Goody Bag

What a busy week! Busy at work, busy tape watching, busy at home. Just busy. I need a break. Mixed goody bag tonight, too much stuff going on. Tomorrow is Friday night and thus requests are welcomed.

Extreme Kid Dynamite
Kid Dynamite has a post up today titled:
Kid Dynamite Slaughters a Cow
And no this does not involve my northern neighbor using alcohol to roll with some unsuspecting college ladies in his youth or taking some huge pot off a tourist in Las Vegas in Hold'Em, he actually helped butcher a cow! I kid (pun intended) you not! Check it out if you like but note MY WARNING, IT IS GRAPHIC! Way to go man.

Foreclosure-Gate
Today had a few wrinkles in the tale of foreclosure fraud saga. First off, a bill was sprinted through the Senate (it had already passed the house on many occasions) that would have made changes to notary laws in relation to interstate commerce. I am no lawyer and I hate this stuff because I don't have a grasp on it, but there is evidence this new law if signed by the president could be played to help skirt around the lack of proper documentation rampant in these matters.

In a move worthy of hefty praise, President Barrack Obama used the "pocket veto" by which he will not sign the bill into law by just letting it exist in limbo. While I think the original plan for this bill may have made sense, there is NO reason now to rush it through until a better grasp on the laws regarding foreclosures can be examined. I offer well deserved thanks and praise for President Obama on this one, it was the right thing to do and went against the house, senate, and banking lobby all at the same time which I love.

Calculated Risk has a guest post by Tom Lawler up that asks:
Foreclosure-Gate: Who Will, and Who Should Pay?
Lawler has been creepy spot on with his housing sales numbers so I read him close! He thinks mortgage servicers will have to pay. That would be nice, but the taxpayer is the easier option!

I will say two things about this. First, I still believe that some new law will be passed to make all the short cuts legal and absolve the banks. There is NO WAY the banks are going to have to open the books and really be checked on this, I am not sure it is even possible. So far I am the only writer that has predicted this and has since the beginning. It does not fit the narrative that banks get clocked.

On the other hand, and second (on purpose I did that!), this story made the NBC Nightly News with Brian Williams and it lead the whole show! That is serious coverage. People are pissed about this (why now, why not before you lunatics!). There is no way a law can be done before the elections. I can see a new CONgress after the election passing a law to save the banks and then hope that voters forget (they will) but that will take time. One can hope for something real change.

SLV Was Good to Me
Back on August 30, 2010 I entered into my biggest trade ever. By trade I mean something I was using in a very short term time frame, maybe a month give or take. I was attracted to a silver play due to macro factors and this coupled nicely with an attractive chart pattern that I favor. I decided to make a move, which I covered here, to go for the gold, I mean silver!
(NOTE: In the post I stated about 50% of my trading portfolio went into this trade, and the exact number was 58%)

I placed my sell order last night for the whole position. Why?:
-My first target (most confidence) was $22 which was already passed
-My upper target was $24 which was getting a bit tired looking
-$23 split the difference, and I wanted to give NOTHING back
So here is the breakdown:
Buy $18.70, sell $22.88 (where my orders where filled)
Short term gain of 22%!

In case you are wondering, I had no idea gold and silver would get moved lower today so much, I just made the move last night.

I am ahead of my own yearly target for 10% returns and I have enough extra to rock on out to the Bahamas on October 22-October 25th so there will not be a Friday night post that week! Here is where I will be:

I would buy you all a drink, but it is all inclusive!

I Submit as Evidence Exhibit A
Some call me a nut job. Some call me a "gloom and doomer". Some label me as a pessimist. Do what you want I say.

I have spilled pixels enough on the ruinous policy of asset bubbles, I don't want to go over all that again. Instead how about a headline and a chart?

From this morning over at Reuters there was this gem which I saved a screen shot of in case it changed (it had not at time of writing; if it does change or get lost I have the picture):
Fed is banking on phony wealth effect
A nice section:

So, there you have it: pump up asset prices and hope that people spend some of the ephemeral gains. The idea that people will spend more if their houses and other assets rise in value is called the wealth effect, but this policy creates only pretend wealth.

Nasty!

I know plenty out there think they will of course wind up with all the loot at the end. Some will, but not me and no one I know! You cannot invest in such an environment, only bet or trade if you want to call it that. When every few years some monster percentage of your "gains" in whatever vanish, what can you do?

Pragmatic Capitalist was kind enough to supply permission to repost this chart (last one in this post) that shows the extremes which we can expect to continue should the FED/Whole crew succeed in their goals:

The red line is the "plan" for recovery. How is that going to happen?

The title of the post was excellent as well:
DID THE CONSUMER EVER RECOVER FROM THE NASDAQ BUST?
I can only answer, No. But they thought they did.

My man Mark is a huge believer in long term trend lines, and I am as well. I think you can figure these out on your own.

Shout Out
For my man that has a reputation as being a bit testy on the trading desk, I offer my version of:
ANGRY G!

My man!

Have a good night.

Who Knows What?

Well that was a shocking display of football last night! After an ugly first half, the Patriots returned the 3rd quarter kickoff for a score and Miami fell apart. Like completely. I would love to say the Pats are in good shape, but that was a serious meltdown by the Dolphins. Thanks anyways guys!

Who Knows What?
If you follow things finance today was a wild day across all markets. Things are a real mess and there are many currents at play. Instead of speaking to a small item or a a few points I thought it may serve better to step back and take a look at the whole picture.

I wrote last night that I had serious questions about the reason the FED and associated players felt it was needed to go out and make all kinds of statements about future policy accommodation. The answer perhaps was found this morning when I opened the computer:
Bank of Japan Reverts to Zero Rates in Surprise Move
The headline is dumb because Japan was at 0% anyway, but they did go further in their own QE quest:

The central bank also decided to set up, as a temporary measure, a 5 trillion yen ($60 billion) fund to buy assets ranging from government bonds and short-term government securities to commercial paper and corporate bonds, and will also accept another 30 trillion yen of those assets as collateral under a loan scheme.The BOJ said it would guide the overnight call rate at a range of zero to 0.1 percent, against the previous target of 0.1 percent. It also pledged to keep rates effectively at zero until prices were seen stabilizing.
"The BOJ is bringing its monetary policy closer to quantitative easing, allowing market rates to hover near zero and pledging to keep a near-zero interest rate policy in the longer term until prices stabilize," said Naomi Hasegawa, senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities.
"These steps are more aggressive than markets had expected. The BOJ's decision is a surprise and will have an impact on currencies due to the message it delivers."

If the move had any effect on Japan's currency, I could not find it!

So going back, the FED on Monday all but screams we are set for another Trillion or so in QE here, and overnight Japan pulls the trigger on their own QE move. Now this makes sense. The Golden Truth had this to say and I find it compelling:

So what is going on here? I believe the market is responding to what it believes will be the U.S. Fed's "counter-measures" to Japan's move last night. In fact, Japan's QE proposition is actually quite small (including the bank lending pool announced, it's not much more than $400 billion) compared to the first round of QE of roughly $1.7 trillion in total by the U.S. It is my view, in conjunction with the speech issued last week by the NY Fed's William Dudley (who is also a former Goldman Sachs partner, meaning he is plugged into the policy channels if not creating them outright), that the U.S. is getting ready to announce, in some form, an even larger stimulus program next month.

The precious metals market and the US dollar index are thus behaving in a manner which is consistent with the expectation by the market that the Fed/Obama Administration will respond to Japan's currency war shot with an even more powerful shot across the bow of its own.

I agree.

And for good measure another FED player, Chicago Fed President Charles Evans, removes any doubt on what the new story is:

"In the last several months I've stared at our unemployment forecast and come to the conclusion that it's just not coming down nearly as quickly as it should," [Chicago Fed President Charles] Evans said in an interview with The Wall Street Journal Monday. "This is a far grimmer forecast than we ought to have," he added. As result, he said, he favors "much more [monetary] accommodation than we've put in place."

One could wonder why the forecast by the FED on unemployment has not mattered one bit until Monday, but why bother. Clearly the FED have been scared by what they are seeing and reacting in a near panic about it.

After yesterday's stunning public policy moment of truth (that the FED targets asset prices with their policy) some were somewhat worried as to where this is headed. Pragmatic Capitalism has good coverage of a David Rosenberg piece that is well worth a look. Prag Cap summarizes

I am honestly still trying to grasp the fact that they have admitted to trying to run what is really nothing more than a ponzi scheme….That is our great American growth strategy. Unbelievable.

Prag Cap is level headed and while I often disagree with things over there, this snippet really got me concerned.

I offered in the comments section that I wonder what S&P 2000 will really mean to a regular person. Many own little or no stocks; others borrowed from their 401k to buy a home or get through being unemployed for 3 years; others have moved their money into bonds, the list goes on. I don't think a higher stock market will carry as much punch as believed. I could be wrong.

After being welcomed to the recovery by Tim Geithner, praise for saving the world up to our ears, constant news of the recovered stock market, and victory laps all around I cannot help but think more expanded accommodative policy should not be needed at this point. Unless all that other stuff is pure crap.

For the final evidence of how messed up things are in the world, this was making the rounds today:
Lend Mexico Money at 6% for 100 Years
There is no bubble in bonds and credit, none at all.

Have a good night.