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AYE- up 36% today on refinancing noise and an upgrade. I see this happening with some of the other utilities soon. Very undervalued industry in my opinion. Bought a little MIR today.
DJ Allegheny Up -2: JP Morgan Sees $1.85B In Financing >AYE
By David Bogoslaw Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Allegheny Energy Inc.'s (AYE) recent steps to bolster its liquidity seemed to find favor with investors as the share price shot up 28% early Monday.
In a research note, J.P. Morgan Securities upgraded the Hagerstown, Md., company to overweight from underweight, citing "an improved risk/reward profile as Allegheny nears a likely secured financing and a significantly improved liquidity position."
Last Thursday, Allegheny suspended its annual dividend of $1.72 a share through at least the fourth quarter of 2003, a move that's expected to save the company $216 million. In addition to cutting staff and capital spending, the company received authority in October from the U.S. Securities and Exchange Commission to arrange for up to $2 billion in secured financing from lenders. Negotiations with banks are ongoing.
In his note, J.P. Morgan analyst Jim Von Riesemann, said he expected Allegheny to arrange for $1.85 billion in secured financing, which should be enough to cover debt maturities next year. He added that he saw the company getting another $200 million in a new unsecured facility.
>>I will definitely squeeze a call to my broker around 10 AM<<
Broker? Curious as to why you use a broker (as in one you would call and expect to get any info that pertains to short term trading).
Thanks, Joe
After the in the teens percentage gains in the last several weeks, new lows will lag the market. Not a good indicator right now in my opinion. Down days often come on low volume as there is a built in bullish bias to the markets. What the low volume tells me is more that there is a shortage of buyers than an abundance of sellers. Higher volume may be considered more healtyhy as we then clear some of the excesses clearing the way to move back up. I have always felt that the low volume big down days portend a very weak market.
Joe
Zeev, Look at the alternative. Right now the momentum is building to put blame on the republicans. If they keep trying to prop it up then they face the possibility that things won't look much better by fall 2004, we will have the muddle thru economy. However, if they let the market fall now, take the heat now, and then pump it up in late 2003, early 2004 they will appear to be the saviors. It could just start with 2003 ending better than 2002. That could get the momentum going to carry them through the elections. I see the key though is wringing out these excesses in valuations. In my opinion, we won't have any channce of a sustained recovery until that happens. I also think there is a very good chance the market will tank in the next six months. I see a bad retail Christmas as being the first domino although a another terrorist action or a war with Iraq could be the first to start the topple.
Just a thought, Joe
>>>My second choice would be to back off here,<<<
I think I would take that choice too.
Something else to think about. Of course the Republicans want to be re-elected in 2004. This last election is behind us. If they could, why not let the economy go in the tank soon, push it down hard, taking out all the excess. Then, orchestrate a recovery starting in the fall of next year and look good into the elections.
Joe
The thing about the PPT is that you just want to acknowledge that they are a part of the market- another piece of the puzzle. Once you do that it explains some of the action you may see. Like everything else in the market there are liimitations as to what they can do and what they can't. My contention has always been that they are there to protect against panic - to let us down slowly. The main thing I use them for is when I feel there are working it tells me to step aside and cut back on my short positions. And , today when it looks like they are letting the market drift on it's own, I hold on to my shorts a little tighter.
Yes, Virginia, there is a PPT.
Joe
In my opinion you can stick a fork into any chances of a good retail Christmas- it's done. That's not going to go over well for the market in general because we needed the hope that J6P was still spending strong. I don't I don't know if the PPT can do much good here. They may wait till we get to October lows to bring in much support. A bounce there and maybe the spin will be that the lows held - time to buy.
Joe
>>Most of my day trades are forced to turn into swing plays!<<<
Couple more days and they'll be investments. <VBG>
2- 1mil block trades reported on QQQ at 2:30 @25.61 and 25.63
Normally I would say that is bullish from the activity we saw about that time and the Fed additions. Here at 3:15, I'm surprised we haven't seen anything yet.
Joe
>>>It seems to me that in watching the action of past years that tax selling is largely over by early to mid Dec. Most of the big blocks get sold way before then. It's pretty obvious when an issue is going to get sold for tax losses so why be the last seller.<<<
Every year for the last three I have bought tax selling candidates. I can't think of one where I didn't get my best price in the last week of trading. Remember that last week is on low volume so small voliume can move stocks. Since the market fundamentals look like crap I'm inclined to wait until the end of the month.
Joe
RRI- I agree with you about RRI. If I had one stock to recommend for the next three years it would be RRI. I think this one can fly once tax selling is over. Of course after the refi is done it's a no brainer but I think will be a near double by then. I'm holding till book value. About $22.
Joe
Good point Kyros on the Ipp's. Just wondering if they may under pressure until the end of the year as they are excellent tax selling canidates for a conservative portfolio that they may now reside in. I'm looking to load some up at the end of the year.
Joe
QQQ- stopped out of my QQQ for .10- .14 losses. ugly day. Core shorts are doing just fine though.
Joe
Hmmm....UTY up 1.4% . RRI, CPN up. MIR up 9%. eom
>>That wasn't my QQQ block joe <<<
Yeah, I know. The buyer was slyvestor. He bought my shorts I just covered before going long. <VBG>
I see the ho-hum atitude for Christmas. I sell Christmas tree trimings in my store here in Atlanta. Every year for the last four we have seen lower sales in this catagory. Last spring we decided to trim way back. Glad we did. First year in several that I won't have much carry over inventory.
Joe
QQQ- Long @ 25.73. 500,000 block reported at 10:58.
Joe
OMG- Up .80 pre-market- PRESS RELEASE: OM Grp To Amend Credit Facility, Loan Pact
OM Group to Amend Revolving Credit Facility and Loan Agreement -- Announces Release Date and Conference Call Information --
CLEVELAND, Dec. 9 /PRNewswire-FirstCall/ -- OM Group, Inc. (NYSE: OMG) today announced that it has been advised that a sufficient number of its lenders have approved the proposal to amend the terms and conditions of its existing $325 million Revolving Credit Facility and $600 million Term Loan Agreement. The amendments modify certain financial covenants and convert $100 million of the $325 million Revolving Credit Facility to a term loan maturing in 2006. The Company anticipates that the amendments will be executed and made effective by the close of business today.
>>We tend to view 'Fed-heads' as good or bad if they help or hinder us from making money. <<<
Lee I haven't had any problem making money in good or bad times and that has nothing to do about my thoughts about Greenspan. Investor's Business Daily's editorial staff always hits Grenspan for being too tight on interest rates. I disagree with that. I think he should have been tighter starting as soon as he saw irrational exuberance. You that "nobody want the circus to end", "nobody wants the fantasy to end". That's the problem with Greenspan. He never knew when to close up the bar and tell folks to go home and rest. As I mentioned the other day, how much better to have controlled growth of 8-12% a year, and be hitting new highs today on the Nas of 1420, than taking the Nas to 5,000 first. Sounds like the bartender that serves his patrons to many drinks and then hands them the car keys. Crash!!!
That's my beef with Greenspan. Never had the balls to say no to those that wanted the bubble to get bigger. Greenspan should have let the markets take more of a natural course during the "Asian Flu", "LTCM" and Y2K. No Lee, I wanted the monetary binge drinking to stop a long time ago. Greenspan job was to stop it. He's the one who could not just say "no".
Joe
I was at Best Buy today about 2pm. 3 registers open with hardly no wait. There was about seven of us total to be checked out. No one in computers and had my choice of four sales people. What was odd was all the handicap spaces were empty except for one and there we several places to park within 3-4 spaces from the front. Then went across the street to Bed, Bath and Beyond. Two registers open with one customer. First time visit for me to BBBY.
If you have a ALDI nearby and looking for a computer they seem to have one hell of a good deal. It's called a "Medion"
P4 - 2.66Ghz 256MB DDR SDram Sony 40x 12x 48 max CD Burner
120GB Hard Drive ......16x DVD-ROM....Dolby 6Channel AudioController for Digital Home Cinema....DSL Ready ....Set-up for two monitors.....all kinds of ports including S-Video...MS works suite 2003 w/ word money etc. $899. Monitor not included.
FWIW, Joe
>>> Keep on watching Mr. Greenspan's actions.<<<
Shat, how many years to you have to watch this guy before he proves himself? He is just plain incompetent in his position. Our current situation should be proof enough. It's not like we don't have any history to look at.
Joe
PRM- IMO, technical analysis on stocks under $5 is a waste of time. Just too easy to manipulate prices on stocks that low. Fundamentally I guess you know this comapny loses a good chunk of money and has no net worth. I would rank it a strong sell after just a quick look at the financials. I don't know anything about the stock. All I know about it is what I have seen in the last 5 minutes of research. Curious as to why you are interested.
Joe
"In the week ending Oct 7, M3 was 8.295 trillion dollars. The latest figures
in the week ending Nov 18, M3 was 8.512 trillion. A gain of 216.7 billion
dollars in six weeks. If my arithmetic is correct, this is an annualized
percentage increase of 22%.
The Dow bottomed on Oct 10 with an intraday low of 7177 and persistently
rose almost 1900 points until reaching it's intraday high on Dec 2 of 9076,
a gain of almost 1900 points. Coincidence? I have no concrete idea. I also
have no idea how the Fed would account for funds injected either directly or
indirectly into the stock market. Would they even have to? Would it be
reflected in M3? Again I don't know.
You have stated in your letters that you have been puzzled by the 1900 point
advance that was never accompanied by a huge burst of upside volume. The
persistent upside bias has been noteworthy for consistent buying pressure
despite the fact that mutual funds had a net outflow of 7 billion during the
month of November, (I don't have the October figures, but I think they were
negative) the pension funds are reeling and I am sure have not yet been
required to inject corporate funds to make up for their ludicrous and
unrealistic projections, and bank equity funds and trust departments are
probably not feeling particularly daring and robust themselves. In addition
to this, Europe has drastically reduced their equity flows into the U.S.
1900 points is no mean advance for the Dow especially without a blowoff or
two. Where did this money come from? Traders are interested in creating
excitement and volatility so they can take profits. This market does not act
like a traders market. In fact this market doesn't act like any market I
have ever seen before and I would better understand it if p/e's were below
10 and yields were over 6 or 7% and everyone was bearish. Who in hell is
running a market priced 50 times the real S&P earnings with almost no
dividends? I can only conclude it has to be the Fed with the ultimate in
OPM's, fiat dollars. Especially since Bernanke has so kindly informed us
there is practically no limit to the Fed's abilities in money creation. The
motivations these people have to get this stock market up are numerous and
compelling. Since their cheerleading and rate cuts hasn't accomplished
anything noteworthy, why not just run it up themselves?"
Someone just e-mailed me an excerpt from Richard Russell's commentary. It appears there is a discussion and thoughts being shared there on China. This is a letter to Richard Russell.
"the answer is not devaluation...even if China devalued...300%...you
would..still have people...working...for $3 to 6 dollars a day..and living
reasonably well.....and the US workers...still could not compete...no ..that
is not the answer..
the people in China are stable...generally happy...and getting more
prosperous..through trade...not through war...they are not hell-bent on
world conquest...like the Japanese were....and it is the better way...they
fight in the market..that is the battlefield..and there do not have to be
losers...either..
You have a huge population in China..and growing...they work hard...for
thousands of years great work ethic...clever...people......tremendous
infrastructure being built...unbelievable....buildings sprouting up in even
the remotest city..that would exceed in one year..in any of these
cities...what you have in La Jolla..or even San Diego...over the last 20
years...highways ..all over...modern..efficient....and more being
built....seeing is believing....I just saw ...in Chungking...a line of
people sitting early in the morn...on plastic stools outside a property
agent's office..waiting to buy...and now in Shanghai..with them winning the
expo...people buying...apartments......at high prices..even by US
standards....
So what is the answer...NO answer...you cannot compete on labor intensive
items...and with the Japanese and the Americans...putting in capital
equipment...you cannot compete on that also...maybe the service
business..area...but in the end .....is what you have is a mega shift...in
equalization of living standards....going on...between the "West"..and
China....even the other countries in Asia...are hearing a giant sucking
sound..as China absorbs and grows...business and investment...
The only way to stop this..is to put up tariff walls..and then China would
be in deep trouble..revolution..discontent...and regional trouble...but
why????...
So enjoy the ride..sometimes..there is no way to fight the tide..and this is
one situation where you do not do so.....and this is not they win and the US
loses...their rising living standard..does not mean that the one in the US
will fall...what you have in the US is unlimited land....plenty of
food....and inventive people...so you have all that you need to enjoy a good
standard of living..China does not have that....sell
them...food...[cake??]....service business...freedom...etc...
This is a change in the world order....and the rise of China does not mean
the decline and fall of the West.
So in conclusion..there is no need or benefit to force China to
devalue...factory workers in the US will lose their job anyway......they
will shift to other businesses...service...agricultural...etc...and China
will be the factory of the world...but there will be bumps..and
dislocations..as the world's economies...go more into balance...on a macro
scale...India will move forward..in service businesses...etc..but that is
life...
go with the flow Richard...and enjoy the ride....
Alan Gold"
Some Chinese stocks worth checking out. CHU, CHINA, SOHO, NTES, SINA, ASIA, CYD, XING, GIGM
Joe
Mlsoft, This is over a year after 9/11. I assume you are talking about what would happen in the event of a interruption of services due to a terrorist act. I think those issues have been put behind us from what steps I have heard taken by the NYSE and others. What caught me eye is when they said"
"Several commenters suggested formation of an industry group to explore the specific changes that would need to occur to enable the two clearing banks to substitute for each other in the event that the services of either were interrupted or terminated ."
Now look at the date here:
On May 13, 2002, the Board and the SEC issued a White Paper on Structural Change in the Settlement of Government Securities. The White Paper expressed concerns about operational, financial,and structural vulnerabilities associated with the status quo, in which all of the most active market participants are critically dependent on one of two clearing banks for settlement of their trades and financing of their positions. The White Paper requested comment on whether structural change was needed to address the vulnerabilities.
"financing of their position"- doesn't sound like a mere short term interuption of service due to a terrorist attack to me.
Now look at this chart for JPM.
http://stockcharts.com/def/servlet/SC.web?c=JPM,uu[l,a]daclyyay[dd][pc20!c50][vc60][iLb14!La12,26,9]...
It was in May that JPM started it's fall. You may recall that the market started to show concerns about JPM and it's derivatives exposure about this time. We also had the Co-head of JPM's investment bank to leave the firm on May 23.
Here's a commentary;
http://moneycentral.msn.com/content/P31234.asp
Excerpt: " Could a failure at J.P. Morgan Chase (JPM, news, msgs) crash the entire financial system? That’s a scenario with credibility on Wall Street, which helps explain the recent trouncing of financial stocks.
If you own stocks, you probably don’t even want to consider this question. Who wants to hear about the chance that complex financial instruments -- derivatives -- could cause an implosion that could send the stock market reeling? After the pain of the last 30 months, who wants to hear about the possibility that the worst isn’t over? " 10-8-2002
Some other links of interest on this subject:
http://www.goldseek.com/cgi-bin/stocks/news/CliveMaund/1032711538.php
excerpt-"Another massive problem facing JP Morgan is that they have, by some estimates, more than $20 trillion of derivatives on their books. Yes, that’s TRILLION not BILLION. I don’t know about you, but I can’t even imagine a sum of money so vast, and, you know, I think that might be at the root of the problem. I don’t think the management at JP Morgan could comprehend it either, it’s so vast it’s almost meaningless. “You’d like another $150 billion in dollar call spreads? Consider it done, Mr Rodriguez – shall I book that to Burkina Faso Leveraged Investments Ltd as usual?”
Compared to the gigantic derivative exposure, the $12 billion of loans to cable and telecom companies seems trifling. Given that, with respect to derivatives, about 2% of a bank’s total exposure is viewed as being at risk, this means that JP Morgan is potentially liable to the tune of $400 billion, which is considerably larger than the bank’s stock market capitalisation of $37 billion."
http://www.goldseek.com/cgi-bin/news/GATA/1020902582.php
excerpt: May 7, 2002
"This morning I received a phone call from the best of
sources in South Africa. The source has a friend who
spent some time recently with two J.P. Morgan Chase
senior bankers. The friend was told by the Morgan
people that they have "lost control of the gold market
and that the gold derivative department was a mess."
The two Morgan people felt it was so bad that J.P.
Morgan Chase -- the bank itself -- might not make it
through the year. They suggested that my source buy
$330 February gold calls."
Maybe a crisis averted?
http://aol.thestreet.com/markets/aarontaskfree/10048891.html
Subject: Salute to Our President
OUR PRESIDENT..... Have you noticed a difference in the salute given by
our military men and women as President Bush walks by? Most folks would not
notice anything, but military people see it right away.
Watch: When President Bush leaves his helicopter or Air Force One, the
honor guards salute and face him as he disembarks, then turn their faces
towards him as he passes by. They continue to salute his back as he walks away.
This kind of salute has not been seen in the previous eight years, though it
is customary courtesy to the Commander-in-Chief.
You see, soldiers aren't required to turn and face the President as they
salute. They are not required to salute his back. They are only required
to salute. They can remain face-forward the entire time. And that is what
they did during Bill Clinton's entire presidency. Our soldiers were forced to
obey Clinton's orders, but they were not force to respect him. From their
salutes, we can surmise that they did not.
Why is such respect afforded to President Bush? He doesn't even know how
to bite his lower lip and not get teary-eyed whenever he speaks! The
following incident from Major General Van Antwerp may give us an insight. Gen.
Antwerp is president of the Officers' Christian fellowship. He lost nearly all
his staff when the Pentagon was attacked Sept. 11. His executive officer LTC
Brian Birdwell was badly burned and in the hospital when President Bush
visited him. Our President spent time and prayed with Brian. As he was
getting ready to leave, he went to the foot of Brian's bed and saluted.
He held his salute until Brian was able to raise his burned and bandaged
arm, ever so slowly, in return. The Commander-in-Chief never initiates a
salute, except in the case of a Congressional Medal of Honor winner. The injured
soldier did not have to return the salute. But he did, out of respect to
his President -a Soldiers' President.
Congressman JC Watts (R. Oklahoma) said, "Character is doing the right
thing when nobody is looking." The nation and world learned some of what our
last President did when nobody was looking. That President has been
disbarred-the worst disgrace (other than imprisonment) to a lawyer. CNN will have a
difficult time shining his or his wife's tarnished images. In this time
of war and danger, I am so grateful to have a President whom the soldiers
salute-fully.
On Special Report with Brit Hume, (hosted by Jim Angle), at the close of
the show when they normally have some funny video clip, they showed President
Bush and the First Lady on their way to Maine to leave for Camp David for
the weekend. As the video starts, the First Lady is leading the way into
the helicopter with the spaniel dog on the leash, and the president is right
behind her with the Scotty on the leash. As the First Lady entered the
chopper, the Marine at the gangway saluted and held his salute. The
Scottie the president was walking decided it wanted to sit right when he got to
the steps. The president pulled on its leash, but the stubborn Scottie
persisted in sitting. The president bent down and scooped up the pooch and entered
Air Force One. After he entered, the Marine cut his salute and returned to
the position of attention. Moments later the president reemerged from the
helicopter and out onto the steps. The Marine was standing at attention,
head and eyes straight ahead. The president leaned over and tapped him on
the left arm. The startled Marine turned his body toward the president
and received his returned salute! I was so impressed by this true act of
respect for our military people by our president! He really does get it. Most any
other person of his stature would have just continued his journey,
disregarding the neglected return salute. Not George W. Bush. He is
earning the respect of the military community, not expecting it-as most have and
would. President George W. Bush. The man who admitted to having a
drinking problem in younger years, and whose happy-go-lucky lifestyle led him to
mediocre grades in college and an ill-fated oil venture. Who mangled
syntax, and whose speaking missteps became known as "Bushisms." He came within a
hair's breadth of losing the election in November. While votes were
counted and re-counted, Bush quietly but confidently waited at his ranch. Make no
mistake, his orders were carried out, but he stayed in the background, faithful and
confident. Bush named Jesus Christ as Lord of his life on public TV. Not an Oblique
reference to being "born-again" or having a "life change." He actually
said the un-PC-like phrase, "Jesus Christ!"
On September 11, he was thrust into a position only known by Roosevelt,
Churchill, Lincoln, and Washington. The weight of the world was on his
shoulders, and the responsibility of a generation was on his soul. So
President George W. Bush walked to his seat at the front of the National
Cathedral just three days after two of the most impressive symbols of
American capitalism and prosperity virtually evaporated. When the history
of this time is written, it will be acknowledged by friend and foe alike
that President George W. Bush came of age in that cathedral and lifted a
nation off its knees. In what was one of the most impressive exhibitions of
self-control in presidential history, President George W. Bush was able
to deliver his remarks without losing his resolve, focus, or confidence.
God's hand, which guided him through that sliver-thin election, now rested
fully on him. As he walked back to his seat, the camera angle was appropriate.
He was virtually alone in the scene, alone in that massive place with God,
just him and the Lord. Back at his seat, George H. Bush reached over and took
his son's hand. In that gesture his father seemed to say, "I wish I could do
this for you, son, but I can't. You have to do this on your own.
President George W. Bush squeezed back and gave him a look of peace that said, "I
don't have to do it alone, Dad. I've got Help". What a blessing to have a
professing Christian as President.
Please take a moment after you read this to "pray for him". He truly does
have the weight of the world on his shoulders. Pray that God will sustain
him and give him wisdom and discernment in his decisions. Pray for his
protection and that of his family. After you have prayed, send this to
everyone on your e-mail list. Our President needs Christians around the
world to be praying for him.
As this makes the e-mail rounds, eventually there could literally be
millions of people praying for him.
Mlsoft , I think you will find this link very interesting.
http://www.federalreserve.gov/boarddocs/press/other/2002/20021126/default.htm
Release Date: November 26, 2002
For immediate release
The Federal Reserve Board announced on Tuesday that it has established a private-sector working group to recommend steps to mitigate risks in the clearance and settlement of U.S. government securities.
The Working Group will explore ways the two major clearing banks could substitute for each other if the services of either were interrupted or terminated. The Working Group has been asked to prepare a final report before the end of 2003.
Michael Urkowitz, Senior Adviser to Deloitte Consulting, has agreed to chair the Working Group. The Working Group will include senior representatives of the two major clearing banks (JP Morgan Chase and The Bank of New York), the Government Securities Clearing Corporation, securities dealers, interdealer brokers, custodian banks, The Bond Market Association, and the Investment Company Institute.
The other members of the Working Group are:
Ms. Mary Ambrecht
Managing Director Salomon Smith Barney (Citigroup)
Ms. Deborah Cunningham
Senior Vice President Federated Investors
Mr. Frank DiMarco
Managing Director Merrill Lynch
Mr. Dennis Dirks
Chief Executive Officer Government Securities Clearing Corp.
Ms. Mary Fenoglio
Executive Vice President State Street
Mr. Ian Lowitt
Global Treasurer Lehman Brothers
Mr. Lawrence Maffia
Executive Vice President Investment Company Institute
Mr. Stephen Merkel
General Counsel &
Executive Vice President Cantor Fitzgerald
Mr. Ernest Pittarelli
Managing Director UBS Warburg LLC
Mr. Brian Ruane
Senior Vice President The Bank of New York
Ms. Jane Buyers Russo
Managing Director JP Morgan Chase
Mr. David Simons
Managing Director Goldman Sachs & Co.
Mr. Paul Saltzman
General Counsel &
Executive Vice President The Bond Market Association
Mr. Thomas Wipf
Managing Director Morgan Stanley & Co.
Staff of the Federal Reserve, the Securities and Exchange Commission and the Department of the Treasury will participate in the Working Group as observers and technical advisers.
The Federal Reserve, Treasury, and SEC have a particular interest in promoting the smooth and safe operation of the U.S. government securities market given the market's critical role for conducting monetary policy operations, financing government activities, and providing benchmark prices and hedging opportunities for other securities markets.
On May 13, 2002, the Board and the SEC issued a White Paper on Structural Change in the Settlement of Government Securities. The White Paper expressed concerns about operational, financial,and structural vulnerabilities associated with the status quo, in which all of the most active market participants are critically dependent on one of two clearing banks for settlement of their trades and financing of their positions. The White Paper requested comment on whether structural change was needed to address the vulnerabilities.
The comments urged the authorities to concentrate on mitigating risks within the current structure, rather than considering structural change, at least in the short run. Several commenters suggested formation of an industry group to explore the specific changes that would need to occur to enable the two clearing banks to substitute for each other in the event that the services of either were interrupted or terminated. The formation of the Working Group announced Tuesday is responsive to that suggestion.
Mlsoft, You may be right but after reading some of the Fed's "white-papers", I don't see a legal vehicle for setting up such guarantees. As I recall, (it's been several months since I read this one paper) they were very specific of what they could do legally.
Here's the Executive Order setting up the Working Group.
http://www.archives.gov/federal_register/codification/executive_order/12631.html
Also, I'm not showing anything that shows that NEM ever traded near that price.
Joe
>>>Quality is no longer a problem and may even supercede products made here.<<<
A few weeks ago I talked to a represetative of a shoe manufacture. They had just closed down their last production facility here in the states and all the work was now done in China. He said quailty control was a big problem here. He said that they just had too much turnover in these low paying jobs to keep quality where it needed to be.
I know what you are saying about unions. When I was 21 and just got out of the Army, I took a job where I was represented by an union. I had no idea how they worked at the time. The first day I saw something that needed to be done and was told I was not allowed to do it because it wasn't in my job description. I thought this is great, nobody wants to do the extra stuff, I should be able to get ahead in this company quick. The next day I asked how often they would review my salary.(remember, I'm agressive and think I can run rings around these other guys. Surely management will notice and raises will come quick). The guy pulled out a book and showed me what my union wages would be for the next three years. I quit the next day.
I think the lack of unions is a definite competitive advantage that China will always have over us.
Joe
>>>If Ca. seceded....<<<
LMAO! That an idea. California becomes the Socialist Republic of Siliconia. Then the rest of the country could then send this newest third world country foreign aid. LOL!
Joe
>>Again, there is no cost as long as it works, but the risk is so great that I would think that guarantees would be necessary.<<
From what I have read I think it would be illegal for Fed to guarantee performance. I also think there is no need to guarantee. The money central banks are big boys and the profits from them being allowed to intervene could be tremendous. It would be my opinion that they are more than happy to accept the risk. In the context of the type money these folks deal with, I don't think they really have that much risk anyway as the risk is more than likely spread amongst several other banks in a coordinated scheme.
JMO, Joe
>>>The Gov't prints more money for itself, why not give some to the states,<<<
LOL! If it was only so easy. I think it's a little more complicated than just "printing" some more money to bail out these states (as in their taxpayers) for their over indulgence.
Amazing how the whole damn Country got caught up in this bubble thing thinking the music would never stop. We had a good thing going and we blew it with our greed.
Joe
>>>I wonder how much of the "productivity miracle" so loved by Greenspan (and which sends Kudlow orgasmic) is due to the loss of low margin (productivity) manufacturing jobs and companies overseas while higher margin (productivity) service and software type jobs remain here.<<<
I've been attacking the "productivity" bandwagon for several years. Just doesn't make any sense for Greenspan and Kudlow to get so excited about that figure. I think a maojor chunk of those gains have come from shipping jobs overseas. If HPQ contracts all of their manufacturing out overseas, of course their productivity will increase substantually - same revenues...less employees.
Here's the kicker and what I fear down the road. One of these days China or some other country will decide that they can sell their own brands over here. They'll set their own distribution and service and the corporate profits will go overseas. Let's face it, brand loyalty is getting harder to secure as the margin of difference is less apparent in domestic owned and manufactured overseas and, foreign owned and manufactured overseas. I think we see this in DVD players today. The ads I see show all kinds of brands. I not much of a techie but I see very little brand loyality in DVD players.
Just a thought, Joe
>>Rather than heading off the bubble by raising margin requirements, rates, reserve requirements, or some other move, he instead did the exact opposite and fed the monster with easy money until it was so bloated it had to be killed. <<
Mlsoft. I agree with much of what you said. Just think- if the market was controlled and irrational exuberance was reigned in, today we could have been looking at today's levels as new high levels and would have been quite happy with that. Back in 1993, Harry Dent, who wrote "The Great Boom Ahead" saw a Dow at 8500 in 2007. At the time, most thought he was nuts. If Greenspan would have stepped in when he was suppose too, we could have been very content with just a gradual climb to current levels. Much better for the economy to slowly march the Nas up to 1400 than take it through the route of getting to 5000 with a guaranteed return ticket.
I remember a poster saying back in 1999 that 50 years from now economic students would be looking back at those bubble years and wondering what we must have been thinking to let things get so out of hand. That's when most will accept that Greenspan looks like one of the biggest incompetent bubbas of the 20th century. I truly don't see anyway out of this mess.
Joe
>>The are still guilty of enormous human rights abuses according to Amnesty International. They are strictly governed by "the end justifies the means" philosoophy.<<
Moot point as to them becoming an economic power. I think you will see that as they become more westernized the above will become less and less of an issue.
Joe
Thanks for posting Noland's essay. I thought this was an interesting point he made.
"today’s extraordinary global backdrop increasingly places the U.S. financial sector directly in harms way. It has no alternative than to perpetuate the Great Mortgage Finance Bubble, but this entails the unending creation of massive amounts of non-productive, volatility-inducing, economic distorting debt. Regrettably, previous Credit excess has made profitable U.S. productive investment largely a thing of the past. Not only have distorted investment flows throughout Asia created enormous over-capacity, inflating U.S. wages and other costs have priced the U.S. out of the global manufacturing marketplace. And this will prove a rather tough structural sticking point for the inflationists. To sustain a level of household income growth necessary to support inflating (largely mortgage) debt levels only widens the competitive disadvantage of U.S. producers and fosters further manufacturing atrophy. While they don’t realize as much, the inflationists are fighting a losing war – fighting fevers with ice baths."
Obviously I have been doing some research this am on the PPT. Just passing on some of the more interesting commentaries.
http://www.fallstreet.com/jul2202/jul2202.htm
What the PPT does (in theory)
Since the Federal Reserve Board is accountable to no one there is very little hard evidence that the PPT exists. Rather, following the formation of the Working Group on Financial Markets the SEC created a 'red book' to help it deal with financial crisis's, and there have been instances when rule changes rig the futures markets. However, whether or not the SEC is ready to change rules to prop up the markets (as they did following 9/11) or futures exchanges are prepared to alleviate the squeeze on some key players are incidental points compared to that of the larger question: does the Fed buy stocks?
The story goes that the PPT (Fed) funnels money through different channels (GS, ML) to buy baskets of Dow stocks and/or S&P/Nas futures. Further, 'unquotable' and 'off the record' insiders insist that the actions of the PPT are sometimes ridiculously obvious – when the markets are collapsing with seemingly no hope of a turnaround, suddenly huge buy orders appear.
Plunge Protecting Success (common): The PPT buys stocks and helps create an illusionary market bottom.
Plunge Protecting Failure (rare): The PPT buys stocks and prices continue to crumble.
Has The PPT Been Buying?
Even though the markets have dropped during the last 2 months it is unlikely that the PPT has been overly active. Why? Because the drop has been methodical and orderly. The last thing the PPT wants is to haphazardly buy futures only to be 'hung' in a few weeks time.
With this in mind, what The Team tries to do, in theory, is ensure that panic selling is undertaken in an orderly fashion (as absurd as this contradiction may sound). As such, last Friday's bout of semi-panic selling could have been the wake up call for napping PPT members who last helped orchestrate a bottom in the markets following 9/11.
The 1929 'Protectors'
"In the very midst of the collapse five of the country's most influential bankers hurried to the office of J.P. Morgan & Co., and, after a brief conference, gave out word that they believed the foundations of the market to be sound, and the market smash has been caused by technical, rather than fundamental considerations, and that many sound stocks are selling too low."
October 24, 1929. New York Times
As the markets crumbled in October 1929 J.P. Morgan and others began to meet in secret quarters and make daily announcements that stocks were cheap and that they were buying. One could argue that J.P. Morgan, the so-called 'lender of the last resort' before the Fed was created, was the ringleader of the 1929 version of the PPT:
"So confident were leading bankers that prices were reaching bottom that they reduced margin requirements for demand loans to brokers from 40 to 25 percent. Members of the banking pool formed last Thursday, when the selling movement reached alarming proportions, again met at the offices of J.P. Morgan & Company, and it was learned that huge buying orders were thrown into the market to absorb selling on the way down and keep the decline orderly."
October 30, 1929. New York Times.
Realizing that the stock market fallout lasted through 1932 the investor is reminded of one truism: no team of Plunge Protectors is infallible. For certain, there comes a point when intelligent and powerful would be 'protectors' begin buying stocks based upon the notion that falling stock prices represent an unacceptable risk to the financial system -- not necessarily because current market prices reflect immediate 'undervaluation'. It is at such a point when the delusion takes full hold – or when the protectors become active investors in falling stock markets.
"Neither assets nor earnings, large as the earnings have been in many instances, warrant the market valuations of hundreds of stock issues. There has been an inflation not free from the charge of criminality, and which has been brought about by misrepresentation, and in many instances dishonest salesmanship. Many corporations have responded to the hysteria and inflationary spirit, and have increased their stocks issues without reason and without justification, expecting to unload them, as unfortunately has been done, upon a credulous, hysterical, if not intoxicated public. It was inevitable that a day of reckoning would come…
…brokers and some bankers and credit organizations have joined in the credit "joy ride" of speculation. They and others must beware lest the catastrophe continue and the limits of the graveyard require enlargement."
Senator King, October 25, 1929, New York Times
The above quote sums up the dangers the PPT faces when they decide it is time to stop stock prices from falling. Indeed, there comes a point when saving a stock market for the sake of saving the stock market is the wrong choice to make. Rather, the more prudent alternative for protectors is to sometimes allow supposedly free markets to fall free of intervention, and to force stockholders who hold nothing more than blind faith to exit ungraciously. After all, the PPT's mandate is to help create an illusionary market bottom – the illusion only becomes real if others join in and buy.
Conclusion
If the Dow crashes the PPT will try to brace the fall. If they are successful life will go on and a new near term bear market 'bottom' will be formed. However, if they fail the PPT will have only have prolonged, in Senator King's words, 'the inevitable'.
Will the PPT be buried alive? To be continued...
"One of my subscribers emailed me after last week’s brief on the government’s Plunge Protection Team (PPT),{Excerpt:http://www.centrexnews.com/columnists/skousen/2002/0726.html) with the plaintiff cry, "Where is the Plunge Protection Team when I need it?" His stocks were falling like everyone else’s and the usual government manipulation of future contracts to buoy up sagging index stocks seemed no where in sight. This is to be expected from time to time, even when the Fed intends to keep the market up--as is currently the case. With a falling dollar, and trillions in national debt and entitlement obligations, even the all-powerful US Treasury has certain constraints. They cannot intervene at will all of the time, but have to save their shots for moments in the markets when their injections of funds will produce a follow-on affect of some magnitude. The Plunge Protection Team can’t carry the market on its own for more than a day or two. At best, they can make it appear as if a rally is happening, hoping that others will jump on the buying bandwagon.
This week, we observed government intervention in a major way. On Wednesday, the market rebounded sharply and gained nearly 500 points (DJIA). Then it fell back on Thursday (almost 250 points) until the PPT intervene during the closing hours in a desperate drive to keep the illusion of an upturn alive. Let’s look at the mechanisms used and why they aren’t working.
The government and its cronies at insider-connected brokerage firms have access to computers at the various stock exchanges and have implemented sophisticated tracking software to monitor the pace of large blocks of futures contracts, derivatives, and shorts. Only a minority of daily transactions are trades by individual investors--the little guy. The majority are done by fund managers, foreign traders, speculators, and the big brokerage houses. The PPT uses its insider knowledge of who is buying and selling large blocks of stock (which normal investors don’t have access to) to track pressure points within the market, such as building margin calls or short contract due dates. When pressures build within a market, relief is sought in a predictable direction, and the manipulators can take advantage of such short-term moves to induce a market reaction either up or down.
For example, in a falling market, numerous hedge players short the market by making an agreement to sell stock to a buyer at the price at which the shares are valued on the date the contract is executed, but with a deferred time of delivery--betting that by the time the delivery is scheduled the price will have fallen and the shorter can buy low and sell at the price already agreed upon. Short players will delay their stock purchases until the last moment if prices are falling (to maximize profits), but if a rally begins, they can be counted on to buy immediately so as to cover their stock position and lock in profits (or minimize losses) before they are left in the dust in the upturn of the market.
I think that is what we saw on Wednesday. With thousands of short contracts coming due from prior week’s betting, all the PPT had to do was start the market upward, and the shorts had to move quickly in order to buy while the price still provided a margin of profit. However, the move failed to engender an overall broad-based rally. It was only a technical rally. The majority of honest players still held onto their suspicions that the economy has more bad news hidden inside.
In addition, there are millions of investors who have already lost a lot of value in their stocks, but have not yet sold. After two years of hearing the financial media hyping the recovery, they don’t believe it anymore. So whenever the market takes a brief jump, a lot of the little guys step in to sell, hoping to salvage some lost profits. Thus, on Thursday, the markets started weak and dropped heavily in the afternoon. Big institutional buyers (working for the PPT) stepped in to buy Dow stock futures in the final two hours of trading in order to force an upturn. The Dow finished the day with a small loss, but other stocks were much further down. One of the signs of manipulation is when the rise in the indexes are not matched by corresponding moves in other non-indexed stocks, in aggregate.
I don’t think this weak recovery will inspire any confidence, despite the constant media barrage of propaganda, selectively quoting only the market optimists. The bloom is off the stock market, and few believe it will return to its glory days for several years. Indeed, the downward forces of excess debt and internal corruption may be too strong for the manipulators to overcome. But these insiders certainly do still have the power to slow down the fall.
PPT- Excerpt from a link below
"Anyone who doubts this could not have been watching the stock market closely
last Thursday, (this is from about a year ago) when a weak and dispiriting opening hour mutated into a bullish
rampage that did not relent until the final bell. During bear markets in particular,
rallies draw that kind of explosive power not from routine buying, but from shorts
panicking to cover positions gone horribly and painfully awry. So when the stock
market is quietly morose, as it was last Thursday, just one sizable buy order
tossed into the S&P pit can have the effect of a Molotov cocktail, quickly engulfing
shorts in the fires of hell. Keep in mind that, under certain conditions, a buy or sell
order as small as 20 or 30 contracts can alter the course of the S&Ps over the
very short-term. Just imagine what kind of pop Goldman Sachs, Morgan Stanley
and Merrill Lynch could create, especially late in the day, if they were to
simultaneously enter large buy orders for S&P contracts.
Scam Up-Close
This is exactly what has been happening in the S&P futures pit recently,
according to friends of mine who have been close to the action, and it represents
the refinement of program-trading techniques that have been used with increasing
effectiveness since the days of the 1987 Crash. The huge growth of electronic
trading undoubtedly has helped to amplify the effect, since a vast, global universe
of traders, hedgers and speculators are effectively on a hair trigger, each seeking
to be a step or two ahead of the stampede. Traders in the S&P pits are among the
first to see the buy programs coming, and it has happened often enough lately to
cause them to pull their offers at the first hint that the usual suspects may be
about to light the fuse. When the sellers then back away from their offers, the
lightened supply that results makes it possible for the S&Ps to lift effortlessly,
kicking off a chain reaction of hedge-buying in other indexes, as well as in specific
stocks and related securities and derivatives. Once the panic starts, it is a simple
matter for the perpetrators to take sizable profits just minutes after the rally has
begun. And if they should conspire to kick things off just before the final bell, they
can position their offers in Asian and European markets so as to reap substantial
profits with almost no risk.
Key to Distribution
There is an additional benefit to the institutional players that is tied to their
long-term goal of easing out of the bear market at better prices than they would
receive in an unrigged game. For, every time stocks spike higher following a buy
program calculated to "run the shorts," the rally subsequently attracts bids below
the market from those who missed the impulse wave. The initial rally will typically
have occurred on relatively light volume, for that is the very nature of a price spike.
But the "detumescence" period that follows can take days or even weeks, allowing
institutional holders to distribute stocks into a steady stream of demand. Of
course, this gambit cannot overcome the inexorable power of a bear market, only
forestall it. Over time, the bear will have its way, as each price spike on the chart
eventually gives way to a lower low. My guess is that the current round of
thimble-rigging will play itself out within a week or two at most. No doubt, the
scheme has succeeded thus far by getting the jump on seasonality factors.
Which is to say, the "Christmas rally" has already occurred -- in
the form of buy
programs that by now have milked the last dime from credulous buyers.
http://members.rogers.com/fallstreet1/plungeprotection/oct3101p/oct3101p.html
ad the best way to get the highest price is to start buying it yourself first, creating a