Cara's Commentary & Community Chat, Fri., Mar. 20, 2009

from Post 17813 - March 19, 2009:

"At the same time, I feel a little bit like I'm making money on the fall of Empire. I don't like it very much. It reminds me of the puts I had on FNM and FRE. I made $5,000, and I felt like some part of the US died."

indeed. there is more to all of this than numbers on a screen. there is nothing wrong with keeping the bigger picture in your mind.

"You cannot help the poor by destroying the rich. You cannot strengthen the weak by weakening the strong. You cannot bring about prosperity by discouraging thrift. You cannot lift the wage earner up by pulling the wage payer down. You cannot further the brotherhood of man by inciting class hatred. You cannot build character and courage by taking away people's initiative and independence. You cannot help people permanently by doing for them what they could and should do for themselves." - Abraham Lincoln

"Neither the wisest Constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt." Samuel Adams

“Our country is in danger, but not to be despaired of. Our enemies are numerous and powerful; but we have many friends, determining to be free, and heaven and earth will aid the resolution. On you, depend the fortunes of America. You are to decide the important question, on which rest the happiness and liberty of millions yet unborn.
Act worthy of yourselves.”
Joseph Warren

http://en.wikipedia.org/wiki/Joseph_Warren

Good morning.

JNJ - Upgraded to Buy @ UBS

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

Other Potential Market Movers:

UBS Initiates Coverage of F with a Buy & GM with a Sell.

Yep, saw Swissrobinson's post after reading the new 3/20 commentary.

great minds.....? :>)

Nice chart and very convincing. I have been watching CPC, CPCE and ISE in disbelief for a few days now as they registered extremely high optimism levels in the last several days. As a matter of fact, $CPC SMA10 is the lowest in the 3 years! Other notable times with similar, but higher, reading were apr 06, jan 07, oct 07, may 08, jan 09, etc. The ISE SMA10 shows the same thing (but inverse due to ISE reporting. Doesn't sound good at all. This is why I'm mostly cash now with a light short position opened yesterday.

On the other hand, the US stock action can be partially explained by US $ in a free fall. If one corrects SPX for the $ value, stocks started to slide since 3/17/09. This throws a monkey wrench at any TA.

Craig,

I recently read a biography of Jackson. Very controversial, very opinionated and very decisive. Certainly no angel, but we could use a leader at a time like this — Jackson was indeed a leader.

Obama is perpetually campaigning and seeking approval through words changeable daily (change we can believe in for the moment). He may mean well, but his lack of ability in picking people matches his lack in leadership.

Obama has promised 3 to 4 million jobs and since promising we've lost as many more. He promises to halve the deficit by 2013, but doubles the debt in a few short weeks. He promises to meet with "moderate" members of terrorist groups, is "tired of bickering over our economic problems," and is "confident" we can lick our worst-ever financial woes and hasn't filled the vacant posts in the Treasury department, but has time to tour the country making broad sweeping new promises.

At a time when confidence, trust and security are in short supply, I long for a Jackson — as Kaimu has pointed out — the last man to leave office with our nation debt free.

>The tactics of diversion are totally insulting to the American intelligence

Would that be the American intelligence community, or the intelligence of the American community?

A world of difference! ;)

New York Times article
This huge company of offshore companies needs to be dismantled and quickly....

http://www.nytimes.com/2009/03/20/business/20aig.h...

% SP above 10 day MA is almost 100%. Will this indicator fail?

http://lh6.ggpht.com/_APmrYvpA45s/ScL2tMuraSI/AAAA...

NO....IT'S NOT POSSIBLE!!!!

Craig, was that great minds think alike or the herd always follows in each others footsteps?

:p

Well GS will be up for a class action law suit from taxpayers if there's solid evidence to back such an assertion...

Mr. Spitzer is singing his tune...they could knock him down but they won't keep him out now. I think it was an interview on CNN where he called for an investigation into the GS/AIG connection. A chance to redeem part of his legacy? Let's hope so for all our sakes. I hope he and his family are doing better.

Someone needs to go after that organized crime organization. But I won't hold my breath, not with so many of its people implanted in the Obama administration.

Anyway, here's the link to the CNN interview:

Watch AIG's payouts, not the bonuses, Spitzer says

"Athletes always talk about being in the "zone." Everything becomes effortless; the game slows down improving decision making, heightened sensations getting him in rhythm with the natural ebb and flow of the contest."

Another way of saying it's all mental. I would add that there is a noticeable lack of emotional involvement when in that state. Obviously, one cannot trade effectively while in the throes of euphoria or despair. Nor while distracted with work/relationship issues.

"Getting in the zone is essential to profitable trading; peak performance achievable only through preparation and visualization. Successful performers and traders share similar attributes and pre-game routines."

Another way of saying you need to be good at it. Which is, of course, essential to being CONSISTENTLY profitable = staying in the game.

"We have all heard the adage that "practice makes perfect." As athletes spend countless hours perfecting their techniques, traders also need to spend time researching and developing their craft. Otherwise, if it’s just a matter of betting red or black, they ought to go to Vegas. Even as a gambler, you want to be the house, so you must put in the necessary work to get the odds on your side."

(a) You have to love the game- why else would anyone be spending 'countless hours' at it?
(b) There is a great deal of overlap in the skills necessary to succeed in either pursuit. Gambling has a bad rap, IMO. 401(k) performances in the past year now has me thinking Peter Lynch had it wrong-> Fidelity funds were the gamble. 'Gambling' is also automatically associated with paying taxes in Nevada, which is not necessarily the case. I end up in Nevada once every two years. With maybe one exception, the trips (aside from expense reimbursements by the company for business), have all been profitable.
(c) Sometimes (not always), house odds translates into (simply) betting against the crowd.

Bill, really enjoyed this morning's commentary, thanks.

I see absolutely no change in the outlook.

I emailed the answer to your question from yesterday.

Each one of us can contribute in a small way with the courage of Andrew Jackson. It's very simple. Identify the connected banks who are corrupting the system and stealing our money and make it a point not to do business with them. Cut up their credit cards and don't take their loans or don't deposit your money with them.

You may have to settle for less return on CD's since sound banks pay below market rates usually. That's why they're sound. Also, you may have to pay higher interest if you need a loan for the same reasons.

Personally, I don't mind earning less or paying more for doing the right thing. My wife just asked me last night how I can pay attention to all this Fraud without doing anything. I responded that I am doing something. I'm boycotting all the corrupt institutions. And if many other people followed my footsteps, then "we the people" could rid ourselves of this cancer!!

Rob.

G- LOL!

2nd,

are you still holding fas at 6.71?

thanks, I am heavy in financials and getting the urge to bail.. I highly value your input.

thanks,

vb

Unless you are an adept shortist now is time to close all longs and begin your weekend.

Happy first day of spring everyone!!!!!

Critical candle print today. XLF has to print 8.4 [weekly trend line] or below if you are bearish, above it for the bulls.

Inside AI-FP, Feeling the Public's Wrath

By Brady Dennis
Washington Post Staff Writer
Thursday, March 19, 2009; C01

WILTON, Conn., March 18 -- A solitary flat-screen television hangs on the back wall of the trading floor inside the headquarters of AIG Financial Products here. Wednesday afternoon, the most-talked-about employees in America huddled around it to find out just how despised they have become.

They watched quietly as members of Congress referred to them as greedy and incompetent. They heard more than one demand that their names be released to the seething American public. They heard the chairman of American International Group, Edward M. Liddy, tell lawmakers that people, in e-mails sent to AIG-FP, suggested that the firm's leaders "should be executed with piano wire around their necks."

The evening before, the firm's chief operating officer, Gerry Pasciucco -- whom Liddy recruited in November from Morgan Stanley to shut down Financial Products before it could do more harm to the economy -- had gathered them together in the same spot.

Pasciucco urged them to keep their heads down, to act professionally and to continue working to extricate Financial Products from its more than $1.6 trillion in outstanding derivative contracts. He acknowledged that the past few days have been like being "inside the piñata."

In reply, they told him that they worried mostly about getting shot, despite the guards now patrolling the parking lot, the front door and some of their homes.

A sense of fear hung in the room -- the palpable, unsettling kind that flashes across people's eyes. But there was anger, too. No one would express it publicly, of course. Who wants to hear a wealthy financier complain? And yet, within those walls off Danbury Road lies a deep sense of betrayal -- first by their former colleagues, now by their elected leaders.

The handful of souls who championed the firm's now-infamous credit-default swaps are, by nearly every account, long since departed. Those left behind to clean up the mess, the majority of whom never lost a dime for AIG, now feel they have been sold out by their Congress and their president.

"They've chosen to throw us under the bus," said a Financial Products executive, one of several who spoke on condition of anonymity, fearing reprisals. "They have vilified us."

They say what is missing from this week's hysteria is perspective. The very handsome retention payments they received over the past week were set in motion early last year when the firm's former president, Joe Cassano, was on his way out the door. Financial Products was already running into trouble on its risky credit bets, and the year ahead looked grim. People were weighing offers from other firms, and AIG executives feared that too many departures could lead to disaster.

So AIG stepped in with an offer to employees of Financial Products. Work through all of 2008, and you'd get a lump payment in March 2009. Stick around through 2009, and you'll get paid through 2010. Almost all other forms of compensation -- bonuses, deferred payments and the like -- have vanished.

"People are trying to do the right thing," the same Financial Products executive said. "Guys have worked their [tails] off to try to get value for the taxpayer. This isn't money that's being advanced to us. People have performed the work and done it exactly as we asked them to do."

Pasciucco cringed at the notion, articulated by many lawmakers and even President Obama, that Financial Products is a firm of nearly 400 reckless and greedy derivatives traders.

In actuality, he said, nearly all the troublesome sectors of the business -- namely, the risky credit derivatives written on mortgage-backed securities -- are now out of the equation, as are the people who worked on them. That leaves a small number of employees to untangle the remaining trades in four main areas: commodities, interest rates, currency and equities -- most of which were fully hedged and have caused little problem. The effort also requires a sizable number of "back office" staff, such as systems, computing, accounting, human resources and legal teams.

"Everybody, including my secretary and including the guy down the hall that serves lunch, gets a payment," said Pasciucco, who added that he received no retention payment and has no contract.

But what about the argument made by top AIG officials that the people receiving retention bonuses have unique skills and knowledge that make them indispensable?

"They are replaceable," Pasciucco acknowledges. "If we were running a long-term business, we could probably replace them over time, not all at the same time."

But it would be impractical at best, dangerous at worst, to get rid of everyone at Financial Products, according to AIG officials. If everyone leaves, Pasciucco said, "you don't have people that really, truly understand the book [of business]. We're still big enough that that matters."

If they did walk out the door, who would volunteer to work at the Chernobyl of the financial world? And what would become of the mammoth portfolio that remains?

"It would become the biggest naked position on Wall Street," one longtime Financial Products executive said, "and everybody would exploit it."

Before he waded into the circus on Capitol Hill on Wednesday, Liddy e-mailed a letter to the employees of Financial Products, asking them to "step up and do the right thing." He asked that anyone who received more than $100,000 in retention payments return at least 50 percent.

The Financial Products staff met twice Wednesday inside one of the firm's large, glass-walled conference rooms to discuss the boss's letter. Numerous employees indicated that they would be willing to return the money, but most wanted nothing more to do with the firm. It was a preview of the possible exodus to come, one that concerns Liddy himself.

"My fear is that the damage is done," he told a congressional subcommittee. "That they will return [the money], but that they will return it with their resignations."

There is little doubt within Financial Products that he's right about that.

"Nobody is going to give it back and then stay," said one of the firm's employees. "If they give back the money, then they will walk. And they will walk into the arms of AIG's counterparties."

In the meantime, the e-mails from the public have continued to roll in, including death threats and calls to blow up the firm's Wilton headquarters. Reporters and photographers have camped out in front of the offices in London and Connecticut. They have staked out employees' houses. The New York Post identified one executive and labeled him "Jackpot Jimmy." Another employee had to relocate his family after a London tabloid printed his address. A protest group is organizing an "AIG magical mystery tour" Saturday, loading up a 47-seat bus to stop at Financial Products and at the homes of some of its executives.

"People are really upset. Everybody's calling them," one Financial Products employee said. "College roommates are calling. In-laws, relatives, cousins nobody has heard from. Because people are reading this around the world and saying: 'Oh, my God, you work for that place?' "

Shark,

welcome back by the way :)

What about more rabbits coming out of the hat over the weekend? and do you mean Gold too?

I am on the fence - maybe I will sell half? and hold faz I bought at 25.62.

thanks!

vb

vb- If it helps, I have this mental picture of FAS in the twenties. I also have a mental bet riding on FAS/FAZ crossing paths @ 14.

"My fear is that the damage is done," he told a congressional subcommittee. "That they will return [the money], but that they will return it with their resignations."

There is little doubt within Financial Products that he's right about that.

"Nobody is going to give it back and then stay," said one of the firm's employees. "If they give back the money, then they will walk. And they will walk into the arms of AIG's counterparties."

Now the news cycle turns to present a sympathetic picture of the people left to clean up the mess left by the "long-departed souls" who created it.

Certainly most, if not all, of the people left at AIG do not deserve this. They are being scapegoated. But this was inevitable given the corruption rotting our financial system and government, and yet another reason why bankruptcy was the first and best option for AIG.

Unless and until the real criminals are brought to heel, expect more of the same.

Oh, and Geithner and Summers need to go yesterday. They are most directly responsible for allowing this situation to occur, and a liability to the Obama administration that grows larger by the day.

It's also why personal responsibility and doing the right thing, no matter what, is paramount.

1. You have to live with yourself.
2. The people you rip off have to *let* you live with yourself.
3. Never forget your job is to SERVE people.

It would surprise everyone here to find out how many we *trust* KNOW this, but do not, and fail to act in ways that reveal this sad fact.

more thanks,

I don't have a margin account so when I sell, I have to wait a few days to rebuy. I have faz at 25.62 which is my version of a hedge or straddle.

vb

For those falling asleep today, Bernanke is speaking at noon, hopefully that will wake things up.

The AIG mothership (jpeg): http://2.bp.blogspot.com/_iV5yDiKxCdk/ScOXeYPfj0I/...

Re. AIG bonuses, who would want to work for that company now anyway?

I still ask daily how letting all these failed companies go bankrupt could be any worse than what's happening now.

Rob.

If we are having fun now, wait until ACORN is empowered to do the US census while we watch the never ending AIG bonus story go on and on and on.

Ya, it would be much worse, mostly for the bankers. Thus, not an option. Bankers learned through 70's, 80's, and 90's how to play the system. Hey, they rule the world by their (elected) proxy's.

Stopped out @$16.96 for a 28% gain, reaching my goal. Off to run errands now, good luck all!!!

TZA just triggered a stop buy. Buckling for a ride (not sure how long though). This my first (non-paper) try of Dr. Elder's old triple screen system. I wonder if it will work?

Just for clarity's sake, my thinking behind being short financials (other than them mostly being insolvent of course) is that:

(1) the XLF etf is bumping up against resistance from the November 21 lows and can't bust through it with conviction.
(2) the AIG bonus scandal and subsequent 90% tax that was approved has left banks in the unenviable position of wanting capital, needing capital, but not wanting to deal with the heavy regulation government assisted capital comes with
(3) the Treasury secretary's issues will ultimately cause his resignation, which will add to the instability of the marketplace

I didn't trade the last 2 pullbacks to the rising 200-day moving average and, after today's "trading reminders" from Bill, I sure am not going to miss this one. Only thing that would prevent me is all the noise, confusion, angst, and opinion sorrounding the $. The July-present uptrend is still intact until the December low is taken out (great stop) and the upside target is clear. Entered a half-position in UUP. It's a great diversifier, anyway. I will add to the position if it continues as I have visualized it :P

http://stockcharts.com/h-sc/ui?s=UUP&p=D&st=2008-0...

Bev, Yes, and you can also use limit orders, etc. on both short sale and cover buy.

I've never had them interfere.

Gracias senor. It was in my spam filter, along with my Reliant bill. Hmmm...maybe I should have all my bills go to spam filter and then ask for a bailout when I don't pay them for a few months.
Seems to be working for others.

I do not have a wife, but I do have a mind and it agrees with you much about your take on the banks and power elites.
I see the US predicament as one of shared responsibility or if I do not do anything then someone surely will mentality. I really enjoy listening to Kaimu who says get rid of the fed. I have commented on Ron Paul and the bill he has which calls for auditing the fed as a first step to dissolving the fed. Sorry to be so negative, but it makes me sick to watch the USA burn around a bunch of sleepy, lazy, uninformed sheep that just want to watch TV and "why can't we just all get along...its crap and I am doing my best to stop our destruction, but it sure is lonely. Lots of talk but no action as far as I can tell. Thanks K for all you do to help us become aware of our situation!

I apologize in advance if I am making claims that are not true, but this situation is wearing me down big-time! There may be some on here who are contacting their senators and/or trying to educate people. I am still hopeful however and know that great men/women step up when challenged.

What does $1 Trillion look like?

http://www.pagetutor.com/trillion/index.html

I would also like to thank Kaimu for constantly ringing in our ears to get rid of the fed (and supporting a lot of evidence to back it up). I know, we wont be able to do it soon enuf but atleast i have learnt the importance between holding paper issued by Le Papier Corporation vs holding physical assets. And thanks also to Bill whos ahead of the curve and call outs all these snake oil salesmen for what they are. This is a really a good community with honest discourse on variety of subjects including Taoism :)

Neil was my mom's favorite singer. This is in my head today for some reason. Maybe its the rush to gold because of the Fed's moves...or maybe its because we're all striving for someone in the financial industry to have a heart full of it...

http://www.youtube.com/watch?v=FFNqj3RGUuM

LOL- That's why I posted a response as well. All the first-time emails end up in the Spam folder.

Billy, am curious regarding your timing. No disrespect intended. My timing is ....not good. I am finding that good entry is key to a good trade in this market. Just wondering the rationale. Natural gas inventories are at higher than year norms, every TA parameter- even the ones I don't know how to use!- that stockcharts has shows high position and slight weakening. At least on the daily charts. Weekly at Stockcharts looks more promising. Its admittedly a great earning company. Better than MEE that I currently hold. Trying to learn not only by my trades but by you all here.
Peace from North Puget Sound

Wiki tells us there are 138M taxpayers in the US. If we assume we will pay the 1T via income tax, your share of $1 Trillion depends on how much you make.

The top 5% income earners (AGI > $137K) pay 57% of the taxes in the US. Let's say you're in that bracket. Your share of $1T comes to ... are you ready?

$82,608

The bottom 50% income earners (AGI < $30k) pay 3.3% of the taxes in the US. Your share is $119.

The numbers really surprised me.

http://en.wikipedia.org/wiki/Taxation_in_the_Unite...

"Let's say you're in that bracket"

How did you know?
But seriously, that is sobering. This why there is no other way than inflation to weasel out from these debts IMHO. There "only" issue is how much more deflation before all that inflation? People have wide rage estimates 2009-2012.

waiting for QT to weigh in on EW

I don't think we can ask Bill to do more than he has (disclosing his RSI777 methodology)

Identifying some edge and repetitively exploiting it is what all of us try to do. Of course, we tend to blow ourselves up because we lack the mental fortitude or proper psychology to follow through (plan your trade, trade your plan)...

Today, I saw AAPL as a double top with risks not only technical (tails up) but also fundamental according to the unknown health risks re: founder Jobs.

So I bought a few in the money puts, and am living with the results (okay so far)...but I was really tempted (as always) to destroy my analysis because of fear of loss. Fear is there every day, and as traders we have to deal with it via position sizing and stops. Manage the fear if not embrace it.

Damn, it's a hard game. But the clowns running the show don't have the fear...that's a problem.

Grym wrote: “but his lack of ability in picking people matches his lack in leadership.”

I disagree. From my executive level experience, I know it’s important to recruit, appoint competent individuals who may bring different viewpoints. It’s not an easy thing to do and requires leadership. The President strikes me as someone who does this (including appointing republicans) as well as someone who listens, which is important. That doesn’t mean he will do what someone advises, but at least the contributor had input into the decision making process.

Unfortunately, HB&B, along with other special interests, have infiltrated our government at different levels. They are imbedded in our government process which is the problem.

Perhaps he appears much better at “picking people” to me as he succeeded President Bush who IMO had a “lack of ability in picking people.”

How about “Brownie” in charge of FEMA? Background experience: Raised champion show horses! Huh? DOJ—nominate Harriet Myers? DOJ-appoint Gonzales who both republicans and democrats realize served the president’s special interests in place of the people’s interest in justice. Just ask all those republican U.S. Attorneys who were fired (acknowledge one was a poor performer and another was mediocre; however the others were persons of integrity and that caused them a problem which cost them their positions).

Lastly, President Obama had Volker advising him during the campaign and Senator McCain unfortunately had Don Luskin of all people. That said it all. Volker is still there advising, but at 84 years old (or whatever), it would be difficult for him to take on full time responsibilities of the Treasury role.

No one’s perfect and I may not agree with everything the president does. But he’s only been in 60 days. Although as traders many of us live moment to moment, I’m willing to adjust my timeframe for resolution of the current challenges.

Back to the markets.

bobbyo
It's certainly not my place to answer for Bill, however I think he has been generous beyond belief with his calls and views he shares with us. To ask for more is simply too much to ask. Specific calls like what you are asking for means you should be placing money with him.
I for one will do just that when/if he eventually gets registered in my place of residence. IMHO.

If only Ron had the "likeability" that Obama does...we would be much better off because of it...

ALOHA !!

As Rob points out ... If we all pulled our funds out of these US FED banks then that would send a PROTEST message, but would they fail? I doubt it, unless we can stop the MOUSE MONEY MACHINE(US FED). These Harvard guys are a lot trickier than those Community college guys over at "fraud challenged" ENRON!

Lets face it nearly all US BANKS and much of the rest of the World Banks would be in line with Lehmans if it were not for BIG GOVERNMENT. Really the only way to kill of the power of the US FED is to eliminate it, but unless we first get the REPS and DEMS out of our way then that road is all UPHILL to the moon, politically speaking.

I have always considered owning gold and silver as a PROTEST against the US FED and against the US GOVERNMENT ... An action that votes against FIAT and that is a vote against the US FED and the US GOVERNMENT!

The current leaders and "their" government are "anti-US Constitution" ... PERIOD!!!! There is nothing more patriotic than voting the two party aristocracy out of office. There is nothing more patriotic than demanding REAL MONEY instead of FALSE MONEY! There is nothing more patriotic than protesting against the "long train of abuses"! It is our RIGHT to get rid of government that preys upon WE THE PEOPLE .... Read the US Declaration Of Independence.

If the current BIG GOVERNMENT we have now was the least bit PATRIOTIC and AMERICAN ... TRUE AMERICAN ... then they would have let the US BANKS fail and they would abolish the US FED and they would eliminate US INCOME TAXES and they would voluntarily dismantle their thrones and shrink to an unnoticeable size. I can only conclude that since our "elected" leaders have done none of that and show NO signs of ever taking those steps that the government we now have is a FASCIST POLIT-BANK!

I am first in line to support RON PAUL'S BILL to take those first steps and have the US FED audited. As the US FED knows the passing of such a Bill would open the door to go over to Ft. Knox and see whats left of our gold reserves.

QUESTION AUTHORITY!!

Now just multiply the $3660 by 12 to get the actual amount each person has promised to these financial institutions. As of March 18th The government has promised 12.85 Trillion to various companies and people with around 4 Trillion of the total already spent.

The national debt before we started this madness last spring was at 9.6 trillion. Paying out everything we promised will more than double the National Debt.

How can our children have a future with our debt well in excess of our entire GDP?

Rob.

Has a good ratio for speculative juice:

XLV x XLP divided by XLK x XLY

healthcare and staples versus tech and consumer discretionary

shortcut = VP versus KY
VP = Cheney (conservative)
KY = well, KY

RE:>How about some simple directions in trading.

Bobbyo, that sux, and I mean it in a nice way. I've come here to learn, to get into the "zone", not be led by the nose, even if the expert means well.

Besides, Bill is throwing out some names for us to buy. I'll be tracking SLW and UXG as core PM holdings once I'm back in the game.

I didn't learn these tickers from anywhere else but here!

And if you're talking about puts and calls, whats the fun in trading if we can't raise our skills and knowledge to a higher level.

Chess master? Bring it on!

$5.15 is close enough to the limit price of $5 at which I wanted to buy 1000 shares. So I just bought them at $5.15.

Bill - You are getting into strategies and tactics that require my knowledge of all factors, which I said I cannot do here.

I know you cannot tell me which strikes and dates I should buy, because you don't know my risk profile, and what else my position might hold.

But here's the thing. You talk a lot about the timing of when to write options, and buy them, and what kinds of options to write, and that has been very helpful. I feel like I have received a great deal of wisdom from you about that. However, I do not feel very knowledgeable about what sorts of strikes and expirations to use in the different situations.

I am willing to learn by experimenting, but I was just hoping for a general lesson from the master on strike prices and expirations. Sometimes people ask you questions and amazing things come out, kinda like the one about oil, metals, and gold. That was so helpful! And I figured since today was a quiet day perhaps you might have the time... :)

Re. IWM 41 Calls and 42 Puts yesterday's in-the-money straddle. 42Ps trading at $1.80, position is profitable.

Note that max pain is much higher than current prices. Max Pain was useless last month and right now is proving useless again.

Falling right into 2nd's wheelhouse?

ALOHA !!

This is what S&P earnings look like adjusted for inflation! Come to think of it the DOW would take a 80% scalp if there was no inflation. What does that say?

Link: http://www.chartoftheday.com/20090320.htm?T

In essence if A+B=C, then B+A=C ... hence inflation is the "be all-end all" cure for US DEBT and plummeting stock markets and real estate! We were all raised on inflation ... MORE BLOAT PLEASE-E-E!!

That is because the stops are being taken out. There could be an up ward spike if the decline is not news driven.

Kaimu do you have any charts on an S&P 500 (or DJIA) ex inflation? My mind boggles on how bad that might look.

All this talk of old presidents and the Constitution remind me that I am related to a Founding Father, William Few. He signed the Constitution for Georgia and later became the first Senator of that State. Still later he went to New York and was the second president of City Bank of New York (todays Citi Group, I believe, but lets not hold that against him). He and I are first cousins six times removed since our closest common ancestor is his grandparents. William Few can be found on Wikipedia.

If I see FAS at $4, then instead of buying more of it, I'll start shorting FAZ at that point.

David/VB- Some of the same traders who couldn't hit the buy button on FAS fast enough on Wednesday/Thursday are the ones bailing today. It's easy to tell. Just put yourself in their shoes. If I'd bought at Wednesday's close/Thursday's open (in the 7+ range), thinking the sector was going to take off, it would take a strong stomach to watch a break of 5 today. Which I think explains some of the increased volume when that occurred. That represents opportunity to you and me. And why emotions have no place in trading/gaming (other than to allow you to empathize with the other side of the trade).

"The above link is Glen Beck talking to Penn Teller...hope spelled correctly, and is about the two party system and being labeled a terrorist if you are independent."

How about the Declaration of Independence, does this document represent an act of terrorism? I suppose from the British point of view the founders of this country were terrorists? How about the Beltway Criminals and their NY counterparts? In this country, criminal acts such as attacking the world trade center are labeled terrorism. So why wouldn't a criminal act perpetrated against the economy also be labeled terrorism.

No, I think the Beltway Criminals and their Wall Street counterparts are the real terrorists.

Begging for forgiveness based upon a patent on ignorance is not an acceptable alternative to asking permission. The Beltway Criminals never show the face of truth because they have no concept of the meaning. They have no morals, scruples, or ethics.

holding up on higher-than-average volume...

David- btw, I don't think you'll see 4...I would really be surprised.

Boy's,
My plea for Bill just to tell us when to buy and sell was just me being facetious. I was trying to interprete how Bill must feel with the many outlandish requests he gets. So I decided to just get to the point of what these request are really asking. When should I buy Bill? When should I sell? I am sorry if my intent was misinterrupreted. Probaly should of used some emoticons.

DavidFairfax and Grasshopper. Bill went into great detail about his option strategy in October or November. You could look in the archives. He did go over timelines too, but of coarse they will change with the ever changing market.
Bob

Regarding timing - my consideration are longer term in nature (rather than short term indicators). Amongst my considerations are:

1) U.S. Coal is highly sensitive to $USD exchange rates. While I am not certain that the $USD has topped for good, I believe its strength will moderate throughout the year which should start to make U.S. coal more attractive and help to stabilize prices. In that regard it is a hedge against the $USD.

2) I think there has been an overreaction to the Obama administration's plans for carbon cap regulations. In the end, excessive costs related to carbon cap and trade schemes will have to be funded by higher costs to end users - the electric ratepayers. With the economy trying to regain footing right now, I think the administration will realize they walk a fine line between encouraging clean power and making electricity rates unnafforable and overly burdensome.

3) ACI's purchase of the Jacob's Ranch mine from Rio Tinto means that ACI and BTU will have a duopoly on Wyoming Powder River Basin coal which should result in greater pricing power in the long run.

4) The credit crunch has (likely) caused coal purchasers to scale back purchasing activity and moderate inventories. Once credit returns, these same companies will have to resume their normal course of purchasing which could result in large price reversals.

5) From a technical standpoint ACI crashed to the 11/20/08 low of $10.43 then rocketed up to over $20 by 1/6/09 only to crash back below $12 on 3/2/09. In the last few weeks daily volatility has stabilized and for the last week or so, the stock fluctuated between $13-14.25 which is a fairly narrow range.

6) We ain't gonna stop burning coal for a long time. New nuclear plants are still a decade away. Wind and solar technologies, while good supplemental power sources, are not an adequate substitute for baseload electricity generation.

ALOHA !!

Interesting analogy of CONFIDENCE!

"Confidence grows at the rate a coconut tree grows, It falls as the rate a coconut falls." - Montek Ahluwalia

Who is Montek?

Montek Singh Ahluwalia (born November 24, 1943) is the Deputy Chairman of the Planning Commission, India. He was appointed to hold the post on June 16, 2004 by the ruling UPA government. He was the first Director of the Independent Evaluation Office, International Monetary Fund (IMF). He assumed office on July 9, 2001.

I like to bounce some thoughts off my youngest son occasionally, and last night sent him some info on the public reaction to the miniscule bonus payments to AIG personnel (miniscule in relation to the total AIG bailout amount and in relation to many other monetary obligations to be borne by the American taxpayer.) He's a psychology Ph.D. candidate in an area known as the Neurotransmitters and Behaviour Lab, and does research on brain receptors that I can't even begin to explain.

Here's some of his response, lightly edited to remove extraneous material to this thread:

I think people don't undertand the difference between "million" and "billion". In fact, humans, among other animals, quantify things on a natural log scale (independent of actual amount...if you talk about "dollars", it's different than talking about "cents"). It's crazy...right from perception (and neural coding of stimuli) right up to what people self-report. Basically what that means is that a billion is only 3 times bigger than a million. And a million is only 3 times bigger than a thousand. And a thousand is only 3 times bigger than a dollar.

Humans (and other animals) simply just have a horrible representation of magnitude. It's effective in some senses (Who cares about the difference between 180 billion and 181 billion? at least we can sort-of-comprehend so much), but leads to horrible mis-representation of what is happening.

Ever notice how the bailouts are never represented as a per-capita amount?
"180 billion from all of us? Okay."
"$600? F*** no! That's MY money!"

I swear that an employer would get better productivity walking around with a stack of $10 bills, giving them out one at a time for particular instances of productivity than they would with a general raise system. "Good Job, Johnson! Here's $10. Keep up the good work!". If this happens once a week, it's like a $0.25/hr raise that only is given when productivity is high (and pays for a $2 coffee each work day). Some quick math and you soon realize that's approaching the bailout amount in one year. You see the irony?

"I swear that an employer would get better productivity walking around with a stack of $10 bills, giving them out one at a time for particular instances of productivity than they would with a general raise system. "Good Job, Johnson! Here's $10. Keep up the good work!". If this happens once a week, it's like a $0.25/hr raise that only is given when productivity is high (and pays for a $2 coffee each work day). Some quick math and you soon realize that's approaching the bailout amount in one year. You see the irony?"

Absolutely, proven over and over by B.F. Skinner. Just ask your son. That's part of the problem with quantity. Our brains are rewarded by enough. Too much? Same reward in our brains. Maybe we learn greed?
What an awesome field of study.

Billy -

To add to your long term view, USAF has recently completed testing all its aircraft on fuel made from coal (CTL) with 100% success and, as a top U.S. consumer of fuel, is seeking permission from Congress to sign a long-term contract for production of said fuel to be produced in the U.S. for national security reasons. If this happens, CTL industry will become viable (See Sansol) and, here's the kicker, put coal's hand in oil's pocket. USAF knows the U.S. is the 'Saudi Arabia of Coal' and CTL is proven tech since WWII. USAF is working to establish emissions sequestration as part of any contract.

Can you imagine Congress just saying Yes to a long-term contract for enhanced national security, less dependence on foreign oil, huge savings fueling U.S. Armed Forces, and a new energy industry (CTL) to boost employment? All we need are Polosi and Reid, no doubt owned by the oil lobby, to get out of the way!

[Edit: Sequestration not a proven tech but pilot plants testing various forms of clean emissions underway in China (with BTU), Australia, Canada, Germany (?), and perhaps a few other places. U.S. pilot project was cancelled when Bush and Congress got in a wrangle over funding last year]

bobbyo - I was trying to interprete how Bill must feel with the many outlandish requests he gets. So I decided to just get to the point of what these request are really asking. When should I buy Bill? When should I sell?

Yeah, I bet Bill thought I was asking for specific trades too. That's on me because I was not clear about what I was looking for. I need to become better at asking questions more clearly.

Hmm, perhaps my mistake was asking Bill. I should have just asked the group. Why bother the master when all the senior students know this stuff too? Ha.

So would anyone here care to share what you use when you do one of these "buy call sell put" strategies? 1 month, 2 month, or longer term? Close to the money or far away? I know already the answer depends on circumstances, but perhaps we can draw from the current market situation as the "circumstances." :)

Posted this early today on Thursday's blog. Be interesting how today's candle affects it.

Everyone enjoy your weekend.

XLF will close below its weekly trend line... Next week might turn out to be a
"FAZtastic week !

long at 11.78. Put a buy stop above the 3 PM price.

April max pain 17.50

do your own homework.

Will look to buy on Monday,if it doesn't blast off. Looks like it could be a good one.Tks for Heads up.

Head and Shoulders Bottom

Event Date: Mar 19, 2009
Opportunity Type: Intermediate-Term Bullish
Close Price: $15.53
Target Price Range: $16.90 - $17.60

Price Period: Daily
Volume: 10,660,370
Pattern Duration: 23 days
Inbound Trend Duration: 27 days

TMC

This one up ~40% this week. Almost double usual volumes today. Been under on this one a long time as I am not a trader, but might be a good one for traders in the next number of days. Mortgage rates gave up a bit today, but seeing rate changes here at the end of the day - should be heading back to 4.75 (no points)on the 30 year - best to select a provider and at risk of a ~$300+ appraisal be set to go once the rates (read mortgage prices) come to you - sound familiar to other things we learn here. Happy Trading.

"The greatest trick the Devil ever pulled was to convince the world he didn't exist"

Don't take the Cdn #'s at face value.
It's spring breakup, and the numbers always fall off very hard this time of year. The true test will be how many go back to work after breakup. I suspect it will be very ugly.

"Stocks Fall, Endangering Second Week of Gains- AP

Wall Street pulled back Friday as traders collected some profits and sent financial shares down again. After starting the day mixed stocks veered lower in the afternoon, threatening what would be the market's first two-week gain in close to a year."

Notice the use of the word "trader"....

Someone ran a wave count on some software near the close of today. He thinks things are just warming up [as in droooooooooping].

http://dl.getdropbox.com/u/312885/SPX%20warming%20...

Note the picture of the target area on the right.

Max Joy! Dave maybe you should share your option strategies with us.
Bob

What a contrast to three years ago!

NOW:

Working on a refinance. Will meet for a scheduled appraisal next week. Sounds good. The way things should be.

THEN:

2006 phone conversation went like this:

What about the appraisal? I can meet someone.

No, not necessary. It’s a drive-by.

Excuse me?

It’s a drive-by.

You mean like a drive-by shooting? (I lived in L.A. for a number of years)

(laughing) Yeah. Someone just drives by and glances up to make sure a house exists at that address. It’s not necessary to stop.

Is that allowed?

Sure. We do it all the time.

***********************************

Have a good weekend everyone!

QT, what is that focus area indicating? There are no legends with which to read the graphical data.

bobbyo - Max Joy! Dave maybe you should share your option strategies with us.

Hmm. I'm not certain if your posting is sincere or facetious...

I guess it shows target 600-650 at the end of March? But how one can trust something like this?
My best guess is pullback to 740-750 IF this bear rally has stem left. 650 and below IF 800 was a top. Not sure how to predict which. Time will tell. Can someone with good handle of support levels chime in?

http://www.youtube.com/watch?v=jeYscnFpEyA&feature...

http://www.youtube.com/watch?v=pKFKGrmsBDk&feature...

I just recently sold the gg jan 2010 40 call and bought the jan 2010 30 put for a net credit of .25. My pnl increases and decreases in proportion to the movement in the stock. If I hold to expiry I essentially break even between 30 and 40 and profit from any move above 40.

My simplistic view of support/resistance lines.

Good chart, proudPapa. A pullback to 750 in S&P would look just about right at this point, even if this rally is destined to proceed.

http://decisionpoint.com/ChartSpotliteFiles/090320...

I'd like to read Carl.

But I like to read Mike Kahn. Sumthin for everyone.

http://online.barrons.com/article/SB12373325673386...

awesome quote

Thanks Kaimu

Carl is very good and correct most of the time. BTW, he is planning on great depression 2.

Kahn's analysis is not that original, I figured out that much myself and many other bloggers said the same thing.

He said: "Unless trading takes the market significantly lower by week's end, the Standard & Poor's 500 will have a pair of long-term bullish events under its belt."

Basically, we don't know what will happen next week.

However, my sentiment indicator are warning of a major top.

Also, small investors bought a lot on a dip today. I expect more bleeding on Monday.

No reason in particular. I just wanted to buy a cheap synthetic position, I intend to close it out long before expiration.

If we have learned one thing the past 6 months is, "anything is possible", manage the risk to the portfolio.....Bill describes an extreme emotional aspect to this market, ....also known as panic in, panic out....

good luck

"The Beltway Criminals never show the face of truth because they have no concept of the meaning. They have no morals, scruples, or ethics."

CP,

Check out this article by Jim Jubak — pretty well lays out the whole dirty mess — naming just who did what and when.

Fluke? Credit crisis was a heist

http://tiny.cc/Mm33J

LOL, I will keep you guessing.
Bob

Leadership, IMO, is not related to "victim population" numbers either. It is a set of personal traits which a person — in any historical setting — has or does not have. Speed of communication is not relevant to leadership qualities.

As for the sports teams — I agree there is a big difference — in the earlier days nobody was on steroids, they often played even when "injured" were paid far less (why they played more) were less likely to be involved in criminal or unsportsmanlike behavior.

"The only comparison to be made at this point is they are both Presidents."

Well, as presidents, they are also men, individuals, leaders of their party, represent our nation and must be accountable for their performance relating to the issues they confront.

I like this illustration of the difference better

http://xkcd.com/558/

:)

Shiva, nice.

"Owes Back taxes for his Nanny, Niet!"

"Leadership, IMO, is not related to "victim population" numbers either. It is a set of personal traits which a person — in any historical setting — has or does not have. Speed of communication is not relevant to leadership qualities."

I don't think I related leadership traits to any number or size. I was talking about conditions, which are like the conditions for sports teams, different. I sort of agree with the second sentence, although I don't think leaders are always naturally born, (have or don't have) sometimes they don't start with leadership skills but develop them. Speed of communication has *everything* to do with it.

Imagine if we didn't know what Obama was doing for a couple weeks. By the time we found out it was said and done. No letters, no phone calls, no e-mails to influence even in the slightest until after the fact.

Crap, we just had eight years of that....nevermind! It's easy to imagine!
GW sent us back to Jackson's time.

Of course speed of communication (or lack thereof altoghether) was/is relevant to leadership. We have recent proof of that. Maybe not qualities, but leadership and what they did was not so subject to public scrutiny on the level it is now. There is no way to escape it. Remember the old smoke filled back rooms? Lobbyists? That's all there was! Hmmm....maybe still.
We still have HB&B!

Just to be ready to take some profits on a run up and free up some cash to buy it back on the dips, placing a sell limit order at $2.7 for the 1000 shares I recently purchased at $1.7, at $2.9 for the 1000 shares I purchased at $1.9, at $3.3 for the 1000 shares I purchased at $1.85 and at $3.85 for another bunch of 1000 shares I purchased at $1.85.

What are you talking about Mark?! This is awesome news! Just "$75 billion and $100 billion in new capital" to "rid the financial system of toxic assets"?

Hallelulja, we're saved!

Oh wait, aren't we already in for like $10t?

Oh, and "that amount could expand down the road." Didn't see that coming.

Guess that's why Geithner has been so quiet lately, he's been working on this piece of genius.

Seamus, a drive-by is called for when your transaction indicates low risk factors. The preliminary research by the appraiser reveals quite a lot about a property. They have access to listing photos from years past and tax records about the building details, permitted additions/ renovations sales history etc and ditto for comparable sales used to establish current market value. Much like a snapshot in time! Banks like them because they are cheaper but sometimes the underwriter will call for a full appraisal after the fact. If your lender appreciates you and your locale the appraisal type is just box checking.

Try this

http://events.startcast.com/events6/122/C0018/Even...

I am seeing signs we have entered a period of rule by govt prompted "mobs." I was expecting a different kind of leadership of our country.

"Working Families is planning a tour to AIG employees' homes in Fairfield County"

http://www.courant.com/business/hc-aigbonus0221.ar...

http://ronsen.blogspot.com/2009/03/saturday-mornin...

That which is working gets worked against by central planners. Inverse financials, gold, volatility, and rising rates.

The free market has become anything but free.

IMO, speed of communication with regard to "news" only adds noise. Real information and a daily chatter are vastly different animals. The speed and quantity of "information" only increases the possibilities for propaganda to influence by muddying the truth.

The fact that Obama talks a lot has virtually no effect on our getting real info. Don't listen — watch!

See how many campaign promises he has delivered on and how many he has modified. Most of what he says is way in the future or hard to measure — all politicians love to do this. Global warming, improved education... in this case more jobs.

Saying "I am creating 3 to 4 million jobs", "cutting the deficit in half" (by 2013) "bringing the troops home" — all talk and either modified or too far out to be meaningful. Since he first promised to create jobs we've lost more than the number promised. The come home date for troops was compromised and a transfer to Afghanistan announced. The deficit? Is that likely, does it even matter if the debt continues to grow exponentially with huge increases in perpetually funded programs?

The time lag hearing of Jackson shutting down a corrupt bank is irrelevant. What matters is what he did and why he did it. Obama avoided making any leadership decisions regarding the current corruption in our financial system and in fact allowed the very people responsible for the mess continue in place. He claimed, "no more earmarks," — with 8,000 of them — he says, "This is the end of business as usual."

There may be less smoke in the rooms, but there is certainly no less off the record, back room governing.

It looks like we are just going to continue to have differing views on this issue. That's OK, since nobody in power is going to care what you and I think.

Mackinaw - Thanks for giving it a shot but unfortunately my tin-can and string internet connection limits my ability when it comes to very large files and of course video. ie: I'm once again unable to enjoy the wisdom communicated through the magic of presentation. I'm sure your link was chocked full of insightful observation, thanks for the attempt, I apologize for my handicap. :(

We agree on the last sentence! That's good!

Without speed of communication, how will you watch Obama? You might be concentrating too much on one message (his), the speed of information benefits both sides if they make use of it. Otherwise how would you know how big the deficit is, the troop levels to be sent to Afghanistan, or any of the other policies and decisions you are questioning?

The information MUST precede your reaction. If this were Jackson's time we would just be reading about the inauguration and his choices for cabinet positions. There would have been NO outrage over Geithner's not paying taxes, there would have been NO public reaction to any of this non-sense.
Some papers would still be on the train or wagons enroute.

Check out the links from Bill's post.
We live in a completely different time, regardless of our differing views.
Our views are informed by the speed and quality of information, whether policy makers act as they should in a timely manner on quality information is probably not a topic we will disagree on.

I think Bill's TED Hans Rosling video says it all much better than I ever could.
As the Firesign Theatre said, "Everything You Know is Wrong".

That sounds great!

Maybe Vegas in 3-4 years, when attendance is up to 4 figures. The Venetian has beautiful convention facilities (space/sound/lighting/technology), and within walking distance of anything you'd want to visit on the Strip.

I worry a lot about Mob Rule, however, all laws, all punishment, all shunning, has it's roots in actual physical punishment.

Consider the irony. For how long have we heard critics describe the American people as "sheeple"? Lulled into complacence by easy money and vapid entertainment while the wolves had a field day. Now, after untenable excesses have lead to the collapse of this system, and people are suffering in large numbers, the People have taken notice. And when we have finally had enough of the incompetence and corruption rotting away at our institutions, and we begin to act, we hear about "mob rule" taking over.

Beware of the wolves as they run for the forest barking about "mob rule".

The groundswell of popular anger is rooted in genuine injustices. Maybe Congress and the President have been jolted into taking the right action at long last? We'll see. It's long overdue.

Agreed that Paulson, the wolf at the head of the pack for so many years, must account for his role in the mess. And the beta wolves he has left behind to lead the pack, Geithner and Summers, must be removed from positions of power.

Instant Data's (karma?) gonna get you? LOL!

I know it's close! You can see all we need now is access to the data. The tools to find, quantify and manipulate are already with us and improving by the second.

We need to write to support access to the data.

There has been some talk of "revolution" here of late. There is a silent revolution ongoing. We all use it everyday.
The information revolution is running full steam ahead. HB&B can't stop it.
Al Queda can't stop it. Computers unleash power to the people through information.
Just ask Gorbachev. There was no choice about Glasnost. It was imposed by information technology. It will be the same for North Korea, Afghanistan, parts of Africa, all the poorest countries on the video. The same will be true for fascism on the upper end/developed countries. Next stop....HB&B.

That video is awesome.

We can all see why HEALTH and infant mortality is so influential in world economies, more than wealth. As a matter of fact, you can see health produce wealth in the video. Anyone doubting our focus on health care needs to see that video, it changes everything and informs our outdated opinions.

And for those worried about such things...yes, Obama uses media and information masterfully, yet, one way or the other, information will be his master.

ALOHA !!

There is a historical equivalent going on now with AIG ... Back in the old days AIG would have been called "SNAKE OIL SALESMEN"! SNAKE OIL was a "product" that was touted to improve or cure your health issues and offer you a better quality life. When the customers realized that the SNAKE OIL was worthless and a fraud they turned on the SNAKE OIL SALESMEN and tar and feathered them or even worse hung them! Most of the time they only hung the SNAKE OIL SALESMAN if a death resulted from the consumption of the product. People have literally committed suicide over their lost wealth.

It is obvious that the financial sector is loaded to the gills with SNAKE OIL SALESMEN!

I find the article about protest tours to AIG employee homes very interesting! Here is a quote from that article.

"Jeffrey A. Sonnenfeld, a professor at the Yale School of Management, said the growing outrage over the AIG bonuses reflects the extreme value of "fairness" in American culture.

"We're a very meritocratic society. We are thrilled that Bill Gates is as wealthy as he is — he earned it," Sonnenfeld said. "But we have an awful lot of people who didn't earn it. It wasn't their capital at risk, it was ours. …There's something very parasitic about it.END"

This is the difference between REAL WEALTH and FALSE WEALTH based on cronyism politics and a corrupt monetary system. Neither BIG GOVERNMENT or FIAT can exist on this scale without mutual cooperation. We have a HUGE PARTNERSHIP of wealth redistribution, from those who actually toil to those who do not! From the moral and responsible to the immoral and irresponsible or in terms that are beginning to become more relevant ... GOOD and EVIL! US AND THEM!!

There is something very parasitic? I would turn that around and apply that to BIG GOVERNMENT. When you redistribute wealth and make it legal those who have the least say in BIG GOVERNMENT ... the US TAXPAYERS ... get angry! There is no difference between the old concept of KING and PEASANTS! This is the byproduct of TAXATION WITHOUT REPRESENTATION!! That was the crux of the American Insurrection(as the British called it in 1776)! For us Americans under British rule at the time we saw it differently, we saw it as a battle for freedom and liberty!

The fact is that BIG GOVERNMENT and HB&B have one BINDING TIE ... OPM(Other People's Money)!!!

And as I have said in the past OPM=OPIUM ... It is very intoxicating to be able to leverage your own wealth, power and fame on the backs of those at the bottom of the political and financial power structure.

When the US CONgress and the US President conspire to allow WALL STREET to run our government you get, rightfully so, the same result as you got back in SNAKE OIL SALESMEN days! Angry and disenfranchised mobs ... The angry mobs of the past did not discern a difference between the SNAKE OIL SALESMAN and his apprentice, they both got tarred and feathered! DUE PROCESS is only as good as the law and its application so when the masses feel the law is not fairly applied you get lawlessness, where DUE PROCESS is scrapped and replaced with vigilantes.

BIG GOVERNMENT allows for the vast inequities to exist ... LEGALLY! If government were shrunken down to a very SMALL level, where there was no benefit to "special interests and lawyers and bankers" that would force them to actually "earn" a living instead of shuffling paper(OPM)! There are now huge industries based on government paper shuffling! One of them is in full swing now trying to meet the April 15th deadline!

BIG GOVERNMENT and HB&B are in effect one BIG WELFARE system derived from OPM! Both take extreme risks with funds that were never earned.

Unlike Bill Gates and MICROSOFT the HB&B "derivative products" have no intrinsic value to the masses and have devastated our children's financial futures for generations to come. HB&B are the purveyors of this FALSE WEALTH! THAT IS THEIR LEGACY!!

I see this MOB mentality now consuming AIG employees as a "start" and as a direct consequence of the FIAT MONETARY SYSTEM cancer! Really, those who are now angry mobs have yet to understand that it is not AIG employees who are EVIL, but AIG is yet another symptom, a manifestation, of FIAT! Without FIAT we could never have BIG GOVERNMENT and without BIG GOVERNMENT you could never have 1000:1 leverage of unregulated derivatives! It is a parasitic symbiosis of banks and politics. If you are in the business of selling an "unregulated" product does that make it legal? The nicotine content in tobacco products was "unregulated" for decades! Why is it "bank toxins" are not being treated the same?

To me there is very little difference between SNAKE OIL and FIAT!

When do the "protest tours" of the US CONgress and US FED begin? I want to picket both Ben and Barny's houses!

By the way ... the right to peaceful protest is a guaranteed RIGHT ... not a wrong! I applaud the idea of law abiding "protest tours"! Kind of like a politically based "Eco Tour"! I hope they catch on, especially in Washington DC!

Whatever tragedy and loss of life that results from the union of BIG BANKS and BIG GOVERNMENT can be squarely placed at the voting booths! I believe a pre-requisite to vote should be a W-2 or a 1099! Many of you will disagree and say that is discrimination. I will reverse that onto you and say that it is discrimination to force TAXPAYERS to pay for those who vote but do not pay taxes. It used to be that only "white male property owners" could vote! What we have now is not fair either and should have been amended when the US CONgress in 1913 made US INCOME TAX laws.

Abolish US INCOME TAX and the current criteria to vote(18+ and a pulse) would be truly DEMOCRATIC! THINK ABOUT THAT! Its a lot deeper than it looks!

ALL OUR BEST VOTING GOT US HERE!

Gates is one of the biggest employers of imported tech workers and keeps pushing for more H1(b) workers.

With all due respect, have you ever worked in high tech? I do and I have been hiring for high tech positions recently. I would like nothing more than to find qualified American workers to hire. But the fact of the matter is that they are few and far between. Even now!

I was in fact surprised at how scarce people are in this industry. This is in stark contrast to the decimation of the 2000-2001 dotcom implosion when everyone I worked with or knew in the industry lost their job.

2nd, at this point a foul ball would be an improvement as it would show he can at least make contact.

I doubt he offers anything other than another wild swing and a miss.

And remember, in baseball it's three strikes and you're out.

number2son
Agreed and from my friends in the US tech industry foreign nationals hired by US co's to fill the gap where Americans are in short supply, are being sent home on expiry of their work visas. Not good for the health of American Tech co's these people are needed right now. Myopic, inward looking policies will do nothing to improve the lot of the US economy.

Except in the financial markets, where it's three strikes and the crowd in the bleachers is down and out. Batter retains his million-dollar contract(s).

I'm thinking news on rising home starts isn't necessarily what we need to hear at this time, it's putting the horse before the cart.... There's over a year of inventory out there and probably more if you think the rate of foreclosure is rising....

Grym,
We may be using parallel arguments, but I will still choose the speed and accuracy of the information we have today over the 19th century, and I'll also choose the data we have today over nothing. Saying all data is bad is wrong, as Hans shows us in the video. We actually have very good data. We can't confuse "news" with data and we also know some data put out by politicians is crap. We have enough sources to overcome the crap data or we wouldn't have known what was happening for the last few years, as one example.
Some knew and some used crap data in an attempt to hide it. Still, they didn't hide it from Bill or a slew of others, so those who knew what data to look at read the tea leaves. That's what we're supposed to learn here! This entire site is nothing BUT data. Everyday Bill posts all those charts and info....DATA!
If it's not good data, why are you here? Because it is good data.

Knowing the deficit is going to be 1 trillion or 2 trillion is only a matter of scale. We know it's out of control and that by any measure, we better react now on a personal level to protect ourselves in the future. In this frame of reference, the data is accurate enough to draw a reasonable conclusion and plan of action. In short, we are in deep crap. The data is clear enough for that conclusion.

"With all due respect, have you ever worked in high tech? I do and I have been hiring for high tech positions recently. I would like nothing more than to find qualified American workers to hire. But the fact of the matter is that they are few and far between. Even now!"

I'd like to see if you could qualify this statement a bit, some specifics please... I know of some US companies that won't bother themselves with interviewing US citizens, and others who's hiring process is shockingly loose. I find both extreme and troubling. Many of these jobs range from simple assembly or equipment operators in the high tech sector to highly skilled equipment engineering. So what is your definition of high tech position, and what are the job functions? I suspect you're guilty of short changing some portion of the population and automatically discount all American made products.

Wow, I'm disappointed!!!

Good one 2nd. Hope you had a nice walk and visit. Sounds like it.

I'm off this thing for the next three days as I have a ton of work to do, will try to check in evenings.

Enjoy spring everyone!

"Also, small investors bought a lot on a dip today. I expect more bleeding on Monday."

Jack, for my learning purpose, what indicator you looked at to tell you small investors bought a lot today? I trolled a few trading forums on Thursday and Friday, and it seems on those board more are in bear camp. Thanks.

Great, there's hope yet then. I'm not sure of your experience but in mine our HR department has always been successful (with some degree of assistance) in the process of acquiring talent. Of course there are many outside professional technical resource specialists I've had the pleasure of working with as well.... I realize my inability to asses the level of detail particular to your requirements and goals, but wouldn't expect too much difficulty accessing the national talent pool through the broad range of available resources.

http://heather.cs.ucdavis.edu/itaa.real.html

http://tinyurl.com/d2bban

And he want to protect his house/assets.
Shame on him.

"The temptation will be to try to buy assets for 5 cents on the dollar, using the government's 85% 'loan' leverage".

Not really, at least not according to Geithner. The government is trying to create incentive for private sector to buy "illiquid assets" that are currently marked at 25C on a dollar at a significant premium, say 60C to 75C. To achieve this, they provide huge leverage (cheap money), also they will set up SEVERAL funds with the the same purpose to promote competition among buyers.

This program is not targeting hedge funds imo. It really is targeting the sideline cash. One of the potential managers of such a public-private fund could be Bill Gross, who I believe has said he is very interested a month ago.

Btw, hedge funds will throw their integrity and independence into trash can in a heart's beat, if they can get that additional 10% return. Haven't this crisis shown us how greedy and stupid Wall Street (broadly speaking) is?

Bill - from saturday report
"Once the toxic assets have been rendered atoxic, the credit default swap insurance problem that is presently sinking the global financial system soon becomes an historical footnote."

This would be very positive for all the financials - isn't it? There could be money made in the short run in all the bank stocks before inflation starts creeping in & commodity stocks take off

"I can't wait...for a few days in the bahamas. I CANT WAIT."

Man... add a few exclamation marks, and bodyguards are in order!

Just kidding, pretty jazzed about it myself :)

Kinross shares slip on diamond foray

March 21, 2009

"Shares in Kinross Gold Corp. finished lower Friday after the company announced late Thursday it would buy a stake in the Diavik diamond mine in the Northwest Territories.

Shares in the gold producer closed down 3.5 per cent, or 81 cents, to $22.28 on the Toronto Stock Exchange on Friday.

Late Thursday, the company announced a $150-million US deal to acquire a minority stake in the Diavik diamond mine in the Northwest Territories, along with a 19.9 per cent stake in Harry Winston Diamond Corp., the biggest Canadian supplier."

any thoughts/opinions on this deal?

In the study named Losing the World’s Best and Brightest more foreign students are planning to head back to their native countries after graduation.

The study surveyed 1,224 foreign national students and recent grads of U.S. institutions of higher learning. Very few foreign students said they’d like to stay in the United States permanently: Only 6% of Indian, 10% of Chinese and 15% of Europeans. The impact will be felt most in technology and entrepreneurial fields where immigrants have historically had a disproportionately greater impact, such as the founders of firms like Google, Intel, eBay and Yahoo.

Perhaps even more disheartening is that fact that only 7% of Chinese students, 9% of European students and 25% of Indian students stated they believe the best days of the U.S. economy lie ahead; 74% of Chinese students and 86% of Indian students feel their home countries hold better economic futures than the U.S

One other thing I'll add. Virtually none of the non-resident aliens with whom I work have any interest in becoming citizens. To a person, they all look forward to returning to their home countries. Even those who have been working in the U.S. for almost a decade and are raising families here.

Perhaps that reflects the same outlook revealed in that study.

number2son

I worked with lots of them. When a call to fix a server comes in after 5 p.m and on weekend. I get paid time half paid from the time I leave my home to return home plus mileage. And I am not a union employee. With me an IBM employee who is on H1B has to come there also. He gets paid nothing and he gets comp time instead.
If he is not on H1B but has citizenship or on green cad he will make double. There are around 1000 H1B people working at financial company in Boston.
If they start to get rid of them and higher others, IT budget of these companies will double and will not be able to find right people. One of the reasons is best and bright among American went for financial or low degree, that’s where the money are.
It is easy to recruit people for $15 to $20 per hour job; it cost a lot to recruit a professional people. And all the politician who goes on TV and complains about it is for public consumption. I posted what I know

We've seen lots of moves on distressed gold miners in the junior space, Kinross is just following that impulse. Buying a diamond miner is probably very ill advised, especially after making such a great coup with their Aurelian purchase. What they are saying with this purchase is that there are virtually no gold properties they would rather buy than a major diamond miner as an investment.

Diamonds have lost half their value in the crash, and will procede along with commodities to be overwhelmed with the onset of a massive deflationary macroeconomic. (despite the rally) They are buying the diamond miner in the hopes that they have their market perspective correct, that we are seeing a recovery and the onset of inflation. Yes, we are seeing the onset of money printing, but this will not set the course for the future, as the further collapse of bad assets in the commercial banking sector, as well as the collapse of the commercial real estate sector along with the collapse of sovereign debt has yet to occur.

Only gold will perform as a store of value, and even then it has its risks going forward. Growth will come in the gold sector as long term bond yields continue to underperform the surge in money printing, diamonds do not have this economic in their favour.

They are buying in at or near the 'top' in a bear market rally.

Derivative markets .... an understandable explanation:

Heidi is the proprietor of a bar in Detroit. In order to increase sales, she
decides to allow her loyal customers - most of whom are unemployed
alcoholics - to drink now but pay later. She keeps track of the drinks
consumed on a ledger (thereby granting the customers loans).

Word gets around about Heidi's drink now pay later marketing strategy
and as a result, increasing numbers of customers flood into Heidi's bar
and soon she has the largest sale volume for any bar in Detroit.

By providing her customers' freedom from immediate payment demands,
Heidi gets no resistence when she substantially increases her prices for
wine and beer, the most consumed beverages. Her sales volume increases
massively.

A young and dynamic vice-president at the local bank recognizes these
customer debts as valuable future assets and increases Heidi's borrowing
limit.

He sees no reason for undue concern since he has the debts of the
alcoholics as collateral. At the bank's corporate headquarters, expert
traders transform these customer loans into DRINKBONDS, ALKIBONDS
and PUKEBONDS.

These securities are then traded on security markets
worldwide. Niave investors don't really understand the securities being sold
to them as AAA secured bonds are really the debts of unemployed alcoholics.

Nevertheless, their prices continuously climb, and the securities become
the top-selling items for some of the nation's leading brokerage houses.

One day, although the bond prices are still climbing, a risk manager at the
bank (subsequently fired due his negativity), decides that the time has come
to demand payment on the debts incurred by the drinkers at Heidi's bar.

Heidi demands payment from her alcoholic patrons, but being unemployed
they they cannot pay back their drinking debts. Therefore, Heidi cannot
fulfill her loan obligations and claims bankruptcy.

DRINKBOND and ALKIBOND drop in price by 90 %. PUKEBOND performs
better, stabilizing in price after dropping by 80 %. The decreased bond
asset value destroys the banks liquidity and prevents it from issuing new loans.

The suppliers of Heidi's bar, having granted her generous payment extentions
and having invested in the securities are faced with writing off her debt
and losing over 80% on her bonds. Her wine supplier claims bankruptcy, her beer
supplier is taken over by a competitor, who immediately closes the local
plant and lays off 50 workers.

The bank and brokerage houses are saved by the Government following
dramatic round-the-clock negotiations by leaders from both political
parties.

The funds required for this bailout are obtained by a tax levied on employed
middle-class non-drinkers.

Bill said - "With the significantly lower yields (from Tuesday, prior to the FOMC announcement), the impact ought to be lower mortgage rates, which will allow Americans to re-finance with some comfort, taking pressure off the foreclosure problem, which helps the banks, making their assets less toxic"

Everything seems to circle back to those bad mortgages. Falling home prices causes toxic mortgages. And falling home prices are due to the deflation of the home price bubble, which is about halfway through its cycle, according to the case-schiller data.

I don't buy the refi argument. Underwater people can't refi, and they're the leading source of defaults. And foreclosure sales are the leading cause of home price drops.

However, I think lower interest rates will help slow falling home prices. Reducing a 6% mortgage to a 4% mortgage is a 25% reduction in payment. But add tax to that, and all the rest of home ownership burden, and so let's call it 15%. So if rates drop to 4%, that might add 15% to home prices.

So lower rates will help a bit, but let's say we still have another 15% drop remaining. At 2% per month, that's another 8 months left.

Perhaps when taken in totality - printing leading to inflation, 4% home mortgages, government sponsored bubble-era-style teaser rate refis for "homeowners in trouble", a capital "saline drip" that will keep the big banks alive, some moratoriums on foreclosures, and while we're at it ignore mark-to-market for the next 18 months, we might see some results. My question is, how far in the future will that be?

Inflation will take a while to occur, the refi programs too, and that massive shadow inventory will have to be worked through, but all that is the "real stuff." It's the psychological reversal of the market realizing that the rate of descent is slowing, that's the important thing. That first report where case-schiller home prices start to decline more slowly, that's possibly the trigger point.

Just imagine that reversal of thinking. Huge when it happens. We've had a nice rally with all BAD news. Imagine if there was some actual good news?

So what's the trade? Home builders? Financials? Who leads in this one? Has this month just been the trial run? Buy your double-long homebuilders and financials and hold on for dear life?

Or perhaps ignore the ever-shrinking roulette wheel ETFs and go for the more basic instruments:

XLF 2010 LEAP Calls @ 10 are trading at $1.30 bid. Implied Vol of 74. Imagine XLF rebounding to half of it's pre-crash value of 34. At 17, those leaps will pay $7 each. That would be pretty sweet!

Getting tax records together tomorrow. Has anyone here had success gaining Mark to Market status with the IRS? Technically I believe I should qualify, but the code is pretty vague. Thanks in advance.

Thanks, Barry! It was encouraging (for my long positions) to hear that Don Coxe is quite pessimistic now and is unwilling to commit capital to the market until the government "gets its act together." John Hussman, who was reasonably optimistic starting October, turned noticeably pessimistic on the weekend before the rally began a couple of weeks ago. So it is true that the rally starts when all optimists turn bearish and the rally continues as long as most of the people stay very skeptical. I don't think enough bad news have happened over the past two weeks, and since even the optimistic investors have sold all positions they could sell two weeks ago, I don't see a large supply of sellers in the market now. I could be totally misreading the situation, but this is what my intuition is telling me.

"RISK IS BAD" Oh contraire!

National Public Radio Podcast from the Planet Money Team 03/20/09: http://www.npr.org/templates/player/mediaPlayer.ht...

The anaylsis is laid out in this podcast regarding the $8-10 Trillion of so called 'Toxic Assets'. According to Planet Money, the actual payback of Mortgage Backed Securities over time vs. the value today (i.e., if you sold your holdings)is worth a closer look: If you sold them today, sure you'd get back 50 cents on the dollar of your investment. You see, the world has gotten the view lately that risk is bad. Lots of folks are buying these things and would continue to buy them today. According to Planet Money: because they are handled by the big money managers who consider them worth every dime of their original investment -- they are not selling them! Sure, the banks that have the ones that are not perfoming seem to be taking their losses and the rest of their businesses are doing well. Holding on seems to be the advice of the day.

This newscast points out that not everyone is suffering and many banks and investors continue to make money in this market. But you knew that....

Guess it depends on your favored substance and personal risk aversion!

'Things' are not a store of value. Gold is a form of money that is. Attempts at re-inflation have no guarantee whatsoever of increasing the value of goods, without increasing the costs. Costs of production are declining, which is deflationary. That means, any rise in the price of oil, or copper is temporary as we must complete an A-B-C-D-E correction until the bottom is reached. imo, we are seeing bear market rally in 'things.'

Diamonds are unlikely to be chosen as a benchmark for currency as a way of getting out of the depression. Therefore, diamond will not be seen as a way of storing value. Gold has outperformed diamonds. The value perceived in Diavik for Kinross is the debt taken on by Diavik during times of boom they can no longer repay, therefore, they must accept the offer for an equity stake.

"If we as a Nation do want to close the door to foreigners then lets take down the Statue Of Liberty!" I cannot but appreciate the high stand taken by Kaimu on this.

Do we want to be xenophoic banana republic or do we want to be a country that thinks & acts higher than the rest, practicing the highest standards in moral code. Personally, I do not agree with illegal migration but whats the beef with legal workers here, if u dont agree with the law, work to change it. For information, biggest offshorers are American companies like IBM, they offer a catalogue to customers with service level & price level & customers make their choice(nobody is forcing them). On the manufacturing side, scales of economy tilt towards China & there is no escape from that unless we are willing to pay significantly higher prices for goods & services produced here..... There is a town in Belgium, Bruge, it was known for its handworked lace(locally made), when I visited it last time, I couldnt find a single lace shop that sells local stuff, everything is made in China. Its really the reality of global trade. And for ages, humans have traded between countries, nothing new here.

And most of these manufacturing facilities/service companies are managed by Americans/Europeans and the host countries (3rd world countries) treat the expats very well, they are in fact treated better than the locals. Nokia sells about 60% of their products in Chindia, so do we say we want their revenues but will only manufacture/do all value add in Finland. Its either global trade and lets all walk together to make a better world or protectionism & lets all go down together.....

Usually I see merit in Mauldin's argument, but not so with his latest post. His math might add up, but i just feel like the whole idea of fixing the economic crisis by putting a floor under house prices is like putting the cart before the horse (I think that's the right metaphor :)

"Let’s assume one million new immigrants would buy homes. At an average price of almost $200,000, that would be $200 billion injected into the economy."

He argues that opening immigration would absorb a lot of the excess housing inventory, but I wonder, where would these people come from? And what would pull them to America? It's not like companies are scrambling looking for employees any more, are they?

It would have to be middle income people abroad that immigrate as Mauldin suggests cause nobody else could afford 200K for a house, but wouldn't they probably be less likely to look to emigrate in the current global environment, especially to America when it's got plenty of it's own problems. Who wants to move to a country shedding 600,000 jobs per month looking for opportunity?

And even if they did move to the US, that's 1,000,000 new, unemployed people, or people who took a job that another American didn't get. So basically you've got a million more unemployed than you did before. What does that do to wage pressures and ultimately household financial condition? (I am not arguing for or against immigration policy, or that immigrants steal americans job, not going there :)

And back to the basic argument: a couple extra hundred billion $'s in stimulus is supposed to solve anything? Wouldn't Bush's first bailout check have made a dent then? It's a drop in the bucket, and the bucket has a boot size hole in the bottom where $40t of credit is leaking out.

Check your SPAM box.

Everything is relative, including the "store of value" in gold. In fact, "store of value" itself is an abstract concept. Gold has a store of value partly because it's exchangeable in a recognized market and mostly because it's rare. If gold production should suddenly increase by 100 or 1000 times above present levels, we could, indeed pave our streets with the stuff or skip gold sovereigns into the sea for fun. This is precisely why certain seashells became a store of value in Maori and other cultures - they were extremely rare and anyone who found one (like a modern-day gold prospector finding a mineable lode) became instantly wealthy - like Sir Harry Oakes.

It's not likely that gold production will increase dramatically, of course. And unless it does, it will continue to have a "store of value," - for awhile - meaning it can be stored without degrading, and can be exchanged for other things(paper currency, for example) at a variable rate that is set by the market and is more or less mutually acceptable to buyers and sellers.

But to say that gold will be worth $1,000 or $5,000 in the future is not to say anything about the "store of value" in the metal itself, but only about the diminishing store of value of the paper currency it is measured against. If gold goes to $5,000 or $10,000 an ounce, it will imply the almost total collapse of paper currencies, hyperinflation and large-scale social upheaval. If that happens, people will be killing for water, food and shelter, not gold.