Saturday, November 13, 2010

Dow Theory

11/13/10 Dow Theory

Tim W. Wood: "I continue to believe that we are in a similar pattern to that of
the 1966 to 1974 period. I believe that the rally out of the 2009 low is
synonymous with the advance out of the 1966 low. One difference now is that the
bull market period that preceded the 1966 top was only 24 years and the bear
market period ran 8 years, which was the historical one-third the duration of
the preceding bull market. In this case, the preceding bull market ran 33
years. Therefore, we should be dealing with a bear market of approximately 11
years. So, the unwinding of this bear market should have much further to go.
Perhaps, QEII will keep this rally going a while longer. But, I don’t think
that QEII or QEIII or even QEIV will ever be able to ultimately save the market
from the natural forces. All these efforts are doing are making matter worse
and if anything, postponing the inevitable."

Bloomberg (Liz Capo McCormick): “The Federal Reserve began a second round of
unconventional monetary easing by buying $7.229 billion of Treasuries in
attempt to drive down borrowing rates to help reduce unemployment and avert
deflation… The acquisitions are part of the Fed’s plan to acquire $600 billion
of Treasuries through June and reinvest maturing mortgage holdings.”

Bloomberg (Theophilos Argitis): “The Group of 20 said emerging markets facing
a surge of capital inflows can adopt regulatory steps to cope, offering them
cover to limit currency swings and stem asset bubbles as the U.S. adds $600
billion of liquidity. ‘In circumstances where countries are facing undue
burden of adjustment, policy responses in emerging-market economies with
adequate reserves and increasingly overvalued flexible exchange rates may also
include carefully designed macro- prudential measures,’ leaders of the G-20
nations said in a statement…”

Bloomberg (Alaric Nightingale): “Frontline Ltd., the world’s biggest
supertanker operator, said it’s seeing ‘huge’ demand for crude-oil imports from

China, potentially reversing a slump that contributed to mostly unprofitable
charter rates since June.”

Doug Noland: "Yesterday, China reported a larger-than-expected 4.4% y-o-y jump
in consumer prices. Also this week, China reported its October money supply
(up 19.3% y-o-y) and bank loan growth ($89bn) surprised on the upside. Reports

on China’s retail sales (up 18.6% y-o-y) and auto sales (up 27% y-o-y) were
strong. And to the chagrin of Chinese authorities, real estate prices remain
resilient at elevated levels. These days, China’s policymakers face an
overheated Bubble Economy, a dilemma compounded by the prospects for surging
commodity costs and destabilizing “hot money” inflows. Patience is wearing
thin. Prospects are not favorable for monetary “tinkering” to be
effective....If the markets are indeed beginning to reevaluate the global
inflation backdrop and the prospects for China/Asian monetary tightening, the
marketplace would also be expected to become more discriminating based on
respective borrower fundamentals. After all, the potential for rising global
yields and a less accommodating liquidity backdrop would more severely impact
the most heavily indebted. As such, I take particular interest in this week’s
jump in yields for the UK, Spain, Italy, U.S. Treasurys and American municipal
bonds....Has quantitative easing – on this, the initial trading day of QE2 –
turned counterproductive? Have markets reached an inflection point, with
concern shifting away from perceived liquidity benefits to the heightened risks

associated with additional Federal Reserve liquidity creation (i.e. inflation,
Chinese/Asian tightening, unwieldy global liquidity flows, heightened market
instability, worsening structural problems, etc.)? Did global policymaking and

the markets’ euphoric perception of endless liquidity set the stage for
disappointment and liquidity issues? This week felt different; highly
speculative global markets are overdue for a bout of “soul searching.”

ALAN ABELSON: "Inflation in China and a slowdown in Germany may be twin omens of

hard times. Plus, a chilly G-20 greeting for President Obama."

Gonzalo Lira: " Tidal forces are pulling the European Union apart.
On one end, European governments have taken on debt and liabilities—both public

and private—which they cannot possibly meet. These debts and liabilities are
near-term enough that there is only one way to characterize many of the smaller

European states: They are insolvent.
On the other end, Europe is unwilling to carry out sovereign default of any one

of its member nations. Indeed, there is a sense that—constant drumbeat of the
Germans aside—Brussels is unwilling to even contemplate the very notion of
sovereign default and debt restructuring. Brussels and the European Central
Bank believes in bailouts, not default, because they believe that the entire
European project rests on the non-default status of all the EU members. They
believe that all EU debt is backed by the entire EU, no matter how
irresponsible the EU country that issued the EU debt.
As we watch Europe get closer and closer to the Global Depression, we are
seeing as these two opposing forces—insurmountable debt vs. unwillingness to
default and restructure—pull the continent apart as surely and relentlessly as
tidal forces." Inc. said Friday it is hiring more than 15,500 people to fill
temporary holiday jobs at shipping centers around the country, more than it
hired last year.

From the FDIC: Stearns Bank National Association, St. Cloud, Minnesota, Assumes
All of the Deposits of Copper Star Bank, Scottsdale, Arizona---bank failure

Nassim Taleb: "The Fed's business should be price stability; unfortunately their

business seems to be price instability."

Art Cashin: "“There are talks about people doing capital controls and other
things,” he explained. “QE2 is looking less like 'the love boat' and maybe a
little like the Titanic."

Ireland can manage on its own, the head of the International Monetary Fund said
on Saturday, a day after euro zone sources told Reuters the former "Celtic
Tiger" was in talks about a possible EU rescue.

When House Democrats return to Washington on Monday, a top priority will be
putting a $250 dollar check in the mail to 58 million Social Security
Democrats plan to vote early in the lame-duck session on a bill that would
provide Social Security recipients with a one-time payment, according to the
office of Earl Pomeroy, a Democrat from North Dakota who authored the
legislation. The bill -- with a total cost of roughly $14 billion -- is designed
to make up for another year without an increase in Social Security benefits.

What is the likelihood that China will sell enough Treasury debt each month to
match any net increase in the amount the Fed purchases under QE2?

In tomorrow's Washington Post's Op Ed page, it is suggested that Obama announce
he is a one term president. It is titled "One and Done".

This week marks the grand opening of the very first Microsoft store. It is located in the Bellevue Square Mall in Bellevue, Washington.

Friday, November 12, 2010

Shanghai Market

11/12/10 Shanghai Market

EU finance ministers failed to reach a compromise with the European Parliament
over the 2011 budget yesterday night (11 November). If they fail to find a
mutually acceptable solution by Monday, the 2010 budget will roll over to 2011,
raising questions as to how the European Union will finance ambitious new
projects such as the European External Action Service.

RT is reporting that 5,000 new nuclear bomb shelters will be constructed in the
city of Moscow by the end of 2012. Russian authorities believe that these new
shelters are urgently needed because the current nuclear bomb shelters will
only hold approximately half the population and are quite outdated.

(CBS) More than 59 million Americans had no health insurance for at least
part of 2010, an increase of 4 million from the previous year, the U.S. Centers
for Disease Control reported Tuesday. While the worsening economic conditions
did have a direct impact on the number of Americans with coverage, the
situation also meant that a far greater number of Americans are forgoing
needed medical care because of costs.
"Both adults and kids lost private coverage over the past decade," Dr. Thomas
Frieden, director of the C.D.C., said at a news conference, according to the
Reuters news agency.

The Shanghai composite closed 5.16 per cent down at 2,985.4 - below the
psychologically important 3,000 level - in its biggest daily loss in 14 months
following a sudden plunge in commodity futures, which saw three-month copper
prices fall nearly 3 per cent.
The sell-off hit other Asian markets, including Hong Kong, where the Hang Seng
index fell 1.93 per cent, Tokyo (the Nikkei down 1.39 per cent), and Mumbai
(the Sensex trading 1.6 per cent lower at 0855BST). The US dollar rose higher
as investors turned to the greenback for safety, despite all the worries about
the American economy. The US dollar was up 0.9 per cent against the Japanese
yen, 0.4 per cent against the euro and 1.59 per cent against the Korean won.

Lenovo Group is planning to launch a tablet computer called LePad in the U.S.
next year, CEO Yang Yuanqing told the Wall Street Journal.

“The more you talk about restructuring debt, the harder it is to obtain debt,”
Irish Finance Minister Brian Lenihan said Nov. 2. “That is the reality.”

A clarification by European Union finance ministers Friday that bonds issued
before mid-2013 would be unaffected by changes to the EU's bailout program
brought relief to the region's pressured government bond.

In an interview with SPIEGEL, German Finance Minister Wolfgang Schäuble, 68,
criticizes US calls for Germany to reduce exports, outlines his plans for an
insolvency framework for indebted European nations and the emphasizes the
significance of the German-French axis for Europe and says "the US has lived on
borrowed money for too long."

Charles Hugh Smith: "Though fraud and complicity are presented in the mainstream
media as isolated conspiracies outside the status quo, the truth is that the
status quo is now entirely dependent on fraud and complicity for its very
survival. Every level of the status quo would immediately implode were fraud and
complicity suddenly withdrawn from the system."

Commodities take it on the chin---Commodities fell the most in 18 months on
speculation that China will increase borrowing costs to damp inflation, eroding
demand for energy, crops and metal-- gold, silver, oil, sugar,and copper had big

The preliminary Reuters/University of Michigan consumer sentiment gauge edged
up to 69.3 in November from 67.7 in October. Economists polled by MarketWatch
expected a reading of 69.0

The yield on the 10-year Treasury note increased 13 basis points to 2.78
percent and the 2-year rose 5 basis points to .50. The yield on the 30-year
rose to 4.28%. Have we seen the low in mortgage rates?

The Conference Board’s findings: “average GDP per capita in China in 2010 was
still only 21 percent of the U.S. level, and it will rise to 40 percent in 2020
in the base scenario and to 32 percent in the pessimistic scenario. Despite
China’s coming leadership in terms of the size of its economy, it remains far
behind the United States and other advanced economies in terms of average
living standards, even with the significant narrowing of the per capita income
gap in the next decade.”

FT: "The Group of 20 has shunned a US plan to reconcile their bitter divisions
over trade imbalances and exchange rates, even as a new report suggested that
the deficits of advanced economies could double by 2014.
World leaders, meeting in Seoul on Friday, succeeded only in setting a loose
timetable over 2011 for nations to agree “indicative guidelines” on how to rein
in groaning current account surpluses and deficits."

A construction crew in the south-central Chinese city of Changsha has completed a 15-story hotel in just six days.

The Dow Jones Industrial Average slumped 90.52 points, or 0.8%, to 11,192.58. The S&P 500 index dropped 14.33 points, or 1.2%, to 1,199.21. The Nasdaq Composite fell 37.31 points, or 1.5%, to 2,518.21. For the week, both the Dow and the S&P 500 fell 2.2% and the Nasdaq fell 2.4%.

Thursday, November 11, 2010

Pre Friday News

Pre Friday News

Group of 20 nations’ efforts to tackle currency and trade imbalances floundered as China rejected policy prescriptions that fault its exchange rate regime and directed criticism at additional monetary easing in the U.S.
“Don’t make other people take the medicine for your disease,” Yu Jianhua, a director general at China’s Ministry of Commerce, told reporters in Seoul late yesterday. “Quantitative easing will have a very big impact on developing countries including China.”

It was just last year that China surpassed the United States as Brazil's largest trading partner, signaling a major shift in the global economic order.

The ICE hiked its Clearing Member outright margin for Sugar (SB and SBC) from $2,150 to $3,550, a substantial 65% increase in margin requirements.

Russia’s Minister of Finance Alexey Kudrin, taking part in the Seoul G20 forum, is against unilateral decisions on devaluing national currencies.
The Minister spoke to reporters on Thursday and said that the possible currency wars are mostly discussed at the summit.
Kudrin finds such a scenario probable, but he also believes that if the countries artificially devaluate their currencies it will lead to other risks, thus such decisions should be made jointly.

Agriculture Minister Yelena Skrynnik said on Thursday that Russia will not be short of winter grains after the worst drought in half a century, and that this year’s grain crop is expected to stand at more than 60 million tons.
She added that farmers had sown 18 million hectares with winter grains across Russia.

As the strike at Chilean copper mine Dona Ines de Collahuasi entered its seventh day Thursday, operations remain normal, a company spokeswoman said.
The 1,551 unionized workers at the mine went on strike Friday after contract negotiations, which included five days of government mediation, broke off.
Workers demand better wages and benefits as a result of a big increase in global copper prices.
The company offered them real wage increases of 2%-3%, improved social benefits and a contract signing bonus of around $27,000 per worker.
The mine has a contingency plan in place to ensure operations continue while the strike lasts.

Meredith Whitney says consumers to remain strained with less access to credit.

Nvidia expects margins will rise "well above" 46% in 2011

EMC Corp. bought its mainframe virtual tape library (VTL) partner Bus-Tech Inc. Wednesday as part of an effort to woo mainframe backup users away from tape while competing with IBM Corp. in that market.
EMC has resold Bus-Tech VTL products since 2004, and has included Bus-Tech's virtual tape controller in EMC Disk Library for mainframe (DLm) platform under an OEM deal since 2008. Bus-Tech's controller provides FICON capability for the EMC disk library. EMC did not disclose financial terms of the acquisition, which has already closed.
Bus-Tech virtual tape engines (VTEs) were part of the Deduplication Storage Expansion for the EMC DLm 960 launched in July. That product also includes EMC's Celerra NS-960 storage and EMC Data Domain DD880 backup targets with data deduplication. Deduplication lets customers effectively perform asynchronous replication between DLm systems.

Oracle will now support customers running Oracle RAC on VMware platforms, a change in its support policy that shows less hostility toward the leading server virtualization vendor.According to a document that Oracle posted on its support page this week, it will now accept service requests (often called SRs) for Oracle Real Application Cluster and later releases running on VMware-based virtual servers. The document, entitled “Support Position for Oracle Products Running on VMware Virtualized Environments” (Oracle Support login required), marks a change in Oracle’s support for RAC on VMware. Previously, Oracle claimed that there were “technical restrictions” when running Oracle RAC on VMware, and its support policy kept some Oracle shops from exploring the possibility of combining the two technologies.

(Bloomberg) -- China is allowing the yuan to lead Asian currency gains this week as it struggles to contain the fastest inflation in two years and faces calls for more balanced global trade at a Group of 20 nations’ summit.
The yuan has advanced 0.5 percent to 6.6257 per dollar in Shanghai and hit 6.6173 yesterday, the strongest since 1993, as consumer-price data for October were released. Only Mexico’s peso has done better among 25 emerging-market currencies tracked by Bloomberg. China’s 12-month swap rate reached the highest level since October 2008 as investors stepped up bets the central bank will add to last month’s interest-rate increase.

Regional banks are going to become less profitable because of tighter financial regulations and are likely to close thousands of bank branches to cut costs, analyst Meredith Whitney told CNBC.

The U.S. Federal Reserve’s policy of quantitative easing will do little to boost the U.S. economy, according to economist Joseph Stiglitz. Instead, it risks triggering currency and trade wars that will leave the country alienated, and the world worse off.
The economist, who won the Nobel Prize for economics in 2001, said that rather than unilateral action, the world needs a “growth compact” aimed at spurring economic expansion around the world. That’s something he hopes the G20 leaders will start addressing at the summit that started Thursday in Seoul.
But he feels that result is unlikely because the G20 will probably spend most of the meeting dealing with the unintended consequences of the Fed’s action.

A new pricing survey of products sold at the world’s largest retailer, Walmart, showed a 0.6 percent price increase in just the last two months, according to MKM Partners. At that rate, prices would be close to four percent higher a year from now, double the Fed’s mandate.

In private meetings with Mr. Obama Thursday, Chinese President Hu Jintao resisted his pressure on currency revaluation. Mr. Obama also failed to secure a free-trade agreement with South Korea by his imposed Thursday deadline, a blow to a U.S. president who has pledged to double U.S. exports over the next five years.

Matt Taibbi: "The foreclosure crisis is Too Big for Fraud. Think of the Bernie Madoff scam, only replicated tens of thousands of times over, infecting every corner of the financial universe. The underlying crime is so pervasive, we simply can't admit to it — and so we are working feverishly to rubber-stamp the problem away, in sordid little backrooms in cities like Jacksonville, behind doors that shouldn't be, but often are, closed."

David Bonderman, co-founder of private equity firm TPG Capital and long regarded by other buy-out experts as one of the savviest investors in the sector, has warned of an emerging markets “crisis of expectation”.
“There will be dislocations. Emerging markets are volatile,” Mr Bonderman said at a conference in Hong Kong. “At some point there will be despair just as there is euphoria now.”

FT: "Rumour has it that certain European investors are no longer willing to provide Irish banks with overnight funding. If true, this could trigger the much-discussed bail-out (for it’s unlikely to end in default). A bail-out might still impose losses on bondholders, though, after recent discussions at the EU."

David Cameron has revealed that he has accepted an invitation to visit Russia next year, in what will be the first visit by a British prime minister to Moscow in five years.

Yahoo Inc. on Thursday deflected a report that the Internet company plans to cut a fifth of its worldwide staff, calling the story “inaccurate.”

Insider Selling

11/11/10 Insider Selling

Last week's insider selling of all stocks (not just S&P) hit an all time record of $4.5 billion.

China will embark on more aggressive monetary tightening to combat
accelerating inflation in coming quarters, according to Deutsche Bank
China's consumer price inflation will rise to 4.5% in November and likely nudge
5% late in the second quarter of 2011, said Deutsche Bank's chief economist for
Greater China, Jun Ma. He said that China would opt for more policy tightening
and faster rates of appreciation in the yuan against the U.S. dollar, as well
as hold off from hikes in power, gas, transport and other public-service fees.
Official Chinese data on Thursday showed October consumer price inflation at a
higher-than-expected 4.4%, compared to expectations of a 4.0% rise. "We see
inflation as the most important investment theme in the coming months," Ma

Speaking on the opening day Thursday of the Group of 20 summit in Seoul, U.S.
President Barack Obama said that South Korea and the U.S. hadn't yet reached a
much anticipated free-trade deal, as some had hoped, but that the two sides
would continue to work to finalize an agreement. "We will work tirelessly in
the coming days and weeks to get this completed and are confident that we will
do so," Obama said at a joint press conference with South Korean President Lee

Brazilian Finance Minister Guido Mantega said the Group of 20 nations may
discuss reducing the dollar’s role as a reserve currency in favor of a basket
that could include the real and yuan.

“The U.S. economy used to reign absolute, it was the strongest economy in the
world and stood out from the others,” Mantega said at a press conference in
Seoul. “Today that is no longer the case.”

The cost of insuring company bonds in Europe against default is the highest
relative to the U.S. since May as concern rises that the euro-region’s most
indebted governments may need a bailout, further damaging the economy. The
Markit iTraxx Europe Index of 125 investment-grade companies climbed to 103
basis points this week, compared with 92 basis points for the Markit CDX North
America Investment Grade Index, according to Markit Group Ltd. Credit-default
swaps on Ireland’s two biggest lenders, Bank of Ireland and Allied Irish Banks
Plc, are soaring on doubts about the ability of the nation to refinance in the
bond market. European credit is being weighed down as governments struggle to
convince investors they remain viable amid taxpayer resistance to budget cuts
and after Goldman Sachs Group Inc. raised the prospect of Ireland and Portugal
failing under the weight of “oversized” debt piles. “The focus is back on
peripheral Europe,” said Mark Dowding, a senior money manager at BlueBay Asset
Management Plc in London, where he helps oversee $22 billion of investment-
grade assets. “Keep your eye on Italy and Spain. If we see any weakness there,
that’s what will drive weakness elsewhere.”

According to the Conference Board, a highly respected economic research
association, China will overtake the US as the world’s biggest economy by 2012,

or within two years.OK, so in dollar terms, that’s obviously not going to be the

case. It will be a lot longer than two years before China overtakes the US on
that measure. But in terms of purchasing power parity, according to the
Conference Board’s latest world economic outlook, China is already nearly there,

and by 2020 will have reached a size of output which is nearly half as big again

as the US.

Sears will open on Thanksgiving Day for the first time in its 124-year history.

The Hoffman Estates-based retailer will open stores from 7 a.m. to noon on
Thanksgiving Day.Doorbuster sales include diamond or ruby with diamond pendants
for $19.99 (regular $59.99); a Craftsman professional 20-volt lithium-ion
three-piece combo.

"But, once again, I'll get on my soapbox and shout from the top of my lungs
that buying U.S. Treasuries is a Ponzi scheme that will all come crashing down
on you when the Fed removes their stimulus. Sure it won't be now, or in the
next 6 months, but this Treasury Bubble will pop one day, and when it does, the

mass exodus to the exit door will be so jammed, that everyone will get
hurt." Chuck Butler, Everbank

Charles Hugh Smith: "The Fed's Quantitative Easing Part 2 has destroyed $4.6
trillion in household wealth, all to boost the stock portfolios of the top
10%.The Federal Reserve's stated goals in launching QE2 were to trigger a
"wealth effect" and boost inflation. The net result of their program is a
massive destruction of household wealth. The basic idea is that goosing "risk
assets," i.e. stocks, then consumers will feel wealthier and thus motivated to
open their wallets and spend, spend, spend. This spending won't be based on any

increase in income (household income fell in 2009 despite the massive run-up in
stocks) but on the illusion of greater wealth created by a temporarily rising
stock market.

(Median household income fell 0.7% to $49,777 in 2009, down 4.2% since 2007,
when the recession started.)"

FMXConnect: "Natural gas prices dropped 16.4 cents per million Btu yesterday,

natural gas traders reacted to this week’s EIA underground storage report which

showed gas in storage at 3.840 bcf, a new record of 3 bcf more than the
previous high point of 3.837 bcf reached almost exactly one year ago now. We
are unlikely to need that much gas in storage to get through the winter, but
companies kept injecting material.

This week’s increase of 19 bcf was less than the 24-25 bcf increase expected by
Bloomberg and Dow Jones. It was also less than the 25 bcf gain seen a year ago
and is well below the five-year average increase of 35 bcf. A week ago, the
year-on-year surplus was 37 bcf (-0.98% compared to 31 bcf (-0.81%) now. The
surplus against the five-year average went from 353 bcf (10.18%) a week ago to

342 bcf (9.77%) now. This report probably would have been bullish or supportive

if overall storage levels had not reached new record levels. Even though this
week’s increase was less than it has been in previous years, it was still
enough to push the overall figure to a new high point. That seemed bearish to a

number of traders yesterday."

AT&T will start selling the Samsung Galaxy Tab on November 21 for a recommended

price of $649, Engadget has learned through a leaked AT&T internal document.

In the third quarter of 2010, worldwide mobile phone sales rose 35 percent over
the same quarter last year, with a total of 417 million units sold. Smartphone
sales continued their meteoric growth, with a 96 percent increase over the same
period last year, accounting for 19.3 percent of all mobile phone sales in Q3.
“This quarter saw Apple and Android drive record smartphone sales. Apple's share

of the smartphone market surpassed Research In Motion (RIM) in North America to
put it second behind Android while Android volumes also grew rapidly making it
the No. 2 operating system worldwide.” said Carolina Milanesi, VP of research
at Gartner. The quarter marked the third consecutive double-digit increase in
sales year-on-year.
In all, nearly 81 million smartphones were sold last quarter. Android made up
slightly more than a quarter of all smartphone sales worldwide, with 20.5
million units sold, positioning it as the second-most popular operating system
behind Symbian, which moved nearly 30 million units. In the same quarter last
year, only 1.4 million Android-based devices were sold.

(Bloomberg) -- President Barack Obama will agree to Republican demands that
Bush-era tax policies benefiting high- income Americans be extended, his top
adviser said in an interview with the Huffington Post.

David Axelrod, the adviser, said that will be the only way to ensure lower tax
rates for middle-income Americans also are continued. Unless Congress acts, the
tax cuts enacted in 2001 and 2003 expire on Dec. 31.

“We have to deal with the world as we find it,” Axelrod told the Huffington Post

during a 90-minute Oval Office interview. “The world of what it takes to get
this done.”

In October 332,172 properties received a default notice.

Irish-Bund spreads trading north of 725 bps.

Wal-Mart Stores Inc. may fail to turn its sales around by the holiday season as
planned since the discount retailer has yet to lure customers back from rival
outlets, according to Cleveland Research Co.

Store traffic has declined and is unlikely to recover in the next two months,
Cleveland analyst Jeff Stinson said in a report yesterday. The Bentonville,
Arkansas-based company also has had to cancel some promotions to "protect"
profit margins, he said.

That evidence suggests Wal-Mart won’t revive sales at U.S. stores open at least
a year by the fourth quarter as Chief Executive Officer Mike Duke predicted,
Stinson said. Duke aims to attract shoppers by bringing back items the retailer
had removed and revamping promotional displays.

Wal-Mart’s U.S. same-store sales have declined for five straight quarters.

Investors should be mostly in cash, which gives them security as well as the
option to take advantage of other investments if prices fall, fund manager
Jeremy Grantham told CNBC Thursday. "And cash has what people don't appreciate
fully. And that is its 'optionality.' In other words, if anything crashes and
burns in value—say the U.S. stock market—if you have no resources, it doesn't
help you. If the bond market crashes, and you have no resources, it doesn't
help you. And what cash is is an available resource. It buys you the right to
buy the U.S. market if the S&P drops from 1,220 today to 900, which is what we
think is fair value....“The Fed has spent most of the last 15, 20 years
manipulating the stock market, whenever they feel the economy needs a bit of a
kick,” he added. “I think they know very well that what they do has no direct

Copper prices hit a record---touching an all-time high of $8,966 a metric ton in London.

The dollar jumped on Thursday, adding to gains that have put the greenback on track for its best week in three months, while the euro continued to feel heat from rekindled worries about Ireland’s fiscal fate and turmoil in sovereign-debt markets.

Gold for December delivery added $4, or 0.3%, to $1,403.30 an ounce on the Comex division of the New York Mercantile Exchange. December silver rose 54 cents, or 2%, to $27.41 an ounce. Silver had stumbled more than 7% on Tuesday as the CME Group increased margin requirements to trade silver futures.

Disney slumped 3.3 percent after reporting a fourth-quarter profit excluding certain items of 45 cents a share, missing the average estimate of analysts surveyed by Bloomberg by 2 cents.

John Taylor: "The euro, which has been perceived as if it were a German mark, has already topped and will decline until it is priced like an Italian lira in the next few months. With Europe and the US in recession next year, commodity prices will drop again and global growth will suffer despite the outperformance of domestic Asian economies. With the policy stresses, and the risk of significant errors in judgment, international strife becomes more likely as well."(via

Dow down 74, Nasdaq down 23, and S&P down 5.

Wednesday, November 10, 2010


11/10/10 Numbers

The number of workers who filed new claims for unemployment benefits fell
24,000 last week to 435,000, the federal government reported Wednesday,
continuing a recent see-saw pattern that's given mixed signals about the U.S.
labor market. Economists polled by MarketWatch had expected initial claims to
fall to a seasonally adjusted 450,000 in the week ended Nov. 6. The four-week
average of initial claims, meanwhile, sank to its lowest level in two years --
down 10,000 to 446,500. The moving average smoothes out quirks in the weekly
data and is considered a more accurate gauge of employment trends. Continuing
claims declined by 86,000 to 4.30 million. A total of 8.62 million people were
getting some kind of state or federal benefit in the week ended Oct. 23, down
almost 308,000 from the prior week.

The U.S. trade deficit narrowed by 5.3% in September to $44.0 billion, the
Commerce Department said Wednesday. The trade deficit was below the consensus
forecast of Wall Street economists of a deficit of $45 billion. The
smaller-than-expected deficit should add a few percentage points to third
quarter GDP, currently estimated at a 2.0% growth rate. Exports inched higher
while imports declined in September. The U.S. trade deficit with China widened
to $27.8 billion in compared with $22.1 billion in the same month last year.
The deficit for the first nine months of the year was $379.1 billion, which is
more than the trade gap for the entire year in 2009.

Prices of goods imported into the United States rose 0.9% in October as fuel
costs surged, the Labor Department reported Wednesday. Prices for imports
excluding fuels increased a smaller 0.3%. Economists polled by MarketWatch had
expected import prices to rise 1.3%. The fuel category jumped 3.0%, the
biggest monthly increase since January, and accounted for two-thirds of the
overall rise in import prices. Petroleum prices shot up 3.3% and more than
offset a 2.3% drop in natural gas. Import prices are up 3.6% over the past
year. Fuel imports have climbed 7.9% in that span, but prices for non-fuel
imports have risen just 2.5%. Meanwhile, export prices rose 0.8% in October for
the third straight monthly gain. Prices for agricultural exports rose 2.5%
while prices for non-agricultural exports edged up 0.7%. Over the past 12
months, export prices have risen 5.8%, the largest increase in two years.

Cotton futures advanced to record in New York after the U.S. government cut its
estimate on global production and inventories and cited a shortage in China, the
world’s biggest buyer and consumer.
The March-delivery contract gained as much as 3.3 percent to $1.5195 a pound on
ICE Futures U.S. in New York and traded at $1.4820 at 11:53 a.m. Singapore time.
Futures have doubled this year, making them the best performer among 19
commodities on the UBS Bloomberg CMCI Index.
The ICE just hiked initial and maintenance margins on cotton across the board
(to $5,600 and $4,000).

Dagong Global Credit Rating Co. Ltd., the only wholly Chinese-owed rating
agency, cut its rating on U.S. debt to A from AA, citing the Federal
move last week to initiate another round of asset buying, worth $600 billion.
It also placed the U.S. sovereign credit rating on negative watch.

China, in response to the Federal Reserve's move to inject billions into the
U.S. economy, has raised the reserve requirement ratio on major banks in an
attempt to control the flow of new money.The People's Bank of China raised the
ratio by half a percentage point between now and Nov. 16.
China had a net positive trade surplus of $27.1 billion, compared to estimates
of $25 billion. This was the second highest number since January 2009, and
lower only to July's $28.7 billion.

Losses mounted for silver futures on Wednesday in the wake of a decision to
raise margin-call requirements. The metal for December delivery plunged $1.93,
or 6.7%, to $27.06 an ounce on the Comex division of the New York Mercantile
Exchange. Gold futures fall further, down $21.60, or 1.5%, to $1,389.30 an

(Bloomberg) -- A presidential commission’s leaders proposed a $3.8 trillion
deficit-cutting plan that would cut Social Security and Medicare, reduce
income-tax rates and eliminate tax breaks including the mortgage-interest
The co-chairmen of the panel appointed by President Barack Obama suggested
reducing Social Security spending by raising the retirement age to 68 in about
2050 and 69 in about 2075. The plan also would slow the rate at which benefits
grow. The savings would come between 2012 and 2020.

The U.S. government began fiscal year 2011 in the red, posting a budget deficit
of $140 billion in October, the Treasury Department reported Wednesday.
Receipts were $146 billion in October, the Treasury said in its monthly budget
report, while the government spent $286 billion in the month. October's was the
25th straight month of deficits.

The Treasury Department sold $16 billion in 30-year bonds on Wednesday at a
yield of 4.32%, the highest since May and more than traders expected.

Soybean margins have just gone up by $250 on maintenance to $2,750.

Scotland Yard revealed that the device taken from a plane in Britain was timed to explode in mid-air over the eastern United States.

Shares of BJ's Wholesale Club Inc. jumped this morning after published reports said the Natick warehouse shopping club may put itself up for sale.
The company has reportedly hired New York investment bank Morgan Stanley to conduct an auction of BJ's. Bloomberg News reported that BJ's management received an undisclosed offer to buy the firm from private equity firm Leonard Green & Partners, which has a portfolio of brand name retail chains. Leonard Green, which took a 9.5 percent stake in BJ's in July, could not be reached for comment this morning, In its July filing with the Securities and Exchange Commission Green said it believed BJ's shares were "undervalued" and that it planned to contact management to discuss options, including taking the company private or finding additional financing, potentially through mortgage financing or sale leaseback transactions.

Cisco Systems reported fiscal 1st quarter 2011 earnings after the bell Wednesday, missing the Zacks Consensus Estimates slightly on both the top and bottom lines. Cisco brought in $10.75 billion in revenues in the quarter, below the $10.76 billion expected, and the company reported earnings of 34 cents per share (GAAP), short of the consensus by a penny. The shares dropped 10% in late trading. The company said it expects revenue for the current quarter to rise 3% to 5% year-over-year. Analysts had expected Cisco to report a 13% year-over-year increase, according to a consensus survey by FactSet Research.

Crude for December delivery gained $1.09 to $87.81 a barrel on the New York Mercantile Exchange, its highest settlement since Oct.8, 2008. In my view the $87-$88 area is a spot to cut back on long positions. Presently, there is too much supply of oil.

Over all, equities closed flat to slightly positive.

The Federal Communications Commission has become the latest regulator to investigate Google Inc.’s collection of personal data including emails and passwords through its Street View mapping service.

Tuesday, November 09, 2010

Fire Him!!!!

11/9/10 Fire Him!!!!

Atlas Energy Inc. said it has entered into a definitive agreement to be acquired
by Chevron Corp. in a transaction valuing Atlas Energy at $4.3 billion,
including Atlas Energy’s currently outstanding debt. In the transaction, Atlas
Energy shareholders will receive consideration valued at $43.34 a share.
The purchase gives Chevron access to the natural gas-rich Marcellus Shale
formation in Pennsylvania.

Sara Lee Corp. is selling its North American Fresh bakery unit to baking
company Grupo Bimbo for $959 million as it looks to concentrate more on its
coffee and meat businesses.

Gold advanced to a record of $1420 in New York as concern that some European
governments may struggle to raise funds and a weaker dollar boosted demand for
bullion. Silver reached a 30-year high of more than $29 an ounce.

Japanese suitors are circling Groupe Danone's sprawling bottled-water business,
which includes the iconic Evian brand, people familiar with the matter said.

Fed Chairman Ben Bernanke testified under oath to Congress in July: "the Federal
Reserve will not monetize the [federal] debt". What a lie! Fire him

One of the most striking differences between a cat and a lie is that a
cat has only nine lives.
- Pudd'nhead Wilson

(Bloomberg) -- The life-support system for Greece, Ireland, Portugal and Spain
is now under threat. The highly indebted nations of the euro area can’t survive
the deficit crisis without access to central-bank credit.
Last month’s Franco-German agreement at Deauville, France, and the statement of
European leaders on Oct. 29 have changed the ground rules for euro-area debt.
All 27 member states have now signed up to the need for a revision of the Lisbon
Treaty in exchange for a permanent crisis-resolution mechanism. The key new
element is that Europe’s leaders have specifically said that future rescues
might involve private creditors. Nothing is known about the magnitude of their
required contribution, but it’s now certain that they might be asked to
Chinese government departments are drafting rules to allow authorities to
intervene in home prices. Local governments may be given the power to limit
selling prices of homes and profits developers take.

Elliott Wave: "Taking a look at the weekly chart of the past few years. We
observe the Major B wave high at $13.69 in 2008, and then the collapse to
$2.62, completing the Primary B wave in 2009. NatGas then started a rising
Primary C wave with the first uptrend off that low. After an initial spurt to
$6.08 it has spent most of 2010 in the consolidation base building process. The
recent low at $3.48 may have ended it. With Crude making new two year highs
recently NatGas looks ready to start moving higher as well. In fact, it just
confirmed a medium term uptrend. Should NG continue its pattern we could see
$13.00-$15.00 levels in the next couple of years."

Google is adding preview graphics to its search results.

Federal Reserve Governor Kevin Warsh said he’s concerned the central bank’s
expansion of record stimulus may spark too much inflation, fail to aid growth
and delay any plans to reduce U.S. indebtedness.
“I am less optimistic than some that additional asset purchases will have
significant, durable benefits for the real economy,” Warsh said today in a
speech in New York. “Of course, benefits may well be more substantial than I

Will China hike rates once again, and further weaken the dollar peg? If the
dollar is devalued, what safeguards are in place to avoid a run on the banks?
Could a long bank holiday be in the wings?

Even printing presses require repair and maintenance.

Always remember--- when they raid the whorehouse, they take all the girls! There
are no musical chairs.

The ICE: "Gold bullion will be permitted for initial margin only and will be
accepted by the clearing house by electronic transfer in increments of 1 troy
ounce, and will be priced daily using the London Gold Fixing Price in US

The National Federation of Independent Business’s optimism index increased to
91.7 from a September reading of 89. Seven of the index’s 10 components rose and
three declined. The measure, which averaged 100.6 in the five years before the
recession began, has been below 93 since January 2008.
To help broaden the recovery, smaller firms need to increase hiring. A measure
of job creation was little changed and capital spending plans declined,
signaling a pickup in the world’s largest economy will be slow to develop.
“The private sector will continue to slog ahead,” William Dunkelberg, the
group’s chief economist, said in a statement. October’s gain in optimism is “not
a huge move, but at least a decent jump, perhaps anticipating an acceleration in
economic activity or a change in the ‘management team’ after the election,” he

Inventories at the wholesale level rose 1.5% in September following a 1.2%
gain the month before, the Commerce Department said Tuesday. Sales of
wholesalers rose 0.4% after a 0.5% rise in August. The inventory-to-sales ratio
rose to 1.18 in September from 1.17 in the prior month. The ratio is still
below the 1.22 level of September 2009. The growth in inventories in September
was very close to the government estimates in the advance gross domestic
product report for the third quarter suggesting little revision to the reported
2% growth rate. There could be implications to Q3 GDP in the September trade
deficit report to be released on Wednesday.

Deutsche Bank's Chief Economist for Greater China Ma Jun pointed out this
second-round quantitative easing, while stimulating the U.S. economy, would
depress the dollar exchange rate, harm the competitiveness of other countries'
exports, and lead to capital influx in developing countries for higher profits.
These countries, in turn, would face difficulties in making decisions, he
added.Ma told Xinhua in an interview that persistent quantitative easing policy
would push up prices for financial assets and bulk commodities and increase
the potential for higher inflation. On the other hand, quantitative easing may also
drive speculative capital to emerging economies, putting them on higher risk of
inflation. The global economy would face a bigger threat from inflation than
from deflation, especially the developing countries, he said.Ma said the
market prediction had sent the U.S. interest rates dropping and the dollar
depreciating even before the U.S. Federal Reserve announced the second round of
quantitative easing on Nov. 13, which caused the prices for bulk commodities to rise remarkably in dollar terms.

-China's state-run Xinhua News Agency published a commentary on Tuesday calling
for the Group of 20 industrial and developing economies to supervise the
issuance of international reserve currencies, and harshly criticized the U.S.
Federal Reserve's new round of quantitative easing.
The G-20 should "set up a new mechanism that effectively monitors the issuer of
the international reserve currency, especially when it is not able to carry out
responsible currency policies," Xinhua said, making an apparent reference to
the U.S. as the issuer of the dominant reserve currency.
"Considering the influence of the policy moves in the major international
reserve currencies on the global economy, it is necessary for the issuer of the
international reserve currency to report to and communicate with the G-20 Group
before it makes major policy shifts."

ZeroHedge: "Fan, meet shit: "Dagong has downgraded the local and foreign
currency long term sovereign credit rating of the United States of America
(hereinafter referred to as “United States” ) from “AA” to “A+“, which reflects
its deteriorating debt repayment capability and drastic decline of the
government’s intention of debt repayment. The serious defects in the United
States economic development and management model will lead to the long-term
recession of its national economy, fundamentally lowering the national
solvency. The new round of quantitative easing monetary policy adopted by the
Federal Reserve has brought about an obvious trend of depreciation of the U.S.
dollar, and the continuation and deepening of credit crisis in the U.S. Such a
move entirely encroaches on the interests of the creditors, indicating the
decline of the U.S. government’s intention of debt repayment. Analysis shows
that the crisis confronting the U.S. cannot be ultimately resolved through
currency depreciation. On the contrary, it is likely that an overall crisis
might be triggered by the U.S. government’s policy to continuously depreciate
the U.S. dollar against the will of creditors."

The cost of insuring debt, also known as credit default swap, for European
sovereigns widened last week, with Ireland and Portugal at the lead, Fitch
Solutions said in a report released Tuesday. Ireland widened to 24% and
Portugal is at 22% during Nov. 1 to Nov. 5, contrasting with market trend
toward tightening spreads. "Materially wider CDS is suggesting mounting concern
over Ireland and Portugal's fiscal stability, with CDS on Ireland hitting an
all-time high," said Jonathan Di Giambattista, a Fitch managing director in a
statement. Spreads on Ireland's five-year sovereign CDS rose to 598.6 basis
points on Monday from 578.3 basis points last week, while the spread on
Portugal's five-year CDS rose to 480 basis points on Tuesday from around 465
basis points Monday, according to various data providers.

US EIA sees US natgas production up 2.5% in 2010 (Prev. up 2.2%), down 1.2% in
2011 (Prev. down 1.5%)

China’s yuan is approaching the strongest level against the dollar since 1993 on
speculation the country’s central bank will permit faster appreciation before
Group of 20 leaders meet this week in Seoul.
The yuan gained 0.51 percent to 6.6440 per dollar yesterday in its biggest daily
advance since China abandoned a peg against the greenback in July 2005. It
touched 6.6420 earlier, compared with 6.6404 on Oct. 15, the highest level since
the central bank unified official and market exchange rates 17 years ago.

Job openings dropped sharply in September, a sign that hiring is likely to
remain weak over the next several months.The Labor Department said Tuesday that
employers advertised 2.9 million jobs at the end of September. That's a drop of
163,000, or 5.3 percent, from the previous month.

The mystery of an apparent missile launch last night
off the Southern California coast deepened today as U.
S. military officials said they were still checking to see
if the missile was one of theirs.
The unmistakable contrail streaking into the
California sunset was captured on video last night by
a KCBS news helicopter flying over Los Angeles at
around 5 p.m. Pacific time. "NORAD and USNORTHCOM are aware of the unexplained
contrail reported off the coast of Southern California yesterday evening," the
agency said in a statement. "At this time, we are unable to provide specific
details, but we are working to determine the exact nature of this event. We
can confirm that there is no indication of any threat to our nation and we
will provide more information as it becomes available."

Seeeking Alpha: "Considering that the grand total of gold mined throughout human
history is estimated to be around 170,000 tons, the 2009 100,000 tons of
in-ground Reserve Base to satisfy future demand is something to think about.
This figure is an estimate of known ore deposits in such quantity that, if all
mined, would satisfy 2009's total global gold demand 28 times over, even
without recycling any scrap gold or reselling any existing gold coin or bar.(1)
And this does not even count much of the known lower grade ore bodies that have
already become economic at higher-than-2009 gold prices. Additionally, many
more known lower grade deposits will become included in "Reserve Base" should
gold rise further. In-ground gold reserves can thus grow dramatically with no
new discoveries whatsoever, simply from the price of gold rising."

Natural gas overcame a wobbly start to surge 12 cents, or 3%, to $4.21 per
million British thermal units, the fuel's highest since mid-August.

The Dow Jones industrials were down as many as 103 points at 3:45 p.m. but
recovered to a loss of 60 points to 11,347 at the close. The Standard & Poor's
500 Index was off 10 points to 1,213, and the Nasdaq Composite Index was down 17
points to 2,563. It was the second loss in a row for the Dow and S&P 500 and
the Nasdaq's first decline after five straight gains.

"CME confirmed silver margins raised from $5000 to $6500 (30%) effective 11/10
settl - no other metals effected."

Monday, November 08, 2010

The Disease

11/8/10 The Disease

FT: "Leading economies should consider readopting a modified global gold
standard to guide currency movements, argues the president of the World Bank.
Writing in the Financial Times, Robert Zoellick, the bank’s president since
2007, says a successor is needed to what he calls the “Bretton Woods II” system
of floating currencies that has held since the Bretton Woods fixed exchange
rate regime broke down in 1971.
Mr Zoellick, a former US Treasury official, calls for a system that “is likely
to need to involve the dollar, the euro, the yen, the pound and a renminbi that
moves towards internationalisation and then an open capital account”. He adds:
“The system should also consider employing gold as an international reference
point of market expectations about inflation, deflation and future currency
His views reflect disquiet with the international system, where persistent
Chinese intervention to hold down the renminbi is blamed by the US and others
for contributing to global current account imbalances and creating capital
markets distortions.
This week’s meeting of government heads in South Korea is likely to see yet
more exchange rate conflict. A US plan for countries to sign up to current
account targets has run into widespread opposition.
Wolfgang Schäuble, Germany’s finance minister, has raised the temperature by
describing the US economic model as being in “deep crisis” and criticising the
US Federal Reserve’s decision to pump an extra $600bn into financial markets.
“It is not consistent when the Americans accuse the Chinese of exchange rate
manipulation and then steer the dollar exchange rate artificially lower with
the help of their [central bank’s] printing press.”

John Hussman: "Historically, a 1% increase in the S&P 500 has been associated
with a corresponding change in GDP of 0.042% in the same year, 0.035% the next
year, and has negative correlations with GDP growth thereafter (sufficient to
eliminate any effect on the long-run level of GDP). Now, even if one assumes -
counter to reasonable analysis - that the GDP changes are caused by the stock
market changes (rather than stocks responding to the economy), the potential
benefit to the economy of even a 10% market advance would be to increment GDP
growth by less than half of one percent for a two year period.
Now, as of last week, the total capitalization of the U.S. stock market was at
about the same as the level as nominal GDP ($14.7 trillion). So a market
advance of say, 10% - again, even assuming that stock prices cause GDP - would
result in $1.47 trillion of market value, and a cumulative but temporary
increment to GDP that works out to $11.3 billion dollars divided over two
years. Moreover, even if profits as a share of GDP were to hold at a record
high of 8%, and these profits were entirely deliverable to shareholders, the
resulting one-time benefit to corporate shareholders would amount to a lump sum
of $904 million dollars. In effect, Ben Bernanke is arguing that investors
should value a one-time payout of $904 million dollars at $1.47 trillion.
Virtuous circle indeed....The problem isn't only that the Fed is treating the
symptoms instead of the disease. Rather, by irresponsibly promoting reckless
speculation, misallocation of capital, moral hazard (careless lending without
repercussions), and illusory "wealth effects," the Fed has become the
disease....It is difficult to interpret Bernanke's defense of QE2 as anything
else but an attempt to replace the recent bubble with yet another - to drive
already overvalued risky assets to further overvaluation in hopes that
consumers will view the "wealth" as permanent. The problem here is that unlike
housing, which consumers had viewed as immune from major price declines,
investors have observed two separate stock market plunges of over 50% each,
within the past decade alone. While investors have obviously demonstrated an
aptitude for ignoring risk over short periods of time, it is a simple fact
that raising the price of a risky asset comes at the sacrifice of lower
long-term returns, except when there is a proportional increase in the long-term stream
cash flows that can be expected from the security.
As a result of Bernanke's actions, investors now own higher priced securities
that can be expected to deliver commensurately lower long-term returns, leaving
their lifetime "wealth" unaffected, but exposing them to enormous risk of
price declines over the intermediate (2-5 year) horizon. This is not a basis on
which consumers are likely to shift their spending patterns. What Bernanke doesn't
seem to absorb is that stocks are nothing but a claim on a long-term stream of
cash flows that investors expect to be delivered over time. Propping up the
price of stocks changes the distribution of long-term investment returns, but
it doesn't materially affect the cash flows. This reckless policy has done
nothing but to promote further overvaluation of already overvalued assets. The
current Shiller P/E above 22 has historically been associated with subsequent
total returns in the S&P 500 of less than 5% annually, on average, over every
investment horizon shorter than a decade."

WSJ: $10.2 trillion: The amount of money advanced-nation governments will need
to borrow in 2011.

AOL Inc. has hired financial advisers to explore various strategic options for
the company, one of which includes a possible tie-up with bigger rival Yahoo
Inc., people familiar with the matter said.

Charles Hugh Smith: "The stock market's growing dependence on the Federal
Reserve will end like all dependencies--badly. In any addiction, the greater the
dependency, the greater the eventual destruction when the choice narrows to
withdrawal or death.The U.S. stock market is increasingly dependent on the
Federal Reserve's constant interventions to maintain the illusion of an organic
demand for equities. The market's impressive climb since September 1 is only a
simulacrum of a healthy market; actual organic demand from individual investors
is falling. The Fed's destruction of the U.S. dollar, its relentless pumping of
cash into banks' trading desks via POMO (Permanent Open Market Operations) and
its destruction of any yield on cash with zero interest rates has driven money
into risk assets--emerging markets, commodities and the U.S. stock market."

Ron Paul: "I think the Fed will self-destruct. People will desert the dollar. I
think the Chinese are hinting that already. They are not wanting our dollars as
much as raw materials. This is a deeply flawed monetary system. Here we have a
small group of people who can create $600 billion with the stroke of a pen... I
don't know where people are coming from to think that this can work. What
really astounds me me is how tolerant the people are, the people in Congress
and the financial market, where did this authority come from? Now somebody
outside of the government can spend trillions of dollars and not think anything
about it. It doesn't work, it's a failure. And next year it will be more.
Bernanke is very clear on what he is going to do - he is going to create money
until he gets economic growth and there is no evidence to show that just
creating money causes economic growth."

Rob Hanna: "though the market is short-term overbought, this is by no means an
ideal short setup. And in general odds seem to favor a continuation rather
than a strong, immediate drop."

Now the average price of regular unleaded gas is $2.83 a gallon and is estimated
to rise 10 to 15 cents a gallon in the next couple of weeks. How will $3 a
gallon gas hinder holiday sales?

Bank of Japan Deputy Governor Hirohide Yamaguchi warned of looming risks to
Japan's economy, stressing that the central bank was ready to boost its asset
buying scheme if it sees clear signs of a downturn.

Cost of insuring Irish debt hits new record high. Renewed worries about
Ireland's ability to finance and control its deficit pushed up the cost of
insuring Irish debt against default on Monday. Spreads on Irish five-year
sovereign credit default swaps rose to 598.6 basis points Monday, up from 578.3
basis points on Friday, according to data provider CMA Datavision. This means
that investors will have to pay about $598,600 annually for five years to
ensure $10 million of Irish debt against default. "As European peripherals such
as Ireland and Greece continue to simmer on the back burner, it may be only a
matter of time before European sovereign debt problems once again capture the
markets' attention," said Michael Woolfolk, senior currency strategist at the
Bank of New York Mellon. Spreads on Portuguese CDS also widened to a record,
recently trading at 465.1 basis points, up from 445.3 basis points on Friday.

(Bloomberg) -- Google Inc. and Dell Inc. plan to push ahead with more
acquisitions, helping maintain a takeover spree that’s boosted the value of U.S.
technology mergers to more than $60 billion this year.
Google is likely to buy more companies about the size of YouTube and
DoubleClick, its two largest deals, to help offer more online services, the
company’s head of mergers and acquisitions said in an interview last week. Dell
plans more takeovers in its drive to double the size of its data-center business
to $30 billion in sales, a company executive said.

Retailers are on pace to hire the most temporary workers for the holiday
season in three years, according to outplacment firm Challenger, Gray &
Christmas, Inc. Retail stores increased payrolls by 150,900 in October - three
times more than the same month in 2009 - based on data from the U.S. Labor
Department. "This is a good sign that retailers feel more optimistic this
year," said John A. Challenger, chief executive of Challenger, Gray. In 2008,
hiring in October for the holiday season fell to its lowest level in 22 years,
with only 38,600 seasonal workers being added. October hiring had reached as
high as 157,800 in 2004. Retailers begin to hire in October in preparation for
Christmas and they add even more workers in November and December. From 2004 to
2007, retailers hired on average more than 700,000 seasonal employees in the
last three months of the year.

Spot gold exceeds $1400.

The president of the Dallas Federal Reserve opposed the central bank's decision
to buy $600 billion in Treasurys, saying the strategy known as quantitative
easing hurts savers, raises commodity prices, increases financial speculation
and could prove very costly if interest rates suddenly rise. Dallas Fed
President Richard Fisher said he would have more confidence in the central
bank's strategy if the Congress and White House agreed on measures to reduce the
large U.S. debt and fix the nation's budgetary shortcomings. Too few businesses
want to invest in the U.S. because of its tax and regulatory policies; they can
get a better return on their investment in other countries, he said. What's
more, the Fed's actions could reduce the odds that lawmakers will agree on
prudent fiscal policies. "The remedy for what ails the economy is, in my view,
in the hands of the fiscal and regulatory authorities, not the Fed," Fisher said
in speech in San Antonio, Texas.

Ambac Financial Group Inc. filed for Chapter 11 bankruptcy on Monday after failing to raise additional capital, the bond insurer said. Ambac will continue to operate as "debtor-in-possession" under the jurisdiction of the Bankruptcy Court. The company also failed to reach an agreement on restructuring its debt with creditors but has agreed to a non-binding term sheet that will allow it to further negotiate with the creditors and emerge from bankruptcy more quickly, it said. As of June 30, the company had outstanding debt of $1.62 billion.

U.S. stocks fell slightly on Monday following a big rally last week, as concerns over sovereign European debt resurfaced. The Dow Jones Industrial Average fell 37.24 points, or 0.3%, to end at 11,406.84. The S&P 500 index dropped 2.60 points, or 0.2%, to 1,223.25, with financials weighing the most on the broad average. The Nasdaq Composite rose 1.07 points to 2,580.05.

Sunday, November 07, 2010

More Cash For Clunkers

11/7/10 More Cash For Clunkers

John C. Danforth: "I have never seen more senators express discontent with
their jobs. ... I think the major cause is that, deep down in our hearts, we
have been accomplices to doing something terrible and unforgivable to this
wonderful country. Deep down in our hearts, we know that we have bankrupted
America and that we have given our children a legacy of bankruptcy. ... We have
defrauded our country to get ourselves elected."

Lester Robert Bittel: "Sometimes in politics one must duel with skunks, but no
one should be fool enough to allow the skunks to choose the weapons."

The only difference between a dead skunk lying in the road and a dead politician
lying in the road is that there are skid marks around the skunk.

What kills a skunk is the publicity it gives itself.
Abraham Lincoln

John Adams:"All the perplexities, confusion and distress in America arise not
from defects in their Constitution or Confederation, nor from want of honor or
virtue, so much as downright ignorance of the nature of coin, credit, and

The state has, in order to control us, introduced division into our thinking,
so that we come to distrust others and look to the state for protection.
Butler Shaffer

When the all-inclusive final tally is completed, the mid-term elections will
have cost about $5.5 billion. Another big cash for clunkers deal.
Compromises will be made that will end up costing taxpayers more money. It's all
about reducing the standard of living for 98% of Americans.

Democracy is when the indigent, and not the men of property, are the rulers.

Franklin P. Adams: "The trouble with this country is that there are too many
politicians who believe, with a conviction based on experience, that you can
fool all of the people all of the time."

You can fool some of the people all the time, and those are the ones you want to
concentrate on. George W Bush

Oscar Ameringer: "Politics is the gentle art of getting votes from the poor and
campaign funds from the rich, by promising to protect each from the other."

I distrust Great Men. They produce a desert of uniformity around them and often
a pool of blood too, and I always feel a little man's pleasure when they come a
E. M. Forster

“Inflation is the senility of democracies”
Sylvia Townsend Warner

Wilbur Ross: "The dollar is still 62 percent of all the reserves in all the
central banks around the world so that's a big issue.
I think one of reasons why the Federal Reserve is doing QE2 is because its
about the only tool they have left. They're trying to do something and that's
why they're pushing out the duration.
Now, I think there is a real possible problem coming from it. The amount they
are talking about buying is virtually equal to the projections to the total
amount of new debt that the U.S. Treasuries are going to issue. So, in effect,
what you have happening with these purchases, is the Federal Reserve is
directly funding the federal deficit."

Mike Burk: "Seasonality trumped breadth last week and now the market is
overbought in both the short and intermediate term.
I expect the major averages to be lower on Friday November 12 than they were
on Friday November 5."

The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976.

Charles Hugh Smith: "By pushing the dollar down 15%, the Fed managed to goose the S&P 500 by 19% since June 1. Stated that way, the leap in stocks can be seen as mostly the result of the Fed's eradication of the dollar's purchasing power.
Priced in wheat, which has soared 71% since June, then the U.S. stock market has woefully underperformed.
If you were paid in maize (corn), which has risen 35% since June, then selling your corn and buying the SPX in June resulted in a serious loss of purchasing power.
Imagine you were paid in a currency backed by grain, cotton, sugar and other agricultural commodities. Let's call it the quatloo, shall we? Your quatloos have gained tremendously in purchasing power since June when priced in U.S. dollars--or the S&P 500....Priced in silver or agricultural commodities, U.S. stocks have collapsed in value, not risen. The Fed has ruthlessly pursued a policy designed to extract wealth from all households (via destroying the purchasing power of the dollar) and funnel it into the Financial Elites and "too big to fail" banking sector.
The con is masked by the apparent rise of the U.S. stock market: the nominal gain is the purest propaganda available, and Mr. Bernanke has recently made it clear that creating a nominal gain (not a real gain in purchasing power, mind you) is his entire game plan to "renew growth" in the non-financial Elite economy, i.e. the real economy.
The Fed and Bernanke have failed in their duty utterly and completely. But thanks to their brilliant propaganda campaign, only those paid in silver and quatloos (wheat, corn, sugar, cotton, etc.) can see this clearly.
The rest of the populace has been fooled--for awhile." Or as George W. Bush said, you can fool some of the people all the time. Maybe so. Hopefully, enough Americans are not sheep.

I don't want anybody suspecting I am some sheep and part of the Washington D.C. establishment.
George Nethercutt

Money and corruption are ruining the land, crooked politicians betray the working man, pocketing the profits and treating us like sheep, and we're tired of hearing promises that we know they'll never keep.
Ray Davies