Old and still drinking water and eating dry white toast.
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I agree, I'm sellng before the government (pump and dump), the tone of news should change after the next unemployment and job release numbers.
Selling before the May go away crowd
I'm selling into this rally, recovered about 80 percent of my stock market losses....moving cash to the sidelines.
Not willing to risk this market gift.
Looks like you have to have a $100K in your IRA to trade on margin....the other FX-Ira platform only needs $5K to start and the FX-trustee only wants $300 dollars per year for the $15K IRA account.
The plan is start the account with $15K then do ROTH rollover with the profit to another FX-Roth account. The profit from the second FX-Roth would be tax free forever.
Forex Roth IRA
Look like we can start trading Forex within a retirement with 100 leverage.
Link
http://www.forex-day-trading.com/forex-trading-roth-ira.htm
Federal Reserve conspiracy
Jim Marrs, in his book Crossfire: The Plot That Killed Kennedy, speculated that the assassination of Kennedy might have been motivated by the issuance of Executive Order 11,110.[30] This executive order enabled the Treasury to print silver certificates, bypassing the Federal Reserve System. Executive Order 11,110 was not officially repealed until the Ronald Reagan Administration. Official explanations claim that the executive order was simply an attempt to drain the silver reserves, and did not actually endanger the careers of anyone working at the Federal Reserve.[31]
This theory was further explored by U.S. Marine sniper and veteran police officer Craig Roberts in the 1994 book, Kill Zone.[32] Roberts theorized that the Executive Order was the beginning of a plan by Kennedy whose ultimate goal was to permanently do away with the United States Federal Reserve, and that Kennedy was murdered by a cabal of international bankers determined to foil this plan.
Actor and author Richard Belzer has also expressed a belief in this theory. According to Belzer the plot to kill Kennedy was set in motion as a response to the President's attempt to shift power away from the Federal Reserve and to the U.S Treasury Department.
Link -http://en.wikipedia.org/wiki/Kennedy_assassination_conspiracy_theories
Trading Week Outlook: November 15 - 20, 2009
With the U.S. Retail Sales, Industrial Production and Consumer Price Index scheduled for release in the week ahead, the markets around the world will focus on consumer spending, industrial activity and inflation conditions in the world’s largest economy.
In preparation for the new trading week, here is a list of the Top 10 spotlight economic events that every currency trader should pay attention to.
1. JPY- Japan GDP- Gross Domestic Product, the main measure of economic activity and growth, Sun., Nov. 15, 6:50 pm, ET.
2. USD- U.S. Retail Sales, an important gauge of consumer spending measuring the total receipts at stores that sell durable and non-durable goods, Mon., Nov. 16, 8:30 am, ET.
3. GBP- U.K. CPI- Consumer Price Index, the main measure of inflation used by the Bank of England, Tues., Nov. 17, 4:30 am, ET.
4. USD- U.S. PPI- Producers Price Index, the main measure of wholesale inflation experienced by manufacturers and a leading indicator of consumer inflation, Tues., Nov. 17, 8:30 am, ET.
5. USD- U.S. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines, and utilities, Tues., Nov. 17, 9:15 am, ET.
6. GBP- Bank of England Monetary Policy Meeting Minutes, an insight into the latest monetary policy decision and the vote on the Asset Purchase Program from the members of the Bank of England’s Monetary Policy Committee, Wed., Nov. 18, 4:30 am, ET.
7. CAD- Canada CPI- Consumer Price Index, the main measure of inflation preferred by Bank of Canada, Wed., Nov. 18, 7:00 am, ET.
8. USD- U.S. CPI- Consumer Price Index, the main measure of inflation in the world’s largest economy, and U.S. Housing Starts, a leading indicator of housing market activity, Wed., Nov. 18, 8:30 am, ET.
9. GBP- U.K. Retail Sales, an important gauge of consumer spending measuring the total receipts at stores that sell durable and non-durable goods, Thurs., Nov. 19, 4:30 am, ET.
10. JPY- Bank of Japan Interest Rate Announcement, Thurs., Nov. 19, expected around 11:30 pm, ET.
Link - http://seekingalpha.com/article/173154-trading-week-outlook-november-15-20-2009?source=hp_wc
From Randall Forsyth's Barron's epistle this morning:
On Prechter and Louise Yamada.
The stock market ultimately reflects waves of social moods, says Robert Prechter, the long-time Elliott Wave theorist. With signs of protest like Tuesday's election results, he sees the mood getting a lot worse before it gets better. "The social mood bottomed in 1974 and rose for 33 years. You don't correct that in two years," Prechter observes.
"It takes a lot of optimism to buy stocks at historically overvalued levels," he continues in a chat in Barron's offices. Lows are made with dividend yields in the 6%-7% range and price-earnings multiples of six times, not the current sub-3% yields and triple-digit P/E on reported trailing earnings, he says.
While the stock market enjoyed a "bear-market rally" after extreme pessimism gripped the market in February, when Prechter says he advised clients to cover shorts and buy, that ended in October. Now, he suggests sticking with cash, as in short-term Treasury bills yielding fewer basis points than the fingers on your hand.
Yield can be the worst grounds for an investment decision, he assets. Prechter recalls that in 1981-82, when he argued equities could increase five-fold from the Dow's level of 800, the response was "how can you buy stocks with T-bills yielding 15%?" Now, he contends near-zero on safe cash is better than the chance of minus 40%.
LOUISE YAMADA, the long-time market analyst who now runs LY Advisors, points to the numerous warning flags that technicians (including Prechter) have been watching: volume has been waning, with more turnover on down days than up days (that includes Thursday's 200-point party on the Dow), various, more esoteric technical measures showing waning momentum and greater divergences, with some groups breaking down even as others, such as technology (excluding semiconductors) leading higher.
The market is the most oversold it's been in eight months, which to her, unlike to most of her technician brethren, isn't a buying opportunity. Rather, Yamada says, it's early evidence of "distribution," the passing of stocks from strong hands to the weak. That doesn't preclude further rallies but also doesn't preclude selling into them. What's likely is a "period of separating the wheat from the chaff," Yamada says That could come as year-end approaches, when investors dump losers for tax losses and replace them with winners.
But Yamada remains unequivocally bullish on gold, as she has been since 2001. Investors would have done better in gold since then, even through the peak of the 2006-7 advance that took the Dow to 14,000 (which seems like an eternity ago.)
Indeed, the Dow in gold terms has fallen from 42 ounces at the peak of the tech bubble in 2000 to nine ounces currently, indicating the Dow has been in a bear market and gold in a bull market since then. That ratio could reach 2:1, which, if the Dow went back to 8,000, would translate to $4,000 gold.
What makes gold stand out now is that it isn't just a play on the ever-weaker dollar, as it's now appreciating in other currencies, Yamada observes. The distrust of Western economies extends beyond the U.S., as evidenced by India's decision last week to purchase 200 tons of gold from the International Monetary Fund. The economies of Europe and America had "collapsed," India's finance minister declared. Hyperbole perhaps, but a sobering assessment from the rest of the world.
While investors’ hopes of an economic recovery might have got ahead of reality, the cartoonists continually reminded us of worrisome issues …
Referring to the surge in the gold price, the quote du jour this week comes from long-timer Richard Russell, author of the Dow Theory Letters. He said:
An integral part of our prosperity since World War II has to do with the dollar as a reserve currency. As the world’s reserve currency, we could print our ‘wealth’ and the world would accept it. That ‘free lunch’ is now in the process of changing.
The key to the whole picture is the acceptance of the dollar. The dollar is compared every minute with real Constitutional money - gold. As gold rises, the dollar’s future declines. At some point ahead, the world will refuse to accept dollars, which are really Federal Reserve notes. When that happens, the U.S.’s great advantage will be over.
The forces of real intrinsic money, gold, are now battering at the door of fiat money, which is money created at will out of nothing by the central banks. It’s a death-struggle between real intrinsic money against ‘counterfeit’ or play money created by bankers.
Who will win?
Reality will always triumph over fantasy.
Rest of the story: http://seekingalpha.com/article/172020-global-markets-in-review-is-the-risk-trade-back-on
Here you go...
http://i.pbase.com/v3/99/499399/1/46523361.Faery12w.jpg
...all is well in Di'go
The government is spending a shit-load of money in this part of the country....I'm just glad I caught the wave.
My engineering contract is pending renewal this month, hopefully I have a job next month.
So far I had a GREAT year., landed a $100K job, Dad gave me a $200K house, 401K is up $40K, and I found a wonderful church.
All you have to do is place the LORD first and everything else will take care of itself.... if not try some fairy dust
A Obama job in the hand is worth two from the Bush...
....even if it's all fairy dust
You have been added.
It's by design, the WEAK banks get weaker and the STRONG banks(to big to fail)got saved at the TAXPAYER expense....same story with the ruling party....the Rep'clan got weak and the Demo'crap got saved at the TAXPAYER expense....GAME OVER @ $50 Trillion.
The Greatest Depression Is Coming
Good times will not be returning any time soon.
We continue to lose jobs month over month. And, while the statistics being released are showing a slow down, this is basically a fabrication. There are thousands of people falling off of unemployment compensation each week — none of them are reflected in the official numbers. Shadowstats.com estimates unemployment is above 20%. Take it for what you will, but these numbers are rapidly approaching the unemployment rate during the last well known depression.
Credit is contracting. The last decade in America has seen credit, or debt, however you want to look at it, essentially become a second income. No more. The banks may be getting billions in loans, but for the individual on the street, credit is frozen. Couple this with the loss of primary income streams and you have a lot of people with no money for even essential goods.
Foreclosures continue to mount. In addition to the foreclosures of the last 2 years, we have millions more in play right now, regardless of the mortgage programs the government institutes. Job Loss + Credit Contraction means there is no way millions of people will be able to make their monthly payments. Nowadays, once you lose your job, you aren’t going to have an easy time finding a new one that adequately services personal debt. In real terms housing prices are not done dropping. There are some conservative down-side estimates that say an additional 15% is likely. But, what if they are underestimating? What if it turns out to be 30%, or more? If we are in a depression, the downside is huge. Japanese real estate lost 80% (adjusted for inflation) in the 1990’s (and so did their stock market!). In some parts of the country, home owners would probably agree that the 45% their homes have already lost would constitute a depression.
Debt defaults keep rising. Bank of America just released their numbers and lost upwards of $2 billion dollars, due in part, to credit card defaults. This is not the sign of a healthy consumer. When a consumer defaults on a credit card, that is leading indicator that they will not get easy credit if they need it in the future. A default in 2009 is a big red flag for lenders. Empirically, this seems like it may be a leading indicator for continued credit contraction on the consumer side.
Small businesses are getting hit hard. Small business is the engine that runs the entire economy, employing around 70% of the workforce. Right now, they have no access to loans, and the consumer is drying up. To survive, they’ve had to cut costs significantly. The next step will be to cut jobs. Many have already resorted to letting people go. As much as owners may not want to let go of their people, they realize they have no choice at this point. Incidentally, many major corporations showing “better than expected” results employed these same strategies. But, the businesses themselves, not necessarily by choice, are perpetuating the negative feedback loop. As they lay off employees, more consumer income is destroyed, leading to fewer revenues across the board for a majority of businesses, big and small.
The Middle Class is holding on for dear life. If small business drives jobs and production, it is the middle class that drives consumption. And the middle class is getting hammered for all of the reasons mentioned above. Many middle class families are realizing, or will realize very soon, that their lifestyle choices are going to need changes. Cut out the gym and take a jog instead. Why pay $100 for cable when you can get similar, if not better, news and movies online for $30 a month? Is organic really necessary at the grocery store when one can save 30% buying the regular stuff we grew up on? Do I really need to get a new car when my 2005 Explorer is just fine? Why go out and spend $100 when dinner and a movie at home a couple of Fridays a month saves enough money to pay the electric bill? These and other questions are going through the collective mind of middle class America. They are desperately trying to avoid becoming a member of working or under class America. The initial step to maintain stability is the same as with small businesses - cut spending.
Visualize a car engine. When there is enough motor oil, the pistons are firing up and down rapidly and the system runs efficiently. When the oil dries up, the engine begins to deteriorate. It’ll go for a little while longer. And it’ll become much more violent and volatile each time it fires. Invariably the engine seizes up and fails.
What we see in many aspects of the system right now are pistons that are firing violently. First a crash in the stock market. Then trillions in bailouts. Then an historic and massive stock market swing in the other direction. We see individuals speaking out in public, on the airwaves and on personal blogs en masse about one topic or another. Whether it is rep-on-Obama or dem-on-Bush bashing, there are extreme levels of divisiveness and heated, sometimes violent clashes. The system is moving into extreme peaks and troughs at a much more rapid pace now than anytime in the last 50 or more years.
We are in the opening stages of the Greatest Depression, a term coined by Trends Forecast founder Gerald Celente. The next stage, as Mr. Celente has said, will be “like nothing we've ever seen in our life time.”
Welcome to the Greatest Depression.
http://seekingalpha.com/article/167060-the-greatest-depression-is-coming?source=article_sb_popular
Fantasy Housing Numbers a Prelude to the Next U.S. Crash
There are two sources for most housing data in the United States. One source is the National Association of Realtors (NAR). Given that this organization represents only people who sell U.S. residential real estate for their livelihood, this is an extremely biased entity – with an obvious agenda. They represent the more reliable source for data.
The other major source of data is the U.S. government, itself. I have written volumes on the legendary excesses of the U.S. government in manufacturing numbers which are ever-further divorced from the real world. As an example, at the beginning of this year, when the Case-Shiller index was reporting that the collapse in U.S. housing prices had reached their most extreme level (a year-over-year decline of 19%), the U.S. government was reporting that U.S. home prices were rising.
As with many other U.S. government “statistics”, I now pay absolutely no attention to government housing propaganda. While it is possible to critically analyze mere exaggerations, there is no analytical value to numbers which are simply invented – and in direct contradiction with what is actually happening in markets.
This leaves the biased NAR as the “best” source for most U.S. housing data. In a report released Friday, the NAR stated that existing home sales had increased to a level of 5.57 million units – the highest since July 2007, crowed the NAR. That was right about the time that the U.S. housing crash first turned really ugly. However, those days are already long-forgotten by the NAR.
Lawrence Yun, the giddy “chief economist” of this organization is claiming that U.S. “housing inventories” have now fallen to a level equal to 7.8 months of supply – and a supposed 15% decline from just the beginning of this year.
This is where the NAR severs all ties with reality. The NAR also acknowledged that “distressed sales” which include foreclosure sales, sales of “repossessed” homes (i.e. “walk-aways”) and “short sales” accounted for just 29% of all sales in its latest report (similar to numbers reported for most of this year). Thus, with U.S. housing sales at their highest level in more than two years, the banks controlling all this “distressed” real estate are on pace to sell only about 1.5 million “distressed properties” this year.
In fact, foreclosures alone are on pace to hit about 4 million units this year – after more than one million foreclosures in the third quarter alone. “Repossessed” homes are on pace to add roughly an additional half-million “distressed properties” to this inventory. I'm unaware of any aggregate statistics on “short sales”, but as a favored choice for both homeowners and banks (versus the alternative of foreclosure), these also obviously total in the hundreds of thousands (at least).
Thus, as I reported in a commentary on the U.S. housing sector about six weeks ago (see “U.S. foreclosures/repossessions on track to hit 5 million in '09”), the total amount of “distressed properties” in the U.S. - generated in just this year – is roughly 5 million units. With U.S. banks on pace to sell about 1.5 million distressed properties this year, this leaves 3.5 million additional units which are being added to the inventory of empty/unsold homes in the U.S.
What this means is that U.S. banks by themselves are holding as much inventory (from just this year) as Yun claims exists in the entire U.S. housing market. Put another way, the only way in which the NAR's “inventory” number would have any validity is if not one, single U.S. homeowner had a home listed for sale.
Returning to the real world, 25% of U.S. mortgage holders are “underwater” on their mortgages, with more than 10,000 additional U.S. homeowners entering the foreclosure process every day – and millions more homeowners only a (missing) paycheque away from joining that category. In other words, there are millions of highly-motivated sellers – easily surpassing the 3.5 million housing units which U.S. banks have added to their existing inventory of unsold homes.
Keep in mind that U.S. banks have been accumulating empty/unsold properties for roughly two years – as “distressed sales” have never kept pace with the rate at which banks are accumulating these properties since the U.S. housing collapse began. A conservative estimate is that they are currently holding roughly 5 million empty/unsold units – equal, by itself, to a year's worth of consumption.
Add to that the millions of U.S. homeowners desperate to sell in order to avoid foreclosure, and the return of large numbers of speculators to this market and this represents at least another 5 million units of inventory – since speculators don't buy-and-hold houses, but rather put them back on the market (either immediately, or after some cosmetic changes).
As a result, none of these speculator-purchases remove any inventory from this market. True, in theory, speculators can rent-out the homes they purchase. However, with U.S. housing vacancies already at their highest level in 23 years and still soaring higher (see “Rising U.S. vacancies mean ALL real estate going DOWN”), the combination of crumbling rental prices and huge over-supply means that any speculator foolish enough to become a “landlord” rather than simply trying to “flip” properties is doomed to be just another foreclosure victim.
There have been a number of recent reports attempting to “pump” this market – which actually claim that buyers are having a hard time finding “distressed properties” to buy. Don't believe a word of this nonsense. As a Canadian, I have been getting spam in my own e-mail every day - “alerting” me to the wonderful “investment opportunities” of buying distressed U.S. real estate. In recent weeks, this has increased to several pieces of spam every day. Presumably such spam is also bombarding Europeans, and investors in any other countries who actually have some spending power.
Ultimately, what this means is that in the real world, there are about 10 million units of “inventory” - which represents nothing more than “REO” homes (those held by the banks), the properties being flipped by speculators, and “distressed” homeowners who are desperate to sell. This estimate excludes any “normal” sellers in the market (i.e. people simply wishing to move to relocate of their own volition).
Thus, the “official” inventories of unsold homes represent less than 1/3rd of actual inventory, and most likely only about ¼. The reality is that U.S. housing inventories have risen to their highest level in history – and added millions of units to the 19 million empty homes which existed a year ago.
When stacked up against real inventories, the sales of only 5 million units this year sets up another nasty “leg” downward for this market by itself. However, as I (and an increasing number of other commentators) are reminding people the second spike in mortgage-resets for the dreaded “ARM mortgages” (adjustable-rate mortgages) is just about to begin.
[Note: this chart only includes data up to January 2007, so it does not include all future, mortgage resets – since U.S. banks were still creating more of these mortgages in 2007.]
As the graph above illustrates, the U.S. has already suffered through the first spike in these mortgage resets – indeed, this market is currently in a brief lull, between the end of the last spike and the beginning of the next. The big difference between the first spike and the second is that unemployment was only beginning to be a serious problem for the solvency of U.S. homeowners during the first spike, while the 2nd spike will occur with employment conditions at their worst level in 70 years. (“Shadowstats.com” puts current U.S. unemployment at over 20% and rising).
Thus, the next spike in mortgage resets was also guaranteed to cause another down-leg in this market – by itself. Roughly $600 billion worth of such real estate (its current, nominal value) is due to implode onto this market over the next two years.
When we combine this with a “shadow inventory” of at least seven million units more than the laughable numbers from the NAR, and an unemployment problem which will be much worse next year than this year, the overwhelming evidence is that the next leg down for the U.S. market will be at least as bad (if not worse) than the previous leg down.
For the U.S. financial sector, this next crash in residential housing comes just as the crash in U.S. commercial real estate has worsened into a crisis of its own. Combine this with record rates of delinquency which are simultaneously occurring with every other category of bank credit to U.S. consumers, and obviously the losses ahead for the U.S. financial sector will greatly exceed the losses already incurred.
To my regular readers, I apologize for the continual need to repeat much of this analysis. However, as I have observed before, there is only one way to counter a relentless campaign of propaganda – through continued repetition of facts.
Stay focused on the “big picture” and do not allow yourself to be deceived by either fraudulent “statistics”, absurd “spin”, or the occasional, positive “blip” in this market. In even the worst crashes, nothing goes down in a straight line. Given that the U.S. experienced a collapse in its housing market more than three times worse than the worst year of the Great Depression (based on data from the highly respected housing economist Robert Shiller), a “dead-cat bounce” for this market was overdue.
At best, this lull in “the eye of the hurricane” will last to the end of this year. Early next year, the new spike in mortgage-resets will begin. At that point, U.S. banks (who have up until now totally ignored this oncoming disaster) will have to confront this next crisis – which will most likely be characterized by the U.S. media as a “surprise”.
By this point in time, there can be no excuse for responsible adults to be “surprised” by developments in the U.S. economy. The same fools and shills who were “pumping” U.S. markets and the U.S. economy at the peak of the U.S. bubble (and Wall Street Ponzi-scheme) are pumping again. Meanwhile the fundamentals for the U.S. economy continue to deteriorate.
It is only the fact that the U.S. government pretends there is no inflation in the U.S. economy which allows it to pretend that some aspects of the U.S. economy are experiencing a tiny improvement. Even then, most of the statistics it spews are not improvements but simply a reduction in the rate of collapse.
The U.S. propaganda-machine has completely erased this important logical distinction. When the Titanic had already taken on almost enough water to drag it to the bottom of the Atlantic, would rational passengers on that doomed ship really be encouraged to hear that the ship was “only” taking on water at a slower rate - simply because most of the ship was already water-logged?
Link to Story:
http://seekingalpha.com/article/168713-fantasy-housing-numbers-a-prelude-to-the-next-u-s-crash
We will have to wait until the buy-out offer is complete before adding the information to the I-box.
All you have to do is add .."["chart"]" and "[/"chart"]" to the beginning and end of your link...<remove the little quotes>
http://i38.tinypic.com/106kplk.gif
All is well, just paying bills and waiting for the next shoe to drop on the U.S consumer
Yep, I've trained my entire life for this crisis....being cheap is the latest vogue.
I would agree that the war is lost and not a single shot was every taken....
Dollar to Hit 50 Yen, Cease as Reserve, Sumitomo Says
Oct. 15 (Bloomberg) -- The dollar may drop to 50 yen next year and eventually lose its role as the global reserve currency, Sumitomo Mitsui Banking Corp.’s chief strategist said, citing trading patterns and a likely double dip in the U.S. economy.
“The U.S. economy will deteriorate into 2011 as the effects of excess consumption and the financial bubble linger,” said Daisuke Uno at Sumitomo Mitsui, a unit of Japan’s third- biggest bank. “The dollar’s fall won’t stop until there’s a change to the global currency system.”
The dollar last week dropped to the lowest in almost a year against the yen as record U.S. government borrowings and interest rates near zero sapped demand for the U.S. currency. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, has fallen 15 percent from its peak this year to as low as 75.211 today, the lowest since August 2008.
The gauge is about five points away from its record low in March 2008, and the dollar is 2.5 percent away from a 14-year low against the yen.
“We can no longer stop the big wave of dollar weakness,” said Uno, who correctly predicted the dollar would fall under 100 yen and the Dow Jones Industrial Average would sink below 7,000 after the bankruptcy of Lehman Brothers Holdings Inc. last year. If the U.S. currency breaks through record levels, “there will be no downside limit, and even coordinated intervention won’t work,” he said.
China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency. Hossein Ghazavi, Iran’s deputy central bank chief, said on Sept. 13 the euro has overtaken the dollar as the main currency of Iran’s foreign reserves.
Elliott Wave
The greenback is heading for the trough of a super-cycle that started in August 1971, Uno said, referring to the Elliot Wave theory, which holds that market swings follow a predictable five-stage pattern of three steps forward, two steps back.
The dollar is now at wave five of the 40-year cycle, Uno said. It dropped to 92 yen during wave one that ended in March 1973. The dollar will target 50 yen during the current wave, based on multiplying 92 with 0.764, a number in the Fibonacci sequence, and subtracting from the 123.17 yen level seen in the second quarter of 2007, according to Uno.
The Elliot Wave was developed by accountant Ralph Nelson Elliott during the Great Depression. Wave sizes are often related by a series of numbers known as the Fibonacci sequence, pioneered by 13th century mathematician Leonardo Pisano, who discerned them from proportions found in nature.
Uno said after the dollar loses its reserve currency status, the U.S., Europe and Asia will form separate economic blocs. The International Monetary Fund’s special drawing rights may be used as a temporary measure, and global currency trading will shrink in the long run, he said.
Thanks for the input on how to post the embedded video using Firefox and posting the Internet link for the non-Firefox believers....
I installed firefox per the prior post recommendation.
FOREX PIVOT POINT TRADING LESSON....
The machine is kick'n my ass
Me, no worry about the US dollar....
....it will be the reserve currency for a few more years
Good-luck on your promotion to Moderator
of Ihub Forex.
The days of 100 percent retirement are over...we will all be working until we are dead...
The Forex moderator job position is open for you....I applied today but I will step down
Hopefully it's a small H-bomb...
Reversal-vs-Pullback
Since the huge move in equities off of March lows, especially as of late, portfolio managers have been bidding up stocks by buying on the dips in an effort to make up for dismal 2008s and remain competitive, which is tough when benchmark averages are up 40-60%. Reminiscent of liquidity-fueled bubbles past, especially the dot-com bubble, common equity in effectively insolvent companies is showing record volume, as daytrading this greater-fool game is the only functioning strategy.
But chasing beta can only work for so long, as a market whose participants are exclusively chasing each others' momentum trades is doomed for a drastic change in its landscape. The key of course is to find the greater fool before it becomes you, and the inevitable reversal of this rally is going to be twice as sharp as the way up.
The S&P 500 is down about 5.1% since its recent top at 1080 on September 23. Many are questioning whether this is a pullback that will eventually resolve into a continuation of the rally or the beginning of a reversal (the reversal) that will send stocks declining. I am in the reversal camp and think that this is the beginning of a sharp, drastic sell-off in stocks.
In attempting to identify this mini-selloff as a pullback or reversal, it is important to trace the catalysts of the rally itself and analyze their sustainability, at these levels specifically. By far the most significant factor regarding the rally is the newly-injected liquidity driving it. As monetary supply increases, as do asset prices, through currency debasement. This can become a self-fulfilling positive feedback loop via the carry trade, as the USD depreciates further, financing demand for higher-yielding assets (such as equities). Also important to the rally are the bank earnings and economic data "supporting" an economic recovery, as they are being used as post-hoc fundamental basis to the move in equities.
The "monetization liquidity" fueling the rally comes from the $300B in long-dates Treasuries announced back in March as part of the Fed's QE. The POMOs executing the injection have been covered extensively, and the end result is primary dealers end up sitting on the cash. Only about $7B (about 2.3%) of the original $300B remain to be injected. Without this liquidity (which correlates very well with the S&P's performance since spring), the rally loses its legs and momentum switches to the downside.
Though liquidity is the primary catalyst to the rally, the move has been magnified by the USD carry trade and by portfolio underperformance against benchmarks. The carry trade, which magnifies the move down in the dollar and the move up in equities, relies on a USD supply increase (liquidity injections) offsetting a demand increase (deleveraging/debt liquidation). Because the liquidity is drying up, deleveraging should regain control of the USD's price movement and an unwinding of the carry trade should result, leading to a spike up in the dollar and a sharp drop in stocks and commodities. The underperformance of portfolios against benchmark indices showing 50-70% rallies in half a year has led to a crowded momo beta-chasing trade as PMs attempt to offset 2008 losses in a blatant greater-fool game (AIG and CIT volume explosions prove that much). An exponential stream of freshly minted dollars is required for the momentum to continue and for the momo trade to work, and as liquidity dries up, the momentum on the way up will reverse to the downside-- and may accelerate.
And then there's the "fundamental" basis to this rally. Bank earnings have been a bunch of accounting shenanigans, boosted with AIG CDS unwinds, trading/i-banking profits due to an engineered market rally in which every company is issuing boatloads of secondaries that all need underwriting and lack of trading competition (Lehman, Bear, Merrill RIP), and a steep yield curve in Q1-Q2 2009. "Extend and pretend" accounting only works temporarily, and as option ARMs reset and borrowers default, assets marked at par tank down very, very quickly, eating away bank equity and ruining 10-Qs. Banks went on a spree in their Q1 and Q2 earnings reports with accounting tricks and those will come to bite them twice as hard in Q3 and Q4. The trading and i-banking profits are dependent on a continuing rally (positive feedback loop) as well as lack of competition (which is now 100% priced in). The yield curve is flattening, as long bond yields topped out in June, and this should hurt bank earnings as well in Q3 and Q4 earnings reports. As for economic indicators, look no further than this to tell you why there's no recovery.
So liquidity is drying up and that effectively screws up all of the engines to the rally, leading to a sharp sell-off. But what's to say the Fed won't pump more liquidity into the market? Well, for one, it decided against expanding its QE, so the liquidity injections have stopped, at least for now. Moreover, the USD is back to last summer's levels, and further decline could break important support and send it spiraling into substantial debasement. Most importantly, if injected liquidity continues expanding, bond yields (which are currently forecasting deflation in the short run, at odds with equities) will skyrocket, leading to very unsustainable interest burdens and a debt crisis. The controlled demolition of the USD requires liquidity financing inflationary rallies, sharp corrections via deleveraging, and then continued bleeding of the USD to prop up other assets. Let the USD hit free-fall, you have a monetary crisis. Let monetary supply remain stable and the USD to rally on demand via debt liquidation and you have deflation (arch nemesis to Ben Bernanke). The plan is to debase the dollar slowly, with an episode of deleveraging as the political capital for bailouts/QE/USD depreciation dries up, until bank deleveraging has hit a pivot point, excess reserves can be unsequestered for use besides mopping up asset depreciation, and holders of Treasuries/USD (who see unique systemic and crowded demand each deleveraging episode through the "safe haven" thesis) are reduced to bagholders. Thus, the USD is ready for its next wave up, and this means a big reversal in equities.
Link http://www.zerohedge.com/article/reversal-vs-pullback
Next year I should make about $100K (real money) and $25K (ESOP funny money)....
....it's getting hard trying to hide all of this income from the wife....I increased the 401K retirement contributions to 22 percent and have the rest of the take-home money going into three different bank accounts.
...just glad I'm back to work and able to hide the money from myself
Too late to post an "ass whoppin picture"....
...no more worries for Jester, I just found out today that I'm getting a 25 percent bonus this year....
...only problem is it's that ESOP funny money, I have to wait five years to be 100 percent vested in the Company Stock program.
Can it be....
....the board is alive and well again.
Off to Church and a little electrical project in the afternoon installing a few receptacles and lights in a Friend's Carport.
Back when the sun goes down.
Gold: $35.00 times 2860% equal $1,001
The dollar is backed by the Full Faith And Credit of the American Taxpayers who is currently out of work, upside down on their home loans, behind on their credit cards payments, and quickly running out of unemployment benefits....
..next year people will return to work for jobs that pays half as much.