I found this on Credit Writedowns today: "Roubini: Cheap Money is Creating the Next Asset Bubble".
If and when the good Doctor Roubini is everywhere as he was the winter of 2009, the next bottom will be in.
Yes, and it looks as though the finalists are shaping up to be U. S. Treasuries vs. gold. Semifinalists include silver on the gold side of the draw, which will ultimately lose to gold though it may surge as it did in the Hunt brothers time, and stocks on the fiat money side of the draw with Treasuries.
As intimated here numberless times, gold is relatively unloved. Louise Yamada has been bullish on gold for years. Her short-term target is $1350/ounce. I believe that many months ago, Barry Ritholtz tabbed that same price as his (then intermediate-term) target. $1350 would be a 10% or so move up from the December high.
We are now seeing Irish protesters getting violent due to the bank bailouts.
It is past time for providers of capital to take their hits. This includes debt to equity swaps of bond holders in bank holding companies. Pensioners and labor cannot get squeezed forever. Too many promises have been made to too many interests. The owners of bank bonds and retirees are on opposite sides of the same boat. Neither interest is bad. But the real economy is struggling to keep all promises. The chaotic, inflationary result is what we see, a gold price that appears to be like an inner tube under water. It wants to reach its proper level.
We may find out in the fullness of time that the proper price for gold all along is $35/ounce, or some larger number, and all this upmove is manipulated, just as the NASDAQ was worth much closer to 500 than the 5000 in hit early in 2000. But for now, unlike the frenzied NASDAQ peak, the country is not rocking to the beat of a rising gold price, and the ratios of gold to other financial instruments such as stocks and Treasury rates is historically average.
Thus if gold is entering a bubble, it has plenty of potential on the upside. Just please don't think that any financial asset is forever unless one is thinking in terms of multiple lifetimes.
It is believed here that it is not too late to buy or add to positions in gold.
Please note that Econblogreview is not an investment adviser and is expressing this blogger's individual views, and that yours truly is "long" various gold and silver instruments.
Copyright (C) Long Lake LLC 2010
Tuesday, May 11, 2010
China's Growling Bear and the Gold Standard
The Chinese stock market has led the U. S. market up and down the last few years. It is now in a bear market, with the main Shanghai index at 2647, down over 20% from last year's peak. Click HERE for a 5-year chart.
The index bottomed half a year before the U. S. index bottomed and topped out late last summer, and since then has put in a series of lower highs and lower lows.
A couple of weeks ago, a news item crossed that the largest property company in China reported sharply lower earnings. It just may be that China's real estate market has in fact entered its downturn. In that scenario, those who are waiting for the bubble to burst may be like the geniuses at our Fed, Congress and administration in 2007-8 who saw no end to housing-led prosperity.
In fact the new trend is more more expatriation from the U. S.
In this country, the mood amongst much of the cognoscenti and in the public is sour. Last year I reported that pro-Obama sentiment amongst anti-Bush, left-of-center financial bloggers I followed had sharply waned, when they saw that there was a Bush-Obama continuity re favoritism toward Big Finance. Now we read that Goldman Sachs went 63 for 63 in profitable trading days in Q1. Great quarter, guys!
New faces in the White House, similar Big Finance-friendly policies.
Money drives and is driven by policy. The trend toward truly unsound money accelerated in this country with the guns and butter policies of LBJ, who was merely implementing JFK's policies, the two most disastrous of which may have been: first, ignoring de Gaulle's warning not to get entangled militarily in Viet Nam, and second, letting government employees engage in collective bargaining.
In any case, the French called our bluff, Nixon took the U. S. fully off the gold standard, and now we see that the fiat emperor has no clothes. One current example is the comment by some commentator in Britain about the bank bailout (no, it's not a bailout of Greece) plan that the IMF "money" is more "solid" than the European commitment.
It's all funny "money". It's not "solid" at all. In theory it is possible for a wise, prudent country to run a system of fiat money. After all, the gold standard had its problems. But it's looking better than the alternatives day by day.
Copyright (C) Long Lake LLC 2010
The index bottomed half a year before the U. S. index bottomed and topped out late last summer, and since then has put in a series of lower highs and lower lows.
A couple of weeks ago, a news item crossed that the largest property company in China reported sharply lower earnings. It just may be that China's real estate market has in fact entered its downturn. In that scenario, those who are waiting for the bubble to burst may be like the geniuses at our Fed, Congress and administration in 2007-8 who saw no end to housing-led prosperity.
In fact the new trend is more more expatriation from the U. S.
In this country, the mood amongst much of the cognoscenti and in the public is sour. Last year I reported that pro-Obama sentiment amongst anti-Bush, left-of-center financial bloggers I followed had sharply waned, when they saw that there was a Bush-Obama continuity re favoritism toward Big Finance. Now we read that Goldman Sachs went 63 for 63 in profitable trading days in Q1. Great quarter, guys!
New faces in the White House, similar Big Finance-friendly policies.
Money drives and is driven by policy. The trend toward truly unsound money accelerated in this country with the guns and butter policies of LBJ, who was merely implementing JFK's policies, the two most disastrous of which may have been: first, ignoring de Gaulle's warning not to get entangled militarily in Viet Nam, and second, letting government employees engage in collective bargaining.
In any case, the French called our bluff, Nixon took the U. S. fully off the gold standard, and now we see that the fiat emperor has no clothes. One current example is the comment by some commentator in Britain about the bank bailout (no, it's not a bailout of Greece) plan that the IMF "money" is more "solid" than the European commitment.
It's all funny "money". It's not "solid" at all. In theory it is possible for a wise, prudent country to run a system of fiat money. After all, the gold standard had its problems. But it's looking better than the alternatives day by day.
Copyright (C) Long Lake LLC 2010
Sunday, May 9, 2010
Gold and the European Bank Bailout
Of course Greece per se is not getting "bailed out". It is the lenders to Greece that are going to be made whole, for now. The mechanism is more debt creation and more leverage. It is a hair of the dog strategy that is fundamentally bullish for gold.
Gold's 50-day moving average is now decisively above its Jan. 21 high, and the shape of the curve is now concave upward; then it was convex and pointing down. The 150 day and longer moving averages never stopped moving up. Gold remains the only major asset for which the technicals and fundamentals (such as gold has any fundamentals) remain bullishly configured. Trying to pick the top of any asset in such condition is impossible. Think NASDAQ 199-. Why not a top at 3000? We're near 2000 a decade later. So 3000 was lunatic. But we went 2000 points and one year later. Meanwhile gold measured against the Dow or housing prices is barely in a bull market at all.
The more speculative precious metal is silver. We shall see on that one.
However, investing or hedging in gold is not easy. The gold fund "PHYS, the Sprott Physical Gold Trust, burst on the scene just a few months ago and is now at a 20% premium to NAV. Such is the anxiety over whether the GLD fund actually has possession of all its gold.
Relative to PHYS, the now smaller but better established fund Gold-Trust ("GTU") is at a mere 10% premium to NAV.
Neither of the above funds can be easily (or at all) sold short and have no linked options. So they are to buy and hold, or trade.
Back to silver. This site has mentioned Silver Bullion Trust several times. Very recently it sold at a discount to its silver. The price has now markedly outperformed the metal and is at about a 7% premium to NAV. There is probably a few percent more outperformance in this fund based on current bull market premia for GTU, the associated Central Fund of Canada ("CEF"), and PHYS, but investors and speculators are now buying silver with SBT.U (Toronto, and associated bulletin board SVRZF in the U. S.), not undervaluation any more.
As far as traditional stocks go, they don't really count anymore.
Copyright (C) Long Lake LLC 2010
Gold's 50-day moving average is now decisively above its Jan. 21 high, and the shape of the curve is now concave upward; then it was convex and pointing down. The 150 day and longer moving averages never stopped moving up. Gold remains the only major asset for which the technicals and fundamentals (such as gold has any fundamentals) remain bullishly configured. Trying to pick the top of any asset in such condition is impossible. Think NASDAQ 199-. Why not a top at 3000? We're near 2000 a decade later. So 3000 was lunatic. But we went 2000 points and one year later. Meanwhile gold measured against the Dow or housing prices is barely in a bull market at all.
The more speculative precious metal is silver. We shall see on that one.
However, investing or hedging in gold is not easy. The gold fund "PHYS, the Sprott Physical Gold Trust, burst on the scene just a few months ago and is now at a 20% premium to NAV. Such is the anxiety over whether the GLD fund actually has possession of all its gold.
Relative to PHYS, the now smaller but better established fund Gold-Trust ("GTU") is at a mere 10% premium to NAV.
Neither of the above funds can be easily (or at all) sold short and have no linked options. So they are to buy and hold, or trade.
Back to silver. This site has mentioned Silver Bullion Trust several times. Very recently it sold at a discount to its silver. The price has now markedly outperformed the metal and is at about a 7% premium to NAV. There is probably a few percent more outperformance in this fund based on current bull market premia for GTU, the associated Central Fund of Canada ("CEF"), and PHYS, but investors and speculators are now buying silver with SBT.U (Toronto, and associated bulletin board SVRZF in the U. S.), not undervaluation any more.
As far as traditional stocks go, they don't really count anymore.
Copyright (C) Long Lake LLC 2010
Something Wrong Here
Having been a bit behind on the news due to limited to no Internet or TV access, I just learned of the following Michael Bloomberg quote (from "The Taliban in My Inbox" by Bill Roggio):
“If I had to guess 25 cents, this would be exactly that, somebody who’s homegrown, maybe a mentally deranged person or someone with a political agenda that doesn’t like the health care bill or something, it could be anything,” Bloomberg told CBS News.
How on earth could the mayor of New York City not think that jihadists were the likely suspects? Instead he implicitly blamed Tea Partiers and Republicans.
This is the financial man who was installed as mayor during the period of great financial crimes and who, for unknown reasons, was allowed to have an unprecedented third mayoral term. And he's so with it that despite all the actual and aborted plots by jihadists on New York since 1993, he muses that a disgruntled anti-Obamacare nut might have been the perpetrator.
On which group is the U. S. raining missiles upon from drone aircraft? Who is NATO fighting in Afghanistan? Well, duh, maybe they are striking back.
This striking back is apparently common in terrorism circles. The story is that the attack in Oklahoma City by Timothy McVeigh's group occurred one year after the Branch Davidian disaster near Waco. Where are the violent deaths from Obamacare that would motivate an anti-Obamacare person or group to attempt mass murder?
As in a mystery story, sometimes small details such as this Bloomberg statement are telling.
After all the lies of commission and omission the past few years regarding the financial scandal and then the Big Lie about the "city" of Marja in Afghanistan (just why was that primitive group of rural villages invaded other than to show that the "surge" was "working"?), is it really possible that the mayor of New York City really thought first about opposition to Obamacare rather than those the U. S. continues to kill overseas and who have been busily trying to attack us, sometimes successfully, for years?
In the words of Robert Zimmerman aka Bob Dylan:
There's something going on and you don't know what it is, do you, Mr. Jones?
Whatever it is, it's bad sh-t.
Copyright (C) Long Lake LLC 2010
“If I had to guess 25 cents, this would be exactly that, somebody who’s homegrown, maybe a mentally deranged person or someone with a political agenda that doesn’t like the health care bill or something, it could be anything,” Bloomberg told CBS News.
How on earth could the mayor of New York City not think that jihadists were the likely suspects? Instead he implicitly blamed Tea Partiers and Republicans.
This is the financial man who was installed as mayor during the period of great financial crimes and who, for unknown reasons, was allowed to have an unprecedented third mayoral term. And he's so with it that despite all the actual and aborted plots by jihadists on New York since 1993, he muses that a disgruntled anti-Obamacare nut might have been the perpetrator.
On which group is the U. S. raining missiles upon from drone aircraft? Who is NATO fighting in Afghanistan? Well, duh, maybe they are striking back.
This striking back is apparently common in terrorism circles. The story is that the attack in Oklahoma City by Timothy McVeigh's group occurred one year after the Branch Davidian disaster near Waco. Where are the violent deaths from Obamacare that would motivate an anti-Obamacare person or group to attempt mass murder?
As in a mystery story, sometimes small details such as this Bloomberg statement are telling.
After all the lies of commission and omission the past few years regarding the financial scandal and then the Big Lie about the "city" of Marja in Afghanistan (just why was that primitive group of rural villages invaded other than to show that the "surge" was "working"?), is it really possible that the mayor of New York City really thought first about opposition to Obamacare rather than those the U. S. continues to kill overseas and who have been busily trying to attack us, sometimes successfully, for years?
In the words of Robert Zimmerman aka Bob Dylan:
There's something going on and you don't know what it is, do you, Mr. Jones?
Whatever it is, it's bad sh-t.
Copyright (C) Long Lake LLC 2010
Saturday, May 8, 2010
Wishing the Times Were NOT So Interesting
The non-permabears I follow who were bearish in 2008 and perhaps 2007 and bullish for most or all of the up-move in stocks, are growling again. This blog has been growling as well for at least 2 weeks and has pointed out for months that stocks are fundamentally overvalued at almost record levels by two different measures, "q" and cyclically-adjusted P/E. Now that systemic contagion occurred with the famous meltdown last week, yours truly simply does not want to be in the U. S. equity markets. ETFs that own gold and foreign currencies are OK still, though some of them hit air pockets in the sell-off as well.
Charts tell the tale. The move up from the 2009 low was lengthy but the angle of the ascent was much weaker than the angle of the descent. If stocks were undervalued, they would laugh at Greek debt problems.
Given our wildly over-financialized economy, falling stocks will have an adverse feedback effect on the real economy. This is what happens when the powers that be try to revive "animal spirits" by printing money.
The problems we have with financial and monetary policy are worse than the excessive debt loads carried at all levels of society. They include lies such as those to Social Security recipients that it's your money, you paid in, you earned it, etc., disguising the pay-as-you-go nature of the scheme. We now have another lie in Obamacare, which passed due to almost certainly fraudulent assumptions such as that the Congressionally-mandated major cuts in Medicare physician reimbursement will finally occur and the pseudo-fraudulent tactic of providing years of tax increases before the costs really kick in.
Most of the country sees through the charade but can do nothing The time for real financial reform was a year ago, when Big Finance was on its knees. Instead Obama focused on remaking the U. S. health care system years from now. What a genius! Let the fire smolder while getting architectural plans for a major extension to the house. Helping Big Finance get on its feet was an essential part of the strategy that guaranteed that real reform would not occur.
The current Greek tragedy is small beer compared to what could come in the New World. Short-term, though, stocks are oversold. But they are too high. Treasuries may be over-bought. But there is no reported net inflation. Thus yields may arguable be too high. Interesting times, to say the least.
Copyright (C) Long Lake LLC 2010
Charts tell the tale. The move up from the 2009 low was lengthy but the angle of the ascent was much weaker than the angle of the descent. If stocks were undervalued, they would laugh at Greek debt problems.
Given our wildly over-financialized economy, falling stocks will have an adverse feedback effect on the real economy. This is what happens when the powers that be try to revive "animal spirits" by printing money.
The problems we have with financial and monetary policy are worse than the excessive debt loads carried at all levels of society. They include lies such as those to Social Security recipients that it's your money, you paid in, you earned it, etc., disguising the pay-as-you-go nature of the scheme. We now have another lie in Obamacare, which passed due to almost certainly fraudulent assumptions such as that the Congressionally-mandated major cuts in Medicare physician reimbursement will finally occur and the pseudo-fraudulent tactic of providing years of tax increases before the costs really kick in.
Most of the country sees through the charade but can do nothing The time for real financial reform was a year ago, when Big Finance was on its knees. Instead Obama focused on remaking the U. S. health care system years from now. What a genius! Let the fire smolder while getting architectural plans for a major extension to the house. Helping Big Finance get on its feet was an essential part of the strategy that guaranteed that real reform would not occur.
The current Greek tragedy is small beer compared to what could come in the New World. Short-term, though, stocks are oversold. But they are too high. Treasuries may be over-bought. But there is no reported net inflation. Thus yields may arguable be too high. Interesting times, to say the least.
Copyright (C) Long Lake LLC 2010
Friday, May 7, 2010
Change is in the Air
Yesterday's stock market chart can be viewed as a fractal (a sort of microcosm for those not familiar with the term) for the stock market chart of the last few years. Big drop, partial recovery, downward trend. What caused the air pocket is of little interest at Econblogreview. Facts are stubborn things. 10% off one day, why not 20% or 30% off the next? And then why not a 70% overnight devaluation of the dollar, a la Argentina? Against what, you ask? Against gold; that is how the reserve currency can devalue.
No charts for a few more days due to limited Internet access due to travel.
According to "q" as interpreted by Andrew Smithers and various measures of the "CAPE" (cyclically-adjusted price/earnings ratio), stock averages should drop about 33% simply to get to fair value. To get to a mere 25% undervaluation implies a 50% off sale.
The chart structures tell you much, more more valid information than whatever you see in the WSJ or NYT. By the time the MSM tells you why stocks have fallen, they have largely finished doing so.
There has been precautionary selling on the Stock Exchange . . .
To be long a lot of conventional stocks here is problematic. All sorts of good arguments exist as to why they may be undervalued. Selling ROST now, 7 points off the high, is crazy given that Greek riots have nothing to do with sales of packaway out of fashion pants at deep discounts. Yet a butterfly's wings may theoretically affect the weather in faraway places . . . even if the mind cannot comprehend it.
Right now eyes are pointed to disarray in Euroland. Yet there is an underlying rot and disarray Stateside. Liquidity has been poorly rewarded the past year plus. The times they may be a'changing.
Copyright (C) Long Lake LLC 2010
No charts for a few more days due to limited Internet access due to travel.
According to "q" as interpreted by Andrew Smithers and various measures of the "CAPE" (cyclically-adjusted price/earnings ratio), stock averages should drop about 33% simply to get to fair value. To get to a mere 25% undervaluation implies a 50% off sale.
The chart structures tell you much, more more valid information than whatever you see in the WSJ or NYT. By the time the MSM tells you why stocks have fallen, they have largely finished doing so.
There has been precautionary selling on the Stock Exchange . . .
To be long a lot of conventional stocks here is problematic. All sorts of good arguments exist as to why they may be undervalued. Selling ROST now, 7 points off the high, is crazy given that Greek riots have nothing to do with sales of packaway out of fashion pants at deep discounts. Yet a butterfly's wings may theoretically affect the weather in faraway places . . . even if the mind cannot comprehend it.
Right now eyes are pointed to disarray in Euroland. Yet there is an underlying rot and disarray Stateside. Liquidity has been poorly rewarded the past year plus. The times they may be a'changing.
Copyright (C) Long Lake LLC 2010
Thursday, May 6, 2010
Turbulent Tuesday Followed by TURBULENT Thursday
Beyond all the attention paid to the meltdown in the stock market today, what I am focusing on was the rally in the silver and platinum complex metal down, joining gold.
That they rallied to close up when stocks closed down big-time is impressive.
SLV's 200 day sma is 16.53; its 2008 high was 16.61 in August. Before that one has to go back probably to 1980 for such prices. Should silver hold up for another week or two, it will then have achieved what gold achieved last year. As for gold, no surprise in the melt-up. What this blog has consistently said is proving out. Gold stocks such as GG, NEM and ABX underperformed the metal. Gold mining stocks move more with the general stock market than with the metal. I exited my ABX with a modest profit. Am getting elemental here. Meanwhile, gold ETFs people really trust, such as the Canadian ones such as GTU and PHYS, traded strongly all day. No "fat fingers" depressing those prices.
Meanwhile, Treasuries followed their long period of hate with immense moves up in price, fueled by short-covering and whatever reasons one wants to provide.
As this is written, Asian stock markets are down 1-3%. In the real world, Gallup's ongoing polling is not showing a lot of employment growth and it shows absolutely no pick-up in consumer spending. This is consistent with my personal limited sample size. I'm not raising my sights above Dollar Tree, Ross Stores or TJX. Because of European exposure, MCD is a bit suspect, though simply as an income play it can be held given declining Treasury yields.
This blog has been warning for some time that the only financial assets one should own were those one was willing to hold during difficult times. That advice continues. There is much more downside potential in the markets, including new lows in the stock averages.
Copyright (C) Long Lake LLC 2010
That they rallied to close up when stocks closed down big-time is impressive.
SLV's 200 day sma is 16.53; its 2008 high was 16.61 in August. Before that one has to go back probably to 1980 for such prices. Should silver hold up for another week or two, it will then have achieved what gold achieved last year. As for gold, no surprise in the melt-up. What this blog has consistently said is proving out. Gold stocks such as GG, NEM and ABX underperformed the metal. Gold mining stocks move more with the general stock market than with the metal. I exited my ABX with a modest profit. Am getting elemental here. Meanwhile, gold ETFs people really trust, such as the Canadian ones such as GTU and PHYS, traded strongly all day. No "fat fingers" depressing those prices.
Meanwhile, Treasuries followed their long period of hate with immense moves up in price, fueled by short-covering and whatever reasons one wants to provide.
As this is written, Asian stock markets are down 1-3%. In the real world, Gallup's ongoing polling is not showing a lot of employment growth and it shows absolutely no pick-up in consumer spending. This is consistent with my personal limited sample size. I'm not raising my sights above Dollar Tree, Ross Stores or TJX. Because of European exposure, MCD is a bit suspect, though simply as an income play it can be held given declining Treasury yields.
This blog has been warning for some time that the only financial assets one should own were those one was willing to hold during difficult times. That advice continues. There is much more downside potential in the markets, including new lows in the stock averages.
Copyright (C) Long Lake LLC 2010
Wednesday, May 5, 2010
Turbulence is Here
The chart pattern on the TLT, a proxy for the long Treasury, looks marvelous. The angle of the ascent is much greater than the gentle slope of the downtrend, which on the descent from the high in price in December 2008 (low in yield) was much sharper.
Given that the Asian markets are collapsing and that risk assets such as silver and platinum are down while gold is up, it is easier and easier to look at the analogy of the dollar breakout against the Euro against general skepticism and project a counter-trend bull market in Treasuries.
Meanwhile, the S&) 500 volatility index (VIX) is nearly at 25, a level which a simple review of the long-term VIX chart suggests is average for turbulent periods. Much above 25 presents the intrepid stock picker a tradeable entry point.
The evils of too much debt and too much financial complexity are making themselves obvious. Gold continues to shine, dully, in this sort of environment.
Postings continue light due to travel and will resume normally in a week or less.
Copyright (C) Long Lake LLC 2010
Given that the Asian markets are collapsing and that risk assets such as silver and platinum are down while gold is up, it is easier and easier to look at the analogy of the dollar breakout against the Euro against general skepticism and project a counter-trend bull market in Treasuries.
Meanwhile, the S&) 500 volatility index (VIX) is nearly at 25, a level which a simple review of the long-term VIX chart suggests is average for turbulent periods. Much above 25 presents the intrepid stock picker a tradeable entry point.
The evils of too much debt and too much financial complexity are making themselves obvious. Gold continues to shine, dully, in this sort of environment.
Postings continue light due to travel and will resume normally in a week or less.
Copyright (C) Long Lake LLC 2010
Tuesday, May 4, 2010
Tuesday Morning Update: Correction Time?
Posting is light due to travel and only intermittent Internet access.
As noted this past weekend and at various times recently, the stock market is fundamentally too rich, sentiment has gotten extreme in various issues, and today's action is a bit of a watershed IMO. Better than expected IMS manufacturing numbers plus a big sell-off. This smells a bit like the opposite of a year ago, when the stock market began ignoring bad news.
Gold and Treasuries remain in established long-term bull markets. Stocks such as MCD and DLTR have initiated new bull markets. This is where I am focusing my investment attention. Real estate: fuggedabout it though you have to live somewhere.
Copyright (C) Long Lake LLC 2010
As noted this past weekend and at various times recently, the stock market is fundamentally too rich, sentiment has gotten extreme in various issues, and today's action is a bit of a watershed IMO. Better than expected IMS manufacturing numbers plus a big sell-off. This smells a bit like the opposite of a year ago, when the stock market began ignoring bad news.
Gold and Treasuries remain in established long-term bull markets. Stocks such as MCD and DLTR have initiated new bull markets. This is where I am focusing my investment attention. Real estate: fuggedabout it though you have to live somewhere.
Copyright (C) Long Lake LLC 2010
Sunday, May 2, 2010
Larry Kudlow Gets It Right: Monetary Policy Over Easy Needs to Come Off the Griddle
King Dollar claptrap aside, I actually just found a Larry Kudlow article which I like! Will wonders never cease:
Obamacon Doves vs. Hard-Money Heartland Hawks. Here's a nice thought:
My own view is that we need a dose of what I call cowboy monetarism. By that, I mean the Fed should surprise Wall Street traders with unexpected policy restraint in order to keep them from taking excessive risks in their financial dealings. Like the cowboys of the Old West, who would act in their own defense at a moment's notice, the Fed should not be afraid to pull the trigger on some small restraining moves now to prevent new financial bubbles and an outbreak of inflation down the road.
Not that cowboys are/were really unpredictable, but the thought is good. The old (younger) Greenspan of the 1990's really shook them up with large interest rate moves down and up following the 1990 recession. Gentle Ben can do it again.
Copyright (C) Long Lake LLC 2010
Obamacon Doves vs. Hard-Money Heartland Hawks. Here's a nice thought:
My own view is that we need a dose of what I call cowboy monetarism. By that, I mean the Fed should surprise Wall Street traders with unexpected policy restraint in order to keep them from taking excessive risks in their financial dealings. Like the cowboys of the Old West, who would act in their own defense at a moment's notice, the Fed should not be afraid to pull the trigger on some small restraining moves now to prevent new financial bubbles and an outbreak of inflation down the road.
Not that cowboys are/were really unpredictable, but the thought is good. The old (younger) Greenspan of the 1990's really shook them up with large interest rate moves down and up following the 1990 recession. Gentle Ben can do it again.
Copyright (C) Long Lake LLC 2010
Bloomberg News Appears to Show Mayor Bloomberg Disagreeing With His Own Police Department About the Bomb in Times Square
Bloomberg.com reports that New Yorkers Avert ‘Deadly Event’; Police Disarm Bomb:
May 2 (Bloomberg) -- New York police disarmed a bomb in a sport utility vehicle parked in Times Square, averting a potential attack near the heart of the city’s theater district on a Saturday evening.
“We are very lucky that we avoided what could have been a very deadly event,” New York Mayor Michael Bloomberg told reporters . . ."
Later in the article, however, we find:
Bomb squad technicians used a robotic dismantler to take apart a crude explosive device that included propane tanks, Deputy Police Commissioner Paul Browne, the department’s chief spokesman, said in a telephone interview earlier.
Parts of the heavily trafficked area were evacuated at about 6:35 p.m. There were no injuries and the bomb appeared to be unable to explode, Browne said. . . .
And then Mayor Bloomberg appears to argue with Mr. Browne:
“It certainly could have exploded and have a decent amount of impact,” Bloomberg said.
You would think that Bloomberg News would at least take care to get its story straight this time. Talk about the decline of standards . . .
Copyright (C) Long Lake LLC 2010
May 2 (Bloomberg) -- New York police disarmed a bomb in a sport utility vehicle parked in Times Square, averting a potential attack near the heart of the city’s theater district on a Saturday evening.
“We are very lucky that we avoided what could have been a very deadly event,” New York Mayor Michael Bloomberg told reporters . . ."
Later in the article, however, we find:
Bomb squad technicians used a robotic dismantler to take apart a crude explosive device that included propane tanks, Deputy Police Commissioner Paul Browne, the department’s chief spokesman, said in a telephone interview earlier.
Parts of the heavily trafficked area were evacuated at about 6:35 p.m. There were no injuries and the bomb appeared to be unable to explode, Browne said. . . .
And then Mayor Bloomberg appears to argue with Mr. Browne:
“It certainly could have exploded and have a decent amount of impact,” Bloomberg said.
You would think that Bloomberg News would at least take care to get its story straight this time. Talk about the decline of standards . . .
Copyright (C) Long Lake LLC 2010
Saturday, May 1, 2010
Small Business: Bad But Less Bad
Discover Small Business Watch reports on April polling:
April results show a surge in the number of small business owners who say economic conditions for their own businesses are getting better: 30 percent of them say the climate will get better in the next six months, compared to only 20 percent who answered that way in March. Of the remaining respondents; 48 percent say the climate is getting worse, but that number is down from 53 percent in March.
When asked about their intentions to invest in their businesses, 23 percent say they would increase spending, up from 18 percent in March, while 43 percent still plan to decrease spending, which is down from 52 percent in March; 31 percent say they will make no changes.
Small business owners who say the current economy is good or excellent was 13 percent in April, up from 7 percent in March and the highest it has been in 20 months; 29 percent rate the economy as fair, and 57 percent think it's poor.
The outlook for the direction of the economy improved: 31 percent say it is getting better, up from 22 percent in March; while 52 percent say it's getting worse, down from 58 percent the prior month; and 14 percent aren't sure.
The trend is your friend. Small business is following big business. Money printing plus cyclical factors are working, for now.
The implications for stock prices are more mixed, given extreme valuations by several fundamental measures.
Copyright (C) Long Lake LLC 2010
April results show a surge in the number of small business owners who say economic conditions for their own businesses are getting better: 30 percent of them say the climate will get better in the next six months, compared to only 20 percent who answered that way in March. Of the remaining respondents; 48 percent say the climate is getting worse, but that number is down from 53 percent in March.
When asked about their intentions to invest in their businesses, 23 percent say they would increase spending, up from 18 percent in March, while 43 percent still plan to decrease spending, which is down from 52 percent in March; 31 percent say they will make no changes.
Small business owners who say the current economy is good or excellent was 13 percent in April, up from 7 percent in March and the highest it has been in 20 months; 29 percent rate the economy as fair, and 57 percent think it's poor.
The outlook for the direction of the economy improved: 31 percent say it is getting better, up from 22 percent in March; while 52 percent say it's getting worse, down from 58 percent the prior month; and 14 percent aren't sure.
The trend is your friend. Small business is following big business. Money printing plus cyclical factors are working, for now.
The implications for stock prices are more mixed, given extreme valuations by several fundamental measures.
Copyright (C) Long Lake LLC 2010
Pak-Ghanistan: Time to Leave Them to Their Own Devices
In Throwing acid on human rights, the Afpak Journal shows why the U. S. has no dog in the internal Pakistani fight:
In the summer of 2008, five women were buried alive in Baluchistan because they wanted to choose their own husbands. A few days after the news broke, the issue was raised in the lower house of Pakistan's parliament: Senator Israrullah Zehri defended the ghastly act, saying it was part of "tribal traditions." A few months after his statement, Zehri was made a federal minister.
In Daily Brief: Pakistan considers North Waziristan ops , the Afpak Journal makes it crystal clear that Pakistan is merely a mercenary for the U. S. in its internal war:
The U.S. is making moves to transfer $600 million to Pakistan as reimbursement for its military operations against militants in the country's northwest (AFP).
And what good does all this action do? From the article immediately above:
The BBC adds to reporting that targeting killings in the scenic Swat Valley hint that Taliban militants are returning after last year's Pakistani military operations there (BBC).
The U. S. is widely hated in Pak-ghanistan. We are spending money we don't have to interfere with their internal affairs. If we confined ourselves to killing a few al Qaeda, that would be one thing. What we are doing is quite something else.
And BTW is Barack Obama a war criminal for authorizing the CIA to kill Pakistani nationals with whom the U. S. is not at war? Simply because they oppose their own government? Consider Legal questions raised over CIA drone strikes:
The CIA strikes are "a clear violation of international law," said Mary Ellen O'Connell, law professor at the University of Notre Dame Law School, who added that going after terrorists should be a law enforcement activity.
She said the rest of the world does not recognize American authority to carry out attacks in Yemen and Pakistan, countries where the U.S. is not involved in direct armed conflict.
CIA officers who operate the drones could be arrested and charged with murder in other countries, O'Connell warned, likening it to having the Mexican police or military bomb hotels in Arizona in order to target drug lords who may be hiding there.
You've got to know when to hold 'em and when to fold 'em.
Message to Obama: The U. S. remains in a domestic crisis. War + weak economy = stagflation. Save money.
Prioritize. Remember your Nobel Peace Prize. Justify it just a little. Storm troopers in Quincy, Illinois guarding you from Tea Party grannies is more than enough militarism. Some wars are just not worth it. Afghanistan looks to be one such war. You said you're planning to bring the troops home in a year. Fuggedabout it. It's 5-10 years or no way (see Britain/Malayan insurgency). Cut your losses or level with the American people.
Out now.
Copyright (C) Long Lake LLC 2010
In the summer of 2008, five women were buried alive in Baluchistan because they wanted to choose their own husbands. A few days after the news broke, the issue was raised in the lower house of Pakistan's parliament: Senator Israrullah Zehri defended the ghastly act, saying it was part of "tribal traditions." A few months after his statement, Zehri was made a federal minister.
In Daily Brief: Pakistan considers North Waziristan ops , the Afpak Journal makes it crystal clear that Pakistan is merely a mercenary for the U. S. in its internal war:
The U.S. is making moves to transfer $600 million to Pakistan as reimbursement for its military operations against militants in the country's northwest (AFP).
And what good does all this action do? From the article immediately above:
The BBC adds to reporting that targeting killings in the scenic Swat Valley hint that Taliban militants are returning after last year's Pakistani military operations there (BBC).
The U. S. is widely hated in Pak-ghanistan. We are spending money we don't have to interfere with their internal affairs. If we confined ourselves to killing a few al Qaeda, that would be one thing. What we are doing is quite something else.
And BTW is Barack Obama a war criminal for authorizing the CIA to kill Pakistani nationals with whom the U. S. is not at war? Simply because they oppose their own government? Consider Legal questions raised over CIA drone strikes:
The CIA strikes are "a clear violation of international law," said Mary Ellen O'Connell, law professor at the University of Notre Dame Law School, who added that going after terrorists should be a law enforcement activity.
She said the rest of the world does not recognize American authority to carry out attacks in Yemen and Pakistan, countries where the U.S. is not involved in direct armed conflict.
CIA officers who operate the drones could be arrested and charged with murder in other countries, O'Connell warned, likening it to having the Mexican police or military bomb hotels in Arizona in order to target drug lords who may be hiding there.
You've got to know when to hold 'em and when to fold 'em.
Message to Obama: The U. S. remains in a domestic crisis. War + weak economy = stagflation. Save money.
Prioritize. Remember your Nobel Peace Prize. Justify it just a little. Storm troopers in Quincy, Illinois guarding you from Tea Party grannies is more than enough militarism. Some wars are just not worth it. Afghanistan looks to be one such war. You said you're planning to bring the troops home in a year. Fuggedabout it. It's 5-10 years or no way (see Britain/Malayan insurgency). Cut your losses or level with the American people.
Out now.
Copyright (C) Long Lake LLC 2010
Heigh-Ho, Silver? Up and Away?
If silver prices remain roughly unchanged, the 200 day moving average for silver prices will hit at least a 30 year high in about two weeks. If this happens, silver will then match gold's performance. Measured as the GLD ETF, gold's 200 day sma peaked in August 2008 at 88.30. It broke through that peak 1 year later, in August 2009 with GLD at $92.34. If one eliminates the late fall spike in GLD over $119 as an over-exuberant breakout, short-covering phenomenon, the increase in gold's price has been steady and almost inexorable.
What is interesting is that silver has been outperforming gold, reminiscent of 1978-80. A good review of that period and related periods is found at the Silver Institute's website; click HERE for link.
Currently, Zealllc.com is featuring detailed arguments from one and two weeks ago that make the case that if one is positively inclined toward gold, one should be more so toward silver.
Excluding a few frenzied days in which the Hunt brothers pushed the silver market to a squeeze situation over 30 years ago, the trading high for that time was about $25.
If spot gold were at $1200, a common gold:silver ratio of 50:1 would give a silver target of $24/ounce.
To my knowledge, the silver ETF with the most upside is Silver Bullion Trust, run by the same folks who got the precious metals ETF concept going decades ago with the Central Fund of Canada (CEF) and who also run Gold-Trust (GTU). SBT_U (Toronto) can be purchased OTC in the U. S. as SVRZF. It trades at a slight discount to net asset value, in contrast to the implied high premium it carries in CEF. Thus there is the possibility that separate from any increase in the spot price of silver, this ETF may have a significant price rise in the order of 5-10%.
Who knows, but my sense is that silver has had enough sharp plunges the past several years, and such a prolonged bear market, that a sharp and sustained breakout to new highs above $21 (roughly its 2008 high) up to perhaps the $24-25 range would be completely surprising but quite typical of this volatile asset.
Given that silver has some superior qualities to gold as transactional hard money, the good news for silver owners is that it can be forever (tarnishing notwithstanding).
Copyright (C) Long Lake LLC 2010
What is interesting is that silver has been outperforming gold, reminiscent of 1978-80. A good review of that period and related periods is found at the Silver Institute's website; click HERE for link.
Currently, Zealllc.com is featuring detailed arguments from one and two weeks ago that make the case that if one is positively inclined toward gold, one should be more so toward silver.
Excluding a few frenzied days in which the Hunt brothers pushed the silver market to a squeeze situation over 30 years ago, the trading high for that time was about $25.
If spot gold were at $1200, a common gold:silver ratio of 50:1 would give a silver target of $24/ounce.
To my knowledge, the silver ETF with the most upside is Silver Bullion Trust, run by the same folks who got the precious metals ETF concept going decades ago with the Central Fund of Canada (CEF) and who also run Gold-Trust (GTU). SBT_U (Toronto) can be purchased OTC in the U. S. as SVRZF. It trades at a slight discount to net asset value, in contrast to the implied high premium it carries in CEF. Thus there is the possibility that separate from any increase in the spot price of silver, this ETF may have a significant price rise in the order of 5-10%.
Who knows, but my sense is that silver has had enough sharp plunges the past several years, and such a prolonged bear market, that a sharp and sustained breakout to new highs above $21 (roughly its 2008 high) up to perhaps the $24-25 range would be completely surprising but quite typical of this volatile asset.
Given that silver has some superior qualities to gold as transactional hard money, the good news for silver owners is that it can be forever (tarnishing notwithstanding).
Copyright (C) Long Lake LLC 2010
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