Quick Hits for Monday

A bit short on time after marking off the electrical lines to be linked to the generator. Hopefully the process will be complete tomorrow. Generac 10Kw should save me from staying at any more hotels when the power goes out.

The Difference Between the Technology Bubble and the Housing Bubble? Who Ended up the Bagholder
A key theme I have harped upon for a long time is that the technology bubble went bust and hardly anyone missed a beat. Certainly no heroic efforts were attempted by the FED to help anyone. Just low rates to encourage new speculation. The housing bubble bust has been fought on all fronts. What is the difference? The big banks had unloaded their dot bomb shares on other people were as now they themselves sit on all the losses, or the losses that do not currently reside at the FED, HA!

Jesse's Cafe of course writes this up in a way that makes me jealous, so I will just point you that way with a small excerpt:

Is the FED Likely to Act if There is Another Stock Market Bubble?
The 'collateral damage' caused by the dot.com and housing bubbles, all those ruined lives and families, is really not a problem and can be addressed by monetary policy (inflation) after the bubble runs its course. The problem in this last financial crisis is that the housing collapse caused a bank run, and the banks themselves were injured, instead of profiting, in the bubble collapse. Talk about an unintended consequence. Good God, not the Banks! This is a fast being remedied by the enormous subsidies granted by the Fed, and their man Timmy at the Treasury, to set the Banks back up again at the roulette tables, bringing home those eight figure paydays.

You should read the whole thing.

Oil Nearing $90; Good Thing the Economy has Recovered
Funny headline at Clusterstock:
Holy S&*# Oil!
I seem to remember quite a few banks loading up tankers with oil a while back, it was January of 2009:
Banks Cannot Let Go of the Gambling Mindset
Which was centered on this Bloomberg item:
Goldman Sees ‘Swift, Violent’ Oil Rally Later in Year
I wrote at the time:

The process of filling a supertanker with oil and planning on selling it later at a higher profit sounds great as long as those "higher prices" manifest themselves. Was it not the banks like Morgan Stanley and Citigroup that were so sure "higher prices" in real estate were such a sure thing? Good to see taxpayer funds going to work on a commodity bet. I am sure this will work out well.

Well it looks like a winner but it took a bit longer!

I would say higher fuel prices may not be the shock to the economy it once was; when no one has a job there is much less driving! How's this for a bumper sticker:
Unemployment: The New Green Revolution!

Bond Rates Moving Up
While some writers (Calculated....) were high fiving the day after the FED MBS program ended because rates did not move up in one hour, it seems as time goes on the slow rise is gaining steam (via Market Ticker):
10 Year Bond Breakout!
Most bulls see this as proof positive the economy is on fire so this remains bullish for now.

Of course you have to love the idea that the government tempted a large number of home buyers into the market at all time low rates, gave them $8-$10k towards a home purchase, and expanded FNM/FRE/FHA loans to any and all. Now, looking out maybe 1 year, higher mortgage rates will make those buyers instantly underwater! This would be funny if it was not so sad.

Metals Make the Mainstream
You things are getting interesting when metal market commentary makes sites like The Huffington Post:
It's Ponzimonium in the Gold Market
Writer Nathan Lewis (who wrote "Gold: the Once and Future Money (2007)" which I have read) discusses the paper market and how that market vastly exceeds the physical gold market. This story is a great recap of all the crazy developments in metals over the past few weeks, including a hit and run perpetrated on a whistle blower not 2 days after his report was published.

As for the metals, my favorite, things are looking good.

Silver closed above $18 an ounce today and that is very strong. When silver was around $15 in February I was chomping at the bit to get some. I did not do any trades via the regular vehicles (SLV, miners, etc) but I could not pass up a deal on some physical to add to the Economic Disconnect holdings. Near term silver is bumping resistance at $18-19. Any break over $20 could be a big one so I will be watching this space.

Gold has not been as exciting, and my target of $900-$950 for accumulation looks to be dead at this time. Gold has been solid and the $1200 an ounce mark looms as resistance.

Have a good night.

GDP Will Be Fine, As Long as Consumers Buy Tchotchkes

Wild rain and heavy winds here last night. No damage to the plants however. The garden is looking strong indeed. Loyal reader Watchtower had asked if I had seen any pictures form the Mars Phoenix lander. I watched the whole thing on NASA TV live! I love space stuff, and the phoenix lander is amazing. Plenty of good photos out there with my two favorites being the lander being photographed during its descent by the Mars recon orbiter, and the picture of the camera shadow from the lander itself. Check out all relevant info here:
http://phoenix.lpl.arizona.edu/

Sudden Assault on Bubbles Obvious to All
It seems that the shear hypocrisy of the "some bubbles are bad" line of thinking is getting a fair amount of coverage. Mish has a good discussion going and Tim Iacono over at The Mess That Greenspan Made has the best one liner yet from one of his posts today:

"Aside from the remarkable surety with which many analysts are now able to identify a "commodities bubble" in real-time, a feat that seemed impossible for both the stock market bubble and the housing bubble just a few year ago, the one part of the "commodities bubble" discussion that seems most ill-reasoned these days is the eagerness to pop it."

I spilled a ton of virtual ink on this already. Tim's line is perfect as it captures everything that is so wrong with the entire system. You had to basically have every possible data point corroborate that there was a stock (2000) and housing bubble (2005) before the bulls were dragged kicking and screaming to see the truth, but now Oil and food are sure fire bubbles that need intervention. Ok I'll play.

Say oil is overpriced relative to some fundamental analysis by, for the sake of argument, by 50%. So oil should be at the $60-$65 a barrel range. No problem. I am sure the stock market would rally huge on that oil price collapse. Now reduce home prices by the 20-40% that they are still out of line with fundamentals and hows that action? Still like bubble popping? I sure as hell would! Vote on the new poll which asks which bubble is/was the most hurtful.

GDP Will Be Fine, As Long as Consumers Buy Tchotchkes
As you may know already, I am a huge fan of the major news outlets and their stories on finance. I think they are very revealing, not through insight or rugged analysis, but because they are the face the MSM wants to put on things. The facade if you will. Sometimes though you get a nugget that shows the underlining belief under the surface, and today was one of those days.

Faced with a durable goods number that was a bit better than expected, the market rallied, pulled back, and closed higher based on a line that a recession will not occur. Leave that debate out of it for a bit and check out today's Yahoo Finance lead headline story:
AP
Stocks rise after durable goods data
Wednesday May 28, 6:01 pm ET By Tim Paradis, AP Business Writer
Stocks rise after smaller-than-expected drop in durable goods, but oil weighs on investors
NEW YORK (AP) -- Wall Street managed to finish an erratic session with a moderate gain Wednesday as investors found some comfort in upbeat data on durable goods orders.
Oil prices, however, remain a big focus on Wall Street. Crude's recovery from its lows Wednesday ate into some of the stock market's enthusiasm over the Commerce Department's durable goods report; the government said orders for items including aircraft, machinery, cars, refrigerators and computers slipped 0.5 percent last month.
Wall Street expected a steeper decline. Excluding transportation, orders rose 2.5 percent -- the sharpest increase in nine months. And orders for electrical equipment and appliances jumped 27.8 percent, the largest-ever increase.
"There's a lot of commentary especially out of the Fed that the oil prices are rising because of basic demand as opposed to speculation in the market. I think that has a chilling effect on the stock market," said Kim Caughey, equity research analyst at Fort Pitt Capital Group.
A drop of more than $3 a barrel helped stocks finish higher Tuesday, the first day of trading for the week after Memorial Day. But last week, oil saw a fresh record of $135, and the major stock market indexes lost more than 3 percent as investors worried that a surge in oil and gas prices would dull discretionary spending and upend whatever growth the economy might manage.
"The consumer's behavior is changing. They're not getting in their car, driving to Wal-Mart and loading up on tchotchkes that they may or may not need," Caughey said."

I have to admit, I had to look up "Tchotchke", and here is the Wiki entry:
Tchotchke originally from Yiddish because there is no standardized transliteration; trinket, ultimately from a Slavic word for "toys" are trinkets, small toys, knickknacks, baubles, or kitsch. The term has a connotation of worthlessness or disposability, as well as tackiness. The term was long used in the Jewish-American community and in the regional speech of New York City.

Imagine this, consumers may not be buying up crap they do not need by the bushel going forward! Oh No! What will become of our economy if every single dollar made, and plenty more that are borrowed on debt, are not spent with reckless abandon?

If you are one of these type of people that are the perfect consumer, take a minute and look over that line again. You are counted on to be a damn fool and spend money on things you do not need to line the pockets of rich people. Too funny. I hope someday soon the severity of how screwed up things have become is somehow brought to bear on many US "consumers".

Until then, I have to open up an online "Tchotchke" business!

Have a good night.