My Game plan

First buy on FXP(China Short) @13.82
Next buy order on FXP @ 10.01

First buy on DUG @18.02
Second buy on DUG @ 10.32

First buy on ZSL @9.42
Second buy on ZSL @ 6.54

First buy on GLL 16.5
Second buy on GLL @ 10.78

Looking to short AEM @ 65

Looking to short MCD 58.24 @62

I have changed some of these numbers and given them more room. The idea is that this the first bounce on the foreign markets, the oil market and the metals market. I fully expect for these to have the same decline as our stock market did. In other words, to erase the move over the last ten years. To me silver goes back to 5 Gold goes to 400 and Oil goes to 25. I think the players getting sucked into these as they did on our market at the end.

The prices I have chosen represent rallies to the underside of the intial breakdowns. In the case of the FXI(China Index) the breakdown was at 42.36. The current price is 37.37. A move to 42.36 from here is 13%. The FXP move double the % of the FXI inversely so I expect that it should decline to .74 of its current price of 13.65. Therefore the target buy is ..74 X 13.65 or 10.01.

I am using the XLE as the oil index now at 51.68. The breakdown on this index was at 62.50. That would be a 20% move up from here. The DUG 17.20 that moves inversely 2 times to that index should drop 40% from here. The target buy would be 17.20 X .6 or 10.32.

On Silver the breakdown was @ 16.33 silver closed at 15.47 Friday. The return to the breakdown of 16.33 would be an increase of 5.5%. The ZSL which is 2 times the inverse of silver is at 7.35 it should decline 11% to 6.54.

Gold now at 978 had a high of 1008 and I am going to give it room to take out the high by 10% to 1108. That should suck in all the bugs for good. The GLL double the inverse of Gold should decline 22% to 10.78.

AEM 61.86 broke down at 62.50 and I can short that right here if I wanted to but I am giving is another 3 points of room to 65.

MCD 58.99 broke down at 60 and is nearing it break down.

Dollar weakness, 5 month low, and strong commodities continue..Gold 3 month high and Oil at 6 month high...Mikey Likey

DJIA 8374 -28.99 SPX 907.31 +.38 VIX 31.12 Gold 978.50 +15 Oil 66.21 +1.13 Dollar Index 79.48 -1.02

Ringy Dingy here fishy fishy

The Dollar:

The U.S. dollar fell to five-month lows against a basket of currencies Friday as an advance in global equities and signs of an easing global recession drove investors to snap up higher-yielding currencies and riskier assets.

Global stocks rose and some equities markets posted 2009 highs, diminishing the safe-haven allure of dollar assets and sending the euro to a 2009 high against the dollar. A government report showed the U.S. economy contracted slightly less than initially estimated in the first quarter but the market had expected evidence of a shallower recession

Gold:

Gold Jumps Above $975, New 3 Month High Gold jumped to a new three-month high above $975 on Friday as traders bought the metal as a hedge against weakness in the dollar, which fell to five-month lows against a basket of currencies.


Rising oil prices, reports of a pick-up in Middle Eastern demand, and firm buying in India, the world's biggest gold consumer, during the wedding season are also supporting prices, analysts said.

Gold touched a peak of $978.30 and was at $974.90 an ounce at 1332 GMT, from $958.80 an ounce late on Thursday. U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange rose $13.50 to $975 an ounce.

"If the dollar continues to be sold, the first obvious target is $1,006 an ounce, which is the peak we had in February this year," said Tom Kendall, precious metals strategist with Mitsubishi Corp. "That is feasible over the next week or so, if that trend in the dollar continues."

The U.S. currency extended losses against the euro and yen after GDP data showed the U.S. economy contracted by less than initially estimated in the first quarter.

Oil:

Oil Hits 6-Month High Above $66 on Economic HopesOil rose to a six-month high above $66 per barrel on Friday, on track for its largest monthly percentage gain in more than a decade, after Japanese and U.S. data suggested the economic downturn may be moderating.
Oil prices have jumped around 30 percent this month, buoyed by expectations of a global economic recovery later this year and a bullish price outlook from key OPEC member Saudi Arabia.

It is the largest monthly price rise since March 1999.

U.S. light, sweet crude [US@CL.1 66.21 1.13 (+1.74%)] for July delivery was up, after reaching a high of $66.47, its highest level since early November last year.

London Brent crude [GB@IB.1 65.53 1.14 (+1.77%)] gained.

Data on Friday showed Japanese industrial production rose 5.2 percent in April on a monthly basis, and the government said it expected continued gains through June.

U.S. growth data on Friday also reinforced the sense that the global economic slump might be abating.

The message is that the economy is staring to turn around. That is a bogus message.
If the economy was turning the Dollar would be rallying and it is not. I think we are headed south again. This is much the same message they we giving us at the end of 2007 and the beginning of 2008. Strong commodities weak dollar strong foreign markets. They carried that message for a long time but in the end we crashed. This looks like the same game and they have the players back in the same old things.

First buy on FXP(China Short) @13.82

Next buy order @ 10.37

Second buy on DUG @ 13.25

Second buy on GLL @ 11.04

Second buy on ZSL @ 7.28...CORRECTION CHANGED TO 6.17
Looking to short AEM 62.18 on a close below 56 or a close above 65

Looking to short MCD 58.24 on a close below 56 or a close above 60

Oil spikes to $65 on inventory report OPEC keeps production unchanged

NEW YORK (MarketWatch) -- Crude-oil futures rose Thursday after government data showed U.S. crude inventories fell last week for a third straight week as the nation imported less oil and as demand for gasoline picked up.

After the data, crude for July delivery rose $1.14, or 1.8%, to $64.59 a barrel on the New York Mercantile Exchange. Oil had been on the rise in the previous three sessions. It ended Wednesday's trading at the highest level since Nov. 5.

"We should expect crude stocks to decline further although inventories levels are still above normal," said James Williams, an economist at energy research firm WTRG Economics. "The gasoline refinery numbers are encouraging."

The American Petroleum Institute, an industry group, reported after the close of trading Wednesday that crude inventories fell by 2.8 million barrels. The EIA and the API use different criteria for gauging inventory levels.

Rounding out the trading in energy futures, June-reformulated gasoline rose 0.2% to $1.8955 a gallon, while June heating oil gained 2% to $1.5927 a gallon.

In oil exchange-traded funds, the United States Oil Fund (USO, Trade ) gained 2.3% to $35.39. In energy equities, the Amex Oil Index (XOI ) rose 2.3% to 962.

Also pushing oil prices higher Thursday, a pair of U.S. government reports showed the number of new layoffs declined last week and durable-goods orders rose more than predicted last month.
The number of new layoffs declined by 13,000 to 623,000 last week, while the number of people collecting state unemployment benefits rose by 110,000 to a record 6.79 million, the Labor Department reported.

Meanwhile, orders for U.S.-made durable goods jumped in April, rising 1.9%.

Also in economic news, U.S. sales of new homes were nearly unchanged in April, the Commerce Department reported Thursday, adding to a sense that sales appear to have hit a bottom earlier this year. See full story.

The Organization of Petroleum Exporting Countries decided to keep production quotas unchanged, in line with expectations.

OPEC, which accounts for about one-third of the world's oil production, decided to leave production levels unchanged at Thursday's meeting in Vienna.

"The Conference noted that the crude volumes entering the market are still in excess of actual demand and that, although crude inventories have fallen over the preceding two months, stocks remain high," the cartel said in a statement released after the meeting.

The group had cut its production by 4.2 million barrels a day in several steps since September. The compliance rate rose to 83% in March, a surprise to industry analysts given OPEC's poor historical record.

But as oil prices rose in recent months, some OPEC members increased their production. The cartel's output rose in April for the first month in eight, according to the International Energy Agency and a survey by energy-information provider Platts


The point of this article is to tell us that the economy is getting stronger and there will be higher demand for oil in the future. This alomng with the recent dollar and bond hit makes the oil move make sense. I still believe that this is a bear market rally and therefore I will short it.

Mikey buys first position on DUG (oil index short) @18.02. Oil is making a new high oil stocks are not. Will start my position on the DUG here...

Still hold my first buy on ZSL (silver short) @ 9.42 now at 7.88 looking to add on @7.28 for my second buy

Still holding my first buy on GLL @ 16.50 now at 14.34 second buy will be @13.50

The fundamentals on the market are looking weak to me now. I am 85% cash 10% long and 5% short.

Mikey Sells GM stock

General Motors' bondholders have accepted an amended debt for equity offer, CNBC has learned.

The bondholders will start with 10 percent equity, 7.5 percent more at both $15 billion and $30 billion market cap. GM [GM 1.28 0.13 (+11.3%) ] will emerge from this deal with $25 billion in secured debt.

The offer came Thursday morning from GM and the Treasury Department. However, the move may not stop a possible bankruptcy for GM.

But in exchange for the improved payout, creditors would agree not to oppose a move to sell GM's profitable assets to a new company funded by the U.S. government in a fast-track bankruptcy process.

The exchange offer will be open to bondholders until 5 p.m Saturday EDT, GM said.

The largest U.S. automaker had failed up until Thursday to gain anywhere near the 90 percent of bondholder support desired to stave off bankruptcy.


They had balked at proposals that they forgive $27 billion in debt in exchange for a 10 percent stake in a restructured company. A member of the bondholder group resigned from the ad hoc committee of bondholders negotiating with the U.S. government Tuesday evening.

GM has been kept in operation since the start of the year with $19.4 billion in emergency federal loans as a plunge in sales overran progress it made in cost-cutting over the past four years.

The U.S. Treasury Department released a statement on the bondholder deal:

"The Treasury proposal announced today provides incentives for GM's unsecured bondholders to support GM's restructuring efforts in the event GM decides to pursue a 363 sale as part of a bankruptcy proceeding.

Implementation of this proposal would result in a New GM with a healthy balance sheet, putting the new company on a clear path toward long-term viability and success. GM appreciates the unwavering support of the U.S. Treasury and the President's Task Force on Autos and thanks the unofficial committee of bondholders for their support of the proposal

Reported on DJ news service at 9:52 AM ...The plan does not include shares for the current shareholders...game over... sold at 1.33

CNBC has reported that the plan may include a 10% ownership for old GM shareholders but they are not sure what that meant. In a press reslease I read this AM it said the old shareholders would not receive any shares of the new company so there you go. They are playing this thing right up to the end. Stock trading at 1.33. If there is no stake for the current shareholders then the current stock is worth zero.

I like Government bond market now

DJIA 8368 -106 SPX 899 -10.64 VIX 31.36 +.74 Gold 952.10 -1.20 Oil 63.38 +.93 Dollar Index 80.38 +.18

TLT (Long term Gov bonds) 90.83
IEF (7-10 year Treasuries) 90.11

I have not bought but like these prices. The rates are moving up on Government bonds now. The experts are putting people in Tax Free, Corporate, and Junk bonds to capture high yields. That is a big mistake. This last market bottom and "bottom" in the economy was brought on by those lower rates. I think that the Munis, corporates and Junks bonds have severe default risk now and I think the market will follow the bond market lower. The best play is to be safe and buy government bonds now. The recession is ending talk is premature and with the increase in rates this phase of the Stock market and economic rally is coming to a close. Just take a look where the public money is going now...Oil, Gold, commodities and back into the market. The experts like energy stocks, techs stocks and even the banks now. I would avoid these groups now. I still have not shorted anything but would like to short the oils.

I have not given up on GM 1.20 yet. I believe that if it rallies now that rally is real and I will chase it. I still smell a setup. Why is it trading at 1.20 if the deal is dead????

The beat goes on ...Mikey

GM (1.28) Says Bondholder Offer Fails, Bankruptcy Looms...Well at least they are consistant

General Motors bankruptcy filing seemed inevitable after a rebellion by its bondholders forced it to withdraw on Wednesday a plan to swap bond debt for company stock.

GM has until Monday to complete a government-ordered restructuring that includes debt reduction, labor cost cuts and plant closures.

But a Chapter 11 reorganization is likely after the company said its offer to exchange $27 billion in unsecured debt for 10 percent of the company's stock had failed. GM has received $19.4 billion in federal loans.

GM [GM 1.3115 -0.1285 (-8.92%) ] shares lost 16 cents, or 11.1 percent, at $1.28 in premarket trading.

John Pottow, a professor at the University of Michigan who specializes in bankruptcy, said GM evading bankruptcy now is almost impossible.

"They said no. That's it. They tried. That's why they're going to have to file for bankruptcy," Pottow said.

GM spokesman Tom Wilkinson said the board will meet later this week to decide its next move, but he would not say exactly when. He also would not say if the company would soon file for Chapter 11, nor would he reveal what percentage of bondholders took the offer.

"The principal amount of notes tendered was substantially less than the amount required by GM to satisfy the debt reduction requirement under its loan agreements with the U.S. Department of the Treasury," GM said in a statement issued Wednesday.

The Obama administration has said it would only provide more funds if 90 percent of the bondholders, as well as unionized workers, agreed to concessions that substantially reduced GM's costs.

GM also said it canceled meetings set for Wednesday with holders of notes that were not sold in U.S. dollars. The statement said the meetings were to discuss amendments to the debt-for-equity offers, but it did not specify what the amendments were.



Jim Graves, a former GM employee, said in a statement issued by the Main Street Bondholders -—a coalition of small investors —that he could no longer serve on the panel. GM had no comment on the bond exchange. The automaker said it would detail results of the exchange on Wednesday morning.

The Main Street group, affiliated with a larger organization of retail investors, also said it plans to seek legal representation to form a creditor committee, assuming the debt proposal fails and GM files for bankruptcy.

There was a small hope Tuesday that GM could avoid a bankruptcy filing when the United Auto Workers union disclosed that it would take a 20 percent stake in GM—down from the original plan of 39 percent. That seemingly freed 19 percent of the Detroit-based company's shares to sweeten the pot for its recalcitrant bondholders.

Wilkinson would not say why GM didn't make the offer to bondholders more attractive.

Because the bondholder deal did not go through, the equity freed by the UAW deal now apparently will go to the U.S. government, which may have to commit billions more for GM's restructuring in court.

The government's stake in the company originally was to be 50 percent, according to GM's regulatory filings. But it now could be as high as 69 percent. The Canadian government also could get equity for up to $8 billion in aid for the automaker.

Such an arrangement would leave bondholders back where they started —and a Chapter 11 filing all but certain. The deadline for GM's bondholders to tender their debt was midnight Tuesday.

Meanwhile, crosstown rival Chrysler heads to court Wednesday to ask a bankruptcy judge for permission to sell the bulk of its assets to a group headed by Italy's Fiat Group SpA in hopes of saving itself from liquidation.

Separately, a source told CNBC that Chrysler, which entered bankruptcy on April 30, could emerge from it in restructured form as early as next week. "I think we're pretty close to the end," the source said.

The government would like to get out of an ownership stake once it was certain that taxpayers' interests were protected in a going concern.

"We're going to exit this investment as soon as we responsibly can in a way that's both fair to the other stakeholders in the company as well as fair to the American taxpayers," the sources said.

Attorneys for Chrysler maintain that the Fiat deal is the company's only hope to avoid being sold piece by piece, but car dealers, bondholders, former employees and others are protesting what they see as the government speeding Chrysler through the bankruptcy process without regard for certain creditors.

Chrysler filed for bankruptcy protection April 30, after the government ended talks with a group of holdout bondholders.

Automakers worldwide are struggling as the global recession has reduced demand for new vehicles. But GM and Chrysler have been particularly hobbled by promises to cover the health and pension costs of tens of thousands of unionized retirees—along with recent record-high gasoline prices that reduced demand for their low-mileage trucks and SUVs.

The UAW disclosed Tuesday it agreed to take a much smaller 17.5 percent stake in GM, plus a warrant for an added 2.5 percent stake to partially fund the $20 billion that GM must put into a trust that will start paying retiree health care costs next year.

In exchange for agreeing to a lower equity ownership stake, GM promised the union $6.5 billion of preferred shares that pay 9 percent interest, plus a $2.5 billion note. The union, facing the possibility that it may not be able to quickly sell GM shares to fund its trust, preferred the certainty of the $585 million annual dividend that accompanies the preferred shares.

The remaining $10 billion will come from health care trust funds that GM already has set up. The trust will get a seat on GM's board as well, although it will have to vote at the direction of GM's other independent directors. The concession deal, on which roughly 61,000 workers will vote by Thursday, also froze wages and cut retiree health care benefits, performance bonuses and cost-of-living raises.

When GM announced its debt exchange last month, the company offered bondholders 225 shares of common stock for every $1,000 in debt—or a 10 percent stake in the restructured company.

In addition to the UAW's share, the federal government was to take 50 percent for exchanging a combined $20 billion of their debt to equity. Current stockholders would end up owning just 1 percent of the company.

A committee representing GM's biggest bondholders—mostly big banks and other institutional investors—has opposed the debt-for-equity swap from the start.

Smaller, "retail" bondholders—individual investors like retirees and families—have also railed against the terms of the exchange. Both groups say the offer gives them too small a stake for the amount they are owed.

GM had said previously that the government was preventing it from offering bondholders more than 10 percent of the restructured company.

Some analysts said GM's bondholders may be holding out for better terms in bankruptcy.

Another factor complicating the decision of GM's bondholders: Many large investors hold insurance policies on their bonds known as credit default swaps. Such policies would reimburse bondholders in the event of a "credit event" like a bankruptcy filing.

Analysts speculated that few bondholders agreed to GM's offer because they differed with the company's view of its stock value.

"They clearly have different valuation opinions as to how much the shares are worth," Pottow said. "If you're bullish on the prospects of the company, you might think that's a great deal. If you're bearish on the prospects of the company, you might not think that's a great deal."

Sold 1/2 position bought @ 1.51 Still willing to hold the rest until dooms day...Mikey

If GM rallies again above 1.50 I will buy it again

5 signs your Financial Advisor is a loser

This article appeared on CNBC.com and tells you how to spot a losing Financial Advisor.

Earlier this year, the stock market fell to a 12-year low, losing 54 percent of its peak value and taking a vast chunk of ordinary Americans' wealth with it.

In the wake of such big losses, many investors are looking for someone to hold accountable. That has placed financial advisers under the microscope.

"From what I've seen from industry surveys and things like that, a very high percentage of people are re-evaluating their adviser," says David Loeper, chairman and CEO of Wealthcare Capital Management in Richmond, Va., and author of "Stop the Investing Rip-Off."

How do you determine whether your adviser has your best interests at heart? By asking questions and doing your homework, says Kristin Kaepplein, director of the Office of Investor Education and Advocacy at the Securities and Exchange Commission.

"Even when you are delegating management of your assets, that doesn't mean you don't have to do your due diligence, especially on an ongoing basis," Kaepplein says.

The following are five signs your adviser may be a dud -- and, by contrast, five qualities the best financial advisers share.


Qualities of bad advisers

Losses that exceed standard benchmarks.
Selling products instead of sound advice.
Maximizing risk regardless of goals.
Linking past performance to future results.
Failure to maintain basic investment safety standards.


I am going to a one more. He says he is a financial advisor. In my years in the business I only found one that I would do business with. Now those are long odds!

Henny Penny says the Dollar is falling, the Dollar is falling

Sell US Stocks, Bonds, Dollar NOW: Strategist
Sell All U.S. stocks, sell U.S. bonds, sell the dollar and protect your wealth by going abroad, said Peter Schiff, president of Euro Pacific Capital.
“When [the U.S.] decouples, the world will thrive,” Schiff told CNBC. “The world doesn’t need our consumption, we need their production. The global economy is fine without propping up the U.S. economy. We are in serious, serious trouble.”

Schiff said it’s not only a possibility, but “it’s inevitable” that Brazil and China are eventually going to dump the dollar as the international currency of choice. (Watch interview for more of Schiff's reasons why the U.S. dollar is in trouble.)

“As far as I’m concerned, the U.S. has already lost its AAA rated status,” said Schiff.

Gross: Sell-Off Driven By Fears US Could Lose AAAHe said emerging markets continue to be strong and had great gains since they bottomed in October 2008.

“Americans are going to lose their wealth if they go down with this ship,” he said. “I’m trying to help by getting their stocks abroad, out of the dollar and protecting them from Ben Bernanke, Obama and the congress.”

And this:

Art Cashin: AAA Loss Fear May Drive 'Critical Mass' Sell-OffPublished: Friday, 22 May 2009 | 12:22 PM ET Text Size By: CNBC.com
Amid anxiety that Great Britain's debt rating will be cut, fears grow that the U.S. could lose its AAA rating.

Art Cashin, director of floor operations at UBS, offered CNBC his stock market insights.

"It got very scary yesterday, with both the dollar and Treasury bonds selling off," Cashin said.
He referred to Mohamed El-Erian's CNBC interview, in which the Pimco CEO exhorted the U.S. government to address the danger of losing America's triple-A rating.

"The fear on the floor has to do with Mohamed's idea of a 'neighborhood.' This thing could start to feed on itself. You get to a certain critical mass of selling..."

For an example, Cashin held up the model of "Bear Stearns and Lehman days," when some analysts said the financials were "solid as a rock."

"But when the market starts to disbelieve something, the selling can turn violent."

About Thursday's positive intra-day moves, he explained:

"Late in the day, we held the lows from the previous Friday — 8221 on the Dow, 879 on the S&P. When they held, that prompted a little short covering."

Dow As to today, Cashin said, "The day before a 3-day weekend tends to be biased towards the upside."

But he cautions against mistaking that bias for an upside guarantee going forward: "Next week will be absolutely critical. We may start to test some lower levels."


Last week I turned bearish but I do not believe we will have any sell off of consequence until this fear of the dollar goes away. The good news is it will go away and we will probably breakout to the upside. The bad news is the economy has more problems to deal with. I am 25% long 70% Cash and 5% short Gold and silver. The "experts" are telling us to get out of the dollar and buy Gold. Now they are telling us to buy the emerging markets because their sell off was only tied to us and they will be OK.

I am looking to buy 20+ US treasuries, and short Gold. Silver, Oil, and the Euro. and short the emerging markets. If we get a hit next week because of the dollar weakness and they say that the market is now going to correct I may do some buying and raise my market exposure to 50%. I almost every case after a rally of this magnitude we don't just rollover this easy and telegraph the sell off as they are doing now, particularly when there is a good reason like the dollar today.

My perfect short scenario would be for the dollar to blast off, Gold to fall apart and the bonds to rally as the market breaks out above the 200 day and the "experts" to proclaim that we all clear. I know that sounds ridiculous now but things can change in a hurry.

You have heard me bash Gold for the last year now. The hype on Gold has been steady for that period and it is in the same price as it was 1 year ago. I have been particularly bearish for the last 6 months and it has rallied from about 800 to 958. Gold made its high on 3-21-2008 at 1003. It sold off to 704.90 on 11/14/2008. It double topped at 1001.80 on 2/20/2009 and is now at 958.50. I am convinced that Gold will have the same fate as the Stock market did last year.

There is universal agreement that everyone should own Gold. They have their hand and it is a pair of dueces. They are bluffing and I know it. It is the same hand they had on the Stock market in 2008. Does that mean it will not go above 1000..no but it does mean that it has a long way to fall. The big money will be made on the downside. Short term the Gold bugs have it but a close below 880 should complete a top.

The beat goes on...Mikey

More on GM (1.43)

In a TV interview broadcast Saturday, President Obama said he hoped both GM and Chrysler emerge from their restructuring as "leaner, meaner" companies that are more competitive. He made no mention of a possible GM bankruptcy filing, however.

Restructuring demands on GM include cutting labor costs, reducing debt, shedding dealerships and brands, and closing excess factories.

The company this week reached cost-cutting deals with Canadian and U.S. unions that still have to be ratified by members, but GM's unsecured bondholders have resisted an offer to take a 10 percent stake in the company to wipe out $27 billion in debt.
They say that's too small a stake for the amount they are owed.

But even if GM files for Chapter 11, Chrysler's performance since its April 30 bankruptcy filing has made analysts optimistic that GM sales won't "fall off a cliff" as the company's CEO predicted in February.

Chrysler's sales to individual buyers are down 40 percent so far this month when compared with May of last year, a little worse than the overall market, which is down around 35 percent, the company has said.

Schuster said that's better than he expected, and he predicted that GM might fare even better if it goes into Chapter 11.

"Maybe optimistic is a little too strong, but I think there could be potential for, once it's announced and once we understand how it's going to work, the potential for an uptick in the second half of the year," he said.

Chrysler is keeping its retail sales up to a large degree by offering rebates and other incentives.

The company led major automakers in April with an average of $4,383 per vehicle, up from $3,795 in the same month last year, according to the Edmunds.com automotive Web site. GM was second with $4,107.

With the government announcing that it would back GM and Chrysler warranties, people are taking advantage of deals to get cars on the cheap, said David Koehler, a clinical marketing professor at the University of Illinois at Chicago.

"I think consumers right now know cars last for a long time," he said. "What they're looking at is the deals. I don't anticipate the doom and gloom that GM said, that this was going to kill them."
Empty GM Dealership


GM's tentative labor deals have raised the pressure on bondholders to accept the debt exchange offer, which may keep the company out of bankruptcy.

The offer expires on Tuesday, but GM said in a regulatory filing that it would decide Wednesday if it will be extended.

Under GM's new capital structure, the government would forgive about $10 billion of its loans and get 50 percent of the company, and the United Auto Workers would own 39percent for cutting in half the $20 billion GM owes to a union-run retiree health care trust.

Given that, bankruptcy experts say it's unlikely that GM can round up enough bondholders to get the debt-reduction to go through.

The Treasury Department, which is overseeing GM's government-funded restructuring, has required 90 percent participation, but a committee of some of GM's largest bondholders have said they won't take the offer.

"The other bondholders are getting such a poor deal, there's just no way I can see them bringing those bondholders on board by June 1," said Jon Groetzinger, a visiting law professor at Case Western Reserve University in Cleveland.

Rep. Jeb Hensarling, R-Texas, and 22 House Republicans wrote Treasury Secretary Timothy Geithner on Friday to seek fairness for GM's debt holders.

"The proposal seems to favor the rights and claims of the UAW, a political ally of the current administration and a powerful lobbying force in Washington, over the rights and claims of the company's diverse group of bondholders," Hensarling and the lawmakers wrote.

A spokesman for the bondholders committee declined to comment Friday.

Also in doubt is GM's plan to cut its network of about 6,000 dealers by 40 percent before the end of 2010.

GM sent notices last week to 1,100 dealers telling them their franchise agreements won't be renewed when they expire next year, and many dealers plan to fight in court.

State franchise laws generally protect dealers, so it's unlikely GM could accomplish the cuts without help from a bankruptcy judge, experts have said.

Fear of bankruptcy and the possibility that it could come as early as next week drove GM shares down 49 cents, or 26 percent, to $1.43 Friday, erasing much of the 32 percent gain from Thursday when the UAW agreement was announced.

As June 1 fast approaches, there's still an outside chance that GM could somehow pull it all together and complete restructuring out of bankruptcy court, said John Pottow, a University of Michigan professor who specializes in bankruptcy.

Since the unions have given concessions and settled, there is pressure on GM's bondholders to do the same or risk becoming the entity that drove GM into bankruptcy, he said.

"When they make those concessions, it becomes tougher for you not to make those concessions as well because everyone's doing it," Pottow said, adding that dissident Chrysler creditors gave up their fight as pressure mounted and other stakeholders fell in line.

But with thousands of bondholders, it will difficult to get 90 percent of them to agree.

"There's no sort of like central negotiating committee of bondholders and unsecured creditors," he said.

YADA YADA YADA.......Mikey

GM Bondholders reject GM offer of 10% equity stake

GM 1.51 -.41

Mikey rebuys at 1.51 Will buy weak close

AAA Staus of US Debt is a Hook, Don't believe it!!!!

Gold 957 +6.30 Oil 61.07 +.02 Dollar Index 79.95 -.69

How perfect for this news to break just as the Dollar makes a 6 month low and Oil "soars: though 60. It all seems so easy now . Short the Bonds buy Gold short the dollar buy commodities. THIS IS A SETUP DON'T BELIEVE IT!!!!

THIS IS A SETUP It is the hook that sets up the shorts to cover Gold, sell the dollar, and blow out the bonds they bought late last year.

To make money you have to spot a setup. This here we go that validates the story always happens at the end. There is always a debate at the end and the one that wins the debate with price ...loses. Well the Dollar, Bonds lost. I will now let the Gold bugs party now and declare victory but a close below 880 seals their fate.

I still have not pulled the trigger on the GLL 14.46 or the SCO 22.46 or the EUO 19.89 but am getting close

Bankruptcy Not A Given In GM Restructuring..The Plot Thickens

A bankruptcy filing is not certain in the General Motors restructuring case and reports that the Obama administration will steer the automaker into bankruptcy as early as next week are premature, a source familiar with the situation said Friday.

The source said the deadline for GM's restructuring is May 31 and the process will go forward until then. The Chrysler case, where negotiations continued until the deadline, are a good comparison, the source said.

Earlier, the Washington Post, citing sources familiar with the discussions, reported that the Treasury Department would steer GM into bankruptcy next week under a plan that would provide the company just short of $30 billion in new federal loans, A U.S. Treasury spokeswoman declined to comment.

The Treasury is continuing to work with GM on its restructuring, and while the situation could change, there were no plans for a GM bankruptcy filing next week, the source, who was not authorized to speak publicly about the matter, told Reuters.

The government task force overseeing GM [GM 1.76 -0.16 (-8.33%) ] and Chrysler restructuring has given GM until June 1 to restructure its operations and prove it can be viable without government aid or face probable bankruptcy.

On Thursday an Obama administration official said the task force was continuing to work with GM and all of the stakeholders involved.

"I think that in terms of the outlook, I'm not going to speculate on the bankruptcy question, but I will say that the administration is committed ... to standing behind GM and is confident that the company will be able to restructure over a short period of time," the official said.

"GM faces a number of hurdles and it may well be that a court process is necessary to effectuate the restructuring, but the administration is committed to standing by the restructuring process whether or not that occurs," the official said.

GM officials could not be immediately reached for comment.

While the company has indicated a bankruptcy is probable, there has been no indication from the automaker, its advisors or the government that a filing would occur as early as next week.

GM must still address a number of concerns before any filing, including payments to suppliers, receiving ratification of proposed labor concessions and sorting out a complex proposal with its bondholders to further reduce debt.

If General Motors files for bankruptcy, its healthy assets will be quickly sold to a new company owned by the U.S. government, a source familiar with the situation told Reuters on Tuesday.

The source, who was not cleared to speak with the media and asked not to be identified, said the U.S. government would pay for the assets by assuming the automaker's $6 billion of secured debt and forgiving the bulk of the $15.4 billion of emergency loans that the U.S. Treasury has provided to GM.

The company on Thursday reached a sweeping deal on concessions with the United Auto Workers and has given its bondholders until next Tuesday to agree to a plan that would reduce the company's debt.

Sold half position @2.20 this AM Looking to rebuy at about the 1.50 area

This was a technical sale based on the move up on 4/27. That was the last rally high the stock had. Normally price will stall in that area. The 50 day average was also in that area. It is a knee jerk thing that I do in this kind of situation. Now things really get tough. Remember the Board did sell their stock so it is nitty gritty time and the stock did have a nice rally off the 1.00 area. It was an easy buy at 1.00 but now after the rally some optimism creeps into the deal and that bothers me a little. ...Mikey

CNBC is in Nigeria.. Invest in Momar

Arron Burnett CNBC crack anchor is in Nigeria touting investment opportunities in Africa. Africa is tied to commodities. They are touting commodities. I remember in 2005 when they were in Miami talking about real estate going bonkers and when they were in Dubai last year touting the new center of the corporate world.Remember they were building a copy of the world in the gulf. Now they are in Nigeria, the oil producer, touting commodities. That one also made 60 minutes. Stop it you"re killing me!!! Cramer is recomending AFK 25.14 for Africa play How timely.....

GM chugging away now at 1.65 but the board sold out and the stock is only worth .02 remember?

GM now 1.91..My guess is that it goes to about 2.20 on this move before it consolidates

New Credit Card law

What the New Credit Card Law Means For You

Now that lawmakers are close to finalizing federal laws to protect millions of consumers who rely on credit cards, it signals a new era of managing credit.

The new normal for credit cards may be more transparent and easier to understand for everyday Americans. Credit card issuers and credit industry analysts say the new law will make credit cards more costly for all users and unaccessible for low-income families. Look for the return of routine annual fees, fewer rewards cards and the possibility that credit card bills will be payable immediately rather than after a month-long grace period.

The new normal
With the passage of a bill Tuesday by the Senate, it assures that a new law containing the most far-reaching changes to the credit card industry in decades will be enacted. The House passed a similar bill in April, and President Barack Obama has indicated strong support for credit card reform. While the bills differ in many details, and will have to be reconciled before reaching the president's desk, they agree in their broad outlines.

What will the credit card law mean for cardholders? Millions of credit card users will avoid retroactive interest rate increases on existing card balances and have more time to pay their monthly bills, greater advance notice of changes in credit card terms and fewer penalty fees, late charges and interest payments. Once in effect, the law will also fundamentally change the way credit card issuers market, bill and advertise credit cards.

Here are the highlights of the proposed law:

Limited interest rate hikes: Interest rate hikes on existing balances would be allowed only under limited conditions, such as when a promotional rate ends, there is a variable rate or if the cardholder makes a late payment. Interest rates on new transactions can increase only after the first year. Significant changes in terms on accounts cannot occur without 45 days' advance notice of the change.

No more universal default: "Universal default," the practice of raising interest rates on customers based on their payment records with other unrelated credit issuers (such as utility companies and other creditors), would end.

More time to pay monthly bills: Credit card issuers would have to give card account holders "a reasonable amount of time" to make payments on monthly bills. That means payments would be due at least 21 days after they are mailed or delivered. Consumers have complained about due dates that change without notice or are moved up, giving them less time to pay their bills and increasing the likelihood of late fees.

Clearer due dates and times: Credit card issuers would no longer be able to set early morning or other arbitrary deadlines for payments. Cut-off times set before 5 p.m. on the payment due dates would be illegal under the new law. Payments due at those times or on weekends, holidays or when the card issuer is closed for business will not be subject to late fees.

Highest interest balances paid first: When consumers have accounts that carry different interest rates for different types of purchases (i.e., cash advances, regular purchases, balance transfers or ATM withdrawals), payments in excess of the minimum amount due must go to balances with higher interest rates first. Current industry practice is to apply all amounts over the minimum monthly payments to the lowest-interest balances first -- thus extending the time it takes to pay off higher-interest rate balances.

Limits on over-limit fees: Consumers must "opt in" to over-limit fees. Those who opt out would have their transactions rejected if they exceed their credit limits, thus avoiding over-limit fees. Fees charged for going over the limit must be reasonable.

No more double-cycle billing: Finance charges on outstanding credit card balances would be computed based on purchases made in the current cycle rather than going back to the previous billing cycle to calculate interest charges. So-called two-cyle or double-cycle billing hurts consumers who pay off their balances, because they are hit with finance charges from the previous cycle even though they have paid the bill in full.

Subprime credit cards for people with bad credit: People who get subprime credit cards and are charged account-opening fees that eat up their available balances would get some relief under the new law. These upfront fees cannot exceed 25 percent of the available credit limit in the first year of the card.

Minimum payments: Credit card issuers must disclose to cardholders the consequences of making only minimum payments each month, namely how long it would take to pay off the entire balance if users only made the minimum monthly payment. Issuers must also provide information on how much users must pay each month if they want to pay off their balances with 12, 24 or 36 months, including the amount of interest.

Thought you would like to know this...Mikey

Dollar sells off on fears of losing AAA rating

Dollar Index 80.73 -.35 Gold 949 +11.60 TLT (20 year Bond index) 95.31 -1.71

For the record I am posting the dollar index along with this news. The bond market is also selling off because"the Fed is buying less than expected." How convenient that this is all coming together right after a huge bond offering in early May and a "break out" in Oil and Gold. The Pros are telling us to buy Gold 948 and short the Dollar 80.73 and buy the TBT (short bonds)51.66. The TLT is 95.31 lets see where these all are in November. Guess who bought the bond auction.......THE FED and they are looking to buy more. We will check back in November to see if the FED made money. We will use the TLT now 95.31 to see if the bonds went up.

What is laughable about this is that they told us to be safe and BUY BONDS from Sept 2008 to January 2009. So all those folks that did that are guess what getting their ass kicked. Remember that Cramer said sell everything and stay in cash for 5 years?

The Fed and the treasury SOLD THE HELL OUT OF BONDS in the 4th quarter of last year. They are now in the process of buying them back AT A LOWER PRICE now. Get it????? The experts last year did not like equities and commodities during that period but they loved bonds. Now they are going to take away AAA status on the Dollar and downgrade our debt. Plus the experts-pros say what....Short bonds and buy commodities. The beat goes on...Mikey

For the record: Gold 949 Oil 60.86 Dollar Index 80.73 TLT 95.31

Pros Say: Gold’s Staging a Comeback, to $1,200

As global stocks fell Thursday on concerns about the economic recovery after the Federal Reserve lowered its forecasts for U.S. growth for the next three years, safe-haven play gold rose. Experts tell CNBC the precious metal's price is likely to resume its upward climb.Gold May Test $1,200

Gold is beginning to gain investors' interest given all the debt funding we are seeing around the world, notes Frank Holmes, CEO & CIO of U.S. Global Investors. He tells CNBC that gold may test $1,200.

Here are those "pros" again

Looking to add to my Gold short with the GLL no buys today

I have noticed through the years that Gold has a tendency into reverse in early June.

Banks upgraded by Goldman.....They think we are brain dead

Goldman Sachs upgraded large US banks to "neutral" due to the substantial capital raised by the banks and prospect for strong gains into the second quarter, the Goldman's analysts said in a research note.

The move follows the recent upgrade of Bank of America [BAC 11.77 0.28 (+2.44%) ] to "conviction buy," alongside JPMorgan Chase [JPM 35.02 0.47 (+1.36%) ], and takes into account "the prospect for continued strong mortgage and capital markets earnings which is likely to persist in the second quarter," the analysts wrote.

Besides, "the leveraged loss cycle for large banks may be over," they wrote, noting that the stress tests induced $100 billion of capital raised at big banks, cutting leverage. Writedowns may also be nearing an end as stock market indices are improving.

Goldman Sachs [GS 136.91 0.47 (+0.34%) ] rates Morgan Stanley [MS 28.43 0.43 (+1.54%) ] at "buy" and PNC [ Loading... () ], US Bancorp [USB 18.14 -0.34 (-1.84%) ] and Wells Fargo [WFC 24.73 0.27 (+1.1%) ] at "neutral." Citigroup [C 3.71 0.02 (+0.54%) ] is not rated.


Trust banks such as Bank of New York Mellon [BK 27.40 0.74 (+2.78%) ], Northern Trust [NTRS 51.60 0.69 (+1.36%) ] and State Street [STT 43.10 1.72 (+4.16%) ] were upgraded to "attractive," while regional banks such as Fifth Third Bancorp [FITB 6.90 -0.81 (-10.51%) ], KeyCorp [KEY 5.45 -0.19 (-3.37%) ] and Regions Financial [RF 4.09 -0.80 (-16.36%) ] were maintained at "cautious".

These banks have less capital, benefit from improving credit spreads, derive 7 percent of their revenue from mortgages versus 20 percent at big banks, and still have capital raises ahead of them "as they play catch-up to the stress test," the note said.


This is the fox guarding the chicken coupe

Topping

DJIA 8267 -154 SPX 885.86 -17.58 VIX 30.97 Gold 937.20 -.20 Oil 60.32 -1.72 Dollar Index 81.34 +.26

I am turning bearish because I believe that they have accomplished what they needed to do from the crisis in Sept. The rally has allow the the opportunity to repair the badly broken balance sheets of the banks and also to restructure Chrysler and allowed Ford to sell common to tide them over for the lean months ahead. The last one GM I believe will work the same way as all of the others. Today it is up in the 1.60 range with very little fanfare.

If you have been reading this blog you know that my reason for going long was because I believed that they need to raise capital and the banks have just sold 40 billion in stock. I also told you that after they sold this stock the the "experts" and "analysts" would turn bullish. I see that starting to happen. There are a number of touts that now like the banks.

This does not mean that I think this market will go down now. Usually you get a number of downside probes before the sell off comes. Art Cashen has said that he thinks a correction to 820 will come if we break 870 on the SPX. I would think that if 870 is broken that we will take out the 200 day now at about 940 with alot of fanfare about this being a bull market. That is what I am waiting for to sell out my last 30% and to start going short. We still do not have the all clear signal that we normally get before the top is set. I still expect that to happen.

This being said I want to change gears because this is a bear market rally in the market and the economy. The consumer is still screwed all they have done is save the institutions. The Credit card bill is JOKE. I expect massive bankruptcies in the consumer area. This is obviously by design. If they wanted to help the consumer they would have mandated that the banks cut interest rates an principle amounts on the credit card debt held by middle class. They easily could have done this but did not.

Where are we now and what am I hearing? I am hearing that the economy is bottoming...Wrong. I am hearing that you have buy now for the longer term...wrong. I am hearing that China is going to be OK and their stimulus will keep them growing...wrong. I am hearing that oil and commodities are telling us that the economy is growing ....wrong. I am hearing that the dollar is going to go to hell in a hand basket....wrong. That is the big lie and has the Gold Bug all a twitter.
What are we going to have ? We are going to have a deflation depression scare later this year and into next year. They will replay this nightmare again.

My market call in the short term...I think it is not finished but topping. A break above 940 on the SPX and some excitement should happen before this is over. A short term break below below 870 should produce a rally to a new high. The old saying sell in May and go away I think is sound advise now....Mikey

MIKEY TURNING BEARISH...Not short Yet

Film at 11...Details tomarrow I still think we have a decent chance of seeing a move above 9000. I am not shorting yet and am looking to sell. I am 30% long 70% cash

Low VIX a Positive.....Really?

As the VIX Continues to Drop, Is S&P at 1,000 Far Behind?

The stock market's main volatility gauge continued to decline on Wednesday, fueling optimism that the recent rally had further to go.

The Chicago Board Options Exchange's Volatility Index [VIX 28.25 -0.55 (-1.91%) ] fell below 28 after closing below 30 on Tuesday for the first time since September, when the collapse of Lehman Brothers triggered the dizzying selloff in stocks.

Since the VIX began pulling back from the 50 range in early March, stocks have followed suit, jumping 30% from their recent lows. Many on Wall Street are hoping the trend will continue.

"This is certainly a positive for the market," says Quincy Krosby, chief investment strategist at The Hartford. "It's apparent investors believe this market is headed higher at least in the short term, albeit with days that you're going to see the market sell off with a little bit of profit-taking."

If the VIX falls to 25, that could propel the Standard & Poor's 500 [.SPX 915.41 7.28 (+0.8%) ] to 1,000, says Richard Sparks, senior analyst at Schaeffer's Investment Reserach in Cincinnati.

"It moves counter to the market, so the recent strength we've had, we've seen a continuing decline in the VIX," Sparks says. "I would consider the trend to be in place and not see a reason why the market can't continue higher."

Yet even with the VIX continue to decline, the state of the market remains uncertain.

The 30 percent rally off the March lows has come on mostly low volume. Monday's surge of nearly 3 percent across the board saw barely 1.3 billion shares traded on the New York Stock Exchange, numbers associated more closely with mid-summer than the tail end of earnings season.

Volume is traditionally slow in the summertime, and market pros say this year is unlikely to be any different.

"The oxygen for the bulls is volume," Krosby says. In Monday's rally, "The volume was not heavy enough for the bulls to declare an out-and-out victory. The breadth was very good, but for the bulls to declare victory the volume needs to pick up."There's also the matter of what constitutes low volatility these days.

A year ago, before the financial crisis hit its peak with the fall of Lehman, the VIX closed just above 17. At that point, 20 on the VIX was considered high and 30 was associated with full-bore panic.

But then the VIX zoomed past 80, at one point hitting an intraday high of 89, and the definition of volatility changed. Now, 30 seems benign, but that too could change.

"Investors are tip-toeing back into risky assets," says Lawrence Creatura, equity market strategist and portfolio manager at Federated Clover Capital Advisers. "It's classic in what has occurred in the sense that volatility and risk aversion tend to spike over very short time periods and are only repaired over longer time periods."

The VIX has managed to repair much of the damage since the manic swings of November and March, when investors were filled with uncertainty over President Obama's plans to fix the banking crisis and whether the new White House would be friendly to Wall Street.

Uncertainty, though, takes many forms, and Creatura believes investors still aren't convinced about the state of affairs.

"What I would describe as uncertainty in the market has increased in the scope of different dimensions," he says. "In the housing market we've seen some increase in uncertainty, in the commodities market I think we've seen some increases in uncertainty, and inflation--people are a little less sure of what occurs next."

At the same time, the move in the VIX itself is being greeted with some suspicion and even disdain.

Traders with a shorter-term view of the market actually like volatility—within reasonable limits. Swings in stock prices present chances for nimble investors to move in and out of positions and make money.

Options traders had been betting heavily against a rise in VIX gains, and Wednesday's futures contract expiration will spell bad news for many of them.

Of the more than 2.1 million VIX contracts expiring tomorrow, more than a third are calls, or bets that the index was going higher. And most of them will expire out of the money, according to an analysis from Interactive Brokers.

With the VIX moving lower, traders could get caught in another trap, the firm said.

"This brief analysis highlights the springboard rally for stocks as overly pessimistic conditions fade," Interactive Brokers said in a note to clients. "As they do, watch for investors to overdo the volatility decline. As we keep noting, we're still not out of the woods yet."

As for the market, though, the lack of volume combined with the air coming out of the VIX could mean good things.

A debate has raged over whether the stock gains have been the product of a bear market rally or if there's something more long-term afoot.

A declining VIX would suggest that the rally can continue.

"I almost see (the low volume) as a positive because it shows there's not overwhelming optimism in the market. That means its' not being overdone," says Schaeffer's Sparks. "Not everyone is buying in yet and not everyone is on the bandwagon That's part of the reason why (the rally is) so sustainable."


Is the low VIX a positive? No it is the air being let out of the puts that were used to hedge a sellof that never came. Notice in this article that they say alot of Call option buyers on the VIX are going up in smoke today. This article has grabbed my attention. I will not buy any more selloffs. Repeat I will not buy any selloffs. I am a seller only I am shifting my attention to shorting commodities and Gold and emerging markets.

Financial Crisis Enquiry Commission to be formed

It will be patterned after the 911 commission and will be a bipartisan commission to investigate the cause of the financial meltdown. It will be chaired by Senator Kent Conrad (D) of North Dakota and Senator Johnny Isakson (R) of Georgia. It will be an independent review to determine the cause of the collapse and what can be done in the future to prevent it from happening again.It will have subpoena power to call before the committee anybody and anyone they think will shed the light about what happened. They want to hold those that they find responsible for the collapse accountable because "that is what the American people want and expect". It will have until December 2010 the investigate the collapse.

This is what capitalism is all about. Let's blow it up and then find out what the real cause was. The 911 event is a good metaphor for this commission. I will say this they knew it was going to happen and they let it happen. But hey let's fix it so it will never happen again....Sure

Sold MTW @6.55

Canceled all buy orders. Looking to sell only now

Dollar at 6 month lows Gold, Oil, Commodities Touted heavily

Gold 937.40 +10.40 Dollar Index 81.30 -.75

Dollar bashing increases as it makes a 6 month low and the Gold bugs come out of their holes. They have my attention and I am going to be adding to my GLL (Short Gold) position soon. Will let you know. The safest way to short Gold is if it closes below 880. I will add if it trades above 950.

I am also interested in short Oil and shorting the Euro and the China stock market. I will use the SCO 22.61 as an oil short and the EUO 20.77 as a Euro short and the FXP 15.02 as the China short. I have not pulled the trigger on these yet.

The story is that we are going to have inflation and the economy is bottoming. I consider that laughable. The touts are now telling us that the economy is bottoming and the commodities action is validating that. They did the same thing last year. You know the world economy is good and the demand for commodities is going to be big. How did that one work? Same old BS now. The trends on these are down and this rally when it ends will roll over in a hurry. They should all blow the lows out. The situation now is one where they are smoking the shorts and sucking in the public.

I will begin to position these shortly ....MIkey

Remember the TARP will cost the taxpayers...Look at this

Repaying Bailouts May Undercut Benefit for Taxpayers

Americans were promised a reward for rescuing the nation’s banks. In return for all those bailouts, the banks essentially granted stock options to the government — a potential jackpot for taxpayers once the crisis blew over.


But now banks, eager to get Washington out of their hair, are pushing to undo those investments as quickly — and cheaply — as possible. If the Obama administration acquiesces, billions of taxpayer dollars could be left on the table.

At issue are so-called warrants that the government received from the banks last autumn, when the financial world was teetering. Like options, warrants give their owners the right to buy stock at a set price over a certain period of time, in this case, 10 years.

Now, with many banks itching to return their bailout money, the warrants are raising some thorny questions. What are these investments worth? Should the government drive a hard bargain, or let the banks off easy? Should it maximize profit for taxpayers, or minimize pain for banks?

Many banks want to buy back the warrants and wriggle free of the government. Big banks like JPMorgan Chase [JPM 37.45 0.19 (+0.51%) ] , Goldman Sachs [GS 143.835 0.685 (+0.48%) ] and Morgan Stanley [MS 28.811 0.531 (+1.88%) ] have formally notified regulators that they want to return their bailout money, according to people briefed on the situation. But as long as the government holds the warrants, it still has some leverage over the industry.

For taxpayers, a lot of money is at stake. The government has an option to buy stock in 579 banks. By some estimates, the warrants on JPMorgan alone are currently worth more than $1.1 billion. They could be worth much more if JPMorgan’s share price rose.So far, one publicly traded bank, Old National Bancorp [ONB 13.57 -0.23 (-1.67%) ] in Indiana, has repaid the government in full by returning its bailout money and repurchasing its warrants. (Two small privately held banks have done the same.)

How Old National pulled this off, and the seemingly favorable terms it secured, shows how aggressively banks big and small are pushing, even after they repay money from the Troubled Asset Relief Program, or TARP. Old National paid $1.2 million for its warrants. Analysts estimate the investments might have been worth as much as $6.9 million.


“It’s a great deal for Old National,” said Linus Wilson, a finance professor at the University of Louisiana, Lafayette. “Treasury accepted a lowball offer.”

Andrew Williams, a Treasury spokesman, declined to comment about the negotiations, but said the government “has a robust process in place for valuing warrants.” He added that the Treasury was required by law to sell the warrants once a bank repaid its bailout money.

Analysts say that has made it difficult for the government to pursue a goal of maximizing profits for taxpayers, though a recent change to the law might give the Treasury more flexibility. Even if it had the option, it is unclear how successful the government would be at actively managing such a complicated investment portfolio.

Mr. Williams said the Treasury’s total warrant holdings were worth more than $5 billion, but the value changes along with the underlying stock prices and other factors.

But Prof. Wilson estimated that the warrants on nearly 300 publicly traded banks, which account for more than 95 percent of the government’s investments, were conservatively worth $2.4 billion to $10.9 billion. Some lawmakers worry that taxpayers will lose out. “Taxpayers were there at a critical moment,” said Senator Jack Reed, Democrat of Rhode Island and a member of the banking committee. “They should enjoy the upside when these institutions recover.”

To extinguish the warrants, the banks can let the Treasury auction them off to private investors or can choose to buy them back themselves. As with other bank rescue efforts, like moves to buy banks’ problem assets, the central issue with the repurchases is determining a fair price.

“That is the problem in TARP asset purchases, and it is the problem here,” said Vincent R. Reinhart, a former Federal Reserve official who is now a resident scholar at the American Enterprise Institute. “Do you value it at roughly comparable asset prices or do you acknowledge that the current market prices reflect an unusual uncertainty in markets and aversion to risk?”

For the government, the decision is about more than dollars and cents. It may be willing to sell the warrants simply to send a positive message about the stability of the banks.

“The U.S. Treasury would be better off rejecting a lot of these bids and selling these warrants to third-party investors,” Prof. Wilson, at the University of Louisiana, said. “Instead of having one buyer, they would have many buyers from all over the world trying to decide what the proper price should be.”

Old National’s move to buy back its warrants illustrates how tricky it is to strike the right balance. Executives at the bank, based in Evansville, Ind., and a large community lender with 100 branches and $8 billion in assets, began seeking to exit TARP almost as soon as the Treasury wired it the money in December.

By the end of March, Old National had won approval from its regulators to repay its $100 million of bailout funds. But the bank also wanted to repurchase its warrants, fearing it could remain subject to pressure from the government or another outside investor.

“We felt more comfortable that we controlled our own destiny rather than have the hands of the Treasury or a third party,” Bob Jones, Old National’s chief executive, said. “We think our stock has plenty of upside and would rather have that in our hands.” On April 20, Old National submitted an initial offer of around $600,000. Ten days later, Treasury officials, after gathering their own estimates from two asset managers and two market participants, rejected the bid as too low. Over the next week, both sides haggled over the price.

Let me pose a question. Did the banks use the TARP money to buy their own stock and other banks?????? If they didn't they were stupid.What is happening now? The Experts like Cramer are starting to tell us to buy the banks. Well maybe he should have done that when the insider bought.( please see my post of 5/14)

The magic of Capitalism...and they said it was dead...Not by a long shot...Mikey


Sold MS @29

Market Technical Guru Art Cashen still Bearish..Whooo who!!

Art Cashin: The S&P's New Danger Number (870)

The Dow, S&P and Nasdaq are each up Monday. How should stock market investors read it? Art Cashin, UBS Financial Services director of floor operations, offered CNBC his insights.

"Some of it [trader optimism] has to do, believe it or not, with the Indian election. That's one geopolitical worry that's not as hot as before," Cashin said.

But he said there are contradictory forces at work:

"There's a real tug of war here. It looks like we're headed for a correction, but the bulls don't want to give in. This is a hypochondriacal week: The market's going to take its own pulse, take its temperature and see how good it feels."

What about climbing energy prices? Cashin attributed that not to economic fundamentals improving, but to "Chinese stimulus — maybe the only stimulus in the world that's working." He believes the same influence is driving up base metals concurrently with energy. Another non-fundamental factor driving oil prices today: reports that "two pipelines in Nigeria were blown up," according to Cashin.

He is monitoring the S&P 500 closely. "If we get a close this week below 870, then you could go down to the 820 region," Cashin warned.



Wouldn't it be cool if we closed below 870 and Art got even more bearish. That would be too much to ask right???? If it does Mikey buys. Well I would monitor what Art does and not worry about the S&P doing anything

In the above article he references the oil rally to pipeline blowing up in Nigeria..and China stimulus. Does that sound familiar???.Remember that one from last year. It never changes. The next thing we will hear is that Israel and Iran are going to go at it again and oil will go back to 100.


We are going higher

The beat goes on ....Mikey

The End Game...Kelly ,Kelly, Kelly,Kelly(song by Woody...from cheers)

Housing Market Shows Signs Of Recovery: Regional Banks

CEOs from several regional banks around the country told CNBC they are seeing some signs of “green shoots” in the housing market.

“The mortgage business is booming—70 percent in refinancing and 30 percent in new home purchases,” Kelly King, CEO of BB&T [BBT 22.12 0.49 (+2.27%) ], told CNBC. “On the low end of the houses, we’re beginning to see some movement…There’s a long way to go, but there’s definitely activity.”

“It’s green sprouts just like springtime in Chicago,” said Steve Calk, CEO of Chicago Bank. “We’re seeing large correspondent warehouse providers coming back into the market making money available to larger mortgage regional bankers. It’s a clear sign that people are looking back at supporting the mortgage market.”

Harris Simmons, CEO of Zions Bancorp [ZION 17.18 2.13 (+14.15%) ] said despite the “green shoots” that show signs of a turnaround; it will be at least 2010 before he expects any signs of stabilization in the housing industry.

“The tax credits are helping…[but] with the rising unemployment rates, it’s still a question mark for us,” said Simmons.

“We’ve been on the acquiring side,” said Simmons. “It’s a fabulous way for [regional banks] to be growing at the moment.”

Meanwhile, Calk said he wants the FDIC to be more open to regional banks acquiring smaller banks and to allow greater growth on the federal level

So what is happening now...The news turns better for the banks after the stock offerings. BBT you will remember had a stock offering last week. There is a huge flood of stock offerings in the banks. Never have there been anything like this. Now the system goes to work and touts the banks and tell us that things are getting better. It is true because they engineered all of this. They want out of their stock now and need to create some excitment in the group so they can sell. Later this year they are going to kick the crap out of these banks again and drop the interest rates to I think 4%. That starts the game all over again with the banks on their butts and we can do this again. We at the end game now but I think we have more to go...Mikey


Added to GLL @15.67...Gold short

Your Tax Dollars at work?

GM May Focus on Cheaper Imports, Cut US Jobs

General Motors is engaged in negotiating a reorganization that could increase vehicle imports from its plants in Mexico and Asia while closing factories and cutting the work force in the United States.

That approach drew a sharp rebuke from the United Automobile Workers union on Friday. In a letter to each member of Congress, the U.A.W., which represents G.M. [GM 1.1899 0.0999 (+9.17%) ] factory workers, argued that to qualify for more government assistance, the auto giant should be required “to maintain the maximum number of jobs in the United States.”

The administration, however, appears to accept the proposition that to return to profitability as quickly as possible, G.M. must import a significant percentage of cars from its plants in low-wage countries, like Mexico and China, or low-cost countries, like Japan.

G.M. already imports a third of the vehicles that go to showrooms in this country. That percentage would not change in the plan that G.M. is preparing to submit to the administration to justify billions of dollars in new loans to stave off collapse.

G.M. would emerge a smaller company, with fewer employees and less output in this country and abroad. But imports would rise from low-cost countries, particularly Mexico and China, and that would be offset by fewer imports from Canada and Europe.

Some economists, like David Autor of M.I.T., say that G.M. cars made in China, among other countries, “are pretty competitive and could be sold here.”

Others, like Harley Shaiken, at the University of California, Berkeley, argue that if G.M. focused more intensely on technology and auto quality, it could concentrate production in the United States and still be competitive. “The other way to go,” he said, “is to cut costs by importing more vehicles from Mexico and China, and lifting the bottom line that way.”

A Treasury spokeswoman said over the weekend that “G.M. and the U.A.W. are in active and constructive deliberations around all aspects of their plan. This is one of several issues they are focused on and the administration is supportive of their efforts to come to a resolution.”

G.M. is asking Washington for billions of dollars more in federal loans to survive, on top of the $15.4 billion already borrowed. In a presentation to Congress, the company laid out the plan for the shifts in production to lower-cost countries. In the United States, G.M. would close 16 of its remaining 47 plants and eliminate an additional 21,000 jobs. The company also announced on Friday that 1,100 dealers would be eliminated from its American network by the fall of next year.

In the letter to Congress on Friday, Alan Reuther, the U.A.W.’s legislative director, also argued that if G.M. cut back production in Canada, it would hurt small manufacturers in the United States that supply parts to G.M.’s Canadian assembly plants.

But the Obama administration apparently sees interference in such plans as crossing a line into industrial policy, rather than helping a giant multinational get back on its feet as a successful, privately managed global operation.

Insisting that G.M. preserve American jobs by shifting production to the United States from abroad, this argument goes, would require many times more in federal aid than the $16.3 billion in loans now anticipated.

“The idea is to get G.M. off the government dole,” Mr. Autor said. “And if that is the case, then one has to take the steps that a free-standing company must take to be profitable

The Consensus

Expect choppy seas for stocks in the coming week.

For the most part, traders say the market should bump along with a downward bias while it establishes a new trading range. The lack of economic news and earnings reports in the coming week leaves a news vacuum, and the market will be looking for catalysts.

Minutes from the last Fed meeting, and the Fed's economic forecast are released Wednesday. Treasury Secretary Tim Geithner testifies Wednesday before Congress on the TARP, and there are a few economic reports, including housing starts and leading indicators. Dow components Home Depot and Hewlett-Packard are among the few companies reporting earnings in the week ahead.

Stocks staged their worst weekly decline since March 6. The Dow was down 306 points, or 3.6 percent to 8268, and the S&P 500 fell 46 points, nearly 5 percent, to 882. The Nasdaq had its first down week in 10, losing 3.4 percent to 1680.

The dollar, meanwhile firmed at the end of the week, and Treasurys saw a gain for the week, as the Fed continued its bond purchases. The 10-year's yield, at 3.125 percent, was below the week-earlier high yield of just under 3.30 percent.

"The push and pull on this market right now is amazing. You have one camp of people who are talking about increasingly positive economic data, and we're getting a lot of (stock) deals done in a short amount of time. There's a lot of positive elements out there. But the bearish argument is we were just up 37 percent and we're still not out of the woods," said Art Hogan of Jefferies.

"There's a bit of common sense here to have a retracement. You want to pull back a little bit. The guys that led the parade are the financials, and they have a lot of new offerings coming out," said Hogan. Hogan noted that the recent $40 billion in secondary offerings, many issued by banks raising capital, is a record for the month of May.

Brown Brothers Harriman's Brian Rauscher turned bullish in early March and is still bullish now, but he admits he expects it to be only temporary. "We're still in the same bear market rally. Could we go down? Have we seen the low for the correction within the bear market rally? That's hard to say. The bigger point is I still think there's higher highs out there. We're recommending clients to still buy the dip," he said.

"It's playing the course of a bear market rally. The gravy part of the rally I think is over. We will now go through the grind it up phase and it will go higher, and it's yet to be seen if it goes three more weeks or three more months.. I don't think we get much through (S&P) 1,000 which is the upper edge of our target," he said.

Traders are watching several key levels on the S&Ps. The next level of support is in the 875 to 878 range. If that level fails, it could slip to the next level of 850 to 855. Many say the market may not be able to break above recent highs until there are real signs of economic improvement, not just "less" bad data.

The coming week's lack of news could pose problems for stocks. "Right now, the market needs reasons to go up, and every time we get something that's second derivative positive, the market acts better. A quiet calendar, in my personal view, makes it challenging for the market," Rauscher said.

Latest on the Autos

GM: Chrysler-Like Sale Most Likely Form of Bankruptcy
General Motors said Thursday night, it would most likely pursue the same legal strategy as Chrysler if it spirals into bankruptcy, while Chrysler unveiled details for slashing its dealer network.

The GM disclosure, in a regulatory filing, marked the first time the automaker has said it would most likely follow the same legal strategy Chrysler is using under federal oversight to slash debt and restructure dealerships.

GM [GM 1.1319 -0.0181 (-1.57%) ] faces a June 1 deadline to restructure its bond debt and reach a sweeping deal with the United Auto Workers. The company restated in its filing with the Securities and Exchange Commission that it expects to seek Chapter 11 if negotiations with bondholders fall short.

Chrysler Cutting Dealerships

Chrysler said it would terminate business with 789 of its 3,181 dealerships as of June 9, a move that could cost up to 40,000 jobs, according to the leading dealer trade group. Dealers in Pennsylvania, Texas, Ohio, Illinois and Michigan -- where Chrysler is based -- would be hit hardest.

"The bankruptcy process that we are in allows us a once-in-a-lifetime chance to achieve a right-sized dealer body," Chrysler Vice Chairman Jim Press said on a conference call. "We do not have enough production or sales to keep all the dealers alive or prosperous."


Chrysler sought permission from a U.S. bankruptcy court in New York to terminate franchise agreements with the dealers. Fifty percent of its U.S. dealers account for 90 percent of sales, according to court documents.

GM also plans to announce up to 2,000 dealer terminations as early as this week, sources have told Reuters.

Chrysler and GM face pressure to bring large sales networks in line with those run by more successful automakers. Toyota has 1,200 dealers in the United States.

Chrysler dealers reacted with a mix of anger and sadness, but most, even those surprised by the news, entertained little hope they could stop Chrysler.

U.S. Rep. Gary Peters, whose Michigan district includes Chrysler headquarters, and other lawmakers from the state said they would consider whether legislation may be needed to provide a softer landing for outgoing dealers.

The National Automobile Dealers Association has spent this week urging Congress and the Obama administration's autos task force overseeing industry restructuring to slow the process.

Chrysler's move to cut dealers will help it cement an alliance with Fiat. U.S. antitrust officials said on Thursday the plan poses no competitive issues.

Ford Optimistic

In Wilmington, Delaware, Ford executives told shareholders at the company's annual meeting that restructuring is on track to be at or above break-even in 2011 excluding special items.

Ford shareholders also approved a funding plan for a healthcare trust for union retirees and rejected a challenge to the share voting structure that gives the Ford family control of the automaker.

Ford shares rose 4 percent to $5.16 on the New York Stock Exchange, while GM shares fell 4.9 percent to $1.15.

The entire industry is dependent on a sharp reversal in plunging U.S. sales. Consulting firm A.T. Kearney said in a report on Thursday that domestic sales are expected to drop 24 percent to 10 million units this year. Industrywide sales were 13.2 million in 2008.

Notice how the good news is breaking for Ford after the offering and the bad news just keeps coming for GM. It spirals into bankruptcy now (nice choice of words) it gives you that warm fuzzy feeling. Remember a few days ago the directors sold and the stock is worth only 2 cents.

I smell a setup here ...we'll see ...Mikey

buy ZSL @9.32...short silver

They are looking at the 200 day..What Mikey will do

Charts Predict: S&P Rally is Hitting a Ceiling

DJIA 8375 +44.21 SPX 894.56 VIX 30.91 -.46 Gold 929.70+1.30 Oil 58.17-.45 Dollar Ind 82.47 +.10
The recent rally in the S&P 500 could be over as the index is struggling to break above a key resistance level, Royce Tostrams, technical analyst from Tostrams Groep, told CNBC.

“The market is running into its falling 200-day moving average and that normally suggests limited upside potential,” Tostrams said.
The S&P's [.SPX 889.6 -3.47 (-0.39%) ] rising trend does appear to be in tact in the short-term, however, Tostrams told CNBC. But “there’s a lot of overhead resistance in New York (and) the rally is running out of steam,” he added.

If the index does manage to break above its falling 200-day moving average it could rise above 1,000 points, according to Tostrams.


This is what I was talking about the last 2 days. They all think we are going to correct now and the market has run out of steam. Notice that his "expert" says that we are bumping up against the 200 day average on the S&P (SPX). That average is now at 945. He says that if we break above that average we could rise above 1000. I think before this is over it will do that. You should hear all the "experts saying we broke above the 200 day and give the all clear. What I am listening for is the all clear to sell out.

In other words, at some point before this rally is over it will look like it is going to the moon and the Tostrams of the world will buy into it. That will be a good time to get out......Mikey


Notic thatnthey are letting the air out of the puts now.....VIX at 30.91

Jeff Macke..CNBC tout likes Ford...Why???

Remember the plan ..run the stocks up sell new stock and then run them up after the offering so the institutions can sell the new stock at a profit. See the GS chart that is the plan. First run the stocks then sell the offering then bring on the touts to get the public to take the new stock over. The banks just had their offerings and the hit into those offerings. Now the banks run up and the touts will come on and tell the public they should buy them. Get it??? That means that Jeff Macke is a Lacke By the way Ford should make a higher high on this move so the buyers of the secondary can blow it out with a profit. The same applies to the banks like BAC 11.31 & BBT 22.34 , COF 24.61, USB 17.82 and C 3.59which had a preferred stock conversion(remember the Government bought(converted it) it at 1.50
The beat goes on...Mikey

Art Cashen ...Here come da correction.....Not yet Art

DJIA 8347 +63.08 VIX 31.88 -1.77 Oil 57.7 -.23 Gold 926.80+.90 Dollar Indx 82.51 -.11

This AM and the past 3 days in the morning call the interviewers have congratulated Art Cashen for calling the beginning of the correction. Like I said yesterday he has been calling for the correction since the March lows.
They are trying to re write history and give him credibility. As long as Art has credibility then we don't have a serious sell off. I still think we go sideways until we "breakout" to the upside....Then we get the correction Art is looking for and maybe a retest of the lows. The bulls are still too nervous and I think the shorts are coming back now. And Art well he will not be looking lower then...Mikey

Order to buy INTC @ 14.50 sell MTW @6.55

The magic of trading your own stock...MBIA example

Banks Sue MBIA Over $5 Billion Restructuring

A group of major banks including Citigroup, JPMorgan Chase and Barclays has sued MBIA, charging that the bond insurer illegally restructured its operations by moving $5 billion of assets and leaving a key unit effectively insolvent.

The group of around 20 financial institutions and affiliates are seeking to ensure that MBIA pays valid claims on insurance it issued on defaulting bonds, but did not put a value on such claims.

MBIA [MBI 5.25 -0.44 (-7.73%) ] , along with rival bond insurer Ambac Financial Group [ABK 1.17 -0.09 (-7.14%) ] , suffered huge losses in the recent financial turmoil as they were hit by claims on insurance policies they issued on repackaged debt, which turned out to be more risky than they assumed.

A spokesman for MBIA, which reported a profit of $697 million last quarter, declined comment on the lawsuit, which was filed on Wednesday in New York State Supreme Court.

The company's shares fell 9 percent in after-hours trading to $5.16, after falling more than 7 percent in regular trading on the New York Stock Exchange.

In the suit, the banks charge that MBIA acted illegally when it created a new municipal-bond insurance business earlier this year, making it free of its contractual obligations to policyholders.

As a result of moving $5 billion in assets, the banks said in their court documents, that MBIA Insurance — the operating unit which pays claims — is now "effectively insolvent" with no means of paying claims.

The banks claim that MBIA could instead have used its own cash to strengthen the balance sheet of MBIA Insurance, but it chose to spend more than $900 million repurchasing its own stock and debt and lending money to its asset management business.

As a result, the suit claims MBIA executives will benefit while policyholders are left facing losses.

I'll bet the banks used the TARP to buy their own stock but covered it up.
What if GM, the GM bondholders and GM unions are buying GM common now????????????

Bought DHI @9.20 MTW 5.24 small positions only

Order to buy BAC @ 8.31 UYG @3.21 FAS @7.20 C @2.89

Tug of War

DJIA 8323 -144 VIX 33.05 Oil 58.72 -.13 +.18 Gold 927.40 +3.50 Dollar Ind 82.53 +.11

It's bottoming ...no it isn't...yes it is....no it isn't. I know one thing its options expiration week and the last 2 weeks they bought calls and this week the calls are going to options heaven.

Art Cashen was on today saying that we are rolling over and we will go to 820 SPX. The interviewer Joe Kernan was giving him kudos for calling this correction and giving the sage advise. Well if you have followed this blog Art has been bearish from 6600. He has been predicting a sell off since the start of the rally in April.

The retail sales numbers were "bad" today and as Art says look out for the sell off in commodities. My position now is that we are consolidating this move and that in the near term neither the bulls or bears win. In other words, buy sharp hits sell sharp run ups.


Bought FAS @ 8.91

Keep an eye on GM now taking out 10000 year lows now and hey the Directors sold, very believable. If a deal is going to get done it will be now.

Still have buy in at .99 went to 1.00 today now at 1.17 +.02 up????

Ford sells stock..Of course..GM directors sell out

Ford Shares Plunge, While GM Hits 76-Year Low

Investors dumped shares of both Ford Motor and General Motors on Tuesday, with GM hitting its lowest level since the Great Depression.

Ford Motor [F 5.4989 -0.5811 (-9.56%) ] dropped almost 9 percent a day after disclosing a public offering of 300 million shares of common stock that will help it fund its health care trust for retired autoworkers and their families.

Meanwhile, shares of General Motors [GM 1.12 -0.32 (-22.22%) ] plunged nearly 20 percent to a 76-year low a day after a group of GM executives disclosed they had sold shares in the struggling automaker.
Ford , the only major U.S. automaker that has not accepted government aid, said late Monday it will use the proceeds of the offering for "general corporate purposes" including funding its Voluntary Employee Beneficiary Association, or VEBA, with cash instead of stock.

Dearborn, Mich.-based Ford owes $6.3 billion to its VEBA by the end of this year.

In March, United Auto Workers members approved a new contract that, besides freezing wages and cutting benefits, allows Ford to use stock to make payments to the retiree health care trust.

The public offering of common stock is a first for the 105-year-old Ford, which went public when the Ford Foundation liquidated its shares of the company in 1956. Since then, the number of shares has multiplied with employee stock options, stock splits and preferred stock offerings.

Shares of Ford have enjoyed a strong rally in recent months, with some investors saying it is well-positioned to recover once the vehicle market improves.

The company has also been picking up market share amid deeper problems at its crosstown competitors, Chrysler and General Motors.

Chrysler filed for bankruptcy protection earlier this month, while GM is working to restructure out of court but may also face bankruptcy. The companies have received billions in government loans, which Ford has not asked for.

Sales at Ford are down 40 percent for the first four months of the year. Industrywide sales are off 37 percent during the same period.

As part of the offering announced Monday, Ford is granting the underwriters a 30-day option to purchase up to 45 million additional shares.


Six GM executives, led by former GM Vice Chairman and product chief Bob Lutz, disclosed Monday they sold almost $315,000 in stock and liquidated their remaining direct holdings in the automaker.

GM is headed for either a bankruptcy filing or an out-of- court restructuring that would wipe out current stockholders by flooding the market with new shares to pay off creditors.

The automaker's stock could be worthless in a bankruptcy or worth less than 2 cents per share if it proceeds with its plans to issue shares to creditors led by the U.S. Treasury, the company has said.

Notice the underwriters on the Ford sale have options to buy shares for 30 days. I would expect them to make money. In other words this sell off will be a short one until they sell and make money

The GM directors just blew out their share signaling to the Bondholders that they think a bankruptcy is a done deal. Hey Bondholders DO THE DEAL.

Two things to notice on this article.

1)The directors sold out
2)The stock is worth only 2 cents if they don't declare bankrupcy.

Mikey must be crazy to buy more now. Hey its only worth 2 cents for God's sake.

added to GM @ 1.14
ORDER TO BUY GM @ .99 MTW @5.24 FAS @8.91

Meridith (The Bearish Banker Babe) On CNBC Trashing the Banks

Meridith Whitney is on CNBC again trashing the banks as they all announce their common stock sales.

Would Not Own Bank Stocks: Meredith Whitney
Banks are overvalued and the government enabled them to have better first quarter earnings than they should, well-known analyst Meredith Whitney told
"At a core basis, I would not own these stocks," Whitney said in a live interview. "Their business models are not going to come back."

Whitney, a former analyst at Oppenheimer who has her own firm, is renowned for calling out the problems with banks' toxic assets before the issue became widespread.

"This is the great government momentum trade," Whitney said on why bank stocks had seen some improvement lately. "But the underlying core, earnings power of these banks is negligible."

Whitney also said that consumer spending is still going to remain slow. "There's a massive retraction in consumer liquidity," said Whitney. "Credit contraction is happening at an accelerated pace. Consumer spending is going to be less than people expect going forward."

She cited Bank of America [BAC 12.60 -0.34 (-2.63%) ] as an example of credit contraction. "They cut more than $200 billion in credit card lines in the first quarter of this year," said Whitney. "Consumers are not going to spend money."

Whitney also said that the rules of trading have changed because of the government's role. "For investors, you invest on what you know to be the rules of the game," said Whitney. "But with the government involved, no rules apply."

Whitney said the changing rules create a big problem for investors going forward. "The biggest danger here is having the retail investor shout out for a period of time because they don't know who to trust on market values."


What does that mean? It means that this sell off will be over in a hurry. Don't get me wrong I agree with everything she says it is just that they only bring her on when they want banks stocks. I do think that the banks are toast later this year but they need to make more money on their stock to cover the losses that will come later this year. So I will buy this hit over the next few days with the cash I raised last week. Not buying today will let you know ...MIkey

Mikey's Mission

I have followed this circus for the past 32 years. This blog is designed to shed the light of day on the system. I do not expect anyone to believe what I am saying and I do understand that. For some reason it is important for me to spread the word.
I do not receive any compensation for this blog and am not sponsored by anyone and do not have an axe to grind other than I do not approve of the way the system is run. I think their is a much better way of doing things and for those people who want to learn and pay their dues I am doing my small part to help. I do not believe that there is another blog out there telling it the real way that it is. I guess in some sense that is my small contribution to my fellow man.....Mikey


Order to buy DRYS at 5.75

Deflation, and Corporate Welfare, a new high in Bonds and $400 Gold

DJIA 8457 -117 VIX 32.74 Oil 57.98 -.65 Gold 914.50 -.40 Dollar Index 82.67 +.03

After this rally in the market and this rally in oil and the commodities the bad news will return. It will be about the world economy and a collapse in the commodities markets. They want out of their cyclicals, techs and oil stocks. and the "experts" will be selling them hard to the public. They will be telling the public that the FED is printing money and it will turn into inflation. They will say that the bond market will get hit hard because no one wants dollars.

The truth is that the bonds and the dollar are a great buy in this selloff. The public will be selling the bonds that they bought to be safe (how did that work?)...remember last year? They will be buying Gold and Oil stocks and as always they will be getting killed. The selloff on the commodities is just the first hit from the high we have a long way to go before they bottom. If you buy Gold you will get what you got if you were in the stock market last year.

The biggest problem later this year will be DEFLATION that is when the 30 year bonds make all time highs and the 30 year mortgages drop to below 4% as I mentioned last year. Oh by the way Gold will be selling for 400 just when the bonds make their new high. This will confirm the idea of deflation and send the lemmings back into the safety of bonds and out of stocks and commodities. The stock offering now are designed to get the corporations liquid through the next 9 months. They will need the money because the earnings won't be there.You see capitalism is corporate welfare and these offerings are their welfare checks. The checks are going to be paid for by anyone who buys stocks this month....Mikey

More banks sells stock

Three Big US Banks To Sell Stock, Repay TARP

Three big U.S. banks announced large common stock offerings on Monday and said they would use proceeds to repay funds received under the government's bank bailout program.

U.S. Bancorp said it plans to raise $2.5 billion, Capital One Financial roughly $1.75billion, and BB&T $1.5 billion.

Capital One [COF 28.41 -2.93 (-9.35%) ] said its offering will total 56 million shares.

BB&T [BBT 25.13 -1.20 (-4.56%) ] also said it will reduce its quarterly dividend 68 percent to 15 cents per share from 47 cents, saving $725 million a year, following 37 straight years of dividend increases.

U.S. Bancorp [USB 19.49 -1.05 (-5.11%) ] also plans to sell medium-term notes.


In premarket trading, shares of U.S. Bancorp fell 3.7 percent, Capital One 8.7 percent and BB&T 6.6 percent.

The three banks were among the 19 lenders to undergo government "stress tests" of their ability to weather a long and deep economic downturn, and were among the nine found not to need more capital.

U.S. Bancorp took $6.6 billion from the government's Troubled Asset Relief Program, while Capital One took $3.55 billion and BB&T $3.1 billion.

Hundreds of lenders took money from TARP, which was designed to spur lending and improve the economy.

Yet many now view TARP as an albatross that imposes too many restrictions, including on executive pay, and suggests that recipients are desperate for capital.


"Rational, objective lending is one of the most important purposes of the banking system, and when you inject Congress and the administration into it, it effectively politicizes the process, which is not healthy," BB&T Chief Executive Kelly King said in an interview on Monday.

King also faulted the stress tests, saying they unnecessarily created "huge levels of anxiety and concern" among investors.

"Regulators have always had the ability to assess the capital of institutions, and require more if they chose," he said.

On Friday, Wells Fargo [WFC 27.52 -0.66 (-2.34%) ] and Morgan Stanley [MS 26.71 -1.49 (-5.28%) ] , each found to need more capital under the stress test, sold $8.6 billion and $4 billion of stock, respectively. Morgan Stanley also sold $4 billion of debt.

Goldman Sachs and Morgan Stanley are arranging the U.S. Bancorp stock offering. Barclays Capital is arranging the Capital One stock offering. Goldman Sachs, JPMorgan and Morgan Stanley are arranging the BB&T stock offering.

Take a look at the chart pattern for COF. It is right at the 200 day average. Now look at GS and notice that they sold stock on 4/14. The stock got hit hard for 2 days and then ran back up. Now today COF, BBT, and USB announce. I would expect them to get nailed for a couple of days too. DHI announced an offering last week notice the hit. It is now stabilizing near the 200 day. I believe that is what is going on with the market and the banks now. They will sell their stock one by one and then rally after the sale. They need time to get this done. I still think we need to go higher in here to get the traders and public more excited. I do believe that after this month the economy and the market have a rough time. ...Mikey


ABK high 2.09 almost hit 200 day. MBI ABK and MTG need to sell stock too