) reporting.” “This will force the MSM to report honest results in line with the documented results posted at TransparentVote.net,” declares a blog post from Spiritof1776, on The Daily Paul blog. “I do not believe the MSM wants to get caught in election fraud. It is a federal crime and we will have the documents to prove it.” … Transparent Vote explains about Transparent Vote Counting and Reporting. December 13, 2011 Transparent Vote Counting and Reporting Fair and honest elections are one of the greatest Rights we as Americans have and cherish. Unfortunately, we can not guarantee that Right today there is a monopoly on the vote reporting. It is called News Election Pool. There is no check and balance. There is no competition. The purpose of this site is to provide a check and balance to the Main Stream Media’s (MSM) reporting. … most Americans and all honest candidates would agreed we want to insure we will have honest, transparent vote counting and transparent reporting of our vote. This is the goal of Transparentvote.net . It is a free site, set up for We the People. We are non-partisan and would like to invite any American citizen that believes in a transparent vote to join us. We have sent out a request to all the Presidential candidates to support us in this effort. We will be starting with the Iowa GOP caucus- January 3, 2012 . Then the NH GOP primary- January 10, 2012. If you will be at an Iowa precinct caucus or a NH voting place on those dates and are willing to volunteer as an independent reporter, we need your help. All you will need is a camera or camera phone to upload the official vote results to this site. It is pretty simple and does not take much time. You will first need to sign up here and agree to the Terms of Service. (We need to be assured only photos of the official vote documents are uploaded.) Below is some history of what happened 4 years ago and what you can do today. We believe you will also see why this project is vitally necessary in keeping our elections honest and transparent. IOWA- Iowa has 1,784 precincts. We will need 1,784 or more volunteer news reporters, at least one at each precinct, armed with a digital camera or camera phone that will photo and upload the official results from that precinct to Transparentvote.net. Four years ago, Liberty News Network, which no longer exists, attempted this. Although, they only had a few hundred volunteers participating in Jan. 2008 Iowa caucus, it shook the monopolistic Establishment Media to it’s core! The problem is News Election Pool is where ALL the MSM get their results. They had never had ANY competition before in reporting the election results. For example, leading up to Caucus night, all these false polls had one particular candidate at 3%. When the precincts started reporting and posting to Liberty News Network, the MSM were reporting the same numbers as Liberty News Network ! This candidate was getting between 12-14% It kept them honest! We believe the MSM eventually saw they did not have all the precincts covered and after a few hours, this particular candidate’s numbers started to drop, but he still finished with 10% instead of 3% ! This year we need 1,750 volunteers to cover ALL of the precincts, officially documenting (with photo) and uploading the total results, precinct by precinct, transparent for everyone to see. … Sign up here. It’s free! My reaction: Whether Ron Paul wins or not tomorrow depends entirely on the success of TransparentVote.net. Expect the vote in any county not independently verified to be rigged to the limits of believability. Ron Paul Grassroots Energy
- *****The Nightly News With Brian Williams Is Government P... Imagine a country passing legislation empowering the president to lock up citizens and throw away key. Then, on the same day, the evening news (instead of covering the massive power grab) runs a story showing the president defending civil liberties by cracking down on “unconstitutional policing”. This would be called government propaganda, and it is happening in America. -------------------------------- The Reality: On December 15, the Obama administration was granted (as requested) the legal authority to send Americans to jail without charges, without trial, without end. The video below explains how Habeas Corpus (the right to due process) died. The Day Habeas Corpus Died World Net Daily reports that bill empowers president to lock up citizens, throw away key. LIFE WITH BIG BROTHER Are Americans really to be jailed at Gitmo? Critics warn bill empowers president to lock up citizens, throw away key Posted: December 16, 2011 7:50 pm Eastern By Drew Zahn © 2011 WND Buried within an 1,844-page bill currently sitting on Barack Obama's desk awaiting his signature is text that many critics are warning could give the president legal authority to send Americans to jail without charges, without trial, without end. Both the U.S. House and Senate have passed the National Defense Authorization Act, a sweeping piece of legislation that affects dozens of aspects of foreign and military policy, but that was designed primarily to give the military – and not civilian courts – the clear authority for prosecuting and jailing terrorists. But voices from across the political spectrum are concerned that the bill opens the door for the military – led by the president as commander in chief – to indefinitely detain American citizens, even within the U.S. "We're talking about American citizens who can be taken from the United States and sent to a camp at Guantanamo Bay and held indefinitely," explains Rand Paul of Kentucky, one of 13 senators who voted against the bill. … … "It's something so radical that it would have been considered crazy had it been pushed by the Bush administration," said [Tom] Malinowski [of Human Rights Watch]. "It establishes precisely the kind of system that the United States has consistently urged other countries not to adopt. At a time when the United States is urging Egypt, for example, to scrap its emergency law and military courts, this is not consistent." … Fox19 reports that the Obama administration demanded power to detain U.S. citizens. Reality Check: The Obama administration demanded power to detain U.S. citizens Posted: Dec 15, 2011 11:08 PM EST Updated: Dec 16, 2011 7:40 AM EST By Ben Swann … According to Sen. Carl Levin, who helped to craft this bill, not only did the President want the power, THIS ADMINISTRATION WAS THE ONE WHO DEMANDED THE POWER TO DETAIN U.S. CITIZENS INDEFINITELY BE PLACED INSIDE THE BILL. … For more, check the links below: Transcript of House Debate on the NDAA (lawfareblog) Obama insists on indefinite detention of Americans (RT, December 12) The National Defense Authorization Act: You, Your Body, and Your Country (thebaynet.com, December 15) Disappointment on 220th Anniversary of Bill of Rights (Yahoo News, December 16) Obama Throws Away Civil Liberties With Defense Bill (Newser, December 16) Rights Activists "Appalled" as Senate Passes Prison Without Trial Bill (The New American, December 16) Death To Civil Liberty: The National Defense Authorization Act Passes (eCorsair.com, December 16) Indefinite Detention Bill: Obama's Trail of Broken Promises (International Business Times, December 16) Etc… -------------------------------- The Nightly News With Brian Williams: On December 15, the Obama administration defended civil liberty by cracking down on “unconstitutional policing” in Arizona. The Nightly News did not report on the death of Habeas Corpus. Instead it aired the segment below: Nightly News: Arizona Sheriff Targeted Latinos, Feds Say Visit msnbc.com for breaking news, world news, and news about the economy This is called government propaganda. -------------------------------- Conclusion: It isn’t just Nightly News that is ignoring Obama’s power grab: the entire mainstream media is dead silent. Just Google habeas corpus or indefinite detention. By the way, the only Republican candidate speaking out against the “indefinite detention act” is Ron Paul (See Ron Paul furious over indefinite detention act). This outspokenness is the reason why mainstream media wants his candidacy to die.
- Wall Street Crooks Don’t Go To Jail—Ever Prosecuting Wall Street, pt. 1 (60 minutes) Prosecuting Wall Street, pt. 2 (60 minutes) For a more detailed exposition of this corrupt system, Rolling Stone asks Why Isn't Wall Street in Jail? (emphasis mine) [my comment] Why Isn't Wall Street in Jail? Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them By Matt Taibbi February 16, 2011 9:00 AM ET Illustration by Victor Juhasz Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer. "Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that." I put down my notebook. "Just that?" "That's right," he said, signaling to the waitress for the check. "Everything's fucked up, and nobody goes to jail. You can end the piece right there." Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and NOBODY WENT TO JAIL. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people. The rest of them, ALL OF THEM, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom — an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities — has ever been convicted. Their names by now are familiar to even the most casual Middle American news consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley. Most of these firms were directly involved in elaborate fraud and theft. Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses. Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. What's more, many of these companies had corporate chieftains whose actions cost investors billions — from AIG derivatives chief Joe Cassano, who assured investors they would not lose even "one dollar" just months before his unit imploded, to the $263 million in compensation that former Lehman chief Dick "The Gorilla" Fuld conveniently failed to disclose. Yet not one of them has faced time behind bars. Instead, federal regulators and prosecutors have let the banks and finance companies that tried to burn the world economy to the ground get off with carefully orchestrated settlements — whitewash jobs that involve the firms paying pathetically small fines without even being required to admit wrongdoing. To add insult to injury, the people who actually committed the crimes almost never pay the fines themselves; banks caught defrauding their shareholders often use shareholder money to foot the tab of justice. "If the allegations in these settlements are true," says Jed Rakoff, a federal judge in the Southern District of New York, "it's management buying its way off cheap, from the pockets of their victims." To understand the significance of this, one has to think carefully about the efficacy of fines as a punishment for a defendant pool that includes the richest people on earth — people who simply get their companies to pay their fines for them. Conversely, one has to consider the powerful deterrent to further wrongdoing that the state is missing by not introducing this particular class of people to the experience of incarceration. "You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once." But that hasn't happened. Because the entire system set up to monitor and regulate Wall Street is fucked up. Just ask the people who tried to do the right thing. Here's how regulation of Wall Street is supposed to work. To begin with, there's a semigigantic list of public and quasi-public agencies ostensibly keeping their eyes on the economy, a dense alphabet soup of banking, insurance, S&L, securities and commodities regulators like the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC), as well as supposedly "self-regulating organizations" like the New York Stock Exchange. All of these outfits, by law, can at least begin the process of catching and investigating financial criminals, though none of them has prosecutorial power. The major federal agency on the Wall Street beat is the Securities and Exchange Commission. The SEC watches for violations like insider trading, and also deals with so-called "disclosure violations" — i.e., making sure that all the financial information that publicly traded companies are required to make public actually jibes with reality. But the SEC doesn't have prosecutorial power either, so in practice, when it looks like someone needs to go to jail, they refer the case to the Justice Department. And since the vast majority of crimes in the financial services industry take place in Lower Manhattan, cases referred by the SEC often end up in the U.S. Attorney's Office for the Southern District of New York. Thus, the two top cops on Wall Street are generally considered to be that U.S. attorney — a job that has been held by thunderous prosecutorial personae like Robert Morgenthau and Rudy Giuliani — and the SEC's director of enforcement. The relationship between the SEC and the DOJ is necessarily close, even symbiotic. Since financial crime-fighting requires a high degree of financial expertise — and since the typical drug-and-terrorism-obsessed FBI agent can't balance his own checkbook, let alone tell a synthetic CDO from a credit default swap — the Justice Department ends up leaning heavily on the SEC's army of 1,100 number-crunching investigators to make their cases. In theory, it's a well-oiled, tag-team affair: Billionaire Wall Street Asshole commits fraud, the NYSE catches on and tips off the SEC, the SEC works the case and delivers it to Justice, and Justice perp-walks the Asshole out of Nobu, into a Crown Victoria and off to 36 months of push-ups, license-plate making and Salisbury steak. That's the way it's supposed to work. But a veritable mountain of evidence indicates that when it comes to Wall Street, the justice system not only sucks at punishing financial criminals, it has actually evolved into a highly effective mechanism for protecting financial criminals. This institutional reality has absolutely nothing to do with politics or ideology — it takes place no matter who's in office or which party's in power. To understand how the machinery functions, you have to start back at least a decade ago, as case after case of financial malfeasance was pursued too slowly or not at all, fumbled by a government bureaucracy that too often is on a first-name basis with its targets. Indeed, the shocking pattern of nonenforcement with regard to Wall Street is so deeply ingrained in Washington that it raises a profound and difficult question about the very nature of our society: whether we have created a class of people whose misdeeds are no longer perceived as crimes, almost no matter what those misdeeds are. The SEC and the Justice Department have evolved into a bizarre species of social surgeon serving this nonjailable class, expert not at administering punishment and justice, but at finding and removing criminal responsibility from the bodies of the accused. The systematic lack of regulation has left even the country's top regulators frustrated. Lynn Turner, a former chief accountant for the SEC, laughs darkly at the idea that the criminal justice system is broken when it comes to Wall Street. "I think you've got a wrong assumption — that we even have a law-enforcement agency when it comes to Wall Street," he says. In the hierarchy of the SEC, the chief accountant plays a major role in working to pursue misleading and phony financial disclosures. Turner held the post a decade ago, when one of the most significant cases was swallowed up by the SEC bureaucracy. In the late 1990s, the agency had an open-and-shut case against the Rite Aid drugstore chain, which was using diabolical accounting tricks to cook their books. But instead of moving swiftly to crack down on such scams, the SEC shoved the case into the "deal with it later" file. "The Philadelphia office literally did nothing with the case for a year," Turner recalls. "Very much like the New York office with Madoff." The Rite Aid case dragged on for years — and by the time it was finished, similar accounting fiascoes at Enron and WorldCom had exploded into a full-blown financial crisis. The same was true for another SEC case that presaged the Enron disaster. The agency knew that appliance-maker Sunbeam was using the same kind of accounting scams to systematically hide losses from its investors. But in the end, the SEC's punishment for Sunbeam's CEO, Al "Chainsaw" Dunlap — widely regarded as one of the biggest assholes in the history of American finance — was a fine of $500,000. Dunlap's net worth at the time was an estimated $100 million. The SEC also barred Dunlap from ever running a public company again — forcing him to retire with a mere $99.5 million. Dunlap passed the time collecting royalties from his self-congratulatory memoir. Its title: Mean Business. The pattern of inaction toward shady deals on Wall Street grew worse and worse after Turner left, with one slam-dunk case after another either languishing for years or disappearing altogether. Perhaps the most notorious example involved Gary Aguirre, an SEC investigator who was literally fired after he questioned the agency's failure to pursue an insider-trading case against John Mack, now the chairman of Morgan Stanley and one of America's most powerful bankers. Aguirre joined the SEC in September 2004. Two days into his career as a financial investigator, he was asked to look into an insider-trading complaint against a hedge-fund megastar named Art Samberg. One day, with no advance research or discussion, Samberg had suddenly started buying up huge quantities of shares in a firm called Heller Financial. "It was as if Art Samberg woke up one morning and a voice from the heavens told him to start buying Heller," Aguirre recalls. "And he wasn't just buying shares — there were some days when he was trying to buy three times as many shares as were being traded that day." A few weeks later, Heller was bought by General Electric — and Samberg pocketed $18 million. After some digging, Aguirre found himself focusing on one suspect as the likely source who had tipped Samberg off: John Mack, a close friend of Samberg's who had just stepped down as president of Morgan Stanley. At the time, Mack had been on Samberg's case to cut him into a deal involving a spinoff of the tech company Lucent — an investment that stood to make Mack a lot of money. "Mack is busting my chops" to give him a piece of the action, Samberg told an employee in an e-mail. A week later, Mack flew to Switzerland to interview for a top job at Credit Suisse First Boston. Among the investment bank's clients, as it happened, was a firm called Heller Financial. We don't know for sure what Mack learned on his Swiss trip; years later, Mack would claim that he had thrown away his notes about the meetings. But we do know that as soon as Mack returned from the trip, on a Friday, he called up his buddy Samberg. The very next morning, Mack was cut into the Lucent deal — a favor that netted him more than $10 million. And as soon as the market reopened after the weekend, Samberg started buying every Heller share in sight, right before it was snapped up by GE — a suspiciously timed move that earned him the equivalent of Derek Jeter's annual salary for just a few minutes of work. The deal looked like a classic case of insider trading. But in the summer of 2005, when Aguirre told his boss he planned to interview Mack, things started getting weird. His boss told him the case wasn't likely to fly, explaining that Mack had "powerful political connections." (The investment banker had been a fundraising "Ranger" for George Bush in 2004, and would go on to be a key backer of Hillary Clinton in 2008.) Aguirre also started to feel pressure from Morgan Stanley, which was in the process of trying to rehire Mack as CEO. At first, Aguirre was contacted by the bank's regulatory liaison, Eric Dinallo, a former top aide to Eliot Spitzer. But it didn't take long for Morgan Stanley to work its way up the SEC chain of command. Within three days, another of the firm's lawyers, Mary Jo White, was on the phone with the SEC's director of enforcement. In a shocking move that was later singled out by Senate investigators, the director actually appeared to reassure White, dismissing the case against Mack as "smoke" rather than "fire." White, incidentally, was herself the former U.S. attorney of the Southern District of New York — one of the top cops on Wall Street. Pause for a minute to take this in. Aguirre, an SEC foot soldier, is trying to interview a major Wall Street executive — not handcuff the guy or impound his yacht, mind you, just talk to him. In the course of doing so, he finds out that his target's firm is being represented not only by Eliot Spitzer's former top aide, but by the former U.S. attorney overseeing Wall Street, who is going four levels over his head to speak directly to the chief of the SEC's enforcement division — not Aguirre's boss, but his boss's boss's boss's boss. Mack himself, meanwhile, was being represented by Gary Lynch, a former SEC director of enforcement. Aguirre didn't stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued. "It all happened so fast, I needed a seat belt," recalls Aguirre, who had just received a stellar performance review from his bosses. The SEC eventually paid Aguirre a settlement of $755,000 for wrongful dismissal. Rather than going after Mack, the SEC started looking for someone else to blame for tipping off Samberg. (It was, Aguirre quips, "O.J.'s search for the real killers.") It wasn't until a year later that the agency finally got around to interviewing Mack, who denied any wrongdoing. The four-hour deposition took place on August 1st, 2006 — just days after the five-year statute of limitations on insider trading had expired in the case. "At best, the picture shows extraordinarily lax enforcement by the SEC," Senate investigators would later conclude. "At worse, the picture is colored with overtones of a possible cover-up." Episodes like this help explain why so many Wall Street executives felt emboldened to push the regulatory envelope during the mid-2000s. Over and over, even the most obvious cases of fraud and insider dealing got gummed up in the works, and high-ranking executives were almost never prosecuted for their crimes. In 2003, Freddie Mac coughed up $125 million after it was caught misreporting its earnings by $5 billion; nobody went to jail. In 2006, Fannie Mae was fined $400 million, but executives who had overseen phony accounting techniques to jack up their bonuses faced no criminal charges. That same year, AIG paid $1.6 billion after it was caught in a major accounting scandal that would indirectly lead to its collapse two years later, but no executives at the insurance giant were prosecuted. All of this behavior set the stage for the crash of 2008, when Wall Street exploded in a raging Dresden of fraud and criminality. Yet the SEC and the Justice Department have shown almost no inclination to prosecute those most responsible for the catastrophe — even though they had insiders from the two firms whose implosions triggered the crisis, Lehman Brothers and AIG, who were more than willing to supply evidence against top executives. In the case of Lehman Brothers, the SEC had a chance six months before the crash to move against Dick Fuld, a man recently named the worst CEO of all time by Portfolio magazine. A decade before the crash, a Lehman lawyer named Oliver Budde was going through the bank's proxy statements and noticed that it was using a loophole involving Restricted Stock Units to hide tens of millions of dollars of Fuld's compensation. Budde told his bosses that Lehman's use of RSUs was dicey at best, but they blew him off. "We're sorry about your concerns," they told him, "but we're doing it." Disturbed by such shady practices, the lawyer quit the firm in 2006. Then, only a few months after Budde left Lehman, the SEC changed its rules to force companies to disclose exactly how much compensation in RSUs executives had coming to them. "The SEC was basically like, 'We're sick and tired of you people fucking around — we want a picture of what you're holding,'" Budde says. But instead of coming clean about eight separate RSUs that Fuld had hidden from investors, Lehman filed a proxy statement that was a masterpiece of cynical lawyering. On one page, a chart indicated that Fuld had been awarded $146 million in RSUs. But two pages later, a note in the fine print essentially stated that the chart did not contain the real number — which, it failed to mention, was actually $263 million more than the chart indicated. "They fucked around even more than they did before," Budde says. (The law firm that helped craft the fine print, Simpson Thacher & Bartlett, would later receive a lucrative federal contract to serve as legal adviser to the TARP bailout.) Budde decided to come forward. In April 2008, he wrote a detailed memo to the SEC about Lehman's history of hidden stocks. Shortly thereafter, he got a letter back that began, "Dear Sir or Madam." It was an automated e-response. "They blew me off," Budde says. Over the course of that summer, Budde tried to contact the SEC several more times, and was ignored each time. Finally, in the fateful week of September 15th, 2008, when Lehman Brothers cracked under the weight of its reckless bets on the subprime market and went into its final death spiral, Budde became seriously concerned. If the government tried to arrange for Lehman to be pawned off on another Wall Street firm, as it had done with Bear Stearns, the U.S. taxpayer might wind up footing the bill for a company with hundreds of millions of dollars in concealed compensation. So Budde again called the SEC, right in the middle of the crisis. "Look," he told regulators. "I gave you huge stuff. You really want to take a look at this." But the feds once again blew him off. A young staff attorney contacted Budde, who once more provided the SEC with copies of all his memos. He never heard from the agency again. "This was like a mini-Madoff," Budde says. "They had six solid months of warnings. They could have done something." Three weeks later, Budde was shocked to see Fuld testifying before the House Government Oversight Committee and whining about how poor he was. "I got no severance, no golden parachute," Fuld moaned. When Rep. Henry Waxman, the committee's chairman, mentioned that he thought Fuld had earned more than $480 million, Fuld corrected him and said he believed it was only $310 million. The true number, Budde calculated, was $529 million. He contacted a Senate investigator to talk about how Fuld had misled Congress, but he never got any response. Meanwhile, in a demonstration of the government's priorities, the Justice Department is proceeding full force with a prosecution of retired baseball player Roger Clemens for lying to Congress about getting a shot of steroids in his ass. "At least Roger didn't screw over the world," Budde says, shaking his head. Fuld has denied any wrongdoing, but his hidden compensation was only a ripple in Lehman's raging tsunami of misdeeds. The investment bank used an absurd accounting trick called "Repo 105" transactions to conceal $50 billion in loans on the firm's balance sheet. (That's $50 billion, not million.) But more than a year after the use of the Repo 105s came to light, there have still been no indictments in the affair. While it's possible that charges may yet be filed, there are now rumors that the SEC and the Justice Department may take no action against Lehman. If that's true, and there's no prosecution in a case where there's such overwhelming evidence — and where the company is already dead, meaning it can't dump further losses on investors or taxpayers — then it might be time to assume the game is up. Failing to prosecute Fuld and Lehman would be tantamount to the state marching into Wall Street and waving the green flag on a new stealing season. The most amazing noncase in the entire crash — the one that truly defies the most basic notion of justice when it comes to Wall Street supervillains — is the one involving AIG and Joe Cassano, the nebbishy Patient Zero of the financial crisis. As chief of AIGFP, the firm's financial products subsidiary, Cassano repeatedly made public statements in 2007 claiming that his portfolio of mortgage derivatives would suffer "no dollar of loss" — an almost comically obvious misrepresentation. "God couldn't manage a $60 billion real estate portfolio without a single dollar of loss," says Turner, the agency's former chief accountant. "If the SEC can't make a disclosure case against AIG, then they might as well close up shop." As in the Lehman case, federal prosecutors not only had plenty of evidence against AIG — they also had an eyewitness to Cassano's actions who was prepared to tell all. As an accountant at AIGFP, Joseph St. Denis had a number of run-ins with Cassano during the summer of 2007. At the time, Cassano had already made nearly $500 billion worth of derivative bets that would ultimately blow up, destroy the world's largest insurance company, and trigger the largest government bailout of a single company in U.S. history. He made many fatal mistakes, but chief among them was engaging in contracts that required AIG to post billions of dollars in collateral if there was any downgrade to its credit rating. St. Denis didn't know about those clauses in Cassano's contracts, since they had been written before he joined the firm. What he did know was that Cassano freaked out when St. Denis spoke with an accountant at the parent company, which was only just finding out about the time bomb Cassano had set. After St. Denis finished a conference call with the executive, Cassano suddenly burst into the room and began screaming at him for talking to the New York office. He then announced that St. Denis had been "deliberately excluded" from any valuations of the most toxic elements of the derivatives portfolio — thus preventing the accountant from doing his job. What St. Denis represented was transparency — and the last thing Cassano needed was transparency. Another clue that something was amiss with AIGFP's portfolio came when Goldman Sachs demanded that the firm pay billions in collateral, per the terms of Cassano's deadly contracts. Such "collateral calls" happen all the time on Wall Street, but seldom against a seemingly solvent and friendly business partner like AIG. And when they do happen, they are rarely paid without a fight. So St. Denis was shocked when AIGFP agreed to fork over gobs of money to Goldman Sachs, even while it was still contesting the payments — an indication that something was seriously wrong at AIG. "When I found out about the collateral call, I literally had to sit down," St. Denis recalls. "I had to go home for the day." After Cassano barred him from valuating the derivative deals, St. Denis had no choice but to resign. He got another job, and thought he was done with AIG. But a few months later, he learned that Cassano had held a conference call with investors in December 2007. During the call, AIGFP failed to disclose that it had posted $2 billion to Goldman Sachs following the collateral calls. "Investors therefore did not know," the Financial Crisis Inquiry Commission would later conclude, "that AIG's earnings were overstated by $3.6 billion." "I remember thinking, 'Wow, they're just not telling people,'" St. Denis says. "I knew. I had been there. I knew they'd posted collateral." A year later, after the crash, St. Denis wrote a letter about his experiences to the House Government Oversight Committee, which was looking into the AIG collapse. He also met with investigators for the government, which was preparing a criminal case against Cassano. But the case never went to court. Last May, the Justice Department confirmed that it would not file charges against executives at AIGFP. Cassano, who has denied any wrongdoing, was reportedly told he was no longer a target. Shortly after that, Cassano strolled into Washington to testify before the Financial Crisis Inquiry Commission. It was his first public appearance since the crash. He has not had to pay back a single cent out of the hundreds of millions of dollars he earned selling his insane pseudo-insurance policies on subprime mortgage deals. Now, out from under prosecution, he appeared before the FCIC and had the enormous balls to compliment his own business acumen, saying his atom-bomb swaps portfolio was, in retrospect, not that badly constructed. "I think the portfolios are withstanding the test of time," he said. "They offered him an excellent opportunity to redeem himself," St. Denis jokes. In the end, of course, it wasn't just the executives of Lehman and AIGFP who got passes. Virtually every one of the major players on Wall Street was similarly embroiled in scandal, yet their executives skated off into the sunset, uncharged and unfined. Goldman Sachs paid $550 million last year when it was caught defrauding investors with crappy mortgages, but no executive has been fined or jailed — not even Fabrice "Fabulous Fab" Tourre, Goldman's outrageous Euro-douche who gleefully e-mailed a pal about the "surreal" transactions in the middle of a meeting with the firm's victims. In a similar case, a sales executive at the German powerhouse Deutsche Bank got off on charges of insider trading; its general counsel at the time of the questionable deals, Robert Khuzami, now serves as director of enforcement for the SEC. Another major firm, Bank of America, was caught hiding $5.8 billion in bonuses from shareholders as part of its takeover of Merrill Lynch. The SEC tried to let the bank off with a settlement of only $33 million, but Judge Jed Rakoff rejected the action as a "facade of enforcement." So the SEC quintupled the settlement — but it didn't require either Merrill or Bank of America to admit to wrongdoing. Unlike criminal trials, in which the facts of the crime are put on record for all to see, THESE WALL STREET SETTLEMENTS ALMOST NEVER REQUIRE THE BANKS TO MAKE ANY FACTUAL DISCLOSURES, effectively burying the stories forever. "All this is done at the expense not only of the shareholders, but also of the truth," says Rakoff. Goldman, Deutsche, Merrill, Lehman, Bank of America ... who did we leave out? Oh, there's Citigroup, nailed for hiding some $40 billion in liabilities from investors. Last July, the SEC settled with Citi for $75 million. In a rare move, it also fined two Citi executives, former CFO Gary Crittenden and investor-relations chief Arthur Tildesley Jr. Their penalties, combined, came to a whopping $180,000. Throughout the entire crisis, in fact, the government has taken exactly one serious swing of the bat against executives from a major bank, charging two guys from Bear Stearns with criminal fraud over a pair of toxic subprime hedge funds that blew up in 2007, destroying the company and robbing investors of $1.6 billion. Jurors had an e-mail between the defendants admitting that "there is simply no way for us to make money — ever" just three days before assuring investors that "there's no basis for thinking this is one big disaster." Yet THE CASE STILL SOMEHOW ENDED IN ACQUITTAL — and the Justice Department hasn't taken any of the big banks to court since. All of which raises an obvious question: Why the hell not? Gary Aguirre, the SEC investigator who lost his job when he drew the ire of Morgan Stanley, thinks he knows the answer. Last year, Aguirre noticed that a conference on financial law enforcement was scheduled to be held at the Hilton in New York on November 12th. The list of attendees included 1,500 or so of the country's leading lawyers who represent Wall Street, as well as some of the government's top cops from both the SEC and the Justice Department. Criminal justice, as it pertains to the Goldmans and Morgan Stanleys of the world, is not adversarial combat, with cops and crooks duking it out in interrogation rooms and courthouses. Instead, it's a cocktail party between friends and colleagues who from month to month and year to year are constantly switching sides and trading hats. At the Hilton conference, regulators and banker-lawyers rubbed elbows during a series of speeches and panel discussions, away from the rabble. "They were chummier in that environment," says Aguirre, who plunked down $2,200 to attend the conference. Aguirre saw a lot of familiar faces at the conference, for a simple reason: Many of the SEC regulators he had worked with during his failed attempt to investigate John Mack had made a million-dollar pass through the Revolving Door, going to work for the very same firms they used to police. Aguirre didn't see Paul Berger, an associate director of enforcement who had rebuffed his attempts to interview Mack — maybe because Berger was tied up at his lucrative new job at Debevoise & Plimpton, the same law firm that Morgan Stanley employed to intervene in the Mack case. But he did see Mary Jo White, the former U.S. attorney, who was still at Debevoise & Plimpton. He also saw Linda Thomsen, the former SEC director of enforcement who had been so helpful to White. Thomsen had gone on to represent Wall Street as a partner at the prestigious firm of Davis Polk & Wardwell. Two of the government's top cops were there as well: Preet Bharara, the U.S. attorney for the Southern District of New York, and Robert Khuzami, the SEC's current director of enforcement. Bharara had been recommended for his post by Chuck Schumer, Wall Street's favorite senator. And both he and Khuzami had served with Mary Jo White at the U.S. attorney's office, before Mary Jo went on to become a partner at Debevoise. What's more, when Khuzami had served as general counsel for Deutsche Bank, he had been hired by none other than Dick Walker, who had been enforcement director at the SEC when it slow-rolled the pivotal fraud case against Rite Aid. "It wasn't just one rotation of the revolving door," says Aguirre. "It just kept spinning. Every single person had rotated in and out of government and private service." The Revolving Door isn't just a footnote in financial law enforcement; over the past decade, more than a dozen high-ranking SEC officials have gone on to lucrative jobs at Wall Street banks or white-shoe law firms, where partnerships are worth millions. That makes SEC officials like Paul Berger and Linda Thomsen the equivalent of college basketball stars waiting for their first NBA contract. Are you really going to give up a shot at the Knicks or the Lakers just to find out whether a Wall Street big shot like John Mack was guilty of insider trading? "You take one of these jobs," says Turner, the former chief accountant for the SEC, "and you're fit for life." Fit — and happy. The banter between the speakers at the New York conference says everything you need to know about the level of chumminess and mutual admiration that exists between these supposed adversaries of the justice system. At one point in the conference, Mary Jo White introduced Bharara, her old pal from the U.S. attorney's office. "I want to first say how pleased I am to be here," Bharara responded. Then, addressing White, he added, "You've spawned all of us. It's almost 11 years ago to the day that Mary Jo White called me and asked me if I would become an assistant U.S. attorney. So thank you, Dr. Frankenstein." Next, addressing the crowd of high-priced lawyers from Wall Street, Bharara made an interesting joke. "I also want to take a moment to applaud the entire staff of the SEC for the really amazing things they have done over the past year," he said. "They've done a real service to the country, to the financial community, and not to mention a lot of your law practices." Haw! The line drew snickers from the conference of millionaire lawyers. But the real fireworks came when Khuzami, the SEC's director of enforcement, talked about a new "cooperation initiative" the agency had recently unveiled, in which executives are being offered incentives to report fraud they have witnessed or committed. From now on, Khuzami said, when corporate lawyers like the ones he was addressing want to know if their Wall Street clients are going to be charged by the Justice Department before deciding whether to come forward, all they have to do is ask the SEC. "We are going to try to get those individuals answers," Khuzami announced, as to "whether or not there is criminal interest in the case — so that defense counsel can have as much information as possible in deciding whether or not to choose to sign up their client." Aguirre, listening in the crowd, couldn't believe Khuzami's brazenness. The SEC's enforcement director was saying, in essence, that firms like Goldman Sachs and AIG and Lehman Brothers will henceforth be able to get the SEC to act as a middleman between them and the Justice Department, negotiating fines as a way out of jail time. Khuzami was basically outlining a four-step system for banks and their executives to buy their way out of prison. "First, the SEC and Wall Street player make an agreement on a fine that the player will pay to the SEC," Aguirre says. "Then the Justice Department commits itself to pass, so that the player knows he's 'safe.' Third, the player pays the SEC — and fourth, the player gets a pass from the Justice Department." [wow] When I ask a former federal prosecutor about the propriety of a sitting SEC director of enforcement talking out loud about helping corporate defendants "get answers" regarding the status of their criminal cases, he initially doesn't believe it. Then I send him a transcript of the comment. "I am very, very surprised by Khuzami's statement, which does seem to me to be contrary to past practice — and not a good thing," the former prosecutor says. Earlier this month, when Sen. Chuck Grassley found out about Khuzami's comments, he sent the SEC a letter noting that the agency's own enforcement manual not only prohibits such "answer getting," it even bars the SEC from giving defendants the Justice Department's phone number. "Should counsel or the individual ask which criminal authorities they should contact," the manual reads, "staff should decline to answer, unless authorized by the relevant criminal authorities." Both the SEC and the Justice Department deny there is anything improper in their new policy of cooperation. "We collaborate with the SEC, but they do not consult with us when they resolve their cases," Assistant Attorney General Lanny Breuer assured Congress in January. "They do that independently." Around the same time that Breuer was testifying, however, a story broke that prior to the pathetically small settlement of $75 million that the SEC had arranged with Citigroup, Khuzami had ordered his staff to pursue lighter charges against the megabank's executives. According to a letter that was sent to Sen. Grassley's office, Khuzami had a "secret conversation, without telling the staff, with a prominent defense lawyer who is a good friend" of his and "who was counsel for the company." The unsigned letter, which appears to have come from an SEC investigator on the case, prompted the inspector general to launch an investigation into the charge. All of this paints a disturbing picture of A CLOSED AND CORRUPT SYSTEM, a timeless circle of friends that virtually guarantees a collegial approach to the policing of high finance. Even before the corruption starts, the state is crippled by economic reality: Since law enforcement on Wall Street requires serious intellectual firepower, the banks seize a huge advantage from the start by hiring away the top talent. Budde, the former Lehman lawyer, says it's well known that all the best legal minds go to the big corporate law firms, while the "bottom 20 percent go to the SEC." Which makes it tough for the agency to track devious legal machinations, like the scheme to hide $263 million of Dick Fuld's compensation. "It's such a mismatch, it's not even funny," Budde says. But even beyond that, the system is skewed by the irrepressible pull of riches and power. If talent rises in the SEC or the Justice Department, it sooner or later jumps ship for those fat NBA contracts. Or, conversely, graduates of the big corporate firms take sabbaticals from their rich lifestyles to slum it in government service for a year or two. Many of those appointments are inevitably hand-picked by lifelong stooges for Wall Street like Chuck Schumer, who has accepted $14.6 million in campaign contributions from Goldman Sachs, Morgan Stanley and other major players in the finance industry, along with their corporate lawyers. As for President Obama, what is there to be said? Goldman Sachs was his number-one private campaign contributor. He put a Citigroup executive in charge of his economic transition team, and he just named an executive of JP Morgan Chase, the proud owner of $7.7 million in Chase stock, his new chief of staff. "The betrayal that this represents by Obama to everybody is just — we're not ready to believe it," says Budde, a classmate of the president from their Columbia days. "He's really fucking us over like that? Really? That's really a JP Morgan guy, really?" Which is not to say that the Obama era has meant an end to law enforcement. On the contrary: In the past few years, the administration has allocated massive amounts of federal resources to catching wrongdoers — of a certain type. Last year, the government deported 393,000 people, at a cost of $5 billion. Since 2007, felony immigration prosecutions along the Mexican border have surged 77 percent; nonfelony prosecutions by 259 percent. In Ohio last month, a single mother was caught lying about where she lived to put her kids into a better school district; the judge in the case tried to sentence her to 10 days in jail for fraud, declaring that letting her go free would "demean the seriousness" of the offenses. So there you have it. Illegal immigrants: 393,000. Lying moms: one. Bankers: zero. The math makes sense only because the politics are so obvious. You want to win elections, you bang on the jailable class. You build prisons and fill them with people for selling dime bags and stealing CD players. But for stealing a billion dollars? For fraud that puts a million people into foreclosure? Pass. It's not a crime. Prison is too harsh. Get them to say they're sorry, and move on. Oh, wait — let's not even make them say they're sorry. That's too mean; let's just give them a piece of paper with a government stamp on it, officially clearing them of the need to apologize, and make them pay a fine instead. But don't make them pay it out of their own pockets, and don't ask them to give back the money they stole. In fact, let them profit from their collective crimes, to the tune of a record $135 billion in pay and benefits last year. What's next? Taxpayer-funded massages for every Wall Street executive guilty of fraud? The mental stumbling block, for most Americans, is that financial crimes don't feel real; you don't see the culprits waving guns in liquor stores or dragging coeds into bushes. But these frauds are worse than common robberies. They're crimes of intellectual choice, made by people who are already rich and who have every conceivable social advantage, acting on a simple, cynical calculation: Let's steal whatever we can, then dare the victims to find the juice to reclaim their money through a captive bureaucracy. They're attacking the very definition of property — which, after all, depends in part on a legal system that defends everyone's claims of ownership equally. When that definition becomes tenuous or conditional — when the state simply gives up on the notion of justice — this whole American Dream thing recedes even further from reality. My reaction: I don’t really have much to add to all this. The corruption speaks for itself.
- *****Three Mainstream Media Attempts to Kill Off Ron Paul... There is a whole list of topics, like congressional corruption (See ‘60 Minutes’ Blows Lid Off Congressional Insider Trading), that mainstream media doesn’t write about. Keeping Americans uninformed about these topics is, at this point, a matter of survival. For example, if Americans realize that Russia-style, clear-as-day corruption has been rampant in congress for decades (again, see ‘60 Minutes’), they will realize that this Washington corruption simply would not be possible without an equally corrupt mainstream media, willing to look away again and again, year after year. That is why mainstream media wants stories like congress’s insider trading to die, keeping the public uninformed about the most vital matters (how can democracy work if the media won’t cover the corruption of elected leaders?). Part of mainstream media's effort to keep Americans in the dark involves making sure big news makers don't talk about undesired topics and sidelining news makers who do. Since the biggest newsmaker is the president of the United States, mainstream media always aggressively winnows the presidential election field down to "status quo" candidates, those who don't talk about unnecessary things like congressional corruption (See VIDEO: Ron Paul Slams Congressional Insider Trading). This leads us to why mainstream media hates Ron Paul: his candidacy will not die. As I have written about before, Mainstream media has been trying very hard to kill Ron Paul’s presidential campaign. He has become a walking media blackout (See *****The Extraordinary Lack Of Coverage Of Ron Paul*****): no matter how well his campaign is doing, no one writes about. However, mainstream media’s efforts to derail Ron Paul's presidential chances go way beyond simply ignoring him. Below I will cover mainstream media's complicity in three attempts to kill off Ron Paul’s campaign: Rick Perry's Candidacy, Occupy Wall Street, and Newt Gingrich's "Surge". -------------------------------- 1) Rick Perry's Candidacy As soon as Rick Perry entered the race, he made Ron Paul look like a moderate. August 18, 2011, 11:27 AM ET Ron Paul: Perry ‘Makes Me Look Like a Moderate’ Presidential candidate Ron Paul, who has long called for abolishing the Federal Reserve, said he now looks “like a moderate” compared with GOP rival and fellow Texan, Gov. Rick Perry, who said it would be “almost treacherous, or treasonous,” if the central bank increased the money supply before the 2012 election. Referring to Mr. Perry, the Texas congressman told supporters at a campaign event in Concord, N.H., Wednesday that “He realizes that talking about the Fed is good, too. But I tell you what: He makes me look like a moderate.” Mr. Paul added, “I have never once said [Fed Chairman Ben] Bernanke has committed treason.” Mr. Perry, who entered the race on Saturday, raised eyebrows among both Democrats and some Republicans Monday with his remarks on the Fed, including the idea that things could get “pretty ugly” for Mr. Bernanke in the Lone Star State if he chooses to pump more money into the economy before the election. The attention on Mr. Perry has irked Mr. Paul’s campaign because Mr. Paul has been railing against the Fed for years, including a 2009 book titled “End the Fed.” In Congress, Mr. Paul chairs the House subcommittee that oversees the central bank. … On basically all important policy positions, Rick Perry mimicked Ron Paul: 1) Ron Paul wants to eliminate the Fed… … Rick Perry wants to eliminate the Fed. 2) Ron Paul wants to eliminate five federal agencies… … Rick Perry declares he wants to eliminate three federal agencies. 3) Ron Paul had staked out a lonely position as the only presidential candidate to oppose aid to Israel (Paul is against all foreign aid)… … Then Rick Perry more or less aped him on that (see Rick Perry: Israel Foreign Aid Starts 'At Zero'). 4) Etc… The end result is that Rick Perry is a spoiler custom designed to hurt Ron Paul. He is appealing to exactly the same demographic as Ron Paul, and virtually all his supporters would otherwise be for Ron Paul supporters. To understand Ron Paul’s true level of support, Rick Perry’s and Ron Paul’s poll numbers should be added together. Reality: Rick Perry is corrupt Perry’s outrage at Washington corruption rings hollow: He is corrupt himself. The Atlantic Wire reports on Rick Perry's Unlikely Crusade Against Casual Corruption. … lot of Perry's wealth has come from well-timed real estate investments. As the Fort Worth Star-Telegram's Aman Batheja reported earlier this year, Perry has long faced criticism that he used his political connections to make money. There was the time in 1993 when he bought 10 acres of undeveloped land that happened to occupy the space between computer magnate Michael Dell's home and municipal sewer lines. Two years after buying it, Perry sold the land to Dell for $465,000 -- more than triple the price he paid. There was the time in 2001 when Perry bought some land in Horseshoe Bay, Texas, for $314,770 and sold it six years later for $1.1 million -- to a guy who was a business partner of with the man Perry bought the land from in the first place. And Perry made some lucky trades himself: In 1996, Perry made $38,000 by selling stock in Kinetic Concepts, a medical supply company founded by a donor… Rick Perry's commitment to his ideas is not genuine Matt Taibbi explains how Rick Perry is The Best Little Whore In Texas Rick Perry: The Best Little Whore In TexasThe Texas governor has one driving passion: selling off government to the highest bidderNovember 26, 2011, by Matt Taibbi … Those in Texas who have followed Perry most closely over the years have all come to the same conclusion about him. "He's a cash-and-carry governor," says Craig McDonald, director of Texans for Public Justice, a group that monitors campaign contributions in the state. "He has an extremely strong stomach for holding his nose and doing really dirty favors." "He'll be whatever you want him to be," says one longtime political opponent. "He's all about greed." "There's no line he won't cross," says another. "This guy doesn't believe in one damn thing," says a third. As for how this classic, big-government, machine politician … could run as a small-market conservative and Tea Party champion, many in Texas express bewilderment. "If you tell a lie often enough, people believe it," says Debra Medina, a Tea Party Republican who ran against Perry in the gubernatorial primary last year. "That's Rick Perry." … Political Ticker reports about Perry's 'Oops'. Will 'Oops' be Perry's campaign epitaph?Posted by CNN Political Unit (CNN) - A visibly flustered Rick Perry was reduced to "Oops" after a painful 53 seconds of trying to remember the name of the third of three federal agencies he would cut at a Republican presidential debate in Rochester, Michigan, on Wednesday. Answering a question about jobs creation, Perry attempted to name the three agencies he has proposed shutting. He named two, but could not come up with the third, even after appearing to consult notes. … "The third agency of government I would - I would do away with Education, the Commerce, and, let's see. I can't. The third one, I can't. Sorry. Oops." … The Republican presidential debate in Michigan revealed Rick Perry for the fraud he was. You forget lines that have been fed to you, not your core beliefs. Commentary: Paul’s authenticity keeps his campaign afloat December 1, 2011 at 9:06 pm By Patricia Kilday Hart, Austin bureau … Paul is unlikely to be accused of a flip-flop, or have an “oops” moment about his positions. YOU FORGET LINES THAT HAVE BEEN FED TO YOU — NOT YOUR CORE BELIEFS. … Mainstream media’s role in promoting the Rick Perry's fabricated candidacy Just look at the chart below. While Ron Paul only appeared as the "primary newsmaker in only 2% of all election stories", Rick Perry appears in a shocking 17% of all election stories, more than any other candidate. (Source: Ron Paul media blackout has been officially confirmed) And it isn’t just any news stories. Search for any major Washington scandal on Google News and Rick Perry shows up at the top of the results: Results for fast & furious: Results for congress insider trading: What this means: If an average American googles any of the scandals that Ron Paul has been railing about for years, all they find is Rick Perry, Rick Perry, Rick Perry… Think about how twisted that is. Status of Rick Perry’s cadidacy Between his career ending “oops” and his deep history of personal corruption, Perry has no chance of being president. Is Rick Perry giving up? Hell no. His purpose was never to win, but to make sure Ron Paul doesn’t. So despite tumbling even lower in new nationwide polls, Rick Perry is pouring it on in Iowa, seeking to rebound. Perry now leads in purchase of Iowa TV ads. IowaPolitics.com: Perry leads in purchase of Iowa TV ads 12/2/2011 By Lynn Campbell and Hannah Hess DES MOINES — Texas Gov. Rick Perry’s large purchase of TV ads in November has made him Iowa’s new leader in paid political advertising, surpassing Texas U.S. Rep. Ron Paul. In Des Moines and Cedar Rapids, Perry purchased 2,665 ad spots at a cost of $745,247.50 during the past month, according to an IowaPolitics.com review of public records this week at the CBS, ABC, NBC and FOX affiliates in the two major media markets. That’s THREE TIMES as many ad spots as Paul, … Perry has also just announced he will launch a month-long Iowa bus tour… and every vote he manages to get will be one less for Ron Paul. -------------------------------- 1) Occupy Wall Street While the discontent it taps into may be genuine, the Occupy Wall Street movement itself is fabrication. Fox News reports that ACORN Playing Behind Scenes Role in 'Occupy' Movement. EXCLUSIVE: ACORN Playing Behind Scenes Role in 'Occupy' Movement By Jana Winter Published October 26, 2011 | FoxNews.com The former New York office for ACORN, the disbanded community activist group, is playing a key role in the self-proclaimed “leaderless” Occupy Wall Street movement, organizing “guerrilla” protest events and hiring door-to-door canvassers to collect money under the banner of various causes while spending it on protest-related activities, sources tell FoxNews.com. The former director of New York ACORN, Jon Kest, and his top aides are now busy working at protest events for New York Communities for Change (NYCC). That organization was created in late 2009 when some ACORN offices disbanded and reorganized under new names after undercover video exposes prompted Congress to cut off federal funds. NYCC’s connection to ACORN isn’t a tenuous one: It works from the former ACORN offices in Brooklyn, uses old ACORN office stationery, employs much of the old ACORN staff and, according to several sources, engages in some of the old organization’s controversial techniques to raise money, interest and awareness for the protests. Sources said NYCC has hired about 100 former ACORN-affiliated staff members from other cities – paying some of them $100 a day - to attend and support Occupy Wall Street. Dozens of New York homeless people recruited from shelters are also being paid to support the protests, at the rate of $10 an hour, the sources said. At least some of those hired are being used as door-to-door canvassers to collect money that’s used to support the protests. Sources said cash donations collected by NYCC on behalf of some unions and various causes are being pooled and spent on Occupy Wall Street. The money is used to buy supplies, pay staff and cover travel expenses for the ex-ACORN members brought to New York for the protests. In one such case, sources said, NYCC staff members collected cash donations for what they were told was a United Federation of Teachers fundraising drive, but the money was diverted to the protests. Sources who participated in the teachers union campaign said NYCC supervisors gave them the addresses of union members and told them to go knock on their doors and ask for contributions—and did not mention that the money would go toward Occupy Wall Street expenses. One source said the campaign raked in about $5,000. Current staff members at NYCC told FoxNews.com the union fundraising drive was called off abruptly last week, and they were told NYCC should not have been raising money for the union at all. Sources said staff members also collected door-to-door for NYCC’s PCB campaign — which aims to test schools for deadly toxins —but then pooled that money together with cash raised for the teachers union and other campaigns to fund Occupy Wall Street. “We go to Freeport, Central Islip, Park Slope, everywhere, and we say we’re collecting money for PCBs testing in schools. But the money isn’t going to the campaign," one source said. "It’s going to Occupy Wall Street, and we’re not using that money to get schools tested for deadly chemicals or to make their kids safer. It’s just going to the protests, and that’s just so terrible.” A spokesman for the United Federation of Teachers told FoxNews.com, "The UFT is not involved in any NYCC fundraising on the PCB issue.” Multiple sources said NYCC is also using cash donations through canvassing efforts in New York’s Harlem and Washington Heights neighborhoods for union-backed campaigns to fund the Wall Street protests. … Those who contribute don't know the money is going to fund the protests, the source said. “They give contributions because we say if they do we can fix things - whatever specific problem they’re having in their area, housing, schools, whatever ... then we spend the contributions paying staff to be at the protests all day, every day. That’s where these contributions - the community’s money – is going,” the source said. … Another source, who said she was hired from a homeless shelter, said she was first sent to the protests before being deployed to Central Islip, Long Island, to canvass for a campaign against home foreclosures. “I went to the protests every day for two weeks and made $10 an hour. They made me carry NYCC signs and big orange banners that say NYCC in white letters. About 50 others were hired around my time to go to the protests. We went to protests in and around Zuccotti Park, then to the big Times Square protest,” she said. “But now they have me canvassing on Long Island for money, so I get the money and then the money is being used for Occupy Wall Street—to pay for all of it, for supplies, food, transportation, salaries, for everything ... all that money is going to pay for the protests downtown and that’s just messed up. It’s just wrong.” … Fox News reports that ACORN Officials Scramble, Firing Workers and Shredding Documents, After Exposed as Players Behind Occupy Wall Street Protests. ACORN Officials Scramble, Firing Workers and Shredding Documents, After Exposed as Players Behind Occupy Wall Street Protests By Jana Winter Published November 03, 2011 | FoxNews.com Officials with the revamped ACORN office in New York -- operating as New York Communities for Change -- have fired staff, shredded reams of documents and told workers to blame disgruntled ex-employees for leaking information in an effort to explain away a FoxNews.com report last week on the group’s involvement in Occupy Wall Street protests, according to sources. NYCC also is installing surveillance cameras and recording devices at its Brooklyn offices, removing or packing away supplies bearing the name ACORN and handing out photos of Fox News staff with a stern warning not to talk to the media, the sources said. “They’re doing serious damage control right now,” said an NYCC source. NYCC Executive Director Jon Kest has been calling a series of emergency meetings to discuss last week’s report—and taking extreme measures to identify the sources in their office and to prevent further damage, a source within NYCC told FoxNews.com. Two staffers were fired after NYCC officials suspected them as the source of the leaks, a source told FoxNews.com. “One was fired the day the story came out, the other was fired on Friday. (NYCC senior staff) told everyone that they were fired because they talked to you,” a source said. NYCC spokesman Scott Levenson denied that anyone was fired for talking to the press. FoxNews.com’s report identified NYCC as a key organizing force behind the Occupy Wall Street protests. Sources within the group also told FoxNews.com NYCC was hiring people to carry signs and join the protests. NYCC -- a nonprofit organization run almost entirely by former ACORN officials and employees --did not reply for comment prior to the publication of the initial article, but later posted a statement on its website dismissing the article and denying that it pays protesters. A source said that immediately following publication of the FoxNews.com report staff were called into the Brooklyn office for meetings headed by NYCC’s organizing director, Jonathan Westin. Westin handed out copies of the article and went through it line-by-line, the source said. Staffers were also given copies of photos of Senior Fox News Correspondent Eric Shawn and three other Fox News staff members, including this reporter. “They reminded us that we can get fired, sued, arrested for talking to the press,” the source said. “Then they went through the article point-by-point and said that the allegation that we pay people to protest isn’t true.” “‘That’s the story that we’re sticking to,’” Westin said, according to the source. The source said staffers at the meeting contested Westin’s denial: “It was pretty funny. Jonathan told staff they don’t pay for protesters, but the people in the meeting who work there objected and said, ‘Wait, you pay us to go to the protests every day?’ Then Jonathan said ‘No, but that’s your job,’ and staffers were like, ‘Yeah, our job is to protest,’ and Westin said, ‘No your job is to fight for economic and social justice. We just send you to protest.’ “Staff said, ‘Yes, you pay us to carry signs.’ Then Jonathan says, ‘That’s your job.’ It went on like that back and forth for a while.” During the meetings, NYCC Deputy Director Greg Basta provided Westin with the copied photos of Fox News reporters to hand out to staff members, the source said. Basta told staffers they might be asked about the article when out in communities working on campaigns or when calling people by phone, the source said. “They told us if people bring up the article, we’re supposed to say the source and all the stuff in there came from a disgruntled ex-employee who’s not working with us anymore.” NYCC is also monitoring its staff’s behavior, cracking down on phone use and socialization. Officials have ordered all papers -- even scraps -- to be shredded every night, the source said. “And all the supplies—everything around the office that said ‘ACORN’ -- is now all in storage until this blows over,” the source said. “People literally have to cover up the cameras on the back of their cellphones in the office.” “Now there’s no texting in the office, no phone calls in the office. They tell us to take our phone calls out into the waiting room where there’s an intercom, and then they turn on the intercom to hear our conversations. They’re installing new cameras and speakers around the building so they can hear everything. “It’s almost like working at Fort Knox.” … Eurasia Review reports that the Obama Administration violated the ban on federal funding for ACORN. US Justice Department Involved In New Corruption Scandal, Says Watchdog Group – OpEd Written by: Jim Kouri December 5, 2011 The already scandal-ridden Obama Justice Department is being accused of more misbehavior, according to a blog this week by a top “Inside the Beltway” watchdog group. A Justice Department program that distributes hundreds of millions of dollars each year to supposedly combat juvenile delinquency is now under fire for giving a leftist group nailed for rampant corruption in the past — the Association of Community Organizations for Reform Now or ACORN — taxpayers’ money that was fraudulently spent. According to a report on the Judicial Watch blog, this is just the latest of several controversies for the DOJ’s Office of Juvenile Justice and Delinquency Prevention (OJJDP) which has managed to maintain a significant budget through the years despite multiple allegations of cronyism. … Now, the Justice Department’s own Inspector General released a report that exposes corruption surrounding a $138,130 grant that OJJDP awarded to an ACORN branch in New York City. The IG’s audit found that there were internal control weaknesses, unsupported grant expenditures, lack of contractor monitoring, weaknesses in budget management, inadequate grant reporting, unmet conditions and deficiencies with the program’s overall performance. The IG also describes the New York group as a “pass-through entity” for ACORN, the crooked nonprofit that’s raked in huge sums of taxpayer dollars over the years. In 2009, Congress actually passed a law (Defund ACORN Act) to ban federal funding for ACORN after a series of exposés about the group’s illegal activities, which include fraudulent voter registration drives and involvement in the housing market meltdown. The group has close ties to President Barack Obama, who worked for ACORN as a “community organizer” in Chicago, prior to embarking on his political career. Earlier this year a Judicial Watch probe found that the Obama Administration violated the ban on federal funding for ACORN by giving the beleaguered group nearly $80,000 to “combat housing and lending discrimination” against minorities. … This year Judicial Watch also published a special report about the organization’s transformation into various spinoffs and affiliated groups. Amid a massive fraud scandal and a series of criminal probes, ACORN supposedly dismantled but the reality is that it simply changed its name. For instance, … ACORN has been one of the driving forces behind the movement to end economic segregation and social injustice in the U.S. culminating in the current Occupy Wall Street movement. … In the 2008 election, Obama’s theme was “political division”. In the 2012 election, Obama's theme will be “economic division” (inequality), as foretold by this December 6 speech. It's Occupy Wall Street's narrative. So, as Bachmann pointed out, Occupy Wall Street Is 'Obama's Reelection Team'. It cleanly and efficiently deflects attention from Obama’s own near-3 year performance as president. It probably won’t work, but the effort itself hurts the Ron Paul Campaign (See Is Anyone Dumb Enough to Believe that Obama Supports the 99%?). Media’s role in promoting Occupy Wall Street The Sun Times reports that media skews tea party, 'Occupy' coverage. Media skews tea party, ‘Occupy’ coverage November 25, 2011 2:40PM How can America solve its problems when the media — our source for information — is biased, hypocritical and short on facts and rational analysis? Americans have observed this journalistic failure in the coverage of the Occupy Wall Street activities and the tea party rallies. The media reaction to the tea party generally was negative, with reporters claiming racist motives without proof. Yet, the tea party clearly stated its goals — stop out-of-control government spending, soaring national debt, and dictatorial rule from Washington, D.C. Tea party members obtained legal permits for their rallies and left public areas clean after making their point. But according to an examination of all mainstream television news reports covering the tea party, only 13 positive accounts were broadcast the first two weeks about this organic outpouring of citizen discontent. The media later wavered between blaming the tea party for gridlock and claiming the tea party was dying. In contrast, the Occupy Wall Street protesters have polluted public parks and walkways, disobeyed laws, created health hazards and resisted police. Yet, the liberal media supported these clueless occupiers 113 times during the first two weeks. … The Daily Caller reports that Tea party groups criticize media coverage of ‘Occupy Wall Street’. Tea party groups criticize media coverage of ‘Occupy Wall Street’ Published: 12:04 AM 10/11/2011 | Updated: 5:06 PM 10/11/2011 By Alex Pappas--The Daily Caller Activists affiliated with the tea party movement say they’re witnessing a double standard in the way the media is covering the “Occupy Wall Street” protests compared to the tea party. “It’s almost laughable,” said Sal Russo, a strategist with the California-based group Tea Party Express, in an interview. While reporters at first didn’t always cover tea party rallies, Russo said, a California newspaper has recently been putting stories about the Occupy Wall Street on its front page. “The Sacramento Bee actually had a front-page story before the rally, TELLING PEOPLE WHERE IT WAS AND WHAT TIME IT WAS,” Russo said. An official at FreedomWorks, the Washington, D.C.-based group that has organized tea party rallies since the movement burst onto the scene in 2009, said the media has been ignoring negative features of the “Occupy Wall Street” protests while it played up dubious charges against conservative activists last year. “I think it’s kind of funny that the media talked about alleged things that the tea party guys did that were never proven,” spokesman Adam Brandon told The Daily Caller. “Then you have pictures of these guys getting arrested and confronting officers and now they’re being celebrated.” (RELATED: TheDC’s Jamie Weinstein: Unlike the tea party, ‘Occupy Wall Street’ will fail) Mark Meckler, the co-founder of the Tea Party Patriots, struck a similar note, saying that when the tea party protests first began, “we were ignored, mocked, and then attacked by the media” and “called ‘Astroturf,’ ‘fringe,’ ‘racists’ and ‘Nazis.’” “Yet today, the leftist media seemingly cheers for a group of lawbreaking miscreants who have openly committed a variety of illegal acts,” Meckler said. Said Brandon: “Of course, you hear about the guy who got arrested throwing a shoe at the White House. I heard they were pepper-spraying people down at the Smithsonian. I have yet to hear a story about a tea partier ever doing that.” And Judson Phillips, the leader of the Tennessee-based group Tea Party Nation, said the “media’s coverage of Occupy Wall Street has been almost totally positive to the point of glossing over some serious issues.” While there have been news stories about some of the more negative attributes of the Occupy Wall Street protests, these conservative activists say it’s nothing in comparison to the scrutiny the media applied to tea partiers. “While a number of people have been arrested and there is even a photo of a protester defecating on a police car, there still is no really negative coverage from the mainstream media,” Phillips said. “Meanwhile, protesters in New York had a photoshopped image of the decapitated head of the chairman of Goldman Sachs on a pike and no one seems to be talking about that,” he said. Occupy Wall Street is a huge distraction for the Ron Paul campaign, siphoning off money and volunteers (See Donations To Occupy Wall Street Skyrocket In October and Creepy 'One Voice' Occupy Protesters Heckle Ron Paul). The result is boosting Obama re-election chances at Ron Paul’s expense. -------------------------------- 3) Newt Gingrich's “surge” When I last wrote about Ron Paul on November 23, the latest poll showed him in the lead in Iowa with a solid 25 percent of likely Republican Caucus-goers supporting him. (Paul’s surging support was a result of Perry’s self-destruction) Despite having the entire mainstream media aligned against him, effort to marginalize him aren’t working: it looks like Ron Paul is headed for a win in Iowa (See Poll watcher: Is Paul the strongest candidate in Iowa?). The latest poll shows Paul now in the lead in Iowa with a solid 25 percent of likely Republican Caucus-goers supporting him, and there are more Ron Paul bumper stickers on cars than all the other candidates put together. There is broad agreement that Paul has momentum in Iowa. That is exactly when the Newt Gingrich's "surge" began, conveniently preventing Paul from enjoying frontrunner status. The Newt Gingrich "surge" is absurd Gingrich is campaigning as an agent of change, yet, as Salon.com reports, Newt is The ultimate Beltway swindler. Wednesday, Nov 23, 2011 8:00 AM 17:26:38 EST Newt: The ultimate Beltway swindler Gingrich has taken money from everyone from Big Pharma to Freddie Mac. How is he leading the Republican pool? By Michael Winship You maybe should think twice when even Jack Abramoff thinks you’re beneath contempt. Not that Newt Gingrich cares. Abramoff, America’s favorite convicted influence peddler, told NBC’s David Gregory that presidential candidate and former Speaker of the House Gingrich is one of those “people who came to Washington, who had public service, and they cash in on it. They use their public service and access to make money.” Newt, he continued, is “engaged in the exact kind of corruption that America disdains. The very things that anger the Tea Party movement and the Occupy Wall Street movement and everybody who is not in a movement and watches Washington and says why are these guys getting all this money, why do they go become so rich, why do they have these advantages?” Why indeed? Granted, Abramoff’s in the middle of his promotion tour of confession and attempted redemption, a pot obscenely eager to call his kettle and former mentor black – especially if it sells books. But Casino Jack does have a point. Gingrich personifies everything rotten about the ATM machine we call Washington: the merchandising of favors and votes; the conversion of past incumbency into insider information, making your contacts and the ability to play the system available to the highest bidder; the archetypal revolving door between government service and shilling for corporate America. Yet there he is, suddenly riding at the top of the polls, his debate skills lauded, his churlish dismissal of the media praised, and infused with sufficient cheek to portray himself to gullible elements of the electorate as an outsider. It’s as if Kim Kardashian proclaimed herself American Housewife of the Year. (Gingrich now is trying to play the inside-outside game both ways, proclaiming last week, “We just tried four years of amateur ignorance and it didn’t work very well. So having someone who actually knows Washington might be a really good thing.”) In fact, a quick look at just a few of Newt’s activities since his GOP colleagues tossed him out of the speakership in 1998 is sufficient to expose him as the ultimate poster boy for inside-the-Beltway game playing — adherence to ideology often shoved aside in favor of expedience and the chance to make a buck. You’ll remember hearing just this past spring about Mr. and Mrs. Gingrich’s revolving, no-interest credit line at Tiffany’s, a luxury store they treated like a diamond encrusted version of the Home Shopping Network, and Tim Carney’s report in the Washington Examiner that, “Christy Evans, formerly a top staffer to … Gingrich, is a registered lobbyist for Tiffany’s.” Now Carney writes, “We know that Gingrich has been paid by drug companies and by the drug lobby, notably during the Medicare drug debate. A former employee of the Pharmaceutical Research and Manufacturers of America (the main industry lobby) told me Gingrich was being paid by someone in the industry at the time. A spokeswoman for Gingrich’s healthcare consulting firm, Center for Health Transformation, told me that drug companies have been CHT clients. PhRMA confirmed in a statement that they had paid Gingrich. Bloomberg News cited sources from leading drug companies AstraZeneca and Pfizer saying that those companies had also hired Gingrich… “Three former Republican congressional staffers told me that Gingrich was calling around Capitol Hill and visiting Republican congressmen in 2003 in an effort to convince conservatives to support a bill expanding Medicare to include prescription-drug subsidies. Conservatives were understandably wary about expanding a Lyndon Johnson-created entitlement that had historically blown way past official budget estimates. Drug makers, on the other hand, were positively giddy about securing a new pipeline of government cash to pad their already breathtaking profit margins.” On Monday, the chair of Gingrich’s Center for Health Transformation estimated its revenues over the past decade at $55 million. Fees are flexible, she said, with “charter memberships” going for an annual fee of $200,000. According to the Nov. 21 Wall Street Journal, “The health think tank also charges for consulting sessions with the former speaker and Mr. Gingrich’s speeches, according to two health care trade groups.” More dynamically, the center’s P.R. materials promised “direct Newt interaction”(!) and as per the Washington Post, “The biggest funders, including such firms as AstraZeneca, Blue Cross Blue Shield and Novo Nordisk, were also eligible to receive discounts on ‘products and workshops’ from other Gingrich groups.” Sounds like the Potomac edition of “The Price Is Right.” Another Center for Health Transformation charter member was Gundersen Lutheran Health System of La Crosse, Wis. The Nov. 17 New York Times reported that in July 2009, without reporting his connection, Gingrich praised the company in the Washington Post “for its successful efforts to persuade most patients to have ‘advance directives,’ saying that if Medicare had followed Gundersen’s lead on end-of-life care and other practices, it would ‘save more than $33 billion a year.’” Advance directives means helping families determine future care for the terminally ill, but when Tea Partyers and others started yelling about “death panels” during the healthcare reform fight, Gingrich made a quick flip-flop to the right and changed sides. Listening to Newt attack child labor laws this week, I thought one of his clients might be Miss Hannigan’s Orphanage. In reality, others who have anted up for his advice include GE, IBM, Microsoft, Growth Energy (a pro-ethanol lobby group that between 2009 and 2011 paid him $575,000) and the U.S. Chamber of Commerce. The Wall Street Journal notes that, “The Chamber, the largest lobbying organization in Washington, paid Mr. Gingrich about $840,000, according to people familiar with the arrangement, or about $120,000 a year for seven years, beginning in 2001, to serve on an informal board of advisers to its president and senior staff.” And then, of course, there’s Freddie Mac, which triggered this recent tsunami of scrutiny when Gingrich claimed at the Nov. 9 candidates’ debate that it was for his expertise as an historian that the home mortgage giant had paid him $300,000. Bloomberg News then reported that THE NUMBER WAS ACTUALLY AS MUCH AS $1.8 MILLION, paid as consulting fees right up until 2008, when the failing agency was taken over by the government and such outside contracts were suspended. Gingrich claims he warned Freddie about “insane” loans and then told USA Today, “I was advising them over a period when they weren’t in crisis. I’m pretty happy to say, I gave these guys advice… on how do you build opportunity for the poor to learn to be non-poor?” Until caught, he hadn’t bothered to mention his own involvement, even as he attacked Barney Frank and others for taking Freddie Mac’s campaign contributions. Through it all, GINGRICH HAS DENIED BEING A LOBBYIST, apparently adhering to a very narrow definition – he’s not officially registered with Congress under the Lobbying Disclosure Act of 1995, as amended by the Honest Leadership and Open Government Act of 2007. But you do the math: According to Julie Hirschfeld Davis and Kristin Jensen at Bloomberg News, “The former Georgia congressman reported assets in 1997 of between $197,000 and $606,000, according to his last House personal financial disclosure report, which permits lawmakers to record their wealth in broad ranges. According to his 2011 presidential disclosure report, the Republican primary candidate today is worth between $7.3 million and $31 million.” NOT BAD FOR GOVERNMENT WORK. Gingrich is utterly unprincipled (he even had delivered divorce papers to his wife at her bedside in the hospital). The Newt Gingrich's popularity is fake Gawker.com reports that Most of Newt Gingrich's Twitter Followers Are Fake. Most of Newt Gingrich's Twitter Followers Are Fake By John Cook, Aug 1, 2011 4:05 PM Yesterday Newt Gingrich laid out a new argument for why he should be the GOP presidential nominee: He's got the most Twitter followers. But according to a former Gingrich staffer, he bought them. Gingrich complained yesterday that the press is ignoring his prodigious Twitter audience: "I have six times as many Twitter followers as all the other candidates combined, but it didn't count because if it counted I'd still be a candidate; since I can't be a candidate that can't count." Which is true! Gingrich currently boasts 1,325,842 followers, whereas competitors Mitt Romney and Michele Bachmann have yet to crack 100,000. But IF NEWT IS WINNING THE TWITTER PRIMARY, IT'S BECAUSE OF VOTER FRAUD. A former staffer tells us that his campaign hired a firm to boost his follower count, in part by creating fake accounts en masse: Newt employs a variety of agencies whose sole purpose is to procure Twitter followers for people who are shallow/insecure/unpopular enough to pay for them. As you might guess, Newt is most decidedly one of the people to which these agencies cater. About 80 percent of those accounts are inactive or are dummy accounts created by various "follow agencies," another 10 percent are real people who are part of a network of folks who follow others back and are paying for followers themselves (Newt's profile just happens to be a part of these networks because he uses them, although he doesn't follow back), and the remaining 10 percent may, in fact, be real, sentient people who happen to like Newt Gingrich. If you simply scroll through his list of followers you'll see that most of them have odd usernames and no profile photos, which has to do with the fact that they were mass generated. Pathetic, isn't it? … While it would be impossible to survey all of Gingrich's followers, a cursory glance immediately turned up a few accounts that featured odd names, no personal information, no followers, no posts, and a small follow list. And there's certainly a healthy market out there for buying Twitter followers, either by hiring a company to strategically follow accounts that will follow you back or by paying for dummy accounts. If Gingrich did goose his Twitter numbers, it would help explain why he has, for instance, more than twice as many followers as Sarah Palin, which just doesn't sound right. … Consider this: The media is justifying Gingrich’s sudden surge as a reflection of his sharp speaking skills. However, Newt has been debating for months, and his performance has been pretty consistent throughout. Are we are supposed to believe that the public suddenly had a complete change of heart right when Paul started leading in the polls? The Media’s role in this fake Gingrich “surge” The Lone Star Watchdog reports that The Media Created Grand Illusion of Gingrich. Sunday, December 4, 2011 The Media Created Grand Illusion of Gingrich. One thing I learned is well spoken charismatic people seeking power can be the most dangerous. I give Newt credit for being a good well spoken orator. But so is any good con artist or a used car salesmen. If BS was money, we would not have a national debt. President Obama, Bush and Clinton would have a budget surplus but giving a good speech if BS was the currency. The truth about Newt must be told. If the media is choosing the person and the party. That is the man who will hurt the country to preserve the power of the party. Newt Gingrich is the poster child for everything that is wrong with Washington DC and the Republican party. What he stands for is the status quo of politics as usual. The Americans are sick and tired of business as usual in the District of Con-artist were everything changes but still stays the same. He is the new boss, same as the old boss. The media in Iowa and New Hampshire is in a synchronized effort to prop up the establishment candidate in an effort to defeat Ron Paul. Skewed polling data trying to sell the illusion must be countered and debunked. … We must not allow Gingrich a free rise … with this synchronized media effort to sell their candidate. Newt is for Carbon taxes and individual mandate for us to purchase health insurance. He still wants to sell the illusion of a war on terror, the patriot act, the justification for torture, wars for Israel and still tries to talk like Ron Paul when it concerns the Federal Reserve. To me IT IS ALL JUST RHETORIC TO WOO THE VOTERS JUST TO GET BURNED ONE MORE TIME AFTER THE ELECTION. It goes back to business as usual. The establishment is scared of Ron Paul. If Ron Paul wins the party nomination and the Presidency. Not only the Federal reserve is in peril. The GOP might have all the globalist and neo cons removed who pretend to be patriots. Ron Paul will be able to change the leadership inside the party back to a libertarian, constitutional orientated people no longer under the globalist control. We can see more fairness in election breaking the monopoly of the two party system controlling the election process allowing other candidates of minor parties the equal forum as the two major political parties enjoy. Ron Paul represents real change and not just political rhetoric. That is what scares the establishment about Dr. No. This is why the media is trying to sell Newt like they are selling the Iphone or the Ipad as the next best thing to sliced bread. Newt is like stale bread and a loser. In an open forum, Newt would lose when his record is shown for all to see. Ron Paul represent who the globalist establishment fear. Loss of control of a major political party that can be a severe blow to the globalist agenda. We in the alternative media must dispel the white wash they will try for Newt. We must shatter this media created illusion. We must show why the main stream news media cannot be trusted and why they are losing credibility. We have to discredit Newt for what he is. A globalist traitor, a sell out, an authoritarian calling for the end to US sovereignty. We allowed the media to burn us with McCain four years ago. We must not let happen fours years ago happen again. If we do not redouble our efforts or nothing will change. No more grand illusions. Ron Paul for President or bust. If we don't, we will again say meet the new boss, same as the old boss. We must never accept that again. This is the year we sink or swim as a republic. The Mainstream media had no choice but to go back to Gingrich. The public was fast losing confidence in Perry (his debate "oops" moment was not supposed to happen). The Gingrich "surge" is fiction. -------------------------------- Below is a video showing why so many people like Ron Paul: his consistency and his integrity.
- *****Gold Manipulation And Naked Short Selling Are ONE Co... As I mentioned in my last entry, the two biggest, most enduring, and most credible “conspiracies” in the financial world revolve around gold manipulation (See GATA's website (Gold Anti-Trust Action Committee)) and naked short selling (See DeepCapture.com). Although they are treated as distinct from and unrelated to each other, these two conspiracies are in fact ONE. Let's begin with a quick overview of gold manipulation and naked short selling in order to show how they are connected. SUMMARY OF THE GOLD MANIPULATION CONSPIRACY GATA provides a summary of the gold manipulation conspiracy. A Summary of GATA's Work - Andrew Hepburn Submitted by Administrator on Mon, 2004-01-12 08:00. By Andrew Hepburn The Gold Anti-Trust Action Committee (GATA) believes that central banks, acting through certain investment banks, have surreptitiously manipulated the price of gold. Such activity appears to have started in the mid-1990s and continues to this day. Prominent entities involved include J.P. Morgan Chase, Goldman Sachs, Deutsche Bank, the Federal Reserve, the Bank of England, and the Bank for International Settlements. GATA specifically alleges that the U.S. Treasury's Exchange Stabilization Fund [ESF] has been used, contrary to official denials, for gold market interventions. Furthermore, GATA believes that the official sector intervened in the late 1990s to prevent an impending gold derivative crisis, the result of excessive short positions accumulated over many years. These claims are based on analyses of publicly available government documents and statistics, trading abnormalities, and material presented in a GATA-backed lawsuit. Howe vs. Bank for International Settlements et al. accusing the BIS, Federal Reserve, U.S. Treasury, and four bullion banks of gold market manipulation. Though the suit was dismissed in 2002 on two technicalities, the evidence presented in it is recognized by many knowledgeable observers as having sufficiently proven the price-fixing allegations. … … Central banks lease gold either by making gold deposits with, or by making gold loans to, bullion banks, the largest of which are international banks or other financial institutions. In both cases, the gold is placed with a bullion bank usually at a very low rate of interest, often 2% or less. This so-called "leased" gold is then sold into the market and the currency proceeds delivered for investment or other use by the bullion bank and/or its customer. When the gold deposit is called or the gold loan comes due, the physical gold required for repayment must generally be repurchased in the market. … The benefit to the bullion banks lay in the difference between gold lease rates and prevailing interest rates. By borrowing gold cheaply, selling it into the spot market, and investing the proceeds in interest-bearing instruments, the gold borrowers realized substantial gains. … Understanding the mechanics of the gold leasing (gold manipulation) The Goldseek article below does a Forensic Examination of the Gold Carry Trade. Forensic Examination of the Gold Carry Trade -- Posted Wednesday, 13 May 2009 By: Rob Kirby … Central Banks “swap” and “lease” gold is an undeniable matter of public record. … … Central Banks claim to “officially” have somewhere in the neighborhood of 30,000 metric tonnes of gold bullion in their vaults. However, the reality is that Central Banks possess LESS physical gold than they officially report – how much less is a matter of speculation and a closely guarded secret. The following formula explains the mechanics of the Gold Carry [lease] Trade: ** Do not confuse the Gold Forward Rate [GOFO] with the Gold futures price – they are not related. … What Happens When Gold Is Leased? When Central Banks lease gold, it PHYSICALLY leaves the vault and the recipient / borrower sells the physical metal into the marketplace to raise cash – to invest or to finance capital expenditures. In this regard, we can say that “GOLD LEASING” is a means by which physical bullion is made available in the market place – thereby lowering the gold price. After the gold physically leaves the vault of the Central Bank, it is replaced with an I. O. U. and the Central Bank, for accounting purposes, “double counts” by continuing to claim that they still possess the same amount of physical bullion in the vault. It is notable that fraudulent accounting practices relating to gold is promoted by lawmakers the world over. This is contrary to generally accepted accounting practices and promotes market opacity instead of the much talked about need for transparency. Explicitly, it serves to promote the supremacy of the fiat U.S. Dollar as the world’s reserve currency. I’ve circled the 10 % spike in lease rates on the chart below: … Now, let’s stop and consider WHO did the lending of metal in Sept. 1999 – expelling physical precious metal, intentionally at a loss, in the face of a RISING PRICE of GOLD. Remember folks, 3 month GOFO [the gold forward rate] is the return “earned” by the lender of bullion: So ask yourself WHO would lend physical gold bullion to ANYONE with a guarantee that you would get LESS bullion back in 3 months???????????? … What to take away from the passage above is that the gold lease rate is an indicator of how much central bank gold is being leased out. The higher the lease rate, the more leased gold is being sold It is also key to note that when leased gold is sold to investors around the world, the money collected is brought to the US and put into “interest-bearing instruments”. This means more gold is leased out, the more demand is created for dollars and US treasuries. Time Frame of the gold leasing fraud The gold leasing that was rampant in the 1990s was ended by the “Washington Agreement”. The gold sextant explains how this happened. February 1, 2000. Two Bills: Scandal and Opportunity in Gold? … On September 26, 1999, 15 European central banks, led by the ECB, announce that they will limit their total combined gold sales over the next five years to 2000 tonnes, not to exceed 400 tonnes in any one year, and will not increase their gold lending or other gold derivatives activities. Besides the ECB and the 11 members of the EMU, Britain, Switzerland and Sweden are parties. The 2000 tonnes include the remaining 365 tonnes of British sales and 1300 tonnes of previously proposed Swiss sales, leaving only 335 tonnes of possible new sales. The announcement, made in Washington following the IMF/World Bank annual meeting, is ironically christened the "Washington Agreement" although the government in Washington played no role. However, the BIS, IMF, U.S. and Japan are all expected to abide by it, and the BIS is expected to monitor it. …the agreement was hammered out secretly among the members of the EMU, the BIS and Switzerland, that the British were given a chance to sign on after the fact, and that the U.S. was not informed until just before the Sunday announcement. For references to European press commentary on the genesis of the agreement, see W. Smith, "Operation Dollar Storm," www.gold-eagle.com/editorials_99/wsmith111099.html. … The notion, shared by many, that the EMU would forever acquiesce in the trashing of its gold reserves by bullion banks operating in the largely paper gold markets of London, New York and Tokyo appears in retrospect to have been incredibly naive. … With the euro successfully launched, they quickly lost reason to continue capping the gold price… … Currently the European central banks through the BIS and within the limits of the Washington Agreement are engaged in a tightly controlled feed of modest amounts of gold into the market. … Verifying timing through gold lease rate data The gold lease rate data going back to 1990 can be found by visiting the LBMA's website (LBMA = The London Bullion Market Association), as seen below. By graphing this data, we see the gold leasing really took off in the 1990s. However, after the 1999 Washington agreement, the flow of leased gold started to die off until it ended completely in the 2001/2002 period. (Remember: The gold lease rate is an indicator of how much central bank gold is being leased out. The higher the lease rate, the more leased gold is being sold.) Full Resolution SUMMARY OF THE NAKED SHORT SELLING CONSPIRACY Deedcapture explains that miscreants are selling billions of dollars of stock that simply does not exist (phantom stock). The Story of Deep Capture You can download a printable version of The Story of Deep Capture here. By Mark Mitchell, with reporting by the Deep Capture Team Introduction - by Mark Mitchell … August 12, 2005…the proudest day of Patrick Byrne’s life. … Patrick is on a conference call with 500 blue chip investors and a few journalists. He tells his telephone audience that he’s been talking to this fellow named Bob …, and … he’s laid out this scheme, he’s made some predictions… so everybody please download Patrick’s computer generated slide show and follow along from home. The first slide reads, “The Miscreants’ Ball.” Patrick says the miscreants are selling billions of dollars of stock that simply does not exist – phantom stock. They have destroyed hundreds of public companies for profit. Some journalists, meanwhile, are “crooked.” They’re “lickspittles.” They are famous journalists and they cover up the miscreants’ crimes. They attack all who oppose them. … And that’s not all, follow along please with the slides — they show how the miscreants and the journalists have ties to government agencies and private investigators, maybe the Mafia, and also an arms dealer, an undercover mole, a corrupt law firm, and Eliot Spitzer. … … The crimes are the work of Wall Street hedge fund managers and brokers who engage in a common trading strategy known as short-selling. A short sale is a way of making money when the price of a stock goes down. You borrow shares from someone else and immediately sell them off. If the price drops, you buy the shares back and return them to the original owner, pocketing the difference. If a company goes out of business, short-sellers hit the jackpot. This is perfectly legal and unobjectionable. But some short-sellers do not play by the rules. A small group of powerful hedge fund managers stop at nothing to annihilate the companies they sell short. Their tactics include: blackmail, smear campaigns, espionage, fraud, harassment, extortion, bribery, rumor-mongering, sabotage, off-shore money laundering, political cronyism, frivolous lawsuits, witness tampering, biased financial research, false identities, bogus credit ratings, bribery, libelous blogs, bad science, forgery, wiretapping, counterfeiting, collusion, lying, cheating, threats and theft. Their most egregious trick is to sell “phantom stock.” By exploiting a glitch in Wall Street’s computerized trading system, and a loophole in federal regulations, some hedge funds sell virtually unlimited amounts of stock that they have not yet borrowed or purchased. This is often referred to as “NAKED SHORT SELLING.” Hedge funds use this tactic to flood the market with supply and drive down prices – which is blatantly illegal. Patrick has written a blog explaining how this works in laymen’s terms. An economist has written a detailed history of “FAILURES TO DELIVER” (i.e. stock sold and not delivered, because it is phantom stock) for Regulation magazine, published by the Cato Institute. A former SEC Chairman has spoken extensively against the problem. Many other researchers, several professors, a former SEC economist, and a former deputy secretary of commerce have also written papers on the subject. If you are interested in the mechanics of the crime, read some of those papers here, here, here, here, here, and here. … In addition to the 300-plus companies on the SEC’s list, as many as 1,000 companies have already been wiped off the map by illegal short-selling, according to some experts. … Understanding the mechanics of stock “failures-to-deliver” (naked short selling) Deedcapture describes the process through which naked short selling is used to destroy US companies. It was in October 2004, and the Easter Bunny [Patrick Byrne's anonymous Wall Street informant] … made some predictions. He said that Gradient would continue to publish outrageous information at Rocker’s behest. He said the same information that had ended up in The Wall Street Journal, would soon get into the hands of specific reporters at Fortune, Forbes, MarketWatch.com, Barron’s magazine, and TheStreet.com – all of whom would call in the coming weeks. And he said that Overstock would soon become the target of a nonsensical federal investigation. The Easter Bunny also laid out THE MECHANICS OF SOMETHING CALLED "NAKED SHORT SELLING." He predicted that OVERSTOCK WOULD SUDDENLY BE LISTED, WITHOUT ITS AUTHORIZATION, ON A BUNCH OF FOREIGN STOCK EXCHANGES—making it easier for hedge funds to sell phantom stock. And he predicted that Overstock would appear on the SEC’s Reg SHO list of victim companies, scheduled to appear for the first time in January, 2005. Over the next two weeks, Patrick received calls from precisely the predicted journalists at Forbes magazine, Barron’s, The Wall Street Journal, The New York Post, and Fortune magazine – all of them reading the same list of questions supplied to them by Gradient. … Within a few weeks, the Federal Trade Commission in San Francisco began a bizarre investigation into Overstock that went nowhere. Within a couple of months, OVERSTOCK HAD MYSTERIOUSLY APPEARED ON EXCHANGES IN STUTTGART, MUNICH, FRANKFURT, BERLIN, AND AUSTRALIA. And come January, the company was indeed on the SEC’s victim list (along with three other companies that Rocker had just hammered in a column for Barron’s magazine). “The power of any theory is its ability to make predictions,” Patrick later says in his “Miscreants’ Ball” presentation. “It doesn’t matter how wacky a theory sounds, if it makes predictions that are confirmed, you’ve got to pay attention to it.” There are two important points to note here about the naked short selling crimes outlined above: 1) The targets of naked short sellers get listed on foreign exchanges Before companies are attacked by naked short selling, they are listed on foreign exchanges without their knowledge. This 2005 Euromoney article offers confirmation of this process. Naked shorting: Stung by the German connection April 2005 by Peter Koh Thousands of US stocks are being traded on a little-known Berlin exchange, without the knowledge of many of the companies involved. … A YEAR AGO Ted Noble, chief financial officer at Advanced ID Corporation, a Calgary-based microchip-tracking company, received some surprising news. "We were congratulated by a third party who saw that our shares were trading on the Berlin Stock Exchange," he recalls. "That came as news to us because WE'D NOT DONE ANYTHING TO GET LISTED IN GERMANY. I talked to a few people and we couldn't figure out whether it was good or bad." Noble soon found out when his company's shares started behaving oddly on the US OTC bulletin board. "April 29 [2004] was a slow day, and only about 10,000 of our shares had traded. Then 370,000 shares traded in the last 20 minutes before the close. It knocked our stock price down from 58 cents to 41 cents, before closing nearly 20% down at 48 cents. That was very unusual for our stock. I'd never seen anything... 2) The money from selling "phantom shares" doesn’t go to the naked short sellers When stock IOUs are sold by naked short sellers, the money paid by the buyer goes into collateral (US treasuries) to backup the stock IOUs. This letter to the SEC confirms that “phantom shares” are collateralized. Ms. Florence Harmon Acting Secretary Securities and Exchange Commission 100 F. Street, NE Washington, DC 20549-9303 Re: Release No. 34-58773; File No. 87-30-08 Amendment to Regulation SHO Interim Final Temporary Rule Dear Sirs, … The foundation for the DTCC-administered clearance and settlement system in use in the U.S. has been illegally converted to one based upon mere “collateralization versus payment” or “CVP” wherein the seller of securities is only asked to collateralize the monetary amount of the failed delivery obligation on a daily marked to market basis. This policy invites abusive naked short selling activity in that the failures to deliver shares results in the procreation of what are referred to as “securities entitlements” that are allowed to be readily sellable as if they were legitimate “shares” of a corporation due to the wording unfortunately incorporated into the text of UCC Article 8-501. … So when "phantom shares" of US companies are sold “on exchanges in Stuttgart, Munich, Frankfurt, Berlin, and Australia”, the money collected from buyers is transferred to the US and put into treasury securities. The more "phantom shares" are sold abroad, the more demand is created for dollars and US treasuries. Time Frame of the naked short selling fraud Naked short selling wasn’t a major problem during the 1990s. It was only more recently that companies started getting wiped out of existence by “phantom shares”. To see exactly when, we need to look at the data. While the DDTC only started releasing failures-to-deliver (naked short selling) data for stocks after 2006, it is possible to get an idea when naked short selling started to be a problem by looking at the failures-to-deliver data for treasury securities, agency debt, and MBS. This data is readily available on the Fed's website going back to 1990, as seen below. By graphing this data, we see that naked short selling problem started in the 2001/2002 period. Full Resolution Comparing the gold lease rate and failure-to-deliver data If we combine the gold lease rate and failure-to-deliver data into one graph, we get a pretty interesting result, as seen below. Full Resolution The graph above shows how naked short selling sprung up after the 1999 Washington agreement and became epidemic as gold leasing died out. The odds of this being a coincidence are astronomically low. Essential, the gold leasing fraud was replaced by the naked short selling fraud. Motive behind gold manipulation and naked short selling To find the connection between gold leasing and naked short selling, all you need to do is "follow the money". Gold leasing: Investors around the world pay billions in foreign currencies to buy the thousands of tons of gold being leased out. These foreign currencies are than converted into dollars (helping keep the US currency strong) and used to buy US treasuries (helping the US treasury finance the federal deficit) to serves as collateral for the loaned gold. Naked short selling: Investors around the world pay billions in foreign currencies to buy the millions of phantom stock in midsize companies listed on foreign exchanges. These foreign currencies are then converted into dollars (helping keep the US currency strong) and used to buy US treasuries (helping the US treasury finance the federal deficit) to serves as collateral for the phantom stock. The naked short selling fraud, which began after the 1999 Washington Agreement, was meant to replace the enormous flow of money into the dollar and US treasury market that was about to be lost due to the end of gold leasing. The party responsible for both frauds Since gold leasing and naked short selling both support the dollar and the US treasury market, the obvious party responsible is the Treasury's Department's Exchange Stabilization Fund (ESF) which is officially in charge of defending the dollar. The ESF role in gold manipulation has long been recognized by GATA and others, as explained by the Golden Sextant. February 1, 2000. Two Bills: Scandal and Opportunity in Gold? … Evidence is accumulating that … the Clinton administration has effectively capped the gold price by using the ESF to backstop the selling of gold futures and other gold derivative products by politically well-connected bullion banks. … … The odd behavior of the gold price over the past five years, including massive gold leasing and heavy bouts of futures selling apparently timed to abort threatened rallies, has generated considerable speculation regarding intentional manipulation by governmental authorities. … The Fed and the ESF are the only arms of the U.S. government with broad statutory authority "to deal in gold" and thus by reasonable extension in gold futures and derivatives. Were the Fed to engage in such activities, it would of necessity have to do so subject to all the institutional safeguards that govern its more important functions. Unlike the Fed, the ESF is virtually without institutional structure or safeguards. It is under the exclusive control of the Secretary of the Treasury, subject only to the approval of the President. Indeed, direct control and custody of the ESF must rest at all times with the President and the Secretary. The statute further provides (31 U.S.C. s. 5302(a)(2)): "Decisions of the Secretary are final and may not be reviewed by another officer or employee of the Government." Originally funded out of the profits from the 1934 gold confiscation, the little known ESF is available for intervention in the foreign exchange markets. … … the allegation that knowledgeable gold market participants and observers are making … is that the ESF -- by writing gold call options or otherwise -- is making sufficient gold cover available to certain bullion banks to allow them safely to take large short positions in gold, thereby putting downward pressure on the price and in the process making huge profits for themselves. … While the ESF’s role in gold manipulation is recognized, its role in naked short selling, on the other hand, is not. Patrick Byrne and Deep Capture unfortunately seem to believe that naked short selling is a wall street crime motivated by greed. That isn't right. It isn't the government regulators (SEC, etc...) that have been "deep captured" by Wall Street Interest. It is Wall Street (DTCC, primary dealers, hedge funds, etc) that has been corrupted by the treasury department (specifically the ESF). Conclusion: It is all ONE conspiracy The gold manipulation conspiracy alledged by GATA and the naked short selling conspiracy alledged by Deepcapture are one and the same, and the Treasury's Exchange Stabilization Fund (ESF) is the force behind gold leasing and "phantom stocks". (for the more about the Treasury's ESF, see my entry *****What I have been afraid to blog about: THE ESF AND ITS HISTORY*****)
Mish's Global Economic Trend Analysis
- First Time Ever - Majority of Unemployed Have Some Colleg... Those who think the answer to the unemployment problem is more education might be surprised to learn the Majority of Unemployed Attended College. For the first time in history, the number of jobless workers age 25 and up who have attended some college now exceeds the ranks of those who settled for a high school diploma or less. Out of 9 million unemployed in April, 4.7 million had gone to college or graduated and 4.3 million had not, seasonally adjusted Labor Department data show. click on chart for sharper image In 2011, 57% of those 25 and up had attended some college vs. 43% in 1992. Those without a high school diploma fell from 21% to 12% over that span. But along with the increasing prevalence of college attendance has come a growing number of dropouts, who have left school burdened by student loan debt but without much to kick-start their careers. Among everyone up to age 24 who has left college or earned a two-year degree — including those not actively searching — the full-time employment-to-population ratio has plummeted from 69% in 2000 to 62% in 2003 to 54%. This has occurred even as student lending and enrollment at community colleges has soared, elevating the student loan crisis to the center of political debate and a rallying cry for the Occupy Wall Street movement. Those who graduated with a four-year degree fared better employment-wise but many of those still struggle with student loans. Many other end up underemployed in retail sector jobs as opposed to the curriculum they studied. Student loans are a trillion dollar problem, and growing every quarter. President Obama wants more student loans, but all that does is make many graduates debt slaves for the rest of their lives. The cost of education is preposterous and the solutions are easy to describe. Five Solutions Kill federally funded student loan program entirely. Student loans do nothing but drive up the cost of education. Anyone can get a student loan because the loans are guaranteed and cannot be discharged in bankruptcy. The beneficiaries of this horrendous setup are teachers and administrators, not the kids receiving loans. Kill state aid to colleges as well Increase competition by accrediting more online universities, even foreign universities. This will drive down costs immensely. Public unions are a huge part of the reason for driving up teacher salaries, so collective bargaining (collective coercion actually), must end. High school counselors and parents must educate kids that there simply are no realistic chances for those graduating with degrees in political science, history, English, art, and literally dozens of other useless or nearly-useless majors. The deflationary overhang of student debt is enormous. Those in debt will postpone buying homes, getting married, starting families, and spending money in general. The only solution is to ensure kids to not get into massive debt in the first place. The way to achieve that is to drive down the cost of education. Sadly the Obama administration (like many before it and many at the state level as well) has done nothing but throw money at the problem, rewarding unions and administrators while making debt slaves of kids as education costs spiral out of control. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
- Apparel Sales by Price and Volume Provide Interesting Vie... Reader Tim Wallace provides an interesting chart of apparel sales in the US by price and by unit volume. In this case, volume is likely the more telling statistic. click on chart for sharper image Tim writes ... Hi Mish As always, I am watching imports, especially with fascination the apparel imports. In the attached graph we see that dollars and units run mostly in slope lock-step until the crash of apparel demand in 2009. In 2010 we see a significant "recovery". One thing about apparel is it does wear out, so a year like 2009 will cause pent-up demand in a following year. Price did not recover as much however. 2011 and the 12 month historical rolling numbers ended in March of 2012 (government data lags two months) is more interesting. Dollar amounts continue to "recover" but the units measure has turned well downward again, in fact off 6% from 2010. Looking at the monthly data from this time last year we see a continued degradation of the units amount every month, while the dollars amount trends up. This is in effect apparel inflation, caused partially by raw materials. Cotton has been replaced in a significant percentage of products, stripping out demand and lowering that cost. China lost some market share due to labor cost competition with Vietnam. However, China still dominates with 41.2% of market share, Vietnam second at 8.5%, then Bangladesh at 6.4% and Indonesia at 5.4%. Thus 61.5% of all apparel imports come from only 4 countries. Regards, Tim Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
- Italy Deploys 20,000 Law Enforcement Officers to Protect ... Italy Deploys 20,000 Law Enforcement Officers to Protect Individuals and Sensitive Sites The Atlanta Journal Constitution reports Italy deploys 20,000 to protect sensitive targets Italy increased security Thursday at 14,000 sites, and assigned bodyguards to protect 550 individuals after a nuclear energy company official was shot and letter bombs directed to the tax collection agency. Under the enhanced measures, Interior Minister Anna Maria Cancellieri deployed 20,000 law enforcement officers to protect individuals and sensitive sites. In addition, 4,200 military personnel already assigned throughout Italy will be redeployed according to new priorities. Authorities will also increase intelligence to "neutralize" the risk of subversive actions "that can be nourished in moments of tension," the statement added. Taxed Out of House and Home In response to Tax Collection Violence in Italy: Mail Bombs in Rome, Police Clashes in Naples, Molotov Cocktails in Livorno I received an email from Frank who lives in Canada but owns property in Italy writes ... Hello Mish Trust me, it really is that bad. I have a condo on the Adriatic in Italy, and lots of family still there. The local municipal property tax, called Imposta Comunale Immobili (ICI), is paid by anyone who owns property or land, whether they are a resident or not. Recently, property taxes have gone up fast. Property is now being reassessed at the "real" value instead of the "official" (wink) value. TV shows highlight the plight of elderly who have had to move out of their own homes into nursing homes because they could not pay property taxes. My uncle has 6 apartments which he's owned for many years. He and his children live in 4 and he collects rent on the other 2 to live on. He is getting hammered. He lived and worked in Canada most of his life but returned to Italy because his daughter married an Italian. Now he desperately wants to return to Canada, but it's impossible to sell now. Frank G. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
- Merkel to Approach Greece with "Growth Proposals" while A... Greek elections are set for June 17th following the impasse of the last election where no majority government formed. The "Destroy Greece to Save the Euro" clowns led by German Chancellor Angela Merkel are out in force hoping to turn the vote into a direct referendum on the Euro. The election is of course a direct referendum on the Euro, but Greek citizens are under three Fantasyland ideas. Three Fantasyland Ideas The euro is a good thing for Greece It is possible for Greece to stay on the euro but default on debt Greece can recover in the eurozone Merkel is doing her best to convince Greeks that number 2 is not possible and she is correct on that score. She is also promoting the Fantasland positions numbers 1 and 3. Merkel Asks For Greece Referendum on Euro MarketWatch reports Merkel Asks For Greece Referendum on Euro. Germany’s chancellor reportedly proposed on Friday that Greece hold a referendum on its membership in the euro currency area, increasing pressure on the nation just as Group of Eight leaders are set to discuss the region’s debt crisis this weekend. In a phone call with the Greek president on Friday, German leader Angela Merkel suggested that Greece could have a referendum on the euro when it holds national elections in June, according to media reports, citing a Greek government spokesman. Whether she actually did make the proposal is in doubt — her spokesman denied it, but the Greek official then reiterated that Merkel made such a request. Merkel Yields on Growth Measures As a matter of political expediency (or do I mean political suicide) Merkel-Hollande Meeting Yields Greece Growth Signal German Chancellor Angela Merkel and French President Francois Hollande said they would consider measures to spur economic growth in Greece as long as voters there committed to the austerity demanded to stay in the euro. Requests for measures to bolster growth will be “considered” and the European Union may also “approach Greece with proposals,” Merkel said late yesterday at a joint press conference with Hollande during his first official visit to Berlin. “Greece can stay in the euro area,” and “Greek citizens will be voting on exactly that.” Is Merkel's Strategy Working? The idea that Germany is going to consider anything for Greece but still more austerity measures is yet another Fantasyland notion. Is proof of her strategy in the polls? The latest polls show pro-bailout conservatives leading Greece's conservative New Democracy party, which backs the country's international bailout, has retaken the lead from the anti-bailout radical leftist SYRIZA, a poll showed on Thursday, the first published since a new election was called for June 17. If elections were held now, New Democracy would win 26.1 percent of the vote compared with SYRIZA's 23.7 percent, according to the MARC/Alpha survey conducted on May 15-17. Based on this result, New Democracy would win 123 seats, the pollsters said. Combined with the 41 seats projected to be won by the Socialist PASOK, Greece's two major pro-bailout parties would command a 14-seat majority in the country's 300-strong parliament. Support for SYRIZA appears to have declined after the party refused to join a national unity government with all the other major parties, the MARC poll showed. In the previous survey by the same agency before the coalition talks collapsed, SYRIZA led with 27.7 percent, up seven points on New Democracy. Money Will Flow Along With Propaganda For those holding the common-sense position Greece needs to leave the eurozone to recover, this may be a bit disconcerting. However, There is likely to be movement in both directions on the polls and I think this is just a temporary snap-back. Moreover, Greece is likely to run out of money before the next elections. Then again, if the polls show the Troika-clowns have a good shot at pulling this off, the money will flow right along with the propaganda. To understand what the battle to "save Greece" is really about, please consider Euro area official sector exposures to Greece in excess of EUR 290bn Total; EUR 84bn Germany, EUR 63bn France, EUR 55bn Italy, EUR 37bn Spain That link shows this has nothing to do with "saving" Greece, rather it is about saving German, French, and Italian banks (further destroying Greece in the process). The irony is every bailout attempt so far has done nothing but increase European banking losses. This attempt should it succeed in another bailout will do the same: increase losses. Three years ago total losses might have been on the neighborhood of 40 billion euros. Look at the losses now. The increased losses were caused by arrogant Troika-clown euroxcrats with asinine positions willing to repeatedly throw good money after bad. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
- Spanish Bad-Loans Ratio at 8.37 Percent, a 17-Year High; ... It's time for another roundup on Spain. Every day is time for another roundup on Spain. Today's report is on bad loans, and complete foolishness at Bankia buying its own shares hoping to stabilize its price. Spanish Bad-Loans Ratio Hits 8.37 Percent The Wall Street Journal reports Spanish Bad-Loans Ratio Hits 17-Year High Bad debts held by Spanish banks rose to a 17-year high in March and the cost of insuring the debt of two major Spanish banks against default hit a record Friday a day after the sector was hit by a downgrade, underscoring the continuing challenges posed by the country's five-year property slump. The central bank said that 8.37% of the loans held by banks, or €147.97 billion ($188 billion), were more than three months overdue for repayment in March, up from 8.3% in February and the highest since September 1994. The total number of non-performing loans is now almost 10 times higher than the level reported in 2007, just as Spain's decade-high property boom peaked. The rapid deterioration of the loan books was one of four reasons cited by Moody's Investors Service for its downgrade of the credit ratings of Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA and 14 other banks in the country late Thursday. "Moody's announcement will increase speculation that the Iberian state will be forced to ask for external support in order to effectively tackle its banking crisis," said interest rates strategists at Lloyds Bank WBM. At 0956 GMT, Spain's IBEX-35 blue-chip index was up 0.5%, following a negative start. Bankia's shares gained 19% after they fell 14% Thursday and had suffered 10 straight days of declines, while those of other banks including also bounced after deep losses earlier in the week. Bankia Suffers Huge Losses Purchasing 15.5 Million Its Own Shares For the "oops" file, courtesy of Google translate please note Bankia bought 15.5 million shares to try to stop its collapse May 17, 2012 Bankia tried unsuccessfully to halt the collapse of its stock market price in the days when the crisis broke out of the entity. The bank bought 15.55 million of shares for 33,250,000 euros between 7 and 10 May, as has been reported to the National Securities Market. The result now is that accumulates heavy losses on these securities, which subtracts capital at a time when the bank is in need of them. In the previous 30 days, Bankia just had bought just over 5 million shares, according to El Confidential, which was published this morning purchases of shares of the entity. Bankia has failed in the attempt to halt the collapse, which today continues to fall that have become over 17% to 1.37 euros per share. At these prices, only purchases made during those four days, Bankia suffer losses of about 12 million euros. But the losses are even greater in the previously performed operations to try to sustain the price at which the entity has accumulated treasury of 86.124 million shares, 4.319% of its own capital. In total, the bank has more than 100 million in losses to the treasury share transactions. Bankia Share Prices Today's rally looks pretty good but here is a little perspective on Bankia Share Prices. Union Silliness For the "where there's public unions, there's stupidity file" Unions urge Employees to buy shares in Bankia to prevent the collapse of the price. Bankia unions urge their employees and clients to buy shares in the company to prevent the collapse of its stock market price and help ensure its future, according to a statement of the Boards and Professional Association (CACAM). Under the slogan 'I buy Bankia. Do you? Are we united? ', These professionals Bankia broadcast a statement following an email I have received, the undersigned, with whom they want to send a message of confidence in the project entity. Bankia Bleeds Cash Meanwhile, Bankia bleeds cash and will not respond to questions. El Economista reports Bankia has lost 1 billion euros in deposits in one week. Bankia customers have withdrawn deposits worth over 1,000 million euros since the government announced its intervention last week, according to data presented suggest the board meeting yesterday. On Wednesday, Bankia not respond to Reuters requests asking whether there were bank runs Thursday and no one has commented on the information published by the newspaper El Mundo in its paper edition. Goldman Sachs Hired to Value Bankia Please consider Spain Hires Goldman Sachs to Value BankiaThe Spanish government has hired Goldman Sachs to carry out an independent valuation of Bankia, the ailing bank taken over by the state last week, Spanish newspaper Expansion said on Friday. The U.S. bank will review Bankia's and its parent company BFA's books and determine within a month how much the state should inject to refloat the lender, which had to be rescued after its auditor, Deloitte, identified several gaps in last year's accounts. Expansion said without citing sources that Bankia's financial hole may reach 8 billion euros on top of the 10 billion euros it needs to set aside to cover potential losses on real estate assets, as required by two financial reforms passed by the government in February and last week.Is this one of those deals where a consultant is hired to give give a predetermined opinion? We will find out soon enough because no one can possibly determine "Bankia is a solvent entity". In fact, the entire Spanish banking system is clearly insolvent. Here's the question of the day: Is there any reason Bankia shares will not or should not trade for pennies at some time in the near future? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
- My Wife Joanne Has Passed Away; Stop and Smell the Lilacs Yesterday afternoon, my wife, Joanne went on to a better place. For those still on this planet, please remember to stop and smell the lilacs. That picture is from our honeymoon on Mackinac Island, Michigan, about 27 years ago. Lilacs were her favorite flower. In lieu of flowers or food, I ask the living to consider a donation in here name to support ALS research, the disease that took her life. I wrote about the disease and an ALS fundraiser I sponsored twice previously. April 2, 2012: My Wife Joanne Has ALS, Lou Gehrig's Disease May 15, 2012: ALS Update; I Still Need Your Help; Money Contributions From 22 Countries! Results as of Thursday 5-17-2012 Donations $14,931 Tickets $236,800 Corporate Sponsorships $20,000 Les Turner gets half of ticket sales so the direct benefit to Les Turner so far is $154,331. Donations From 23 Countries Donations have come in from 23 countries now. Click the second link above to see. Over the years many people have asked me to put up a tip jar. I refused. I have always thought the best information is free. That philosophy has served me well. I have never asked for anything, but I am asking now. If information from this blog, for free, 4-5 posts a day (for 7 years!) has made you money or kept you out of trouble, then please consider purchasing a raffle ticket or making a donation. If times are tough, and they may very well be, then please consider a cash donation of $10 or more. Every bit helps. Checks To make a cash donation by check or money order, please send a check or money order to Lacey Wood Mish Campaign Les Turner ALS Foundation 5550 W. Touhy Avenue, Suite 302 Skokie, IL 60077 847.679.3311 (Main) Any questions, please call the above number. Credit Card You can make a donation or purchase raffle tickets by credit card on the raffle site. Some people did not like entering the information fields required, however, the purpose is only to ensure the foundation knows how to get in touch with raffle winners. People move, phone numbers change, and email addresses change. It's as simple as that. Those who do not like disclosing personal information on a form (the site is secure) can send a check or money order for tickets or to make a donation. Philosophic Point of View Whether you make a donation or not, please stop and smell the lilacs. Joanne did, at every opportunity. Goodbye Joanne we love you and miss you already.Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
- Spanish Bank Debt With ECB Up 15.7% in April; Surprise VA... Courtesy of Google translate, please consider the following bleak reports from Spain. Spanish Bank Debt With ECB Up 15.7% in April El Confidencial reports The Spanish bank debt with the ECB increased by 15.7% in April The debt of Spanish banks with the ECB shot up to 263.535 billion euros in April, that is 15.7% compared to 227.6 billion recorded in March, a new record, according to the Bank of Spain. This amount is outstanding entities resident in Spain still have yet to return to the European Central Bank as a result of the funding the agency has been granted previously. The net financing granted in April by the Eurosystem to Spanish banks accounted for 68.8% of total Eurozone, which amounted to 382.712 billion euros. However, the gross amount of appeal does not collect the money that Spanish banks have borrowed from the ECB and have been redeposited in the body to receive a return of 0.25% a day. The increasing difficulties of Spanish institutions to borrow from the interbank appreciate finding that the credit requested by Spanish banks headed by Mario Draghi school increased sixfold compared to that recorded in April 2011 (42.227 billion). Surprise Vat Hike? Hiking taxes in the middle of a recession is horrendous policy. Yet one should never underestimate the potential stupidity of bureaucrats. El Economista reports The Government is preparing a surprise rise in VAT for up to three points by 2013 Mariano Rajoy's government is determined to adhere strictly and without delay the requirements of Brussels to get the unequivocal support of the European Union to reform measures taken and to try to appease the markets. This is the VAT in the rest of Europe: average at 20.9%. So, on Monday, the minister Luis de Guindos, acceded to the wishes of Merkel and European Commission to be the European Central Bank (ECB) who audit the Spanish banks. And now, the chief of government has already committed to some partners of his confidence that the government might have to climb two or three points in the VAT, by surprise, without waiting for 2013, as planned. Specifically, Rajoy met last weekend privately with the president of the CEOE, Juan Rosell. A meeting that was held at the Moncloa Palace and that was unveiled yesterday at the meeting of the Board of the Spanish employers that some attendees described as "a funeral" to the bleak picture of the business leaders to draw on our economy. And the funeral was the scenario that Juan Rosell took the opportunity to ask business leaders support unreservedly to government reforms, despite the critical position CEOE has kept tax increases approved for the Income Tax and Companies. And it was at that funeral in which some of the attendees told that during his speech, the president of the employers said that while Rajoy is not in favor of raising the VAT, may be forced to do it, and surprise. Moody's downgrades 16 Spanish banks Reuters reports Moody's downgrades 16 Spanish banks Moody's Investor Service carried out a sweeping downgrade of 16 Spanish banks on Thursday, including Banco Santander, the euro zone's largest bank, citing a weak economy and the government's reduced ability to support troubled lenders. All the banks' long-term debt ratings were downgraded by at least one notch, and some suffered three-notch cuts. Thursday's move came after Moody's downgraded 26 Italian banks on Monday and followed a press report about a run at troubled lender Bankia, Spain's fourth largest bank. The Spanish government, which took over Bankia last week, denied the report. Santander suffered a three-notch cut to its long-term rating to A3 from Aa3. Moody's also cut BBVA's long-term rating by three notches to A3 from Aa3 and put the credit on a negative outlook. BBVA is Spain's second largest lender. The government's borrowing costs shot higher on Thursday after data confirmed the economy was back in recession. Prime Minister Mariano Rajoy said Wednesday his government, which is struggling to reduce the budget deficit, could soon have trouble financing itself in the bond market unless the pressure eases. The government's strained finances are another risk for banks, since many have used cheap loans from the European Central Bank to buy three-year and five-year government bonds. Through March, Spanish banks held almost 150 billion euros of Spanish government bonds, up from about 76 billion at the end of November. Capital Flight at Bankia Please consider Bankia have lost 1,000 million in deposits in one week Bankia customers have withdrawn deposits worth over 1,000 million euros since the government announced its intervention last week, according to data presented suggest the board meeting yesterday. On Wednesday, Bankia not respond to Reuters requests asking whether there were bank runs Thursday and no one has commented on the information published by the newspaper El Mundo in its paper edition. According to this method, was at the meeting yesterday with senior management where the CEO, Francisco Verdú, brought the fact of multi withdrawal of funds: Bankia days would have lost a similar amount to 1,160 million withdrawn in the first quarter. The withdrawal of money from customers Bankia is due to the mismanagement of the departure of Rodrigo Rato for the entity and the subsequent nationalization. Scramble for Deposits Leads to System-Wide Cannibalization Here are the key paragraphs from the above article. The competition from the big banks is a point of concern to the entity. In fact Santander is showing particularly aggressive in trying to attract customers disenchanted with Bankia have decided to withdraw their savings from the entity. For his part, Jose Ignacio Goirigolzarri, has not made any statement on these data and harangued their managers to work hard to retain customers. The new president of the organization claimed that "Bankia is a solvent entity, which continues to function quite normally and that offers total security." Spain goes deeper in trouble every day. No one can possibly believe "Bankia is a solvent entity". In fact, the entire Spanish banking system is clearly insolvent. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
- German Finance Minister Wolfgang Schäuble Tosses Hat Int... In the truth is stranger than fiction category, German Finance Minister Wolfgang Schäuble is calling for a political union "now" with a directly elected EU president (and of course he is the unstated logical candidate). Translation: Schäuble is running for "Grand Keiser of All Europe". Please consider Schäuble calls for closer EU integration Wolfgang Schäuble, Germany’s finance minister, called on Thursday for the EU to move decisively towards a political union in the face of the eurozone crisis, with a directly elected president in Brussels. In a passionately pro-European speech delivered in Aachen, where he was awarded the annual Charlemagne prize, Mr Schäuble said the economic and financial crisis made it clear that closer European integration was needed. “We must create a political union now,” he said. But he said that would not mean the creation of a European superstate, or a “United States of Europe”. A debate was needed on precisely what responsibilities should be transferred to European level, on the principle that whatever tasks could best be done locally, regionally or nationally should not be changed. One answer would be to give a face to European political union with a directly elected EU president in Brussels. Mr Schäuble, who is regarded as the most pro-European member of the German government, said the EU urgently needed to improve its negotiating capacity on the world stage, with a more effective common foreign policy, and international treaties signed by all member states together. “We must have the ambition to do more than simply protect the status quo,” he said. Wolfgang Schäuble (centre) receives the Charlemagne prize on Thursday Today the Charlemagne prize, tomorrow the crown of the "Grand Keisership" Addendum: I am aware of the correct spelling of Kaiser. Keiser is a joke spelling that has a personal meaning but also seems appropriate for the job. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
- Euro area official sector exposures to Greece in excess o... Via email I received an interesting set of facts from Barclays regarding banking exposures to Greece. Greece: Euro area official sector exposures in excess of EUR290bn Euro area official sector exposure According to the French Finance Minister, F. Baroin, Greece's exit from the euro area "would cost France EUR50bn net, in addition to the securities held by banks and insurers in their portfolios." In the German press, it is reported that a Greek exit would cost approximately EUR80bn (EUR16bn from bilateral KfW loans, EUR20bn from the EFSF, EUR12bn from the SMP and EUR30bn from Target 2, based on December 2012 data, source: FAZ). Here, we estimate the euro area's official sector exposure to Greece (bilateral loans, EFSF guarantees and Eurosystem) and show that the cost estimations mentioned in the press match the exposure if you consider a 20% recovery rate on Greek holdings. 20% is rather low, but not unrealistic given the outcome of the PSI and devaluation of the new Greek currency in the event of an exit. However, because of the accounting treatment of the different exposures and the presence of some financial buffers within the Eurosystem, the one-off, year-end shock on public accounts will be much smaller, probably around EUR100bn (1% of GDP). Euro area exposure via bilateral loans and EFSF guarantees: As part of the first Greek bailout package (May 2010), EUR53bn has been disbursed by member states out of the EUR80bn committed over a three-year period. These disbursements are in the form of bilateral loans between Greece and the other member states. In February 2012, a second bailout package was signed, but this time funds would be transferred to Greece by the EFSF and the guarantees passed on to member states according to (adjusted) ECB capital key allocation. This second package has taken over the unused funds from the first package and no further bilateral loans have been made since then. To date, the EFSF has issued EUR73bn out of the EUR145bn committed by member states. Altogether, the euro area states currently have a total exposure of EUR126bn, representing 1.3% of GDP. Euro area exposure via the Eurosystem's refinancing operations and interventions: In a Greek exit scenario, the Eurosystem faces losses stemming from either direct holdings of Greek bonds in the SMP portfolio1 or from Target 2 claims on the Greek central bank. Based on anecdotal evidence and central banks' balance sheet movements, we estimate that the Greek SMP exposure is approximately EUR35bn and that Target 2 claims on the Greek central bank are around EUR130bn. Indirect exposure via the IMF: Even though the IMF prides itself on never having made any losses on a programme, a Greek exit would certainly challenge this record. Potential losses would be redistributed to IMF members according to their quota. With 20% of the quota (link) the euro area would be exposed to a further EUR4.4bn. Altogether, we estimate that the total official sector exposure to Greece is somewhere in excess of EUR290bn (see table below), representing 3.1% of (nominal) GDP. Because ECB capital keys do not exactly match GDP weights, the exposure in GDP terms varies from one country to the other, between 1.8% (Luxemburg, excluding programme countries) up to 4.5% (Malta, Estonia, see table and chart below). Total Exposures to Greece click on chart for sharper image Looking for a reason for all the pressure on Greece to stay in the Eurozone? There it is. Pray tell where is Spain going to come up with 37 billion euros? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
- Brain Drain: Businesses and Brightest Minds Flee Italy; C... Brain Drain Courtesy of Google Translate, this time from Italy, please consider From the North-East and abroad, fleeing already 720 companies Farewell, ungrateful Italy. In addition to brain drain, we'll get used to the migration of entrepreneurs. The news coming from the North-East lab are not at all encouraging. Until 2010 no employer has had the courage to leave Italian soil. A sort of waiting anxiety that charge went through the last part of 2008 and the two following years. Explains Daniele Marini, a sociologist at the University of Padua and the Director of the North East: "Entrepreneurs have felt a great loneliness. And 720 of them already internationalized and holding sizes above the threshold of 10 employees, in 2011 the companies have decided to move abroad. It remains to be seen how many entrepreneurs make the same choice in 2012. Marini argues that choice in the book "Innovator of the Border", just published by Marsilio, "In the face of an institutional environment essentially static, ie where no desired reforms take shape, the government is not modernization, the level of taxation remains unchanged, the preconditions favorable to business life are reduced to such an extent as to suggest some to place in other countries where the fiscal and administrative environment allows them to remain competitive." It is as if suddenly the toy was broken, cracks in the same constituent elements Venetian economy: the capital first of all, based on the triad family, capital, labor. Marini explains: "The crisis has changed the DNA of the North-East. A society that puts its identity in the work today is to consider it as a hassle. The families, however thrifty and highly oriented economy, fear of not having resources available to address such a long period of recession." The summation of all these elements outline the framework that has led entrepreneurs "secessionists" to set sail. Credit Crunch Italian Style Also courtesy of Google Translate, please consider The credit crunch? Ask the EBA The solution to the crisis is growing. Virtually all agree on this. Even the Germans. The problem is that funding needed to grow. Especially businesses. But the credit supply to companies in Italy continues to be weak. "They closed the taps, the banks have stopped doing," complained some time ago with emphasis Fancelli Mauro, president of the National Confederation of Craft Small and Medium Business in Florence. The same bankers recognize the problem. "Not only have we reduced the new credits. But we're doing it furiously, "admits a senior executive at one of the five largest Italian banking groups. The data reported by Mauro Fancelli for your region are dramatic: "In the first quarter of 2012 the bank has paid to Tuscan businesses for 33.5% less than the same period of 2011. The Monte dei Paschi di Siena, a leading institute in the region, has even been a decline of 70 percent." "The worst of the credit crunch we have yet to see it," warns a second top manager at another establishment of the five largest in Italy. With this investigation, Il Sole 24 Ore has wanted to find the reason for this phenomenon often referred to with two little words that English, along with spreads, are now common even in the chat at the bar: credit crunch - or credit crunch. Anecdotes From Italy My friend Francesco writes ... Hello Mish The banks in distress list gets longer. Two banks on chapter 11 by Bank of Italy in a few days. Last Saturday it was the turn to the Bank Credit Cooperative Monastier and Sile suffer to be placed under protection by the Financial Regulator. Last Friday was the turn instead of Tercas bank, savings bank in the province of Teramo in the meshes of the extraordinary finish. A customer of mine have been required to close his position with that bank, he will never be able to repay its loans to 1.5 million eur in 4 months. I expect a very difficult summer and in September, many businesses do not reopen. German firms will detect the best companies in the north east, at a very cheap cost, the other will close in a year. In Italy we have two realities, Germany and Greece, in the same borders. The North, particularly the North East, has a GDP per capita equal to or higher than Germany, the South is in a worse condition than Greece. Obviously you cannot find the solution without reexamining borders. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post ListMike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Slope Of Hope with Tim Knight
- Money Flow for May Week Three Further to my last weekly market update, here is a summary of where money flow ended for Week 3 of May 2012. The Weekly charts below of YM, ES, NQ & TF show that they all closed much lower than the prior week on higher volumes. They have now broken out of their ranges from January. The YM, ES & NQ are sitting above their weekly 50 sma, while the TF has closed below...whether they find short-term support at these levels remains to be seen. As I mentioned in my market update of April 13th, I'm assigning a weekly bullish...
- Someone Is Lying (by BBFinance) The correlation between Euro and SPX has been strong. And yet, something funny happened today. Around noon, Euro surged and SPX dropped. You can see the divergence in the following chart. One of these two is lying. I guess it is SPX. For one, it is more difficult to manipulate the forex market which is many times bigger than the US equities market. Let’s take a look at US $ Index. It’s down substantially. I wrote few days back that US $ is hitting multiyear resistance and is making a double top. So here it is. Something is fishy out...
- Iggy's Favorite Web Ad Oh, and on a wholly unrelated note, here's what took place this morning about a mile from where I'm sitting.
- My Assessment of Facebook's Flaccid IPO
- A Flesh & Blood Bar Herewith I present to you a couple of pictures that Vittorio was kind of enough to send me from the pre-Slopefest activities. The big event is tomorrow, and I'll be popping by for dinner (my affection for Vegas is well known, so set your kitchen timers). Thanks for a fantastic week, everyone, and I'll see a few of you tomorrow night!
- It's Time to Short Natural Gas Again
- Going Long the Euro Well, given my disposition, this is a "man bites dog" kind of post, but I've put together a large long position on the Euro via FXE, and I've also got a long position on crude oil (USO) for the ride. These items are, errrr, not much affected by Internet IPOs, and I think it's high time for a nice bounce. I assure you, my ultimate goal is to short the bejesus out of everything in sight once we get a substantial lift in commodities. Until then, I want to try to benefit from some of the "extraordinary measures" that are...
- Forbidden Terms As Of Today Now that, thank God, the Facebook IPO is behind us, effective immediately, new Federal regulations expressly ban the following terms within the fifty United States and its territories: + Any ostensibly clever use of the word "Like" (e.g. "Investors 'Like' This IPO") + Adidas flip-flops + Any reference to Sean Parker + Any reference to the renouncement of U.S. citizenship by Eduardo Saverin + "Harvard dorm" + "Zuck" + "Hoodie" Your compliance is expected.
- RUT and TRAN Break Down (by Springheel Jack) The Russell 2000 and The Transports Index were holding up relatively well in this downtrend, but that ended yesterday. On the RUT I've posted the H&S there a few times as it formed, and the downside target is at 720. On the chart you can see that the support broken yesterday was at the H&S neckline last year: I was talking yesterday about how a definite close well below the lower bollinger band on SPX would be a signal that a short term low might be close. We saw that close yesterday and as SPX approaches the strong support level...
- Charts of Interest for May 18th Charts of interest that I'll be watching on Friday (and next week) to see if bulls maintain control of bonds and U.S. $, and if the selling continues in equities...
the evil speculator - one nefarious trade at a time
- How To Trade Vega At Market Bottoms As I was perusing the comment thread this morning I saw a few musings on how to best get positioned near a potential market bottom. The option strategies that were suggested are definitely reasonable (i.e. regular credit spreads) but IMNSHO non-optimal during times of rapid volatility spikes. In order to set the stage observe that IV [...]
- Not Business As Usual Market dynamics seem to be in the process of shifting and that suspicion was one among several reasons that lead me to suggest to not waste your time looking for a floor here. It seems that policy has served us well in the past few days and thus far there’s really not much to add. [...]
- Targets While equities are pressing everyone’s buttons at once let’s take a quick look at some targets we touched today: USD/CHF – clean entry a few sessions back and I decided to reap my rewards today. Copper – same deal but in the other direction. Also at target – yes, it may overshoot but I’m not in the [...]
- Alea Iacta Est So we crossed the Rubicon and I wanted to spend a little time to review the implications right here and over the longer term. What we know so far is that yesterday the starts were perfectly lined up for a textbook reversal but instead the tape suddenly fell off the plate late in the session. The timing [...]
- The Plot Thickens I really like where things are going and for the first time in a while I’m actually getting excited about equities. It’s been a while and I better mark my calendar! As you know I always try to fade the hype and try to glance below the hood to hopefully see early signs of market [...]
- Paene Alea Iacta Est No, it’s not pig latin – it’s the real thing with a creative twist courtesy of your resident market megalomaniac. Most likely I screwed up the grammar – is there anyone with higher education among you guys? So, this is what we know: We are crossed an important support line – just barely – but [...]
- Bounce Territory Obviously I’m reaching a little with this title as nobody can ever predict what the tape will do. However the purpose of this weekend post is to demonstrate that we have reached a level of retracement that now necessitates a bounce or equities may be heading for a crater near you. I have collected quite [...]
- Valencia! After ten days of being tortured by street musicians offering a very limited repertoire of Vivaldi we left Madrid behind this morning and took the high speed train (AVE) to the magnficient city of Valencia. What can I say – it’s absolutely gorgeous over here – although Madrid as the capital stands on its own [...]
- Gremlins I love times like this. Everyone is running around with their hair and fire screaming about death and destructions. And plenty of blame to go around when things suddenly find a bid. Unfair market manipulations, insider trading, the Fed’s casino, you name it. But only a few selected people know the secret of what has been [...]
- Ping Pong Seems equities are playing ping pong down here at the Maginot line. During the European session the spoos are being killed and as soon as the Bruce Bernanke rolls out of bed and reaches for his nunchaks. Let’s see how long we can hold this up but if we don’t see a decent bounce here soon [...]
thetechnicaltake
- Investor Sentiment: Are We There Yet? Like my whiny children, who after 30 minutes into a 6 hour car drive, investors are asking themselves, “Are we there yet?” After all, the SP500 is down a little over 8% from their highs in the past 3 weeks, and investors want to know if the selling is done and if this is a [...]
- Gold: 4 Reasons to be Bullish In my opinion, this is the best opportunity to buy gold in several years. One, it’s all about the fundamentals. With interest rates low and heading lower (10 year Treasury is under 2%), this is gold positive. (See this article from December, 2011.) Furthermore, with the global economy in recession, interest rates will likely continue [...]
- Charts with Comments Some of the more popular charts across a variety of markets. These are weekly charts. The black and red dots are key pivot points, which represent the best areas of support (buying) and resistance (selling). The general consensus: if you were a bull 3 weeks ago, then you are likely underwater in your positions and [...]
- Gold: Fundamentals Strong, Price Action Ugly Until proven otherwise, central banks will continue to devalue their currencies and intervene in markets because if they didn’t “life as we know it would not exist”. This is the sole basis for understanding the positive fundamentals behind gold. Period. Economic weakness leading to lower interest rates is very gold positive. But sometimes the price [...]
- Market Internals Have Broken Down Figure 1 shows a weekly chart of the S&P Depository Receipts (symbol: SPY). The indicator in the lower panel is constructed from the 9 SP500 sector ETF’s (data hidden). The indicator assesses the relative strength of each sector utilizing a 13 week look back period. As you can see, the indicator is rolling over. Figure [...]
- Dollar Index to Move Higher I last wrote about the Dollar on January 20, 2012 when I stated: “This week, I am going to say that the bull trend in the Dollar is “definitely” over. I am basing this observation on the fact that we are starting to see a clustering of negative divergence price bars. This doesn’t necessarily mean [...]
- Daily Sentiment Report: 5.14.12 The Rydex market timers represent a small segment of the investing world. Nonetheless, their actions remain a useful window into the mindset of investors. The Rydex asset data is sentiment data, and it is based upon real asset flows. It is not an investor opinion poll. By tracking the money, we get to see how [...]
- Investor Sentiment: It’s too Early to “BTFD” In the absence of extreme bearish sentiment (i.e., bull signal) developing, it is unlikely that any upward price move in the major equity indices will last more than a couple of days and it is likely that selling will resume once those prices move towards the recent cyclical highs. Having more bears than bulls at [...]
- BTFD — Then What? A lot of the same analysts, pundits, and bloggers, who were pounding the table only 2 short weeks ago that this market was a “can’t miss”, are now imploring investors to “buy the f—ing dip”. I guess if the market looked so good at its top, then it must look really good after two weeks [...]
- Daily Sentiment Report: 5.11.12 (delay) The data that goes into the Daily Sentiment Report is not yet available tonight. Although this does not happen frequently, this is the second occurrence this week. Once I get the data, I will haveFriday’s report available. If there is new information to pass along, you can be assured that I will communicate this to [...]
Sovereign Speculator
- Natural gas a value and sentiment play Here is a chart of US natural gas (source) going back 25 years. Adjusted for inflation, gas has never been cheaper. Compared to oil and coal on an energy equivalent basis, gas is far cheaper than it has ever been. … Continue reading →
- Economic surprises run in cycles As the financial media obsess over data like this morning’s payroll numbers, it’s interesting to observe trends in the direction and degree of “surprises” about the data. Here is the Citigroup Economic Surprise Index for the US: http://www.bloomberg.com/quote/CESIUSD:IND/chart
- Topping pattern developing, stay tuned We finally have a weakening trend on the daily RSI (see RSI on bottom of chart). This is a prerequisite for anyone considering taking a short position, especially with leverage. It would be typical for some type of quick plunge … Continue reading →
- Retail sales since 1990, normalized for population growth... This chart (courtesy of Mish), shows that contrary to hype, retail has not recovered to anywhere near pre-crash levels, though the consumer culture is still very much alive.
- Ron Paul’s amazing predictions from a 2002 speech About the only thing he got wrong was his prediction that the financial collapse would be inflationary, but of course he called gold correctly (it was about $300 at the time).
- Chanos: Chinese banks weaker than most believe. Good interview on Bloomberg today – follow this link, since Bloomberg has disabled embedding.
- Who says small dogs are no fun? Jump to 1:05 for the action.
- Ron Paul or more of the same From Mish:
- Why not sell German bonds? The German 30 year bond is yielding 2.8%: bloomberg.com The US 30 year bond is yielding the same: Yahoo Finance There is no margin of safety in Germany debt against the strong likelihood that the country will be forced (by … Continue reading →
- Investable wine index down in 2nd half of 2011, as in 2008 Here’s the 10-year chart, created from data provided by liv-ex.com: Wine investing is a silly fad, since very few wines improve beyond a few years (this index does not track the same bottles – it’s components are continuosly updated). Most … Continue reading →
Reigning The Nifty Through Technical Analysis
- S&P500 18th May 2012 Daily ChartExtremely bearish candle closing below the 200 dema.The 1290-1292 area should hold as it is the 38.2% retracement level of the rise from 1075 and the peak made in October 2011.The triangle pattern target is at 1295.If fails then will slide to 1250-1202.follow me on twitter http://twitter.com/#!/lucksrHappy Trading !!Lakshmi Ramachandranwww.vipreetsafetrading.com
- Reigning The Nifty 18th May 2012 Daily ChartHalf Hourly ChartToday's daily candle resembles an invereted hammer candle pattern which is bullish.Yesterday's downward gap closed.Yesterday's low was maintained which has broken the lower low streak of the last 9 trading sessions.Nifty is oversold too which supports short term pullback.However the pullback could be weak as the Nifty could not even attempt to scale the last peak at 4954 thus making a lower peak at 4922.The 5/20 got whipsawed again.Only a move and close above 4958 can get the bulls to stage a pullback. follow me on twitter http://twitter.com/#!/lucksrHappy Trading !!Lakshmi Ramachandranwww.vipreetsafetrading.com
- Reigning The Bank Nifty 18th May 2012 Daily ChartHalf Hourly ChartAn inverted hammer after a hammer maintaining the low of the hammer.Yesterday's downward gap too closed.Both are bullish patterns and with the Bank Nifty oversold on daily charts we may expect the pullback to materialise.However the pullback could be weak as the Bank Nifty could not even sustain the 23.6% retracement level and did not even attempt to scale the last peak at 9361 thus making a lower peak at 9328.The 5/20 got whipsawed again.Only a move and close above 9361 can get the bulls to stage a pullback. follow me on twitter http://twitter.com/#!/lucksrHappy Trading !!Lakshmi Ramachandranwww.vipreetsafetrading.com
- S&P500 17th May 2012 Daily Chart 1295 looks within reach now.The candle formed resembles an Inverted hammer though not to the 'T'.If tomorrows candle makes a higher high a pullback may be in place due to the oversold status.follow me on twitter http://twitter.com/#!/lucksrHappy Trading !!Lakshmi Ramachandranwww.vipreetsafetrading.com
- Reigning The Nifty 17th May 2012 Daily ChartHalf Hourly ChartYesterday's bullish engulfing pattern failed to follow through giving in to bear pressure.The gap down too not being filled increases the bearishness.The daily oscillaotrs are oversold indicating the Nifty may see a pullback soon.The falling wedge breakeout on half hourly charts failed and the Nifty is back below the downtrendline.The gap made between 4943-4882 will prove stiff resistance and till it is closed the trend will continue down.The minor peak at 4976 needs to be taken out decisively for the rally to materialise.Stiff resistance at 4954-4958 exists.With the 20/50 ema giving a 400 point gain to the bears already partial profits on shorts need to be taken in anticipation of a pullback.follow me on twitter http://twitter.com/#!/lucksrHappy Trading !!Lakshmi Ramachandranwww.vipreetsafetrading.com
- Reigning The Bank Nifty 17th May 2012 Daily Chart Half Hourly ChartDaily charts show a hammer pattern formed as per the candlestick theory.This is a bullish pattern with confirmation necessary from the next day's candle with a minimum requirement of maintaining the low of the hammer. Oscillators too oversold on daily supporting the view.On the half hourly charts the 5 and 20 ema have been desperately trying to maintain a buy but have failed and whipsawed several times.The 20 and 50 ema have been in a sell for almost a 1250 point gain to the bears.A pullback is due soon and one needs to book partial profits on shorts.Breaking out of the falling wedge and a close above the latest peak will be the first sign of a sustained pullback.follow me on twitter http://twitter.com/#!/lucksrHappy Trading !!Lakshmi Ramachandranwww.vipreetsafetrading.com
- S&P500 16th May 2012 Daily Chart 1290 is the 38.2% Fibo level as shown on the chart.1292 is the peak made in September and 1295 is the triangle target. Looks like this will be strong support. follow me on twitter http://twitter.com/#!/lucksrHappy Trading !!Lakshmi Ramachandranwww.vipreetsafetrading.com
- Reigning The Nifty 16th May 2012 Daily ChartHalf Hourly ChartA bullish engulfing pattern while the daily oscillaotrs are oversold indicates the Nifty may see a decent rally.The falling wedge on half hourly charts brokeout on the upside but was not too impressive.The minor peak at 4976 and the red trendline of the expanding triangle which has resistance at 4952-5941 for the day needs to be taken out decisively for the rally to materialise.follow me on twitter http://twitter.com/#!/lucksrHappy Trading !!Lakshmi Ramachandranwww.vipreetsafetrading.com
- Reigning The Bank Nifty 16th May 2012 Daily Chart Half Hourly ChartPullback came in but seems just a technical pullback as the lower high lower low sequence of candles continues.Reaction came in before reaching even the 23.6% retracement level of the last leg from 9924.Only a decisive breakout from the falling wedge scaling at least the 61.8% level at 9643 is necessary to get the bears to retreat.follow me on twitter http://twitter.com/#!/lucksrHappy Trading !!Lakshmi Ramachandranwww.vipreetsafetrading.com
- S&P500 15th May 2012 Daily ChartBears enjoying the slide to 1295.Bump ahead at 1314-1300.follow me on twitter http://twitter.com/#!/lucksrHappy Trading !!Lakshmi Ramachandranwww.vipreetsafetrading.com
The Market Oracle
- Gold Bottom is In, But is it September 2008 or October 2008? We began the week by making a ballsy prediction about the precious metals complex. We believed a major bottom could happen this week. In the wake of the European debt crisis and potential "credit events," the precious metals became extremely oversold based on a number of metrics. Technically, we saw that Gold and Silver were nearing the December lows which produced a good rally. The gold stocks were nearing the 50% retracement of their 2008-2011 bull move. The combination of an extreme oversold condition and technical support usually produces bottoms. It wasn't a difficult call but putting it on paper was. With the low in, the question now becomes, is this an interim bottom or will it be the major low we initially expected?
- Elites Deterrence is Dead With Greece potentially on the brink of exit from the Eurozone before year's end, a lot of analysis out there has turned to what the consequences of such an event would be, and, specifically, what punishment Greece would receive from the EU and other international organizations, such as the IMF and perhaps even NATO. The general line of thinking here is that Europe will make such a devastating example out of Greece that no one else will dare to question the status quo setup ever again. While Greece is dragged down the Green Mile in shackles to its final destination, all the other prisoners will watch with an unmistakable sense of dread, and the ceiling lights will ominously flicker as the "juice" is turned on, electro-frying Greece into a crispy black corpse.
- Understanding JPM's Blunder That Cost It $2bn & Counting Simit Patel writes: I feel it is imperative for all market participants to have a general understanding of how JPM's hedge blew up, something that some espouse as a black swan (think LTCM in 1998 & probably the exposing of MFGlobal's corzining of investor capital to cover losses on sour speculative bets). The MSM has been quick to cover this story on JPM's alleged felony with regards to its risk management and how a "hedge turned speculative". Whilst there are bits of true facts and opinions presented, a good chunk of it is quite literally bosom-dung. Zerohedge has put up a meticulously detailed analytical piece on how things went wrong and puts the CIO (chief investment office) decision making tree in soft focus - A must read for folks who want the fresh juice of the entire edifice on a grand scale. I'm merely going to share my analysis which contains alot of the stuff in Zerohedge's piece but also delve deeper into where more explanation is warranted. This isn't child's content, it is deep stuff (think quantitative finance) so take some time to really understand every sentence in this post and in Zerohedge's piece.
- Europe and Eurozone Economy Q1 2012 GDP Why Read: Because in our fiat currency world continuing GDP growth is of huge importance. Featured Article: An article earlier this week reported GDP growth for both the 17 country Eurozone and the 27 country European Union was 0.0% in Q1 2012. The European Union includes the 17 Eurozone countries.
- Is Major Decline in Gold and Silver Stocks Underway? All eyes are on Greece which is heading toward national elections six weeks after the last vote. Many feel that a Greek euro exit would be a chance to cauterize a festering wound and move on. There are also those that feel that Greece could be the first of several dominoes to fall, much larger economies such as Spain, Italy, for example.
- Renewable and Non-renewable Resources Investing, An Argum... While it might not look like it now, the most investable trend over the next 20 years is going to be in the resource sector, the renewable and non-renewable resources, the minerals, ores, fossil fuels and biomass a wealthier and growing global population is increasingly demanding from finite supplies and already strained production capabilities.
- Gold Stock Capitulation Gold stocks have been pummeled mercilessly this month, their price action looking almost apocalyptic. The psychological stress spawned by such extreme weakness is intense, breaking the wills of this sector’s few remaining bulls. This week their selling cascaded into a full-blown capitulation, a mass surrender by weary investors. While exceedingly miserable, these events flag major long-term bottoms.
- This is the Gold Price Bottom In an interview with Louis James, John Hathaway discusses the US's economic outlook and why he's delighted by the current bearish sentiment toward gold. Louis James: Ladies and gentleman, thanks for tuning in. We're at the Casey Research Recovery Reality Check Summit. We're talking with John Hathaway, one of the more successful fund investors – institutional investors – in our precious metals field near and dear to my heart. John, can you give us a quick version of what you talked about here, for those who didn't make it to the conference?
- A Different Approach to Trading Apple Stock Using Options Apple (AAPL) is one of the most actively traded stocks currently. For the trader who trades only stock, there are two major difficulties in executing trades in this stock: 1. It is breathtakingly expensive. 2. It exhibits periods of neck snapping volatility exposing the trader to substantial losses if he gauges the direction wrong and does not act quickly.
- The Five Best Solar Power Stocks Solyndra famously imploded, the price of polysilicon dropped 60%, and a glut of natural gas has made it the "new" alternative energy source. But make no mistake about it: alternative energy stocks are going to be long-term winners-especially for solar power investors.
The Inflationist - Making Money in Stocks, Bonds, Forex, Commodities, Agriculture
- Reshort Amazon We shorted Amazon last 12 months from $140 to $240 with an average of $200 and covered all $200k worth of Amazon shorts at an average of $175 when it dropped ate last year. We were beginning to worry that we got off prematurely and Amazon would take a sharp dive to our target $35-40 [...]
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- Chipotle Check out the hype of a Chipotle Grande Opening: Market Cap : $13.5 bil (compared to McDonalds $99b) Market cap/# stores = $10 million PE: 60 All time high Chipotle vs McDonalds - 5 Year Chart We shorted at about $340 - and looking forward to short more at $500 and $600. Our margin of error is huge - not the [...]
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- Short US Tech Long ASX Relativity: ASX vs NASDAQ vs SPX vs Dow vs Germany DAX
- Realised Profits in Jefferies and Wells Fargo - Buying Go... We have taken profits in both JEF and Wells Fargo.
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- maiakroyal Buys VZ maiakroyal Buys VZ
- The Loonie Has Been Appreciating Lately But Will This Tre... Tom Cleveland from Forex Traders examines the Loonie and its price trends during the first quarter of 2012 below: The Canadian Dollar has appreciated modestly in recent months versus the Greenback. The Loonie has traditionally correlated quite tightly with global oil prices, and, with Iran threatening to cutback shipments, tensions have risen, as has the price [...]
THE STOCK & ETF CORNER
- GLD : A closer look
- GLD : Gold is extremely oversold ! Gold is very very oversold ! Could it be "the bottom" ? It's true that the RSI reading are extremely low: 20 ! We haven't had such a low RSI reading like this since the summer of 2008. It ,however,...
- TLT : Update on US Govt Bonds Here is an update of the last post
S2 Trading
- Tues 5/8/2012. USD coiling. (Update Tue 5/15/12 9:15AM EST)USD has surpassed its previous high which breaks the triangle pattern I was following. Either USD is forming a larger triangle in which case USD/SPX should continue to chop around for a couple months OR USD is about to break out of a 1-2-1-2. Both scenarios are ultimately USD bullish and SPX bearish with the only difference being timing over the next 2-4 months. Both scenarios likely call for a USD breather in the near-term.What appeared to be a 5-wave SPX completion for 1415-->1343 finishing a 3-3-5 from 1422 may have only been 1 of 5. If so, SPX may be completing an EDT 5th today down to 1325-1335. Even if we get a sizable and possibly explosive bounce, the break of 1340 is disconcerting for the bullish scenario calling for another wave to 1410-1450. There is a ton of resistance at 1375-1390 so that will be the test. My work calls for a bad June/July with a probable important high during the week of June 4th +/- 1 week. I am dealing with a personal issue from last week probably through much of June that will not allow me to post as often. Good luck.(Update Wed 5/9/12 12PM EST)Another intraday reversal. This morning, SPX met all the "ideal" criteria for a long trade as mentioned the other day: VIX pierced its upper BB20, SPX fell to the 1340s preferably 1340-1345, TRIN>2 yesterday and USD rose near $80.25 to possible complete wave D of a 5-month sideways triangle. I am now 100% long with an average entry of 1348-1349. In case an EDT allows SPX to go a little lower, I'll use a stop a few pts below 1340. A dream can turn into a nightmare, but, if SPX completed 5 waves down from 1415, we should at least get a 50-62% retracement to 1379-1388+, and my 3-3-5 flat count from 1422 suggests a new high is possible with Dow forming an EDT to a slight new high around the first week of June +/-. If SPX does rally now, there is a lot of price-volume resistance and moving averages near 1380-1390 right near the Fib 50-62% retracement zone, so it's highly likely SPX will pullback from there and that's when we'll find out if the bearish or bullish counts are active. Also, keep in mind max option pain for May 18 OPEX was around 1380-1400 recently. If SPX breaks much below 1340, I'll re-think my position. Good luck.(Update Wed 5/9/12 8:10AM EST)It is possible (even using my old DRSI tool) to count the Tuesday afternoon rally as wave 4 from 1415. So, yesterday's low may be broken, but, in that scenario, w5=w1 at 1345 and I still expect 1340ish to hold. Either way, I am using the 3-3-5 flat count from 1422, so I'm anticipating a retest of 1422 around the week of June 4th +/- 1 week. However, more bearish scenarios are possible especially if 1340 is breached by much. I will likely go from 50% to 100% long at 1340-1345, but I should mention that 4-hour candle resistance was not broken on yesterday's rally so it's a risky trade and not recommended for others. Good luck.(Update Tues 5/8/12 9:50AM EST)SPX did not quite pierce 1357 after the open. There is a possibility that it has completed wave 5 of C or will barely break 1357 to do so. If so, SPX has a much better shot at retesting 1410-1450 while Dow makes a slight new high to complete an EDT. It's hard to say whether a breach of SPX 1357 would lead to a cascade lower to 1340 or 1320, but caution is warranted for bears too because some posd is building up and we have a potentially completed 3-3-5 flat from 1422 near recent support and within 3 trading days of my projected May 3 cycle low. I think a ton of shorts and hedges will cover if SPX rallies much from here, so be careful. I sold half my short position just below 1360 and will sell most or all of the rest on a piercing of 1357. I may even go long if I see the right candle setup. Good luck.P.S. Just sold all shorts at 1353 and went long 50%. I may add to that position in the lower 1340s and sell it if today's close smells funny or SPX rallies near 1380. Obviously, I'm now expecting 1340ish to hold this week with uncertainty as to how high the next rally will go. An ideal SPX long entry would be in the 1340s with USD at 80-80.25 and VIX at its upper BB20 and TRIN>2, but you don't always get "ideal" so I started a position a few pts early. ___________________________ The US Dollar continues to coil. Since the $81.78 high in January, USD has been in a $3 range much like May-Sep 2011. To me, it looks like a sideways triangle. 81.78-->78.10=A, 78.10-->80.74=B, 80.74-->78.60=C with D underway.If I am correct, USD currently needs to complete b and c of D without exceeding $80.74. That should occur over the next few days. Then, USD would fall one more time for 1-3 weeks without falling below $78.10. After that, USD is likely to explode higher. It only took 1 month to rally $6 in Sep 2011 and $5 in Nov 2011.Both previous cases caused SPX to lose more than 10%. Likely, the next big USD rally will be a wave C to finish an ABCXABC (WXY) from May 2011, but there is a possibility it will be the heart of a 1212123!!! That would be scary for the stock market and almost certainly lead to a retest of 2011 lows. However, keep in mind, triangles are not common for wave 2 psychology and curencies tend to move more slowly than stocks, so we should conservatively project one more wave C up, not a wave 3.Regardless, since the 123 and ABC scenarios for USD will look nearly identical for the next 2 months, let's analyze how they would impact SPX assuming an inverse relationship.USD wave DofBofY this week = SPX 1300-1360 with 1360, 1340 and 1320 providing good support and 1340 having the most technical convergenceUSD wave EofBofY late May = SPX lower high to 1380-1410 (a new high is possible but each triangle wave gets smaller so unlikely)USD wave CofY June/July = SPX 10%+ drop to break the 200dSMA and possibly retest the 2011 lowsI gave 5 or 6 reasons why I expected a severe SPX drop in June/July. You can add USD to the list. The last week of May and the first week or two of June appear to be D-Day. The expiration of Operation Twist is also supportive of this scenario, but, of course, that could change if the Fed takes action. So, the June 20 and July 31 FOMC announcements are opportunities for intermediate-term bottoms. Good luck.
- Mon 5/7/2012. 1340ish target? (Update Mon 5/7/12 2:55 PM EST)Critical moment for clarity. Until SPX breaks 1357.38, there are countless possible patterns including sideways and diagonal triangles, so, for selfish technical reasons regardless of ultimate outcome, I'd like to see SPX briefly break 1357 down to the 1340s. Today's consolidation seems like the wave 4 of C I was looking for in which case I might get my wish, but I'm wary of a triangle. Good luck.___________________________ If we assume Friday's large SPX drop was part of a "flat" pattern (1422-->1357=A,1357-->1415=B, 1415-->1340ish?=C), then it is likely that this morning's drop will complete wave 3 of C with price symmetry at 1358 +/- near the previous 2 lows. A shallow 20-30% wave 4 retracement of wave 3 would allow an 8-13pt bounce, so today's gap open may be filled or nearly filled followed by a wave 5 down with w5=w1 in the 1340s and lots of support (described in a recent post) at 1340ish. VIX would also likely test its upper BB20 in this scenario with TRIN > 2 at least intraday.I think the same scenario works whether or not SPX pierces 1357 today. If SPX does manage to hold 1340ish or higher, it is very plausible for SPX to make 1 more run at 1422 to 1410-1450 in May before really rolling over in June/July. Amazingly, discretionary spending is at multi-year highs right now and the remaining bears may jump off the bandwagon if the "sell in May" mantra appears to fail this year with a new high in late May or early June. And, 1-2 more months in a 7-8% range really sets the market up for a HUGE move once that price-volume becomes support/resistance. I think the direction will be down to retest the 2011 lows, but a surge to all-time highs at 1576+ is not out of the question.Here are some of the reasons I favor a HUGE down move in June/July....1. Terry Laundry's bearish T with expected downside acceleration into late June or July2. a potentially huge discretionary spending projected top for the week of June 4th +/-3. the high odds that a presidential election year should end near flat (1257)4. the rolling over of index after index in the last few months and5. the gaming of the political time bomb waiting to explode with debt ceiling breaches and new 2013 taxesGood luck.
- Fri 5/4/2012. Jobs just like GDP. (Update Sat 5/5/12 9AM EST) I just read the OEW blog and Tony is expecting SPX to reach 1313 +/- 7 near the end of May with an imminent bounce this week. I can certainly see that possibility, because the anticipated low on Mon/Tues could merely conclude 1 of C of a flat or it could merely finish A of C/Z of a zigzag if Dow and SPX are on different counts due to the Dow high. That would suggest the near-miss May 18 cycle low on May OPEX will be a runaway low instead of a max pain 1380-1400 close. You usually get one or the other. That would also suggest April 2nd was the significant discretionary top, not the week of June 4th +/-. And, it would fit with seasonality seen the last couple years and it would still keep SPX in the 1320-1420 range with possible short-lived piercings as I suggested would happen for 6+ months.So, the key is going to be how SPX holds up after the next large bounce. I'll probably still position long from 1340-1360 for a ride back to 1380-1400 as I described below, but, since a bearish story can be logically painted, I'll need to stick to stops and take profits quickly until SPX technicals make the bearish scenario unlikely. Good luck and great weekend!________________________ Just like GDP, the jobs numbers were not good but not bad enough to justify a new round of QE. That is not good for stocks. It appears likely that the 3-3-5 flat scenario is in effect. If so, Dow is finishing an irregular flat after making a new high while SPX is finishing a regular flat after falling short of 1422. Thus, today was likely 3 of C and maybe even 4 of C and wave 5 should finish on Monday/Tuesday which is only a couple trading days after my May 3rd +/- cycle low projection. Targets are C=A at 1350, Fib 23.6% of 1159-->1422 at 1360, Fib 23.6% of 1075-->1422 at 1340 and pivot and 100dSMA support at 1340. TRIN>2 supports a bounce soon, but VIX is in no man's land and will probably test its upper BB20 first. All in all, I expect SPX to test 1360ish on Mon/Tues with high odds of reaching 1340ish.After this down leg finishes, I've been expecting a nice May rally. My next cycle low projection is June 4ish but discretionary spending pointed to a significant top the week of April 9th or June 4th +/- a week. Combined with an irregular flat and a narrowly-missed cycle low projection for May 18th, I tend to think SPX will rally for about a week starting Tuesday-ish and bounce around during OPEX week finishing near max pain at 1380-1400 and then make one final spurt into late May. I also tend to think SPX will reach the 1440s, but Terry Laundry's bearish T and the economic downturn would allow for lower highs. Either way, I expect June and probably July to be brutally bearish well below the 200dSMA, although the downturn might not start until mid-June.I still maintain my short position and plan to sell all of it on the anticipated Mon/Tues drop. I may take a quick trade or two at 1340-1360 in either direction, but I will position myself long for a ride back to 1400+ with appropriate candle stops. Good luck.
- Fri 4/27/2012. Yes, I know. (Update Tues 5/1/12 12PM EST)Today's SPX rally supports either (A) a 5th wave rally to the 1440s or higher or (B) a 4th wave 3-3-5 flat needing one more drop to retest/pierce 1357. The latter scenario would allow SPX to fall short of its April high while Dow has already surpassed its own. The short-term technicals are bullish so shorting is dangerous without a 4-candle support break at a minimum. My May 3rd +/- cycle low projection looks unlikely unless the market really tanks over the next week. I mentioned recently that May 18th almost qualified as a cycle low but narrowly missed my standards, so I'll throw out the possibility that SPX plans to bottom between those 2 dates likely (May 7-14ish) allowing for an OPEX max pain bounce back to 1380-1400. That bottom could end the B scenario or just be a lull in the A scenario. Regardless of pattern, I still think SPX will be stuck in the same basic range for 1-2 more months with maybe a short-lived 2% piercing above or below. Good luck._________________________ Yes, I know that stock market analysis and economic analysis are 2 different things. But, I interpret the GDP data to indicate a slowing economy or one that is stabilizing at a weak level which ain't good given the humongous deficit spending undertaken by Congress and the Fed at the expense of our long-term future. However, the data is not weak enough to be a siren call for QE3 either, and that's probably not a good thing for a stock market that has traveled fast since March 2009 and October 2011. Earnings have formed a similar story: better than expectations but generally slowing with warning signs. The US Dollar is also hanging in there.Of course, that has no bearing on short-terms SPX action but it does fit with a bull market top any month now which is good to know if one is investing or swing-trading intermediate trends. My discretionary spending analysis allowed for a significant top around April 9 or June 1 depending on your interpretation of bull or bear market. My cycle analysis called for "a" low around May 3rd and another one around June 4th. Terry Laundry's work suggests late June or early July should be a big top or bottom and breadth is at a short-term decision point now. OEW has been expecting SPX weakness to 1300-1340 followed by new highs into late 2012.So, I've amalgamated all that data into a projection for weakness in April and strength in May with uncertainty in Jun/Jul depending on whether SPX 1320ish holds into early May. The April weakness has panned out but not as much as anticipated...thus far. If the SPX breakout out 1393 becomes support, we'll obviously retest/break the highs. Either way, it's looking more and more likely that SPX 1320 and probably even 1340-1356 will hold. That makes a new high in late May or early June very likely regardless of pattern. We'll know better in a week or so after the April jobs report is released on Friday May 4th.As far as my current personal short trade goes, I will likely lighten up my position on any retest of 1390-1394 near breakeven and set a stop at today's high for the rest with possible reload if 1390 becomes resistance again. Until then, I'll give SPX a little more rope and hope it doesn't hang me more than 1-2%. Good luck.
- Sun 4/22/2012. SPX 1320ish. (Update Thu 4/25/2012 3:55PM EST) I lied about creating a new post. Sue me. But this is too quick a note. I might regret it but I am staying short against my own advice (well, literally by pennies). I willre-evaluate tonight and might take a small loss on the next pullback or ride it out...not sure yet but I think SPX is overbought at the potential conclusion of a dead cat bounce and I think SPX will at least backtest where it is now, so I don't see any reason to sell out just yet.(Update Wed 4/25/2012 2:30PM EST)I'll create a new post next time I add comments. Under the bearish scenario, SPX may be forming an EDT 5ofC from Monday's 1359 low in which case the next touch of 1391-1393 could lead to a collapse OR it may be finishing 1-2-1-2of5ofC in which case SPX will shoot up near 1400. I sure hope the latter does not occur just before the close because that would risk a bullish gap up above 1402 tomorrow and might cause me to reduce my position size. I am going 100% short at 1391-1393 playing the EDT double top pattern or on the next decent bounce. Wish me luck.(Update Wed 4/25/2012 12:45PM EST)No Fed surprise. So, I think the technical setup is still in place which is not to say the outcome is guaranteed. I am personally 70% short again from 1389. From Monday's low at 1359, we could have an ABC completed at 1391 but we might need the 5th wave of C to 1390-1393+. Today's high should either complete a WXY from 1357 or the first 3 legs of a triangle that will bounce around 1360-1390 for another 1-3 days. I will likely go 100% short on the next 5-10pt rally from any level. With the Fed out of the way and a double ZZ possible to 1393+ and a good short entry at 1389 and a potentially large reward to 1320ish, I will raise my stop to a max 1402. If I decide to exit before 1340 or 1402, I'll let you know as soon as possible. Good luck.(Update Wed 4/25/2012 9:15AM EST)Apple surprise. 1384ish would make C=A from Monday's 1359 low. If SPX is in the 3rd leg of a B-wave triangle, it could go as high as 1393. There is an OEW pivot at 1386 and Friday price pivot at 1387, so SPX may test that level. I think it's a good setup to short again, because the reward of 1300-1340 is much greater than the risk of 1393+. There is a double ZZ setup which would allow 1393-1402 but I'd stop out at 1393 and reevaluate afterward, because SPX could possibly be in a bullish wave 3 up at that point. Good luck.(Update Tues 4/24/2012 12PM EST)SPX reached our target zone of 1375-1385. I suspect it has not reached the high for the day but who knows. Throw a dart to pick a corrective pattern. Apple's technicals suggest the fundamentals will be bad, but the persistent negativity could allow for a 1-2 day reprieve if Apple meets or beats the rapidly falling expectations. It's a toss-up to me. So, I'll just stick with my call for another SPX downleg starting in the next couple hours or days from 1375-1385 or possibly just above 1393 down to 1320ish around the projected May 3ish cycle low. With 2+ weeks of price-volume consolidation and many oversold indicators reset, it does seem more and more likely that a break of 1356ish would easily cascade to 1340 and probably the 1320s. Sell the rips. Good luck.(Update Mon 4/23/2012 4PM EST)SPX did not quite overlap 1370 but Dow did overlap Thursday's low. With that overlap in mind, SPX is highly unlikely to be in a wave 3 of 3/C. Either A=1422-->1357 and B=ongoing to 1375-1385 (or less likely 1393+) OR SPX is in a nested 2 of C/3. Both scenarios are likely to rally a little higher prior to Apple earnings and the FOMC announcement with 1375-1385 being the projected target zone. There are only 6 trading days prior to my May 3 +/- cycle low projection, so another 1-2 days of bouncing around would mean a likely final down leg to 1320ish lasting 3-6 days starting Tues/Wed. Good luck.____________________________ (Update Mon 4/23/2012 9AM EST)1% SPX gap down expected to the mid-1360s. Although the gap could run to 1356ish or lower, I see 2 other possibilities that would still allow for chop into the Apple earnings and FOMC announcement.1. SPX could bounce from the 1360s finishing the B-leg of a 2-week triangle B-wave from 13572. SPX could form a couple more 1-2s below 1387Those 2 options could almost look identical and both would allow today's gap to be filled or nearly filled. Although the triangle would allow for overlap along the way, SPX seems unlikely to break 1387 at this point. I'd be surprised if SPX does not break 1365.38 this morning. Good luck.____________________________ I recommend reading Tony's OEW post this weekend. He offers his own evidence for 1320+/- being an important target as I did recently, and he also sees the possibility for one more SPX rally to complete a triple ZZ wedge at 1387-1398 or not. You have probably noticed that SPX has been weaker than Dow for the last couple days likely due to the Apple effect. Regardless of why, SPX is 6.6% above its Oct 2011 high while Dow is 6% above its Oct 2011 high. That gap has narrowed and could get even smaller, so one of my reasons for the importance of SPX 1320 has been greatly diminished, because SPX could reach 1300-1310 without Dow or SPX breaking their respective 2011 highs. But, there is still support at Fib 38%, C=A, a 100pt wave size and the previous 4th wave (2 degrees lower) at 1320ish.I also see some SPX support at 1356ish but agree with Tony that the odds for that holding are extremely small. Dow has been leading and it already broke the equivalent of SPX 1340, so I expect SPX to follow. A lot of traders are watching that 1340 level, so there should be some support there but a break should trigger stops and easily allow SPX to reach the 1320s. That's where I expect real support to kick in for the reasons given above with a possible final scare to 1290-1320 where breakout support and an uptrend line reside.I have a few related things to add.1. The 1422-->1357 downtrend appears to be an ABC. I think it's a severe stretch to count it as 5 waves, and that has been a mistake to do for 3+ years. The subsequent bounce has also been corrective, so a double ZZ down to 1320ish appears likely. But, that also suggests 1422 is likely not the bull market top unless SPX has started a large LDT like it did to start the last bear market in October 2007. But, even that 2007 downtrend appeared to be more impulsive than what we're seeing thus far and it retraced about 80% of the top once finished. So, if SPX falls 4-6 days starting this week, bounces for a few days overlapping 1357 and then falls for another few days, we could get an LDT to 1300-1320 near May 3rd followed by a strong retracement to 1380-1410. If we don't see an LDT, SPX is likely to reach 1422+.2. SPY barely pierced its 2002 low in 2009, and it narrowly missed its 2007 top earlier this month. SPY considers dividends and has better explained SPX tops and bottoms. If SPY were to pierce its 2007 top like it did the 2002 bottom, SPX could reach the next 1440s resistance. SPY has come close enough to allow a bull market top. However, the 3 obvious uptrends since 2009 on SPY's weekly chart all look like they have 5 waves except the current one from SPX 1075, so unless we have an extremely truncated ABCXABC (very unlikely), SPY should make one more high to complete an expanding triangle (unlikely) or 2 more highs to complete a double ZZ (likeliest). But, given that SPY has nearly reached its 2007 high already, the next SPY high or two may not allow SPX to test 1576.3. Terry Laundry is calling for a bearish T with a typical scary drop into late June or early July. And, my cycle work calls for a low on May 3ish and June 4ish with a possible discretionary spending lag high around June 1st.4. The 200dSMA is likely to stay flat for the next month based on SPX being in the 1300s 200 days ago. I expect the 200dSMA to rise from 1273 to 1280ish near the end of May and then rise more quickly in June even if SPX falls because it will be compared to the flash crash. If Terry is correctly expecting damage into late June, then maybe we'll get a flash crash repeat, but, assuming it's a little less dramatic, the 200dSMA should rise near the 2011 high of 1293 in June. So, it's not hard to imagine SPX piercing the 200dSMA and 2011 high and upcoming low of 1320ish in late June or early July. That would signal the likely end of the bull market to most, but Mr. Market could have one more trick up his sleeve to retest the high and complete an ABCXABC from March 2009 or at least retrace much of the initial drop.So, if you combine my work with Tony's and Terry's, I can paint a logical scenario where SPX...1) bottoms in the next 2 weeks +/- in the 1320s or maybe a little lower to 1290-1320 finishing either a double ZZ or LDT from 14222) bounces into late May possibly stopping in the 1380-1400 zone but likely just pausing there on the way to 1420-1450 completing ABCXA from 667 or maybe an expanding triangle3) breaks the April/May low in June/July by piercing the 200dSMA and 2011 high at 1250-12904) retraces much of the previous drop From there, it all depends on whether the bounces made lower highs or higher highs to set the pattern for late 2012. Higher highs could support a rally through the election and possibly into early 2012, whereas lower highs could lead to another major Q4 low. Regardless, as I've been saying a lot in recent weeks, I expect SPX to hang around 1320-1420 with brief piercings into June and possibly longer so I think there is lots of money to be made building reversal positions at the extremes of that range and then taking partial profits on each multi-percent move in your favor until the next extreme is approached.For now, I expect SPX to hold up reasonably well into the Apple earnings and FOMC meeting on Wed possibly exceeding 1393 at which point it is likely to accelerate downward for a week or so. But, there is a bit of weekend risk with the French elections and with OPEX having passed, so let's see what happens Monday morning but the main thing is to keep the big picture above in mind and not to get too caught up in the intraday squiggles. If 1402 is surpassed this week, the scenario will probably change but the trend is down unless that happens. Good luck.
- Fri 4/20/2012. Explosive setup. SPX did manage to open near OPEX max option pain of 1383-1393 and stay there most of the day. Remember that because I expect something similar next month. Max pain for May is currently around 1390 but will go lower if SPX drops into May 3ish as I have projected.As SPX has coiled for the last couple weeks, the importance of Apple earnings on Tuesday and the FOMC announcement on Wednesday grows. Based on my hourly and daily technicals, one should sell the rips. However, the intraday technicals would support a temporary bounce, because SPX formed a wedge down today narrowly holding its 2-4 channel with posd, VIX closed right on top of its 20dSMA and Apple made a slightly lower low with posd possibly completing an ABC or 121. The French elections are a slight wildcard this Sunday but most people know who the 2 winners will be, so it's probably priced in. SPX technicals could support a wave 3/C down on Monday, but I lean towards another bounce to 1387+ and more choppiness through Tuesday until Apple and the FOMC help set the next direction (probably down into May 3ish). Good luck and stupendous weekend!
- Wed 4/18/2012. Slow slide. (Update Thu 4/19/2012 3PM EST)Well, my original 1370ish target for today was met but I was shaken off the ride at 1385 for a small profit after SPX pierced 1390. Dangit! Anyway, I do believe there is some support at 1370ish, 1356ish, 1340ish etc. My technicals do not suggest SPX is too oversold to go much lower and they are still bearish for the next couple weeks. If SPX bounces from 1370, there are 3 things supporting a rally to 1380ish+: (1) the 50dSMA at 1379, (2) a 50-62% retracement of 1390.46 at 1380-1381 and (3) OPEX max pain near the 1383-1393 range and the historical bullish bias of April OPEX. There is also an OEW pivot at 1372 and 1386. None of those are a guarantee of anything and neither is consolidation into the Wednesday FOMC meeting. Just the facts, m'am. I wouldn't rule out an overlap of 1383 as part of an LDT wedge down in time for a Fed headfake, and I wouldn't rule out a more complex zigzag back up to 1393+, but the count is less important than the overall technical evidence supporting more downside for 2 weeks. So far, this week's historical odds have played out with an overall bullish bias having strength on tax day and weakness for 1-2 days after. Now, let's see if we see a bullish April OPEX Friday as the odds favor. I've been getting a little too caught up in the intraday wiggles the last few days which has mostly worked because I've been mostly in sync with the market, but I've also learned that's a quick way to get out of sync and miss the forest for the trees, so I've got to temper myself a little bit. I'm done for today and swamped with work tomorrow. Good luck.(Update Thu 4/19/2012 10:30AM EST)From the Tuesday 1393 high, it appears that we have an ABC down into the Wednesday open followed by a complex sideways ABC all day Thursday followed by an ABC down until about 10:15 this morning. This increases the odds that SPX is heading higher to 1393-1402. The theme is still for SPX to end up near the max option pain range of 1383-1393 by tomorrow morning and hold up reasonably well into the FOMC announcement next Wednesday. I've taken small profits on the last couple drops but I will completely exit temporarily on the next pullback after 1390 four-hour candle resistance is breached and wait for another short opportunity (or potentially a long opportunity if 1402 is exceeded). Good luck.P.S. Out of my shorts at 1385 but may reload if 1379 is breached or SPX reaches 1393+.P.P.S. 12:30PM. Wild 1% range day so far. I don't recommend this, but I'm trying a half-size long position at 1380 only because I can place a tight stop at 1378/1379 and expect a rally to 1393+ and have 4 hours to exit if I don't like the close into overnight. I'll likely flip back to short if 1379 is breached but maybe after a bounce since I think 1383-1393 is the target for Friday morning.P.P.P.S. Out again. Got too cute but no harm done. I'm not sure of the count or pattern (wedge to 1393+ still possible but a triangle, LDT, multi-zz and endless other possibilities exist so no edge there) and I still expect a small bounce into OPEX so I will just step aside until at least tomorrow. I probably won't go long again until sometime after SPX reaches the 1320s, approaches May 3ish or exceeds 1402. Peace.______________________________ The bottom line is that "sell the rips" is still in command due to the technical setup, but OPEX max pain, the upcoming FOMC meeting, the anticipated Spanish auctions and trained dip buyers are holding the market up. I think the setup favors a trip to SPX 1370ish followed by a bounce near 1380-1385 for OPEX followed by another stair step lower into the FOMC announcement followed by a fast and hard drop into the last week of April or first week of May. After that, we can judge whether SPX has held 1320ish (equivalent to Dow's 2011 highs) and whether or not it has formed an ABC or 123. In either case, I expect a sizable May rally whether it begins May 3ish or May 18ish but the 123 pattern would obviously lead to a miserable June/July. Let's see what happens. I'm short again with a cost basis of 1391, stop at 1402 and initial targets of 1371ish and 1356ish. There is heightened weekend risk with OPEX finishing, Spain in trouble and few people expecting a large downside surprise especially if the Spanish auction does not go well, although odds still favor nothing happening prior to the FOMC meeting. Good luck.
- Sun 4/15/2012. Back to basics. (Update Tues 4/17/2012 12:30PM EST)Apple has now retraced Fib 38%+ of its April 10 high. Its sharp drop on Monday started a few pts higher just beyond a 50% retracement, so maybe Apple will test that especially since the rebound is so much shorter in time. But, SPX has now reached the 1390s and its own 50-62% Fib retracement zone with strong resistance at 1398-1400 and USD is not giving up the ghost which defies the typical inverse correlation, so the SPX rally should be near an end if its bearish downtrend is not over. Tax day is historically bull friendly but the day or two after tax day are supposedly not and this is OPEX week, so SPX should pull back 10+pts soon and then bounce around settling near max option pain which is supposedly at 1383-1393. And, I wouldn't expect the next strong wave 3 down (or up) until the FOMC announcement. That is why I am building a short position in the 1390s but will take partial profits frequently on any 8-12pt drops for the next week if I am so fortunate. I will likely cut bait at 1401.61.(Update Tues 4/17/2012 10AM EST)A triangle 3rd leg near 1385 or a double ZZ in the 1390s appears to be most likely. A triangle and 30-50% retracement fits a B wave better. A double ZZ and 50%+ retracement fits a wave 2 better and would match Dow. So, if you are leaning towards 1422 being the bull market top, you should probably hope for the double ZZ to the 1390s. I lean that way slightly because Apple looks like it may have completed a wave structure on Monday and needs a more sizable bounce and the triangle count would require a breakdown well before the FOMC announcement next Wednesday. But either are possible, so I will build a new short position in the 1390s or on a 4-hour candle breakdown if that comes first. If 1422-->1357 proves to be a wave 1 instead of A, then the remaining waves would typically break SPX 1320 whereas C=A would not. So, we have another technical tool that says 1320ish is important for projecting the remainder of the year in addition to the reasons I gave the other day. Good luck.(Update Mon 4/16/2012 5:30PM EST)Something smells funny. ISEE closed very low at 65. TRIN was still above 1. SPX closed right on its wave 2-4 channel line (parallel to 1267/1422). VIX closed just below its upper BB20. The SPX cycle low possibly occurred last Tuesday but can still occur Tues/Wed. Apple may have washed out to complete a wave 3/C or 5 into the close. Dow came within pennies of breaking Thursday's high. OPEX week and tax day hve a bullish bias. USD closed just above its 20/50dSMA. SPX is kinda setup to either dive or rally hard, but something tells me all the forces are going to cross each other out and give us a lot of chop at 1350-1390 for a few more days.(Update Mon 4/16/2012 3PM EST)I've had a pretty good feel for the market in recent weeks. Believe me, I know it comes and goes, and I'm still learning that part of good trading is knowing when you are in sync and when you're not. The intraday count for the last couple days is difficult as many corrections are and Dow may still need to break yesterday's high (it fell pennies short), but most of the evidence supports selling the rallies including Apple's technicals.One new thing I want to note is the US Dollar. The USD coiled in a $4 range for 6 months last year culminating in an $8 rally that crushed SPX to 1075 in October 2011. Well, it has coiled again in a $4 range for the last 5+ months and given that it is in the middle of the coil, it will likely end up being 6 months before it breaks out like 2011. It sure looks to me like USD will enter a wave 3 up after a series of 1-2s for the last year OR maybe just a C wave as part of a double ZZ. In either case, I favor the USD breaking upward. If it's a wave C with marginal new highs, SPX could hold up at 1290-1320 as I've projected or possibly a little lower to the 200dSMA, but if USD is starting a wave 3 up, then the spending cycle lag will almost certainly have topped at April 2nd (estimated week of April 9 +/-) instead of the alternate projection of June 1 and my cycle lows at May 3ish and June 4ish would likely turn out to be lower lows as Terry Laundry is suggesting. USD is flirting with its 10/20/50dSMAs today, so whether they become support or resistance could be a huge clue. Maybe we get choppiness through OPEX and the Fed meeting which would allow SPX to hang around 1340-1390, but I'd expect a strong USD reaction by the middle of next week. Good luck.One other small thing. I saw a chart the other day that showed every presidential cycle since 1960, and I don't remember a single one having all 4 years positive. And, the 4th year was usually pretty flat. So, the presidential cycle, business/economic cycle, inflation cycle, breadth cycle, annual seasonal cycle and the world's can-kicked financial problems may be converging in which case SPX will almost certainly test/break 1260ish and its 200dSMA by end of year if not summer. That might be helpful to keep in mind for multi-week swing trading as SPX reaches extremes.(Update Mon 4/16/2012 10AM EST)SPX reached 1378-1388, but Apple dragged everything down. AAPL looks like it is in a wave 3 down but may be finishing that now. If Apple bounces in a wave 4, SPX should retrace/retest its morning high before collapsing when Apple finishes one or two 5th waves down. That would fit perfectly with our scenario for a 3-6 day SPX bounce from 1356ish or possibly 1340ish starting Tuesday. Not sure about the count but sell the rallies. Good luck.___________________________ SPX is below its 5/10/20/50dSMA with a 7% gap down to the 200dSMA.The 5/10/20dSMA are all trending down with the 50dSMA beginning to flatten.The 3-day candle support at 1391 was broken forming a daily downtrend with daily resistance now at 1401.60 just above a large gap down.Hourly candle support was broken at 1383/1385.The uptrend line from 1075 has been pierced.All of those indicators are in slightly worse shape for the Dow and its early March low has been broken with the October high not far below.That paints a short-term bearish picture, so rallies should be sold. However, TRIN and VIX are at levels that would support an oversold bounce and April OPEX is very bullish-biased with tax day good and a day or 2 after bad. Based on history, I'd expect either (A) a sharp drop on Monday probably into Tuesday morning OR (B) a 1-day sideways-to-up day before making a weaker drop with marginal new low. Scenario A is more likely to reach 1340ish but, in either case, I expect 1340ish or 1356ish to hold and for a sizable bounce to ensue back to 1378-1408. Scenario B could see a Monday rally back to 1378-1388 but it need not go that high, and Scenario B would also fit the tax/OPEX week history better. That might sound a bit wishy-washy but the bottom-line is that I expect SPX to make another low this week without filling the 1398 gap and with a rally into end of week. I am wrong if SPX breaks 1401.60 this week.With my jaded eye conjuring up ways for Mr. Market to suck the most money out of people's wallets in line with technical indicators, I could see the following count happening:1422-->1357=A1357-->1388=B1388-->1370 (or a little lower)=1st abc wave of EDT C1370+/--->1379+ to run stops-->1360s-->1370+ to overlap-->1350s to form marginal new low with posd=completion of EDT C1350s-->1380s around OPEX since max SPY option pain is estimated to be 1383-1393 and the week would end positive.Overall, I still think there are a lot of dip-buyers and believers in the economic turnaround, so SPX is unlikely to go down without a fight. But, SPX has had a long strong run, Fed monetary support is waning, signs of economic trouble are creeping in and the short-term technical indicators are bearish. Also, my cycle work was expecting a low around last Thursday +/- (bookend lows 2-3 days on either side of that day in the 1350s would be perfect) and is expecting another low on May 3ish. The projected low I mentioned for May 18ish is questionable because the weakness of the recent SPX rallies in RSI was not quite enough to trigger another official cycle. June 4ish is now the next official projected low, but my discretionary spending lag indicator calls for potentially significant tops on April 12ish (1422 on April 2nd is close) and June 1ish. So, the June 4ish low could be a 1-week sharp drop or just a weak final wave 4 low in the final SPX rally into early June. To me, all that stuff equals a choppy downtrend for at least 2 more weeks with a likely strong May uptrend culminating in another important top in late May or early-to-mid June.Intriguingly, in terms of Elliott Wave counts, Tony's OEW expectation is for a wave 4 down to the 1313-1327 area followed by a new 5of3 high to possibly 1500ish. That matches well with my technical work in terms of timing and direction but I'm not so sure about the price high. In a recent post, I argued that Dow technicals may actually be the leading factor. If SPX breaks below 1320, it will likely stay above its critical 1293 support, but there is a good chance that Dow will will break its Oct/Nov 2011 highs causing wave overlap not allowed in EW except for EDTs. I like that scenario if for no other reason than I tend to believe Mr. Market likes to screw and confuse the most people and creating different SPX/Dow setups would do it. So, if SPX breaks below 1320, the next high is much likelier to be a lower high OR merely a slightly higher high (maybe 1440-1450) with Dow forming an EDT. Likewise, if SPX holds above 1320 with Dow not overlapping its 2011 highs, the possibilities for a much stronger rally go up and Tony's count calling for an ultimate high near 1576 in late 2012 or early 2013 would look pretty good. The various technicals I see favoring an intermediate-term bottom very soon on gold and miners are indicative of another inflationary surge coming our way.If you are still reading this, you are a trooper and you can tell that the SPX1320ish/Dow12284 level will be an important factor in my forecast for the remainder of the year. The FOMC meeting on April 24-25 is likely to cause a volatile multi-day inflection point. I think there are a lot of people still holding out hope that the Fed will at least talk about further easing at a minimum, but recent inflation figures and continued debt worries have them in a bit of a bind. My suspicion is that the market will feign disappointment in the Fed meeting causing the final low into April30-May4 but the Fed will leave the door open enough to QE3 and economic stats will be not be bad enough to make people worry about recession but will be bad enough to favor more Fed action, so there could be a lot of optimism heading into the June 19-20 Fed meeting. I don't think anybody will expect major Fed action on Jul 31 or in Sep/Oct as the elections heat up, so the June meeting is the one that could serve up real fireworks. The 1st half of June could prove to be the final bull market top (whether its a higher high or lower high) if the Fed disappoints as I expect or it could be just a bump in the road to test SPX 1576 if the Fed acts strongly especially if it is in coordination with the EU.Essentially, until June/Jul as I've stated before, I tend to think SPX will largely stay in a 6-8 month 100-pt (7-8%) range at 1320-1420 with possible piercings for a few days. That would frustrate a lot of people and setup SPX for either a huge multi-month rally to complete the bull market in late 2012 or early 2013 or a huge confirmation of a new bear market with a possible brief reprieve around the election followed by a disappointing Christmas spending season as real estate, foreclosures, bankruptcies, margins, global growth and financials all take a turn for the worse. I expect the latter even though I'm not sure whether the June high will be lower or higher than 1422, and I'm open-minded to a multi-month breakout to SPX 1576 depending on what happens at SPX 1320ish in the next couple weeks and at the FOMC meeting in June. Good luck.
- Fri 4/13/2012. Dow in charge? (Update Fri 4/13/2012 3:50PM EST)Lots of chop. The only thing I feel comfortable saying is that the 1357-->1388 rally looks corrective and the drop this morning looks impulsive followed by a corrective rally. That continues to favor bearish action, but corrections can be complex, so, while a Monday morning gap down would fit my pattern well, another rally to 1378-1388 is not out of the question before we get the next leg down to sub-1357. SPX is only 1% from 1357 now but TRIN and VIX and 1370ish support could allow a decent bounce if 1370 holds into the close. Tough call. Next week is supposedly a very good week historically after April 15th taxes and more so with OPEX, so any early week weakness is likely to be bought. Good luck and great weekend!(Update Fri 4/13/2012 10:35AM EST)Wedge/channel broken at 1376. Apple broke down too. An SPX double ZZ is still technically possible back to 1388+, but my sub-1357 5th wave scenario into Mon/Tues is looking very good. I expect a decent 8-10pt bounce imminently but the trend is still down so I wouldn't get caught long until SPX makes a new low or holds 1400.(Update Fri 4/13/2012 10AM EST)If SPX holds around 1377ish and then rallies back to 1387+, we'd have what looks like a wedge/LDT up from 1357. That would increase the odds for continuation higher as part of an LDT wave A to 1390ish, a small wave B to 1367-1377 and then a wave C to 1390-1400+. That would make Tuesday the cycle low that was projected for Thursday +/- and allow the rally/consolidation to stretch near OPEX Friday before dropping to 1340 and probably sub-1320 approaching May 3rd. However, if SPX breaks below the lower wedge/channel line at 1375ish today, that scenario becomes much less likely and we'd have 3 waves up from 1357 with wave overlap back down keeping my bearish expectation for a 5th wave down to sub-1357 and maybe 1340ish by Mon/Tues. Although SPX did not reach 1393 to break my preferred count, it got close so I give my 5th wave scenario only a 60/40 chance over the ABC up continuing for another week. Let's see what happens at 1375/1387. Good luck.___________________________ I mentioned a couple weeks ago how the Dow technicals seemed to be driving things more than SPX. Dow tested/pierced its 20dSMA about 5 times during the 3-month rally while SPX only came close a couple times. Dow double-bottomed off its 50dSMA in December before rallying 12%. Both Dow and SPX have been backtesting their 2011 bull market highs.If Dow continues to provide better techncial indications, things look bearish unless Dow can continue rallying for the next few days past SPX-equivalent 1400. It should be noted that Dow severely broke its 50dSMA on Tuesday and has since bounced right back to it for a possible backtest. Also, Dow broke its March low (SPX equivalent 1340) and its uptrend line from October 2011 unlike SPX. If SPX and Dow fall a similar percentage, Dow would break its Oct-Dec 2011 wave highs when SPX breaks below 1320ish.SPX 1340 is important but the equivalent was already broken in Dow. SPX 1293 is also important but Dow would break its equivalent level long before SPX. So, within my target range of 1290-1320 for SPX in May, 1320ish is gaining in significance. SPX could find support at 1300-1320 not breaking its 1293 high from 2011 or coming anywhere close to its 200dSMA, while Dow could pierce its 2011 high and tests its 200dSMA. That would leave a little something for bulls and bears to hang onto...perfect for a big bounce and sentiment confusion. But, if the Dow continues to lead technically, you'd have to lean towards the bearish case and probably a lower high around the spending-projected June 1+/- top.Apple is behaving weakly but still looks like it may be completing a wedge/LDT from its high, so a sharp rebound (LDT scenario) or sharp drop (1-2-1-2 scenario) seems imminent. In addition to my typical SPX analysis, I will be looking at Apple and Dow for clues, and I'd also expect a dollar bounce for what could be the heart of a wave 3 starting within days. Good luck.
- Thu 4/12/2012. Retest 1357? SPX has now bounced in ABC fashion to my target of 1380+/- and the previous degree wave 4 target zone at 1378-1387 where other resistance resides. I think SPX will pull back shortly. However, some people are counting a completed 5 waves for 1422-->1357 and, even if it is only 3 waves as I've proposed, that could be the end of the first zigzag rather than needing a 4-5 to finish. So, we are left with the possibility that SPX is retracing 1422 now.If we assume, SPX still needs a 5th wave down, then SPX should top in the 1378-1387 zone and retest 1357 at a minimum with 1340ish possible. If we assume SPX is retracing 1422 as part of a wave X or wave 2, it should reach 1380-1400 which approximates a 38-62% Fib range and then retest 1357 at a minimum and likely reach 1340 or even 1290-1320 as I've projected. So, I think building a short position in the 1380s has a very good risk/reward.If SPX surpasses 1400 particularly closing above 1398, it will have filled a gap, broken a psychological level and likely allowed Apple and other high-flyers to escape the parabolic collapse temporarily. And, there is the possiblity that a 1422-->1357 ABC is all we get or is part of a flat pattern. And, we could even be forming an ugly expanding ending triangle to complete at 1420-1430. So, 1400ish is a good spot to get out of any short position temporarily. My cycle work projected a low today +/- a few days, so it is unclear whether the low was Tuesday (conditions were certainly oversold enough compared to recent months) or may still lie ahead on Fri/Mon/Tues. However, since I don't expect another low until May 3ish and since next week is OPEX, I am still leaning towards one more low in the next couple days whether that completes a 5th wave or double ZZ before SPX rallies for a week and rolls over again. If SPX can get below 1357 again, the odds increase that it will not retest 1400-1422 until maybe the bounce from May 3 or May 18. I'll be watching Apple for clues too since its parabola will collapse very soon. Good luck.
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- Getting Technical: Weekend Update May 18, 2012 Serge Perreault Here's the latest weekend update from Serge Perreault, a Chartered Accountant and market technician located near Montreal, Canada. Serge has been following the U.S. market in a series of weekly charts. Here is his update on the S&P 500.More...
- Risk Ratio Indicates More Correction Coming May 18, 2012 Lance Roberts The current market correction should not come as a surprise to any one. There has been consistent and substantial evidence that the rally that began last October was unsustainable. The question now is whether the current correction is over ... or is there more to come? It fascinates me to watch the media during market rallies as the bullish sentiment takes hold. Investors are never told that the risks of investing are rising and some caution should be taken. It is "always" a time to buy and never a time to sell.More...
- S&P 500 Snapshot: Friday Selloff Ends the Worst Week of 2012 May 18, 2012 Doug Short Facebook mania notwithstanding, the S&P 500 posted its sixth consecutive decline, the longest losing streak of 2012, to close the day below 1,300 -- a loss of 0.74% for the day and 4.30% for the week, which is its worst weekly performance since last November. And speaking of weeks, the current string of three weekly declines is the longest since the series of four that began in late July of last year. Year-to-date the index is up 2.99%, which is 8.73% off its interim closing high set on April 2nd (which was a YTD gain of 12.84%). More...
- ECRI Recession Call Update: WLI Declines, But Growth Impr... May 18, 2012 Doug Short The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) is now at 0.4 as reported in today's public release of the data through May 11, up from the previous week's revised 0.0. However, the underlying WLI dropped from 125.4 to 124.5 (see the fifth chart below). Today's data release to the general public is rather anticlimactic following Lakshman Achuthan repeated reaffirmation of ECRI's recession call in live interviews around the major business networks on May 9th.More...
- Is This the Start of 'The Big One'? May 18, 2012 John F. Carlucci As regular readers of my weekly update know, the OEXA200R (the percentage of S&P 100 stocks above their 200 DMA) is a valuable metric for accurately assessing the state of the market in order to make profitable trading decisions. That is, whether we are in a bull, a bear or transitioning from one to the other, as well as market volatility and risk within each of those situations.More...
- Fed Intervention and the Market: Looking Good, Ben! May 17, 2012 Doug Short Note from dshort: I've updated the charts below in commemoration of today's historic closing low for the 10-year Treasury yield and the all-time 30-year fixed rate mortgage low. We still have about six weeks of "Twist" left, so it's a bit too soon to make a definitive pronouncement on the success of this strategy for lowering interest rates. Changes can be sudden in this global atmosphere of economic unrest, and the decline in markets around the world is a bit nervous-making. But at this point, the Fed seems to be achieving its "Twist" goal.More...
- Treasuries Update: 10-Year Yield at Historic Closing Low May 17, 2012 Doug Short Note from dshort: With the fifth consecutive daily decline for the Dow and S&P 500, yields have likewise tumbled. The yield on the 10-year note hit an interim high of 2.39 on March 19. Today it closed at 1.70, its historic closing low. The 30-year fixed rate mortgage likewise hit its all-time low, according to today's Freddie Mac weekly survey.More...
- The Collapse of the Athens Index May 17, 2012 Doug Short Of the many grim facts about the situation in Greece, here is a snapshot of one of the ugliest. The Athens Stock Exchange General Index is a capitalization-weighted index of Greek stocks listed on the Athens Stock Exchange. As of today's close, the index has fallen 89.94% from its all-time high at the end of October in 2007. To put this catastrophe in the larger historical context, let's examine an overlay of the Dow Crash of 1929 and the Crash of the Athens Index.More...
- Profit Margin Squeeze: New Update May 17, 2012 Doug Short Amid the disappointing news today from both the Conference Board's Leading Economic Index and the Philly Fed's Business Outlook Survey, I found a bit of encouragement in the latter. The two charts below offer clues for evaluating the risk of profit margin squeeze in the current economy. One is the ratio of crude to finished goods in the Producer Price Index. The other is an indicator constructed from two data series in the Philadelphia Fed's Business Outlook Survey through today's release.More...
Kimble Charting Solutions Blog
- Nasdaq 100 “Cracks” below support as Apple remains at... CLICK ON CHART TO ENLARGE Apple remains below its 30-year resistance line and the Nasdaq 100 has been weak of late as it cracks below a bearing rising wedge support, after hitting key resistance. The Power of the Pattern reflected back in February that the top of the channel and its 50% Fib retracement level [...]
- Joe Friday….Dollar hitting resistance line as bullish s... CLICK ON CHART TO ENLARGE Bullish Dollar sentiment is reaching levels seldom seen in the past four years as the Dollar is attempting to break resistance line (1) for the 4th time since late 2010.
- Key metals (Gold/Silver) break support and now add Copper... CLICK ON CHART TO ENLARGE Gold & Silver pushed below support recently and now Copper is working on a similar breakdown. In the past Copper weakness was a message of a global slowdown and a sign that "Deflation" was taking place. The Power of the Pattern suggested in the chart below (published 5 weeks ago) [...]
JIM ROGERS BLOG
- Jim Rogers Fox Business News Interview - 14 May 2012 May 14, 2012 Rogers Holdings Chairman Jim Rogers on how investors can gain from the coming boom in farming and the agriculture industry."You should become a farmer , learn how to drive a tractor , because Farming is going to be one of the greatest industries of the next 20 to 30 years , Finances... This is only an excerpt please visit http://jimrogers1.blogspot.com for the full story , Thank You
- The Market Turmoil will Escalate in the Fall Jim Rogers : "I thought this would start in the fall - this is an election year in America. They will print money and spend money before the elections; a lot of people are spending money to keep the economy going," - Jim Rogers told CNBC this Friday morning in Singapore. Jim Rogers... This is only an excerpt please visit http://jimrogers1.blogspot.com for the full story , Thank You
- Jim Rogers no longer long the Euro Jim Rogers : "I hope the euro survives, I think it will survive in some shape and form," - Jim Rogers told CNBC this Friday morning in Singapore. Jim Rogers started trading the stock market with $600 in 1968.In 1973 he formed the Quantum Fund with the legendary investor George... This is only an excerpt please visit http://jimrogers1.blogspot.com for the full story , Thank You
- Jim Rogers : More Debt & Currency Turmoil to come Jim Rogers : "The world's got serious problems facing it, I don't particularly like saying it, but it's true," "Unfortunately there will be more debt and currency turmoil to come." - Jim Rogers told CNBC this Friday morning in Singapore. Jim Rogers started trading the stock market with $600 in... This is only an excerpt please visit http://jimrogers1.blogspot.com for the full story , Thank You
- Jim Rogers : 2013 to be a huge mess. 2014 will be a real ... Jim Rogers : "...I don't own American equities.I have shorts in the United States , I a have mainly short stocks around the world. because I don't expect the world economy to be very good in the next couple of years. in fact, 2013 is probably going to be a huge mess. 2014 will be a real mess." "... This is only an excerpt please visit http://jimrogers1.blogspot.com for the full story , Thank You
- Jim Rogers on How to Invest in Farming and Agriculture Jim Rogers : " Maria, I have told you before, become a farmer. stop all this financial stuff. become a farmer. drive a tractor. get a tract." " You can become a farmer , you can own farmland and lease it out. you can sell it , you can speculate , you can do whatever you want . there are many... This is only an excerpt please visit http://jimrogers1.blogspot.com for the full story , Thank You
- Jim Rogers on JP Morgan 2 bln Losses Jim Rogers : I know there are a lot of people are having to liquidate positions because now the banking examiners are all over the banks , especially JP Morgan so they are trying to take off as many positions as they can so that the regulators don't put them out of business. " " of course there... This is only an excerpt please visit http://jimrogers1.blogspot.com for the full story , Thank You
- Jim Rogers : stop all this Financial stuff , and become a... Jim Rogers : " Maria, I have told you before, become a farmer. stop all this financial stuff. become a farmer. drive a tractor. get a tract." " yes. you can become a farmer , you can own farmland and lease it out. you can sell it , you can speculate , you can do whatever you want . there are... This is only an excerpt please visit http://jimrogers1.blogspot.com for the full story , Thank You
- Jim Rogers : I own more Dollars than I have owned in years Jim Rogers : "I still own the dollar. I own more dollars than I have owned in years " " It is a horrible currency to own. but I own it. because everybody hates it. And in times of turmoil such in Europe, everybody flees into the dollar. it is the wrong thing to do. It's not a safe haven. but... This is only an excerpt please visit http://jimrogers1.blogspot.com for the full story , Thank You
- Jim Rogers Shorting JPMorgan Jim Rogers : “We — the financial types — are getting blamed for all the world’s problems," "There are going to be more regulations, more controls, more taxes." “I know that a lot of people are having to liquidate positions because now the banks’ examiners are all over these banks especially... This is only an excerpt please visit http://jimrogers1.blogspot.com for the full story , Thank You
Marc Faber Blog
- Marc Faber: Looming Global Catastrophe? Dr. Doom Marc Faber , discusses the future of the euro and whether a global catastrophe is on the... [[ This is a content summary only. Visit my Blog for full story, http://www.marcfaberchannel.blogspot.com >>>>]]
- Outlook for the Eurozone and Greece Marc Faber : First of all, this is a political sensation by the European leaders. I think 3-5 years... [[ This is a content summary only. Visit my Blog for full story, http://www.marcfaberchannel.blogspot.com >>>>]]
- China Slowdown Causing Global Market Slowdown Marc Faber : Well, why industrial commodities are weak has nothing to do with Greece. Greece is an... [[ This is a content summary only. Visit my Blog for full story, http://www.marcfaberchannel.blogspot.com >>>>]]
- Outlook for The Indian Market Marc Faber : We have to distinguish between the economy and the performance of financial markets.... [[ This is a content summary only. Visit my Blog for full story, http://www.marcfaberchannel.blogspot.com >>>>]]
- The realistic projection of the GDP Growth of China Marc Faber : I wouldn’t rely too much on statistics published by any government including the... [[ This is a content summary only. Visit my Blog for full story, http://www.marcfaberchannel.blogspot.com >>>>]]
- Why Industrial Commodities are Weak Marc Faber : Well, why industrial commodities are weak has nothing to do with Greece. Greece is an... [[ This is a content summary only. Visit my Blog for full story, http://www.marcfaberchannel.blogspot.com >>>>]]
- Markets to Rally if Greece Exits the Eurozone Marc Faber : "I think it is a discounting mechanism the markets has been going down because of... [[ This is a content summary only. Visit my Blog for full story, http://www.marcfaberchannel.blogspot.com >>>>]]
- Germany to stay alone in the Eurozone Marc Faber : well regardless whether Greece stays in the Eurozone or exit huge losses must be taken... [[ This is a content summary only. Visit my Blog for full story, http://www.marcfaberchannel.blogspot.com >>>>]]
- Greece : The Endgame Marc Faber : Yes in the case of Greece we are close to the end game , and I think if Greece exited... [[ This is a content summary only. Visit my Blog for full story, http://www.marcfaberchannel.blogspot.com >>>>]]
- Marc Faber : Global markets to rally if Greece exits Euro... Marc Faber, Editor and Publisher of 'The Gloom, Boom & Doom Report', shares his views on how... [[ This is a content summary only. Visit my Blog for full story, http://www.marcfaberchannel.blogspot.com >>>>]]
Gordon T Long
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- SPeaRMiNT G-8
- Alasdair Macleod: All Roads In Europe Lead To Gold Submitted by Chris Martenson Alasdair Macleod: All Roads In Europe Lead To Gold This week we bring back Alasdair Macleod, publisher of Finance and economics.org, because, as he puts it "every horror that we discussed last time we spoke is coming about". Especially scary since our previous conversation with him was less than three weeks ago... Today's interview continues building on his excellent synopsis from last month that detailed the origins of the Eurozone crisis. The fundamental shortcomings warned of at the Euro's creation in 1997, combined with the excessive sovereign debts run up since then, have finally expressed themselves at a scale too large to be contained any longer. Today, Alasdair details in-depth the huge and serious challenges facing Greece and the major Eurozone countries, and the likely impacts of the fast-dwindling options left remaining. He sees no happy ending to this story, no outcome in which serious pain and permanent behavior change can be avoided. And for those looking for shelter from the unfolding economic storm, he sees few options besides the precious metals (which he believes are severely under priced at the moment): Greece The Greek situation is entirely predictable: when you force enormous pressures on an economy and try and raise taxes from the private sector -- a private sector which isn’t used to paying taxes because usually they find away around it -- you start cutting pensions, you start cutting this, cutting that, and the people revolt. They haven’t a clue what they are doing, but we get the revolt nonetheless. It looks like nobody there can form a government; and it looks like there will be another election probably in June. That won’t resolve anything unless by some miracle, some sense gets knocked into people’s heads. The other thing, which nobody has mentioned, is that there are about 90 billion dollars in derivative contracts involved in the Greek economy. This is not just government, but also local governments and towns and cities and all the rest of it. The counterparties to this $90 billion must be getting a bit worried about that, I would think because that looks as if it will default. The people who have been most active in getting these derivative contracts going over time have been people like Deutsche Bank, Goldman Sachs and I suppose JP Morgan -- so you can see the problems aren’t just limited to the government and some unfortunate Greek citizens who are caught in the middle of this. We are looking at potentially up to ninety billion dollars worth of derivatives which one side of those transactions is going to default. One side: it is not a balanced figure is it? I don’t know that it is necessarily as bad as that, but it is a problem that needs to be dealt with, addressed and contained. I think what they have to do as much as possible, is to try to work for a sensible outcome in this, which probably will involve Greece leaving the Eurozone, but maybe obtaining help from the ECB to set up a currency board. The reason I say that is that I think for Greece to return to the drachma would be complete destruction. You would have a situation where people who owe money in Euros would still owe money in Euros. If the Greek government tried to change that by law, for starts, that could only apply to loans taken out in Euros in Greece; whereas a lot of these have been taken out in Euros elsewhere in the European Union. In any event, I think if they tried to do a law on this, it would be a retroactive, which would be open to legal challenge. Meanwhile, if you have deposits in a Greek bank, you can be sure the Greek government would say we are going to re-designate those into New Drachmas, which would impoverish the depositors. When it comes to trade, I think everybody would just stay well clear. To go back to a New Drachma, I think is the most destructive path Greece can have. Now, they could do that on the basis that, if the European Union wanted to make an example of Greece, then this is a way in which they could just let them go hang. The importance of that would be that the situation for Greece should be so bad that no other member of the Eurozone would contemplate leaving the Eurozone. That is a possibility. But I think that is less likely than coming to terms in such a way to give Greece an exit. But if they do get an exit, again, they’ve got to have an exit in such a way that it hurts enough and anybody else who wants to take that exit would see, well it is actually probably more painful than staying where we are. It is a very difficult balance to achieve. The people who will do this, I don’t believe are the politicians. It would have to be the sensible people in the ECB and perhaps some of the more backroom boys who could put together some sort of face-saving mechanism without this becoming too much of a political hot potato. It is very, very tricky, it really is, and quite honestly, the way political governance has been going in Europe, the chances of them getting some sort of orderly withdraw in the interest of continuing relationships, et cetera, I think are actually probably slim. That is what we are up against: this is not easy. There is no precedence for this at all and I know that lots and lots of people are saying it has got to return to the Drachma; I just think that a New Drachma would collapse almost immediately. I think that a currency board in the Euro is actually a more sensible result given where we are. France France is a mess. They have outstanding debt of 1.3 Trillion Euros, something like that. Their debt/GDP is around about 85-90% going on a hundred quite rapidly. That is a very liquid and nasty situation. Unemployment is running close to ten percent. It is almost impossible to employ anyone in France because the taxes are so high. Do you know the total tax that you pay as an employer, more than doubles the salary that you pay an individual? This is absolute craziness, but it is been like that in France forever and a day. The result is an awful lot of the market is black market. Spain & Italy Spain is a worse situation. Government debt alone is just under a trillion. A trillion dollars equivalent, I should say, and that is a lot of money. That is a lot of money. Italy is over two trillion dollars. That really is a very, very big one, so this contagion must not be allowed to happen. Germany Their economy is performing reasonably well, but it is not performing well because they are doing well for Europe; they are doing well because they are selling the most cars, machine tools and everything else to China, to Brazil, to Russia. Africa’s a great growth area. Europe, as far as Germany is concerned is dead. Which of course brings us on another question; that is why should Germany continue to support all these bust Europeans? There is a sort of conscience if you like about the last two world wars, but there is going to come a point where that wears pretty thin I would have thought. The trouble is that it is all very well, everyone turning around and saying, Germany has to help. Actually, what they are saying is that Germany’s citizens should give up their savings, their hard won savings to rescue a project, which is obviously dead or deceased. I think Germany really should bust out as soon as possible and I am sure that there are an increasing number of businessmen and bankers in Germany who are beginning to feel that way. On Gold People who have gold or silver, I think actually had a very rough ride over the last couple of months. A lot of them are wondering what on Earth is going on because every time you get good news, gold seems to rally along with equities, but every time there’s bad news and gold actually should be giving you some protection, it goes down the swanny. I think the problem there is that the whole system is run by people who went to college and were taught keynesian economics. In my day, when I first went into the stock market and I enjoyed that first bull market in gold when it went from thirty-five bucks to eight-fifty, the traders and investment managers were all practical people. They all cut their teeth, all learned their trade the hard way. Some of them had degrees in college, but generally it would have been something like classics or history or something like that. If they got a degree in economics, they probably would have left because they never would have understood it in those days. But now it has changed. Everybody who is employed has a degree and if they are anything to do with investment strategy, or the investment business, it is all economics degrees. So they have been brainwashed in the keynesian thing. This sort of neoclassical approach where gold is yesterday’s story, paper money is the future. They really do believe it and it is the opinions of these people who drive the markets in the short term. The result is that gold and silver have become very, very seriously mispriced. I don’t think I have seen a stretch like this as I can remember; by stretch, the difference between perhaps where it should be. We must be careful not to tell the market what the price should be, but it is so underpriced at a time of enormous systemic stress, that I think when gold and silver snap back into a more sensible, logical valuation relationship with the markets, the move actually could be very, very sharp and quite large. If gold ran up through the $2,000 level very quickly, which I think is a very strong possibility, because it is been held down so much, that could bring other problems. The central banks, who might have sold gold and not told us about it will find that they are embarrassed. I think also the bullion banks in London who operate a fractional reserve system with gold, exactly the same way as to do with any paper currency, will be hurt very, very badly on the run. Any shorts in the futures market equally could be hurt very, very badly. We have a situation, where there is a potential for a huge run in gold and I personally wouldn’t be surprised to see it. Click the play button below to listen to Chris' interview with Alasdair Macleod (48m:07s): iTunes: Play/Download/Subscribe to the Podcast Download/Play the Podcast Report a Problem Playing the Podcast or Read the transcript here.
- G-8 Caption Contest Today, the G8 came, saw, and wrote down a bunch of meaningless promises on paper as it does every several months (spoiler alert: more printing). They also posed for photos, such as this one. We leave it up to readers to provide the context.
- Will Rogue Fundamentalist Christian Military Leaders Star... Before You Write Off This Threat … Read This Russian Prime Minister Dmitry Medvedev said that if the U.S. invades the sovereignty of countries like Syria or Iran, it could lead to nuclear war. And see this. Russia and China have previously stated that an attack on Iran would be considered a direct threat to their national security. And Iran and Syria have had a mutual defense pact for years. China and Russia might also defend Syria if it is attacked. So an attack on Syria could draw Iran into the war … followed by China and Russia. The House approved a resolution Thursday preventing containment as a method of making sure that Iran does not obtain nuclear weapons, rejecting: any policy that would rely on efforts to contain a nuclear weapons-capable Iran. The next day, the House authorized the use of force against Iran to keep it from developing nukes. Of course, while the Middle Eastern wars are mainly driven by oil (and perhaps protecting the dollar) – and while real conservatives are anti-war- many in the U.S. military view the wars as a literal crusade, and see Islam itself as their mortal enemy. For example, Wired reported last week: The U.S. military taught its future leaders that a “total war” against the world’s 1.4 billion Muslims would be necessary to protect America from Islamic terrorists, according to documents obtained by Danger Room. Among the options considered for that conflict: using the lessons of “Hiroshima” to wipe out whole cities at once, targeting the “civilian population wherever necessary.” If this sounds nuts, remember that millions of evangelical Christians want to start WWIII to speed the “second coming” … and atheist Neocons and Neolibs are using religion to rile them up to justify war against Iran. And Professor Michel Chossudovsky documents that the U.S. is so enamored with nuclear weapons that it has authorized low-level field commanders to use them in the heat of battle in their sole discretion … without any approval from civilian leaders. What could possibly go wrong?
- Congressional Threat to Every Investor, Business Owner an... Latest comment from David Kotok at Cumberland Advisors deserves your attention. -- Chris May 19, 2012 This is an open letter in response to legislation recently passed in the US House of Representatives. The behavior of Representative Harold Rogers, Chairman of the House Appropriations Committee, has made the front page of The New York Times, describing the $17,000 drip pan for Black Hawk helicopters that is earmarked for his district in Kentucky. The US House of Representatives, that includes his leadership, has passed Bill H.R. 5326. This legislation decimates the statistical agencies that support the entire fabric of business investment, policy-making, and decision-making in the United States. This action speaks volumes concerning the failure in Congressional accountability to review this legislation thoroughly and the abysmal behavior of Congressional leadership to permit it to pass. This threatens the economic recovery and long-term growth trend of the United States. Below is a copy of a letter sent to the membership of the National Association for Business Economics (NABE). It recounts the important elements of the legislation that must be opposed. It also gives the appropriate number and reference in the US Senate version. It contains sample text which citizens can use to send letters, emails or telephone calls when it comes to lobbying on their behalf. We are asking all who read our list serve to use this information, publicize it to others, and to stress to those in Congress that while we support some of their efforts in fiscal discipline, we do not support the emasculation of the agencies mentioned and the destruction of the statistical base that is essential to the ongoing business and investment climate in the United States. I discussed this legislation with Bob Parker, Former Chief Statistician of the Bureau of Economic Analysis and the Government Accountability Office. Bob is a good friend and colleague in several economist organizations where we are both active. He is the most skilled professional I know. Bob said that this legislation would "eliminate the economic census. That means no more bench-marking of key indicators such as retail sales, service receipts, manufacturers shipments and orders, trade inventories, industrial production index, etc." So dear reader, this legislation can really cost and hurt you. Please act now while damage can be mitigated. Thank you. Dear NABE Members and Friends: Last week, we alerted you that the U.S. House of Representatives was considering an appropriations bill for Commerce, Justice, Science, and Related Agencies (H.R. 5326) that would drastically reduce funding for the Census Bureau and make participation in the American Community Survey voluntary. Thanks to the many NABE members and other data users who contacted their representatives to try to prevent this action. Regrettably, the legislation ultimately passed the House along party lines and was much more damaging than originally proposed. In its current form, H.R. 5326 will "devastate" the nation's economic statistics. Specifically, the legislation will: Terminate the American Community Survey; Cancel the 2012 Economic Census; and Halt development of cost-saving measures for the decennial census. NEXT STEPS: The Senate is expected to take up its own FY2013 Commerce, Justice, Science, and related agencies appropriations bill shortly. The Senate and House versions of the bill will then presumably be addressed by a conference committee comprised of members of both bodies. HOW YOU CAN HELP: Call or email your senators and representative today to tell them why you value the Economic Census and the American Community Survey. You can use this sample letter below: Dear : I am writing to express my concern over passage of H.R. 5326 by the U.S. House of Representatives, which would drastically cut funding for the U.S. Census Bureau and eliminate the Economic Census and the American Community Survey (ACS) - two of the most important tools we have for understanding the U.S. economy. These programs are critically important to businesses, policymakers, and government agencies which use the data to make informed decisions and plan for the future. The increased uncertainty accompanying the loss of these data will most certainly result in more missed opportunities and waste for businesses and misallocation of resources by policymakers and government agencies. I urge you to ensure that the Census Bureau receives adequate funding to continue these vital programs. How are Economic Census data used? By the federal government as an input to calculate elements of key economic indicators, such as economic growth (GDP), prices, and productivity; By retailers in evaluating whether to expand into new market geographies; By economic development commissions in attracting new businesses to their areas; and By companies to benchmark performance against industry averages How are ACS data used? By corporations to examine workforce characteristics of neighborhoods to determine optimal locations for new factories or sales centers; By homebuilders looking to tailor new subdivisions to surrounding neighborhoods based on income, family size and existing home values; and By municipal governments in planning to meet the educational, safety and housing needs of their citizens. The information we glean from the Economic Census and the ACS increases our understanding of current economic conditions and reduces uncertainty, allowing businesses and policymakers to make well-informed, efficient decisions. If we eliminate these programs, we are choosing to "fly blind," an alarming proposition in these challenging economic times. Again, I urge you that you vote to ensure adequate funding for both the ACS and the Economic Census. Sincerely, David R. Kotok, Chairman and Chief Investment Officer
- "Dear Angela, Dear Francois, Dear Mario" - From Citi, Wit... The big banks are getting restless. Nowhere is this more evident than in the latest just released letter from Citi's European Credit Strategy, literally a letter to Europe's trio of leading politicians, which follows hot on the heels of yet another recent Citigroup missive from Willem Buiter, which was largely ignored in the noise, yet which made it all too clear that when all else fails, it is the Chairman's sworn duty to paradrop money. Because if anyone, it is the banks that know that if things aren't fixed (they aren't), it is up to the central banks to do something to prevent the vigilantes from forcing the politicians hands, as they did in the summer and fall of 2011 (which will not provide a long-term fix, but at least allow bankers to hope that the next collapse won't take place before bonus season). As Citi says, "Until the gravity of the situation is made clear, until the self-reinforcing mechanisms that already seem to be in motion are understood, we don't see how the solutions, the answers, and the certainty that market craves can be brought to the table." Which simply means that things are about to get much, much worse as it will be up to the markets to bring the world to the edge of collapse once again, just so Europe, with the help of the Fed of course, once again is forced to get over the political bickering and prop up risk assets, in yet another iteration of "this time it's different", even though it isn't. Sure enough: "Our impression is that markets will need to act as the proverbial 'attack dog', forcing the issue on the political agenda. We can't escape the sense that it is probably politically easier to let the markets run loose for the time being to make it apparent that further intervention is needed. But 1000bp on Crossover is much closer than you imagine." In other words, Citi just gave the green light for the bottom to fall from the market just so Europe's increasingly impotent political elite does something, anything. Look for many more banks to sign off on the same letter. From Citi: Dear Angela, Dear Francois, Dear Mario It seems that we are at a watershed once again. Judging by the movement we have seen in the credit market and in other risk assets over the last week, a chain of events that could lead to implosion has been unleashed, unless checked by policy action. 2012 started so well. The LTROs allayed market fears about a liquidity crisis in the European banking system and created additional demand for periphery sovereign debt during the first quarter. However, we reckon it is now time to face the fact that the market does not believe Schäuble's firewall works. Most urgently, the market fears a Greek exit, or the reintroduction of capital controls to stem deposit outflows, might spark deposit flight from banks across a number of other countries. Playing down the importance of a Greek exit now is hardly reassuring, when Mario Draghi said the consequences for the Eurozone would be 'incalculable' only last December. While the lack of an elected government in Greece complicates matters, the market sees a growing risk any new government will not be able to make the concessions demanded by the Troika quickly enough – or at all. Then what? If a hard line is to be taken on Greece, then we reckon the firewall must be reinforced at least with a pan-European deposit guarantee scheme of some form. The market knows that it is not easy to sell politically in Germany. It doesn't help that the Spanish spread to Bunds has drifted to record levels again, while there is no clarity on where the funding necessary to recapitalise the Spanish banking system will come from. It may be that LTRO-driven bank demand can sustain the auctions for now, but it seems likely to us that foreign investors will continue to pull out. Add in the prospect of Moody's downgrading more banks across Europe and North America, the persistent negative bias in the economic data relative to consensus, the upcoming Irish referendum, all the funding Italy still needs to do this year and the prospect of Portuguese PSI discussions in only a few months – and it is small wonder that market confidence is breaking down. Through the LTROs and extremely low interest rates policymakers have ensured that financial markets are flush with cash. We don't recall a time where the liquidity situation and the technical position of the credit market has been much stronger than now. But that isn't enough. Quite simply, the uncertainty is killing any incentive to take risk. What goes in financial markets generally goes in the wider economy too. Companies are flush with cash, but we struggle to see them investing – especially in the countries where investment is sorely needed – while there is no visibility on the Euro project. Meanwhile, things grind to a halt. We understand the political constraints key policymakers operate under. We know that many backbenchers and ECB board members are not fully onside. We can see in the election results and the opinion polls that a large part of the electorates are not onside either. There seems to be a dangerous perception in many places that enough has been done already. However, don't be fooled by the apparent resilience of many corporate bonds (and equities). Aside from the sheer amount of cash funds have been left with, it is only the perception that the policy intervention will come eventually, triggering a very large short squeeze that is preventing more selling. Every day seems to bring headlines that challenge that perception. We could be close to the breaking point. Already in the last week there are clear signs in credit that the selloff is becoming more systemic. If you have come across our 'five phases of grief' framework – it appears we are moving straight from 'depression' back to 'anger'. Until the gravity of the situation is made clear, until the self-reinforcing mechanisms that already seem to be in motion are understood, we don't see how the solutions, the answers, and the certainty that market craves can be brought to the table. Our impression is that markets will need to act as the proverbial 'attack dog', forcing the issue on the political agenda. This would not be the first time that markets have had to bark to get a credible policy response. We can't escape the sense that it is probably politically easier to let the markets run loose for the time being to make it apparent that further intervention is needed. But 1000bp on Crossover is much closer than you imagine. Moreover, every bark comes with a loss of credibility – a loss of faith in the institutional capacity of the European Union to address the fundamental imbalances. Reining in the market eventually may end up taking a bigger effort than policymakers are bargaining for. The market needs to know what policymakers are committed to and it needs to see actions that validate those commitments. Inaction is just a carte blanche for investors to sit on the sidelines and wait for things to deteriorate further. Yours sincerely, Citi Credit Strategy
- Crumbling BRICs... And Why The Developed World Is Not "Ta... The problem with self-reported economic data by various countries, especially those which are supposed to be at the forefront of economic growth, now that the "developed" world is groaning under consolidated debt/GDP ratios which will soon be the 4 digits, is just that - that they are self-reported: a main reason for the development of such governmental offshoot programs as the "Ministry of Truth." Which means that when the investing public hears of an updated Chinese GDP, or Brazilian inflation, or Russian industrial production, most roll their eyes but go with it, as this is the data that the greater fool down the street will also be using for investment decisions. Luckily, there are secondary indicators which present a much more realistic picture of what is truly happening in this fringe growth markets. A few days ago, we presented the "stock" view of the world's two biggest housing bubbles: China and Saudi Arabia, when demonstrating the epic outlier nature of these two countries in the context of cement consumption relative to GDP per capita: a snapshot which showed just how unsustainable the regional construction bubble in these two countries is. But since this is a snapshot in time, and hence "stock", how about the "flow", or the perspective of the economy from a continuous basis. For that we once again go to Goldman, which has conveniently compiled two alternative yet very critical data sets which go to the core of the BRIC economies: Chinese electricity consumption, as well as Brazilian toll road traffic. The picture(s) is (are) not pretty. First, a brief reminder of the perilous state of Chinese over expansion - i.e. "stock" And here is how Chinese electricity consumption has been faring recently, or economic "flow" Brazil is not doing that much hotter either... But don't worry: the developed world isn't taking off anyewhere in a hurry soon - as the following chart showing business jet travel shows (until of course the chart goes parabolic at some point in the near future...) What does this mean? That the world is slowing down everywhere. And since conventional theory means that much, much, more debt will soon be unleashed to restart growth, and since everyone already is full to the gills with debt, the only realistic buyers remain central banks. And they know it. Which, incidentally, is why the market is tumbling: after all, as we have been claiming all along, there must be some pretext for global coordinated QE. Well, another 10-15% drop in the global capital "markets" will get us there in no time.
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- The Jeff Gundlach Trade Had Another Monster Day On Friday Just checking in on Jeff Gundlach's famous long natural gas/short Apple trade. It's still been on a ridiculous run since he announced it, gaining nearly another 3% just on Friday. Please follow Money Game on Twitter and Facebook.Join the conversation about this story »
- Chris Wood Explains Why Markets Have Probably Peaked, And... Christopher Wood of CLSA has a tidy sumup of the Greece situation in the latest version of his GREED & Fear note. GREED & fear was asked this past week what were the possibilities that stock markets have seen their highs for the year? Four weeks ago GREED & fear had put the odds at “as high as 35%” (see GREED & fear – Fine lines, 19 April 2012). They are now at least 50% and probably higher, with the potential trigger of a rally from likely lower levels the policy response that will come sooner or later from Bernanke and Draghi if the deflationary action intensifies, as is likely. It is likely because the Greek election is still one month away with the polls scheduled for 17 June. This is a long time in the markets. With the far-left Syriza party leader Alexis Tsipras seemingly intent on abandoning Greece’s latest debt restructuring deal, and also still seemingly leading in the opinion polls, the issue will be whether the electorate can be convinced by the two mainstream parties, New Democracy and Pasok, that voting against debt restructuring and staying in the euro is not an option. That is also the message being sent by German spokesmen, including Financial Minister Wolfgang Schäuble. Still it is not quite as simple as that. Germans love order and Berlin will be as concerned as everyone else, if not more so, about the potential chaos triggered by a Greek exit. This is why a potential Syriza-led government would have more room to negotiate than is commonly supposed. Still a total refusal by Athens to compromise in any way would leave Berlin and Brussels with little option but to let Greece go. Meanwhile, the main threat ahead of the June poll is deposit outflows from the Greek banks as everyone starts to hoard physical euro. Thus, The Guardian reported yesterday that Greek savers have withdrawn €3bn from banks in the 10 days since the 6 May election. Greek private sector deposits had fallen by 17%YoY or €34bn to €171bn as at the end of March. Please follow Money Game on Twitter and Facebook.Join the conversation about this story »
- The Greek Government Will Run Out Of Cash In A Few Weeks,... The next tranche of Greek aid remains up in the air, and tax collections (surprise!) running vastly below expectations, so Greece is urgently trying to come up with a solution to fund itself as it sees its cash pile rapidly dwindling. Ekathimerini has a good report on the situation: The public coffers are seen running dry at the end of June, but this will depend on two key factors. First, revenue collection: In the first 10 days of May, inflows were about 15 percent lower than projected but there are fears that the slide may reach 50 percent. The GAO will have a picture for the first 20 days on May 23, while the last three days of the month are considered crucial, when 1.5 billion euros of the month’s budgeted total of 3.6 billion are expected to flow in. Second, whether the IMF and EFSF installments are disbursed: This is not certain, as the decision will be purely political for both providers and evidently partly linked to political developments. Earlier this month the eurozone approved a disbursement 1 billion short of the 5 billion euros that were expected. Some of the options: Suspending various tax credits and rebates. Cuts in payments to the social security fund. Other trimming of grants to state agencies (a move which has been done before, and bought the country a few months actually). Not paying Greece's contribution to the EFSF. Raiding the fund designed for bank recapitalization. Please follow Money Game on Twitter and Facebook.Join the conversation about this story »
- The Iconic Photo Of World Leaders Watching Soccer White House photographer David Souza has done it again. From The White House flickr: Prime Minister David Cameron of the United Kingdom, President Barack Obama, Chancellor Angela Merkel of Germany, José Manuel Barroso, President of the European Commission, and others watch the overtime shootout of the Chelsea vs. Bayern Munich Champions League final, in the Laurel Cabin conference room during the G8 Summit at Camp David, Md., May 19, 2012. (Official White House Photo by Pete Souza) Seeing as Bayern Munich lost the shootout, we hope Angela Merkel isn't gong to push for double austerity out of some sense of revenge. Please follow International on Twitter and Facebook.Join the conversation about this story »
- Kyle Bass's Most Famous Trade Is A Disaster, And It Is Ne... Kyle Bass was one of the handful of hedge funders who made a fortune betting against housing during the subprime bust, and since then he's been stalking his next big "career trade." For years now, his big target has been Japan, a country with a debt-to-GDP ratio of over 200% and a shrinking/aging population. He's convinced that it's only a matter of time before the country implodes in a massive sovereign debt crisis that sends bond yields soaring, while the yen becomes worth less than confetti. Back in early 2010, there was a story about how he took out a mortgage in yen, because he was so sure that it was going to implode, thus meaning he'd get his house for free. Well, it hasn't exactly worked out that way he planned (yet). Since the beginning of 2010, the exchange has gone from about 92 yen against the dollar to just 80. Kyle Bass's mortgage has gotten way more expensive. Of course, the mortgage was probably all for show, a clever marketing move that's augmented his regular media and conference appearances where he touts the big end-of-Japan trade. Here's how he described Japan in a letter last December: Madoff's scheme collapsed for one primary reason -- he had more investors exiting his scheme than entering. As soon as this happened it was over. According to this most recent census, the Japanese population peaked within the last few years at 127.9 million and has since lost 3 million. Japan has one of the most homogeneous -- and some might even call it xenophobic -- societies of any developed nation in the world. It is no secret that there is no love lost between the Japanese and their neighbors, and therefore, immigration is an unlikely answer to a dwindling populace. .... It is indisputable that Japan has the worst on balance sheet debt burden in the world (roughly 229% of GDP). ... The European debt crisis will simply act as an accelerant to the Japanese situation as it will most likely change the qualitative thoughts of JGB investors. We believe that the sequence of events is set to begin in the new few months. So basically he thinks it's a giant Ponzi scheme, and that it's only a matter of time before the market "wakes up", smells the coffee, and the whole thing implodes. But not only has his mortgage gotten more expensive, per the chart above, his fund seems to be doing very badly. According to the website ValueWalk, citing sources, his fund lost 29% of its value in April, and has really been getting clobbered since inception. We haven't been able to confirm the losses, though a trader we talked to thinks the numbers pass the smell test, given how Bass has structured his trades, and given the performance of said instruments (a series of currency and bond derivatives designed to profit in a Japanese demise), over the past year. But still, the general thinking on Bass is that he's not wrong, he's just early. After all: 229% debt to GDP! Back in April, Harvard Business School actually did a case study on the trade and basically said just that: Japan may not blow up imminently, but it's only a matter of time before it will. Of course, there are two problems with that. 1) Kyle Bass's fund may not have years and years worth of investor cash to burn through while waiting around. 2) The entire premise of the trade might be wrong, and it will never happen. The second reason -- that the premise is totally screwed up and that Japan will never implode -- is what we're going to focus on here. It's worth nothing that for years people have been making this bet. Kyle Bass is the latest to step in front of what's been dubbed "The widowmaker", so-called because of the number of investors who have gotten pummeled trying to short JGBs (Japanese Government Bonds). But hey, just because something hasn't worked int he past, it doesn't mean that it won't work at some point in the future. Bass is hoping that he got the timing right, and what gives him hope in the timing is that we've seen the first sovereign blowups in Europe, and that that will cascade into sovereign blowups elsewhere, and when people see the country with the worst debt-to-GDP in the world, they will pounce. The problem is that the analysis is totally simplistic and incorrect. To start, debt-to-GDP (which is the number that in Bass' mind really damns Japan) is a lousy measure of anything. It's flawed right from the get-go, given that it's measuring a stock (total debt) to a flow (a country's national income for the year). But beyond that, debt-to-GDP just doesn't tell you anything about interest rate risk or credit risk. We pointed out in this chart that for major economies, there's actually a slight negative correlation between debt-to-GDP and yield on the national 10-year bond. In the US, it's well known that rates have gotten lower and lower while the national debt has blown through the roof. So right off the bat, trying to bet against a country based on its debt-to-GDP is a losing idea. But still, people are convinced that for the US and Japan, it's just a matter of time. In Japan, the story that bears like Bass tell themselves is that Japan has a huge well of domestic savings, and that those savings go into Japanese Government Bonds, but that now that Japan is running a trade deficit, those savings are getting depleted, and the country will need to look for outside borrowers, and those borrowers won't be eager to lend to Japan at the pathetic 0.83% rate on the Japanese 10-year, and that when those foreign borrowers demand market rates, Japan will blow up because there's just SO much debt that an increase in rates will wreck the country's public finances. But this too is nonsense. There's no connection between rate sustainability and domestic/foreign borrowing. For example, in the US, the amount of debt held by foreigners has exploded over the last few decades, but it hasn't created any upward pressure on rates. And it's well known that the majority of Italy's public debt is held domestically, but that hasn't prevented the country from teetering on the brink of crisis. So the whole foreign/domestic borrowing thing is a canard, although it does warrant the question of why it doesn't matter. After all, it does seem logically like it should be problematic that Japan would have to borrow more and more from abroad. Here's how to think about it... Foreign ownership of debt is not a function of the country going cap in hand all around the world, looking for investors to buy their bonds. It's a function of trade. When a country runs a trade deficit, it basically means it's spending more on goods from the rest of the world, than the rest of the world is spending on goods from said country. So it stands to reason that if Japan is buying a lot from the rest of the world, then there are a lot of yen floating around the world: More yen wind up in places like China, the Mideast, the US, Europe, etc. What happens to those yen? Well, some will get spent on other things, but in the end, they'll all wind up in bank accounts somewhere, and somehow they'll find their way into a Japanese Government Bond, so that the holder of said yen might get some yield. Now theoretically if someone had a bunch of yen, they might prefer to buy German bonds or US bonds, and that's fine, but then there's another private holder of yen who has to make a decision about where they're going to place their currency. Eventually, that currency will find its way home, and the cycle is complete. This is the key idea that Bass is missing, and why his trade is never going to pay off. For a country that borrows in its own currency, government spending finances borrowing! If Japan spends 100 billion yen on something, that's 100 billion yen out there in the world that will eventually wind up in a financial institution, where ultimately 100 billion yen worth of JGB will be purchased. It's the same with the US of course, and it's this idea that Bill Gross didn't get when he famously asked: Who will buy our debt after QE2 runs out? It caused him to get crushed on the Treasury boom of 2011. But what about Europe? The problem in Europe is that the cycle is broken. When the Spanish government spends money, that money doesn't necessarily end up in bank accounts where the money will be paired with Spanish debt. Instead, a lot of it leaks to bank accounts in Germany, where it goes to buying German debt. Or maybe it goes into French debt. Spanish government spending doesn't help finance Spanish government debts. This is why Richard Koo's modest proposal to save the Eurozone is to ban countries from selling sovereign debt to anyone that's not domestic, so that the cycle of spending and borrowing would stay domestic. Europe's problem really isn't about sovereign debt. It's about the fact that countries don't have their own currencies, and are thus totally flawed. It's fun to look at a chart like this, showing that only Japan has more debt than Greece, and to conclude that it's going to implode, but extrapolating from Europe to anywhere else, where countries borrow in their own currencies, and have their own central banks, is a recaipe for disaster. No doubt Kyle Bass will keep pumping his Japan trade for awhile, but the logic is badly flawed, and it is never going to pay off for him. SEE ALSO: The costliest mistake in all of economics > Please follow Clusterstock on Twitter and Facebook.Join the conversation about this story »
- What The Latest Data Is Telling Us About The Global Economy Monthly data reported in the last week was mixed, due to revisions in the prior month's data. Retail sales were up, just barely. There was no consumer inflation. Housing permits fell sharply, but only because the prior month's numbers were revised even more sharply higher. This caused the Index of Leading indicators to record a slight decline. Housing sales are in a definite uptrend. Industrial production rose strongly, but less so taking into the negative revision to the prior month. Regional manufacturing reports were mixed with NYS up strongly, and Philly in contraction. The high frequency weekly indicators this week, with one exception, were neutral to positive as the Oil choke collar disengages due to the now-annual ritual of late spring Europanic. Let's start with the exception. Rail traffic was mixed again this week. The American Association of Railroadsreported a -1.3% decrease in total traffic YoY, or -8,100 cars. Non-intermodal traffic was down by -15,200 cars, or -5.2% YoY. Excluding coal, this traffic was up 5,800 cars. Ethanol-related grain shipments were also off, as were chemicals, metals, and scrap. Intermodal traffic was up 7,100 carloads, or +3.1%. Railfax's graph of YoY traffic continued to show that the YoY improvement in hauling of cyclically sensitive materials remains strong. Oddly, it remains baseline, non-cyclical shipments that are declining, and declining ever more sharply. Housing was mixed but at slightly higher recent levels: The Mortgage Bankers' Association reported that the seasonally adjusted Purchase Index fell -2.4% from the prior week, and was down slightly, -1.0% YoY. The Refinance Index jumped 13.0% with record low mortgage rates. This index continues to be near the upper end of its 2 year generally flat range. The Federal Reserve Bank's weekly H8 report of real estate loans, which had been negative YoY for 4 years, turned positive over one month ago. This week, real estate loans held at commercial banks was flat w/w, and their YoY comparison declined -0.1% to +0.9%. On a seasonally adjusted basis, these bottomed in September and remain up +1.6%. YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker were up +2.4% from a year ago. YoY asking prices have been positive now for almost 6 months. Median current list prices are now higher than at any point last year. Either this indicator will turn, or the Case-Shiller repeat sales index is likely to turn within the next several months. I do not see how the divergence between the two can continue much longer. Employment related indicators were also neutral to positive: The Department of Labor reported that Initial jobless claims rose 2,000 to 370,000 last week. The four week average fell 4000 to 375,000. It seems more likely that in April we saw a quirk of seasonality rather than a more ominous sign. The Daily Treasury Statement for the first 13 days of May showed $87.7 vs. $95.6 B for April 2011. This has everything to do with the month starting on a Tuesday rather than a Monday. Compare Monday through Wednesday in the equivalent period and this year is $4.0 B ahead of last year. For the last 20 reporting days (4 x each day of the week), $132.7 B was collected vs. $129.6 B a year ago, an increase of $3.1 B, or +2.4%. This reverses last week's decline, but is still a weak advance. The American Staffing Association Index remained at 93 for the third week. It remains two to three points below the all time records from 2006 and 2007 for this week of the year. Same Store Sales continue to be solidly positive. The ICSC reported that same store sales for the week ending May 12 fell -0.8% w/w, but were up +4.5% YoY.Johnson Redbook reported a 3.7% YoY gain. Shoppertrak reported a gain of 12.0% YoY after last week's YoY decline of -2.7%. The 14 day average of Gallup daily consumer spending turned positive again this week at $71 vs. $68 in the equivalent period last year. Money supply was mixed: M1 fell -1.5% last week, and also fell -0.6% month over month. Its YoY level increased to +16.5%, so Real M1is up 14.2%. YoY. M2 was flat for the week, and was up +0.4% month over month. Its YoY advance rose slightly to +9.6%, so Real M2 increased to +7.3%. Real money supply indicators continue to be strong positives on a YoY basis, although they have had a far more subdued advance since September of last year. Bond prices rose and credit spreads were flat: Weekly BAA commercial bond rates fell .07% to 5.08%. Yields on 10 year treasury bonds also fell .07% to 1.88%. The credit spread between the two remained even at 3.20%. Strongly falling bond yields mean that fear of deflation is strong. Spreads have been widening for the last month until this week. Finally, the energy choke collar is disengaging: Gasoline prices fell for the fourth straight week, down another .04 to $3.75. Oil fell almost $5 this week, $96.13 to $91.48. Oil prices are now below the point where they can be expected to exert a constricting influence on the economy. Since gasoline prices follow with a lag, we can expect gasoline to fall to that point in about a month as well. The 4 week average of Gasoline usage, at 8692 M gallons vs. 8864 M a year ago, was off -1.9%. For the week, 8971 M gallons were used vs. 9048 M a year ago, for a decline of -0.9%. Gasoline usage is moving to parity with the reduced levels that began to be established one year ago. Turning now to high frequency indicators for the global economy: The TED spread remained at 0.390, near the bottom of its recent 3 month range. This index remains slightly below its 2010 peak. The one month LIBOR rose slightly to 0.240. It is well below its 12 month peak set 3 months ago, remains below its 2010 peak, and has returned to its typical background reading of the last 3 years. The Baltic Dry Index rose slightly from 1138 to 1141. It is about 1/3 of the way back from its February 52 week low of 670 to its October 52 week high of 2173. The Harpex Shipping Index rose another 5 points from 440 to 445 in the last week, and is up 70 from its February low of 375. Finally, the JoC ECRI industrial commodities index fell sharply for the second week in a row, from 122.82 to 120.25. This indicator appears to have more value as a measure of the global economy as a whole than the US economy. When the US is in a recession, that doesn't mean that every single state's economy is contracting. Texas or Washington state might be doing well, for example. The sharp declines in the JoC ECRI index and treasury bond yields seem to be all about Europanic. The global economy as a whole might be slipping into contraction thanks largely to austerian stupidity in Europe (but note that global shipping rates appear to have bottomed). But when we look at the up to the moment indicators for the US, we see a slow improvement in housing, refinancing of mortgages at lower rates, consumer purchases remaining strong, payroll taxes modestly improving, the Oil choke collar loosening, and both industrial and retail consumers of energy focusing like lasers on efficiency. On the other hand, rail traffic is an actual drag, even if there are very good reasons for the decline that are longer-term economic positives. In short, the US economic expansion appears intact. Please follow Money Game on Twitter and Facebook.Join the conversation about this story »
- INTRODUCING THE 'GEURO': A Radical New Currency Idea To S... Here's a radical new idea from former Deutsche Bank Chief Economist and current Senior Advisor Thomas Mayer, based on the facts that a) Greeks don't want to leave the euro and b) they also don't want to continue with the Troika bailout programs as they are currently constituted. All of the talk to date has been of a binary option for the eurozone between a cooperative Greek government that gets to stay in the euro and a non-cooperative one (presumably led by the likes of Syriza boss Alexis Tsipras) having to exit the euro. But maybe there's a third option, just because the stakes are so high here. The rest of the eurozone doesn't want to see a Greek exit because of the potential for other countries following suit (whether they contemplate leaving as well or experience similar runs on bank deposits), which would be disastrous. What would that middle ground look like? According to Mayer, the Troika could decide on "a partial stop in financial assistance, with continuing support for debt service needs and the Greek banking sector but no further support for the financing of the government’s primary expenses." Thus, the "Geuro" is born: Assuming that the Greek government is unable to quickly balance its primary budget, a plausible response of the government to the shortage of euro cash as a result of the end of financial transfers would be to issue debtor notes (IoUs) to its creditors, promising payment as soon as fresh euro cash would become available. As creditors lacking euro cash would have to use the IoUs to settle their own bills, these instruments would assume the role of a parallel currency (let’s call it Geuro). The Geuro would probably quickly be used in most domestic transactions. For the purchase of essential imports, Geuros would have to be exchanged against euros, most likely at a hefty discount of 50% or more. Since an increasing number of domestic goods, services and wages would be paid in devalued Geuros, the export sector could reduce its prices in euro and regain competitiveness against foreign suppliers. The exchange rate of the Geuro relative to the euro would be determined by the primary budget gap of the government that is being filled by Geuro issuance. Political pressure could build for more prudent policies as Greek residents saw their terms of trade decline. This plan comes with strings attached: Europe would have to completely take over the Greek banks to avoid even greater capital shortfalls. However, Hooper points out that consensus is quickly building around this idea as necessary for any reasonable stability plan going forward anyways. So, Greece gets what they need under the "Geuro" plan: a recapitalized banking system and internal devaluation to increase competitiveness and hopefully spur growth. The icing on the cake is the exit strategy. Mayer: Greece could formally remain in EMU, execute the exchange rate devaluation necessary to regain international competitiveness, and in the future decide for itself through issuance of Geuros, whether and over what time span it would want to return to a hard currency that is stable against the euro. It could eventually even return completely to the euro by repurchasing Geuros against euros. Is the Geuro the elegant solution Europe has been waiting for? Troika, are you listening? Please follow Money Game on Twitter and Facebook.Join the conversation about this story »
- Europe's Depressing Prospects Normally I don’t like to write about European prospects in the midst of a very rough patch in the market because in that case there isn’t much I can say that isn’t already being said. I find it more useful to wait for those recurring periods in which the markets recover and optimism rises. Still, given the conjunction of political uncertainty in Beijing, low Chinese growth numbers, and another round of deteriorating circumstances in Europe, I will spend most of this issue of the newsletter trying to outline the possible paths countries like Spain must face. For several years I have been saying that Spain would leave the euro and restructure its external debt. I should say that I specify Spain because it is the country in which I was born and grew up, and so it is also the country I know best. When I say Spain, however, I really mean all the peripheral European countries that, like Spain, are uncompetitive, have high debt levels, and suffer from low savings rates that had been forced down in the past decade to dangerous levels. Spain had a stronger fiscal position and healthier bank balance sheets than many of its peers when the crisis began, so any argument that applies to Spain is likely to apply more forcefully to its peers. As an aside I will add that France is for me the dividing line between countries that will be forced into devaluation and restructuring and those that won’t – in my opinion France could go either way and we will get a much better sense of this in the first year of Hollande’s presidency. There are two reasons why I was and am fairly sure that Spain cannot stay in the euro (or, which amounts to the same thing, that Germany will leave the euro instead of Spain). The first has to do with the logic of Spain’s balance of payments position, and the second has to do with the internal dynamics that drive the process of financial crisis. To address the first, I would start by noting that thanks to excessively loose monetary policies driven primarily by German needs over the past decade, Spain has made itself wholly uncompetitive in the global markets and in so doing has run large current account deficits for nearly the entire past decade. Its fundamental problem, in other words, has been the process by which its savings rate has collapsed, its cost structure forced up, its debt levels soared, and a great deal of investment directed into projects, mostly real estate, that were not economically viable. As I have discussed often enough in previous issues of this newsletter, I think all of these problems are related and are the automatic consequences of the same set of policy distortions implemented in Spain and in Germany. Until Spain reverses its savings and consumption balance and drives down its current account deficit into surplus, which is what a reversal of these distortions would imply, it should be pretty clear that Spain will continue struggling with growth and will continue to see debt levels rise unsustainably. But the balance of payments mechanism imposes pretty clear constraints on the process of adjustment. In that sense there are really only three ways Spain can regain competitiveness sufficiently to raise savings and reverse the current account: Germany and the other core countries can take steps to reverse the policies that led to the European crisis. They can cut consumption and income taxes sharply in order to reduce domestic savings and increase domestic consumption. These would lead to a reversal of the German trade surpluses and higher inflation in Germany, the combination of which would allow Spain to reverse its trade deficit and regain competitiveness via lower inflation relative to that of Germany and a weaker euro. Spain can force austerity and tolerate high unemployment for many more years as wages are slowly pushed down and pricing excesses are ground away. It can also take measures to reduce costs by making it easier to start businesses, reducing business taxes, and by improving infrastructure, but these latter provide too little relief except over a very long period, especially given the difficulty Spain will face in financing infrastructure and reducing taxes. Spain can leave the euro and devalue. This would leave it with a problem of euro-denominated debt, whose value would soar relative to GDP denominated in a weakening currency. In that case Spain would almost certainly be forced to halt debt payments and restructure its debt. I want to stress that these are, practically speaking, the only three ways for Spain to regain competitiveness. There are other ways that could in theory also work, but they are too unlikely to consider. One could assume for example that the rest of the non-European world – most importantly the US, China and Japan – take steps to stimulate their domestic economies sufficiently to force up consumption and run in the aggregate large and growing trade deficits. These deficits, whose counterpart would be a very large European trade surplus, would then bail out the whole eurozone by generating GDP growth rates that exceed the debt refinancing rates. I think most of my readers will however agree that this is pretty unlikely. The rest of the world is also struggling with growth and in no hurry to run large trade deficits. Another possibility is that we suddenly see a rapid and dramatic move towards full fiscal union in Europe, in which sovereignty, for all practical purposes, is fully transferred to Brussels (or Berlin). But that probably won’t happen either – the rise of nationalism throughout Europe has made this always-unlikely prospect even less likely. So we are left largely with these three ways of allowing Spain to regain a cost structure that makes it competitive and allows it to amortize its debt while growing. Anyone who rules out two of the three ways listed above must automatically imply that Spain will follow the third way. So which will it be? Humpty Dumpty economics The first way is for Germany to reverse its surplus and begin running large deficits. This is by far the best way, but I think it is very unlikely. Berlin has made no indication that it is prepared to do what would be necessary for it to run large deficits and, on the contrary, it is even talking about the need for more austerity. In part this is because Germany has a potentially huge debt problem on its balance sheet. As a consequence of its consumption-repressing policies during the decade before the crisis, Germany’s domestic savings rate was forced up to much higher than it otherwise would have been and Germany has had to export the excess capital. Not surprisingly, given European monetary dynamics, this capital has been exported largely to the rest of Europe in order to fund the current account deficits of peripheral Europe that corresponded to the surpluses Germany so badly needed to grow. It did this not by accumulating euro reserves, which it could not do anyway, but rather by accumulating loans to peripheral Europe through the banking system. As a result of all of these loans, Germany is rightly terrified that a wave of defaults in Europe will cause its own banking system to require a state bailout if it is not to collapse, and so it does not want to cut taxes and reduce savings because it believes (wrongly) that austerity will make it easier to protect its creditworthiness. But German’s anti-consumption policies are leading it towards a debt problem in the same way that similar US policies in the late 1920s created an American debt crisis during the next decade. In that light I thought this very illuminating quote from then-presidential candidate Franklin Delano Roosevelt might be apposite: A puzzled, somewhat skeptical Alice asked the Republican leadership some simple questions: “Will not the printing and selling of more stocks and bonds the building of new plants and the increase of efficiency produce more goods than we can buy?” “No,” shouted Humpty Dumpty, “the more we produce the more we can buy.” “What if we produce a surplus?” “Oh, we can sell it to foreign consumers.” “How can the foreigners pay for it?” “Why, we will lend them the money.” “I see,” said little Alice, “they will buy our surplus with our money. Of course these foreigners will pay us back by selling us their goods.” “Oh not at all, “said Humpty Dumpty. “We set up a high wall called the tariff.” “And,” said Alice at last, “how will the foreigners pay off these loans?” “That is easy, said Humpty Dumpty. “Did you ever hear of a moratorium?” And so alas, my friends, we have reached the heart of the magic formula of 1928. Humpty Dumpty’s grasp of the balance of payments, it turns out, is no more naïve than that of many European policymakers, and I suppose Germany will follow the historical precedent set by the US – and so many other countries that confuse trade surpluses with moral vigor. By refusing to take steps that seem on the surface to undermine its creditworthiness, Berlin will only ensure the debt moratorium that will probably demolish its creditworthiness anyway. And of course without a major reversal of German’s current account position the balance of payments constraint absolutely prevents net repayments from peripheral Europe. This game will go on as long as the core countries continue financing the periphery, but once they finally stop, the peripheral countries will almost certainly default or restructure their debt. To take a brief detour before returning to discussing the three paths Spain can take, I think Berlin is betting that if they can prolong the crisis long enough, while pretending that the problem is one of liquidity, not solvency, they can recapitalize the German (and other European) banks to the point where they eventually are able to recognize the obvious and take the losses. This was, after all, the strategy followed by the US during the LDC Crisis of the 1980s, when it waited until 1989, seven or eight years after the crisis began, to arrange the first formal debt forgiveness (the Mexican Brady Bond). During that time a steep yield curve engineered by the Fed allowed the US banks to earn sufficient profits to recapitalize themselves to the point where they could finally formally recognize what had long been obvious. There are at least two reasons however why this strategy won’t work for the European banks. First, the hole in the European banks’ balance sheets dwarves the equivalent hole in the balance sheets of the American banks during the LDC crisis. It would take them much longer then seven or eight years to fix the problem. Second, postponing resolution of the debt crisis is extremely painful for the debtor countries, who have to bear the full brunt of the adjustment that both debtor and creditor countries really need to make together. This reduces maneuvering space for Europe because the political system in Europe is less able than that of Latin America during the 1980s to accommodate this very painful process. Well-functioning democracies, after all, make it harder for bankers and elites to force the cost of the adjustment onto the middle and working classes. Can Spain adjust by itself? This is also the reason why Spain cannot follow the second of the three paths described above. The second path requires that Spain bear the full brunt of the economic adjustment, which in reality Spain and Germany should bear together. Spanish voters, however, will not permit (and rightly so) that Madrid force such economic pain on its citizens in the name of an ideal of “responsible behavior” (i.e. remaining within the euro) that is both mistaken and extremely painful. The adjustment will require that Spanish wages and prices are forced down substantially until Spain can reverse the higher price differential relative to Germany from which it suffers. Figuring out how to do this is not very hard – we have plenty of historical precedents upon which to draw. To simplify substantially, there are basically two things that have to happen in order to force a relative decline in prices. First, unemployment must remain very high for many years so that wages either decline, or rise by less than inflation and relative productivity growth. This is pretty straightforward. Second, there must be some way to deal with the real increase in the domestic debt burden. Why? Because there are two ways relative prices can be forced down, and both of these result in a real increase in the debt burden. First, high inflation in Germany can exceed lower Spanish inflation, and second, Spain can deflate. In both cases the real cost of debt must increase substantially – in the former case because high German inflation will force up euro interest rates so that Spain’s refinancing cost will exceed its domestic growth rate, and in the latter case because deflation automatically increases the real debt burden. How will we deal with the rising debt burden? Typically we do so by confiscating the wealth of small and medium enterprises or by confiscating the savings of the middle classes, and usually we do both. So for Spain to adjust we need both very high unemployment for many years and we need to undermine the middle classes. Any policy that requires an enormous and unfair burden on both the workers and the middle classes is unlikely to be rewarded at the polling booths. The huge unpopularity of the newly elected Prime Minister Mariano Rajoy, in that context, should not be a surprise. I wrote last year just after the election that this would happen, although I thought it would take a year or two before the population really turned on him and made it impossible for him to govern. But Spaniards, from business leaders down to workers, are furious at the Rajoy government and this anger will continue until either the two major parties eject those of their leaders who continue to demand that Spain behave in a “responsible” way, or harder line extremist parties replace the two parties themselves. I place the word “responsible” in quotation marks not because I am opposed to responsible behavior but rather because the attempt to tighten the budget and impose austerity in the name of remaining on the euro is being presented as the “responsible” thing to do. It is, however, no more responsible than the policies France used in the 1920s to revalue the franc to pre-War parity, which were also sold to the French public as the “responsible” thing to do. In both cases (and in many other deluded attempts to protect hopelessly overvalued currencies underpinned by rising eternal debt), policymakers did not understand that their policies were guaranteed to fail and were based on a misunderstanding of the causes of the underlying crisis. The responsible thing to do is to acknowledge that the euro is indefensible and that Germany’s refusal to share the adjustment burden, after it absorbed most of the benefits of the mismanaged monetary position it imposed on the rest of Europe, means that Spain will be forced to take on far more than its share of the cost. But whether or not everyone agrees with my analysis of what really is “responsible” behavior, I think it most people will agree that, rightly or wrongly, Spanish voters are unlikely to accept high unemployment and an assault of middle class savings for many years without rebelling at the polls. Spain simply cannot accept the full burden of adjustment. This means that the first two of the three paths I listed above cannot be followed. If I am right, we are automatically left with the third. Spain (and by extension many other countries) must leave the euro. It will be very painful and chaotic for them to abandon the euro, but the sooner they do it the less painful it will be. The death spiral I said at the beginning of this newsletter that there were two reasons why I was certain Spain would leave the euro, the first of which has to do with the logic of Spain’s balance of payments position and the second with the internal dynamics that drive the process of financial crisis why I was certain that Spain would leave the euro. To address the second, I think Spain will leave the euro because it seems to me that the country has already started on the self-reinforcing downward spiral that leads to a crisis, and there is no one big enough to reverse the spiral. How does this process work? It turns out that it is pretty straightforward, and occurs during every one of the sovereign financial crises we have seen in modern history. When a sufficient level of doubt arises about sovereign credibility, all the major economic stakeholders in that country begin to change their behavior in ways that exacerbate the problem of credibility. Of course as credibility is eroded, this further exacerbates the behavior of these stakeholders. In that case bankruptcy comes, as Hemingway is reported to have said, at first slowly, and then all of a sudden, as the country moves slowly at first and then rapidly towards a breakdown in its debt capacity. What is key to understanding the process is to see that stakeholders will behave for perfectly rational reasons in ways that politicians and moralists will decry as wholly irrational. Rather however than respond to appeals that they stop behaving irrationally, stakeholders will continue making conditions worse by their behavior as they respond the distorted incentives created by the erosion of sovereign credibility. To do otherwise would almost surely expose them to disaster. To summarize what the self-destructive and automatic behavior of the stakeholders is likely to be, it is worth identifying some of the major stakeholders and to suggest how they typically react to a rise in the sovereign’s default risk: Private creditors. As Spain’s credibility deteriorates, private creditors will demand higher yields on their loans to Spain even as they change the form of their lending to reduce their own risk, for example by shortening maturities. This has a double impact on making conditions worse. First, higher interest rates mean that debt rises more quickly than it otherwise would. Second, shorter maturities and other changes in the loan structure mean greater balance sheet fragility and a rising probability of default. Official lenders. As they are forced into providing liquidity facilities, official creditors typically demand and receive seniority. This of course increases the riskiness for other lenders and creditors by pushing risk downwards, and so worsens balance sheet fragility and increases private sector reluctance to lend. Depositors. As the probability rises that Spain will leave the euro, and that bank deposits will be frozen and redenominated in the weaker currency before any abandonment of the euro is announced, depositors respond rationally by taking money out of the banking system. As they do, banks are forced to contract lending, to increase balance sheet liquidity, and to reduce risk, all of which act as a drag on economic growth. Workers. Rising unemployment and the prospects for an unequal sharing of the burden of adjustment cause unions to become increasingly militant and to engage more often in various forms of industrial action, which, by raising uncertainty and costs for businesses, force them to cut output and employment. Small and medium businesses. One of the sectors most likely to be penalized in a debt crisis is the small and medium enterprise sector. Owners of small and medium businesses know that they are vulnerable during a crisis to an expropriation of their wealth through taxes, price and wage controls, and other forms of indirect expropriation. They try to forestall this by disinvesting, cutting back on expenses, and taking money out of the country. Political leaders. As time horizons shorten and politics becomes increasingly radicalized, policymakers shift their behavior in ways that reduce credibility further, increase business uncertainty, and raise national antagonisms. It is important to recognize the almost wholly mechanical nature of credit deterioration once a country is caught in this kind of spiral. Deteriorating creditworthiness forces stakeholders to adjust. Their adjustment causes debt to rise and/or growth to slow, thus eroding creditworthiness further. The combination of these and other actions by stakeholders, in other words, can’t help but reduce GDP growth, increase debt, and increase the fragility of the balance sheet, all of which of course undermines credibility further, so reinforcing the suboptimal behavior of stakeholders. All of the exhortations by politicians, the church, public intellectuals, bankers, etc. – and there will be many – that stakeholders put personal self-interest aside and act in the best interests of the nation will be useless. Slowing this behavior is not enough. It must be reversed. But how can it be reversed? No one is big enough credibly to guarantee the creditworthiness of all the afflicted countries, and without a credible guarantee the downward spiral will occur, more or less quickly, until it is clearly unstoppable. Only connect… It is pretty clear that all of this is already happening in Spain and it is also pretty clear that every few months when the government announces the latest batch of economic and debt data, these numbers always turn out to be worse than expected and much worse than originally projected, which is, ironically, exactly what we should expect under the circumstances. Here is an article from Saturday’s Financial Times that shows just how bad it is: Nearly one Spaniard in four is unemployed, according to data released on Friday, as the country’s economic and financial predicament prompted a government minister to talk of a “crisis of enormous proportions”. The data from the National Statistics Institute showed 367,000 people lost their jobs in the first three months of the year. That means more than 5.6m Spaniards or 24.4 per cent of the workforce are unemployed, close to a record high set in 1994. The data, which follow a sovereign credit rating downgrade, prompted José Manuel García-Margallo, foreign minister, to say that they were “terrible for everyone and terrible for the government”. He compared the European Union to the doomed liner Titanic, saying that passengers would be saved only if all worked together to find a solution. It is interesting that Garcia-Magallo is openly discussing the possibility of the “passengers” not being saved. Usually in the beginning of a sovereign debt crisis we spend an unfortunately long time in which policymakers insist that the market is overreacting to bad news and that the problem – inevitably a short-term problem driven largely by illiquidity – can be resolved with patience and hard work. There is no discussion of contingency plans because the contingency is unimaginable. At some point however it becomes possible at least to acknowledge formally that policymakers might be forced into the contingency. Once this happens, the debate becomes much more intelligent and the resolution of the crisis is speeded up. I have no idea if we have reached that stage in Spain, but in that light I found an article last month, by Ambrose Evans-Pritchard of the Telegraph, both very worrying and, at the same time, comforting. In the article he says: Articles calling for Spain to withdraw from EMU – or at least exploring the idea – are no longer rare. They are appearing every day. …What is striking is the response on the comment threads of such pieces. My impression over the last month is that a large bloc of informed Spanish opinion has reached the conclusion that EMU is dysfunctional, and increasingly destructive for Spain. Many posters seem extremely well-informed, using terminology such as “debt-traps”, “internal devaluations”, and “relative unit labour costs”. Many point the finger directly at Germany, correctly stating that Berlin seems to think it can lock in a current account surplus with Club Med in perpetuity. Clearly, such as an arrangement is mathematically impossible within a currency union – unless Germany is willing to offset the surplus with flows of money for ever, either through fiscal transfers or loans or investment. These flows have been cut off. Opinion is divided, of course. The pro-euro camp is still a majority. But the smothering conformity of past years has been obliterated. As recently as six months ago one didn’t discuss in polite company in Madrid the possibility that Spain would leave the euro and restructure its debt. The prospect was unthinkable and like many unthinkable things it could not be discussed. This made it very unlikely that anyone except the radical parties of the left or right would be able to control the discussion and of course this was likely to lead to a more disorderly resolution. But now perhaps things have changed. If responsible policymakers, advisors, the press, and public intellectuals are indeed discussing and debating the future of the euro now, I am pretty sure that a real and open debate about Spain’s prospects will quickly move the consensus towards abandoning the euro. And that is why the article is comforting. The historical precedents suggest that typically policymakers postpone the decision to reverse the monetary straightjacket for as long as they can, and in the process they erect barriers towards such a reversal in the name of shoring up credibility. These barriers work by increasing the cost of a policy reversal, and the point of this is to improve credibility in investors’ eyes by increasing the cost of “misbehavior” by policymakers. Mexico did this for example in 1994 when, in order to convince an increasingly skeptical investor base that the central bank would not devalue the peso against the dollar, the Ministry of Finance shifted its domestic borrowing from peso-denominated funding to dollar-denominated funding, which of course would increase the debt-servicing cost of a devaluation for the government. Unfortunately, when policy is reversed anyway, as was the case in Mexico in 1994, the cost indeed ends up being much higher, and it takes longer for the economy to recover. In that sense the sooner Spain prepares for an abandonment of the euro the less painful it will be. But of course it won’t be painless. Whenever an analyst predicts that Spain will soon leave the euro he is almost always countered by someone who earnestly explains that Spain cannot leave the euro because the process will be too painful. In 1993-94 of curse we were told that this was why Mexico could not possibly devalue, and in 2000 and 2001 this was why Argentina could not possibly break the currency board. It would have been too painful to devalue. But of course Mexico and Argentina both did devalue and, yes, it was a very painful experience but they did it because the alternative was worse. And likewise while it is true that Spain cannot leave the euro without experiencing a very painful process, the point is not that anyone is arguing that Spain should willingly and irrationally choose to endure pain. Spain will leave the euro because the alternative is worse. This is an abbreviated version of the newsletter that went out last week. Academics, journalists, and government and NGO officials who want to subscribe to the newsletter should write to me at chinfinpettis@yahoo.com, stating your affiliation, please. Investors who want to buy a subscription should write to me, also at that address. Please follow Money Game on Twitter and Facebook.Join the conversation about this story »
- A Day After Facebook's IPO, Mark Zuckerberg Marries! (FB) Facebook CEO Mark Zuckerberg married his long time girlfriend Priscilla Chan today – a day after the company finally went public. The two met at Harvard. She once offered him a Twizzler. The ceremony was in the back yard of Zuckerberg's home in Palo Alto. 100 or so people attended. Congratulations, Mark! Best wishes, Priscilla. Attaboy, Beast. The AP Story: Facebook founder and CEO Mark Zuckerberg updated his status to "married" on Saturday. Zuckerberg and 27-year-old Priscilla Chan tied the knot at a small ceremony at his Palo Alto, Calif., home, capping a busy week for the couple, according to a guest authorized to speak for the couple. The person spoke only on the condition of anonymity. Zuckerberg took his company public in one of the most anticipated stock offerings in Wall Street history Friday. And Chan graduated from medical school at the University of California, San Francisco, on Monday, the same day Zuckerberg turned 28, the person said. The couple met at Harvard and have been together for more than nine years, the person said. Zuckerberg designed the ring featuring "a very simple ruby," according to the person who gave the following characterization of the wedding. The ceremony took place in Zuckerberg's backyard before fewer than 100 guests, who all thought they were there to celebrate Chan's graduation. Even after the IPO, Zuckerberg remains Facebook's single largest shareholder, with 503.6 million shares. And he controls the company with 56 percent of its voting stock. The site, which was born in a dorm room eight years ago, has grown into a worldwide network of almost a billion people. Zuckerberg founded Facebook at Harvard in 2004. He was named as Time's Person of the Year in 2010, at age 26. Zuckerberg grew up in Dobbs Ferry, N.Y. Please follow SAI on Twitter and Facebook.Join the conversation about this story »
- CHART: Eduardo Saverin's Not The Only One Trying To Save ... Did you know the government publishes a quarterly list of every individual who renounces his or her citizenship? The Wall Street Journal's infographics team decided to crunch the data and came up with a chart tracking the growth of how many Americans no longer wish to be so. The results are fairly striking: The accompanying article by Laura Sanders notes that in 2010, Congress passed a law requiring foreign financial institutions to certify that U.S. taxpayers aren't hiding money in them as a condition for being allowed to do business here. Funny how that appears to coincide with the sudden surge that year. Now check out 17 scary charts about America's coming retirement crisis > Please follow Your Money on Twitter and Facebook.Join the conversation about this story »
Long Investing Ideas from Seeking Alpha
- Applied Materials Ready To Bounce On Book To Bill Improve... By Arie Goren:On May 17, 2012, Applied Materials (AMAT), the global leader in providing manufacturing solutions for the semiconductor, display and solar industries, reported results for its second quarter of fiscal 2012 (ended April 29, 2012) which beat estimates, but nonetheless its stock has remained depressed. Considering its fundamentals parameters, it seems that the stock is undervalued. In contrast to its historical character of a growth stock, AMAT might now be considered a very good value stock: low price to earnings, low price to book value and low price to sell, as well as low debt and a generous dividend. As a matter of fact, its price to book and price to sell are now the lowest in this century. Applied's valuation is attractive also when comparing it to its peers, as shown in the table below.PEER GROUP: Semiconductor Equipment AMAT KLAC LRCX NVLS Closing Price (May 18, 2012) 10.36 45.56Complete Story »
- Velti: A Small, Undervalued Company With High Growth Pote... By David Zanoni:Velti (VELT) is a $424 million small-cap Ireland based company with a leading global marketing platform that connects brands with consumers. The company is the largest mobile marketing provider listed on the Nasdaq. It is reinventing marketing for the mobile era with innovative technology and solutions. Velti's mGage platform provides users with easy-to-use tools to plan and run highly-interactive marketing campaigns. Customers are able to produce their content once which can be used on a variety of handheld devices. The mGage platform also provides detailed analytics and reporting allowing customers to determine whether campaigns are successful or not. Some of Velti's customers include: Ford (F), General Motors (GM), AT&T (T), Disney (DIS), American Express (AXP), Macy's (M), and more. click to enlarge images Revenue for Q1 2012 increased 75% from $29.6 million in Q1 2011 to $51.8 million. The revenue breakdown by region is as follows: 31% from the UnitedComplete Story »
- Valuing Facebook Against Its Peers: Can A Case Be Made Fo... By Helix Investment Management:The hype surrounding the Facebook (FB) IPO resembled something seen in the heyday of the dot-com era, with the fervor reaching a fever pitch on Thursday, May 17, the day before Facebook started trading on the NASDAQ. The IPO was priced almost perfectly, as the stock did not see a huge pop, meaning that the underwriters did not underprice it, thus leaving money on the table for the company. However, the stock almost fell through the $38 IPO price, and the underwriters were forced to step in and defend the stock. With the IPO now complete, investors can begin to look at Facebook and value it just like any other company. That is what we aim to do in this article. We will be comparing Facebook to several of its peers to see if a case can be made for investing in the stock. We chose 3 peers in theComplete Story »
- The Final Nails In The Dot-Com Coffin: Facebook And Apple By Stanley Barton:The beauty of being a long-term, value investor is that you get vindication every 20 years or so. Unfortunately, that is small compensation for all those luncheons with colleagues bragging about their stock picks doubling, when the best thing you have to celebrate is a ten-cent dividend bump. There are also uncomfortable situations, such as stepping into the batter's box at the company softball game, as hecklers taunt you with nicknames like "Dead Money."For better or worse, my value-oriented investment style generally prevents me from participating in "bubbles." Early in that phase, frothy stocks are disqualified by my value screens, so all I can do is watch them inflate, rise and pop. This article describes how I believe the market action of Apple (AAPL) and Facebook (FB) signals that the "Dot-com Bubble" can rest in peace.The anticipation leading up to the Facebook IPO, combined with lofty valuations ofComplete Story »
- Hewlett Packard: 75% Profit Likely By Mid 2014 By Stock Croc:Hewlett-Packard (HPQ) has not had a good going of late. Its stock is down over 14% in 2012 and most analysts are lukewarm to its prospects. When HP reports its first quarter earnings next week, it's expected to report earnings of 91 cents per share -- down around 27% from a year earlier.The Personal Computer maker is clearly not a stock market darling. HP's Price-Earnings (P/E) ratio is just below 8, which is below that of the S&P500 (21) and the PC Sector (14). Like its chief competitors, Dell (DELL), Lenovo (LNVGY.PK) and Acer, HP has plugged away in an industry stuck in a vicious cycle of product commodification, tight margins and poor business prospects.The silver lining for HP is that it regained the top spot in the PC market in the first quarter. Moreover, PC shipments actually increased by 21% -- and shipments of Desktop and NotebookComplete Story »
- Has Research In Motion Become A Bargain? By Maple Markets:It is no secret that Research In Motion (RIMM) is not the favorite technology firm of Wall Street any longer. The Blackberry developer and manufacturer has struggled, failing to meet product launch deadlines, missing sales targets with its Playbook tablet and to this point it has failed to engage the application development community. With all of these negatives to consider, there is little doubt that Research In Motion is no longer the Canadian technology darling amongst investors that it was several years ago.With all of these negative aspects considered, investors do need to look at the value of the assets behind the company as well as the potential value of patents and the enterprise services business. What kind of value does a sum of the parts analysis yield? Is Research In Motion worth more than its current market price?First, the firm has substantial cash resources on the balanceComplete Story »
- Google Could Jump $80 By 2013, Anything Beyond That Is A ... By Stock Croc:Google (GOOG) recently announced a significant revision to its search engine algorithm called Knowledge Graph. This modification uses word associations (in a manner similar to the human brain) to enable it to deliver more relevant search results, thereby enhancing its users' search experience.The change came amidst reports that Google has been losing search market share in the U.S. market - which has long been the bulwark of its profitability - to Microsoft's (MSFT) Bing search engine. Tallies for April 2012 show that Bing now accounts for about 30% of the U.S.'s online web searches, up over 3 percentage points from a year earlier.Meanwhile, by April of 2012, Google's share of U.S. online queries had fallen by almost 3 ½ percentage points, from close to 68% to around 64.4%. Even beleaguered Yahoo (YHOO) saw a moderate uptick of 1% on its searchThis is more significant than it seems:Complete Story »
- Why Investors Are Buying EMC Like Crazy By Mel Daris:EMC (EMC), a major player in the data storage industry, is making something of a splash in the technology sector. Trading at just over $26 per share, EMC has a market capitalization of almost $55 billion. Call traders have shown increased interest in EMC recently, so I'm going to analyze the stock from a value investor's perspective and see what catalysts are afoot that may account for EMC's recent popularity with these investors.EMC is a global provider of virtual infrastructure technologies and solutions, enterprise storage systems and software, data backup and recovery, disaster recovery and archiving solutions, fraud protection, consulting, and a host of other products and services.The stock has a trailing twelve month price to earnings ratio of 22.63 and an almost ideal price to earnings growth ratio of 1.08. EMC's price to book is a very acceptable 2.73. Return on equity stands at 13.85% and quarterlyComplete Story »
- Envivio: Shares Unfairly Tossed Out After A Broken IPO? By Spencer Grimes:While the media and many stock market participants were endlessly fascinated by the Facebook (FB) IPO (which overwhelmed the immediately prior obsession with the JP Morgan trading loss), I took the opportunity to buy shares of an all-but-forgotten company called Envivio (ENVI) that had a much less celebrated IPO just three weeks ago. Like FB on Friday, ENVI experienced a disappointing first day of trading on April 25. But unlike FB's underwriters, led by Morgan Stanley, which stoutly supported the stock to prevent an embarrassing breach of the issue price, ENVI's underwriters, led by Goldman Sachs, apparently declined to support the ENVI stock in the aftermarket. ENVI's IPO came at $9 per share, down from the stated range on its S-1 filing of $10-$12 and has only briefly traded above the issue price in the ensuing three weeks. It closed down 5% on its first day and after 18 tradingComplete Story »
- Intel Ready To Rise 15% By 2013 By Stock Croc:With shipments of Tablet PCs expected to exceed that of traditional desktop and notebook PCs by 2013, Intel (INTC), the Goliath of the semiconductor market, finds itself in a bit of pickle.While Intel continues to dominate the x86 processor market, having shipped 80% of all x86 chips in the 1st Quarter of 2012, it has a much smaller footprint in the mobile processor market, where chips based on ARM Holdings (ARMH) designs, such as Apple's (AAPL) A5 Qualcomm's (QCOM) Snapdragon, Samsung's (SSNLF.PK) Exynos and Texas Instrument's (TI) OMAP, have competitive market shares.Some have actually suggested that Apple, owing to the dominance of the iPad in the tablet market, could actually become the leader in mobile processors by the end of 2012. The truth of the matter is not that simple. While it may come to pass that Apple-branded chips could ship the most numbers in 2012, for allComplete Story »
Short Stock Ideas from Seeking Alpha
- Facebook Has A Growth Problem By Jim Pyke:On May 18, 2012, Facebook, Inc. (FB) finally opened to a furious day of trading with over 580 millions shares exchanging hands. However, FB closed at $38.23, just pennies above its IPO price. This means that those who bought on the public market are most likely in the red. However, this also means they did a near perfect job of pricing the shares to maximize capital raised which benefits the pre-IPO investors. FB's current equity market capitalization is a staggering $104.8 billion, the highest market cap on its IPO day of any American company. Rival Google, Inc. (GOOG), despite having about a ten times the revenue and net income of FB, is not even worth twice as much. This difference is reflected in FB's staggering PE ratio of 105x. When one considers that the S&P 500 trades at around 14x earnings, it is clear that FB has lofty expectations. GrowingComplete Story »
- Nvidia: The Long-Term Situation Is Grim By Braden Holstege:Nvidia (NVDA) faces a major strategic problem. Integrated graphics, in the form of Intel's (INTC) Ivy Bridge and AMD's (AMD) newly released Trinity, are rapidly reaching the point of being good enough for the majority of usage cases. Integrated graphics processors are now capable of real time video transcoding and smooth game playing at common laptop resolutions. Three or four years ago, seeing this type of performance from an integrated chip would have been unthinkable.Furthermore, the relative performance of integrated graphics is likely to increase substantially in the next couple years. Intel's Haswell GT3 graphics chip is projected to have performance increases of at least 50% over Ivy Bridge, and possibly much more. Current Intel Ivy Bridge processors have an incredibly small die size, at 160mm2 for a quad core model. This means the company can devote die space to scaling graphics performance with great flexibility.AMD has alsoComplete Story »
- Will Frontier Communications Go To Zero? By Jim Pyke:I have been a long time skeptic on Frontier Communications Corporation (FTR). In the past year, FTR has done nothing to encourage shareholders and lots of things to excite the shorts ranging from lost subscribers to multiple dividend cuts. Over this period, the stock has dropped from $7.49 at the end of July to $3.22 this past Friday. Factoring in three quarterly dividends means that shareholders have suffered through a 51% loss.FTR is a rural telecommunications services provider to residential and business customers offering basic telephone service, internet and data services, and additional services. As of March 31, 2012, FTR served 5.2 million access lines (landline telephones), 1.78 million high speed internet subscribers and 562 thousand video customers. FTR also provides switched access service to other carriers.I think FTR has a very bleak outlook under current management and based on its performance of the past year. FTR hasComplete Story »
- I Told You So: Facebook's Ugly IPO Debut By Value in Stock Market:Earlier, I wrote that Facebook's (FB) IPO is becoming a sucker's bet. On its IPO debut, Facebook started at $42, hit a high of $45 for a brief moment, and then turned south quickly. It hovered around the round number psychological price of $40, and went directly to $38 at approximately 11:50 EDT. $38, Facebook's official IPO price, provides the second psychological barrier that sustained through the day. Its price bounced back from there and stay above $38 for most of the rest of the day. The fact that $38 has been hit multiple times during the day makes it a very ugly IPO.Once $38 is penetrated, the bottom for Facebook's stock price can be pretty deep.By midday, many Facebook related plays went down in sympathy: Zynga (ZNGA) was down 13.3% and its trade was halted. Renren (RENN), the Chinese equivalent of Facebook, was down 9.4%. GSV CapitalComplete Story »
- CRM Is Too Expensive Even If You Love The Business Idea By : Tiago Romão Salesforce.com (CRM) supplies customer relationship management services, providing a technology platform for customers and developers to build and run business applications. Notice that this is a company with a core business focus on the relationship between suppliers and customers' through social media using a cloud system, which implies a great potential in terms of future for its core business. Nevertheless, sometimes a company with great potential in terms of their main activity can be expensive in terms of stock market price, and this is one of this cases.CRM's balance sheet presents a debt ratio of 60% reflecting the recent investments in the cloud system which were mostly financed by debt. This is clearly a strategy based on growth financed by creditors that produced the desirable consequence, an increase in revenues. Notice that CRM's residual value is $919 Million when the current market cap is $18942 Million, implying a potentialComplete Story »
- BioTime: A Track Record Of Broken Promises By Apsara Biotechnology Research/a>:Our extensive research has led us to conclude that BioTime (BTX) is grossly overvalued and that its shares should trade at a small premium to the company's cash balance - currently 45 cents per share. Both BioTime and its current CEO Michael West have a long track record of commercial failure. The company has inflated its valuation by selling an appealing story about the potential of stem cells. Its marketing has been aided by overly optimistic rhetoric from investment newsletter writers who claim the company has cracked the DNA command code and that it can produce new cardiovascular systems on demand. BioTime has achieved no such thing; in fact, it does not even have any stem cell-derived products in the FDA pipeline. Embryonic stem cells have failed to produce marketable drugs for more than a decade now. BioTime's CEO, Michael West, has previously headed two struggling stem cell-centered biotech companies.Complete Story »
- Facebook Vs. LinkedIn: Comparison And Fundamentals Show L... By Colin Lokey:In a recent Forbes article, contributor Daniel Fisher suggests that LinkedIn (LNKD) is a more "clever" way to play the social networking craze than Facebook (FB). The argument hinges on the supposed superiority of Linkedin's business model -- the company generates most of its revenue by charging employers to search LinkedIn member profiles for prospective hires. Fisher asserts that this more "conventional" way of doing things is a far more predictable revenue generator than selling advertisements and, as such, will ultimately prove to be a more reliable generator of free cash flow. There are multiple problems with this idea.First, Fisher bases the argument on the fact that LinkedIn generated free cash flow of $41 million in the first quarter of 2012 while Facebook's free cash flow was negative $50 million for the same period. What he doesn't mention is that LinkedIn's trailing twelve month (TTM) free cash flow wasComplete Story »
- Salesforce.com's Cash Flow Shows The Real Decline In Mome... By Sunil Shah:If you are looking for 'awesome, terrific, fantastic' superlatives for the first quarter of Salesforce's 2013 fiscal year, you need go no further than the call transcript. No doubt the sell side brokers will echo Benioff's gusto today.I bring a different angle: the decline in momentum is evidenced by their cash flow. In the January 2012 quarter they booked a couple of huge deals. This is best seen by the jump in deferred revenue and the debtors for the period (462m and 365m respectively). In other words a few big deals boosted both numbers at the end of January, and this clearly impressed the market.However the cash flow for April tells a very different story.On a sequential basis, their version of cash flow fell from 240m in Jan to 213m in April; quite a reduction, of 12% in itself. They include shares issued to staff as partComplete Story »
- Discounted Free Cash Flow Model Shows El Paso Is Overvalued By Vytautas Drumelis:El Paso Corp. (EP) operates in the Oil & Gas Pipeline industry. I think this stock is overvalued by up to 61% or even more. Below are my calculations using FCFF model, multiples comparison and other interesting facts and threats. Discounted Free Cash Flow Valuation In this article I will run you through my DCF model. In particular I will be using free cash flow to the firm FCFF model to evaluate the stock. Feel free to share your opinion regarding the assumptions I made for this valuation.Let's start with the top line. It recorded $5.22B revenue in 2011, which represented 8.54% growth Year/Year. In 2010 revenue contracted by 8.75% compared with 2009. In 2012, however, I predict that the company will record 13.8% revenue as in 2011, and modest 1% recovery in 2013. I would predict up to 10% growth for the next 4 years, however, I willComplete Story »
- Amazon.com Triggers Signal To Short - But Do Not Pull The... By Dr. Duru: Amazon.com (AMZN) reported earnings April 26th and soared in the after-hours about 22%. At the time, Complete Story »
Transcripts from Seeking Alpha
- Brookdale Senior Living's CEO Presents at Bank of America... Brookdale Senior Living Inc. (BKD) Bank of America Merrill Lynch 2012 Health Care Conference May 17, 2012 11:40 AM ET Executives Bill Sheriff – CEO Ross Roadman – SVP, IR Analysts Kevin Fischbeck – Bank of America Merrill Lynch Presentation Kevin Fischbeck It’s my pleasure to introduce Brookdale Senior Living. Brookdale is the largest Senior Living company in the country through its portfolio of assisted living retirement center and continued care retirement center portfolio. The company also has a large and growing ancillary services business. Presenting today we have Bill Sheriff, CEO and Ross Roadman, Senior Vice President of Investor Relations. And with that, I hand over to Bill. Bill Sheriff Thank you Kevin and we do appreciate the opportunity to present today. And as Kevin mentioned, I’ll be sharing the presentation this morning with Ross, our Senior Vice President and Investor Relations. I want to try to cover theComplete Story »
- GATX Management Presents at Bank of America Merrill Lynch... GATX Corporation (GMT) Bank of America Merrill Lynch 2012 Global Transportation Conference May 17, 2012 2:55 PM ET Executives Mark Rittenbaum – VP, EVP and CFO, The Greenbrier Companies Bob Lyons – SVP and CFO Tim Wesley – VP, IR, Wabtec Corporation Analysts Ken Hoexter – Bank of America Merrill Lynch Presentation Ken Hoexter – Bank of America Merrill Lynch I will knock off my part before the panel gets started. So keeping with the panel of team of the afternoon, right now we’ve got Rail CapEx Cycle in Full Swing. With us today, we’ve got The Greenbrier Companies, GATX Corp, and Wabtec on our next panel. Let me start off with Greenbrier Companies will be up first. About $400 million market cap company. With us today, we’ve got Mark Rittenbaum, Vice President, EVP and Chief Financial Officer. And the company is a leading designer and manufacturer of rail roadComplete Story »
- Cameco Management Presents at Bank of America Merrill Lyn... Cameco Corporation (CCJ) Bank of America Merrill Lynch 2012 Global Metals, Mining & Steel Conference May 17, 2012 12:10 PM ET Executives Alice Wong – SVP and COO Analysts Oscar Cabrera – Bank of America/Merrill Lynch. Presentation Oscar Cabrera (inaudible) for another great conference. Last but not least is Cameco Corporation. Presenter for Cameco is Ms. Alice Wong. She is Senior Vice President and Chief Corporate Officer with oversight for investor, corporate, government, and regulatory relations, and corporate-social responsibility. Alice has worked with Cameco for more than 25 years and has experience in a number of areas including marketing, corporate development, strategic planning and communications. And again Alice, after Fukushima, the uranium markets has been in a bit of a turmoil and you guys have been the stewardess of the uranium industry, always looking forward to hear updates on your views in the market and what’s new with Cameco inComplete Story »
- VCA Antech's Management Presents at Bank of America Merri... VCA Antech, Inc. (WOOF) Bank of America Merrill Lynch Health Care Conference Call May 17, 2012 14:20 ET Executives Tom Fuller – Chief Financial Officer Jeff Framer – Corporate Controller Analysts Erin Wilson – Bank of America Bob Willoughby – Bank of America Presentation Erin Wilson – Bank of America ….services team with Bob Willoughby. We are happy to have such a strong animal health contingent this year at the Bank of America Merrill Lynch Health Care Conference. Up next, we have VCA Antech, the leading animal hospital chain and leader of what we’d like to call the diagnostic sector. And with that, I’ll hand it over to the Chief Financial Officer, Tom Fuller. Tom Fuller Thank you, Erin. I am Tom Fuller, the CFO of VCA. With me is Jeff Framer, who is actually our new Corporate Controller. And about six months ago I think Jeff has the –Complete Story »
- Parametric's CEO Presents at JP Morgan TMT Conference (Tr... Parametric Technology Corporation (PMTC) JP Morgan TMT Conference Transcript May 17, 2012 9:50 AM ET Executives Jim Heppelmann – Chief Executive Officer Tim Fox – Investor Relations Analysts Sterling Auty – JP Morgan Presentation Sterling Auty – JP Morgan Thanks, everyone for joining us. My name is Sterling Auty. I'm the software technology analyst with JP Morgan. Happy to have with us Jim Heppelmann who is Chief Executive Officer of Parametric Technology. I'm going to turn the mic over Tim Fox briefly to do safe harbor, then over to Jim just to do couple of brief overview comments. And we're going to jump right into fireside chat Q&A. With that, Tim. Tim Fox So today's presentation is and Q&A session contains forward-looking statements regarding future products, or anticipated future operations or financial performance any such statements will be based on current assumptions of PTC's management and are subject or risksComplete Story »
- JetBlue Airways' Management Presents at Bank of America M... JetBlue Airways Corporation (JBLU) Bank of America Merrill Lynch Global Transportation Conference Call May 17, 2012 10:50 ET Executives Mark Powers – Chief Financial Officer Analysts Glenn Engel – Bank of America/Merrill Lynch Presentation Glenn Engel – Bank of America/Merrill Lynch Powers, Chief Financial Officer of JetBlue. Having joined JetBlue in 2006, Mark became CFO last year and he brings a relatively young airline, plenty of experience gleaned from his years at Continental, Northwest, GE Capital. JetBlue often likes to talk about its commitment to all of its stakeholders. And I'd like to think that Mark is probably the most forceful advocate for the shareholder within JetBlue, and for that, I appreciate him. Mark Powers So, that's put pressure on me right? So, this is Investor Relations. Glenn, thank you very much. And I know this is webcast, so for those of you who are joining us on webcast today,Complete Story »
- Valassis' Management Presents at J.P. Morgan Technology, ... Valassis Communications Inc. (VCI) J.P. Morgan Technology, Media and Telecom Conference Transcript May 17, 2012 11:10 AM ET Executives Bob Recchia – Chief Financial Officer Analysts Presentation Unidentified Analyst I’m pleased to welcome Valassis Communications to the J.P. Morgan TMT Conference. Valassis is a leading marketing -- media and marketing services company, both national and local level, reaching $100 million households every week through the mail, internet and store and newspapers. With us today is Bob Recchia, CFO. Thanks for being here Bob. Bob Recchia Thank you. Unidentified Analyst To start it off, could you give an update on advertising trends you are seeing both for Valassis, specifically in the wider promotional market? Bob Recchia Yeah. Just I would start with Valassis specifically the numbers that we saw in the first quarter are pretty much an indication of what we expect in the first half of the year in termsComplete Story »
- BioScrip's CEO Presents at Bank of America Merrill Lynch ... BioScrip Inc. (BIOS) Bank of America Merrill Lynch 2012 Health Care Conference Transcript May 17, 2012 3:40 PM ET Executives Rick Smith – President and CEO Analysts Presentation Unidentified Analyst …this afternoon for, I guess, last but not least for our final presentation of the conference. But with the final presentation we have Rick Smith, the President and CEO of BioScrip. Thank you, Rick for joining us… Rick Smith Thank you. Unidentified Analyst …and let’s take it away. Rick Smith Okay. Good afternoon. Here is a Safe Harbor for your information. The BioScrip has been going under series of steps of transformation over the last 15 months. As of for 2011 our total revenue size is about a $1.8 billion in revenue and as part of our transformation we had made a decision to sell certain parts of our business that represent about a $1.2 billion revenue is more inComplete Story »
- Schiff Nutrition International's CEO Presents at Bank of ... Schiff Nutrition International, Inc. (WNI) Bank of America Merrill Lynch 2012 Health Care Conference Call May 16, 2012 6:40 pm ET Executives Tarang Amin – President and Chief Executive Officer Joseph W. Baty – Executive Vice President and Chief Financial Officer Presentation Unidentified Analyst Okay. My name is (inaudible) I work with Gregg Gilbert. I’m the specialty pharmaceuticals in U.S. Major Pharmaceuticals team. I’m happy to present to you, Schiff Nutrition, this is Tarang Amin, CEO; and also Executive Vice President and CFO, Joe Baty. Tarang Amin Thanks. Good afternoon. My pleasure to give you a little bit of an overview on Schiff Nutrition and then Joe and I’ll then answer any of your questions. For those of you who are not familiar, Schiff has actually got a 75 year history of delivering high quality nutritional supplement with a rich heritage (inaudible) first brand in this space, and a greatComplete Story »
- Varian Medical's CEO Presents at Bank of America Merrill ... Varian Medical Systems, Inc. (VAR) Bank of America Merrill Lynch Health Care Conference Call May 15, 2012 04:00 pm ET Executives Elisha W. Finney – Corporate Executive Vice President, Finance and Chief Financial Officer Spencer R. Sias – Vice President, Corporate Communications and Investor Relations Analysts Presentation Unidentified Analyst [Call Starts Abruptly] Analyst at B of A. And here with me from Varian, we have Elisha Finney, the CFO, and Spencer Sias, the Head of Investor Relations. Elisha's is going to go ahead and speak for 15 minutes or so, and then we will open it up for Q&A. Elisha W. Finney Thank you, [Lenux]. What we thought we would do is just give a brief summary this afternoon and then make sure we leave time to answer any questions that you might have. I will be making some forward-looking statements. Varian's mission is focusing energy on saving lives. AndComplete Story »
Jim Cramer's Stock Picks from Seeking Alpha
- Cramer's Mad Money - 13 Things To Watch In The Coming Wee... By SA Editor Miriam Metzinger: Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday May 18. 13 Things To Watch In The Coming Week: Lowe's (LOW), Campbell's Soup (CPB), TechData (TECD), Autozone (AZO), Best Buy (BBY), Ralph Lauren (RL), Dell (DELL), Toll Brothers (TOL), Hewlett-Packard (HPQ), Pandora (P), Phillips Van Heusen (PVH), Costco (COST), Tiffany (TIF). Other stocks mentioned: Home Depot (HD), Hain Celestial (HAIN), LinkedIn (LNKD), Facebook (FB), Salesforce.com (CRM), Chesapeake Energy (CHK). Cramer discussed things to watch in the coming week: Monday: Lowe's (LOW) reports, and Cramer is circumspect after a downbeat reaction to Home Depot's (HD) good quarter. HD might be picking up market share from Lowe's, and Cramer would rather own HD than Lowe's.Campbell's (CPB) yields 3.5%, and might ordinarily be a buy, but after talking with CEO Irwin Simon of Hain Celestial (HAIN), Cramer thinks the latter might be winning the soup wars, asComplete Story »
- Cramer's Mad Money - Salesforce Is The Facebook For Enter... By SA Editor Miriam Metzinger: Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday May 17. CEO Interview: Marc Benioff, Salesforce.com (CRM). Other stocks mentioned: Facebook (FB), Vodafone (VOD) Cramer called Salesforce.com (CRM) the "Facebook for Enterprise," and it has the best growth of any tech stock. The company reported a quarter that beat numbers on every metric, with a 38% increase in revenue and operating cash flow up 53% year over year. While Europe seems to be the root of many companies' evils, CEO Marc Benioff said that business was strong in Europe, particularly the U.K. where it completed a deal with the Royal Mail post office and Vodafone (VOD). Japan was also strong. Salesforce.com is a revolutionary tech company that pioneered cloud computing. Benioff discussed another revolutionary company, Facebook, and believes there is very strong fundamental growth ahead for FB; "We've never had an application like this. ItComplete Story »
- Cramer's Lightning Round - Intuit Lacks A Catalyst (5/17/12) By SA Editor Miriam Metzinger: Stocks discussed on the Lightning Round session of Jim Cramer's Mad Money TV Program, Thursday May 17. Editor's Note: There were no bullish calls on Thursday's Lightning Round. Bearish Calls: Intuit (INTU): "It is a great franchise. I don't like to buy it after tax season, because there is no catalyst. Don't buy." Oshkosh (OSK): "Governments are cutting back on buying equipment. I don't want to buy the stock." Canadian Pacific (CP): "I don't like the rails because they ship many things that involve oil, and oil is going lower, and of course (they ship) coal. I want you to ring the register."Complete Story »
- Cramer's Mad Money - Oil's Not Well (5/16/12) By SA Editor Miriam Metzinger: Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday May 16. Schlumberger (SLB), Apache (APA), Occidental Petroleum (OXY), Joy Global (JOY), Freeport McMoRan (FCX) Commodities and oil are getting hit hard, but are stocks in this sector low enough to buy? Cramer discussed the analysis of Carolyn Boroden of FibonacciQueen.com. In a word, the charts of most oil stocks are horrible and are not going to get better. Schlumberger (SLB), Apache (APA) and Occidental Petroleum (OXY) are making lower highs and lower lows and are below their 50 day and 200 day moving averages. Unless SLB can break out above $76, 10 points from where it is right now, it could fall 26% to $47.72. Apache needs to break out above $98, or 16 points above its current level, or it could drop 20 pointsComplete Story »
- Cramer's Lightning Round - The Greatest Speculative Stock... By SA Editor Miriam Metzinger: Stocks discussed on the Lightning Round session of Jim Cramer's Mad Money TV Program, Wednesday, May 16. Bullish Calls: VirnetX Holding Corporation (VHC): "The greatest spec of all time...or at least since our show began. It keeps winning battles and lawsuits. Even though it is a lawsuit patent name, it can go higher. It trades radically." Las Vegas Sands (LVS): "I prefer Las Vegas Sands (to MGM)." PepsiCo (PEP): "I don't want you to sell. There is a big turnaround. I am telling you to hold on. You can see higher prices now that commodities are coming down." Federal Realty (FRT): "We are Federal Realty believers...yes to Federal Realty." Bearish Calls: Superior Energy (SPN): "It is in the doghouse...down for the year. I am avoidingComplete Story »
- Cramer's Lightning Round - McDonald's Informed Downgrade ... By SA Editor Miriam Metzinger: Stocks discussed on the Lightning Round session of Jim Cramer's Mad Money TV Program, Tuesday May 15. Bullish Calls DirecTV Group (DTV): "...DirecTV is a better buy (than Dish). It is a better company." Energy Transfer Partners (ETP): "...the MLPs are down. I'm going to send you to Energy Transfer Partners." Bearish Calls: McDonald's (MCD): "Someone downgraded it and it didn't go down...ordinarily, I'd say buy it, but it was an informed downgrade...let's wait and see if we can get it between a 3% and 3.5% yield." Tractor Supply Company (TSCO): "Someone is going to say this should be sold....we are going to take this down to $92-93 as a place to buy. Not right here." Newcastle Investment (NCT): "We've looked at this over and over again...unless they come on the show, I don't know what theyComplete Story »
- Cramer's Mad Money - The Facebook No Buy Zone (5/15/12) By SA Editor Miriam Metzinger: Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday May 15. No Buy Zone For Facebook (FB), Zillow (Z), Jive (JIVE), Linkedin (LNKD) It has been announced that the Facebook IPO will be priced 14% higher than anticipated, to over $38. A huge pop on Friday is a foregone conclusion, since recent social media IPOs jumped an average of 42% the first day. While Cramer urges investors to get in on the FB deal and buy as many shares as possible, he calls Friday a "No Buy Zone" for Facebook. Even if the stock falls dramatically from its initial pop on Friday, there will be a better time to buy it than Friday. Cramer discussed other social media IPOs that have worked as long-term investments: Zillow , Jive and LinkedIn. Investors who were patient and waited for a lower entry point in ensuing weeks andComplete Story »
- Cramer's Mad Money - Disney Takes Revenge (5/14/12) By SA Editor Miriam Metzinger: Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday May 14. CEO Interview: Bob Iger, Disney (DIS) Following the disappointment of John Carter, Disney (DIS) has gotten revenge against bearish statements with The Avengers, a success that demonstrates the power of a great acquisition, namely Disney's merger with Marvel. "The Avengers exceeded our expectations," explained CEO Bob Iger. "...We are fortunate to have Marvel, which is a great brand and a great franchise with great people." The Avengers, which will inspire a sequel, a TV series and eventually a theme park ride, will give Disney earnings visibility for years. Disney is firing on all cylinders with the success of its theme parks and cruises. The domestic business is strong, "Europe is a little bit softer, Asia is on fire," especially the parks in Hong Kong and Japan. When asked about the viability of television advertisingComplete Story »
- Cramer's Lightning Round - Slim Pickens For Clean Energy ... By SA Editor Miriam Metzinger: Stocks discussed on the Lightning Round session of Jim Cramer's Mad Money TV Program, Monday May 14. Bullish Calls: American Axle & Manufacturing Holdings (AXL): "I like the auto parts companies. People think they are slipping, and that is why the stock is slipping back...I want to stay long on it." Domino's Pizza (DPZ): "...has come down a lot. They paid that dividend. I want to step up to the plate and buy." Bearish Calls: Clean Energy Fuels (CLNE): "CLNE is suffering from comments from Boone Pickens, and he's saying Washington is hopeless. That means CLNE doesn't have a lot of hope that Washington willComplete Story »
- Cramer's Mad Money - 15 Things To Watch In The Coming Wee... By SA Editor Miriam Metzinger: Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program,Complete Story »
Hugh Hendry Blog
- Hugh Hendry Comments “The thing that I fear is confiscation. Confiscation of my assets, confiscation of my clients’ assets. I fear that this thing could get out of [control]. I think we’re a year away from the French fully nationalizing their banking system…” Hugh Hendry is a fund manager at Eclectica Asset Management. He has become prominent in the United Kingdom for his commentary on the financial crisis. Hendry has been referred to as "the most high-profile Scot in the controversial (Hedge Fund) sector."
- Hugh Hendry 2012 Letter and Views Hugh Hendry is back with a great investment and shareholder letter which provides a great insight into what he thinks. Here is a brief summary from BusinessInsider. Hendry is still very bearish on China. He doesn't think that China will be supplanting the US economy as the world's #1 in GDP anytime soon, and in fact he's fairly bullish on the US thanks to the burgeoning energy business. He might be right as natural gas is extremely cheap and USA could become energy independent at a certain point in the future. The problem in China is that its success was long based on the artificial depression of the currency, and financial repression that prevented banks from offering decent interest rates to savers. Anyone with their money in a bank got crushed, so to get around this financial repression the people bought houses like crazy. That is why he believes that there is a big housing bubble. The scale of the Chinese housing bubble has been unprecedented, and the scale of underground credit is enormous. There are trillions of dollars of loans that originate through firms that are nominally in businesses like shipbuilding, but which ended up in the mortgage credit game. Once the market start crashing it will also affect Japan. China is so freaked out by all this, it's given death sentences to some of the underground players in the real estate bubble. Hendry sees a Weimar-like situation where Chinese leaders thought they could get away with fiscal profligacy on the back of strong exports, but the weakness abroad means it might not happen. He is worried that the Yuan might also depreciate and even crash given the huge money printing the Chinese did compared to the size of their economy. The Chinese market is a casino, pure and simple. It only benefits insiders. There's no reason for anyone to invest in it. The way Hendry has shorted it, however, is via Credit Default Swaps on Japanese corporates that are exposed to China. Japanese companies remain very troubles with debt loads that are way too high. This is why Japan is a value trap that has taken in suckers for years, thinking that stocks are very cheap. In Japan he sees, what he calls "The Tranquility That Could Rock the World." Even though he is pessimistic about the Japanese corporations, he believes that the authorities and the centra bank of Japan will not devalue the yen and will probably do it after another round of yen appreciations and corporate losses. Ultimately, he thinks we'll see one more washout in the market, with 30-year Treasury yields hitting 2.5% (they're currently at 3.125%) and the VIX surging to 80, at which point we'll have a truly 'generational' opportunity to buy risk assets. It is really interesting view because he is not overly bullish on bonds compared to VIX. I wonder how much stocks must go down so the VIX go to 80. Probably his view on the bonds expresses that even though bonds are safe heaven they are at their last stage of a bubble. You can view the whole 2012 Hugh Hendry letter below: April 2012 TEF Commentary Hugh Hendry is a fund manager at Eclectica Asset Management. He has become prominent in the United Kingdom for his commentary on the financial crisis. Hendry has been referred to as "the most high-profile Scot in the controversial (Hedge Fund) sector."
- Hugh Hendry Investments Below you can read what Hugh Hendry of Electica Asset ManagementHas Been Buying "In the next 12 months, we'll see further pathological swings in investor sentiment. Despite my reservations, I'm modestly long equity-market futures, some nonindustrial commodities, and some bullish fixed-income positions. We are very bullish agricultural commodities and agricultural equities, and hold a global basket of businesses—with interests ranging from fertilizer to farm equipment." He has also positioned his fund by betting on Japan’s corporate debt problems by buying protection on steel names and businesses sensitive to the yen. He's also bought credit protection on the shipping industry in Japan such as Mitsui OSK. Additionally, Hendry mentioned he's got protection on companies levered to the global economy such as Sumitomo and Marubeni. Hugh Hendry is a fund manager at Eclectica Asset Management. He has become prominent in the United Kingdom for his commentary on the financial crisis. Hendry has been referred to as "the most high-profile Scot in the controversial (Hedge Fund) sector."
- Hugh Hendry Quantitative Easing Cycle 1. FED QE 2. Rejects Globalization 3. Rejects China Gaming FX 4. Fed Seeks to Create Domestic Price Inflation Overseas 5. Fed Seeks to Revalue China et al FX Real v Nominal Prices 6. But China Imposes Tighter Credit Controls to Offset Fed Stimulus 7. And Euro Debtor Countries Raise Rates Despite High Unemployment a la 1931 8. And so EM Growth Slows 9. And with a six month lag US / Germany Slows 10. But Zero Lower Bound Restricts Monetary Policy 11. And High Sovereign Debt Restricts Additional Fiscal Stimulus 12. FED do another QE Hugh Hendry is a fund manager at Eclectica Asset Management. He has become prominent in the United Kingdom for his commentary on the financial crisis. Hendry has been referred to as "the most high-profile Scot in the controversial (Hedge Fund) sector."
- Hugh Hendry 2012 Investments In the next 12 months, we'll see further pathological swings in investor sentiment. Despite my reservations, I'm modestly long equity-market futures, some non-industrial commodities, and some bullish fixed-income positions. We are very bullish agricultural commodities and agricultural equities, and hold a global basket of businesses—with interests ranging from fertilizer to farm equipment. Hugh Hendry is a fund manager at Eclectica Asset Management. He has become prominent in the United Kingdom for his commentary on the financial crisis. Hendry has been referred to as "the most high-profile Scot in the controversial (Hedge Fund) sector."
- Hugh Hendry on the Greece As for Greece, the end game will be the Greeks rejecting austerity. The euro is nothing but a gold standard lacking flexibility, and the entire onus is on private citizens to take the pain. Eventually, a Greek politician will say, ‘Vote for me, and I’ll get us out of this system.’ Hugh Hendry is a fund manager at Eclectica Asset Management. He has become prominent in the United Kingdom for his commentary on the financial crisis. Hendry has been referred to as "the most high-profile Scot in the controversial (Hedge Fund) sector."
- Hugh Hendry bought CDS on Japanese Corporations Hugh Hendry of Eclectica Asset Management: Clearly, they can and do go bust. I’m buying the CDS on investment-grade Japanese corporations because of the overpricing anomaly. Japan had a bust 20 years ago, and yet today the banking stocks, relative to (Japanese bourse) Topix, are making fresh lows. If I’m a Japanese bank and I lend money to a new business, I get 1% on 10-year paper. Then the bank gets a call from me, and I’m willing to pay 50 basis points for five-year protection on this same company. So suddenly, the yield has gone from 1% to 1½%. Compare that to five-year Japanese government bonds, yielding 30 basis points. The bank thinks: This is a great trade! Japanese steel companies are investment-grade and won’t go bankrupt. So, the bank gets this huge yen yield, and thinks it is not taking any risk. You’d better believe it will sell way too much of that good thing. One of my partners told me about Japanese steel: Here is a country with no energy, no iron ore or coal, yet it’s the largest exporter of steel in the world, exports half its output. To put that in context, China manufactures 700 million tons of steel and exports perhaps 30 million. Japan produces 110 million tons and exports 40 million. As long as Asia is strong, they are fine. But if Asia hiccups or reverses, plant-utilization rates go from very high to very, very low very quickly. Then we discovered that Warren Buffett owned shares of South Korea’s Posco [5490.S. Korea], and that Korea was the biggest importer of Japanese steel, but Posco and Hyundai [5380.S. Korea] are building huge, integrated steel plants. They have a surplus of steel capacity and—guess what?—they’re exporting to Japan, because the yen is so strong. Initially, I wanted to buy a three-year, out-of-the-money put on Nippon Steel. My broker said, “I’ve been in a 20-year bear market; my boss will kill me.” Then I thought, being long credit protection is being long volatility. I redialed his credit counterpart. I said: “I’m thinking of purchasing up to a billion yen of five-year credit-default swaps in Nippon Steel.” The first thing he said was, “Would you consider 10 billion?” So one part of the bank is banned from selling volatility, and the other part is having a party. I bought reams of the stuff. Hugh Hendry is a fund manager at Eclectica Asset Management. He has become prominent in the United Kingdom for his commentary on the financial crisis. Hendry has been referred to as "the most high-profile Scot in the controversial (Hedge Fund) sector."
- Hugh Hendry on Hyperinflation and Hyperdeflation Hugh Hendry: The world is very fearful of hyperinflation. Pension schemes have a preponderance of real assets, from forestry to gold to TIPS [Treasury inflation-protected securities], because they are very fearful. The road to hyperinflation is via hyperdeflation. That is why it’s proving so difficult for hedge funds to make money. How does the rational mind that anticipates hyperinflation own 10-year government Treasuries yielding less than 2%? It can’t. That’s why people are struggling. To lay the seeds of hyperinflation, you need really, really bad things to happen. I thought the U.S. housing market having a massive crash would be hyperdeflationary. But then my Chinese friends pumped $1 trillion of credit into their $5 trillion economy, and created a global recovery, which has just come to an end. I’m speculating that hyperdeflation happens before hyperinflation. What’s the worst that could happen? But the sum of all my fears would be China having a real hard landing of minus 5% or minus 10% GDP growth. If we had that—and Europe—the Fed would be printing $20 trillion, and I would have gold at $5,000. You can have a modest amount of gold, but you can’t have all your assets in real assets, in case we get that hyperdeflation event. Hugh Hendry is a fund manager at Eclectica Asset Management. He has become prominent in the United Kingdom for his commentary on the financial crisis. Hendry has been referred to as "the most high-profile Scot in the controversial (Hedge Fund) sector."
- Hugh Hendry on the Chinese Stock Market Hendry: I should add something else that is contentious—U.S. quantitative easing [that eventually sent more money flowing to China], promoted because America had two sharp recessions and pursued orthodox policies, and had very little to show in the creation of jobs.The policy was very successful. China now has inflation. Minimum wages have grown 20% annually for the past three years. This has encouraged the Chinese to tighten monetary policy. When you have bubbles and you tighten, bad things happen. China’s stock and property markets are weak, a side-effect of quantitative easing. We may now have the pricking of the Chinese bubble. A year or two down the line, it could have enormous repercussions for the global economy. It seems that Hugh Hendry same as Jim Rogers, believe that the collapse might come in 2013-2014, and not in 2012. Hugh Hendry is a fund manager at Eclectica Asset Management. He has become prominent in the United Kingdom for his commentary on the financial crisis. Hendry has been referred to as "the most high-profile Scot in the controversial (Hedge Fund) sector."
- Hugh Hendry China Hendry: In 2009, I made a YouTube video of the empty skyscrapers in Wuhan, China. Goldman Sachs and others articulate a very reasonable and compelling argument of being invested in China. With the evidence of my own eyes, I concluded that China had a very robust system of creating gross-domestic-product growth, but forsaking the creation of wealth.When America was having its China moment in the 19th century, it occurred against the backdrop of a gold standard, a hard-money regime, with a public sector that was minuscule versus the overall size of the economy. As an entrepreneur, if your project failed to generate a sustainable level of cash flow, you failed.If you talk about a hard landing in China, you talk about GDP growth of 5%, not minus 5% or minus 15%. The Chinese government prints money. It can build superfast railways and overbuild airports, because the rest of the economy can subsidize it. China’s swollen public sector is directing asset allocation, rather than pursuing profit maximization. They see [their system] as a success. But it creates a bubble, which can prove quite damaging. Hugh Hendry is a fund manager at Eclectica Asset Management. He has become prominent in the United Kingdom for his commentary on the financial crisis. Hendry has been referred to as "the most high-profile Scot in the controversial (Hedge Fund) sector."
Kyle Bass Blog
- Kyle Bass and Japan Update It seems that so far Kyle Bass’s bet against Japan is not working. Still it might be too early and we could be near Japan’s debt crisis. According to private sources the Macro Opportunities Master Fund was down 29% for 2012. This fund has CDS on Japan as well as leveraged shorts on bonds and probably the yen. What is interesting is the fact that another great hedge fund manager David Einhorn, the manager of Greenlight Capital is also bearish on Japan as of recently. He believes that Japan bonds must go down and soon the yen will start weakling. Einghorn stated that Japan no longer has a trade surplus and its currency the yen must finally stop going up. In addition, he said that the Bank of Japan is having a hard time controlling some of the issues in the marketplace and 9% of REITs in the US are owned by the Japanese. Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.
- Kyle Bass: Buy after Big Debt Crisis – Japan, Europe, U... Kyle Bass: "Plan B is, to the extent that I'm right, and you start to see sovereign dominoes falling and the focus ends up on Japan very quickly, what do you do with your money? Well, if we go to +4 in GDP to -3 or 4 in global GDP, and we have an equity market contraction of 40 or 50 percent, you're going to need some money to buy. That's going to be the greatest time in the world to buy once these restructurings happen." We see now why Kyle doesn’t own much stocks and he is mostly short stocks or owns only a few special situations. He has also pointed out that the USD is the best currency in an environment like this. If he is right, investors will need US dollars to buy cheap assets in few years. According to him the world cannot growth until debts disappear and there is only one way for it to happen. Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.
- Kyle Bass: Japan is next to face Sovereign Debt Crisis According to Kyle Bass of Hayman Capital, Japan is the next in line to face a sovereign debt crisis and very soon the markets’ focus will turn on it. He expects deflation that will lead to a correction in equity prices because such economic shock will spread to the world economy and if he proves to right, economic growth might go to minus 3 – 4%. That will lead to a stock market correction of 40-50% and that will be a time when investors need to have cash to buy cheap stocks. He believes that it will be the best time to buy equities, right after these big restructurings. He mentions that Japan is next after Europe but it is still unclear to us whether the European debt crisis is finished or not. We believe it is not and before we move to Japan, we will have more problems in Europe and probably more restructurings. According to Kyle Bass, it depends on Japan and Europe, how long time USA has until a debt crisis. In his opinion it is 3-5 years away. If he proves to be right, it might be wise to hold significant cash portfolio weighing. Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.
- Kyle Bass loves asymmetric bets Kyle Bass of Hayman Capital prefers to make investments in situations that could earn the hedge fund extraordinary profits. He looks for asymmetric bets where the risk-adjusted-return is out of norm. For example by predicting in 2009 that Greece will restructure, he bought cheap CDS and that resulted in a bet where the risk/return is 1/500… It seems that today Kyle Bass is having similar bet but on Japan. He believes that the focus will soon be on Japan and the country will face a debt crisis within 2-3 years. According to unofficial information, Hayman Capital betted on Japan problems by CDS, swaptions, puts on Yen as well as options on JGB. It’s hard to predict the risk/return here but we believe it’s between 1/15 – 1/100. Kyle Bass has expressed his pessimism about the yen many times on different TV programs. His target is 120 USDJPY which is about 45% from current levels. Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.
- Kyle Bass: Gold is Going a Lot Higher This is a transcript from an interview with Kyle Bass of Hayman Capital. He explains why he's so bullish on gold, with CNBC's Bob Pisani Bob: Are you still bullish on gold? Kyle Bass: I think that the pattern is set. The pattern is set that we are going to continue to monetize fiscal deficits by expanding central bank balance sheets. Call it how you wanna call it, LTRO, QE any kind of acronym that the powers want it to be called but I call it money creating out of thin air and that is why gold has a further to go. Bob: aks what will happen to the price of gold if China and India economies slowdown: Kyle Bass: When you think about the way that India is now... they have significant inflation, if they have stagflation we will continue to see gold going higher. Bob: Can you explain the decision to buy physical gold? Kyle Bass: It costs you certain amount of money to roll the contract. As far as I know it costs 19 basis points per year and the holding and insurance to keep physical gold is cheaper than that. From a Fiduciary perspective physical gold is a must. Kyle store and insure gold at HSBC. Gold is currently taxed as collectable at 28%, should there be some change to that? Kyle Bass: Gold must be taxed as every other asset that you own. It is just a simple asset. Piece of art work, collectibale-gold coin, equity must be taxed the same especially if held long-term. There is so much talk about gold these days. Should we go back to a gold-standard? Kyle Bass: I don't think so. I'm not an advocate of such. Ting an enourmas economy to one metal coming out of the ground would probably be a bad idea but ting it to a basket of goods and services might be a good idea. Because we need to limit the amount of capital created in the system. I just don't understand the logic behind it. I think that the people who are deemed to be gold bugs, you know, are talking to a portfolio to a certain, yes I own some but when I tire our whole economic future as a nation to that idea, if you think about rationality it's a bad idea. Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.
- Kyle Bass Likely Made $10 Billion on Greek CDS This is an update on how much Kyle Bass possibly made from his CDS on Greek debt and how much will soon receive. We still do not have the official numbers but we believe the profit is about $10 billion which will put Hayman Capital on top of performing hedge funds as well as Kyle Bass in the billionaire's list. It is unknown how much CDS Kyle bought but average CDS contract signed is for $10 million. According to unofficial information Bass bought $15 million of Greek CDS, and that means he will receive $10 billion USD when the insurance is paid. Bass might have bought more, in which case he might now be one of the richest people in the world but we still don't know. Considering that he has $726 million assets under management and that about 20% of the assets were put in CDS and other instruments to bet against Greece, Portugal, Ireland, Japan... we believe that Greece bet is at least $15 million. As soon as we have the official numbers we will update this post. More about his bet was posted in the previous post: Kyle Bass Profits 700 times on Greek CDS payout Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.
- Kyle Bass: Profits 700 times on Greek CDS Payout Kyle Bass bought CDS on Greece debt in 2010 around $1,000 per $1 million debt. He has been an advocate about Greece going into disorderly default and triggering CDS payouts. So far Bass is wrong that Greece will face disorderly default as it seems that it’s controlled one, but still the CDS has been activated as there is credit event according ISDA. That will trigger the CDS payouts and Kyle Bass’s fund Hayman Capital will earn about 700 times on his CDS investment. Let’s repeat again “70,000%” return on investment! We have no information how much CDS on Greek debt he purchased in 2010 but we believe that his fund will earn millions. Bass is known for his uncommon investment bets as well as talented mind. He currently holds physical gold. Platinum as well as 20 million 5 cent Canadian Nickels. His 700 times return on his investment will earn him many fans in the investment world. The true value of his holdings will be fully revealed when the payout rates are decided after an auction of the old Greek debt. Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.
- On Why Kyle Bass owns so much gold "My opinion is very simple as a fiduciary... to the extent that you own gold and you are going to own it a long time --it's not a trade. It costs us about 90 basis points a year to roll it through financial futures contracts," he said. "And then we went and looked at the COMEX. The COMEX at the time they had about $80 billion in open interest between futures and futures options. In the warehouse they had $2.7 billion of deliverables. So $80 billion in open interest - $2.7 billion in deliverables. We’re gonna own it a long time. You're on the board, as a fiduciary, what do you do? That’s an easy one. You go get it. So you go take a billion of $2.7 billion and you let them worry about the rest." "When I talked to the head of deliveries at COMEX NYMEX, I was like, 'What if 4% of the people want deliveries?' He said, 'Oh Kyle, that never happens. We rarely ever get a 1% delivery.' And I asked, 'Well what if it does happen?' And he said, ‘Price will solve everything' And I said, 'Thanks, give me the gold.' It is noteworthy to mention also that Kyle Bass owns physical platinum bars as well as Canadian nickels. It seems he is worried about runaway inflation and believes metals are best to protect him. Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.
- J Kyle Bass recommends that investors stay in cash Investors should be more in cash. To the extent that he is right about the order of debt events, the USD will be strong short to medium term and EUR and JPY will be weak. Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.
- Kyle Bass is worried about France and UK The UK and France are both in trouble, according to Kyle Bass of Hayman. Bass said when you looked at a particular country's banking system such as Iceland, it didn't take a genius to figure out it was going to blow up. "Regulators weren't paying attention to the size of the host country's banking systems in relation to the sovereign's ability to maintain losses," he said. According to Hayman Advisors' estimates, the UK is in "big trouble" and France is in "huge trouble" just as the Europe as a whole is. Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.
Andy Zaky's Comments
- Green Mountain Coffee: Is It Toxic Or Is It Phantom Inven... lol @ your disclosure. Great article too.
- How To Properly Use Apple's Guidance To Accurately Foreca... The only thing I can really say is that I think you should just stop reading what I write because you obviously don't know how to interpret the following sentence. And if that's the case, then there is really nothing else I can do for someone who simply cannot comprehend such a simple idea: "It's important to understand that investors should view the Bullish Cross “official” outlook this quarter as being merely the lower boundary but we believe there is a MUCH HIGHER LIKELIHOOD that Apple will report in-line with our high-point forecast." What can't you understand about "MUCH HIGHER LIKELIHOOD?" Do you simply not get it that we do have to give an official outlook that is purposefully conservative?Are you really that obtuse? Really just stop reading my commentary. It really won't do you any good because you can't juggle very simple concepts that everyone seems to understand very well. So just move on. There are plenty of other good analysts to read and you simply can't read between the lines. So forget about it.Our official outlook is not what we believe Apple will report, it is what we have to conservatively publish. Do you really believe that Gene Munster actually believes the forecast he has to publish? Gene Munster knows that Apple is going to report $45 billion. He just has to give an estimate that is conservative because he has to do so given his position. His firm has to be conservative. So they give an estimate that is below their actual belief. That's why you will see him give an official estimate of 30 million iPhones on the one hand and then come out and say in public, "Hey Apple is going to sell 35 million iPhones by the way." Only a moron doesn't understand what's going on there.
- How To Properly Use Apple's Guidance To Accurately Foreca... I'm just saying. We clearly indicated that our lower boundary estimates were $42b $11.75 and that we felt it was "more likely" that Apple would report $45 and $12.80. You come in here after a month just to post that we missed by 10%. I'm stating that only someone simple minded seeing things only from one side of the spectrum would make such a statement. We put two numbers out not because we don't believe our own words, but because we have to both have to be conservative and realistic. Conservative demands we give our lower boundary estimate. Realistic demands that we say what we think is most likely. Just because you have significant difficultly understanding that, doesn't mean we missed by 10%. That's your problem. I'm done dealing with you.
- How To Properly Use Apple's Guidance To Accurately Foreca... Did I miss revenue by 10%? I'm not sure how well you interpret things, but read the following which has been on the front page of Bullish Cross since December 16 and you tell me if I missed revenue by 10%: http://bit.ly/wHYP9e"Now it is important to understand that investors should view the Bullish Cross “official” outlook this quarter as being merely the lower boundary of what one should reasonably expect Apple to report. While we think there’s a significant chance that Apple will end up reporting $11.75 in EPS on $42 billion in revenue, we still believe that there’s a much higher likelihood that Apple will report a quarter that is more in-line with the outlook presented by my colleague at Asymco, Horace Dediu. Horace Dediu is one of the best analysts out there, is one of the leading experts on the global smart-phnoe market, and is a testament to his Alma Mater, the Harvard Business School.Dediu has put together an expectation that is very much in-line with the Bullish Cross “high-point” forecast for Apple. Our “high-point” forecast is an expectation we put out every quarter that takes into account the possibility that Apple could deliver a perfect quarter. Notice that Apple has delivered a report that was in-line or slightly above the Bullish Cross high-point estimate twice in the past two years. Once in fiscal Q2 2010 and again in fiscal Q3 2011. Both times it resulted in Apple gapping up uncontrollably after being unhalted in after-hours. The table below outlines the Bullish Cross High-Point Outlook:"High Point Forecast: Revenue: $45.14 billion EPS: $12.90There's a difference between setting expectations at the "lower boundary" and stating plain as day what we think is going to happen.ONLY THE SIMPLE MINDED can't see what we're doing here.
- Some Context For Apple's Massive Numbers True that was our estimate. But then again we also did note the following: Apple Fiscal Q1: The Biggest Blowout in Historyhttp://bit.ly/wHYP9eNow it is important to understand that investors should view the Bullish Cross “official” outlook this quarter as being merely the lower boundary of what one should reasonably expect Apple to report. While we think there’s a significant chance that Apple will end up reporting $11.75 in EPS on $42 billion in revenue, we still believe that there’s a much higher likelihood that Apple will report a quarter that is more in-line with the outlook presented by my colleague at Asymco, Horace Dediu. Horace Dediu is one of the best analysts out there, is one of the leading experts on the global smart-phnoe market, and is a testament to his Alma Mater, the Harvard Business School.Dediu has put together an expectation that is very much in-line with the Bullish Cross “high-point” forecast for Apple. Our “high-point” forecast is an expectation we put out every quarter that takes into account the possibility that Apple could deliver a perfect quarter. Notice that Apple has delivered a report that was in-line or slightly above the Bullish Cross high-point estimate twice in the past two years. Once in fiscal Q2 2010 and again in fiscal Q3 2011. Both times it resulted in Apple gapping up uncontrollably after being unhalted in after-hours. The table below outlines the Bullish Cross High-Point Outlook:Our high-point outlook was $12.80 in EPS on $45.140 billion in revenue. If Apple didn't miss last quarter, we would have published that as our official estimate. But we simply had to allow Apple to completely decimate for a quarter before we get aggressive again. So on the one hand. Apple reported closer to what we actually believed they would report. But on the other hand, we had to "officially" hold an $11.75 EPS estimate. But most of our subscriber don't really believe that I actually believed that Apple would only report $11.75 in EPS. That was our lower boundary line. So it was a highly political issue. We issued the lower boundary as our official estimate. It kind of sucks because we get no glory or recognition because we basically had to do this as it was the responsible thing to do. We did a lot of hard work to come up with an estimate that we believe in and really couldn't publish it. So I sort of have to play the whole "whisper numbers" thing that Wall Street analysts have to play and we will probably never give another real official estimate that will put us at #1 ever again. We're just not in a position anymore that will allow us to just do that. We have to be ultra conservative. But that doesn't mean we can't publish a "high-point" estimate that tells people, "ok look. Here's what we really believe." That's why we said, "Now it is important to understand that investors should view the Bullish Cross “official” outlook this quarter as being merely the lower boundary of what one should reasonably expect Apple to report. While we think there’s a significant chance that Apple will end up reporting $11.75 in EPS on $42 billion in revenue, we still believe that there’s a much higher likelihood that Apple will report a quarter that is more in-line with the outlook presented by my colleague at Asymco, Horace Dediu." By the way, Apple reported $660.0 in iPhone ASP. I know you had asked me about that. They reported pretty much a few dollars above our expectations on APS.
- Apple's Bullish Guidance Stephen -- On November 28, 2011, you published an article entitled, "Apple May Have Scrapped Its Low-Ball Guidance Strategy." In this piece, you argue that $9.99 in EPS is the most likely target while giving a cop-out range of almost $3.00 saying that Apple will probably report $8.71 to $11.29. Pretty pathetic. That's like saying, Apple will probably earn between $30 billion in revenue $50 billion in revenue. Great analysis. How useful. Then after I pointed out why your analysis is pretty much worthless for the most obvious reasons, you come out and say with such confidence: "Andy, Don't take this personally, but your going to miss earnings and revenue. Your namers are too high. Please do promise me this: When you do miss, stop crowing about yourself." So after I show gaping holes in your analysis -- and they were pretty huge -- you decide to attack me personally. So what are you going to do on Tuesday when Apple reports above your $3.00 range and nearly $2.00 above your EPS expectations. Are you still going to sit there and publish this drivel? Will you at least own up to the fact that you got bitch-slapped? Or will you hide in a pool of your own cowardice? After making a statement like that, I hope you man up and apologize. Mostly because while I've merely attacked your analysis, you've decided to attack me personally.
- Apple Fiscal Q1 2012: The Biggest Earnings Blowout In His... Kenneth explain to me how Apple is trading at around $400 a share right now when it was trading at $80.00 during the financial crisis. That's 5x higher than it was in 2009. The S&P 500 is barely up 100% during the same period. Apple goes in phases of consolidation for 6-months ahead of another major leg up. We're nearing the end of that consolidation phase. I know precisely what I'm talking about. Apple's next leg is pretty imminent. Now if everyone wants to cling on to this very asinine notion that "they want to keep Apple down," then that's your bad. The fact of the matter is, Apple doesn't go straight up. I moves up in legs. The next leg will begin by January.
- Apple Fiscal Q1 2012: The Biggest Earnings Blowout In His... I'm still young so I "can be excused for not knowing how or why Wall Street truly works." That's funny. You obviously know very little about me. I would be truly impressed if you come here and apologize after Apple reports fiscal Q1.
- Apple Fiscal Q1 2012: The Biggest Earnings Blowout In His... Notice most of the comments here are rather bearish. My point exactly. People are going to get epically blindsided this quarter. Even when I publish the numbers, people still don't get it.
- How To Properly Use Apple's Guidance To Accurately Foreca... "it can follow any rules it wants in providing guidance (though it will hurt itself in the financial community by doing so, as it's guidance will then be ignored)." When I read stuff like this, it really makes me believe that I work in an industry full of people who know very little about what they do. I guess you probably don't know much about Enron, Arthur Anderson, Worldcom and the resulting regulations on GAAP accounting. This statement pretty much demonstrates that you don't know much of anything and yet you have "to read this closer" because YOU believe that YOU are in a position to be able to judge whether I've made a few major mistakes. Oh the irony.
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