Tuesday, January 12, 2010
Now Onto Global Cooling?
http://www.dailymail.co.uk/sciencetech/article-1242011/DAVID-ROSE-The-mini-ice-age-starts-here.html
Some weather “experts” are now predicting Global Cooling over the next 20 – 30 years… I am certain that some of this new attitude stems from the leaked emails about how the last 160 years of temperature “data” was ginned up to make it look like humans causes the icebergs to melt. Blah Blah Blah…
I see it simply as this. Here is a list of the most profitable companies in the world. The top six are oil companies. If you are in government and you want to extort an industry, which one do you choose? I choose to target the one with the most money – oil companies.
In my opinion, the whole “Global Warming” thing is simply to try and make it appear that humans are going to destroy the world because of all the excess Carbon we put in the atmosphere, in order to provide cover for the looting of the oil industry by politicians.
If human-induced carbon is the cause for the world to warm, then why did temperatures fall the last decade, while another 1 billion humans were born and why then are temperatures now expected to fall for the next 20 – 30 years?
I think people know that Kyoto is designed to move wealth from rich countries to poor countries and that “Cap and Trade” is designed to extort money from oil companies and make banks like Goldman rich with yet another derivative market to create, over-leverage and screw up. The public sees it as another tax that will cost us jobs, wealth and freedom, and we don’t want it. Now the smart scientists are running for new grant money to study the cooling of the earth.
Some weather “experts” are now predicting Global Cooling over the next 20 – 30 years… I am certain that some of this new attitude stems from the leaked emails about how the last 160 years of temperature “data” was ginned up to make it look like humans causes the icebergs to melt. Blah Blah Blah…
I see it simply as this. Here is a list of the most profitable companies in the world. The top six are oil companies. If you are in government and you want to extort an industry, which one do you choose? I choose to target the one with the most money – oil companies.
In my opinion, the whole “Global Warming” thing is simply to try and make it appear that humans are going to destroy the world because of all the excess Carbon we put in the atmosphere, in order to provide cover for the looting of the oil industry by politicians.
If human-induced carbon is the cause for the world to warm, then why did temperatures fall the last decade, while another 1 billion humans were born and why then are temperatures now expected to fall for the next 20 – 30 years?
I think people know that Kyoto is designed to move wealth from rich countries to poor countries and that “Cap and Trade” is designed to extort money from oil companies and make banks like Goldman rich with yet another derivative market to create, over-leverage and screw up. The public sees it as another tax that will cost us jobs, wealth and freedom, and we don’t want it. Now the smart scientists are running for new grant money to study the cooling of the earth.
Sunday, January 10, 2010
Time and Price Square Out?
This is the chart that should define trading in the first half of 2010.
The markets have been heavily influenced by technicals. That seems to be due to the fact that computers account for about 80% of all trades. So plug in your algorithm and let the cash register ring…
Technicians would refer to this as a “square out” where you simultaneously reach key levels in time and price.
These situations are often setups for accelerations of trend or sharp, nasty reversals. Time cycles are expected to trigger +/- 2 periods from the key date, so sometime between now and the end of January will be a very important period of time.
If we are going to see a nasty correction, then the next week or two from the current price range or a few percentage points higher should offer a very good technical setup.
I think the two most likely scenarios are the following –
1. A spike up over the next two weeks into the 1,228 – 1,250 range
2. Price stalls out in the 1,140 – 1,158 range
You should be on high alert for a meaningful reversal if price becomes extended above here! For those interested in committing new Long Term capital, you should probably be looking for a better entry in the future - or have a very tight stop and expect a better than 50% chance of being stopped out of your position in the next few weeks.
Let’s see if the reversal triggers.
In The Mean Time
I see lots of breakouts from trading ranges and as long as prices are working their way higher, the rest is just noise.
Railroads have broken out again. Also, watch how Cisco and Intel trade over the next few days. They are still big components of the Market Cap-Weighted Indexes and can have meaningful impacts on price if they continue their breakouts –
The markets have been heavily influenced by technicals. That seems to be due to the fact that computers account for about 80% of all trades. So plug in your algorithm and let the cash register ring…
Technicians would refer to this as a “square out” where you simultaneously reach key levels in time and price.
These situations are often setups for accelerations of trend or sharp, nasty reversals. Time cycles are expected to trigger +/- 2 periods from the key date, so sometime between now and the end of January will be a very important period of time.
If we are going to see a nasty correction, then the next week or two from the current price range or a few percentage points higher should offer a very good technical setup.
I think the two most likely scenarios are the following –
1. A spike up over the next two weeks into the 1,228 – 1,250 range
2. Price stalls out in the 1,140 – 1,158 range
You should be on high alert for a meaningful reversal if price becomes extended above here! For those interested in committing new Long Term capital, you should probably be looking for a better entry in the future - or have a very tight stop and expect a better than 50% chance of being stopped out of your position in the next few weeks.
Let’s see if the reversal triggers.
In The Mean Time
I see lots of breakouts from trading ranges and as long as prices are working their way higher, the rest is just noise.
Railroads have broken out again. Also, watch how Cisco and Intel trade over the next few days. They are still big components of the Market Cap-Weighted Indexes and can have meaningful impacts on price if they continue their breakouts –
Government Has Taken Over
I was reading this weekend and I came across a chart that I couldn’t ignore. Sometimes I have a bunch of thoughts going through my head and it takes a chart to get my thoughts lined up in a manner that explains what I am seeing in the economy and the markets.
Here is the chart. Notice that the largest employer in California is Government. I looked through the data on a bunch of states and I could not find a state whose largest employer was the not Government.
http://www2.fdic.gov/recon/
In my line of work we have always believed that Management added nothing to profitability and were simply a structural cost to doing business. So we referred to them as “overhead”.
Government is “overhead”. It is a parasite to profits. It is a cost. In some cases it is obviously necessary, but to make it 17% of the economy is absurd.
Which gets me to my point – the government has taken over.
Manufacturing
The number of United States Manufacturing Jobs has fallen -26.3% since 1989. The US has lost Manufacturing Jobs every single year since 1999! The falling Manufacturing Jobs number is considered to be a result of efficiency gains and a falling Dollar.
Checkout this chart - Manufacturing and Construction jobs have flat-lined for 40 years, while the number of Government Jobs has doubled. I guess “efficiency gains” have not quite made their way into the Government Sector the last 40 years…
Over the past 10 years, the employment base has shrunk, but the size of the government has grown – by 7 million jobs!
We’ve lost the productive guts of our country and become a gigantic tenured, unionized blob of overhead. And that overhead is expensive. The average Government Job paid $73,203 in 2008, for a total cost (yes it is a COST to taxpayers) $184.4 billion.
If California is broke and needs to save $28 billion in 2010, then simply fire 382,000 average Government workers and presto – a Balanced Budget with zero entitlement cuts and no new taxes. That would make California’s Civilian Unemployment Rate 12.3% and its Government Worker Unemployment Rate 15%. Close enough for Government Work, don’t you think…
Now Arnold is begging for another $7 billion handout from Washington, so as not to have to stop spending money we don’t have.
“Stimulus 2009”
$53.6 billion went to saving Government Jobs –
“State Fiscal Stabilization Fund to avoid cutbacks and layoffs (82% must be used for education while 18% may be used for public safety and other government services. The latter part may be used for repairs and modernization of K-12 schools and college and university buildings).”
Our taxes spent to save union jobs.
Credit Contraction
With high unemployment and insolvent banks, the government is concerned that contracting Consumer Credit will cause Deflation. Therefore, the Government is expanding its borrowing as Consumer borrowing decreases for the first time ever!
What concerns me is that at some point Interest Rates will go vertical and the US Taxpayer will have to pony up a lot more money in Interest payments on all this newly-borrowed money. The Fed has even been so kind as to warn banks that higher interest rates are indeed coming.
Yet at the same time, the US Government has bought about $1 trillion in new mortgages maturing between 2037 and 2039. When rates go up, these bonds will lose a ton of money. Maybe that is why Geithner has uncapped the losses at Freddie and Fannie. BTW, most of these bond were either bought from place like the Central Banks of Asia, financial institutions like PIMCO and Banks or newly created as people refinanced at artificially low interest rates over the past year.
What’s Next?
At some point they will have to crash the value of the US Dollar. Venezuela just did it.
http://www.reuters.com/article/idUSN096521320100109
Unless we are willing as a country to restructure all of our promised entitlements, then Hyper Inflation is inevitable.
The Social Contract will get rewritten and there won’t be lobbyists in the room when it is done.
Here is the chart. Notice that the largest employer in California is Government. I looked through the data on a bunch of states and I could not find a state whose largest employer was the not Government.
http://www2.fdic.gov/recon/
In my line of work we have always believed that Management added nothing to profitability and were simply a structural cost to doing business. So we referred to them as “overhead”.
Government is “overhead”. It is a parasite to profits. It is a cost. In some cases it is obviously necessary, but to make it 17% of the economy is absurd.
Which gets me to my point – the government has taken over.
Manufacturing
The number of United States Manufacturing Jobs has fallen -26.3% since 1989. The US has lost Manufacturing Jobs every single year since 1999! The falling Manufacturing Jobs number is considered to be a result of efficiency gains and a falling Dollar.
Checkout this chart - Manufacturing and Construction jobs have flat-lined for 40 years, while the number of Government Jobs has doubled. I guess “efficiency gains” have not quite made their way into the Government Sector the last 40 years…
Over the past 10 years, the employment base has shrunk, but the size of the government has grown – by 7 million jobs!
We’ve lost the productive guts of our country and become a gigantic tenured, unionized blob of overhead. And that overhead is expensive. The average Government Job paid $73,203 in 2008, for a total cost (yes it is a COST to taxpayers) $184.4 billion.
If California is broke and needs to save $28 billion in 2010, then simply fire 382,000 average Government workers and presto – a Balanced Budget with zero entitlement cuts and no new taxes. That would make California’s Civilian Unemployment Rate 12.3% and its Government Worker Unemployment Rate 15%. Close enough for Government Work, don’t you think…
Now Arnold is begging for another $7 billion handout from Washington, so as not to have to stop spending money we don’t have.
“Stimulus 2009”
$53.6 billion went to saving Government Jobs –
“State Fiscal Stabilization Fund to avoid cutbacks and layoffs (82% must be used for education while 18% may be used for public safety and other government services. The latter part may be used for repairs and modernization of K-12 schools and college and university buildings).”
Our taxes spent to save union jobs.
Credit Contraction
With high unemployment and insolvent banks, the government is concerned that contracting Consumer Credit will cause Deflation. Therefore, the Government is expanding its borrowing as Consumer borrowing decreases for the first time ever!
What concerns me is that at some point Interest Rates will go vertical and the US Taxpayer will have to pony up a lot more money in Interest payments on all this newly-borrowed money. The Fed has even been so kind as to warn banks that higher interest rates are indeed coming.
Yet at the same time, the US Government has bought about $1 trillion in new mortgages maturing between 2037 and 2039. When rates go up, these bonds will lose a ton of money. Maybe that is why Geithner has uncapped the losses at Freddie and Fannie. BTW, most of these bond were either bought from place like the Central Banks of Asia, financial institutions like PIMCO and Banks or newly created as people refinanced at artificially low interest rates over the past year.
What’s Next?
At some point they will have to crash the value of the US Dollar. Venezuela just did it.
http://www.reuters.com/article/idUSN096521320100109
Unless we are willing as a country to restructure all of our promised entitlements, then Hyper Inflation is inevitable.
The Social Contract will get rewritten and there won’t be lobbyists in the room when it is done.
Walk Away...
In the New York Times this week, there is an article entitled “Walk Away From Your Mortgage!”
“Time was, Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. So some of them are making a calculated decision to hang onto their money and let their homes go. Is this irresponsible?
Businesses — in particular Wall Street banks — make such calculations routinely. Morgan Stanley recently decided to stop making payments on five San Francisco office buildings. A Morgan Stanley fund purchased the buildings at the height of the boom, and their value has plunged. Nobody has said Morgan Stanley is immoral — perhaps because no one assumed it was moral to begin with. But the average American, as if sprung from some Franklinesque mythology, is supposed to honor his debts, or so says the mortgage industry as well as government officials.”
“And given that nearly a quarter of mortgages are underwater, and that 10 percent of mortgages are delinquent, White, of the University of Arizona, is surprised that more people haven’t walked. He thinks the desire to avoid shame is a factor, as are overblown fears of harm to credit ratings. Probably, homeowners also labor under a delusion that their homes will quickly return to value. White has argued that the government should stop perpetuating default “scare stories” and, indeed, should encourage borrowers to default when it’s in their economic interest. This would correct a prevailing imbalance: homeowners operate under a “powerful moral constraint” while lenders are busily trying to maximize profits. More important, it might get the system unstuck. If lenders feared an avalanche of strategic defaults, they would have an incentive to renegotiate loan terms. In theory, this could produce a wave of loan modifications — the very goal the Treasury has been pursuing to end the crisis.”
You could see this coming. I wrote the following on December 18, 2009 -
http://nbcharts.blogspot.com/2009/12/jingle-mail-jingle-mail.html
“How freakin' stupid is Morgan Stanley? If they are mailing in their keys, then what is to stop all of those Millions of homeowners currently with Negative Equity?”
“2010 will be a referendum on Washington's conduct towards Wall Street. So expect the anti-Wall Street rhetoric to pick up in Washington after the Health Care socialist-wealth-transfer-scam is passed or shelved.”
Geithner uncapped the losses at Freddie and Fannie, so that they can be turned into giant land banks that will own millions of vacant houses. This will be done to keep this excess supply off the market, to make it easier to artificially prop up housing prices via state-subsidized low interest rates.
“Time was, Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. So some of them are making a calculated decision to hang onto their money and let their homes go. Is this irresponsible?
Businesses — in particular Wall Street banks — make such calculations routinely. Morgan Stanley recently decided to stop making payments on five San Francisco office buildings. A Morgan Stanley fund purchased the buildings at the height of the boom, and their value has plunged. Nobody has said Morgan Stanley is immoral — perhaps because no one assumed it was moral to begin with. But the average American, as if sprung from some Franklinesque mythology, is supposed to honor his debts, or so says the mortgage industry as well as government officials.”
“And given that nearly a quarter of mortgages are underwater, and that 10 percent of mortgages are delinquent, White, of the University of Arizona, is surprised that more people haven’t walked. He thinks the desire to avoid shame is a factor, as are overblown fears of harm to credit ratings. Probably, homeowners also labor under a delusion that their homes will quickly return to value. White has argued that the government should stop perpetuating default “scare stories” and, indeed, should encourage borrowers to default when it’s in their economic interest. This would correct a prevailing imbalance: homeowners operate under a “powerful moral constraint” while lenders are busily trying to maximize profits. More important, it might get the system unstuck. If lenders feared an avalanche of strategic defaults, they would have an incentive to renegotiate loan terms. In theory, this could produce a wave of loan modifications — the very goal the Treasury has been pursuing to end the crisis.”
You could see this coming. I wrote the following on December 18, 2009 -
http://nbcharts.blogspot.com/2009/12/jingle-mail-jingle-mail.html
“How freakin' stupid is Morgan Stanley? If they are mailing in their keys, then what is to stop all of those Millions of homeowners currently with Negative Equity?”
“2010 will be a referendum on Washington's conduct towards Wall Street. So expect the anti-Wall Street rhetoric to pick up in Washington after the Health Care socialist-wealth-transfer-scam is passed or shelved.”
Geithner uncapped the losses at Freddie and Fannie, so that they can be turned into giant land banks that will own millions of vacant houses. This will be done to keep this excess supply off the market, to make it easier to artificially prop up housing prices via state-subsidized low interest rates.
Monday, January 4, 2010
Here We Go Again
Here is a chart released by Zero Hedge in December –
Red Line – Performance while the US Stock Markets are open
Blue Line – Performance while the US Stock Markets are closed
What the chart illustrates is that the majority of the returns since March 2009 have been achieved while the markets are closed.
Why?
Because that is when liquidity is lightest, so it takes less money to drive prices higher – if that is your goal (er, policy).
Here is a chart of the S&P 500 ETF (SPY). Look at how Volume has plunged, while prices have gone vertical. That is not the stuff of strength. That is the stuff of when the party stops, prices go vertically downward…
The Game
1. Crash the Dollar
2. Use “Analyst” Upgrades to pop key stocks or sectors above obvious stop loss levels for large Short positions, causing a “Short Squeeze”
3. Buy SPX Futures Contracts while the US Market is asleep
We got the trifecta today!
The Dollar got punked.
Futures were bought hard pre-Market.
Analyst upgrades on Financials like Morgan Stanley, with Financials sitting right below the 50-day, upgrades to Intel as it sits at the top of a trading range, when you know that a move above $20.60 triggers a mountain of Stop Buy orders, ditto for Cisco, Gaming Stocks like LVS and WYNN get upgraded and gap up or ramp up hard through their 50-days, triggering short squeezes…
If you are trying to figure out how it is that things keep going up while Companies are issuing stock and inflows into Equity Mutual Funds are flat to down the last 6 months, then you are not alone. Clearly, the buying is being done at night by the computers. Guys like Greenspan have admitted the need to use rising stock prices as a policy tool.
Put two and two together and enjoy it while it last. Today’s breakouts were probably meaningful (I bought several of them) and a good sign until the SPX 1,230 – 1,250 zone is reached. If we get there, then we will have to reevaluate holdings and strategies.
Red Line – Performance while the US Stock Markets are open
Blue Line – Performance while the US Stock Markets are closed
What the chart illustrates is that the majority of the returns since March 2009 have been achieved while the markets are closed.
Why?
Because that is when liquidity is lightest, so it takes less money to drive prices higher – if that is your goal (er, policy).
Here is a chart of the S&P 500 ETF (SPY). Look at how Volume has plunged, while prices have gone vertical. That is not the stuff of strength. That is the stuff of when the party stops, prices go vertically downward…
The Game
1. Crash the Dollar
2. Use “Analyst” Upgrades to pop key stocks or sectors above obvious stop loss levels for large Short positions, causing a “Short Squeeze”
3. Buy SPX Futures Contracts while the US Market is asleep
We got the trifecta today!
The Dollar got punked.
Futures were bought hard pre-Market.
Analyst upgrades on Financials like Morgan Stanley, with Financials sitting right below the 50-day, upgrades to Intel as it sits at the top of a trading range, when you know that a move above $20.60 triggers a mountain of Stop Buy orders, ditto for Cisco, Gaming Stocks like LVS and WYNN get upgraded and gap up or ramp up hard through their 50-days, triggering short squeezes…
If you are trying to figure out how it is that things keep going up while Companies are issuing stock and inflows into Equity Mutual Funds are flat to down the last 6 months, then you are not alone. Clearly, the buying is being done at night by the computers. Guys like Greenspan have admitted the need to use rising stock prices as a policy tool.
Put two and two together and enjoy it while it last. Today’s breakouts were probably meaningful (I bought several of them) and a good sign until the SPX 1,230 – 1,250 zone is reached. If we get there, then we will have to reevaluate holdings and strategies.
Watch the Foregin Market Breakouts
International markets have taken a powder since mid-October. Today they seemed to have awoken again. I see lots of breakouts from trading ranges today – Russia (RSX), South Korea (EWY), Canada (EWC), Emerging Markets (EEM), Commodities (DBC). I have been waiting a long time for these trading ranges to break.
These are all potentially starting to work as the Euro (FXE) is testing its 200-day (Purple Line), after a 38% pullback in December.
The New York Stock Exchange ($NYA) also broke out today. If these breakouts hold, then we probably get another leg up and test the 61.8% retracement level of the last Bear Market at 1,230.
These are all potentially starting to work as the Euro (FXE) is testing its 200-day (Purple Line), after a 38% pullback in December.
The New York Stock Exchange ($NYA) also broke out today. If these breakouts hold, then we probably get another leg up and test the 61.8% retracement level of the last Bear Market at 1,230.
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