The good news? My chest infection is much better and I am feeling pretty good, except for....the bad news is while all the crud in my chest was loosening up, I coughed it out to keep my lungs clear and I may have been overzealous. I know I at least pulled a muscle on my right side, and it had better not have torn. Of course now coughing is sort of impossible. It never ends.
Discount Window Borrowing The FED released details of the discount window borrowing operations today. Of course they used old school technology to do it, so any real write up will have to wait. Not that it matters, we know everyone and their brother in the banking world was borrowing, even Libyan banks. Not much news here.
The collateral accepted is not disclosed and that is where the meat would have been. The FED is only supposed to accept the highest quality paper and assets at the window, but we all know that went out another window to save the system and all that. I guess in a way this would not be news either; the FED accepted bad mortgage paper, less than AAA rated paper, and I will say it, equities as collateral. Where is my proof? I have none, the FED won't give me any information. The burden of proof is on them to prove me wrong, they have all the information right? Now why would the FED want a higher stock market via POMO again.....sorry going down the bear cave again!
Market Operations It has been a pretty good 10 day span for Economic Disconnect.
I sold my position in YGE around noon today, banking a 7.6% win.
As we are heading into earnings season (already!?) I am looking to go to cash here. This stinks because I have a few winners riding here that I like, but that's the way it goes. I have to go over things tonight, but here is where I am: TAN +7.0% KCG +3.4% My wife gave me the idea for the following two stocks: SHW +2.3% RPM +4.2% I will update as things unfold.
Planetary Pictures While I await plenty of pictures of the planet Mercury by the Messenger space craft, I wanted to post my 4 favorite space pictures. Long time readers will probably remember them. Click for better views.
The Soviets are the only nation to have landed on the planet Venus and broadcast back pictures of the tortured world: Venera 13: Venera 14:
The Americans own Mars with all the hardware we have there! Mars at sunset from a rover on the surface: Looking back at Earth from the surface of Mars:
I can look at those pictures for hours (A couple are framed high resolution pictures in my den) and just be amazed. It looks like places on Earth, but you know it is not. Maybe it's just me.
This is important because a little while ago AIG offered to buy a big package of assets held by the FED that used to belong to AIG at a cheaper price than could be had by going piecemeal. Again, see this Kid Dynamite item. This not only makes financial sense, but it is the right thing to do. I am hard on the FED crew all the time, but color me impressed here. And no, I am still very sick and losing my mind.
It is going to be 50 degrees here tomorrow and then snow on Friday. About a foot of snow. Unreal.
Handling Your Own Financial Future It occurred to me this past weekend that I have never really discussed how to get into trading or investing on this blog. I think there are twp major reasons for that. One, I figured most that stop in here already had their stuff together. Two, it's not my place to offer that kind of advice.
That said, I figured a quick little big picture post may have some use for anyone wanting to take part in their financial future instead of handing money off to funds and managers to handle. There is nothing wrong with that of course, and this post is in no way is advice to pull all your capital and go crazy in the markets. As of late quite a few people have asked me how to best start handling their own finances, so here is my run down.
I am sure this topic has been covered a million times elsewhere, so forgive me if this is all boring.
1. How Much Capital Are You Willing to Risk It all starts here. You have to be 100% honest with yourself right from the start on a dollar amount you are comfortable putting at risk. This is the big step and the most important. If you are using rent money or this week's grocery cash to start investing, it will not work out and you will have zero fun. On the flip side, opening a trading account with $100 is going to limit your ability to do very much. All investment is risk, a form of gambling that is legal. Every time you put on a position you are risking it all (in a sense).
2. What Kind of Investor Are You The type of trader you want to be is the next step. If you work 50 hours a week or more at a real job, daytrading will probably not work out and maybe will get you fired. Are you the type that likes to play long term macro plays which form and move over months or would you like to focus more on a weekly look? Maybe you work in a field that interests you and you can focus there as you already have some knowledge in the arena. You need to decide how the bulk of your positioning is going to be.
3. Read After steps 1 and 2, now you have to read. Books are ok, but the real pulse of the markets and economy can be found on the blogosphere. The MUST READ column at the left on this site is a good place to start, then fill it out with sites you find that add value. While in no way to you have to read everything at all times, you need to understand current dynamics and how things flow.
4. What Kind of Trigger Will You Use There are just too many ways to pick an idea to try to cover here. I have always used simple candle stick charts with a few indicators added for most of my ideas. A cool screening tool like The PPT can add real time saving value after you get to know it. There are a million services out there to choose from but many are not worth the time. You will have to decide under what triggers you are going to open a position. (Note: No affiliation with The PPT; I am a subscriber)
5. Test Run No one should ever jump right in and put capital at risk. Luckily you can test your ideas out first. FreeStockCharts is a service that allows you to book a portfolio and then track performance. The basic package will only cost you an email sign up. Using your system trigger start "trading" by selecting stocks for a portfolio. Monitor them as a test environment. At this point you may see your trigger system is either not working at all or you are not using it right. You may find that you are just really unlucky and need never trade in real life. You may find you cannot lose. In any case, play with play money first so you know what to expect. To go to the next level, set up the virtual account the same way you will set up your real account. Then test some more.
6. Start Small After the 5 steps above, it's time to get to work. I would assume you have a trading service at this point (there are quite a few, shop around). In step 1 you decided on an amount to fund your account with. Divide that number by 3 and transfer the cash to your account. The 30% is arbitrary, but you should start in at that area. I think this is the best way to open activity and keep fear levels down at the start.
7. Notes and Honesty The first month you will need to make notes about what you are doing. I am old school and use a leather planner to write down my ideas and trades. You new age folks can use some kind if electronic notebook or just post all your trades on Facebook (kidding!). Keep detailed notes about everything; what you were looking at, how you felt about a position, where you are going to sell if you are up, and where if you are down. The biggest thing to stick to here is to be honest. You may be tempted to delete or forget bad ideas or trades that went south to pretend it did not happen. This will not help you out at all and is the single biggest money loser I see among the small type traders I know in real life.
8. Assessment After 3 months, how are you doing? All things being equal (a normal market, no major sell off or monster moves up), how do you stack up? Again, be honest. While nothing is certain, if you have studied and tested your system you should be performing within the limits of your test results. At this point it is decision time.
9. Commit or Quit If you had huge losses after three months you need to go back to step one and try again using another angle. This will restart the entire process. It is a huge commitment. While there are a million ways things can go wrong, if your system is not working out you need to stop and not put the other 70-80% of your money into this. What would be a loss figure to decide this on? I think if you are down 30% in 3 months you need to rethink the whole thing.
If you came out even, slightly up, or really up (one can hope!) you need to decide right now how much time to commit to this. You will know how much effort it took by now to get to this point, can you keep it up? Will you do homework and try to get better? Again, be honest. If you are happy with how things went, go ahead and deploy your target amount in step 1 to your account.
Not quite 10 steps.
I hope this helps anyone that is in this position.
Lightsaber Factory? Any real Star Wars fan knows that a lightsaber is constructed by a force user in a dedicated way that uses the Force to align the crystals in the handle to form the blade. Still, this video is really cool. A steel factory has a backup of molten steel and it looks really wild (hat tip Geekologie):
It was a tough day at work and I ran out of gas big time after lunch. Still not feeling all that well, but getting better. Only 4 weeks to go until I will be in Antigua for a week getting warm and tan. So soon.
Good Position Day Had a pretty good day in the markets with some of the positions I took last week: YGE TAN RPM Even a stopped clock is right twice a day!
The Robots are Still Marching I have not had a robot story up for a bit, but here is your regular warning about humans being taken over very soon.
A robotic bird?
THE HORROR! This thing is creepy!
We have talked about the Uncanny Valley here before. Here it is in chart form: All I know is that as I watched the video I wanted to shoot that abomination out of the sky with a huge shotgun.
Small Crowd From Geekologie, the countries that do not use the metric system: Wow, I actually had no idea it was that bad.
Taxes Suck The accountant called today and told me where we stand tax wise. Seems between raises at work for the wife and I, and the killing I made on the SLV trade last year, we have moved up to the next tax bracket! Well that's just aces really. Wunderful. Anyways, it put me in a mind of a film from way back, Kidco.
I wrote this last year about this time, but it still fits: Paying taxes on money I made when it is done using after tax money I already paid on reminds me of a scene from an obscure film "Kidco". The set up is the owner of the all kid fertilizer business is taken to court on a charge of not paying sales tax on his product, which is horse manure. The lead kid represents himself and calls as a witness the man that sells hay and oats to his father to feed the horses that make the manure he uses as fertilizer. The exchange goes like this, but it is from memory so I may be off:
Kid: Mr. Jones, does my dad buy all his feed from your store? Mr. Jones: Yup. Kid: Does my Dad pay you sales tax on said items? Mr. Jones: Yup. Prosecutor: Your honor, the question is not whether the defendants father paid sales tax....(interrupted) Kid: Good. Good. Your honor, you see all Kidco sells is manure, which used to be hay and oats! Don't you see!? We are getting taxed at both ends!!! Court erupts with laughter.
A funny film if you can find a copy.
All There Is? I still cannot believe the only copy of Craig T. Nelson's speech in the film "All the Right Moves" is this cruddy quality one. Must be copyright issues. Ugh.
This feeling ill is still dragging on, but improving every day. Luckily I had a huge lift today from the sports world.
Kevin Harvick Wins at Fontana Speedway! The #29 car must have known I was feeling bad, because he pulled off one of the sickest last lap passes for the win I have ever seen!:
Go KEVIN!: That was so awesome to see live! I feel a bit better already!
I am doing market homework tonight and will update if I see anything I like.
Image Change I changed my profile picture to Darth Nihilus, The Lord of Hunger. Check him out if you like!
I am feeling a bit better today, but that is not saying much. I probably should have taken today off from work, but I thought it would be better to be up and about. Great idea.
In the Money? Tonight in the Massachusetts Lotto game Mega Millions, the jackpot is around $315 Million dollars! When lotto jackpots get over $100 Million I always buy 20 quick picks just in case. When I win I will handle it very calmly.
I plan on blowing about a million in Vegas, handing out millions to my close friends (there are not many) and with the rest I would try and get either Josh Brown or chessNwine to manage for me. It's all planned out. Wish me luck.
JP Morgan and Silver - The Story Never Ends I do not want to get all into this issue, either you believe JPM has silver games going or you don't. I do. For some interesting commentary I would point you to today's post over at The Golden Truth: The COMEX goes "Extend and Pretend" on JP Morgan's Paper Silver Short Whatever you think about the JPM/silver connection the move to allow JPM fast track access to silver storage (by the CME) cannot be dismissed as nothing.
Market Operations I was ill most of the week, but I did open some positions: -On Tuesday ,after something my wife said put an idea in my head, I went long SHW (Sherman Williams) and RPM (RPM International). I also bought TAN (solar ETF) but that was a rip off of chessNwine. -On Thursday as I waited for my doctor's appointment I went long YGE (a solar company) again ripping off sir Chess, and KCG (Knight Capital) which was a chart I liked before and I wonder if all the volatility and trading volume might just make it's way to their next earnings report.
As always, not investment advice. Just telling you what I am up to.
Friday Night Entertainment Some non-financial related items for a change of pace.
Now I want to bowling after seeing this vintage ad: see more Very Demotivational Sometimes I get this feeling that the 1950's were more fun than people think.
Fishing Flu I may be sick, but it is that time of year to get ready for fishing season! Time to buy a license and do that most sacred of all outdoors man ceremonies; cleaning your gear and buying new stuff!
It may be a bit before I can get out there, all the snow has raised the Merrimack River to dangerous levels for a Kayak and the cold meltwater may delay the fish waking up. Here are a few posts that show EonomicDisconnect out on the water. There is even a post with a real picture of me! I still am able to remain anonymous/mysterious/afraid to show my face: Quabbin Reservoir 1 The Mighty Merrimack The Kayak Rigged for War Quabbin Reservoir 2 Can't wait to get back out there.
Film Clips Well sort of.
I just got the new Star Wars book "Deceived" by Paul Kemp via Amazon. This novel covers the origins of the upcoming game "Star Wars: The Old Republic". If you have not seen the game trailer, well you should remedy that:
SICK! Better, clearer version here. Second trailer here.
One of my favorite scenes of all time: Uther Pendragon (Gabriel Byrne) embeds the mythical sword Excalibur into the stone (skip to 1:50 mark on):
That rocks I don't care who you are.
Rock Blogging Low on energy, low on concentration, but EconomicDisconnect always delivers on Friday night.
The last time I had "Green River" by Creedence on, I also featured a DNA based puzzle in this post. Check out the puzzle and see if you would like more, and of course check out this tune:
Love that tune.
The yearly appearence of "Libera Me":
So nice.
Ok, for all you "Princess Bride" maniacs out there (I am one of many, 'My name is legion for we are many') here is "My Love is Like a Storybook Story" by Willy Deville:
Mega points for who can source the quote above.
Still going strong, Bon Jovi with "Who Says You Can't Go Home":
Two left and that's it.
Please enjoy Anthrax with "Black Lodge":
HA, you had no idea they could play that kind of tune!
Last call!
Closing up shop with Depeche Mode and "Wrong" with a great live show:
I had to take today off from work and get to my doctor. My sinus infection got worse and now I am in a full on bronchitis infection. I used to get them a lot when I was a kid, but not too many after College. They freaking hurt! Anyways, I put on my most pained face and asked my doctor for help!:
And he was kind.
I am now armed with my antibiotic of choice, Clarithromycin (Biaxin) which kills everything that is not you. Thanks doc! I should feel better as soon as tomorrow afternoon. This would be good as I have slept about 6 hours this week.
Maybe it is because I am cranky and in pain, but I found some articles today that recaptured my nasty side when it comes to things economic. I hung up the "try to help things" towel a while ago but items like the following deserve a look even if they don't matter at all.
Saw this link over at The Big Picture site:
Four States Consider Legislation Barring Distressed Sales as Comparables Homebuilders and real estate sales agents are concerned that the prevalence of distressed sales, and their subsequent use as comparables, is resulting in the appraised value of residential properties not matching the contract sales price, or in the case of new construction, the cost to build. The Missouri legislation, known as House Bill 292, would prohibit appraisers from using a property that has been sold at a foreclosure sale as a comparable. Similar to the Missouri proposal, the Illinois legislation would prohibit appraisers for the next five years from using as a comparable sale “a residential property that was sold at a judicial sale at any time within 12 months.” The Nevada legislation would prohibit the use of foreclosures and short sales. The prohibitions contained in the Maryland legislation are somewhat broader and include any property that was sold under “duress or unusual circumstances, such as a foreclosure or short sale.”
There is a discussion at the link about how this will put appraisers in a bad spot legally.
This is just so unreal I have to leave it alone. Cannot wait until they bar sales of any stock more than 5% under it's closing price at it's all time high! Any idiot paying a stupid appraised price for a new/used home without considering the distressed sale prices is a fool that deserves to get fleeced 100% and then bailed out. This is your world folks.
The Automatic Earth has a guest post from reader El Gallinazo that demands your 5 minutes to read it. Yes, you could read about how Groupon will be worth a trillion dollars or that Twitter will make your life more happy as you gain social influence but you would be better served on a mcro level to check this one out: Cookie Inflation and the End of Quantitative Easing No excerpts, you have to read the whole thing.
I had a good head and sinus cold brewing this weekend but I thought I had pushed it off. No such luck as my head is killing me and breathing is a conscious effort through my nose. I am exhausted and cranky so as I ponder the pros and cons of Rhinitis medicamentosa to try and be able to sleep, just a quick note.
Fear Threshold Extremely High Given all the bad news out in the world one would think financial markets would be some kind of worried, nervous, or fearful. It's not happening. What do the markets fear? The Dark perhaps?:
The latest "correction" was brought on at first by buyer exhaustion and then the multi gut punches of: -Egypt -Libya -Bahrain, Saudi Arabia -Japan Earthquake and nuclear issues -Oil prices While any one is pretty big, all together the picture is very bad. So where is the fear?
You have to first know what the market fears, then you can answer.
If you jumped up at the question like Arnold Horshack: Sit the heck back down, you are most likely wrong.
The old line "the market fears uncertainty" applies, but not in the way you might think. All of the above issues are monster unknowns, but the market could give a hoot.
The last time real fear existed was last summer when the liquidity pump of QE 1 was dry and markets were left on their own. That was the only time I saw any real concern. Even now, what I am looking at are mobs angling to cash in on said above issues, not run from the market.
QE 2 ends this June. Either markets are willing to party right up until then, or they are pricing in more intervention (via QE 3 or some other pet invention of central bankers).
Japan is only an issue if Japan will not print. Portugal and Ireland bond yields at record highs are only an issue if they cannot be rolled over by the ECB by printing. You get the idea. The reason the market is not afraid is because they have no reason to be.
The wife and I went out for dinner so I am home too late for any real post. Maybe a cartoon?
"They Got Money for Wars, But Can't Feed the Poor" -Tupac
Ran across this cartoon over at Abstruse Goose: Thick Face, Black heart (click for larger view): Indeud.
I have covered this before so I do not want to get stuck here again. Buying big bank stocks that got bailed out and continue to stick it to the taxpayer is not cool in my book, but each to their own. AIG, BAC, JPM, GS, and others are on permanent blacklist for me, I don't care if I could make a zillion dollars trading them.
There has certainly been plenty to keep an eye on over the last two weeks. I will be doing homework on market screens tonight, so I am leaving this post as an open thread.
Leave a comment and ask a question, offer ideas, discuss what ever you like. I will check in during the evening.
Added: I like SHW and RPM here.
And by popular demand (the whole thing is funny) but go to the 1:30 mark for some real fun:
I am doing my market homework tonight and running screens but with all the headline risk out there I am not buying anything right now.
I have some free time and seeing that there seems to be a a ton of boxing fans out there, here are some clips for review.
Boxing Clips Enjoy!
There was a rule enacted after Arturo Gatti stopped Joey Gamache in this fight that barred a fighter from pigging out after the weigh in and gaining over 10 pounds! Go to the 0:50 second mark for a brutal KO, so don't watch is you are squeamish:
Lights out.
Over at iBankCoin there was a thread that got all into boxing and some punk said that Roberto Duran had a glass jaw! Not wanting to start trouble, I let it go. Duran was KO'd one time (By Thomas Hearns) and it was a fight he was not prepared for. Hands of Stone was one of the best fighters of all time. Go to the 2:16 mark of this clip and ask Davey Moore:
A great book I read was "Hands of Stone" by Christian Giudice. Grab it!
When Ray "Boom Boom" Mancini got his first shot at the lightweight title, he ran into my hero, Alexis Arguello. After a valiant effort Mancini gets beaten by one of the greatest fighters of all time. Scroll to 1:05 mark:
Master defeats the apprentice.
The 1984 fight between Juan Meza and Jaime Garza featured two fighters with the highest knockout percentages in history. So what happens? A first round knockout of course! But not without drama. Round 1 starts at the 2:00 minute mark:
WOW!
One of the sickest punchers of all time was Julian Jackson. Spool up most any win of his and it was a crazy knockout (Terry Norris comes to mind). It is lights out time for Herol Graham in 1990 here:
Ouch.
In one of the more brutal fights in living memory, Chris Eubanks and Michael Watson put on a show in their second fight (in 1991) that was amazing yet terrible. Watson has the fight in hand and almost stops Eubanks in the 11th round, but walks into a shot so severe it had terrible consequences (go to 1:00 mark):
Watson suffered a brain blood clot and brain damage after this fight. Very sad, and shame on his corner for letting him come out for the 12th round.
While a quick knockout is fine, there is no more fierce a display in boxing as total domination. Julio Cesar Chavez finished the careers of quite a few fighters during his unbeaten streak and some (Meldrick Taylor, Roger Mayweather, Greg Haugen, Sammy Fuentes) were effectively finished as top flight fighter after Chavez drained them. Edwin Rosario never was the same after his loss to Chavez, watch the whole clip to the end of round 11 when Rosario's corner thankfully throws in the towel:
Brutal.
Ok, last clip!
In 1988 Thomas "The Hit Man" Hearns had a mandatory title defense against Iran "The Blade" Barkley. It was a total mismatch but I got it on Pay-Per-View anyway. Hearns was killing Barkley and the fight was sure to end in the 3rd round, but a wild right hand out of no where wins the fight for The Blade in a shocking ending (watch from 6:00 min mark on):
Shocker!
I hope you liked the clips and feel free to suggest fight clips or ask boxing history questions!
A friend of mine used to say that (the title) right before he peeled out in his Trans Am and it always cracked me up.
I am a bit burned out this Friday after the event filled week. My cable and internet just came back on about a half hour ago so I am pressed for time as well. I had quite a few things I wanted to write about tonight, but I will slim it down to quick notes and then some comic relief and fun stuff to lighten the mood.
Unvarnished Opinion and Observation No candy coating or being nice tonight, I am cutting loose.
-If I see another idiot say a country cannot default if they have a printing press I am going to scream. I like Modern Monetary Theory (MMT) as a thought project but in the end it only backs up 100% what I have said; notional money is not real money. Here is the MMT application killer should you encounter one on the street and don't want to physically assault them:
So how come every Japanese, British, and American is not given 50,000 a year from age 16 to death if printing money is so easy and with no consequence? This is where the MMT fails big time, they like to promote the printing press, but only in ways that are book keeping games between central banks. No country with it's own currency should not have 100% millionaires by their reasoning, yet it is not so.
Waiting for an answer that makes sense boys. -Along the same lines I see that the FED said the big banks are healthy as can be and can buy back stock and raise dividends, and the FED will raise rates to 3%, HA! Just kidding. If the banks think the all clear is here, what about all those reserves sitting pretty? Do they get it in their head to deploy them? -What would be so delicious (and I would cheer FOR the banks) is if they take all those reserves and counter all the currency intervention by central banks! Too funny and I think not too far fetched. -Is this blog by Dinosaur Trader maybe the best thing you have read all year? It is for me, wow. -At this point I want Warren Buffet to retire and go away. -I was over in the 12631 chat room last night and who knew there were so many boxing fans? Cool. Search this blog with the top left search function for Boxing History and have at it. Bonus points if you can identify the fighters in this pic:
Friday Night Entertainment Over 10,000 smiles served since 2007.
New Engine Idea? I did not have time to really look into this but it sounds amazing:
Shockwave Generating Wave Discs Could Replace Internal Combustion Engines Michigan researchers have built a prototype of a new auto motor that does away with pistons, crankshafts and valves, replacing the old internal combustion engine with a disc-shaped shock wave generator. It could slash the weight of hybrid cars and reduce auto emissions by 90 percent... It consists of a rotor carved with wave-like channels. Fuel and air enter through central inlets, and the rotor spins to block their exit through a separate outlet. The sudden build-up of pressure generates a shock wave, compressing the mixture. Then it’s ignited, and as the rotor keeps spinning, the outlet opens again to let the hot gases escape. New Scientist explains in further detail.
Here is a look: Anyone know anything about this?
Now Things are Getting Out of Hand Regular readers know my most ardent future prediction (other than higher gold and silver) is the ever closer take over of the world by robots. Keep laughing, you will come to learn that I was right, punks.
I am totally watching "No Country for Old Men" this weekend as I have had it on my mind all week. Too many great scenes (especially the coin toss scene) but this is a close second:
Chilling.
A boxing film many have not seen is "Streets of Gold" and if you can find it (big if) I can highly recommend it:
Rock Blogging Keep on rocking in the kind of free world.
Reader Gawains suggested some Bob Dylan and "Shelter from the Storm" live. I like it:
My lovely wife suggested "Rolling in the Deep" by Adele and this new tune rocks!:
Wow, the word timeless comes to mind.
Ok, I am going new age here! The first time I heard this song I thought the lyrics were cliche like and all that. After a while it grew on me and I can recommend "Jar of Hearts" by Christina Perri:
Not bad at all.
Love the Grand Funk Railroad tune "I'm Your Captain" and if you take it for a spin you will too:
Cus I just can't live without it, nice.
Only two left and I promise no Iron Maiden or Ozzy.
For me live music separates the men/women from the boys/girls. Any fool can sound great with all the studio help, but real talent live is so rare. How about Metallica playing "Sanitarium" live and it's better than the album version?:
Just get out great.
Last call. Hope you have a drink in hand.
I found a new live version of "Harden My Heart" by Quarterflash so have a run!:
I had my teeth cleaned today which is always fun. Little did I know things would get worse in the afternoon.
It is Friday night tomorrow, but I do not know how much fun we can have with all the news coming down (covered below). Requests always welcomed though.
Short post as there is too much going on and I want to follow things this evening.
On Japan I have no special understanding of the issues involved at the troubled nuclear plant. My feeling is that if something was going to happen, and I mean worse than what already has, it would have happened by now. Let's hope the new power line can be in place so that the material can be controlled.
What about the earthquake and tsunami damage? While all the talk has been about how Japan will rebuild and how they will pay for it (No one wondered about Haiti for some reason..) not much sympathy has been shown for the stoic Japanese people. I cannot fathom what it feels like. One minute you live on the sea and all is well and the next the earth moves and the ocean becomes an enraged force that sweeps your town, your friends, your family out to sea, never to be seen again. Find words for that.
No Fly Zone Resolution Tonight the UN which usually cannot authorize stopping genocide (Rwanda has no oil I guess) somehow found a way to pass a resolution authorizing a "No Fly Zone" over Libya.
It is not clear as yet who will be doing the enforcing, this Wall Street Journal article was thin on details (understandable) but there was this section which is a little strange for a No Fly Zone:
Options included using cruise missiles to take out fixed Libyan military sites and air-defense systems, according to these officials. Manned and unmanned aircraft could also be used against Col. Gadhafi's tanks, personnel carriers and infantry positions, with sorties being flown out of U.S. and North Atlantic Treaty Organization bases in the southern Mediterranean.
Did not know tanks could fly.
Conflict is always dangerous for the known and unknown. I have mixed feelings on this. I would like to see Gadhafi go, but where does it end? I would like to see more British and French forces in on this and not just a US show. We shall see what happens but this is very serious and deserves your attention.
Right now the Japan disaster is consuming the news speak and headlines, and rightly so. Libya will now command attention when bombs start dropping. Ok. It is at times like this that sneaky, nasty players like Russia, China, and especially Iran like to make some kind of major move, going quiet and unnoticed. These are dangerous times.
As if every day since last Friday was not enough, more and more issues are surfacing every hour. I will do the best I can to hit what I think is important, but no one writer can cover all the moving parts.
Japan Nuclear Reactor News I really cannot comment much here. The news items are all over the place and it is hard to know what to make of the news that does come out. I suggest checking in at major news sites and following the more headline centered financial blogs for the latest news.
What is troubling is how sketchy the real hard information is and why nobody seems to be able to really explain what the scenarios are. It is either "Total Meltdown Catastrophe" or "Troubling, but With Limited Large Scale Impact". Seems a wide divide.
Yen Carry Trade Wonderful, yet another market that I do not have a firm grasp of!
I understand the Yen carry as a vehicle for cheap liquidity for speculation. The Wiki entry for this in regards to Carry:
By early year 2007, it was estimated that some US$1 trillion may have been staked on the yen carry trade. Since the mid-90's, the Bank of Japan has set Japanese interest rates at very low levels making it profitable to borrow Japanese yen to fund activities in other currencies. These activities include subprime lending in the USA, and funding of emerging markets, especially BRIC countries and resource rich countries. The trade largely collapsed in 2008 particularly in regards to the yen.
I have no idea how much it collapsed then or if it was reborn after.
Some items worth a look (via Zero Hedge): The Day the Yen carry Trade Died I would expect intervention on this, but how much can Japan do at this point?
Josh Brown, The Reformed Broker, has a great list that will get longer during the evening: Yen Linkfest
Video Recap a Must See iBankCoin write chessNwine does not post much free content anymore (and he should not, it's too good) but here is a great video recap not only of just today, but a long stretch where being cautious and on the sidelines would have been a very good thing to do: Video Market Recap 3-16-2011 I of course was not listening too much but I did scale way down my position sizes while I played a few ideas the past few weeks. Thanks Chess!
Just How Important are Stock Indices to Policy Makers? Grabbed a headline this morning off Yahoo because something about it just pissed me off royally for some reason. Here it is: You can click for a larger view but it reads: Stocks Hit by Japan Fears Despite Nikkei Rally
After a 20% drop, Japan's Nikkei rose 6% today. Somehow the stock market moving up failed to calm anyone. How much Japan blew buying stocks instead of saving to either rebuild the country or defend their currency is open for debate.
This kind of thing pisses me off because it is a waste. When markets are ready to rise, they will rise. They will not need help. All the money funneled here to the banks via POMO to raise the stock market was done to provide a "Look, SHINY Object" kind of distraction against serious issues. All that money and all that work gets erased pretty quick.
It should be totally clear by now that all things cannot be controlled at all times. Pretending otherwise is foolish and silly.
There are many big picture things to consider tonight, but I am out of time.
"No Shaking, No Tenderizing, Down You Go" There are three parts to the story today in regards to markets and things economic.
The first part was the 'make you puke if you are long' morning open, which was pretty nasty and was sure to have triggered plenty of sell calls first thing. This needs no real coverage. For about 30 minutes this morning it as just like back in the days of Lehman Brothers.
The second part is more the part I want to spend time on because if I am right this could get ugly pretty quick.
After the terrible open, stocks caught a bid all day and moved steadily up to the day's end. Please note that I closed my positions in GG, NGD, and KCG around 3pm for bad losses, but not terrifying ones. The indices closed lower, but it was not as bad as it was. The volume involved on the upside was dwarfed by that of the selling in the morning, but that is pretty common in this market. Many observer's were watching the action and were amazed. Trader Mark offered:
While we have to wait until the major averages get back over their respective 50 day moving averages to feel more comfortable it appears nothing short of aliens invading will cause speculators not to believe in The Bernank. Natural disasters are now clearly bullish because it means rebuilding.
I left the following comment:
I think an alien invasion would be bullish due to all the new technologies we would be exposed to :)
Indeud.
It was just like at Camp Mohawk in the film "Meatballs"! All of a sudden all the problems of Japan and a market collapse just didn't matter! II JUST DOESN'T MATTER!:
A late day selling deluge was the warning that caught my eye and makes up act three of the day.
For quite some time people have been conditioned to buy the dip, or BTFD. Most pull backs have been benign in nature so this has worked well. The action today seemed to be a mass dumping followed by a baby walk up to attract Pavlov conditioned buyers, and then a hammer at days end. As of now futures are ugly and there may be another big dump at the open tomorrow.
This made me think of the line from the film "Jaws":
"No Shaking, No Tenderizing, Down You Go"
No one can possibly have any idea how the Japan disaster will play out. No one. Many argue this or that, but it is far from clear. I will go out on a limb and predict that Japan will not be getting to work rebuilding the region on a grand scale by this Thursday. Long term issues are not even on the radar right now.
The markets were damaged again on a technical basis and that coupled with how the selling is being done is reason for caution here. The perfect setup for distribution to BTFD chumps is in place, and I do not mean the good kind of distribution. I mean like wash out coming distribution. I could be wrong.
Stock Blocked I had a few plays I was ready to run with this morning. As it turned out, the sector a couple of the ideas were in got red hot right at the open and I was "stock blocked" by a huge run up! I missed a huge move and I did not want to chase at that point. Ugh, so annoying.
I did open a position in KCG (Knight Capital) due to a nice reversal look on the chart and some interesting PPT screen results.
Key Moment for Long Term Confidence News is breaking as I type of another explosion at reactor 2 of the Fukushima Daiichi nuclear complex. I don't really have any details and the situation is fluid. This fits in with what I wanted to write tonight.
What is happening in Japan has major long term consequences for all developed nations going forward. I am not talking about economic plans or debt sales here. The bedrock of any system is confidence and how Japan handles the disaster will be important.
Looking back just a few years we were shown that the US government is totally incapable of handling a disaster (Katrina, Gulf Oil Spill) and is given over to saving the banking system instead of applying the rule of law (financial crisis, ongoing). While this clearly showed the true self of the US government, at least it could be argued that they were basically honest about their incompetence and up front about why they were saving the banking system.
The nuclear issues in Japan must be open and honest. I know things are a mess right now and Japanese officials may not have complete information. If nuclear reactor explosions are causing widespread contamination, this must be discussed and communicated to the public. If there is contamination and it is being kept quiet I think the damage to long term confidence in developed nation governments will be damaged beyond repair. This is not the old Soviet Union or North Korea.
Social Media Viewed from Science Fiction For all you Facebook and Twitter lovers, here is an article worth a read: How Social Media Is Science Fiction
Japan News As I had feared, the more time goes by the worse the news out of Japan gets. The earthquake was upgraded to a full 9.0 and data shows the main island of Japan moved 8feet and the axial tilt of the Earth may have been changed by 4 inches. The power involved in such a thing cannot be grasped in any reasonable way.
For a visual aid, here is an old picture (found at this site) which shows a fence that was moved 8 feet during an earthquake near the San Andreas fault in California in 1906: Almost unbelievable.
Of course it was not long before some Keynesian asshole had to go ahead and try to paint a terrifying tragedy as a way to stimulate an economy(via Mish). One has to think Keynesians would support firebombing entire cities to foster growth they are so stupid it hurts to even have to deal with them:
“This is a Keynesian stimulus program that nobody can argue with: just rebuilding the city of Sendai,” said Marcus Noland, deputy director of the Peterson Institute for International Economics in Washington, co-author of the 2001 book “No More Bashing: Building a New Japan-United States Economic Relationship.” “Rebuilding Sendai could actually be an opportunity to try to create a growth pole in northern Japan.”
Makes me sick.
Stoneleigh of The Automatic Earth has experience in the nuclear safety area and so if you want a full run down on what to be thinking about concerning the nuclear issues facing Japan (and by extension the environment) please stop on over and read today's piece: How Black is the Japanese Nuclear Swan? Thanks TAE!
Economics of the Disaster Reader Gawains had a comment that was right in line with what I was thinking over the weekend:
This will have a serious impact on financial markets. The yen is a widely circulated currency. Now it's going to have to come home to finance the rebuilding effort. Japan, which is the second largest holder of US treasuries, will probably have to start selling them in order to raise capital. That will have a profound effect on the US economy, and interest rates will necessarily rise. I happen to think they're been too low for too long, but a forced increase is going to cause major disruptions in the markets.
I may differ with Gawains as I do not think Japan will have to sell Treasuries. They are serial money printers and will issue debt, not raise cash via sales. I could be wrong. What will happen is that Japan will need to crank up funding and this will compete with US debt sales as well. There is only so much liquidity out there and massive debt sales by Japan and our own will strain things a bit.
I penned an article last week showing why Quantitative Easing 3.0 was on the way, and I mentioned that time scales would be compressed. Well ramp that up. The FED will have to continue their buys of paper now, it is almost a sure thing. What will be interesting is that I was thinking the FED would move to municipal debt, mortgage paper (again) and maybe some other junk bonds, but now US Treasuries may be where it is at by necessity. What a mess. Maybe Bill Gross is throwing things at walls this weekend after dumping all of is treasuries?
I have no idea what the short term effect on the gold/silver complex will be. Longer term it seems very favorable as the expansion of paper promises for debt will explode going forward: -Japan need big money -The USA needs huge money -Europe need big money for the rapidly deteriorating debt situation there That's a lot of paper coming online.
I have a few plans for trades this week but I am not going to write about them as they were not my own, I am mooching off of chessNwine! I am working up some ideas I had tonight and will update later if need be.
Japan Earthquake Just a terrible and sad day. The pictures and reports are overwhelming. I can only offer best hopes at this point. At times like this I remember that man has limited dominion over the Earth. Very limited.
Market Commentary I was thinking about making a few moves today while I was home but not much was looking good. Followed the Pelican crew over at iBankCoin and there are some really good intraday operators over there. It was fun to watch them work. Near days end I bought some GG (Goldcorp) and NGD (New Gold Inc) as they were near bases that I think will hold but both may be moved from the trading account to a more long term section of my portfolio.
If the earthquake news was not enough to move you over to the QE 3 camp, the words of FED member Bill Dudley should have sealed the deal. Trader Mark has this great summary up:
•Dudley faced persistent questions from the audience on food inflation. The president of the Federal Reserve Bank of New York said people forget that even as the price of food is rising, other prices are falling. He mentioned the price of the IPad 2, prompting guffaws from the audience. •"While rising commodity prices may be giving some of you a bad headache, they are not likely to lead to a sustained rise in inflation to levels inconsistent with our dual mandate," Dudley said. Yes Mr. Dudley - I am sure rising food and energy is giving a room full of business leaders making 6 or 7 figures a few headaches. It's a bit more of an issue for the average American however.
Freaking joker.
You have to understand that the FED cannot make anything happen, only influence things via blunt instruments of monetary policy. If you had Ben Bernanke in your car and the tire blew out, Bernanke could not change the tire. He would lower interest rates in an effort to get you to chase a return and then with your profits you could hire Triple A. Like a good little servant most are doing just that.
Markets have been called 'resilient', 'bullish', and 'strong' in the face of bad news. The line gets thin indeed between those descriptions and 'oblivious', 'lacking any understanding', and 'blindly optimistic'. I am convinced at this point the following news story could actually run in the near future (note this is sarcasm, it's free BTW):
Massive Asteroid to Hit Earth, Stocks Look Good Market Watch Confirmed data show that a 3 mile wide asteroid will hit Earth next Wednesday. While this event will return man to the stone ages, there is some hope to be found. Analyst Marky Zandii had the following advice for those concerned about the future: "You need to be buying Apple Inc (AAPL) like now and in size. There has never been a better opportunity. Man was in the stone age before, right? And what happened? After a while he figured out how to make the IPad, that's what. It will happen again and think of the return you are going to get if you buy now". When it was pointed out that it may take a thousand years or more to get back to a technology era for man kind, Zandii quipped "What are you, a bond guy? Shut up".
Indeud.
Friday Night Entertainment An attempt at some comic relief after a day of bad stuff.
Highlander Series Paris Location Guided Tour Special treat this week for me! Writer David Batista is a monster "Highland the Series" fan. Readers know that I am also a huge fan of the greatest show in television history. David went to Paris on a few occasions and while he was there made a stunning and jealousy inducing picture tour of all the key Paris locations for the show! Two parts: Part 1 Part 2 One sample but if you know the show take the tours!: Good stuff.
Movie Reviews that Rock I have no idea how I never found this site before, but a new favorite is BadMovies.org. I will warn you you can get lost reading about all the bad films and the hilarious reviews. I would say that not all the movies they say are bad are that bad, but in any case the reviews are the main attraction. Here is the summary for the film "Bloodsport":
Things I Learned From This Movie: -By moaning like a zombie, one can regain their vision. -Security on military bases are extremely sparse. -Just about anyone can get into the Kumite, including Grace Jones lookalikes. -There are fighting arenas in the middle of the Hong Kong slums. (Isn't there one in every slum?) -Doing splits is a relaxing experience. -Never hurt the feelings of a buff Chinese guy. Only bad things will occur. -The best way to learn to learn focus is to be tied to trees and almost have your limbs ripped out of their sockets. -Arab guys are not the ladies' men they are cracked up to be.
Too much fun.
How Big is a Blue Whale's Heart? This big: Now you know. And knowing is half the battle! (G.I. Joe!)
Clips Well you knew a Highlander clip was sure to come!
In the episode "Comes a Horseman" Duncan Macleod learns that his dear friend Methos was once part of "The Four Horseman", a group of 4 immortals that were the incarnation of the Horseman of lore:
Excellent. Want more Methos? Click here ,with Ron Perlman.
When the TV movie "Failsafe" ran in 2000 I remember thinking it was amazing. Anyone remember this one?:
Rock Blogging Music for the weekend.
My fellow Big Steel Keg user, Smoking in Peosta, was looking for The Doors and "The End":
I have a list of songs that I really cannot play while I am driving. You know the kind of tune that gets you in a zone, you look down and see the speedometer over 110mph and that's not so good. Here is one that makes the cut, "22 Acacia Avenue" by Iron Maiden with the greatest metal front man of all time, Bruce Dickinson:
One of my favorite tunes, but only live versions of it.
Get your lighters out for Cheap Trick's "The Flame":
How about "Crimson and Clover" by the lovely bad girl Joan Jett?:
Hi Joan! Call me, it is my birthday!
Two songs to go, does anyone even play this stuff? Well no matter, I have fun.
I have to admit, I stopped watching TV except for sports (we do watch movies on DVD or on demand) about a year and a half ago. I don't miss it at all. The last time I watched American Idol (Kid Dynamites favorite show for what it's worth??) I got to see Chris Daughtry be the best the show has ever had on and still lose. Here is his version of "Hemorrhage" (skip to 1:00 mark):
Wow. What idiot ended up winning that year, I do not even remember. So stupid.
Last song.
I lied, two. One great and the other my all time favorite song. It is my birthday after all.
Van Halen's masterpiece, "Atomic Punk":
Best ever from them.
The best song ever recorded? You should know by now:
I have tomorrow off to get a 3-day Birthday weekend going early. Tomorrow is Friday so get requests in for whatever kind of thing floats your boat; music, film, literature, science, etc.
Swing and a Miss I was stopped out or sold all my stocks yesterday and I was a bit pissed that I had to eat losses on all of them. It did keep me out of today's grinder though. I broke a few trading rules this week but the biggest one was that I really did not like anything when I did screens on Sunday night but I figured I would try a few things just to have something to follow. If you don't like the setups you are putting on, you are a fool to open them. I am that. In a never ending melt up Bernank market miscues and broken rules can be ignored. In a meat grinder they get amplified. I will sharpen it up.
A Fine Mess I have to be honest, between the awesome pic for Macbeth by a Storm Trooper and the outline why QE 3 will happen in last night's post, it went off with zero notice. Maybe it sucked. I thought it was good. Anyways, here is my run down for tonight.
The news headlines are fast and furious. With so much going on it is little wonder the markets are nervous, though it took about 2 months of bad news to get there. The headline that shook the world? Here it is: Paris calls for targeted Libyan air strikes And yes, Paris as in Paris FRANCE! I wonder if the French aircraft carrier Charles de Gaulle is still working? Did you know it was named after a true gold bug? Oh, the dripping irony here.
If you are looking for news during these wild times you can use the regular news feeds but the two I like Drudge Report for breaking stuff and the best cover site on the Web, Instapundit if you want deeper news stories that are not covered everywhere else. Don't bug me with political comments, both Drudge and especially Instapundit get the job done.
I wanted to get this out of the way as soon as possible because I see that plenty of people are getting either worried or have questions about the end of the FED's Quantitative Easing (QE) campaign.
Barry Ritholtz has two items up this week that look at why QE was started in the first and second place (Part 1) and some things to think about when QE 2 ends (part 2). Part 3 comes later this week and will be worth a serious look.
The easy way to look at this is to think the same thing that happened at the end of QE 1 will happen again before QE 3 is rolled out. I think it will happen about the same way but the time frames may be more compressed. I do not want to spend a lot of time going over all the reasons that the FED will now be boxed into supporting markets for a long time. I have spent enough pixels tilting at windmills trying to do anything about it. Who cares.
A lower stock market is going to happen when QE is over because there is so much firepower that flows from it. A lower stock market will rob the FED and the Government of their only example of progress.
Housing is getting worse and will continue to do so. The latest scam settlement with banks for maybe $20 Billion (and the banks are balking at even this!) is a sick joke. More MBS will need to be bought by the FED and I think second mortgage paper will also have to be purchased to "ease tight credit markets". This translates to transferring losses from banks to US taxpayers.
Municipal (muni) bonds are going to have a rough time going forward. Hello QE 3! Another asset class to keep higher than they otherwise might be.
Those are the big three for QE 3 introduction. I think all are almost 100% guaranteed to be serious issues that will threaten the "fragile" recovery that is at the same time a once in a generational rally in our markets (?).
For QE 3 to be either not needed or not able to be used you have to believe one or more of the following lines.
Municipal cutbacks will make large enough differences in budgets to attract capital while at the same time not damaging their finances even more by spending cuts. Tough trick to pull off.
Consumers armed with new low paying jobs (if they have one at all) and a shiny new sub-400 FICO score go on a buying binge with credit expansion that is not student loan debt.
Business is able to pass along substantial margin killing input costs or are able to fire more workers to keep margins a sick levels, hence record earnings on flat revenue.
Housing recovers (lol).
So how do you think this all plays out?
The process will be disjointed and ugly and I expect a hissy fit by Wall Street at some point that results in an ugly day or two. Then it will be the FED's time to ride to the rescue once again.
Rebooted As a huge film fan, I like to see all kinds of things. What annoys me though is when Hollywood goes on a binge of remakes or "reboots" for films we have already seen. Sometimes they can work, the new Batman films are amazing, but mostly they come up far short of the original. Here is a list of the many reboots/remakes at least in the works:
At a time when every single comic character is getting a film (Thor looks insanely stupid) whats left but a bunch of reboots and remakes? Come on, we need some new ideas!
If I have to keep seeing the 'WINNING' meme for much longer I may scream.
Blade Runner Sequels and Prequels? Mixed feelings on this news item:
Blade Runner Sequels and Prequels Happening The iconic science fiction film Blade Runner, based on a book by Philip K. Dick and directed by Ridley Scott, will be followed up with sequels and prequels soon. Variety reports that Alcon Entertainment is in final discussions to secure film, TV and franchise rights to produce prequels and sequels based on Scott's 1982 science fiction masterpiece. Andrew Kosove and Broderick Johnson, the film producers from Alcon negotiating for the rights, told Variety they're in the early stages of sorting out how to proceed and were not sure if Ridley Scott would be involved.
I am excited but I hope they don't do a crappy job. Who can forget the "I've seen Things" scene:
Classic.
Market Operations I reviewed a ton of stocks last night but I could not find anything too appealing. I did open a position in SIL (Global X Silver Miners ETF) as it has been lagging the basic silver ETF SLV and I am thinking it may catch back up: Of course SLV might just drop back down to meet SIL but I figured take a shot.
I went with tiny positions in some lotto names that may be fun to watch: MGH EGI HRZ These are not long term holds and stops are set pretty tight.
QE3 and Silver at $50? I was wondering when a FED member would start massaging markets with QE3 hot oil. It was Dennis Lockhart today who opined that higher oil due to QE2 and unrest in the middle east brought about by high food prices due to QE2 would require QE3. One trick ponies over at the FED.
Silver I think could run to $50 as I do not think $40 is an important psychological barrier. Gold is still lagging a bit behind.
The Rare Amazon Jungle Animal Correction There has been plenty of hand wringing and discussion about the coming "correction" that every single trader sees coming yet fails to materialize. For all the turning and burning the S&P 500 is still sitting pretty over 1300 and safe from a technical standpoint. The Nasdaq had a "Uh Oh" moment today but ended the day in ok shape. So what gives? Buying the dip has not been working as of late and a correction becomes less likely the more key support holds the line.
You need to get David Attenborough's voice in your head and hear him explain The Rare Amazon Jungle Animal Correction:
Here on the banks of the Amazon River, deep in the jungles that man has yet to fully explore, we are on the look out for a ghost. A rumor. A myth. Local people have reported for years a seldom seen and never before photographed creature that has eluded documentation, yet lives on in the minds of the people; The Rare Amazon Jungle Animal Market Correction.
We found a local villager who told us his tale of glimpsing the animal. Here are the words of Ralph through a translator: 'I came around the corner of the river and there it was, a market closing beast clearly under the 50 day moving average! My grandfather once saw a 20 moving day version, but none of us believed him. Before I could do anything the beast was gone into the forest.'
Using state of the art night vision cameras, motion detectors, and infrared photography, we hope to once and for all get evidence that such a creature exists. Join me, David Attenborough, for an hour where we hunt one of natures most elusive animals, The Amazon Jungle Animal Market Correction.
At this point I wish markets would either go up big or break down. This running in circles stuff is boring, it's almost like a normal market with all the back and forth!
