DJIA 10300 -7.63 SPX 1089.95 -1.56 VIX 25.19 +.45 Gold 1176.70 +2.50 Silver 18.39 +.088 Oil 77.20 +1.15 RBOB (Whsl Gasoline 1.9927 +.066 Dollar Index 74.94 -.10 EURO 1.496 unch TLT (Long Term Gov Bonds)96.62 +.22 IEF (7-10 Yr Gov Bonds)93.04 +.13 XLK (Tech)21.67 -.03 XLE(Oil Index)56.50 -.52 (XLF Financials Index)14.46 +.18 XHB (Homebuilders Index)14.19 -.25 EEM (Emerging Markets)40.19 +.05 FXI (China Index)43.52 +.42 GDX (Gold Miners Index)50.69 -.13
The credit problems of Dubai will be resolved just like the sub prime loan problems were resolved for Bear Stearns and Lehman. The reason the economy did not grow was that the banks, even though solvent, could no longer make new loans to prop up underlying assets.
What people don't get is that the economic problems were not resolved. THE ASSET BASE CONTINUED TO CONTRACT BECAUSE THE LOAN MONEY DRIED UP. There was a rally after the loan problems were fixed by the Fed. The problem was that the market was only looking at the loans and not the economy.
The Wizard wants to show you that the Dubai loans will be fixed. Over the weekend the Dubai banks were given liquidity at prime to keep them going but new loans cannot be made and that leads to deleveraging. This is just 2 years behind.
The real problems with the emerging world will be the economy. The same problem exists in the US. The Wizard is telling you that the banks will be OK. The are letting the banks live at a nice spread between the Discount rate of 0% and the loan base. The problem is that the banks are not loaning out the money because that are sill writing off bad loans. The leads to more deleveraging and DEFLATION. This process will last at least 2 years probably alot longer.
A good analogy is that if the banks were a swimming pool and the Fed was pouring water into the pool it would not fill up because the pool has a crack at the bottom. There will be no recovery for YEARS not only in the US but in the emerging world.
The US economy which is the consumer engine to the emerging markets was created on the leveraging of appreciating real estate. The real estate market in the US is deleveraging, and therefore, the asset base continues to fall. The banks cannot loan money because , if you will the pool has a crack in the bottom. No matter how much water is added to the pool it will only leak away. The loan problems of the banks are very very deep and until those loans are "filled" there will be no asset appreciation, no inflation and no economic growth anywhere.
Note: Housing and now retail stocks are acting weak.
Mikey
Monday, November 30, 2009
The other side of a bubble
A bubble is caused when hot money chases an asset class. That can be the Technology industry, the Real Estate industry, or Commodities. Most people want to make money fast. Its the dream of most investors to strike it rich. That is what drives Capitalism. Just give them a story and sell it hard. That brings in the money. It becomes so so easy to make money that the banks get in the game and start to loan money on an assumption that things will continue to grow at the same rate.
That works great until the grow rate starts to slow. It then takes more and more borrowed money to prop up the asset. It also takes more and more lies by the investment bankers to keep the public money coming in. The combination of the two creates the bubble. Prices of the asset become unsustainable. All buyers and no sellers is a good thing until the money dries up. The end result is a bunch of leveraged owners who can't get out.
There will come a time when the loans start to fail. That is the beginning of the end of the bubble. The system will tell the public that there is no reason to panic and everything will be OK. The problem is that leverage that was a good thing when prices were rising is now a bad thing. The price has to go back at least to where the game began.
The Tech bubble completely retraced it move from 1995 to 2000 by Oct of 2002. The housing industry, which broke out in Jan of 2002 and peaked in July of 2005 more than had retraced that move by July 2008.
Now it is the turn of the Oil and commodities industry to do the same thing. They broke out in July of 2004. The move as measure by the XLE began at about 34. That whole move should go bye bye. It took Real Estate a little over 2 years to destroy its whole move. The oil index...and Gold ...and commodities topped in July of 2008. I would think that they will have destroyed the whole move by the MIDDLE OF NEXT YEAR.
Look at the chart of CSCO going ito is highs in 2000. Th bubble began in ealy 1998 with a break of 9. The top came after a parabolic move to 82 in March of 2000. The whole move had gone bye bye in Oct of 2002. It made a low of 8 in Oct of 2002. IT IS NOW AT 23.28 (that was the Tech bubble)
Look at the chart of KBH going into its highs of Jul 2005 at 85. The break out was at 20 in early 2001. The whole move was gone by Jan of 2008. It i now at 13.46 AND IS STILL FALLING.( that was the Housing bubble).
Look at the top in IYR (Commercial Real Estate...surragate for the consumer bubble) it went parabolic in Jan 2006 and topped in early 2007 at 95. It wipped out its whole move by Oct 2008 it is now 42.30
Now look at the chart of AEM the break out was 20 in Dec of 2005. It went parabolic in July of 2007 and topped in March of 2008. The target is 15
Look at the chart of EEM the emerging market index. The break out again was at 20 in March of 2005. The move went parabolic in late 2006 and topped in Nov 2007 at 56. Now at 40 the Target would be 15.(This is the emerging markets bubble)
Look at the move on the GLD that began it parabolic move in Sept of 2007 at 70. Tne low of that nove began in Oct of 2005 at 43.
Notice that in all of these charts after they made the parabolic top they had a huge sell off that tries to rally back to the prior top. That rally is the rally where the system tell you that things ae going to go back to where they were BEFORE the sell off. That rally is too keep the public in and to let the insiders out. THAT IS WHAT THIS RALLY IN THE STOCK MARKET AND THE COMMDOITIES IS ALL ABOUT
THE BUBBLE HAS BURST THIS RALLY IS YOU LAST CHANCE TO BAIL. THERE IS GOING TO BE A FULL RETRACEMENT OF THIS MOVE BECAUSE THAT IS THE WAY IT WORK.
The beat goes on....Mikey
That works great until the grow rate starts to slow. It then takes more and more borrowed money to prop up the asset. It also takes more and more lies by the investment bankers to keep the public money coming in. The combination of the two creates the bubble. Prices of the asset become unsustainable. All buyers and no sellers is a good thing until the money dries up. The end result is a bunch of leveraged owners who can't get out.
There will come a time when the loans start to fail. That is the beginning of the end of the bubble. The system will tell the public that there is no reason to panic and everything will be OK. The problem is that leverage that was a good thing when prices were rising is now a bad thing. The price has to go back at least to where the game began.
The Tech bubble completely retraced it move from 1995 to 2000 by Oct of 2002. The housing industry, which broke out in Jan of 2002 and peaked in July of 2005 more than had retraced that move by July 2008.
Now it is the turn of the Oil and commodities industry to do the same thing. They broke out in July of 2004. The move as measure by the XLE began at about 34. That whole move should go bye bye. It took Real Estate a little over 2 years to destroy its whole move. The oil index...and Gold ...and commodities topped in July of 2008. I would think that they will have destroyed the whole move by the MIDDLE OF NEXT YEAR.
Look at the chart of CSCO going ito is highs in 2000. Th bubble began in ealy 1998 with a break of 9. The top came after a parabolic move to 82 in March of 2000. The whole move had gone bye bye in Oct of 2002. It made a low of 8 in Oct of 2002. IT IS NOW AT 23.28 (that was the Tech bubble)
Look at the chart of KBH going into its highs of Jul 2005 at 85. The break out was at 20 in early 2001. The whole move was gone by Jan of 2008. It i now at 13.46 AND IS STILL FALLING.( that was the Housing bubble).
Look at the top in IYR (Commercial Real Estate...surragate for the consumer bubble) it went parabolic in Jan 2006 and topped in early 2007 at 95. It wipped out its whole move by Oct 2008 it is now 42.30
Now look at the chart of AEM the break out was 20 in Dec of 2005. It went parabolic in July of 2007 and topped in March of 2008. The target is 15
Look at the chart of EEM the emerging market index. The break out again was at 20 in March of 2005. The move went parabolic in late 2006 and topped in Nov 2007 at 56. Now at 40 the Target would be 15.(This is the emerging markets bubble)
Look at the move on the GLD that began it parabolic move in Sept of 2007 at 70. Tne low of that nove began in Oct of 2005 at 43.
Notice that in all of these charts after they made the parabolic top they had a huge sell off that tries to rally back to the prior top. That rally is the rally where the system tell you that things ae going to go back to where they were BEFORE the sell off. That rally is too keep the public in and to let the insiders out. THAT IS WHAT THIS RALLY IN THE STOCK MARKET AND THE COMMDOITIES IS ALL ABOUT
THE BUBBLE HAS BURST THIS RALLY IS YOU LAST CHANCE TO BAIL. THERE IS GOING TO BE A FULL RETRACEMENT OF THIS MOVE BECAUSE THAT IS THE WAY IT WORK.
The beat goes on....Mikey
Dubai not backed by the state...What if Oil tanks????
Dubai World Debt Gets No State Guarantee: Official
The Dubai government disclaimed responsibility for the debts of Dubai World on Monday, dealing a blow to creditors' assumptions that the Arab emirate would guarantee the conglomerate's liabilities.
"Creditors need to take part of the responsibility for their decision to lend to the companies," said Abdulrahman al-Saleh, director general of Dubai's department of finance. "They think Dubai World is part of the government, which is not correct."
United Arab Emirates stocks plunged on Monday as investors waited for clarity on Dubai's request for a delay until May 2010 on repaying billions of dollars in debt issued by Dubai World and its Nakheel unit, developer of three distinctive palm-shaped islands in the emirate.
Saleh's remarks in an Arabic-language interview to Dubai TV, a station owned by the ruler of Dubai, came after UAE markets closed.
"They have confirmed there is going to be a restructuring and are doing what they can to differentiate between the government and companies," said Mohieddine Kronfol, managing director at Algebra Capital.
"It doesn't take away from the fact that you have a major potential event that is unravelling. People's expectations aren't going to be met with this announcement." Pledges of financial support have come from the UAE's central bank, helping to steady global markets.
The central bank promised additional liquidity to local banks and an official in Dubai's oil-exporting neighbour Abu Dhabi said on Sunday it would offer selective support to Dubai firms.
But Michael Ganske, head of emerging market research at Commerzbank in London, said a default, which could ultimately benefit the region, "is becoming more likely." "At the end of the day it should be positive for Dubai, Dubai's sovereign risk should go down," he said. SAY WHAT!!!!!!!!
Dubai World — which had $59 billion of liabilities as of August — shocked investors last week with news of the standstill request while it restructures, along with its property developer Nakheel.
The agreement would affect about $5.7 billion of debt due to mature before the end of May.
Nakheel earlier on Monday asked for three of its Islamic bonds, worth a total of $5.25 billion, to be suspended on Nasdaq Dubai until it was in a position to "fully inform the market."
Standalone Entity
Saleh made clear on Monday that while the government owned Dubai World, the conglomerate had long operated as a standalone entity and was never guaranteed by the emirate's government.
"It deals with all parties on this basis and it borrows based on ... its projects and not the guarantee of the government," Saleh said.
When contacted by Reuters and asked whether Dubai could still repay its Nakheel bond, Saleh declined to comment. Dubai World Chairman Sultan Ahmed Bin Sulayem also declined to comment on Monday. Other Dubai World officials could not immediately be reached.
John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group, said the distinction between the Dubai government and the flagship company appeared minimal.
------------------------------------------------------------------------------------
The economies of the middle east are based on Oil prices. Many loans were made on the assumption that oil was going to stay above 100. Like every asset bubble oil is now returning to the beginning of the move. That would be 30 to 40. We are going to see a whole bunch of loans blow up and alot more Dubai's to come.
The Dubai government disclaimed responsibility for the debts of Dubai World on Monday, dealing a blow to creditors' assumptions that the Arab emirate would guarantee the conglomerate's liabilities.
"Creditors need to take part of the responsibility for their decision to lend to the companies," said Abdulrahman al-Saleh, director general of Dubai's department of finance. "They think Dubai World is part of the government, which is not correct."
United Arab Emirates stocks plunged on Monday as investors waited for clarity on Dubai's request for a delay until May 2010 on repaying billions of dollars in debt issued by Dubai World and its Nakheel unit, developer of three distinctive palm-shaped islands in the emirate.
Saleh's remarks in an Arabic-language interview to Dubai TV, a station owned by the ruler of Dubai, came after UAE markets closed.
"They have confirmed there is going to be a restructuring and are doing what they can to differentiate between the government and companies," said Mohieddine Kronfol, managing director at Algebra Capital.
"It doesn't take away from the fact that you have a major potential event that is unravelling. People's expectations aren't going to be met with this announcement." Pledges of financial support have come from the UAE's central bank, helping to steady global markets.
The central bank promised additional liquidity to local banks and an official in Dubai's oil-exporting neighbour Abu Dhabi said on Sunday it would offer selective support to Dubai firms.
But Michael Ganske, head of emerging market research at Commerzbank in London, said a default, which could ultimately benefit the region, "is becoming more likely." "At the end of the day it should be positive for Dubai, Dubai's sovereign risk should go down," he said. SAY WHAT!!!!!!!!
Dubai World — which had $59 billion of liabilities as of August — shocked investors last week with news of the standstill request while it restructures, along with its property developer Nakheel.
The agreement would affect about $5.7 billion of debt due to mature before the end of May.
Nakheel earlier on Monday asked for three of its Islamic bonds, worth a total of $5.25 billion, to be suspended on Nasdaq Dubai until it was in a position to "fully inform the market."
Standalone Entity
Saleh made clear on Monday that while the government owned Dubai World, the conglomerate had long operated as a standalone entity and was never guaranteed by the emirate's government.
"It deals with all parties on this basis and it borrows based on ... its projects and not the guarantee of the government," Saleh said.
When contacted by Reuters and asked whether Dubai could still repay its Nakheel bond, Saleh declined to comment. Dubai World Chairman Sultan Ahmed Bin Sulayem also declined to comment on Monday. Other Dubai World officials could not immediately be reached.
John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group, said the distinction between the Dubai government and the flagship company appeared minimal.
------------------------------------------------------------------------------------
The economies of the middle east are based on Oil prices. Many loans were made on the assumption that oil was going to stay above 100. Like every asset bubble oil is now returning to the beginning of the move. That would be 30 to 40. We are going to see a whole bunch of loans blow up and alot more Dubai's to come.
Friday, November 27, 2009
Dubai..First Shot across the Bow..Their Story is starting to unravel
DJIA 10329 -134 SPX 1094 -15.74 VIX 23.76 +3.28 Gold 1180 -7.00 Silver 18.44 -.328 Oil 75.67 -2.29 RBOB (Whsl Gasoline 1.9466 -.055 Dollar Index 74.98 +.095 EURO 1.4940 -.0197 TLT (Long Term Gov Bonds)96.32 +.28 IEF (7-10 Yr Gov Bonds)92.91 +.42 XLK (Tech)21.79 -.28 XLE(Oil Index)56.94 -1.17 (XLF Financials Index)14.40 -.20 XHB (Homebuilders Index)14.47 -.23 EEM (Emerging Markets)40.45 -1.30 FXI (China Index)43.38 -1.78 GDX (Gold Miners Index)51.17 -1.66
The news today that Dubai needs to restructure its debt is just another symptom of ILLIQUIDITY. That's right no dinero,nada por los jentes. It is the first shot and first break from the relentless story of fast easy money they have been cramming down our throats. The first take from the press will to be uses this selloff as a buying opportunity. Read this:
Dubai Spooks Investors But May Bring Buying Opportunity
While the immediate reaction Friday to the Dubai crisis was to sell stocks, many investors are more likely to wait for the issue to unfold before making any big decisions. In fact, caution rather than panic prevailed after the United Arab Emirates nation's ability to pay on its debts came into question.
If anything, pros seemed to be anticipating a buying opportunity should Wall Street get overly pessimistic about the Dubai ramifications"I would tell investors to sit tight and watch this play out," said David Kotok, chief investment advisor at Cumberland Investment Advisors. "We raised a little cash before the holidays. Hopefully we'll get to employ it in the dip." A slew of advisors appearing on CNBC Friday weighed in about their positions in the immediate aftermath, most saying that Dubai's problems at worst would send the market into the correction that many have been anticipating for months. Such an opportunity, they said, would bring about opportunities to get back into what some consider an overbought market.
"This is a good reminder that people have to be careful that it's not yet the calm, we still have bits of last year's storm operating," said Mohamed El-Erian, CEO of bond giant Pimco. "This is a catalyst for a repricing of markets across the board (for) markets that have gone too far on pure liquidity. There will be opportunities created because markets tend to overshoot on the way up and they overshoot on the way down."
Correction, Not Crisis: El-ErianBanks Play Down ExposureDubai Just a 'Blip': StrategistDubai Debt Delays Revive Fear of CrisisBanks Play Down ExposureTips: Don't Fret Too Much About Dubai. A holiday-shortened trading day Friday saw light volume, so the day was unlikely to serve as a reliable barometer for what investors' true reaction will be to the Dubai situation.
Still, there were concerns that the problems could run deeper.Dubai's standing as a centerpiece of the emerging markets dynamic that investors are counting on now comes into question. Contagion from the nation to other developing economies—affecting their ability to import goods and drive global growth— would pose a significant headwind to the rally that has sent US markets up more than 60 percent off their lows. Should Abu Dhabi balk at providing aid to Dubai, that would serve as an even greater catalyst for investors to start selling.
"This changes the animal spirits rather dramatically," said Dennis Gartman, editor of the Gartman Letter, which analyzes trends in commodities and other markets. "The fact that Abu Dhabi has not come immediately to the aid of its sister Emirate Dubai raises concern, it raises confusion, and as I like to say confusion breeds contempt."
Among other things, analysts were watching the Chicago Board Options Exchange's Volatility Index [VIX 23.58 3.10 (+15.14%) ] for clues as to which way the market is heading. The index hit its low for the year earlier in the week but soared more than 20 percent in early trading Friday.
"The VIX will have a huge impact on the market," said Andrew Keene, an independent trader at the CBOE. "We're going to have more details next week. Today's reaction is kind of like a blip in the bucket."
Yet Friday's selloff was fairly orderly and abating as the day went on.
All 30 Dow components fell but none dramatically. Alcoa [GE 15.91 -0.27 (-1.67%) ] was the biggest decliner of the day on the bluechip index, falling less than 2.5 percent in the first hour of trading. The other major indexes reflected the same trend, underscoring the notion that while investors were worried, nobody seemed to be panicking.
"We'll wait and see," said Art Cashin, director of floor operations at UBS. "I think this is somewhat tempered until we find out what the details are." Those worried about what Dubai might portend for the market focused not on the situation in the nation itself, which most figure to be resolved one way or another, but rather on whether it will shake broader confidence.
A flight to safety would push the US dollar up, after months of investors using the cheap greenback to buy up undervalued assets.
"You don't get a hangover from drinking, you get a hangover when the drinking is done. It looks like the party is over in Dubai for now," said Jack Bouroudjian, CEO of Index Futures Group. "We have to be concerned that we're probably going to see some weakness as we start to see that trade unwind."
Indeed, investors may well start to take a closer look at some other emerging countries to make sure they're as sound as they appear, said Tim Seymour, of Seygem Asset Management. "It doesn't mean that suddenly we have to reassess the credit quality of the whole world," Seymour said. "It has been a rough week. It may get a little rougher."
--------------------------------------------------------------------------------
This is exactly the reaction I want to see. Notice how the "experts" are saying not to worry. That is what you get if the sell off has legs. What I would not want to see is for the news to be selling panic. I still have 10200 as my sell signal.
This is the first big sell off we have had in weeks. It will be a process but I still think this thing has had it. I like the way they are soft peddling this hit.
This whole caca story of the printing of dollars and future inflation is just an attempt to keep the loans floating that were made when oil was above 100 and every bank was loaning money on commodities. The Dubai news tells us that the story is about to blow up. It is the same old thing that happens after every bubble. They are trying to put Humpty back together but the debt load is based on higher asset prices created by the bubble. THE ECONOMY CANNOT SUPPORT THOSE PRICES ANYMORE. Supply demand kicks in.
The tech bubble was killed by loans that were based on unrealistic revenue expectations. Those loans had to fail and when they did so did the tech bubble. This cycle saw loans backed by commodities, oil and emerging markets. The Dubai news tells us that those loans will be unsustainable AND are starting to blow up. The "experts know it and are telling us not to panic.
This BS story they are feeding us now is just a way for the Rats to sneek out of those loans. The truth is that that dog won't hunt. We are going into a deflation not an inflation. That is why I am short assets because this move is nothing but hot air.
The beat goes on.....Mikey
The news today that Dubai needs to restructure its debt is just another symptom of ILLIQUIDITY. That's right no dinero,nada por los jentes. It is the first shot and first break from the relentless story of fast easy money they have been cramming down our throats. The first take from the press will to be uses this selloff as a buying opportunity. Read this:
Dubai Spooks Investors But May Bring Buying Opportunity
While the immediate reaction Friday to the Dubai crisis was to sell stocks, many investors are more likely to wait for the issue to unfold before making any big decisions. In fact, caution rather than panic prevailed after the United Arab Emirates nation's ability to pay on its debts came into question.
If anything, pros seemed to be anticipating a buying opportunity should Wall Street get overly pessimistic about the Dubai ramifications"I would tell investors to sit tight and watch this play out," said David Kotok, chief investment advisor at Cumberland Investment Advisors. "We raised a little cash before the holidays. Hopefully we'll get to employ it in the dip." A slew of advisors appearing on CNBC Friday weighed in about their positions in the immediate aftermath, most saying that Dubai's problems at worst would send the market into the correction that many have been anticipating for months. Such an opportunity, they said, would bring about opportunities to get back into what some consider an overbought market.
"This is a good reminder that people have to be careful that it's not yet the calm, we still have bits of last year's storm operating," said Mohamed El-Erian, CEO of bond giant Pimco. "This is a catalyst for a repricing of markets across the board (for) markets that have gone too far on pure liquidity. There will be opportunities created because markets tend to overshoot on the way up and they overshoot on the way down."
Correction, Not Crisis: El-ErianBanks Play Down ExposureDubai Just a 'Blip': StrategistDubai Debt Delays Revive Fear of CrisisBanks Play Down ExposureTips: Don't Fret Too Much About Dubai. A holiday-shortened trading day Friday saw light volume, so the day was unlikely to serve as a reliable barometer for what investors' true reaction will be to the Dubai situation.
Still, there were concerns that the problems could run deeper.Dubai's standing as a centerpiece of the emerging markets dynamic that investors are counting on now comes into question. Contagion from the nation to other developing economies—affecting their ability to import goods and drive global growth— would pose a significant headwind to the rally that has sent US markets up more than 60 percent off their lows. Should Abu Dhabi balk at providing aid to Dubai, that would serve as an even greater catalyst for investors to start selling.
"This changes the animal spirits rather dramatically," said Dennis Gartman, editor of the Gartman Letter, which analyzes trends in commodities and other markets. "The fact that Abu Dhabi has not come immediately to the aid of its sister Emirate Dubai raises concern, it raises confusion, and as I like to say confusion breeds contempt."
Among other things, analysts were watching the Chicago Board Options Exchange's Volatility Index [VIX 23.58 3.10 (+15.14%) ] for clues as to which way the market is heading. The index hit its low for the year earlier in the week but soared more than 20 percent in early trading Friday.
"The VIX will have a huge impact on the market," said Andrew Keene, an independent trader at the CBOE. "We're going to have more details next week. Today's reaction is kind of like a blip in the bucket."
Yet Friday's selloff was fairly orderly and abating as the day went on.
All 30 Dow components fell but none dramatically. Alcoa [GE 15.91 -0.27 (-1.67%) ] was the biggest decliner of the day on the bluechip index, falling less than 2.5 percent in the first hour of trading. The other major indexes reflected the same trend, underscoring the notion that while investors were worried, nobody seemed to be panicking.
"We'll wait and see," said Art Cashin, director of floor operations at UBS. "I think this is somewhat tempered until we find out what the details are." Those worried about what Dubai might portend for the market focused not on the situation in the nation itself, which most figure to be resolved one way or another, but rather on whether it will shake broader confidence.
A flight to safety would push the US dollar up, after months of investors using the cheap greenback to buy up undervalued assets.
"You don't get a hangover from drinking, you get a hangover when the drinking is done. It looks like the party is over in Dubai for now," said Jack Bouroudjian, CEO of Index Futures Group. "We have to be concerned that we're probably going to see some weakness as we start to see that trade unwind."
Indeed, investors may well start to take a closer look at some other emerging countries to make sure they're as sound as they appear, said Tim Seymour, of Seygem Asset Management. "It doesn't mean that suddenly we have to reassess the credit quality of the whole world," Seymour said. "It has been a rough week. It may get a little rougher."
--------------------------------------------------------------------------------
This is exactly the reaction I want to see. Notice how the "experts" are saying not to worry. That is what you get if the sell off has legs. What I would not want to see is for the news to be selling panic. I still have 10200 as my sell signal.
This is the first big sell off we have had in weeks. It will be a process but I still think this thing has had it. I like the way they are soft peddling this hit.
This whole caca story of the printing of dollars and future inflation is just an attempt to keep the loans floating that were made when oil was above 100 and every bank was loaning money on commodities. The Dubai news tells us that the story is about to blow up. It is the same old thing that happens after every bubble. They are trying to put Humpty back together but the debt load is based on higher asset prices created by the bubble. THE ECONOMY CANNOT SUPPORT THOSE PRICES ANYMORE. Supply demand kicks in.
The tech bubble was killed by loans that were based on unrealistic revenue expectations. Those loans had to fail and when they did so did the tech bubble. This cycle saw loans backed by commodities, oil and emerging markets. The Dubai news tells us that those loans will be unsustainable AND are starting to blow up. The "experts know it and are telling us not to panic.
This BS story they are feeding us now is just a way for the Rats to sneek out of those loans. The truth is that that dog won't hunt. We are going into a deflation not an inflation. That is why I am short assets because this move is nothing but hot air.
The beat goes on.....Mikey
Wednesday, November 25, 2009
The story chugs into Thanksgiving
DJIA 10460 +28 SPX 1110 +4.36 VIX 20.49 +.02 Gold 1189 +23.30 Silver 18.83 +.375 Oil 77.98 +1.96 RBOB (Whsl Gasoline 1.999 +.06 Dollar Index 74.32 -.80 EURO 1.5137 +.0162 TLT (Long Term Gov Bonds)96.00 +.40 IEF (7-10 Yr Gov Bonds)92.52 +.34 XLK (Tech)22.05 +.02 XLE(Oil Index)58.20 +.54 (XLF Financials Index)14.65 -.04 XHB (Homebuilders Index)14.71 +.13 EEM (Emerging Markets)41.71 +.44 FXI (China Index)45.16 +.16 GDX (Gold Miners Index)52.89 +1.44
The weak dollar stock market "risk" trade strong Gold/Commodity story is chugging into Thanksgiving. The old saying Feast on Thanksgiving Starve on Xmas I think is relevant. I don't expect Xmas to be worth anything this year and I am hearing that even the shorts think this rally will last until year end. We'll see
Have a good Thanksgiving!!
Mikey
The weak dollar stock market "risk" trade strong Gold/Commodity story is chugging into Thanksgiving. The old saying Feast on Thanksgiving Starve on Xmas I think is relevant. I don't expect Xmas to be worth anything this year and I am hearing that even the shorts think this rally will last until year end. We'll see
Have a good Thanksgiving!!
Mikey
Tuesday, November 24, 2009
The Buffet/Gates Card...The Coupe de grace for the Shorts!!!
The expression coup de grâce (pronounced /ˌkuːdə ˈɡrɑːs/; French: [kudəɡʁas], "blow of mercy") means a death blow intended to end the suffering of a wounded ...That is what the Buffett buyout is intended to do to the shorts.
Take a look at the charts at the beginning of November. The market is rolling over the fundamentals are screamimg sell and the transportation average is breaking down. This average is a very good indicator of economic health. It is becoming obvious that the economy has had it. You can see it everywhere. Not only was it obvious as you walk the streets but you could see many stocks starting to break including the Rails,.airlines and truckers. Yellow freight stock was breaking into the 1's.
This is where I started to add on to my shorts. I believe I had a lot of company too. The trade looked obvious. The shorts were coming to the party then the Wizard played the Buffett/Gates card. They told everyone that they were buying and the stock market took off. How could you not believe everything is going to be OK when Buffett buys BNI for billions. Hey, he looks like such a kindly old man.
First of all he is the WIZARD OF OMAHA and why would he spend that kind of money if he didn't know something. I will not lead you to a conclusion you cannot see for yourself. Most will argue with the intent of this article. But if you are to be a successful investor you need to consider this. Let's just say that that event makes the shorts think that the Wizard can pull this out of his butt anytime he wants and he can!
That is what makes this game so tough. I have learned that there is always some kind of event that occurs after you are sure it is over that makes you question your position. But again remember this, in the end the economy DOES MATTER. That is what you have to focus on. Everything in between is just the Wizard doing his thing to get you to believe that what you see is not real.
This time it is the Buffett/Gates card. You may choose to believe this or not but I am going to write it for your consideration.
My sell signals are a close below 10200 on DJIA and 1087 on the SPX. Those were the closes on the day Buffett and Gates were interviewed by CNBC by Becky Quick. It will also be the fifth head fake we will have had since August when the real economy topped.
No add on's today.
Mikey (The Idiot)...suffers on......until I don't
Take a look at the charts at the beginning of November. The market is rolling over the fundamentals are screamimg sell and the transportation average is breaking down. This average is a very good indicator of economic health. It is becoming obvious that the economy has had it. You can see it everywhere. Not only was it obvious as you walk the streets but you could see many stocks starting to break including the Rails,.airlines and truckers. Yellow freight stock was breaking into the 1's.
This is where I started to add on to my shorts. I believe I had a lot of company too. The trade looked obvious. The shorts were coming to the party then the Wizard played the Buffett/Gates card. They told everyone that they were buying and the stock market took off. How could you not believe everything is going to be OK when Buffett buys BNI for billions. Hey, he looks like such a kindly old man.
First of all he is the WIZARD OF OMAHA and why would he spend that kind of money if he didn't know something. I will not lead you to a conclusion you cannot see for yourself. Most will argue with the intent of this article. But if you are to be a successful investor you need to consider this. Let's just say that that event makes the shorts think that the Wizard can pull this out of his butt anytime he wants and he can!
That is what makes this game so tough. I have learned that there is always some kind of event that occurs after you are sure it is over that makes you question your position. But again remember this, in the end the economy DOES MATTER. That is what you have to focus on. Everything in between is just the Wizard doing his thing to get you to believe that what you see is not real.
This time it is the Buffett/Gates card. You may choose to believe this or not but I am going to write it for your consideration.
My sell signals are a close below 10200 on DJIA and 1087 on the SPX. Those were the closes on the day Buffett and Gates were interviewed by CNBC by Becky Quick. It will also be the fifth head fake we will have had since August when the real economy topped.
No add on's today.
Mikey (The Idiot)...suffers on......until I don't
Misdirection is the Wizards game
DJIA 10408.17 -42.63 SPX 1103.04 -3.20 VIX 20.92 -.24 Gold1167.40 +2.40 Silver 18.47 -.14 Oil 76.29 -1.27 RBOB (Whsl Gasoline1.9545 -.0249 Dollar Index 75.30 +.13 EURO 1.4943 -.0007 TLT (Long Term Gov Bonds)95.17 +.17 IEF (7-10 Yr Gov Bonds)91.91 +.20 XLK (Tech)21.98 -.08 XLE(Oil Index)57.22 -.11 (XLF Financials Index)14.69 -.11 XHB (Homebuilders Index)14.61 -.15 EEM (Emerging Markets)41.01 -.48 FXI (China Index)44.76 -.86 GDX (Gold Miners Index)51.11 -.67
Every market cycle ends with a disconnect. A disconnect from the reality of the economy and the prices of stocks. Why? The reason is that, in the end, the Wizard wants to distribute stocks but to the knowledgeable trader it is obvious that the economy is waning. That creates a situation where the sellers come in before Wizard is ready to sell. So Wizard wants to sell at the same time the sellers do.
What the Wizards must do is create a misdirection. He must create a story that makes the economy irrelevant. Something that drives prices that appears to be greater than what is going on in the economy. If the Wizard does that long enough it will crush the sellers and create a situation where, if you want to make money, you have to capitulate and buy.
In the end, IT IS ALL ABOUT PRICE. The trade becomes a momentum trade. Don't fight the tape. Regardless of the economy if you are a trader you have to be in. If you look at the charts even my kid could tell you that you don't want to be a short you have to be a buyer, "everyone knows that". The economy becomes irrelevant and like a pack of lemmings the crowd runs off the cliff.
The misdirection now is the weak dollar. The Wizard calls this the risk trade. Every time the dollar drops the market goes up. The focus is on the Fed "printing" so much money that inflation and a growth economy is coming. The Wizard has the traders watching the dollar and not the economy. Hey it must be true look at Gold. The risk trade is the misdirection that the Wizard needs to distribute his stocks now.
The truth is that in the end the economy which does not matter now will matter in the end. The misdirection has the effect of getting all of the traders and the public long and in the wrong stocks for the next business cycle as the Wizard moves on.
The Wizard is selling his commodity stocks and using the money to buy government bonds. Those bonds while being held are not increasing liquidity in the system. The system is starved for cash and the Wizard will only put in liquidity when the bonds are sold. The Wizard will only be able to sell these bonds in a very negative economic environment. Those assets that are being pushed now will be the ones that will tell the traders to buy bonds.
The Wizard works his magic when he lays down the bread crumbs for the Lemmings and the Lemmings get to eat. It is so easy that they willingly follow the bread willingly eating. The problem is that the trail goes off of the cliff.
REMEMBER THIS: THE TOP DOES NOT COME UNTIL THERE IS NO ARGUMENT BECAUSE PRICE IS EVERYTHING. THOSE WHO POINT TO THE FUNDAMENTALS ARE IDIOTS. WHEN PRICE IS SO DRAMATIC THAT FUNDAMENTALS MEAN NOTHING. THE PRICE MUST GO MUCH FURTHER THAN YOU THINK IT CAN POSSIBLY GO. WHEN YOU GET WEAKNESS OFF OF THAT MOVE THAT IS IT!!!!.
What the Wizard is selling: Gold, China, Emerging Markets, Oil, Techs, Commodity related, Banks.
What he Wizard is buying: The Dollar, US Bonds
Note: VIX is near low of its trading range. Fear is low
The XHB (housing) topped on 9/16 at 16.47 is now at 14.59
The $RUT(Russell 2000) is 591.30 the high was 623 on 10/15 a decline of 5%
The $XAL(airline index) topped ai 30.50 on 9/21 is now at 26.57
The DJIA is 10420 right on the high
Mikey
Every market cycle ends with a disconnect. A disconnect from the reality of the economy and the prices of stocks. Why? The reason is that, in the end, the Wizard wants to distribute stocks but to the knowledgeable trader it is obvious that the economy is waning. That creates a situation where the sellers come in before Wizard is ready to sell. So Wizard wants to sell at the same time the sellers do.
What the Wizards must do is create a misdirection. He must create a story that makes the economy irrelevant. Something that drives prices that appears to be greater than what is going on in the economy. If the Wizard does that long enough it will crush the sellers and create a situation where, if you want to make money, you have to capitulate and buy.
In the end, IT IS ALL ABOUT PRICE. The trade becomes a momentum trade. Don't fight the tape. Regardless of the economy if you are a trader you have to be in. If you look at the charts even my kid could tell you that you don't want to be a short you have to be a buyer, "everyone knows that". The economy becomes irrelevant and like a pack of lemmings the crowd runs off the cliff.
The misdirection now is the weak dollar. The Wizard calls this the risk trade. Every time the dollar drops the market goes up. The focus is on the Fed "printing" so much money that inflation and a growth economy is coming. The Wizard has the traders watching the dollar and not the economy. Hey it must be true look at Gold. The risk trade is the misdirection that the Wizard needs to distribute his stocks now.
The truth is that in the end the economy which does not matter now will matter in the end. The misdirection has the effect of getting all of the traders and the public long and in the wrong stocks for the next business cycle as the Wizard moves on.
The Wizard is selling his commodity stocks and using the money to buy government bonds. Those bonds while being held are not increasing liquidity in the system. The system is starved for cash and the Wizard will only put in liquidity when the bonds are sold. The Wizard will only be able to sell these bonds in a very negative economic environment. Those assets that are being pushed now will be the ones that will tell the traders to buy bonds.
The Wizard works his magic when he lays down the bread crumbs for the Lemmings and the Lemmings get to eat. It is so easy that they willingly follow the bread willingly eating. The problem is that the trail goes off of the cliff.
REMEMBER THIS: THE TOP DOES NOT COME UNTIL THERE IS NO ARGUMENT BECAUSE PRICE IS EVERYTHING. THOSE WHO POINT TO THE FUNDAMENTALS ARE IDIOTS. WHEN PRICE IS SO DRAMATIC THAT FUNDAMENTALS MEAN NOTHING. THE PRICE MUST GO MUCH FURTHER THAN YOU THINK IT CAN POSSIBLY GO. WHEN YOU GET WEAKNESS OFF OF THAT MOVE THAT IS IT!!!!.
What the Wizard is selling: Gold, China, Emerging Markets, Oil, Techs, Commodity related, Banks.
What he Wizard is buying: The Dollar, US Bonds
Note: VIX is near low of its trading range. Fear is low
The XHB (housing) topped on 9/16 at 16.47 is now at 14.59
The $RUT(Russell 2000) is 591.30 the high was 623 on 10/15 a decline of 5%
The $XAL(airline index) topped ai 30.50 on 9/21 is now at 26.57
The DJIA is 10420 right on the high
Mikey
Monday, November 23, 2009
Here's another bearish article on the Dollar...Everyday now
DJIA 10450.95 +132.79 SPX1104.40 +14.86 VIX21.21 -.98 Gold 1165 +18.20 Silver 18.58 +.14 Oil 77.60 +.13 RBOB (Whsl Gasoline1.9770 -.0036 Dollar Index 75.125 -.52 EURO 1.4972 +.0117 TLT (Long Term Gov Bonds)94.99 -.13 IEF (7-10 Yr Gov Bonds)91.71 -.13 XLK (Tech)22.06 +.37 XLE(Oil Index)57.35 +.75 (XLF Financials Index)14.81 +.21 XHB (Homebuilders Index)14.77 +.19 EEM (Emerging Markets)41.50 +.85 FXI (China Index)45.63 +1.03 GDX (Gold Miners Index)51.67 +.85
Short ETF's I own: BGZ (3X Big Cap Short) 18.07 -.69 ERY 3X Oil Index short 11.45 -.45 Gll (2X gold short) 9.30 -.26 ZSL (2X silver short) 4.06 -.04 FXP (2X China Short) 7.45 -.37 EDZ (3X emerging markets short) 5.26 -.34 SCO (2X oil short) 13.46 -.03 SMN (2X Basic materials short) 8.91 -.10 FAZ (3X financials short) 19.21 -.78
Just wanted to document the media blitz that is ongoing about the "weak" dollar.
Dollar Index at the time of this article is 75.125 where it has been for the last month. The Wizard wants you to know that Dollar is going down and is using considerable ink to make sure you know.
...................................................................................
Why the US Dollar Will Likely Remain Weak for Some TimeThe dollar is weak. Get used to it.
The U.S. currency's fate is tied to market speculators, geopolitics and economic-trade crosswinds and will remain weak for both the short-term and mid-term, unless major governments take unusual steps to intervene.
“There's been a very dominant trend since 2001,” says economist Chris Rupkey of Bank of Tokyo-Mitsubishi. “The foreign exchange market often deals with themes and it sometimes difficult to change those.”...(Take a look at the chart on MTU his bank)
And those themes, or trends, often remain in place for years. Since 2000, for instance, the dollar has slid from a record high against the Euro to a record low.
Though the U.S. currency is now very weak by historical standards, it has been this weak before. On a trade-weighted, inflation-adjusted basis, the dollar was actually weaker at two points in the 1970s, once in the 1990s and as recently as the first quarter of 2008. Of course, it was much stronger for much of the early 1980s, when it hit a record high. (see chart below)
“The charts suggest this is the new reality for awhile," says Robert Brusca, chief economist at FAO Economics. “Clearly, the dollar has to be weaker. That's rational."
Most economists are unwilling to declare that this is, in effect, a new dollar—weaker, of little stature and at immediate risk of losing its status as the world's reserve currency. At the same time, the greenback is unlikely to make a roaring comeback, as it did in the mid 1990s, the last time the doom-and-gloom quotient was high and market and political analysts galore were bemoaning the debilitating drag of the twin deficits (trade and budget).
At that time, then-Treasury Secretary Robert Rubin essentially launched the we-want-a-strong dollar mantra, which though very effective at first, has since become empty political rhetoric.
That’s where the national pride comes in. The world’s only superpower (for now) should have a powerful currency, reflecting its economic and military might. The difference this time is that a new economic-military superpower with a huge trade surplus is emerging: China.
Given all this, it may now be impossible, if not improbable, to achieve a strong dollar again. Nor will it become some sort of Banana Republic peso, even with the federal borrowing binges of the Bush and Obama administrations.
“I don’t think there’s a new norm, or era, dollar,” says Rupkey.
................
Well as they say...another day and another dollar. The hype we have over this trade is so great that the first big sell off we get will be the beginning of an era of dollar strength that will last for years.
Remember, a DJIA below 10200 is my sell signal. I have a high confidence level that it will be before year end. Everyone knows the economy is in shambles and that is the reason for this rally. The Wizard has to make the rally creditable by price and time before the sell off begins. It is still to early to call the top but the first hit below 10200 will be a signal for me. No add ons today
Mikey
Short ETF's I own: BGZ (3X Big Cap Short) 18.07 -.69 ERY 3X Oil Index short 11.45 -.45 Gll (2X gold short) 9.30 -.26 ZSL (2X silver short) 4.06 -.04 FXP (2X China Short) 7.45 -.37 EDZ (3X emerging markets short) 5.26 -.34 SCO (2X oil short) 13.46 -.03 SMN (2X Basic materials short) 8.91 -.10 FAZ (3X financials short) 19.21 -.78
Just wanted to document the media blitz that is ongoing about the "weak" dollar.
Dollar Index at the time of this article is 75.125 where it has been for the last month. The Wizard wants you to know that Dollar is going down and is using considerable ink to make sure you know.
...................................................................................
Why the US Dollar Will Likely Remain Weak for Some TimeThe dollar is weak. Get used to it.
The U.S. currency's fate is tied to market speculators, geopolitics and economic-trade crosswinds and will remain weak for both the short-term and mid-term, unless major governments take unusual steps to intervene.
“There's been a very dominant trend since 2001,” says economist Chris Rupkey of Bank of Tokyo-Mitsubishi. “The foreign exchange market often deals with themes and it sometimes difficult to change those.”...(Take a look at the chart on MTU his bank)
And those themes, or trends, often remain in place for years. Since 2000, for instance, the dollar has slid from a record high against the Euro to a record low.
Though the U.S. currency is now very weak by historical standards, it has been this weak before. On a trade-weighted, inflation-adjusted basis, the dollar was actually weaker at two points in the 1970s, once in the 1990s and as recently as the first quarter of 2008. Of course, it was much stronger for much of the early 1980s, when it hit a record high. (see chart below)
“The charts suggest this is the new reality for awhile," says Robert Brusca, chief economist at FAO Economics. “Clearly, the dollar has to be weaker. That's rational."
Most economists are unwilling to declare that this is, in effect, a new dollar—weaker, of little stature and at immediate risk of losing its status as the world's reserve currency. At the same time, the greenback is unlikely to make a roaring comeback, as it did in the mid 1990s, the last time the doom-and-gloom quotient was high and market and political analysts galore were bemoaning the debilitating drag of the twin deficits (trade and budget).
At that time, then-Treasury Secretary Robert Rubin essentially launched the we-want-a-strong dollar mantra, which though very effective at first, has since become empty political rhetoric.
That’s where the national pride comes in. The world’s only superpower (for now) should have a powerful currency, reflecting its economic and military might. The difference this time is that a new economic-military superpower with a huge trade surplus is emerging: China.
Given all this, it may now be impossible, if not improbable, to achieve a strong dollar again. Nor will it become some sort of Banana Republic peso, even with the federal borrowing binges of the Bush and Obama administrations.
“I don’t think there’s a new norm, or era, dollar,” says Rupkey.
................
Well as they say...another day and another dollar. The hype we have over this trade is so great that the first big sell off we get will be the beginning of an era of dollar strength that will last for years.
Remember, a DJIA below 10200 is my sell signal. I have a high confidence level that it will be before year end. Everyone knows the economy is in shambles and that is the reason for this rally. The Wizard has to make the rally creditable by price and time before the sell off begins. It is still to early to call the top but the first hit below 10200 will be a signal for me. No add ons today
Mikey
Friday, November 20, 2009
Geez another Bullish article for Gold...What a surprise. Me Thinks that they protests too much
Everyday the Wizard spreads the message to the public to buy Gold. Each mssage is more convincing than the one before. Here is the lastest one I saw today.
Latest Bullish Sign for Gold: Central Banks Are Big Buyers
Gold prices, which have already soared to record levels in recent weeks, could get a further boost from a new investor: central banks.
Several central banks are joining average investors in betting that weak currencies—particularly the US dollar—could be a friend to the gold trade for quite some time.
After a weak summer, gold has rallied strongly over the past three months on the belief that that the dollar will continue to fall until the US economic recovery is on more solid footing.
For Rob Lutts, CIO of Cabot Management in Salem, Mass., bull markets such as gold's run in three stages—denial, acceptance and love affair.
The market as he sees it is in the second stage now, so until the love affair commences and the trade gets too frothy, he believes investors can't loose with gold.
"I think we've moved a little more into the acceptance phase," Lutts says. "Eventually asset allocation models like those that come out of big brokerage houses will be increasing their allocation to gold and making it more of a permanent sort of recommendation."
While the weak dollar has been fueling retail investor interest in the metal, it's been only in recent weeks that global central banks—for two decades net sellers of gold—have gotten in on the act as well.
"The big spenders are coming to the table," says Sean Brodrick, natural resources analyst for Weiss Research's Uncommon Wisdom Daily newsletter. "Central banks are buying and they are buying big time. If central banks are buying, that's the biggest money around and I want to be on their side of the bet."
Most recently, the Reserve Bank of India said it will buy 200 metric tons from the International Monetary Fund, half what the IMF is selling.
Gold Rebounds FridayGold's 'Money' Value is $4,000 to $11,000: Market StrategistDollar Rally ContinuesFear Driving Rally
That's been the trend around the world as Mexico, Russia, the Philippines and Mexico all have increased their gold holdings this year.
The trend is expected to hold up and make global central banks net buyers of gold for the first time since 1988, Evy Hambro, who runs two commodities funds for BlackRock, recently told a media briefing in Australia.
"Gold's role is gathering a lot more attention in terms of risk diversification," Hambro said.
As that trade becomes more global in nature, it presents varying opportunities for investors.
While Brodrick believes gold is on its way to $1,300 an ounce, he said investors could do just as well with gold miner stocks as with the metal itself. He sees consolidation coming in the industry as mining becomes more and more the domain of large companies that can afford to look for a metal that is becoming increasingly scarce in terms of new discoveries.
"Despite the fact that gold has been marching higher for years, global gold mine production is actually going down. The reason is they aren't finding these big elephant-sized deposits," Brodrick says. "There's a real squeeze coming on. If we're not at peak gold, we might be approaching it."
One way investors can tap the mining consolidation trend is through the Market Vectors Gold Miners [GDX 50.82 -0.28 (-0.55%) ] exchange-traded fund. The fund seeks to mimic the performance of the AMEX Gold Miners index.
"The beauty of that is you can have some awful surprises that send your (gold) investment into the tank," Brodrick says. "Sure (the ETF) could go lower, but it's not going to get one of those hits that knocks it for a loop."
To be sure, there are analysts who worry that gold's rally—up about 24 percent for the year and 19 percent since the March stock market lows—could be getting overheated.
The warnings are similar to those bracing for a severe stock market correction that hasn't happened, but they nonetheless remain.
"While a golden rule in the current precious metals market is, 'Never stand in the way of a raging bull,' invesors should also note the other adage of 'Caveat Emptor' or 'Buyer Beware,'" Jeffrey Nichols, senior economic advisor at Rosland Capital, wrote in an analysis.
Nichols notes that large mining companies like Barrick Gold [ABX 43.98 -0.36 (-0.81%) ] are buying back previous sales so shareholders can continue to get exposure. He also echoed comments of other advisors who feel gold dips have been treated as buying opportunities.
"However, if these players stand aside for any reason, gold prices could drop precipitously, and this would be an opportunity for investors to establish or augment their own positions," he wrote.
Potential for sudden moves in gold's price, though, is scaring off some investors who worry that the gold run can only go as long as conditions such as dollar debasement stay ideal.
"The downside with gold is that it has a volatility that is a whole lot greater than bonds and even greater than stocks," says Tim Courtney, chief investment officer at Burns Advisory Group in Oklahoma City, Okla.
Past gold rallies have always preceded inflation, says Courtney, who believes that with inflation being almost wholly discounted as a threat, gold probably has hit its peak.
Nonetheless, he understands why investors want it in their portfolios.
Cabot Management's Lutts thinks $2,000 gold is a strong possibility for 2010, though he acknowledges there will be bumps and bruises along the way.
"It's not going to be a straight line," he says. "There's going to be periods of concern and people are going to be selling. But it's very clear to me that investment dollars out there in the world today have a very high regard for things that can protect their value against deteroirating currencies.
Investors should allocate about 15 to 20 percent of their portfolios towards gold, says Lutts, who advocates gold-based ETFs including the GDX miners' fund as well as the SPDR Gold Shares [GLD 112.94 0.64 (+0.57%) ], which holds physical gold; as well as the lightly traded PowerShares Global Gold and Precious Metals [PSAU 39.89 -0.284 (-0.71%) ], which seeks to replicate the Nasdaq Global Gold and Precious Metals index.
Only when the gold bull market hits the love-affair stage and too many buyers step in will Lutts think about getting out.
"I would probably cut my positions significantly (then), take profits and try to judge then the love affair," he says. "You'll know you're in the love affair phase when you go to Thanksgiving dinner and everybody tells you how much gold they're buying."
It all makes soooooo much sense doesn't it?
You can't lose hey buy the pullback. This market is set up on a tee and the next sell off is the one you DON'T want to buy.
Mikey
Latest Bullish Sign for Gold: Central Banks Are Big Buyers
Gold prices, which have already soared to record levels in recent weeks, could get a further boost from a new investor: central banks.
Several central banks are joining average investors in betting that weak currencies—particularly the US dollar—could be a friend to the gold trade for quite some time.
After a weak summer, gold has rallied strongly over the past three months on the belief that that the dollar will continue to fall until the US economic recovery is on more solid footing.
For Rob Lutts, CIO of Cabot Management in Salem, Mass., bull markets such as gold's run in three stages—denial, acceptance and love affair.
The market as he sees it is in the second stage now, so until the love affair commences and the trade gets too frothy, he believes investors can't loose with gold.
"I think we've moved a little more into the acceptance phase," Lutts says. "Eventually asset allocation models like those that come out of big brokerage houses will be increasing their allocation to gold and making it more of a permanent sort of recommendation."
While the weak dollar has been fueling retail investor interest in the metal, it's been only in recent weeks that global central banks—for two decades net sellers of gold—have gotten in on the act as well.
"The big spenders are coming to the table," says Sean Brodrick, natural resources analyst for Weiss Research's Uncommon Wisdom Daily newsletter. "Central banks are buying and they are buying big time. If central banks are buying, that's the biggest money around and I want to be on their side of the bet."
Most recently, the Reserve Bank of India said it will buy 200 metric tons from the International Monetary Fund, half what the IMF is selling.
Gold Rebounds FridayGold's 'Money' Value is $4,000 to $11,000: Market StrategistDollar Rally ContinuesFear Driving Rally
That's been the trend around the world as Mexico, Russia, the Philippines and Mexico all have increased their gold holdings this year.
The trend is expected to hold up and make global central banks net buyers of gold for the first time since 1988, Evy Hambro, who runs two commodities funds for BlackRock, recently told a media briefing in Australia.
"Gold's role is gathering a lot more attention in terms of risk diversification," Hambro said.
As that trade becomes more global in nature, it presents varying opportunities for investors.
While Brodrick believes gold is on its way to $1,300 an ounce, he said investors could do just as well with gold miner stocks as with the metal itself. He sees consolidation coming in the industry as mining becomes more and more the domain of large companies that can afford to look for a metal that is becoming increasingly scarce in terms of new discoveries.
"Despite the fact that gold has been marching higher for years, global gold mine production is actually going down. The reason is they aren't finding these big elephant-sized deposits," Brodrick says. "There's a real squeeze coming on. If we're not at peak gold, we might be approaching it."
One way investors can tap the mining consolidation trend is through the Market Vectors Gold Miners [GDX 50.82 -0.28 (-0.55%) ] exchange-traded fund. The fund seeks to mimic the performance of the AMEX Gold Miners index.
"The beauty of that is you can have some awful surprises that send your (gold) investment into the tank," Brodrick says. "Sure (the ETF) could go lower, but it's not going to get one of those hits that knocks it for a loop."
To be sure, there are analysts who worry that gold's rally—up about 24 percent for the year and 19 percent since the March stock market lows—could be getting overheated.
The warnings are similar to those bracing for a severe stock market correction that hasn't happened, but they nonetheless remain.
"While a golden rule in the current precious metals market is, 'Never stand in the way of a raging bull,' invesors should also note the other adage of 'Caveat Emptor' or 'Buyer Beware,'" Jeffrey Nichols, senior economic advisor at Rosland Capital, wrote in an analysis.
Nichols notes that large mining companies like Barrick Gold [ABX 43.98 -0.36 (-0.81%) ] are buying back previous sales so shareholders can continue to get exposure. He also echoed comments of other advisors who feel gold dips have been treated as buying opportunities.
"However, if these players stand aside for any reason, gold prices could drop precipitously, and this would be an opportunity for investors to establish or augment their own positions," he wrote.
Potential for sudden moves in gold's price, though, is scaring off some investors who worry that the gold run can only go as long as conditions such as dollar debasement stay ideal.
"The downside with gold is that it has a volatility that is a whole lot greater than bonds and even greater than stocks," says Tim Courtney, chief investment officer at Burns Advisory Group in Oklahoma City, Okla.
Past gold rallies have always preceded inflation, says Courtney, who believes that with inflation being almost wholly discounted as a threat, gold probably has hit its peak.
Nonetheless, he understands why investors want it in their portfolios.
Cabot Management's Lutts thinks $2,000 gold is a strong possibility for 2010, though he acknowledges there will be bumps and bruises along the way.
"It's not going to be a straight line," he says. "There's going to be periods of concern and people are going to be selling. But it's very clear to me that investment dollars out there in the world today have a very high regard for things that can protect their value against deteroirating currencies.
Investors should allocate about 15 to 20 percent of their portfolios towards gold, says Lutts, who advocates gold-based ETFs including the GDX miners' fund as well as the SPDR Gold Shares [GLD 112.94 0.64 (+0.57%) ], which holds physical gold; as well as the lightly traded PowerShares Global Gold and Precious Metals [PSAU 39.89 -0.284 (-0.71%) ], which seeks to replicate the Nasdaq Global Gold and Precious Metals index.
Only when the gold bull market hits the love-affair stage and too many buyers step in will Lutts think about getting out.
"I would probably cut my positions significantly (then), take profits and try to judge then the love affair," he says. "You'll know you're in the love affair phase when you go to Thanksgiving dinner and everybody tells you how much gold they're buying."
It all makes soooooo much sense doesn't it?
You can't lose hey buy the pullback. This market is set up on a tee and the next sell off is the one you DON'T want to buy.
Mikey
Thursday, November 19, 2009
Top Near
DJIA 10336 -90.54 SPX 1095 -14.95 VIX 22.76 +1.13 Gold 1145 +3.80 Silver 18.55 +.135 RBOB (Whsl Gasoline 1.9696 -.04 Dollar Index 75.40 +.135 EURO 1.497 -.002 TLT (Long Term Gov Bonds)95.10 +.13 IEF (7-10 Yr Gov Bonds)91.83 +.09 XLK (Tech)21.85 -.27 XLE(Oil Index)57.14 -1.30 (XLF Financials Index)14.70 -.28 XHB (Homebuilders Index)14.82 -.30 EEM (Emerging Markets)40.93 -.66 FXI (China Index)44.72 -.90 GDX (Gold Miners Index)51.23 +.26
Everyone is looking up to year end. The fundamentals of the economy are worsening as the "Fed Printing" is not getting to the public. The liquidity is only being dumped into a big dark hole that no one seems to know is how deep. The market manipulators are pointing to Gold as a sign that inflation is coming back but the Fed is keeping rates low for " protracted period of time", meaning they don't see inflation.
The shorts have seen the market go up everyday for the past two weeks and are now believers that we can keep going until year end. I would chase any weakness below 10200. I think we will take out 9700 before we have a bounce. That bounce will be a dead cat bounce.
Bought EDZ( 3X emerging markets short) 5.60 and added to BGZ (3X big cap short) at 18.78. This sell off will be viewed as buying opportunity and that would be a mistake.
I think the TLT 95.10 and the IEF 91.85 are super buys here. Everyone is looking for higher interest rates because of the inflation story. The Fed owns the bond market and won't sell until the D word comes bad. I blogged that mortage rates are going to drop below 4 and I am sticking with that. They are now at 4.85 and falling.
The beat goes on.....Mikey
Everyone is looking up to year end. The fundamentals of the economy are worsening as the "Fed Printing" is not getting to the public. The liquidity is only being dumped into a big dark hole that no one seems to know is how deep. The market manipulators are pointing to Gold as a sign that inflation is coming back but the Fed is keeping rates low for " protracted period of time", meaning they don't see inflation.
The shorts have seen the market go up everyday for the past two weeks and are now believers that we can keep going until year end. I would chase any weakness below 10200. I think we will take out 9700 before we have a bounce. That bounce will be a dead cat bounce.
Bought EDZ( 3X emerging markets short) 5.60 and added to BGZ (3X big cap short) at 18.78. This sell off will be viewed as buying opportunity and that would be a mistake.
I think the TLT 95.10 and the IEF 91.85 are super buys here. Everyone is looking for higher interest rates because of the inflation story. The Fed owns the bond market and won't sell until the D word comes bad. I blogged that mortage rates are going to drop below 4 and I am sticking with that. They are now at 4.85 and falling.
The beat goes on.....Mikey
Wednesday, November 18, 2009
Of irrational Markets and bubbles
Keeping in mind what Lord Keynes said a long time ago… the market can stay irrational longer than you can stay solvent…Keynes indeed had a point. Unfortunately, bubbles can usually outlast your line of credit. Once bubbles pop however, they tend to not only retrace to whence they began, but more importantly, overshoot this area
John Maynard Keynes, 1st Baron Keynes, CB (pronounced /ˈkeɪnz/) (5 June 1883 – 21 April 1946) was a British economist whose ideas have been a central influence on modern macroeconomics, both in theory and practice. He advocated interventionist government policy, by which governments would use fiscal and monetary measures to mitigate the adverse effects of business cycles, economic recessions, and depressions. His ideas are the basis for the school of thought known as Keynesian economics, and its various offshoots.
In the 1930s, Keynes spearheaded a revolution in economic thinking, overturning the older ideas of neoclassical economics that held that free markets would automatically provide full employment as long as workers were flexible in their wage demands. Following the outbreak of World War II Keynes's ideas concerning economic policy were adopted by leading Western economies. During the 1950s and 1960s, the success of Keynesian economics was so resounding that almost all capitalist governments adopted its policy recommendations.
Keynes's influence waned in the 1970s, partly as a result of problems that began to afflict the Anglo-American economies from the start of the decade, and partly due to critiques from Milton Friedman and other economists who were pessimistic about the ability of governments to regulate the business cycle with fiscal policy.[1] However, the advent of the global financial crisis in 2007 has caused a resurgence in Keynesian thought. Keynesian economics has provided the theoretical underpinning for the plans of President Barack Obama, Prime Minister Gordon Brown and other global leaders to ease the recession.[2]
Mikey
John Maynard Keynes, 1st Baron Keynes, CB (pronounced /ˈkeɪnz/) (5 June 1883 – 21 April 1946) was a British economist whose ideas have been a central influence on modern macroeconomics, both in theory and practice. He advocated interventionist government policy, by which governments would use fiscal and monetary measures to mitigate the adverse effects of business cycles, economic recessions, and depressions. His ideas are the basis for the school of thought known as Keynesian economics, and its various offshoots.
In the 1930s, Keynes spearheaded a revolution in economic thinking, overturning the older ideas of neoclassical economics that held that free markets would automatically provide full employment as long as workers were flexible in their wage demands. Following the outbreak of World War II Keynes's ideas concerning economic policy were adopted by leading Western economies. During the 1950s and 1960s, the success of Keynesian economics was so resounding that almost all capitalist governments adopted its policy recommendations.
Keynes's influence waned in the 1970s, partly as a result of problems that began to afflict the Anglo-American economies from the start of the decade, and partly due to critiques from Milton Friedman and other economists who were pessimistic about the ability of governments to regulate the business cycle with fiscal policy.[1] However, the advent of the global financial crisis in 2007 has caused a resurgence in Keynesian thought. Keynesian economics has provided the theoretical underpinning for the plans of President Barack Obama, Prime Minister Gordon Brown and other global leaders to ease the recession.[2]
Mikey
Where is the Dollar
Every day for the past 3 months I have heard about the Fed printing money and the resulting decline of the dollar. I would like to put this in perspective. The dollar as measured by the Dollar index today is at 75.07. The index was at 74.97 one month ago on Oct 22 and was at 71.57 om March 13, 2008. The price does not jive with the story.
News today:
U.S. mortgage applications fell last week, with demand for home purchase loans dropping to a 12-year low even as interest rates on 30-year loans fell to their lowest level in six months, data from an industry group showed on Wednesday.
Home purchase loan demand fell for a sixth straight week, a trend that does not bode well for the U.S. housing market, which has been showing signs of stabilization after a three-year slump. You don't have economic recoveries without a recovery in the housing market.
Market Tips: Everyone's Talking About Year-End Rally
Global stocks and commodities rebounded on Wednesday, with gold rising to a fresh high near $1,150 an ounce. Experts told CNBC stocks are likely to rally through until the end of the year.
Gold Could Hit $1,400 This Year: CEO
The gold rally is far from over and the price of the precious metal could hit $1,400 per troy ounce by the end of the year and keep rising from there, James Turk, CEO of GoldMoney, told CNBC.
If you’re waiting for a correction, hope you brought a book. You may be waiting for a while.
At least, that’s what Raymond James chief investment office Jeff Saut seems to be suggesting. In an article published on Minyanville Saut makes the case that a correction probably isn’t in the cards, -- at least if history is any indication.
First ,“we just entered the best six months of the year for the equity markets,” he says. (November through April have, on average, shown superior stock market performance )
Second, “over the past 12 years the Dow has always shown a profit between November 11 and December 5.”
But that’s not all. Saut thinks history may be repeating itself – in an even bigger way.
S&P Action Repeating Itself
Since last April Saut has been using the stock market’s chart pattern from 2003 as a template for this rally – and it’s been spot on accurate.
In case you're like us and not immediately familiar with the market action of 2003-- in a nutshell, ”the S&P 500 bottomed in March 2003 and rallied sharply into June,” he says. “From there it flopped/chopped around for a few months, but never gave back much ground.”
Sound familiar? Well guess what, there’s more.
“In late 2003 stocks took off on the second leg of the rally, rising into the first quarter of 2004,” he says.
And get this. The first leg of the 2003 rally was driven by liquidity-- much like 2009’s first leg (March to June) – while the second leg of the 2003 rally was driven by improving fundamentals and earnings -- just like 2009’s “July through now” rally.
Sooooo they are all looking for a year end rally and 1400 Gold. What they are all saying is to buy the easy money rally now before it gets away from you. I am very sure that the opposite will occur.
Mikey
Friday, November 13, 2009
Putting lipstick on a Pig
JC Penny, (JCP) 31.24 +1.85, reported earnings today. Sales fell to 4.18 billion from 4.3 billion. Earning fell from .56 a share to .11 a share. Same store sales fell 7 to 7.5%.
Bad ...Nah, why, because they expected worse than that and guess what they say next year looks much better.
I saw the same reports coming out of the housing industry in early 2006. They told us that their outlook for 2006 & 2007 was better. A lie but this was used to prop up the stocks in early 2006. Same old tired game.
Mikey
Bad ...Nah, why, because they expected worse than that and guess what they say next year looks much better.
I saw the same reports coming out of the housing industry in early 2006. They told us that their outlook for 2006 & 2007 was better. A lie but this was used to prop up the stocks in early 2006. Same old tired game.
Mikey
Thursday, November 12, 2009
The Wizard Plays the Buffet and Gates card
DJIA 10200 SPX 1087.24
How do you convince people that these prices are a bargain? How do you get people to be bullish on America when the economy is going into the tank. If you are the Wizard you have Becky Quick interview Bill Gates and Warren Buffet on CNBC for an hour and have them spout off how Great a country this is.
For this reason I will say that I think this is it. The Wizard has pulled everything out of his bag of tricks. After this act I suspect everyone will be just like Bill and Warren and buy the pullback.
My bullshit meter is exploding through the top of the scale.
Mikey
How do you convince people that these prices are a bargain? How do you get people to be bullish on America when the economy is going into the tank. If you are the Wizard you have Becky Quick interview Bill Gates and Warren Buffet on CNBC for an hour and have them spout off how Great a country this is.
For this reason I will say that I think this is it. The Wizard has pulled everything out of his bag of tricks. After this act I suspect everyone will be just like Bill and Warren and buy the pullback.
My bullshit meter is exploding through the top of the scale.
Mikey
Soooooooo You're all short the Dollar?
The US government will likely borrow substantially less than initially anticipated, with banks repaying the funds they received during the crisis with interest and more "significant repayments" are ahead, Treasury Secretary Timothy Geithner told CNBC Thursday.
"We are likely to have to borrow substantially less than we initially anticipated to help repair the damage to our financial system," Geithner told CNBC in Singapore. There is also confidence that the US government will bring its fiscal balance in line as growth recovers, he said.
There are signs that stability is returning as Americans save more, the current account imbalance is coming down and there is much greater confidence in the stability of financial system, Geithner added.
He also reiterated his stance that a strong dollar is in the country's interests.
"We are committed to working with countries around the world to make sure that we have a recovery in place, we have a more stable financial system, we have a more balanced pattern of growth globally," he said. "A strong dollar is part of that commitment."
Geithner attended a meeting of finance ministers from Asia-Pacific countries in Singapore, ahead of the start of US President Barack Obama's visit later Thursday.
There is very strong consensus regarding the importance of the Asia-Pacific region moving, over time, to "more flexible market-driven exchange rates," Geithner said after the meeting.
Some analysts have said one of the causes of the global financial imbalances was the fact that the Chinese currency was kept artificially low because of China's restrictions on capital flows and the fact that the yuan is not a free-floating currency.
This has helped Chinese exports, creating the huge trade imbalance between China and the US, according to analysts.
Growth led by domestic demand and a shift to more market-oriented, flexible exchange rates over time are very important for the Asia-Pacific region and for the world economy, Geithner said.
The dollar was flat on Thursday but it has dropped at a steady pace over the past weeks as traders bet that the Federal Reserve will not raise interest rates any time soon.
Geithner did not want to comment on the dollar's current value, but said markets have recovered from the period when the world was facing risks of depression, deflation and financial collapse, which had caused a big rush into US financial assets.
"You're seeing as confidence returns, investors, savers around the world starting to take risk again, that's a fundamentally healthy thing, it's encouraging," he said.
Progress is being made on the legislative front to make sure banks will no longer be able to take the risks that plunged the world into crisis, Geithner said.
"We're going to make sure we put in place comprehensive, fundamental reform of the financial system so you don't see a repeat of the kind of excessive risk-taking that led to this crisis cause so much damage to economies including the US and around the world," he said.
"We've got to do it on a global basis, these markets are global," Geithner added.
And This From Cramer...He is pandering to the Public and pimping Gold
Rising gold prices don’t portend doom as they once did. In fact, Cramer said Wednesday, these days they trumpet good news. He even went so far as to call the present gold rally, with the commodity up 26% year-to-date to $1,117.80 an ounce, “a huge positive.”
How could this precious metal’s affect on the market make such a sharp 180? Cramer offered three reasons.
First, expensive gold equals a weak dollar, and that’s good for American business. The lagging greenback keeps our exports cheap, thereby making our companies more competitive overseas. As Cramer said, Boeing [BA 50.3007 -0.3793 (-0.75%) ] can undercut Airbus and Caterpillar [CAT 59.11 -0.95 (-1.58%) ] can undercut Komatsu. Plus, the money that companies make in euros translates into more dollars, which then leads to earnings beats. And when estimates are beaten, stocks go higher.
Second, high gold prices indicate that deflation’s not a threat. Deflation, which is very difficult to reverse, struck hard during the Great Depression. Costly bullion now means we won’t repeat the experience.
And third, gold’s climb higher is a sign of possible reflation, Cramer said, of prices recovering. While some on Wall Street fear inflation, some pricing strength would do companies a world of good. Again, reflation would help to boost earnings.
Cramer also debunked the myth that it’s dangerous to trade gold as an asset class. Some people think it takes money away from equities. But that wasn’t the case when oil, also treated as an asset class, fetched $147 a barrel. And expensive oil is much more detrimental to the economy than expensive gold. So there’s really no reason, Cramer said, why high gold prices should hurt the stock market.
Of course, Cramer offered a way to play the commodity’s big move. He’d been recommending the SPDR Gold Shares ETF [GLD 108.72 -0.88 (-0.8%) ], which tracks the price of gold, saying it was better, and seemingly safer, than individual gold-miner stocks. But there’s a new ETF that he said might be better right now.
The Market Vectors Junior Gold Miners ETF [GDXJ 25.21 -0.23 (-0.9%) ] just launched on Wednesday, and it allows shareholders to own 38 different medium and small gold and silver miners. Cramer said the fund, with its younger stable of miners, has more room to run than the Market Vectors Gold Miners ETF [GDX 48.89 -1.01 (-2.02%) ], which follows the larger gold miners. And given that the GDX is up 47% year-to-date compared with the GLD’s 27%, the GDXJ could be in store for similar, if not better, returns. Cramer’s bottom line? Don’t fear rising gold prices. They can help the economy and your portfolio.“Gold is good,” he said, “especially when it goes higher.”‘
If the Dollar strengthens EVERYONE AND I MEAN EVERYONE IS INVESTING THE WRONG WAY.
So as Boomer(Cris Berman) would say SO YOU'RE ALL SHORT THE DOLLAR, EH!
The beat goes on...DZZ is 14.43 GLL is 10.24 I am adding to my Gold short today
Mikey
"We are likely to have to borrow substantially less than we initially anticipated to help repair the damage to our financial system," Geithner told CNBC in Singapore. There is also confidence that the US government will bring its fiscal balance in line as growth recovers, he said.
There are signs that stability is returning as Americans save more, the current account imbalance is coming down and there is much greater confidence in the stability of financial system, Geithner added.
He also reiterated his stance that a strong dollar is in the country's interests.
"We are committed to working with countries around the world to make sure that we have a recovery in place, we have a more stable financial system, we have a more balanced pattern of growth globally," he said. "A strong dollar is part of that commitment."
Geithner attended a meeting of finance ministers from Asia-Pacific countries in Singapore, ahead of the start of US President Barack Obama's visit later Thursday.
There is very strong consensus regarding the importance of the Asia-Pacific region moving, over time, to "more flexible market-driven exchange rates," Geithner said after the meeting.
Some analysts have said one of the causes of the global financial imbalances was the fact that the Chinese currency was kept artificially low because of China's restrictions on capital flows and the fact that the yuan is not a free-floating currency.
This has helped Chinese exports, creating the huge trade imbalance between China and the US, according to analysts.
Growth led by domestic demand and a shift to more market-oriented, flexible exchange rates over time are very important for the Asia-Pacific region and for the world economy, Geithner said.
The dollar was flat on Thursday but it has dropped at a steady pace over the past weeks as traders bet that the Federal Reserve will not raise interest rates any time soon.
Geithner did not want to comment on the dollar's current value, but said markets have recovered from the period when the world was facing risks of depression, deflation and financial collapse, which had caused a big rush into US financial assets.
"You're seeing as confidence returns, investors, savers around the world starting to take risk again, that's a fundamentally healthy thing, it's encouraging," he said.
Progress is being made on the legislative front to make sure banks will no longer be able to take the risks that plunged the world into crisis, Geithner said.
"We're going to make sure we put in place comprehensive, fundamental reform of the financial system so you don't see a repeat of the kind of excessive risk-taking that led to this crisis cause so much damage to economies including the US and around the world," he said.
"We've got to do it on a global basis, these markets are global," Geithner added.
And This From Cramer...He is pandering to the Public and pimping Gold
Rising gold prices don’t portend doom as they once did. In fact, Cramer said Wednesday, these days they trumpet good news. He even went so far as to call the present gold rally, with the commodity up 26% year-to-date to $1,117.80 an ounce, “a huge positive.”
How could this precious metal’s affect on the market make such a sharp 180? Cramer offered three reasons.
First, expensive gold equals a weak dollar, and that’s good for American business. The lagging greenback keeps our exports cheap, thereby making our companies more competitive overseas. As Cramer said, Boeing [BA 50.3007 -0.3793 (-0.75%) ] can undercut Airbus and Caterpillar [CAT 59.11 -0.95 (-1.58%) ] can undercut Komatsu. Plus, the money that companies make in euros translates into more dollars, which then leads to earnings beats. And when estimates are beaten, stocks go higher.
Second, high gold prices indicate that deflation’s not a threat. Deflation, which is very difficult to reverse, struck hard during the Great Depression. Costly bullion now means we won’t repeat the experience.
And third, gold’s climb higher is a sign of possible reflation, Cramer said, of prices recovering. While some on Wall Street fear inflation, some pricing strength would do companies a world of good. Again, reflation would help to boost earnings.
Cramer also debunked the myth that it’s dangerous to trade gold as an asset class. Some people think it takes money away from equities. But that wasn’t the case when oil, also treated as an asset class, fetched $147 a barrel. And expensive oil is much more detrimental to the economy than expensive gold. So there’s really no reason, Cramer said, why high gold prices should hurt the stock market.
Of course, Cramer offered a way to play the commodity’s big move. He’d been recommending the SPDR Gold Shares ETF [GLD 108.72 -0.88 (-0.8%) ], which tracks the price of gold, saying it was better, and seemingly safer, than individual gold-miner stocks. But there’s a new ETF that he said might be better right now.
The Market Vectors Junior Gold Miners ETF [GDXJ 25.21 -0.23 (-0.9%) ] just launched on Wednesday, and it allows shareholders to own 38 different medium and small gold and silver miners. Cramer said the fund, with its younger stable of miners, has more room to run than the Market Vectors Gold Miners ETF [GDX 48.89 -1.01 (-2.02%) ], which follows the larger gold miners. And given that the GDX is up 47% year-to-date compared with the GLD’s 27%, the GDXJ could be in store for similar, if not better, returns. Cramer’s bottom line? Don’t fear rising gold prices. They can help the economy and your portfolio.“Gold is good,” he said, “especially when it goes higher.”‘
If the Dollar strengthens EVERYONE AND I MEAN EVERYONE IS INVESTING THE WRONG WAY.
So as Boomer(Cris Berman) would say SO YOU'RE ALL SHORT THE DOLLAR, EH!
The beat goes on...DZZ is 14.43 GLL is 10.24 I am adding to my Gold short today
Mikey
Wednesday, November 11, 2009
Nero Fiddles as Rome burns...or Money is what Money does
DJIA 10289 +43 SPX 1098.23 +5.28 VIX 23.06 +.22 Gold 1116 +13.50 Silver 17.55 +.22RBOB (Whsl Gasoline 1.9958 +.0184 Dollar Index 75.23 +.12 EURO 1.4962 -.0017 TLT (Long Term Gov Bonds)93.73 +.46 IEF (7-10 Yr Gov Bonds)91.15+ .23 XLK (Tech)21.87 +.14 XLE(Oil Index)58.19 -.02 (XLF Financials Index)14.97 +.20 XHB (Homebuilders Index)15.24 +.44 EEM (Emerging Markets)41.25 +.25 FXI (China Index)45.14 +.30 GDX (Gold Miners Index)49.87 +1.27
FIDDLING WHILE ROME BURNS - According to the "Random House Dictionary of Popular Proverbs and Sayings" by Gregory Y. Titelman, "Nero fiddled while Rome burned" refers to ".heedless and irresponsible behavior in the midst of a crisis. Legend has it that in A.D. 64 the emperor Nero (A.D. 37 - A.D. 68), last of the Caesars, set fire to Rome to see 'how Troy would look when it was in flames' and to serve as a suitable background for a recitation of his poetry while accompanying himself on the lyre."
That is what is happening now. The "easy money" rally in the markets are because the economy is going to get better because of all of the liquidity being put in the system. What would Forrest Gump say? He would say that money is what money does. It ain't doing anything now. That is why the Fed is not worried about inflation. The story is that the economy is going to take off and inflation is around the corner but the money is being used to replace the lost value of assets and not to pump the economy.
There will be a time in the future where the "recovery" will be so weak that they can not play that song anymore. This is what I have been saying for the last 3 months, but the market goes higher. Today, for me, is just another day of being wrong but I have time on my side while Rome burns.
The breath of the market is narrowing into the big names that impact the averages the most. The lower tier stocks are starting to crack. The big names will follow when they have sold all of their stock. The dollar while not strong is in the same spot is has been for months even though the news would have you believe otherwise.
Mikey
FIDDLING WHILE ROME BURNS - According to the "Random House Dictionary of Popular Proverbs and Sayings" by Gregory Y. Titelman, "Nero fiddled while Rome burned" refers to ".heedless and irresponsible behavior in the midst of a crisis. Legend has it that in A.D. 64 the emperor Nero (A.D. 37 - A.D. 68), last of the Caesars, set fire to Rome to see 'how Troy would look when it was in flames' and to serve as a suitable background for a recitation of his poetry while accompanying himself on the lyre."
That is what is happening now. The "easy money" rally in the markets are because the economy is going to get better because of all of the liquidity being put in the system. What would Forrest Gump say? He would say that money is what money does. It ain't doing anything now. That is why the Fed is not worried about inflation. The story is that the economy is going to take off and inflation is around the corner but the money is being used to replace the lost value of assets and not to pump the economy.
There will be a time in the future where the "recovery" will be so weak that they can not play that song anymore. This is what I have been saying for the last 3 months, but the market goes higher. Today, for me, is just another day of being wrong but I have time on my side while Rome burns.
The breath of the market is narrowing into the big names that impact the averages the most. The lower tier stocks are starting to crack. The big names will follow when they have sold all of their stock. The dollar while not strong is in the same spot is has been for months even though the news would have you believe otherwise.
Mikey
Thursday, November 5, 2009
I expect a good Jobs number tomarrow
That would be the last piece of good news the the economy needs to tell the players that we are up and away. It is the one last hope the bears have to cling to. The best way to finish the bears off would to to give a good jobs number followed by a new high in the market.
Just like Gold recently took out its highs and good the "easy money" wink from the Fed. It all makes sense right?
Mikey
Just like Gold recently took out its highs and good the "easy money" wink from the Fed. It all makes sense right?
Mikey
Easy Money?
DJIA 9969 +167 SPX 1061 +1515 VIX 26 -1.72 Gold 1087.90 +.60 Silver 17.36 -.04 RBOB (Whsl Gasoline)1.9809 -.0237 Dollar Index 75.94 +.11 EURO 1.4847 -.0002 TLT (Long Term Gov Bonds)93.07 -.14 IEF (7-10 Yr Gov Bonds)90.49 -.02 XLK (Tech)21.19 +.42 XLE(Oil Index)57.02 +.75 (XLF Financials Index)14.26 +.25 XHB (Homebuilders Index)14.42 +.32 EEM (Emerging Markets)39.51 +.61 FXI (China Index)44.06 +.87 GDX (Gold Miners Index)46.35 -.30
The Fed yesterday left rates unchanged and expects to keep them here for an extended period of time. The "market reaction" was a big run up because the easy money policies are going to continue, but is it really easy money or just cheap money that no one can borrow. There is a big difference because this cheap easy money is only available to a small elite group. The money is not available to the economy and the public as a whole. The average person can't get a loan and their rates are actually being raises. I am saying that the FED is tightening not easing and the money is not easy but hard to come by. The economy is getting choked now and the banks and the Fed is are doing the choking.
The idea of inflation or a growing economy here is just not possible under these kinds of conditions. The talk of excessive printing of money is not true. They are not printing enough money to replace the lost value assets that came when the bubble burst. An analogy would be that if you had a swimming pool that held 1000 gallons and drained the pool to 500 gallons then added 300 gallons back into the pool the pool would still not be full. Then to top it off you put a no swimming sign by the pool what good would the pool be. Lower rates do not mean easy money. The no swimming sign has been posted and the pool is only 2/3 full.
They are selling the idea that inflation is coming because of easy money. It is a false argument but when they show you Gold making new highs it becomes believable. They have control of prices and can move them at will but in the end prices will seek their own level because the truth does come out in the end.
The public is hearing words like soaring when they talk about commodities and Gold. Those words draw them end like a moth to a light. It difficult to stay away from these markets when it is so easy to make money because you just buy every pullback. That is the nature of what they do. Most are drawn in and they are able to distribute their assets to the public. Easy, that is what they want you to believe. Maybe for now but easy ends bad.
The beat goes on....Mikey
The Fed yesterday left rates unchanged and expects to keep them here for an extended period of time. The "market reaction" was a big run up because the easy money policies are going to continue, but is it really easy money or just cheap money that no one can borrow. There is a big difference because this cheap easy money is only available to a small elite group. The money is not available to the economy and the public as a whole. The average person can't get a loan and their rates are actually being raises. I am saying that the FED is tightening not easing and the money is not easy but hard to come by. The economy is getting choked now and the banks and the Fed is are doing the choking.
The idea of inflation or a growing economy here is just not possible under these kinds of conditions. The talk of excessive printing of money is not true. They are not printing enough money to replace the lost value assets that came when the bubble burst. An analogy would be that if you had a swimming pool that held 1000 gallons and drained the pool to 500 gallons then added 300 gallons back into the pool the pool would still not be full. Then to top it off you put a no swimming sign by the pool what good would the pool be. Lower rates do not mean easy money. The no swimming sign has been posted and the pool is only 2/3 full.
They are selling the idea that inflation is coming because of easy money. It is a false argument but when they show you Gold making new highs it becomes believable. They have control of prices and can move them at will but in the end prices will seek their own level because the truth does come out in the end.
The public is hearing words like soaring when they talk about commodities and Gold. Those words draw them end like a moth to a light. It difficult to stay away from these markets when it is so easy to make money because you just buy every pullback. That is the nature of what they do. Most are drawn in and they are able to distribute their assets to the public. Easy, that is what they want you to believe. Maybe for now but easy ends bad.
The beat goes on....Mikey
Wednesday, November 4, 2009
Days like today are the reason I write this blog
Today the market is up in advance of the FED decision on interest rates. Their main story is that the FED is pumping so much money into the system that were are going to have a growing economy and inflation. Nothing could be furthur from the truth but you will not here the other side of that story.
I write my blog to tell the other side. There is not enough common ground between me and the public to get them to believe my side but at least some one is warning the public of the problems to come. I know that only a small group will be helped by this blog but at least that is something and this blog allows me a forum to shine the light on these crooks.
Capitalism is a process were assets are accumulated by the insiders and distributed to the public. The way you know when something is being distrubuted is by the amount of noise the financial press makes on a subject. The process takes time and the price movements are overwellingly relentless to back up that story. When they are finished they pull the plug...Remember Real Estate and Oil.
More on this tomarrow
I write my blog to tell the other side. There is not enough common ground between me and the public to get them to believe my side but at least some one is warning the public of the problems to come. I know that only a small group will be helped by this blog but at least that is something and this blog allows me a forum to shine the light on these crooks.
Capitalism is a process were assets are accumulated by the insiders and distributed to the public. The way you know when something is being distrubuted is by the amount of noise the financial press makes on a subject. The process takes time and the price movements are overwellingly relentless to back up that story. When they are finished they pull the plug...Remember Real Estate and Oil.
More on this tomarrow
Tuesday, November 3, 2009
Buffet bets on America ...AND spilits his stock...Now everyone can buy it
Investment Genius Warren buffet is making a bullish bet on America by buying BNI. Hey if Warren is buying that means that everything is OK, right?. Just when all of the economic numbers are starting to cave in. Not only that he is splitting his stock 50 for 1 making it affordable for all of the little people. What a guy. Warren all I can say is that you really care. What a nice old guy. I makes me want to cry.
Remember, Warren bought GE preferred stock on Sept 17, 2008. The stock was 22 at the time. The preferred is convertible at 22. It bounced to 26.05 in a week and then traded to 6.85 in March 2009 it is now 14.35. That was his last big buy until the BNI buy today.
CNBC is running spots on how to invest with Buffett. The are naming Coal stocks an anything a railroad can move ie commodities. This is clearly advertisingf for the boys to sell out hose stocks.
Remember, Warren bought GE preferred stock on Sept 17, 2008. The stock was 22 at the time. The preferred is convertible at 22. It bounced to 26.05 in a week and then traded to 6.85 in March 2009 it is now 14.35. That was his last big buy until the BNI buy today.
CNBC is running spots on how to invest with Buffett. The are naming Coal stocks an anything a railroad can move ie commodities. This is clearly advertisingf for the boys to sell out hose stocks.
Next stop 9400
DJIA 9705 -84 SPX 1035 -7.31 VIX 30.39 +.31 Gold 1077 +23.60 Silver 16.93 +.49 RBOB (Whsl Gasoline)1.9758 -.0145 Dollar Index76.33 +.34 EURO 1.4639 -.0126 TLT (Long Term Gov Bonds)94.45 -.60 IEF (7-10 Yr Gov Bonds)90.80 -.18 XLK (Tech)20.50 -.21 XLE(Oil Index55.80 +.20 (XLF Financials Index)14.00 -.17 XHB (Homebuilders Index)13.97 +.14 EEM (Emerging Markets)37.78 -.37 FXI (China Index)42.22 -.52 GDX (Gold Miners Index)45.26 +2.36
I expect this break will take us to around 9400 where there should be a good sized bounce. Gold is making a new high today but the GDX 45.26 is way off of its highs of 49.19 and I don't expect this move to go anywhere.
Most early stocks including the GDX sold off to the 90 day average which is DJIA 9376. That is where I get that number. This number would break the October 2 low and draw in some sellers. Of course the boys would have to buy and would then make up some excuse to rally so they could sell what they bought at that level.
The XLF is a leader and is already at that level. The Oils and big averages are lagging and should catch up. The rally today in the transports comes after its move to the 90 day and a break of its Oct 2 low day. The players sold that break and today Buffet buys out BNI today and presto the boys make an instant profit. Thanks Warren for waiting for that chart break before you bought out BNI.
With the XLF 14 already at the 90 and below its Oct low...can you say bank buyout?
They will come up with something because they are obviously buying bank stocks now.
The beat goes on ...Mike
I expect this break will take us to around 9400 where there should be a good sized bounce. Gold is making a new high today but the GDX 45.26 is way off of its highs of 49.19 and I don't expect this move to go anywhere.
Most early stocks including the GDX sold off to the 90 day average which is DJIA 9376. That is where I get that number. This number would break the October 2 low and draw in some sellers. Of course the boys would have to buy and would then make up some excuse to rally so they could sell what they bought at that level.
The XLF is a leader and is already at that level. The Oils and big averages are lagging and should catch up. The rally today in the transports comes after its move to the 90 day and a break of its Oct 2 low day. The players sold that break and today Buffet buys out BNI today and presto the boys make an instant profit. Thanks Warren for waiting for that chart break before you bought out BNI.
With the XLF 14 already at the 90 and below its Oct low...can you say bank buyout?
They will come up with something because they are obviously buying bank stocks now.
The beat goes on ...Mike
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