Tuesday, October 13, 2009

Short and Sweet

Well, I was suckered into watching the entire Miami Dolphins vs NY Jets game last night! An incredible game with lead changes and momentum turns galore. I just wish they could kick off at 8pm eastern time so I could go to bed at a respectable hour.

On that note, a bit short on time tonight, so just a couple of thoughts.

-Intel (INTC) blew away earnings estimates, which was expected, but the company went above the "whisper number" as well. What should be clear to any observer is how silly the earnings estimate game is. Why is it that every quarter the analysts polled are off on the numbers by wide margins, both the upside and downside? Anyway, expect a rocket ship ride up tomorrow in the indices.

-Related to the INTC news, where did all these sales come from? Where are these chips going? Of course revenue is still down year over year, but I would be interested to know where this "unexpected" rebound came from.

-I am not familiar with the author of this post, so I offer his article with all the usual caveats. That said, if this story has any merit ......
Central Banking: A Blight On Humanity
Details a possible issue with gold bullion for physical delivery contracts being renegotiated for cash settlement instead, and at huge premiums to spot gold price.

For a chuckle, enjoy this Fail Blog post:
epic fail pictures
see more Epic Fails

Have a good night.


Stagflationary Mark said...


"Where are these chips going? Of course revenue is still down year over year, but I would be interested to know where this "unexpected" rebound came from."

I can only offer anecdotal evidence.

My girlfriend lost her job and is now back in college. Her college requires her to have a laptop. She's in a worker retraining program so the government actually bought it for her. Go figure.

Based on my story, I wouldn't consider Intel a good proxy for the direction our country is headed though. Should we reach 100% unemployment, I would expect Intel to have a banner year if my girlfriend is any indicator.

Let's also not forget that Intel announced layoffs earlier this year. That's a good way to increase the bottom line. Cost cutting isn't sustainable in the long run though. At best all you can do is get costs down to zero (which is impossible) and then you are done growing earnings unless revenue actually rises.

Stagflationary Mark said...

Here's another thought.

I read Rob Kirby's article that you supplied. I see nothing but hearsay. I'm not about to trust his reputable sources if he can't mention them by name. I also am very skeptical of anything GATA (Gold Anti-Trust Action Committee) has to say.

Here's Mish's take on gold conspiracy theories from 2008.


There is indeed ample reason for mistrust. Few are more cynical than me in this regard.

I am not saying JPMorgan is lily white or that the other accused parties are lily white. In fact, I am quite sure they are not. What I am saying is there is no conspiracy, there no collusion, and there is no reason for the banks involved to continuously and purposely want to suppress the price of gold.

Furthermore, and more to the point, I do not think they could suppress the price of gold or silver even if they wanted to. Previously I posted a chart of Japan's massive intervention in the Japanese Yen. Take another look at Currency Intervention And Other Conspiracies .

Japan acted to suppress the Yen. They openly admitted it. The Yen rose anyway. And the amazing irony is the yen fell for a two year period as soon as they stopped.

The Bank of England dumped gold at $250. It rose ever since. Was the BOE acting to suppress the price of gold or was the BOE guilty of blatant stupidity? I suggest the latter. Never blame conspiracies when stand alone stupidity is a reasonable alternative.

I completely agree. I have a great deal of cynicism in me as you are probably aware. I don't limit my distrust to our government and our banks though. I also distrust the distrusters, especially when they have a vested interest to sell me either a story (through a subscriber based newsletter) and/or a physical metal (since they either own it or have gold dealers as sponsors).

Aluminum is the same price it was 5 years ago. Nickel and Zinc are roughly twice as expensive. Gold's price has done even better though. So where's the conspiracy? How come there isn't an AATA (Aluminum Anti-Trust Action Committee)?

If there was a conspiracy, I'd suggest the true "Gold Cartel" (i.e., the vast network of gold pumpers such as Monex, GoldSeek, and the like) is attempting to keep the price up just like the "Diamond Cartel" tries to do with diamonds and the "Oil Cartel" tries to do with oil. Hey, just a thought.

Stagflationary Mark said...

Sorry to hog the thread, but I just reread Mish's "Conspiracy Theory Psychology" article from 2008. It's a good read.


Who Benefits From Conspiracy Theories?

The answer is those promoting the conspiracy theory as well as the faithful follows. In this case, those promoting the idea that gold or silver is never over-priced and is therefore the best investment in the world no matter how far or how fast the investment had run are the primary beneficiaries.

We saw the similar thinking in the dot-com bubble in 2000. Back then it was called "The Gorilla Game". No price was too high to be paid for a "gorilla".

Those fervently holding beliefs that no price is too high have a psychological need to rationalize losses and/or explain pullbacks. No logical argument about dollars, interest rates, or even consolidations can possibly be sufficient to explain to a "true believer" how or why whatever it is he is promoting is falling in price.

Once again, aluminum is the SAME price it was 5 years ago. If hyperinflation was just around the corner (as implied by the movement in gold's price), then why aren't more people willing to hoard aluminum? I certainly don't have a problem hoarding aluminum foil. I don't see much harm in locking in the price. In fact, the higher the price of gold goes, the better aluminum looks to me and the worse gold looks to me. I'm a cheapskate.

Aluminum was certainly a good thing to hoard in the 1970s. So why isn't it now? Why isn't aluminum pricing confirming the gold story? Why isn't toilet paper pricing confirming the gold story? Seriously. I'd really like to know. Aluminum is a VERY useful metal. While it is true that aluminum is VERY common (roughly 8% of the earth's crust), this was also true in the 1970s. The same can also be said of toilet paper. The stuff practically grows on trees. ;)

In 1972, aluminum averaged $551 a ton.

In 1980, aluminum averaged $1,680 a ton.


Just more thoughts. Once again, sorry for hogging the thread.

getyourselfconnected said...

the chip angle of returning to school could very well be the answer (mostly or at least in part), great thinking.

I have covered the drama of aluminum many times here. I will try and perhaps offer my ideas on why gold is not correlated with aluminum tonight.

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