Thursday, December 23, 2010

Ivy League Education is Priceless

Many out there have questioned and challenged my extremely harsh and derogatory treatment of the Ivy League set in our financial structure. Rather than address the issue I raise of  these Ivy league business schools being modern day assembly lines cranking out financial sociopaths and terrorists to be loosed on the populace, many prefer instead to counter with the 'you're just jealous' and never overused 'just not smart enough' to get in. 

With great sadness I finally have to admit that I am. Jealous and not smart enough! 

Now that we have cleared that up take a moment and read the very short article below off Reuters and I'll tell you why.


Ex-Fund Manager Settles Insider Trading Claims.
by Reuters


A former hedge fund manager and a pharmaceutical executive have agreed to settle federal insider trading charges related to the 2007 takeover of the biotechnology company MedImmune, the Securities and Exchange Commission said Wednesday. 

Stephen R. Goldfield, 46, who ran the hedge fund firm Imperium Capital Management in Tampa, Fla., was charged with making $13.98 million in illegal profits by trading in MedImmune securities before AstraZeneca agreed to acquire the company for more than $15 billion. 

The S.E.C. also accused James W. Self Jr., 45, Mr. Goldfield’s friend and former classmate at the Wharton business school, of tipping him off about the MedImmune sale process with information he learned as an executive director of business development of a New Jersey pharmaceutical company. 
Merck's Web site lists a James W. Self as an employee in business development at its vaccine division. Merck did not return a call for comment. 

Federal regulators have brought several insider trading cases in recent months after facing criticism for having missed fraud in previous years. 

According to the S.E.C., Mr. Goldfield’s settlement called for him to pay $16.65 million, reflecting the profit he made plus interest. But he will pay only $600,000 because he lost all the illegal profit by aggressively trading index put options. Mr. Goldfield did not admit wrongdoing.
“Mr. Goldfield is happy with the settlement and is looking forward to putting the matter behind him,” 

Robert Heim, his lawyer, said.
Mr. Self accepted a $50,000 civil fine, also without admitting wrongdoing, the S.E.C. said.
John Grugan, who represents Mr. Self, declined to elaborate on the settlement.



Definitely not smart enough for sure. This gig Goldfield pulled off is sheer brilliance that's why. Not with me?  Okay, hang on as I need a few minutes and some fingers free to do math as I didn't go to Wharton. 


Okay, check out this brilliance.... 


13.98 million in ILLEGAL profit, minus 600,000 in SEC fines equals...... hang on now.... remember I couldn't get into Wharton,... that leaves $13.38 million left over in loot!


NICE ! 


And to think I have the nerve to insult and degrade the Ivy league crowd. Actually I take it all back!


I am the the moron here. I should bow down before these cats I mean are you kidding me!  Paying $600k -as any ivy league MBA would know is a 4.29% cost of doing business commission to the SEC - to clinch a $14 million deal ! Can you say NO BRAINER?!

Seriously, are you kidding me? Now how smart is that? Heck, buying a home you're forking over 6% to the realtor. This is killer. Sure makes you remember that an Ivy league education is priceless.


Oh yeah, all while neither admitting nor denying wrongdoing. 
Yeah Baby !! Hear that Judge Napolitano. 

Maybe after all this inconvenience Mr. Goldfield can now get to share and spread his insight and acumen with others via the Milken Institute or better yet CNBC! The boobs and boobs in chairs there can bring invite him on to glorify and agrandize him, even set out jumbo shrimp appetizers for a VIP like that. Maybe Carl Qunitanilla can ask him what its like to be a deca-millionaire.




In all fairness Goldfield's SEC settlement:

"called for him to pay 16.65 million reflecting the profit he made plus interest but he will pay only $600,000 because he lost all the illegal profits trading index put options." 


Sure he did! Would you expect anything less here? 
My question for the SEC is what if he had doubled that stake?  Are you sure Goldfield lost it trading index options and didn't blow it at Aqueduct? You sure its not in a burlap bag somewhere. Yeah, I know that just crazy to think that given how thorough the SEC is in its investigations.




Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84

Tuesday, December 21, 2010

Some Randomly Useless Items

 Lets have a peak at Autozone ticker AZO again this morning.





Note the highlighted area on the chart. Recently I targeted this for readers which at the time was a decent looking outside reversal or bearish engulfing candle Dec 6. I also made note of the heavy volume which came into the stock the same day. The stock gapped up the next day only to reverse yet again on even larger volume. So what does this all mean?

Well I guess it means you should ignore the chart and just buy the dip


Do you remember back in late 2008 when the market was in free fall? Do you remember the boobs and boobs in chairs on CNBC hauling in technician after technician trying to read the charts of a market none could make sense of while popping Prozac with a brandy chaser?

You see the charts are not necessary when the market is going up because you just buy the dip. No one needs the charts when the market is going up...... that is, until is isn't anymore.


Anyone catch the USA Today article Experts Agree: Get over your fear and get back into stocks. Some things never ever will change.


In other news, not that anyone cares mind you, bank closure Friday continues on in unabated fashion with 6 more this past weekend. This now brings the total for the year now up to 157.  But hey its not a problem of of solvency, its simply a liquidity problem. Just ask any Nobel prize winning economist !


In other useless news, It appears that the muni bond market is finally getting some attention from the mainstream media as the 60 minutes piece Sunday highlighted some of bank analyst Meredith Whitney's concerns. If you have been like many others out there following the idiot bloggers you know that many like Mish Shedlock have been all over this for quite a long time.


Of course the sell side shills on Wall St. can't see her 'numbers working' in Whitney's negative scenario which shouldn't be shocking as they couldn't see the numbers working in the housing bubble or the dotcom bubble. Caveat emptor to all those Pavlovian dogs managing other people's money out there.


I laugh at how the focus in the media are in denial about the real issue here. They dance around the issue highlighting symptoms like how the states are in arrears on their bills due to revenue shortfalls while ignoring the elephant in the room, the unfunded liabilities in these golden plated pension plans for these 'civil servants'. Complete denial regarding the real issue. The issue of INSOLVENCY.

What do you think is going to happen when the cops, firefighters, EMT's, bus drivers, teachers, DMV workers, post office workers et al realize those pension statement numbers they have been receiving in the mail are a mirage?


Given this debacle unfolding in municipal finances over here or lack thereof rather you might want to take a peek around you on your local street or community to survey the landscape and see how the sides will be draw up.


Speaking of municipal finances anyone notice the activity in Greece and the UK? O know the stock market doesn't pay attention so for it and those caught up in Dancing with the Stars or Survivor it seems the students in the UK are rioting over a 200% increase in tuition fees from 4,500 to about 14,000 pound sterling. 

Imagine that! 

Over in Athens, the Greeks seemed to be miffed at a 2 year increase in the retirement age and responded with Molotov cocktails and mass protests.


Amazing how shocked everyone seems to be when the heroin junkie goes ape shit in response to his free supply being cut off? Of course those brilliant lawyers we elect as politicians always are shocked at anything that happens as they skipped taking Introduction to Unintended Consequences 101 for sure. 

Those brain dead mainstream media types who regurgitate what they are told to print no doubt do as well. Actually I'd be shocked as all get out as well were I too in a Ritalin/Prozac/Ambien induced fog as well. Sadly I am not.


This is all just the tip of the 'austerity measures' iceberg in my opinion, the appetizers if you will. I wonder what the reaction over there will be when the real austerity measures, the entrees are unveiled? I gotta give them credit over there thought, they don't sit on their ass and take it, maybe Idol wasn't on this week, not sure which?


Over here we borrow to give a tax break out. Gotta love Ivy league finance. Hey, lets call up Lloyd Blankfein over at Goldman and if hes not too busy doing God's work - and just maybe if his puppeteer 'the oracle' Warren Buffett gives his permission -he can canjur us up a massive trillions dollar muni-refi deal involving inverted interest rate credit default swaps based on the Indian Rupee/Polish Zloty spead. 

Yeah thats it ! 

Or maybe it might be easier for us to simply get a neg am adustable rate HELOC on the Constitution since we don't use it anymore and post the Bill of Rights as collateral for that trillion dollar inverted interest rate, Rupee/Zloty credit default swap. 

Doesn't that should stunningly brilliant? Hey, lets ask the folks down in  Jefferson County Alabama how brilliant it sounds.

Housekeeping notes;

Yesterday I was stopped out of AZO at $272.22 for a loss of 1 3/4 pts on 1 unit short.

Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84

Friday, December 17, 2010

Autozone - AZO

Autozone, ticker AZO, is challenging the upper reaches of the Dec 7 outside reversal on the daily chart. Company buying back another 500 million in stock and insiders selling hand over fist.


This and a quick look over the 10yr chart I can only conclude that it must be yet more brilliant Ivy league management spending shareholder cash to buy it up here (from insiders?). Time will tell how it will all work out.

Based on all this, I am punting 1 unit of AZO short up here at $270.61

Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84
Short 1 unit Autozone ticker AZO @ $270.51 stop @ $ 272.21

Bull Market in Mirrors Awaits !

Regular readers know I am a big fan of the writings of Charles Hugh Smith. His blog Of Two Minds is a must read for me as is his book Survival + Structuring Prosperity for Yourself and the Nation which, by the way would make an excellent gift for a loved one. 

Well today Charles has penned a must read which I have reproduced below or which you can see by clicking the title and visiting his site. I wish I could say Charles is all wet and way off base with his missive but sadly he strikes on so many truths about us and our state it is staggering. 


It's still very early but a bull market in mirrors awaits!


The Devil's Christmas Letter   (December 17, 2010)


The Devil pens a Christmas letter.

  Through means I am unable to disclose, I have obtained a copy of the Devil's Christmas letter. Yes, Satan too sends a Yule letter, and no, I was not on his mailing list. I think Satan's Holiday cheer should give us all pause.

To my fallen angels Beelzebub, Lucifer and Leviathan, princes of Hell's demons, and to my minions, lackeys, toadies and sycophants on Earth:
As you know, this time of year usually finds me quite despondent, as the Prince of Peace's influence waxes most atrociously around his birthday. But this year I am in fine spirits, nay, let me even declare myself absolutely giddy, for the destruction of the United States of America draws ever nearer.
Though my minions have long sown festering seeds of hate and disharmony in that now-benighted land, only recently have my favored weapons of destruction--leverage, debt, half-truths and endless, preening justifications for greed, sloth, lust, pride, envy, anger and gluttony--have been unleashed to worm their way into the stricken heart of that Republic.
My most treasured hopes of destitution and conflict in the U.S.A. are nearing fruition.
First, my minions in the Federal Reserve--such loyal servants!--and the Federal government have unleashed a veritable orgy of leverage and debt upon the land, spreading ruination under the false guise of prosperity. What a delicious irony, that the fools doomed to eternal damnation in my Empire believe themselves prosperous as they absorb the poison of exponentially rising leverage and debt.
They have made a mockery of the rule of law, openly flouting it by letting financial crimes go not just unpunished but rewarded. The blatant injustice that roams the land like a foul, slobbering beast--there are two sets of laws and two sets of books now, one for the financial Elites and their political toadies, and another one for the tax donkeys beneath them--this will eventually ignite the firestorm I seek.
American extravagance has surpassed even my highest expectations, as purveyors of luxury goods reap record profits, and the childish desire for instant gratification has become the unspoken ruler of the land. Convenience is now worshipped as a god, sitting triumphant beside entitlement, greed and willful ignorance.
Convenience is, as you all know, the name of a peculiarly slick slide into Hell.
One of my favorite sins, gluttony, is running amok, with half of the people groaning under their own weight, sickened and weakened. My loyal minions in the fast-food and packaged food industries have followed my plans to perfection, and my lackeys in the marketing and media have fueled the instant gratification and ignorance which insidiously undermine even the greatest empires.
Pride--oh, how the Americans excel at hubris and pride! The Federal Reserve chairman, bless his doomed soul, has declared himself 100% confident about an economy that is nothing but a confidence game. Oh, what joy to hear his lies spoken with such confidence!
The mere thought of the word greed cause me to chuckle delightedly, as the U.S. excels as a haven for greed without bounds, a greed so boundless that the entire universe would be insufficient to satisfy its bankers, hedge fund managers, high-frequency traders, Imperial factotums and politicians. How happy I am to see their greed grease their way into Hell.
I feel like dancing a jig when I hear the unbridled sense of entitlement which has poisoned the American spirit. Yes, let greed and avarice be cloaked with rationalizations--"I was promised," "It's my right," "I deserve it," "it's in our contract"--it is wondrous indeed how my secret invention, "free money," debilitates once-independent souls.
Anger is now overflowing everywhere, building my empire with every thoughtless word. Politicians rage against each other, the people rage against the politicians, and behind the scenes my servants in the political action committees feed the anger with billions of dollars in campaign donations. How amusing to see the politicos lay claim to noble ideals even as they scramble on their knees to collect the millions tossed at their feet to do my bidding.
Oh yes, my bidding, for their greed, pride and anger are my bidding. By all means, politicians, do my work: give tax breaks to the ultra-wealthy, let financial crimes go unpunished, allow the financial Elites' looting to go unhindered, transfer the wealth earned by the citizens' sweat to the financial Elites when their trillion-dollar bets go bad--fuel the anger which will tear you from power, and tear the country apart.
I laughed with glee when One Beholden To Me announced that he was doing "God's work"--how I love twisting together irony and lies! He fooled no one, of course, for even the most deluded souls know he is doing My Work, not the Lord's, but they are too distracted by games and ginned-up contests to care.
Not caring is doing my work, too, of course.
The nation bleeds itself with unwinnable wars, sacrificing its best youth on the altar of endless war--how can I not rejoice at this orgy of death, destruction and sowing of hate? The feeble liars at the nation's helm print endless sums to fund war and to prop up vile tyrants, but offer nothing for libraries or literacy or the curing of malaria. How can I not rejoice at a nation which finds trillions for war and next to nothing to fight the diseases of the poor residents of former colonies, including that Prince of Disease, ignorance.
As for sloth--that millions are being paid to sit around watching television instead of being productive creates the perfect breeding ground for resentment, malice and envy. How perfect to pay people to sit at home and rot away, with only their discontent and despair for company.
As you know all too well, idle hands end up doing my piecework for free.
It was almost beyond my dreams to find the nation's wealth and politics so dominated by a tiny handful of wealthy financial plutocrats--they are doing my bidding without hindrance, though I see by their troubled sleep that they know where their greed and rationalizations are taking them. To channel the nation's wealth to a few hands--what better way to nurture envy and anger?
If ignorance were treasure, the American political class must be declared wealthier than Midas, for its ignorance has reached a pinnacle I can truly admire. Ensnared by their lust for power, blinded by their greed for fame and perquisites, they look no further than the next election cycle, dooming their nation to division, disharmony and the desolation of permanent conflict over the dwindling productive assets of this once-great nation.
The people cry out to be saved by the government, as if it was a Savior instead of a vast combine chewing through the wealth of the nation, "investing" it in corruption, parasitic financial Elites, military misadventures, Homeland "Security"--ha, isn't that a jewel, as the nation withers from within--and the steady, unyielding oppression of the remaining productive members of society.
When the people cheer "We're number One," I cheer with them, for pride goeth before a fall. When they believe the half-truths, the illusions, the mispresentations, the misdirections and yes, the outright lies of the ruling class repeated by their toadies in the media, I can no longer restrain my delight, for lies and half-truths are my favored weapons of destruction. The leaders are themselves leaderless, blank, hollowed-out souls doing the bidding of their parasitic masters, focused only on keeping the corrupt and venal status quo together for a few more months, never looking out ten years.
I delight in that shortsightedness, that abject fear of change and transformation, that clinging to failure and pride, that refusal to face reality.
For the U.S.A. is now an Empire of Debt and Lies, its fraudulent financial system built on misrepresentations of risk and value, and its "economy of confidence" a con game based on illusory wealth, parasitic skimming, government gaming and tax donkeys paying for their Financial Masters' idiotic mistakes.
This adolescent desire to believe the lies, because in believing the lies then nothing need change--this might be my most powerful destructive tool.
A hunger for fantasy and illusion, a fear of adaptation, a childish demand for instant gratification--these are forces I can rely on to lead the once-great country to absolute ruin.
And here is the beautifully evil part, my minions--no external enemy is required. The Americans are destroying themselves with their reliance on leverage, debt, denial, half-truths and overflowing servings of the Seven Deadly Sins, all of which they have elevated to "assets" in their hopelessly twisted values. To be supremely unproductive, a churner of lies and financial trickery, is now the most rewarded and admired state in America.
The spiritual rot is now so deep and pervasive that the people no longer even recognize the decay --they have been lulled into a false belief that this culture of fraud, embezzlement, manipulations, propaganda and parasitic financial Elites has always held sway. This is precisely how a people act when they have lost their way, spiritually and morally: they elevate sins to virtues, and forget the lessons of their past.
And of course everyone claiming that there is no spiritual vacuum sucking the nation dry, that the status quo is simply "business as usual"--they are doing my work, too, for habituating to all that is corrupt and reprehensible, all that is lacking in integrity and honesty, this is doing my work most admirably.
Americans no longer hate me, they hate sacrifice, with a passion that enlivens my enthusiasm for their self-destruction.
How can I not be pleased this season? At long last, the destruction of the United States by its own citizens is close at hand. Give me two years, minions, no more than four, and I shall insure they will finally begin reaping what they have sown. Ignorance, my poor dear Americans, will not save you, nor will your endless parade of excuses, justifications and rationalizations. Indeed, they are my weapons which you drive deeper into your nation's heart with every lie, every excuse, every frantic justification for your own entitlement.
I await 2011 with high expectations.
Most sincerely yours,
Satan



Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84

Thursday, December 16, 2010

Lead Pipe Cinch

Much thanks to the cats over at Zero Hedge for the Albert Edwards piece today "I Do Not Really Have One Scintilla of  Doubt this will all end in Tears - Again." which I have posted below.

Enjoy!

Submitted by Tyler Durden
Sometime we wonder if we are the only ones who are stunned by the ridiculousness coming out of the stock market on what seems a daily basis. Luckily, there is at least one other person out there who, like us, take a bemused approach to the endless insanity. As Albert Edwards says in his latest note: "I’ve been doing this job long enough to recognise when the markets are entering a new phase of madness that leaves me scratching my head with  bemusement. The notion that we are in a sustainable economic recovery is as ludicrous as it was in 2005-2007. But investors are back on the dance floor, waltzing their way towards the next, inevitable implosion – yet another they will no doubt claim in retrospect was totally unpredictable!"
In that vein, it is not surprising that Edwards shares our disdain toward the Chairman:
Very little surprises me anymore in this business. But even I was surprised by Ben Bernanke?s comment on CBS?s ?60 minutes? that he has ?100% confidence? that he can act quickly to stop inflation getting out of control. Surely if there is one thing Ben Bernanke should be 100% confident about, it is his own fallibility. Remember this is the man who was not only adamant that US house prices would not decline, but refuted the very notion that there was even a house price bubble in the first place! I realise these guys have to pretend that they know what they are doing, but you would have thought that, having been at the epicentre of the biggest economic and financial crash since the 1930s, he would show a little humility and uncertainty. Apparently not.
But when the entire system, the whole global ponzi pyramid, knows it has no choice but to continue ploughing ahead, as otherwise the consequences would lead to the end of the financial system as we know it, what can one do but join the banks...
In July 2007, the then CEO of Citigroup, Chuck Prince, told the Financial Times that global liquidity was enormous and only a significant disruptive  event could create difficulty in the leveraged buyout market. "As long as the music is playing, you've got to get up and dance," he said. "We're still dancing?. This of course was a variant on the Japanese saying "When the fools are dancing, the greater fools are watching." Well, I suppose if  Bernanke is specifically targeting the equity market with QE, who but the most curmudgeonly bear would not be gyrating their hips in time to the music?

Unlike Ben Bernake, I like to retain some sense of humility. And it?s at times like these that I really start to think I haven?t got a clue what is going on anymore. It really is a mad, mad, mad world. Although on the sell-side I think I remain a lone voice of bearishness, there are other commentators who share my extreme scepticism of the current situation.
You are correct Albert, even though in this case you refer to another Zero Hedge long time favorite, Fred Hickey of the High-Tech Strategist.
In his last missive he makes the very simple point that we have seen the current pattern of behaviour before. We saw it in 2005-2007 and in 1999-2000. In both cases easy money conditions led to asset bubbles and reckless investor behaviour. Now we are seeing it again even more blatantly, egged on openly by the Fed. Without wanting to sound as over-confident as Ben Bernanke, I do not really have one scintilla of doubt that this will all end in tears ?- again.
What is the primary driver of Albert's scepticism? Deleveraging, deleveraging, deleveraging.
We keep making the point that while the private sector de-levers, continual growth disappointments are almost inevitable -? as seen in the wake of the 1991 recession (see chart below). History suggests growth jitters of this autumn will come back again and again.
Far more important is the correlation between bond yields and equity valuations, for the period that Edwards has coined the trademark phrase of "The Ice Age" (i.e., the time over the past 12 or so years in which equities have gone exactly nowhere even as cost of credit has plunged):
In the 1990s, we were still in the midst of a secular equity valuation bull market where equity and bond yields enjoyed a tight positive correlation. In a post-bubble, Ice Age world, lower bond yields go hand in hand with higher equity yields. So, in contrast with the early 1990s, we are locked in a secular bear market for equity valuations.
Edwards also has some amusing observations on the plight of a bears in an environment in which the market spends far more time going up than down... but when it does go down, the move is savage and instantaneous:
Having been underweight equities in our model portfolio now since the end of 1996, I am used to the derision that starts to be heaped upon my dogged views at these times. Since I turned structurally bearish, equities have spent far longer rising than they have falling. Bear markets tend to be quicker and more violent than bull phases so I tend to appear totally wrong most of the time. But let?s put the recent equity rally and bond sell-off into some sort of longer-term context. Can you see any break in the uptrend of government bonds? Not yet, I can?t.
Albert's target for the next equity "challenge point": 4.25% on the 10 Year, which is the upward bound on the historical 10Y channel.
Despite the savagery of the recent rise in yields, again let?s put this into some sort of longer-term, bull market context. Yields would have to rise above 4¼% before the bond bull market was to be seriously challenged. For the moment I remain a structural bond bull. I see yet another attempt from the authorities to levitate the equity markets to boost economic activity as I have always done; as an ultimately fruitless endeavour that merely produces bubble upon bubble and inevitably bust upon bust ? each one bigger and more dangerous than the last.
Since the 10 Year has moved by 100 bps in about a month, this means that should the move continue, we may get an advance look on what stock performance in 2011 will look like just around the corner...

Most will simply discard Edwards words as the useless drivel of a perma-bear who just doesn't 'get it'. Edwards comments remind me of a very sharp market watcher's comments to me recently over the phone where he used the words Dow 3000 and the phrase "lead pipe cinch". 

Caveat emptor people !


In other irrelevant news how fitting is it that the propaganda network CNBC can schedule former Obama car czar  Steve 'pay-for-play' Rattner on a day when more insider trading charges are flying on Wall St. Of course Mr. Rattner greed to settle that suit brought by the Securities and Exchange Commission by paying $6.2 million and accepting a two-year ban from Wall Street for those pesky little charges. Those pay-for-play charges involving NY state pension money would be more commonly referred to by the hoi polloi as bribery but hey why get hung up on phraseology. You think the settlement with the SEC involved Rattner neither admitting nor denying wrongdoing? 

It's all far too funny for me... far to funny.





Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84

Wednesday, December 15, 2010

David Stockman Interview

Dylan Ratigan had a great interview recently with Office of Management and Budget (OMB) David Stockman. You can click here to see the video. 


Saw the Best Buy news yesterday. Is it me or weren't holiday retail sales supposed to be nirvanic. Maybe BBY didn't get the memo.


Housekeeping notes:


Last week, Tuesday the 8th to be precise, I was stopped out of my TLT trade at $93.39 for a loss of about 1/2 a pt. on 1 unit.


Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84 

Tuesday, December 7, 2010

Buying Long Bonds

Funny how 'buying the dip' only applies to stocks and never to bonds. So, in honor of the equity boyz and girlz, I am taking a page out their book and buying the dip here on the long bond. I am doing so via the TLT's here at $93.80. The potential double bottom here doesn't hurt either. I am keeping an eye on the prior low made Nov.15 as the exit.


In the back of my mind I wonder if saner heads (re: adults in the room... if there are any left that is!) might just realize that our dollar and treasury market are more worth protecting than our equity markets. Given the choice. 

Just a thought.


Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84 
Long 1 unit Barclays 20yr Treas Bond ticker TLT @ $93.90 stop @ $93.39


Read and Decide for Yourself

Is suggest that rather than being told what to think, your read for yourself the following piece and be your own judge. The piece is an op-ed by Julian Assange editor-in-chief of Wikileaks that appeared today in The Australian newspaper.


In 1958 a young Rupert Murdoch, then owner and editor of Adelaide's The News, wrote: "In the race between secrecy and truth, it seems inevitable that truth will always win."

His observation perhaps reflected his father Keith Murdoch's expose that Australian troops were being needlessly sacrificed by incompetent British commanders on the shores of Gallipoli. The British tried to shut him up but Keith Murdoch would not be silenced and his efforts led to the termination of the disastrous Gallipoli campaign.

Nearly a century later, WikiLeaks is also fearlessly publishing facts that need to be made public.

I grew up in a Queensland country town where people spoke their minds bluntly. They distrusted big government as something that could be corrupted if not watched carefully. The dark days of corruption in the Queensland government before the Fitzgerald inquiry are testimony to what happens when the politicians gag the media from reporting the truth.
These things have stayed with me. WikiLeaks was created around these core values. The idea, conceived in Australia, was to use internet technologies in new ways to report the truth.

WikiLeaks coined a new type of journalism: scientific journalism. We work with other media outlets to bring people the news, but also to prove it is true. Scientific journalism allows you to read a news story, then to click online to see the original document it is based on. That way you can judge for yourself: Is the story true? Did the journalist report it accurately?

Democratic societies need a strong media and WikiLeaks is part of that media. The media helps keep government honest. WikiLeaks has revealed some hard truths about the Iraq and Afghan wars, and broken stories about corporate corruption.

People have said I am anti-war: for the record, I am not. Sometimes nations need to go to war, and there are just wars. But there is nothing more wrong than a government lying to its people about those wars, then asking these same citizens to put their lives and their taxes on the line for those lies. If a war is justified, then tell the truth and the people will decide whether to support it.

If you have read any of the Afghan or Iraq war logs, any of the US embassy cables or any of the stories about the things WikiLeaks has reported, consider how important it is for all media to be able to report these things freely.

WikiLeaks is not the only publisher of the US embassy cables. Other media outlets, including Britain's The Guardian, The New York Times, El Pais in Spain and Der Spiegel in Germany have published the same redacted cables.

Yet it is WikiLeaks, as the co-ordinator of these other groups, that has copped the most vicious attacks and accusations from the US government and its acolytes. I have been accused of treason, even though I am an Australian, not a US, citizen. There have been dozens of serious calls in the US for me to be "taken out" by US special forces. Sarah Palin says I should be "hunted down like Osama bin Laden", a Republican bill sits before the US Senate seeking to have me declared a "transnational threat" and disposed of accordingly. An adviser to the Canadian Prime Minister's office has called on national television for me to be assassinated. An American blogger has called for my 20-year-old son, here in Australia, to be kidnapped and harmed for no other reason than to get at me.

And Australians should observe with no pride the disgraceful pandering to these sentiments by Julia Gillard and her government. The powers of the Australian government appear to be fully at the disposal of the US as to whether to cancel my Australian passport, or to spy on or harass WikiLeaks supporters. The Australian Attorney-General is doing everything he can to help a US investigation clearly directed at framing Australian citizens and shipping them to the US.

Prime Minister Gillard and US Secretary of State Hillary Clinton have not had a word of criticism for the other media organisations. That is because The Guardian, The New York Times and Der Spiegel are old and large, while WikiLeaks is as yet young and small.

We are the underdogs. The Gillard government is trying to shoot the messenger because it doesn't want the truth revealed, including information about its own diplomatic and political dealings.

Has there been any response from the Australian government to the numerous public threats of violence against me and other WikiLeaks personnel? One might have thought an Australian prime minister would be defending her citizens against such things, but there have only been wholly unsubstantiated claims of illegality. The Prime Minister and especially the Attorney-General are meant to carry out their duties with dignity and above the fray. Rest assured, these two mean to save their own skins. They will not.

Every time WikiLeaks publishes the truth about abuses committed by US agencies, Australian politicians chant a provably false chorus with the State Department: "You'll risk lives! National security! You'll endanger troops!" Then they say there is nothing of importance in what WikiLeaks publishes. It can't be both. Which is it?

It is neither. WikiLeaks has a four-year publishing history. During that time we have changed whole governments, but not a single person, as far as anyone is aware, has been harmed. But the US, with Australian government connivance, has killed thousands in the past few months alone.

US Secretary of Defence Robert Gates admitted in a letter to the US congress that no sensitive intelligence sources or methods had been compromised by the Afghan war logs disclosure. The Pentagon stated there was no evidence the WikiLeaks reports had led to anyone being harmed in Afghanistan. NATO in Kabul told CNN it couldn't find a single person who needed protecting. The Australian Department of Defence said the same. No Australian troops or sources have been hurt by anything we have published.

But our publications have been far from unimportant. The US diplomatic cables reveal some startling facts:
  • The US asked its diplomats to steal personal human material and information from UN officials and human rights groups, including DNA, fingerprints, iris scans, credit card numbers, internet passwords and ID photos, in violation of international treaties. Presumably Australian UN diplomats may be targeted, too.
  • King Abdullah of Saudi Arabia asked the US to attack Iran.
  • Officials in Jordan and Bahrain want Iran's nuclear program stopped by any means available.
  • Britain's Iraq inquiry was fixed to protect "US interests".
  • Sweden is a covert member of NATO and US intelligence sharing is kept from parliament.
  • The US is playing hardball to get other countries to take freed detainees from Guantanamo Bay. Barack Obama agreed to meet the Slovenian President only if Slovenia took a prisoner. Our Pacific neighbour Kiribati was offered millions of dollars to accept detainees.
In its landmark ruling in the Pentagon Papers case, the US Supreme Court said "only a free and unrestrained press can effectively expose deception in government". The swirling storm around WikiLeaks today reinforces the need to defend the right of all media to reveal the truth.

Julian Assange is the editor-in-chief of WikiLeaks.


 Housekeeping notes;


This morning I was stopped out of 1 unit of TLT at $94.68 for a loss 1 pt. 



Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84

Autozone - AZO


Below is a daily chart below of Autozone, ticker AZO. Like I said before, is it possible there is a magnet next to the gauges and instruments?


Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84
Long 1 unit Barclays 20yr Treas Bond ticker TLT @ $95.61 stop @ $94.69

The Tape - Truth or Dare

This current market has prompted me to have many 'internal' discussions on it. I was always taught that the stock market is the closest thing to a crystal ball one can find on the planet.  

I want to begin this post by stating that I am an ardent proponent of the tape as the final arbiter of all things financial. I believe the sum knowledge of the market is far greater than that of any one or group of men. Having said this, I also want to state that there are anomalies, black swans (thx Nassim), rogue waves, that defy logic and the numbers that so many rely and count on. 

Is it possible the vast majority participating in the tape are simply wrong at the worst possible time (major turning points)? What if the vast majority of participants in the tape, human or programmed by humans, have the wrong map?

It made me think of a story and old friend who taught me much shared with me. He is recently passed away and is missed very much. As a very successful person in many endeavours one of which was he was an accomplished pilot. Back when JFK junior's Piper went down on the East Coast we had a discussion about it the next day. He recounted the time he was flying his single engine to Cleveland, Ohio over lovely Lake Erie on an absolutely picture perfect summer day in July. Suddenly the alarms in the cockpit started going off. His eyes told him everything was okay, that he was flying into the clear blue skies above Cleveland, yet the instruments flashed imminent danger. As he was taught, he remembered to trust his instruments.  Luckily for him he did for the plane was flying into the clear blue all right, the clear blue of Lake Erie as he was in a nose dive headed straight into it!  

It made me recall my training in the Open Water course as a diver. Besides planning your dive and diving your plan you always and often check and trust your gauges. Like piloting an aircraft your eyes can and will deceive you, up looks like down, down looks like up. Now for a moment, try to imagine someone has put a magnet (or the like) next to your gauges and instruments. Would you still rely on them? Would you place you life on the line for them? Or in the case today with the markets you financial life?


It made me think of the current insiders of this market selling hand over fist as if in a stampede to get out. For me these insiders are like the indigenous animals who populated places like Banda Ache and Sri Lanka before the tsunami. None of them died. They all fled to higher ground. In Sri Lanka approximately 22,000 were killed by the tsunami but no dead animals could be found. I read that the indigenous native peoples of the Banda Aceh area -who many on Wall St. would consider savages or lets just say much lower on the food chain than they - noticed and heeded this warning from the wildlife and moved their villages fleeing to higher ground. In this case the masses (the market) said everything was okay even though underlying conditions flashed warnings like the tide receding among others. Some even ventured out into the retreated surf area to pick up stranded fish and shells etc., me thinks Jim Cramer and the Fast Money crowd on CNBC would roundly endorsed this activity, like buying the dip!


This current market is not only not creating jobs which is a must it is still shedding jobs. The municipal and state financial predicament only ensures this will get worse. This is fact no matter how much Steve Liesman and the rest of the shills on CNBC counter otherwise. 


Traders I have a ton of respect for continue to admonish that a market that responds bullishly to negative news is to be bought. I hear that loud and clear. I also am smart enough to know, no check that I am suspicious enough to recognize that a market that chooses to ignore facts and cling to fiction can turn on a dime and is more often than not most assuredly headed for disaster. It is not a matter of if but only a matter of when this happens.You can choose to believe the cheerleaders, shills and vested interest parties. Or you can choose to believe the facts. Facts like
  • the bankruptcy numbers, 
  • the foreclosure numbers, 
  • the living mortgage free numbers, 
  • the shadow housing inventory numbers, 
  • the record food stamp numbers, 
  • the income growth numbers, 
  • or most importantly the lack of employment growth numbers

The equity market seems to just not care not a whit about any of  this. It seems to believe that we can grow and justify current and future multiples without any job creation. I am here to tell you that this is abject and utter lunacy! CNBC can trot out an army of experts with more letters than most alphabets it still won't matter. Physics and math have laws, no matter what a Harvard trained MBA made Goldman partner has to say about them.  


During the complete and utter lunacy that was the dotcom/tech market companies with no earnings, no cash flow and gross revenues (sales numbers) that resembles a 'shoe repair in a garage' startup company and yet were rewarded with billion dollar market caps. Then as now as then you can choose to believe the tape or you can choose to believe your purported lying eyes. You can choose to  recognize that there are moments in time, where the tape has gone mad. The Uranium market in the 60's, the precious metals market of the late 70's, the Nikkei in the late 80's, the dot com market of the late 90's, the Greenspan debt and free credit induced housing market of late. 


Just as these markets mentioned cared nothing for their underlying circumstances and simply fed upon themselves as the lie was repeated over and over again this current market is no different. In each and every case, naysayers and critics were whack-a-mole'd by the believers and who keep repeating the mantra "but the tape says up". 

Bernie Madoff was a ponzi scheme pure and simple. It relied on people believing and repeating the lie. His firm ignored the bad news and traded higher, which according to the rules I and many traders out there were taught is bullish and hence was to be bought.  How did this work out? Could any of those people exit. How many thought they could before anything untowards happened?

Back to the magnet analogy. Is there a magnet next the gauges and instruments of this market, that magnet being the Fed, the treasury or their POMO errand boys on Wall St.? 

I don't know. 
What I do know is that the Fed is buying any and all debt paper. We had QE 1. We have now QE 2. 
Would you bet against QE 3?
Bernanke has publicly stated they will target equity prices. 

Market manipulation? 
Plunge protection team?
All too far fetched, right?

Has to the time come to break out the tin foil?


How many of you would have taken the revelations of Julian Assange from Wikileaks at face value had he made them? Free thinkers right? Open to free discussion? Can you say Vietnam and the Gulf of Tonkin?

So I ask again, is there a magnet next to the gauges that renders the charts invalid. Readers have emailed me commenting that I post fewer and fewer charts anymore. The answer I give is the same. Those charts are becoming less and less reliable. Almost to the point where they are boobie-trapped to ensnare you. But alas I have lived through this before where what you thought was your ally was your enemy and I shall live though this as well. 


In my opinion this market will end like it always has before, terribly and in tears, sparing very, very few.




Housekeeping notes;

I was stopped out of 1 unit of DZZ today at $8.04 for a loss of about 3/4 of a pt.
I was stopped out of a 2nd unit of DZZ today at $7.98 for a lost of 3/4 of a pt.


Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84
Long 1 unit Barclays 20yr Treas Bond ticker TLT @ $95.61 stop @ $94.69