Seek ye the Lord while he may be found, call ye upon him while he is near Isaiah 55:6KJV
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Retailers Still Face Reluctant Shoppers
The economy may be slowly improving, but consumers still have less money to spend on food than before the recession.
Advertisement.More than half of shoppers — 61% of the population — are “survivalists,” said Thomas J. Blischok, chief retail strategist and senior executive advisor of Booz and Co., at the “Understanding Today’s Changing Retail Trends” workshop at the United Fresh Show in Dallas last week.
“Every day they go to the store they think about, ‘What can I buy? What can I afford? And what can I not buy?’” Blischok said, noting these survivalist consumers are typically heavy coupon users.
In addition, 35% of consumers are “selectionists,” who opt in and out of different categories, he said.
A lack of emergency savings adds pressure on cash-strapped shoppers of all ages.
When surveyed, 61% of Millennials, 65% of Generation-X consumers, 60% of Baby Boomers and 47% of seniors said they do not have $2,000 saved in case of an emergency, according to Blischok.
“This is the first time in history we’re seeing this kind of economic instability where shoppers don’t have access to $2,000,” he said.
With limited savings, limited spare time and more concern about retirement savings, retailers can bring in more customers by providing a comfortable experience within stores and simplifying shopping in store.
“The reality is that they’re looking for comfort,” Blischok said. “Whenever you have fears you look for comfort.”
Perishables departments in particular can do more to make shopping easier for consumers. Blischok pointed out how much longer it takes to find the right apple than to pick out a specific kind of canned soup.
One way fresh departments might change shopper experience is by looking at the way they merchandise.
“So one of the mistakes that I think most grocers make is they put categories in the store the way they want to put [them] in the store, not the way people buy,” Blischok said. “So ask yourself do you have the opportunity to change some of the displays.”
He advocated bundling products, such as creating a Greek salad display with all the ingredients in one place so shoppers don’t have to cross the store several times to put together a meal.
“Merchandising displays will drive an average basket up about 22% to 25%,” Blischok said.
Also, interesting displays can pique shopper interest, and large displays with lots of product can give category authority.
“I’m not suggesting you fundamentally go change what you do for a living. But I am suggesting that if you’re going to compete, you’re not going to compete by stacking and racking stuff the way you have in the past,” Blischok said.
With the many, many products available in grocery stores now, retailers could benefit from simplifying how to find products. Blischok noted that several retailers are moving from grouping by category to creating departments, and others are creating smaller stores with a limited assortment specifically catered to the needs of their surrounding neighborhoods.
“The question you have, is when you put products in stores if people can’t find them in 7 and 15 seconds, you’ve got the wrong display because what you want to do is take the 20-minute shopping trip and reduce it to 15 and give people 5 minutes to browse.”
There’s draw in consumer education in displays, too. Blischok observed that with some stores offering nearly 50 different kinds of apples, it’s important to teach customers how to use products, and what the different flavors and textures mean.
Spending time on merchandising and simplifying displays in perishables departments can have a big impact on which customers come to the store. Blischok said customers tend to say that the quality of perishables is a top concern.
Growing retailer emphasis on store experience reflects customers’ new definition of value.
“The American consumer has redefined value as quality received per dollar spent. It is critical that you recognize that phraseology because it’s not just price,” he said
Frontrunning China's Insatiable Demand For Gold....
I like investing in commodities because they’re very simple to understand—it’s all about supply and demand. Naturally, I take a very strong interest in the increasing demand for gold coming out of China. You see, in the short run, the paper markets (leveraged traders) rule the day. In the longer run, the physical market is all that matters. In the past few months, we’ve seen some very important changes in the physical market for gold—China is hungry.
Monthly Chinese Gold Imports (excludes March's 63 Tons)
In this year’s first quarter, Chinese gold production hit a record around 80 tons, but that’s only part of the story. The real story is on the import side, where China imported 135.5 tons (up from 19.7 tons last year). In total, China is now consuming almost 30% of the world’s gold production. India is no longer the price setter—China is. Even more interestingly, gold imports are starting to rise rapidly, 32,948kg in January, 39,668kg in February and 62,913kg in March. If there is one true lesson from the past decade, it is to watch what China needs. When their internal production can no longer fill the need and they resort to imports, watch out!! Import demand starts small and grows forever.
If you’ve been paying attention to recent earnings from the mining sector, you will know that almost everyone missed their targets. Where growth did exist, other mines had shortfalls. There is minimal production growth from the industry. I don’t see substantial growth in gold production for at least a number of years. What happens when demand increases and supply cannot keep up?
Despite what the tin-foil-hatters may want you to think, in the end, gold is just another commodity where the majority of production still goes into jewelry, dental and industrial applications. At the margin, guys hoarding coins and central bank buying has mattered, but basic demand has really set the trend. Gold isn’t valued at much more than the marginal cost of bringing on new production. If you want to see big production increases, you need for the price to go substantially higher. Given the massive headache of operating a gold mine, you need to make at least a 20% return on capital to even consider it. We need much higher prices for new mines to earn those sorts of returns.
I mention all of this because I am watching as gold is in free-fall. Sentiment is at multi-year lows. Everyone thinks that gold is going lower. Yet, demand is ramping up while supply is stable
The Chinese have finally found an asset class that they can put their money into and feel secure. Their current options are bank deposits with negative real yields at insolvent banks, fraudulent Chinese stock exchange companies or real estate in a real estate bubble. Gold is the answer that the whole country has been looking for. 63 tons of buying in March is a tiny number. It’s a mere $3 billion. Wait until a billion people decide to make the shift in allocations.
I’ve been long gold for almost a decade. There have been stunningly brutal selloffs in the past. This is another one of them. I think we are near the final legs of this sell-off. A few days back, I sold some of my miners to reduce my exposure as they weren’t “acting right.” Instead, I’m buying gold. I don’t have to worry about all the headaches of mining. This is a large position that I’m making larger. I want to own what China wants to own.
Harris Kupperman
http://adventuresincapitalism.com/
JER1
This sucks- $100,000 antique coin collection was stolen after fire
A December apartment fire in Bayonne displaced tenants and destroyed personal possessions in several units.
However, Helmy Makarious, a resident of the building whose apartment was spared by the blaze, says he may have lost the most of all: his life's savings.
Two years ago, Makarious invested most of his money in his coin collection. That collection went missing in the aftermath of the fire, and four months later, there are no leads in the search for the missing coins.
Makarious, 66, was among the tenants of 92 W. 33rd St. who were evacuated from their apartment building on Dec. 29, 2011. Makarious was asleep in his fourth-floor apartment when his wife roused him from his slumber around 8 p.m.
"My wife tells me, 'Hurry up, we have a fire,'" Makarious said.
Makarious and his wife made their way out of the building, stopping once to turn back after encountering fire in the hall. Makarious was taken to Bayonne Medical Center to be treated for smoke inhalation. By the time he was released from the hospital and returned to his apartment, it was 4 a.m.
The couple were allowed back into their apartment and were relieved to find it had escaped being damaged by the blaze. However, that feeling was quickly replaced with despair as Makarious realized his coins were gone.
The police report, filed with Bayonne Police Department, tells the tale: Makarious told police his collection of old English money had been stolen sometime between 8 p.m. and 4 a.m. on the night of Dec. 29. The estimated value of the money listed in the report: $80,000 to $100,000.
Makarious said when he returned to his apartment, the door was ajar. He found the reinforced lockbox in which he stored the money open and on the floor. The lock mechanism on the box was twisted, as if it had been pried open. Another jewelry box, which Makarious said contained more of the antique coins, was also missing. Makarious did not have insurance on the collection.
Bayonne Police Chief Robert Kubert said the standard protocols for securing the scene of a fire were followed. He said the owner of the building is responsible for securing the building after emergency crews are finished at the scene, unless foul play is suspected.
"If the Fire Department deems it suspicious, then it's a crime scene," Kubert said.
Hopeful the police would be able to trace the coins when the thief inevitably attempted to sell them, Makarious waited. However, four months later, he's beginning to lose hope.
"Every day, I hope somebody will call me," Makarious said. "Still nothing."
Kubert said investigators check local pawn shops and other gold and jewelry dealers in cases like this, and the stolen valuables often turn up. However, there has been no sign of the thief attempting to sell Makarious's coins.
How did a man living in a modest Bayonne apartment come to have $100,000 of antique money?
Makarious said he moved to the United States from Egypt about 38 years ago. He has since lived in New York, Pennsylvania and North Carolina. He settled in Bayonne 19 years ago.
In 1984, Makarious was injured while working for the Hudson Construction company in Manhattan. He fell two stories at a job site, sustaining an injury to his back that would require two surgeries. Unable to continue working, Makarious received workers' compensation checks every two weeks for nine years before receiving a lump sum settlement. He put the money into savings, amassing a respectable nest egg.
On May 3, 2010, according to a bank statement, Makarious withdrew $180,000 of the money he had been saving since his accident. He used the money to purchase $100,000 in antique British gold coins and paper money from Thomas Cook Currency Services in New York. The collection included a rare misprinted coin with Queen Elizabeth's portrait on both sides, among other valuable pieces.
Since the theft, Makarious said he asked the company to provide him with proof of his purchase, but was told the company did not keep such records. The Thomas Cook location in Manhattan has since become Travelex Currency Services. A representative from Travelex said the company no longer deals in antique currency.
Makarious doesn't even have a photo of the coins. The only evidence of the collection's existence is the damaged lockbox. With no leads and no hope, all Makarious can do is wait.
"All my life's money is gone," Makarious said.
http://www.nj.com/bayonne/index.ssf/2012/05/bayonne_man_says_100000_antiqu.html
Yahoo Shares Rise Despite Concerns About Strategy
Yahoo Inc (YHOO) investors welcomed the appointment of a media veteran as interim chief executive of the Internet company even as analysts worried that the company's strategy would face months of uncertainty.
Yahoo's shares rose 2.5 percent on Monday after Chief Executive Scott Thompson stepped down -- after just four months on the job -- following a controversy over his academic record and Yahoo named Ross Levinsohn interim CEO.
Yahoo's board, which was sharply criticized for how it handled Thompson's hiring, was now giving three director seats to the activist hedge fund headed by Daniel Loeb, settling a looming proxy fight. Yahoo Chairman Roy Bostock was also stepping aside.
Thompson's departure caps another of many tumultuous episodes involving Yahoo management over several years and comes as the company struggles to regain relevancy and revive growth amid fierce competition from rivals Google Inc <GOOG.O> and Facebook.
Analyst Ken Sena of Evercore Partners said investors "are likely to take comfort in fresh leadership, particularly at the board level, as eight of the 11 board seats were named in the past year."
Others applauded Levinsohn's appointment because of his history in media and advertising sales, but worried that it could be some time before the company strategy is clarified.
"As a practical matter, what this means for the company is that the past four months have been little more than a false start, and it must once again start at the beginning in terms of establishing a strategic direction," Macquarie analyst Ben Schachter said in a research note.
Thompson exited the company 10 days after Loeb's hedge fund, Third Point, accused him of padding his biography with a computer science degree. Third Point is one of Yahoo's largest shareholders, with a 5.8 percent stake.
Before resigning, Thompson disclosed to the board he had been diagnosed with thyroid cancer, the Wall Street Journal reported, citing sources. Yahoo representatives did not immediately respond to requests for a comment on the report.
TECH OR MEDIA STRATEGY?
Describing Yahoo as "a mess," Schachter said the management changes were necessary after the controversy, which he dubbed "Resumegate." Levinsohn may be "auditioning to take on this role on a permanent basis," he said.
Clayton Moran, an analyst for The Benchmark Company, also sees Levinsohn as a CEO candidate, but said it was not clear when Yahoo would decide on the top job or how long it would take the new leader to build a new strategy.
"We could be in a period of limbo again," Moran said. "Once somebody has solidified that position we may have to wait 90 days for them to complete their review."
If Levinsohn keeps the CEO job, his appointment and background in media may provide investors with clues as to the company's future strategy.
Levinsohn is popular among Yahoo's rank-and-file and has credentials as a negotiator. He helped steer News Corp's <NWSA.O> acquisition of MySpace, and started an investment fund to buy interests in various digital and media companies across the globe before joining Yahoo.
In comparison, Yahoo's last two CEOs, Scott Thompson and Carol Bartz, had stronger backgrounds in technology than media. Yahoo had hoped they would find a way to catch up with Google, whose stronger technology helped it beat Yahoo, analysts said.
"(Levinsohn) would fit with where Yahoo's strongest today but might not accelerate the pace of technology innovation," Moran said, citing Yahoo's strength in online media content.
"They've failed to keep up with the evolution of the Internet," Moran added. "What they'd most benefit from is somebody with a bit more vision that could capitalize on their brand and focus more resources on higher growth areas."
One area Yahoo could do well is in online video, Moran suggested. Credit Suisse analyst Spencer Wang said Levinsohn could help Yahoo build its existing business.
"We view Mr. Levinsohn as well-equipped to lead the organization and to build off of the company's core strengths -- advertising products and digital media," Wang said.
In the meantime, investors can only wait for new decisions.
"It remains unclear how the new management will turn things around at Yahoo.com and how quickly yet another new strategy can be formulated," Schachter said.
Mark Cuban, a noted tech entrepreneur who has closely followed Yahoo's gyrations since selling his Broadcast.com to the company in 1999 for more than $5 billion, said shareholders should give Yahoo breathing space to find growth.
"I don't think shareholder activism helps Yahoo. It puts too much pressure on increasing the stock price. That is the least important of their worries." he said. "They have to change the culture and find their leverage points to grow the business."
Shares of Yahoo rose 38 cents, or 2.5 percent, to $15.57 in morning trade on Nasdaq.
http://www.foxbusiness.com/technology/2012/05/14/yahoo-shares-rise-despite-concerns-about-strategy/
Got it will do. Thanks!
JER1
Happy Monday Calvf!
JER1!
Europe, Global Economic Growth May Dominate Headlines Again Next Week
By Debbie Carlson
Of Kitco News
http://www.kitco.com/
Europe’s political uncertainty and worries about global economic growth may dominate headlines next week and how the U.S. dollar performs will determine the direction of precious metals.
Prices were lower on Friday and on the week. The most-active June gold contract on the Comex division of the New York Mercantile Exchange fell Friday, settling at $1,584 an ounce, down 3.72% on the week. July silver fell Friday, settling at $28.89 an ounce, down 5.07% on the week.
In theKitco gold surveyout of 33 participants, 24 responded this week. Of those 24 participants, nine see prices up, while seven see prices down, and eight are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.
Prices on Friday were pressured by weak Chinese economic data, underscoring worries about global economic growth. Further pressure came after banking giant J.P. Morgan said it lost $2 billion in complex interest rate hedges. That pushed investors to seek safety in the U.S. dollar, which weighed on gold and other markets.
Following this week’s sharp sell-off in precious metals and other markets, traders are being cautious. There’s no strong consensus where prices may go in the short-term, but overall analysts have said longer-term they remain bullish on metals. The losses this week prompted several banks, including BNP Paribas and Barclays, to lower outlooks for precious metals.
Looking ahead to next week, politics will remain in the headlines. On Sunday, elections in Germany’s most-populous state, North Rhine-Westphalia, will occur, with political pundits suggesting that Chancellor Angela Merkel’s party will lose the election. Greece will remain on the radar as a coalition government still has not been formed after last week’s elections.
“The political situation in Greece remains uncertain, but a deal to form a unity government in the coming days would be a positive surprise and avoids new elections in June. This may provide a temporary boost to the euro, but we advise selling into rallies to position for a steady grind lower over the coming weeks,” said analysts at Brown Brothers Harriman.
For economic news, on Tuesday gross domestic product data from the eurozone area will be released and is likely to show the region is in recession, confirming what most people already suspect.
Also on Tuesday, market watchers will look to see where U.S. consumer inflation came in at in April, especially after the drop in wholesale inflation data on Friday. Analysts surveyed by MarketWatch look for the overall and core consumer price index to show a 0.2% rise in inflation.
Daniel Pavilonis, senior commodities broker with RJO Futures, said he sees further weakness for gold. “With the J.P. Morgan news, I see it getting a lot worse (for banks)…. There’s the scare factor and I see flight to quality continuing into the dollar next week and no QE3 (third quantitative easing),” he said.
Market participants said with gold holding under $1,600, there has been some interest in buying physical metal, but it hasn’t been a groundswell. Earlier this week Edel Tully, UBS precious metals strategist, suggested there might be greater interest to by around the $1,550 region. That would mean further weakness for the metal, given where prices settled Friday.
Nomura analysts listed a few signs that might signal the end of the current weakness of gold including the metal not being correlated with the euro, prices rising during Asian trading hours and inflows into exchange-traded gold funds.
“In spite of the recent bearish price action, our long-term view remains bullish. There are several factors for this, including the continued low-rate environment. Furthermore, we think that gold is likely to benefit as a tail-risk hedge, related to increasing uncertainty surrounding the eurozone situation, even if at the moment it is (not),” they said.
Not everyone sees lower prices ahead. A few market watchers said given that gold is holding around the $1,580 area, the market could try to rebound next week and test the $1,600 area. If it can break through that ceiling, the next area of resistance would be the April intraday low of $1,613, said Richard Baker, editor of the Eureka Miner.
GIGANTIC COLLECTION OF PENNY STOCK CHARTS
LBSR
THRA
FFGO
SAPX
EXPU
ENTI
TRDY
MMTE
FOGC
MASP
EPTI
KNOS
ACTN
ANSH
RAYS
CBAI
MFGLQ
TPIV
CAMS
LJWY
MDFI
MPX
HAR
MEG
OCZ
QQQ
CIM
JPM
GIII
AAPL
FTWR
WFC
S
GE
F
BAC
JBII
WAMUQ
MLXO
CAMS
EVCA
THWI
FOGC
PSPW
CMGO
BIEL
SRSR
RBTI
PMI
GRDO
DUSS
ZPCM
SDRC
SRRY
SPOR
PPRW
PHAR
PDOS
PDGO
NTUR
NRTI
NVIV
ONTC
NPHC
NEON
NCEN
MDGC
CVSL
CBBD
CHBT
CLSP
CNLG
DRFO
EDIG
EXTO
FCCN
FEEL
HKFI
ICBU
VELA
VSHC
WQNI
XCEL
ZMTP
WGBS
WWAG
VMCI
VCTY
UYMG
TEMO
HLCS
BVTI
CBWP
BMPI
BLVT
BORK
BUGS
COPY
CXTO
EPEO
LRTR
NDBE
OPMG
OVIT
PTSC
QMCI
RFNN
SMNG
SOON
TBBC
BRYN
CPQQ
CZFS
ENCO
IMCI
MDFI
LCHL
TLAG
SNAX
SLUP
RLTR
MCET
LLEG
LGDI
HWIC
BLQN
BKRS
BLSP
BRGO
CMXI
DUSS
ERFB
FNCX
PWSV
UCRP
ZAAP
TRUE
SOLU
SMKY
SKNY
SIOR
PFSD
OTCM
NXRA
NOEC
NGHI
MYFT
LBSR
KATX
IMGG
ICTY
HYGN
GBLE
FRMC
CONX
BNLB
FOFU
WRIT
WTKN
WWPWE
TBIO
SUGO
ABCP
AAVG
AAST
AAPT
AAPH
AAIR
AAGC
AACS Chart
AAAA Chart
CURX
PEIX
CURX
GIGANTIC COLLECTION OF PENNY STOCK CHARTS
LBSR
THRA
FFGO
SAPX
EXPU
ENTI
TRDY
MMTE
FOGC
MASP
EPTI
KNOS
ACTN
ANSH
RAYS
CBAI
MFGLQ
TPIV
CAMS
LJWY
MDFI
MPX
HAR
MEG
OCZ
QQQ
CIM
JPM
GIII
AAPL
FTWR
WFC
S
GE
F
BAC
JBII
WAMUQ
MLXO
CAMS
EVCA
THWI
FOGC
PSPW
CMGO
BIEL
SRSR
RBTI
PMI
GRDO
DUSS
ZPCM
SDRC
SRRY
SPOR
PPRW
PHAR
PDOS
PDGO
NTUR
NRTI
NVIV
ONTC
NPHC
NEON
NCEN
MDGC
CVSL
CBBD
CHBT
CLSP
CNLG
DRFO
EDIG
EXTO
FCCN
FEEL
HKFI
ICBU
VELA
VSHC
WQNI
XCEL
ZMTP
WGBS
WWAG
VMCI
VCTY
UYMG
TEMO
HLCS
BVTI
CBWP
BMPI
BLVT
BORK
BUGS
COPY
CXTO
EPEO
LRTR
NDBE
OPMG
OVIT
PTSC
QMCI
RFNN
SMNG
SOON
TBBC
BRYN
CPQQ
CZFS
ENCO
IMCI
MDFI
LCHL
TLAG
SNAX
SLUP
RLTR
MCET
LLEG
LGDI
HWIC
BLQN
BKRS
BLSP
BRGO
CMXI
DUSS
ERFB
FNCX
PWSV
UCRP
ZAAP
TRUE
SOLU
SMKY
SKNY
SIOR
PFSD
OTCM
NXRA
NOEC
NGHI
MYFT
LBSR
KATX
IMGG
ICTY
HYGN
GBLE
FRMC
CONX
BNLB
FOFU
WRIT
WTKN
WWPWE
TBIO
SUGO
ABCP
AAVG
AAST
AAPT
AAPH
AAIR
AAGC
AACS Chart
AAAA Chart
CURX
PEIX
CURX
Double or Nothing: How Wall Street is Destroying Itself
There’s nothing controversial about the claim— reported on by Slate, Bloomberg and Harvard Magazine — that in the last 20 years Wall Street has moved away from an investment-led model, to a gambling-led model.
This was exemplified by the failure of LTCM which blew up unsuccessfully making huge interest rate bets for tiny profits, or “picking up nickels in front of a streamroller”, and by Jon Corzine’s MF Global doing practically the same thing with European debt (while at the same time stealing from clients).
As Nassim Taleb described in The Black Swan these kinds of trades — betting large amounts for small frequent profits — is extremely fragile because eventually (and probably sooner in the real world than in a model) losses will happen (and of course if you are betting big, losses will be big). If you are running your business on the basis of leverage, this is especially dangerous, because facing a margin call or a downgrade you may be left in a fire sale to raise collateral.
This fragile business model is in fact descended from the Martingale roulette betting system. Martingale is the perfect example of the failure of theory, because in theory, Martingale is a system of guaranteed profit, which I think is probably what makes these kinds of practices so attractive to the arbitrageurs of Wall Street (and of course Wall Street often selects for this by recruiting and promoting the most wild-eyed and risk-hungry). Martingale works by betting, and then doubling your bet until you win. This — in theory, and given enough capital — delivers a profit of your initial stake every time. Historically, the problem has been that bettors run out of capital eventually, simply because they don’t have an infinite stock (of course, thanks to Ben Bernanke, that is no longer a problem). The key feature of this system— and the attribute which many institutions have copied — is that it delivers frequent small-to-moderate profits, and occasional huge losses (when the bettor runs out of money).
The key difference between modern business models, and the traditional roulette betting system is that today the focus is on betting multiple times on a single outcome. By this method (and given enough capital) it is in theory possible to win whichever way an event goes. If things are going your way, it is possible to insure your position by betting against your initial bet, and so produce a position that profits no matter what the eventual outcome. If things are not going your way, it is possible to throw larger and larger chunks of capital into a position or counter-position again and again and again —mirroring the Martingale strategy — to try to compensate for earlier bets that have gone awry (this, of course, is so often the downfall of rogue traders like Nick Leeson and Kweku Adoboli).
This brings up a key issue: there is a second problem with the Martingale strategy in the real world beyond the obvious problem of running out of capital. You can have all the capital in the world (and thanks to the Fed, the TBTF banks now have a printing-press backstop) but if you do not have a counter-party to take your bets (and as your bets and counter-bets get bigger and bigger it by definition becomes harder and harder to find suitable counter-parties) then you are Corzined, and you will be left sitting on top of a very large load of pain (sound familiar, Bruno Iksil?)
The obvious real world example takes us back to the casino table — if you are trying to execute a Martingale strategy starting at $100, and have lost 10 times in a row, your 11th bet would have to be for $204,800 to win back your initial stake of $100. That might well exceed the casino table limits — in other words you have lost your counter-party, and are left facing a loss far huger than any expected gains.
Similarly (as Jamie Dimon and Bruno Iksil have now learned to their discredit) if you have built up a whale-sized market-dominating gross position of bets and counter-bets on the CDX IG9 index (or any such market) which turns heavily negative, it is exceedingly difficult to find a counter-party to continue increasing your bets against, and your Martingale game will probably be over, and you will be forced to face up to the (now exceedingly huge) loss. (And this recklessness, is what Dimon refers to as “hedging portfolio risk“?)
The really sickening thing is that I know that these kinds of activities are going on far more than is widely recognised; every time a Wall Street bank announces a perfect trading quarter it sets off an alarm bell ringing in my head, because it means that the arbitrageurs are chasing losses and picking up nickels in front of streamrollers again, and emboldened by confidence will eventually will get crushed under the wheel, and our hyper-connected hyper-leveraged system will be thrown into shock once again by downgrades, margin calls and fire sales.
The obvious conclusion is that if the loss-chasing Martingale traders cannot resist blowing up even with the zero-interest rate policy and an unfettered fiat liquidity backstop, then perhaps this system is fundamentally weak. Alas, no. I think that the conclusion that the clueless schmucks at the Fed have reached is that poor Wall Street needs not only a lender-of-last-resort, but a counter-party-of-last-resort. If you broke your trading book doubling or quadrupling down on horseshit and are sitting on top of a colossal mark-to-market loss, why not have the Fed step in and take it off your hands at a price floor in exchange for newly “printed” digital currency? That’s what the 2008 bailouts did.
Only one problem: eventually, this approach will destroy the currency.
Would you want your wealth stored in dollars that Bernanke can just duplicate and pony up to the latest TBTF Martingale catastrophe artist? I thought not: that’s one reason why Eurasian creditor nations are all quickly and purposefully going about ditching the dollar for bilateral trade.
The bottom line for Wall Street is that either the bailouts will stop and anyone practising this crazy behaviour will end up bust — ending the moral hazard of adrenaline junkie coke-and-hookers traders and 21-year-old PhD-wielding quants playing the Martingale game risk free thanks to the Fed — or the Fed will destroy the currency. I don’t know how long that will take, but the fact that the dollar is effectively no longer the global reserve currency says everything I need to know about where we are going.
The bigger point here is whatever happened to banking as banking, instead of banking as a game of roulette? You know, where investment banks make the majority of their profits and spend the majority of their efforts lending to people who need to the money to create products and make ideas reality?
Double or Nothing: How Wall Street is Destroying Itself
There’s nothing controversial about the claim— reported on by Slate, Bloomberg and Harvard Magazine — that in the last 20 years Wall Street has moved away from an investment-led model, to a gambling-led model.
This was exemplified by the failure of LTCM which blew up unsuccessfully making huge interest rate bets for tiny profits, or “picking up nickels in front of a streamroller”, and by Jon Corzine’s MF Global doing practically the same thing with European debt (while at the same time stealing from clients).
As Nassim Taleb described in The Black Swan these kinds of trades — betting large amounts for small frequent profits — is extremely fragile because eventually (and probably sooner in the real world than in a model) losses will happen (and of course if you are betting big, losses will be big). If you are running your business on the basis of leverage, this is especially dangerous, because facing a margin call or a downgrade you may be left in a fire sale to raise collateral.
This fragile business model is in fact descended from the Martingale roulette betting system. Martingale is the perfect example of the failure of theory, because in theory, Martingale is a system of guaranteed profit, which I think is probably what makes these kinds of practices so attractive to the arbitrageurs of Wall Street (and of course Wall Street often selects for this by recruiting and promoting the most wild-eyed and risk-hungry). Martingale works by betting, and then doubling your bet until you win. This — in theory, and given enough capital — delivers a profit of your initial stake every time. Historically, the problem has been that bettors run out of capital eventually, simply because they don’t have an infinite stock (of course, thanks to Ben Bernanke, that is no longer a problem). The key feature of this system— and the attribute which many institutions have copied — is that it delivers frequent small-to-moderate profits, and occasional huge losses (when the bettor runs out of money).
The key difference between modern business models, and the traditional roulette betting system is that today the focus is on betting multiple times on a single outcome. By this method (and given enough capital) it is in theory possible to win whichever way an event goes. If things are going your way, it is possible to insure your position by betting against your initial bet, and so produce a position that profits no matter what the eventual outcome. If things are not going your way, it is possible to throw larger and larger chunks of capital into a position or counter-position again and again and again —mirroring the Martingale strategy — to try to compensate for earlier bets that have gone awry (this, of course, is so often the downfall of rogue traders like Nick Leeson and Kweku Adoboli).
This brings up a key issue: there is a second problem with the Martingale strategy in the real world beyond the obvious problem of running out of capital. You can have all the capital in the world (and thanks to the Fed, the TBTF banks now have a printing-press backstop) but if you do not have a counter-party to take your bets (and as your bets and counter-bets get bigger and bigger it by definition becomes harder and harder to find suitable counter-parties) then you are Corzined, and you will be left sitting on top of a very large load of pain (sound familiar, Bruno Iksil?)
The obvious real world example takes us back to the casino table — if you are trying to execute a Martingale strategy starting at $100, and have lost 10 times in a row, your 11th bet would have to be for $204,800 to win back your initial stake of $100. That might well exceed the casino table limits — in other words you have lost your counter-party, and are left facing a loss far huger than any expected gains.
Similarly (as Jamie Dimon and Bruno Iksil have now learned to their discredit) if you have built up a whale-sized market-dominating gross position of bets and counter-bets on the CDX IG9 index (or any such market) which turns heavily negative, it is exceedingly difficult to find a counter-party to continue increasing your bets against, and your Martingale game will probably be over, and you will be forced to face up to the (now exceedingly huge) loss. (And this recklessness, is what Dimon refers to as “hedging portfolio risk“?)
The really sickening thing is that I know that these kinds of activities are going on far more than is widely recognised; every time a Wall Street bank announces a perfect trading quarter it sets off an alarm bell ringing in my head, because it means that the arbitrageurs are chasing losses and picking up nickels in front of streamrollers again, and emboldened by confidence will eventually will get crushed under the wheel, and our hyper-connected hyper-leveraged system will be thrown into shock once again by downgrades, margin calls and fire sales.
The obvious conclusion is that if the loss-chasing Martingale traders cannot resist blowing up even with the zero-interest rate policy and an unfettered fiat liquidity backstop, then perhaps this system is fundamentally weak. Alas, no. I think that the conclusion that the clueless schmucks at the Fed have reached is that poor Wall Street needs not only a lender-of-last-resort, but a counter-party-of-last-resort. If you broke your trading book doubling or quadrupling down on horseshit and are sitting on top of a colossal mark-to-market loss, why not have the Fed step in and take it off your hands at a price floor in exchange for newly “printed” digital currency? That’s what the 2008 bailouts did.
Only one problem: eventually, this approach will destroy the currency.
Would you want your wealth stored in dollars that Bernanke can just duplicate and pony up to the latest TBTF Martingale catastrophe artist? I thought not: that’s one reason why Eurasian creditor nations are all quickly and purposefully going about ditching the dollar for bilateral trade.
The bottom line for Wall Street is that either the bailouts will stop and anyone practising this crazy behaviour will end up bust — ending the moral hazard of adrenaline junkie coke-and-hookers traders and 21-year-old PhD-wielding quants playing the Martingale game risk free thanks to the Fed — or the Fed will destroy the currency. I don’t know how long that will take, but the fact that the dollar is effectively no longer the global reserve currency says everything I need to know about where we are going.
The bigger point here is whatever happened to banking as banking, instead of banking as a game of roulette? You know, where investment banks make the majority of their profits and spend the majority of their efforts lending to people who need to the money to create products and make ideas reality?
JER1
GIGANTIC COLLECTION OF PENNY STOCK CHARTS
LBSR
THRA
FFGO
SAPX
EXPU
ENTI
TRDY
MMTE
FOGC
MASP
EPTI
KNOS
ACTN
ANSH
RAYS
CBAI
MFGLQ
TPIV
CAMS
LJWY
MDFI
MPX
HAR
MEG
OCZ
QQQ
CIM
JPM
GIII
AAPL
FTWR
WFC
S
GE
F
BAC
JBII
WAMUQ
MLXO
CAMS
EVCA
THWI
FOGC
PSPW
CMGO
BIEL
SRSR
RBTI
PMI
GRDO
DUSS
ZPCM
SDRC
SRRY
SPOR
PPRW
PHAR
PDOS
PDGO
NTUR
NRTI
NVIV
ONTC
NPHC
NEON
NCEN
MDGC
CVSL
CBBD
CHBT
CLSP
CNLG
DRFO
EDIG
EXTO
FCCN
FEEL
HKFI
ICBU
VELA
VSHC
WQNI
XCEL
ZMTP
WGBS
WWAG
VMCI
VCTY
UYMG
TEMO
HLCS
BVTI
CBWP
BMPI
BLVT
BORK
BUGS
COPY
CXTO
EPEO
LRTR
NDBE
OPMG
OVIT
PTSC
QMCI
RFNN
SMNG
SOON
TBBC
BRYN
CPQQ
CZFS
ENCO
IMCI
MDFI
LCHL
TLAG
SNAX
SLUP
RLTR
MCET
LLEG
LGDI
HWIC
BLQN
BKRS
BLSP
BRGO
CMXI
DUSS
ERFB
FNCX
PWSV
UCRP
ZAAP
TRUE
SOLU
SMKY
SKNY
SIOR
PFSD
OTCM
NXRA
NOEC
NGHI
MYFT
LBSR
KATX
IMGG
ICTY
HYGN
GBLE
FRMC
CONX
BNLB
FOFU
WRIT
WTKN
WWPWE
TBIO
SUGO
ABCP
AAVG
AAST
AAPT
AAPH
AAIR
AAGC
AACS Chart
AAAA Chart
CURX
PEIX
CURX
These Silver Stocks Could Bounce in a Major Way
As I was reviewing the list of stocks hitting 52-week lows this week, I noticed an unusual cluster of stocks: silver-miners. These stocks have been under heavy pressure in recent weeks and are falling anew, leaving them -- at least in the context of recent trading patterns and valuation sentiments -- quite cheap. Then again, just because something is cheap doesn't mean it's a bargain. After all, stocks moving below their 52-week lows can fall yet further before rebounding. So are these lagging silver-mining stocks offering up value, or are they just a value trap?
Here's what I found...
The cycle and costs -- a double whammy
Silver miners, just like any other mining firm, are seeing rising costs as labor and equipment expenses have both risen steadily in recent quarters. Higher expenses aren't a short-term blip -- they're the "new normal." Adding insult, commodity prices have been steadily falling on concerns that a European economic implosion will affect global trading partners from Brazil to China.
Yet here's the most important factor: Even with rising expenses and falling selling prices, silver miners continue to be a solidly profitable group. The EPS (earnings per share) figures noted above actually understate their profitability. High levels of depreciation dampen net income, but operating cash flow per share for almost every one of these companies is solidly higher than that EPS figure
Emotions rule
Yet these stocks aren't selling off on valuation. Instead, investors are increasingly spooked that the troubles in Europe will put a brake on global economic growth, crimping demand for silver and pushing prices ever lower.
Silver has actually been on a roller-coaster ride since the start of 2011. Roughly a year ago, the globaleconomy was starting to look a bit healthier, and commodities traders were snapping up silver contracts in anticipation of rising demand for this industrial metal. But fresh economic concerns have pushed silver back to levels it touched on two recent occasions.
Make no mistake, Europe's problems should greatly concern you, as I noted in this article. You shouldn't be surprised to see the market take a quick tumble on a day the headlines are especially scary. Yet it's impossible to know when such an event will happen -- if at all. And if you are a long-term investor, then you need to start thinking about buying whenever a deep sell-off emerges. These are precisely the areas that will have the strongest snapback when conditions stabilize and growth returns. And growth surely will return to places like China, Brazil and the United States, all of which are poised for sustained growth.
Right now, the sell-off in these sliver mining stocks looks like a severe overreaction, trading in many instances for half of their 52-week high. Sure, they could fall further, but odds are they will be well higher in a few years once the current economic scares no longer dominate trading sentiment.
Not just cheap, but a bargain as well
So where are the bargains now? Wall Street analysts are starting to compile a list of favorites, each using slightly differing methodologies. Dahlman Rose has been looking at mining stocks in the context of what their dividends will likely be in a few years. They note that Pan American Silver (Nasdaq: PAAS) has heavy capital spending commitments for the next 12 months, but should then be generating solid free cash flow after that. If this company boosted its payout ratioto 50% in 2014, then the dividend would be $1.95 a share, good for adividend yield above 5%, according to Dahlman Rose.
Merrill Lynch prefers to look at the projected long-term output of a company's mines, in some cases up to eight years, and then figures out what a particular miner should be worth in relation to the cash flow that the silver output will generate. For example, Merrill thinks industry giant Silver Wheaton (NYSE: SLW)is worth $51 a share, roughly twice the current stock price. For Hecla Mining (NYSE: HL), the target is $6, or nearly 50% above the current price.
Analysts at UBS are bullish on Couer D'Alene Mines (NYSE: CDE). The miner released first-quarter results earlier this week that appear to have missed estimates, but after backing out a series of one-time inputs, UBS found that Couer D'Alene actually earned $0.39 a share, well ahead of UBS' $0.18 a share forecast. They note "the significant beat relative to expectations was driven by higher production and lower costs," and see shares rising from a recent $18.50 to $28.
Hecla Mining also reported results this week that were, frankly, uninspiring. Yet as I've noted in a few recent articles, Hecla's results are being dampened by troubles at a key mine, and results in 2013 should look far better. (Its Lucky Friday mine should be back in operation early in the year.) UBS figures Hecla's mines are worth more than $7 a share, well above the current $4 share price.
Risks to Consider: These silver stocks could still fall lower as Europe's troubles deepen and/or if the spot price for silver drops further.
Action to Take --> Don't try to call the bottom on this sector. It may already be in. It may not. We just don't know. Instead, focus on the fact that these silver miners now represent deep long-term value, whether as an asset play or a cash flow play. Commodity plays in general provide great trading opportunities, as they are often oversold in tough markets and overbought in brighter times. Indeed, I wouldn't stick around with these stocks if they were anywhere their 52-week highs. But the 52-week lows that are in place are surely enticing candidates to buy.
JER1
CHECK OUT MY BOARD-- http://investorshub.advfn.com/boards/board.aspx?board_id=21922
These Silver Stocks Could Bounce in a Major Way
As I was reviewing the list of stocks hitting 52-week lows this week, I noticed an unusual cluster of stocks: silver-miners. These stocks have been under heavy pressure in recent weeks and are falling anew, leaving them -- at least in the context of recent trading patterns and valuation sentiments -- quite cheap. Then again, just because something is cheap doesn't mean it's a bargain. After all, stocks moving below their 52-week lows can fall yet further before rebounding. So are these lagging silver-mining stocks offering up value, or are they just a value trap?
Here's what I found...
The cycle and costs -- a double whammy
Silver miners, just like any other mining firm, are seeing rising costs as labor and equipment expenses have both risen steadily in recent quarters. Higher expenses aren't a short-term blip -- they're the "new normal." Adding insult, commodity prices have been steadily falling on concerns that a European economic implosion will affect global trading partners from Brazil to China.
Yet here's the most important factor: Even with rising expenses and falling selling prices, silver miners continue to be a solidly profitable group. The EPS (earnings per share) figures noted above actually understate their profitability. High levels of depreciation dampen net income, but operating cash flow per share for almost every one of these companies is solidly higher than that EPS figure
Emotions rule
Yet these stocks aren't selling off on valuation. Instead, investors are increasingly spooked that the troubles in Europe will put a brake on global economic growth, crimping demand for silver and pushing prices ever lower.
Silver has actually been on a roller-coaster ride since the start of 2011. Roughly a year ago, the globaleconomy was starting to look a bit healthier, and commodities traders were snapping up silver contracts in anticipation of rising demand for this industrial metal. But fresh economic concerns have pushed silver back to levels it touched on two recent occasions.
Make no mistake, Europe's problems should greatly concern you, as I noted in this article. You shouldn't be surprised to see the market take a quick tumble on a day the headlines are especially scary. Yet it's impossible to know when such an event will happen -- if at all. And if you are a long-term investor, then you need to start thinking about buying whenever a deep sell-off emerges. These are precisely the areas that will have the strongest snapback when conditions stabilize and growth returns. And growth surely will return to places like China, Brazil and the United States, all of which are poised for sustained growth.
Right now, the sell-off in these sliver mining stocks looks like a severe overreaction, trading in many instances for half of their 52-week high. Sure, they could fall further, but odds are they will be well higher in a few years once the current economic scares no longer dominate trading sentiment.
Not just cheap, but a bargain as well
So where are the bargains now? Wall Street analysts are starting to compile a list of favorites, each using slightly differing methodologies. Dahlman Rose has been looking at mining stocks in the context of what their dividends will likely be in a few years. They note that Pan American Silver (Nasdaq: PAAS) has heavy capital spending commitments for the next 12 months, but should then be generating solid free cash flow after that. If this company boosted its payout ratioto 50% in 2014, then the dividend would be $1.95 a share, good for adividend yield above 5%, according to Dahlman Rose.
Merrill Lynch prefers to look at the projected long-term output of a company's mines, in some cases up to eight years, and then figures out what a particular miner should be worth in relation to the cash flow that the silver output will generate. For example, Merrill thinks industry giant Silver Wheaton (NYSE: SLW)is worth $51 a share, roughly twice the current stock price. For Hecla Mining (NYSE: HL), the target is $6, or nearly 50% above the current price.
Analysts at UBS are bullish on Couer D'Alene Mines (NYSE: CDE). The miner released first-quarter results earlier this week that appear to have missed estimates, but after backing out a series of one-time inputs, UBS found that Couer D'Alene actually earned $0.39 a share, well ahead of UBS' $0.18 a share forecast. They note "the significant beat relative to expectations was driven by higher production and lower costs," and see shares rising from a recent $18.50 to $28.
Hecla Mining also reported results this week that were, frankly, uninspiring. Yet as I've noted in a few recent articles, Hecla's results are being dampened by troubles at a key mine, and results in 2013 should look far better. (Its Lucky Friday mine should be back in operation early in the year.) UBS figures Hecla's mines are worth more than $7 a share, well above the current $4 share price.
Risks to Consider: These silver stocks could still fall lower as Europe's troubles deepen and/or if the spot price for silver drops further.
Action to Take --> Don't try to call the bottom on this sector. It may already be in. It may not. We just don't know. Instead, focus on the fact that these silver miners now represent deep long-term value, whether as an asset play or a cash flow play. Commodity plays in general provide great trading opportunities, as they are often oversold in tough markets and overbought in brighter times. Indeed, I wouldn't stick around with these stocks if they were anywhere their 52-week highs. But the 52-week lows that are in place are surely enticing candidates to buy.
JER1
CHECK OUT MY BOARD-- http://investorshub.advfn.com/boards/board.aspx?board_id=21922
These Silver Stocks Could Bounce in a Major Way
As I was reviewing the list of stocks hitting 52-week lows this week, I noticed an unusual cluster of stocks: silver-miners. These stocks have been under heavy pressure in recent weeks and are falling anew, leaving them -- at least in the context of recent trading patterns and valuation sentiments -- quite cheap. Then again, just because something is cheap doesn't mean it's a bargain. After all, stocks moving below their 52-week lows can fall yet further before rebounding. So are these lagging silver-mining stocks offering up value, or are they just a value trap?
Here's what I found...
The cycle and costs -- a double whammy
Silver miners, just like any other mining firm, are seeing rising costs as labor and equipment expenses have both risen steadily in recent quarters. Higher expenses aren't a short-term blip -- they're the "new normal." Adding insult, commodity prices have been steadily falling on concerns that a European economic implosion will affect global trading partners from Brazil to China.
Yet here's the most important factor: Even with rising expenses and falling selling prices, silver miners continue to be a solidly profitable group. The EPS (earnings per share) figures noted above actually understate their profitability. High levels of depreciation dampen net income, but operating cash flow per share for almost every one of these companies is solidly higher than that EPS figure
Emotions rule
Yet these stocks aren't selling off on valuation. Instead, investors are increasingly spooked that the troubles in Europe will put a brake on global economic growth, crimping demand for silver and pushing prices ever lower.
Silver has actually been on a roller-coaster ride since the start of 2011. Roughly a year ago, the globaleconomy was starting to look a bit healthier, and commodities traders were snapping up silver contracts in anticipation of rising demand for this industrial metal. But fresh economic concerns have pushed silver back to levels it touched on two recent occasions.
Make no mistake, Europe's problems should greatly concern you, as I noted in this article. You shouldn't be surprised to see the market take a quick tumble on a day the headlines are especially scary. Yet it's impossible to know when such an event will happen -- if at all. And if you are a long-term investor, then you need to start thinking about buying whenever a deep sell-off emerges. These are precisely the areas that will have the strongest snapback when conditions stabilize and growth returns. And growth surely will return to places like China, Brazil and the United States, all of which are poised for sustained growth.
Right now, the sell-off in these sliver mining stocks looks like a severe overreaction, trading in many instances for half of their 52-week high. Sure, they could fall further, but odds are they will be well higher in a few years once the current economic scares no longer dominate trading sentiment.
Not just cheap, but a bargain as well
So where are the bargains now? Wall Street analysts are starting to compile a list of favorites, each using slightly differing methodologies. Dahlman Rose has been looking at mining stocks in the context of what their dividends will likely be in a few years. They note that Pan American Silver (Nasdaq: PAAS) has heavy capital spending commitments for the next 12 months, but should then be generating solid free cash flow after that. If this company boosted its payout ratioto 50% in 2014, then the dividend would be $1.95 a share, good for adividend yield above 5%, according to Dahlman Rose.
Merrill Lynch prefers to look at the projected long-term output of a company's mines, in some cases up to eight years, and then figures out what a particular miner should be worth in relation to the cash flow that the silver output will generate. For example, Merrill thinks industry giant Silver Wheaton (NYSE: SLW)is worth $51 a share, roughly twice the current stock price. For Hecla Mining (NYSE: HL), the target is $6, or nearly 50% above the current price.
Analysts at UBS are bullish on Couer D'Alene Mines (NYSE: CDE). The miner released first-quarter results earlier this week that appear to have missed estimates, but after backing out a series of one-time inputs, UBS found that Couer D'Alene actually earned $0.39 a share, well ahead of UBS' $0.18 a share forecast. They note "the significant beat relative to expectations was driven by higher production and lower costs," and see shares rising from a recent $18.50 to $28.
Hecla Mining also reported results this week that were, frankly, uninspiring. Yet as I've noted in a few recent articles, Hecla's results are being dampened by troubles at a key mine, and results in 2013 should look far better. (Its Lucky Friday mine should be back in operation early in the year.) UBS figures Hecla's mines are worth more than $7 a share, well above the current $4 share price.
Risks to Consider: These silver stocks could still fall lower as Europe's troubles deepen and/or if the spot price for silver drops further.
Action to Take --> Don't try to call the bottom on this sector. It may already be in. It may not. We just don't know. Instead, focus on the fact that these silver miners now represent deep long-term value, whether as an asset play or a cash flow play. Commodity plays in general provide great trading opportunities, as they are often oversold in tough markets and overbought in brighter times. Indeed, I wouldn't stick around with these stocks if they were anywhere their 52-week highs. But the 52-week lows that are in place are surely enticing candidates to buy.
Looking for a pretty steep correction coming soon now that operation twist is on its way out the door.
JER1
No Joke I just found out aboout it today
JER1
David Rosenberg: Gold Will Go To $3,000
Highly respected economist and strategist David Rosenberg has told that Financial Times in a video interview that gold “will go to $3,000 per ounce before this cycle is over.”
Markets are repeating the downturns of 2010 and 2011 and it is time to search for safety, David Rosenberg of Gluskin Sheff tells James Mackintosh, the FT Investment Editor.
Rosenberg sees a “very good opportunity in gold” as it has corrected and seems to be “off the radar screen right now”.
He sees gold as a currency and says the best way to value gold is in terms of money supply and “currency in circulation.”
As the “volume of dollars is going up as we get more quantitative easing” he sees gold at $3,000 per ounce.
Mackintosh says that Rosenberg’s view is a “pretty bearish view”.
To which Rosenberg responds that it is “bullish view on gold and gold mining stocks.” Mackintosh says that it is “bearish on everything else”.
Rosenberg says that it is not about being “bullish or bearish,” it is about “stating how you view the world” and he warns that the major central banks are all going to print more money and keep real interest rates negative “as far as the eye can see.”
This is “critical” as one of the key determinants of the gold price are real short term interest rates.
The longer they stay negative “the longer the bull market in gold is going to be.”
Rosenberg sums up that “this is not about being bullish or bearish, it is about how do we make money for our clients.”
The interesting interview can be watched: http://www.goldcore.com/commentary/gold-going-3000
JER1
David Rosenberg: Gold Will Go To $3,000
Highly respected economist and strategist David Rosenberg has told that Financial Times in a video interview that gold “will go to $3,000 per ounce before this cycle is over.”
Markets are repeating the downturns of 2010 and 2011 and it is time to search for safety, David Rosenberg of Gluskin Sheff tells James Mackintosh, the FT Investment Editor.
Rosenberg sees a “very good opportunity in gold” as it has corrected and seems to be “off the radar screen right now”.
He sees gold as a currency and says the best way to value gold is in terms of money supply and “currency in circulation.”
As the “volume of dollars is going up as we get more quantitative easing” he sees gold at $3,000 per ounce.
Mackintosh says that Rosenberg’s view is a “pretty bearish view”.
To which Rosenberg responds that it is “bullish view on gold and gold mining stocks.” Mackintosh says that it is “bearish on everything else”.
Rosenberg says that it is not about being “bullish or bearish,” it is about “stating how you view the world” and he warns that the major central banks are all going to print more money and keep real interest rates negative “as far as the eye can see.”
This is “critical” as one of the key determinants of the gold price are real short term interest rates.
The longer they stay negative “the longer the bull market in gold is going to be.”
Rosenberg sums up that “this is not about being bullish or bearish, it is about how do we make money for our clients.”
The interesting interview can be watched: http://www.goldcore.com/commentary/gold-going-3000
JER1
Bernanke and Fed Foe Ron Paul Unexpectedly Breakfast Together
Wednesday morning, Ron Raul shared breakfast with Federal Reserve Chairman Ben Bernanke. Mr. Paul indicated that the decision to meet up was mutual but declined to comment on too many specifics of the unexpected meeting.
It appears that even enemies can willingly come together if it's over a hot mug of freshly-brewed-java, perfectly prepared Eggs-Benedict...
But, was a "return to gold standard" on Wednesday's menu?
The “off the record” meal conversation has piqued the interst of politics, economic experts, and, of course, anyone associated with media. Considering how little the two men have in common – Ron Paul drafted a bill to completely eliminate the central bank last year while Ben Bernanke is ultimately in charge of that central bank . Not a likely duo at all, but a breakfast of champions nonetheless: one championing the gold standard and one championing to keep our money printing press hot!
In a time of economic panic amidst an array of flaws plaguing the structure of our financial system, Ron Paul has repeatedly preached his message to the masses, advocating for a return to a gold standard. Meanwhile, Bernanke recently spent a large portion of a University lecture attempting to prove Mr. Paul's gold standard theory rather unpractical. In a March, Mr. Bernanke spoke at George Washington University to shed some light on the flaws associated with a financial system “in which the dollar is valued at a fixed price per unit of gold.”
While the content of conversation may remain a mystery forever, that doesn't stop outsiders from speculating on what in the world this odd couple may be up to...
Anxious reporters seeking answers got a brief chance to talk to Ron Paul. In Paul's ever-charming, light-hearted-sophisticated-sense-of-humor-way, Mr. Paul jokingly told those reporters that Bernanke's all for the gold standard now!
All joking aside, we know Paul can be a pretty persuasive guy. Who knows what problems and solutions these two men discussed in privacy. The real question is, what will the Fed do next?
Bernanke and Fed Foe Ron Paul Unexpectedly Breakfast Together
Wednesday morning, Ron Raul shared breakfast with Federal Reserve Chairman Ben Bernanke. Mr. Paul indicated that the decision to meet up was mutual but declined to comment on too many specifics of the unexpected meeting.
It appears that even enemies can willingly come together if it's over a hot mug of freshly-brewed-java, perfectly prepared Eggs-Benedict...
But, was a "return to gold standard" on Wednesday's menu?
The “off the record” meal conversation has piqued the interst of politics, economic experts, and, of course, anyone associated with media. Considering how little the two men have in common – Ron Paul drafted a bill to completely eliminate the central bank last year while Ben Bernanke is ultimately in charge of that central bank . Not a likely duo at all, but a breakfast of champions nonetheless: one championing the gold standard and one championing to keep our money printing press hot!
In a time of economic panic amidst an array of flaws plaguing the structure of our financial system, Ron Paul has repeatedly preached his message to the masses, advocating for a return to a gold standard. Meanwhile, Bernanke recently spent a large portion of a University lecture attempting to prove Mr. Paul's gold standard theory rather unpractical. In a March, Mr. Bernanke spoke at George Washington University to shed some light on the flaws associated with a financial system “in which the dollar is valued at a fixed price per unit of gold.”
While the content of conversation may remain a mystery forever, that doesn't stop outsiders from speculating on what in the world this odd couple may be up to...
Anxious reporters seeking answers got a brief chance to talk to Ron Paul. In Paul's ever-charming, light-hearted-sophisticated-sense-of-humor-way, Mr. Paul jokingly told those reporters that Bernanke's all for the gold standard now!
All joking aside, we know Paul can be a pretty persuasive guy. Who knows what problems and solutions these two men discussed in privacy. The real question is, what will the Fed do next?
Unborn babies count in the White House
One pro-lifer finds it interesting that pregnant mothers must register their preborn babies before taking a tour of the White House, considering the fact that the current occupant of the White House is pro-abortion.
A recent e-mail newsletter distributed by Ellie Schafer, director of the White House Visitors Office, provides specifics about the information required for an unborn baby visitor, including the child's gender. "Crazy as it may sound, you MUST include the baby in the overall count of guests in the tour," Schafer writes.
Given the president's stance on abortion, Douglas Johnson of the National Right to Life Committee (NRLC) does not understand this security measure.
"We think that it's ironic that President Obama's staff recognizes the existence of unborn babies for purposes of providing security within the White House, and yet there's no indication that President Obama has any problem, for example, with the fact that throughout the District of Columbia, abortion is now legal for any reason up to the moment of birth," he notes.
And since the information has to be updated once the baby is born, the pro-lifer has another question regarding security.
"We think it's notable that the newsletter provides no guidance on what the staff should do if an unborn baby is first registered for security purposes, but then aborted." He wonders, "Do they deregister the child?"
The NRLC spokesman suggests that if the president is concerned about the security of an unborn child inside or outside the White House, he ought to endorse the District of Columbia's Pain-Capable Unborn Child Protection Act when it comes up in a House committee hearing next week. But Johnson adds, "We're not holding our breath for that."
Charlie Butts - OneNewsNow - 5/11/2012
Can’t stand the darn Communist News Network!
JER1
Watch for QE3 as the bottom to this drop in oil, gold, silver and stocks
from arabianmoney 09 May 2012
The summer shake-out is upon us with a vengeance. Assets priced for a vibrant recovery are being repriced for stagnation or decline. Sell in May and go away never looked a more appropriate stock market adage.
How low will financial markets go? Well this certainly looks to be a fair sized correction if nothing else. You could envisage $1,550 gold, $25 silver, $90 oil and a Dow Jones a thousand or two points lower.
QE3 cavalry
Then presumably the Fed will finally roll out QE3 money printing and that will rally markets again for a while. It is a pattern we have seen before over the past few years.
Therefore the ArabianMoney investment newsletter next month will be looking hard at what to buy when markets bottom and subscribers could be in for some interesting opportunities
Sometimes it feels as though all that is holding up stocks, or preventing them from falling further is the Facebook IPO. So many hands are in this cookie jar it cannot be allowed to fail.
But that does not take us more than a week or so ahead. Things could get pretty unpleasant after that.
For the list of global nasties is getting very long while the bullish case is increasingly bordering on the hilarious side of wishful thinking. Where are those US jobs? Rising US house prices?
How about the eurozone crisis? What about Spain? Greece? Is a socialist French president good news? How about the Chinese slowdown? What does that mean for commodity prices?
Our best advice is to use this opportunity to stock up on precious metals at prices that the coming money printing just guarantees to be far too low to last for long. The news flow is actually still very bullish for precious metals.
Demand fundamentals
The Indian government has just performed a U-turn on the proposed doubling of duty on gold jewellery imports. Then consider the news that Chinese gold demand in Q1 was up six times on last year, and China is all set to become the world’s largest market for gold this year, ahead of India.
Taking advantage of short-term sell-offs to buy the right assets for the next phase of this economy is what keeps ArabianMoney talking late into the night!
JER1
Bro Mick, Long time no talk. How you been sir?
JER1
No prob
JER1
Why Markets Could "Slam the Speculator"
Peter Brandt, a technical trader who's been trading commodities for about 40 years, says that this is harvest time for commodities traders. Brandt boldly asserts, “Markets are getting set up to slam the speculator.”
These days, Mr. Brandt is particularly bearish on some things many other renowned investors have previously been quite bullish on: farmland, oil, natural gas, corn and other grains.
This is very surprising as both Warren Buffett and Jim Rogers have recently spent time preaching about the importance of investing in agriculture in today's tough market times.
Like everyone else though, Brandt is holding onto his bullish predictions for a long-term gold bull run. Additionally, he speculates that a “huge bubble” will be in store for Treasurys among other fixed-income investments when interest rates rise again.
Based on this information, here are five factors you will want to consider before making any major moves considering the current supply-demand phase the commodities world is now in (compiled by Market Watch).
Natural Gas Won't Make You Tons of Money Right Now
Natural gas prices can't seem to climb above the recent decade lows due to the increase of unseasonably warm winters curtailing demand amidst an overwhelmingly huge supply of natural gas in the United States.
Brandt warns investors to resist the urge to dive headfirst into and natural gas ETFs. At least not just yet...
Oil Isn't Doing Much Better...
Oil futures trades will be troublesome as well. Brandt believes oil will actually crawl back down to about $60 in a years time.
Brandt advised investors to avoid or take short positions on leveraged oil ETFs and exchange-traded notes, such as PowerShares DB Crude Oil Double Short ETN (US:DTO) and ProShares Ultra DJ-UBS Crude Oil (US:UCO), and even avoid the straight, nonleveraged United States Oil Fund (US:USO) . “It’s a sucker play,” he said about the oil-patch ETFs.
Short-selling Grain Futures...
Food prices have been rather high this year as fears of inflation continue to rise this year. Corn, grain, and other crop prices a “too high” according to Brandt. That's why he's short-selling his grain futures and harvesting his crop profits.
Brandt asserts, “there's nothing that cures high prices like high prices.”
Is Farmland Really a Good Investment?...
Not in the eyes of Mr. Brandt. He perceives agricultural investments as being little more than risky business as he believes that agricultural products are now in a bubble. Moreover, he interjects that the price of farmland is currently “at an obscene level.” Farmers can't feasibly make good money and, therefore, why should investors rationalize that farmland is a smart investment decision?
High food prices and demand from Asia is responsible for the recent land rush, but Brandt seems certain that more realistic (reduced) prices are sure to settle in sometime in the near future. When that happens, investors owning thousands of dollars of land in the middle of nowhere will begin to get nervous...
“The only reason you own farmland today is the belief that you can sell it to the next sucker for more than you paid.”
His warning to investors who have exposure to farmland: “Scramble quickly. Land is not a liquid asset. You want to sell it on the way up.”
Gold May Surge to $2,200 an Ounce...
Brandt has an extremely bullish gold forecast for gold's next big move. In what many are calling “the most boring gold market ever” gold is now in a perfect position to break out with the potential to make a pretty substantial move upwards.
Brandt reminds readers that present-day gold technical analysis reveals a market that closely resembles a period in 2009 when gold prices drifted sideways and remained relatively stagnant for several long months. Those situations are aptly suited for sharp rallies. As further incentive to stay long on gold, Brandt says that the dull gold market has recently “washed out a large swath of buyers.”
So if you can trudge through these mundane gold days, a big move may reward your patience in the end...
JER1
S&P Opens The Pandora's Box: The Wall Of Refi Worry Is $46,000,000,000,000 Tall
In what S&P calls a 'Perfect Storm', the next four years will see a minimum of $30 trillion in companies' refinancing needs related to maturing bonds and loans and further they expect $13-$16 trillion more debt will be required to finance growth. With bond portfolios over-stuffed with corporate debt (since angst over sovereign risk has skewed asset allocation away from that cohort) the rating agency is concerned that ongoing bank deleveraging, these huge debt re-funding requirements, and the diminishment of central banks and governments to do anything about it leave serious problems with a credit overhang so large. Critically, especially as we hear calls for 'growth' plans from Europe, is the increasing likelihood that, as Reuters reports, this will potentially influence corporate credit quality and "alter the fragile equilibrium that currently exists in the global corporate credit landscape". While S&P expect the refinancing needs may well be met "This global wall of nonfinancial corporate debt will potentially compound the credit rationing that may occur as banks seek to restructure their balance sheets, and bond and equity investors reassess their risk-return thresholds" which "raises the downside risk in global markets" as an inability to finance growth may well be the catalyst for another risk flare. "Governments and central banks have less fiscal and monetary flexibility to prevent serious problems emanating from future market disturbances. A perfect storm scenario would likely cause financing disruptions even for borrowers that are not highly leveraged."
Of course the size of this massive refinancing wall dwarfs the recent discussion of how much of Europe's financial system's equity market cap is nothing but vaporware - since we note that 30% of this $30 trillion is for European financials and corporations.
JER1
S&P Opens The Pandora's Box: The Wall Of Refi Worry Is $46,000,000,000,000 Tall
In what S&P calls a 'Perfect Storm', the next four years will see a minimum of $30 trillion in companies' refinancing needs related to maturing bonds and loans and further they expect $13-$16 trillion more debt will be required to finance growth. With bond portfolios over-stuffed with corporate debt (since angst over sovereign risk has skewed asset allocation away from that cohort) the rating agency is concerned that ongoing bank deleveraging, these huge debt re-funding requirements, and the diminishment of central banks and governments to do anything about it leave serious problems with a credit overhang so large. Critically, especially as we hear calls for 'growth' plans from Europe, is the increasing likelihood that, as Reuters reports, this will potentially influence corporate credit quality and "alter the fragile equilibrium that currently exists in the global corporate credit landscape". While S&P expect the refinancing needs may well be met "This global wall of nonfinancial corporate debt will potentially compound the credit rationing that may occur as banks seek to restructure their balance sheets, and bond and equity investors reassess their risk-return thresholds" which "raises the downside risk in global markets" as an inability to finance growth may well be the catalyst for another risk flare. "Governments and central banks have less fiscal and monetary flexibility to prevent serious problems emanating from future market disturbances. A perfect storm scenario would likely cause financing disruptions even for borrowers that are not highly leveraged."
Of course the size of this massive refinancing wall dwarfs the recent discussion of how much of Europe's financial system's equity market cap is nothing but vaporware - since we note that 30% of this $30 trillion is for European financials and corporations.
JER1
GREAT BOARD MaRkEd!
JER1
Welcome And Thanks for the mark!
JER1
How The Fed Quietly Bought 1,150 S&P Points
With the need for exponentially larger expansions of the central bank balance sheets - and most importantly, the rate of expansion (flow) not just the size (stock) - we thought it useful to see just how the Fed's actions had impacted the S&P 500. From the lows in March 2009, 1150 S&P points have been 'created-or-saved' thanks to central bank largesse.That is a cost of $2 million for every S&P 500 pointsince the Fed started to expands its balance sheet by $2.3 trillion. Money-well-spent, we are sure you'll agree. In the meantime, it is the printing-endgames that we care about and the horrible sense of deja vuthat the following chart inspires should at minimum see investors scaling back (which it appears the sensible retail investor is) - despite the imploring of every long-only asset manager.
The S&P 500 overlaid with the various Fed experiments...
And it seems like the balance sheets of the central banks need to expand at an ever-increasing rate just to stand still in terms of asset prices...
Does make one wonder what the 'real' value of the S&P 500 would have been without all that assistance?
But we are heading towards the end of Operation Twist and given the previous examples we have seen, it seems we are echoing once again...
JER1
How The Fed Quietly Bought 1,150 S&P Points
With the need for exponentially larger expansions of the central bank balance sheets - and most importantly, the rate of expansion (flow) not just the size (stock) - we thought it useful to see just how the Fed's actions had impacted the S&P 500. From the lows in March 2009, 1150 S&P points have been 'created-or-saved' thanks to central bank largesse.That is a cost of $2 million for every S&P 500 pointsince the Fed started to expands its balance sheet by $2.3 trillion. Money-well-spent, we are sure you'll agree. In the meantime, it is the printing-endgames that we care about and the horrible sense of deja vuthat the following chart inspires should at minimum see investors scaling back (which it appears the sensible retail investor is) - despite the imploring of every long-only asset manager.
The S&P 500 overlaid with the various Fed experiments...
And it seems like the balance sheets of the central banks need to expand at an ever-increasing rate just to stand still in terms of asset prices...
Does make one wonder what the 'real' value of the S&P 500 would have been without all that assistance?
But we are heading towards the end of Operation Twist and given the previous examples we have seen, it seems we are echoing once again...
JER1
How The Fed Quietly Bought 1,150 S&P Points
With the need for exponentially larger expansions of the central bank balance sheets - and most importantly, the rate of expansion (flow) not just the size (stock) - we thought it useful to see just how the Fed's actions had impacted the S&P 500. From the lows in March 2009, 1150 S&P points have been 'created-or-saved' thanks to central bank largesse.That is a cost of $2 million for every S&P 500 pointsince the Fed started to expands its balance sheet by $2.3 trillion. Money-well-spent, we are sure you'll agree. In the meantime, it is the printing-endgames that we care about and the horrible sense of deja vuthat the following chart inspires should at minimum see investors scaling back (which it appears the sensible retail investor is) - despite the imploring of every long-only asset manager.
The S&P 500 overlaid with the various Fed experiments...
And it seems like the balance sheets of the central banks need to expand at an ever-increasing rate just to stand still in terms of asset prices...
Does make one wonder what the 'real' value of the S&P 500 would have been without all that assistance?
But we are heading towards the end of Operation Twist and given the previous examples we have seen, it seems we are echoing once again...
JER1
Top Ten Ways for a New Trader to Lose Money
With the wild action in the market it is more important than ever for us not do stupid things in our trading. While the market is trying to digest what a socialist president means for France and a Greek political fracture means for Greece’s future in the European Union we need to tread carefully. The market is now trying to price in new scenarios and probabilities for the markets, traders and investors are still stepping in to buy at major supports in this long term up trend. But we are no longer in the Polly Anna first quarter it is time to trade with discipline and focus on finding what is working.
Top Ten Ways for a New Trader to Lose Money
1. Be stubborn about your opinion instead of stop losses use hope as an exit strategy.
2. Trade big, go all in on every trade, believe that your trade just can’t miss.
3. Buy options out of the money so you not only have to be right about direction but you also have to be right about the time and price.
4. Don’t do any homework just believe you are special and so damn clever you will win.
5. Start giving advice to other people on twitter and stock twits even though you do not have a long term winning record.
6. Go long in a market in correction and short the best stocks in a bull market.
7. Buy all time lows and short all time highs.
8. Goal #1 is just to prove you are right.
9. Instead of having a proven method and a trading plan just ask others for advice.
10. Trade with no understanding of your risk of ruin or your trades reward to risk ratio.
Competence must come before confidence in trading.
JER1
Top Ten Ways for a New Trader to Lose Money
With the wild action in the market it is more important than ever for us not do stupid things in our trading. While the market is trying to digest what a socialist president means for France and a Greek political fracture means for Greece’s future in the European Union we need to tread carefully. The market is now trying to price in new scenarios and probabilities for the markets, traders and investors are still stepping in to buy at major supports in this long term up trend. But we are no longer in the Polly Anna first quarter it is time to trade with discipline and focus on finding what is working.
Top Ten Ways for a New Trader to Lose Money
1. Be stubborn about your opinion instead of stop losses use hope as an exit strategy.
2. Trade big, go all in on every trade, believe that your trade just can’t miss.
3. Buy options out of the money so you not only have to be right about direction but you also have to be right about the time and price.
4. Don’t do any homework just believe you are special and so damn clever you will win.
5. Start giving advice to other people on twitter and stock twits even though you do not have a long term winning record.
6. Go long in a market in correction and short the best stocks in a bull market.
7. Buy all time lows and short all time highs.
8. Goal #1 is just to prove you are right.
9. Instead of having a proven method and a trading plan just ask others for advice.
10. Trade with no understanding of your risk of ruin or your trades reward to risk ratio.
Competence must come before confidence in trading.
JER1