That’s One Surefire Way to Boost Spending

November 18th, 2010

Two reports just released, the Deloitte Consumer Spending Index and the Booz & Company consumer spending report, both arrive at the same conclusion… US shoppers keep holding back and putting off big purchases.

If Bernanke has his way, this will change. His master plan of gently stoking inflation is intended, in part, to show consumers — the hard way — that if they don’t rush out and buy what they can today those very same goods will be more expensive tomorrow. Unfortunately, not everyone has the same perks as Mrs. Bernanke.

That’s One Surefire Way to Boost Spending originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
That’s One Surefire Way to Boost Spending




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Bonds, Dollar, SP500 & Gold Have Changed Direction – Are You Ready?

November 18th, 2010

There have been some major trend changes recently and it looks as though more investments are about to follow. The real question though is… Are You Ready To Take Advantage Of It?

It has been an exciting ride to say the least with the equities and metals bull market and the plummeting dollar. But it looks as though their time is up, or at least for a few weeks. Traders and investors will slowly pull money off the table to lock in gains or cut losses and re-evaluate the overall market condition before stepping back up to the plate and taking another swing.

Below are a few charts showing some possible money making trade ideas in the weeks ahead.

TBT 20+ Treasury Note Inverse Fund

This fund moves inverse to the price of the 20yr T.N’s also known as bonds. Looking at the chart you can see the recent reversal which took place. We had a great entry point shortly after this reversal took place using my low risk setup strategy.

Falling bond prices are considered to have a negative impact on equities because it implies that interest rates may start rising which means more investors will pull money out of stocks and put that money into a safe interest earning investment. You will typically see bonds change direction before equities. That being said the chart below is an inverse fund, so when this bond fund goes up, it means actually indicates bond yields are falling. I will admit these inverse funds really throw my brain for a loop at time… I prefer the good old days, buying long and selling short… so simple and clean…

UUP – US Dollar Index Fund

This fund moves with the dollar and allows equities traders to take advantage of currency trading. This chart below shows a possible trend reversal for the dollar. If the dollar continues to rally then it’s also a good sign that interest rates could be rising in the near future and it also means more downward pressure on equities.

SDS – Inverse SP500 Index Fund

These bear funds make it possible for traders and investors to profit from a falling market using a regular buy and sell strategy. They can also be traded in retirement accounts making them a golden investment for those willing to play a falling market.

This chart moves the same as the SP500 index only flipped. As the SP500 falls this fund rallies.

The strategy we just used to play the recent rally is the same strategy we will use during a bear market, but instead of trading the SPY, we are trading this fund.

It is important to note that while bull market rallies tend to drag out; bear markets typically have faster movements. Fear is much more powerful than greed which is why the stock market drops quicker than it goes up.

GLD – Gold Exchange Traded Fund

Gold also looks to be topping and could actually be starting to form a Head & Shoulders reversal pattern.

Mid-Week Trend Trading Conclusion:

In short, understanding inter-market analysis is crucial for traders/investors to know. Not understanding how they affect one other can be very costly in the long run. Remember that volatility and volume rise together at the end of a trend. You can view the recent volatility index (VIX) to see its price action also. Volatility changes also make for great low risk options trades if options are your thing. Focus on trading with the trend, bounces in a down trend are typically muted or trade sideways making is very difficult to make money buying in a falling stock market.

Get My Daily Pre-Market Trading Analysis Videos, Intraday Updates & Trade Alerts Here: www.GoldAndOilGuy.com

Chris Vermeulen

Read more here:
Bonds, Dollar, SP500 & Gold Have Changed Direction – Are You Ready?




Chris Vermeulen is a full time daytrader and swing trader specializing in trading (NYSE:GLD), (NYSE:GDX), XGD.TO, (NYSE:SLV) and (NYSE:USO). I provide my trading charts, market insight and trading signals to members of my newsletter service. If you have any questions feel free to send me an email: Chris@TheGoldAndOilGuy.com This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Commodities, ETF, OPTIONS

Bonds, Dollar, SP500 & Gold Have Changed Direction – Are You Ready?

November 18th, 2010

There have been some major trend changes recently and it looks as though more investments are about to follow. The real question though is… Are You Ready To Take Advantage Of It?

It has been an exciting ride to say the least with the equities and metals bull market and the plummeting dollar. But it looks as though their time is up, or at least for a few weeks. Traders and investors will slowly pull money off the table to lock in gains or cut losses and re-evaluate the overall market condition before stepping back up to the plate and taking another swing.

Below are a few charts showing some possible money making trade ideas in the weeks ahead.

TBT 20+ Treasury Note Inverse Fund

This fund moves inverse to the price of the 20yr T.N’s also known as bonds. Looking at the chart you can see the recent reversal which took place. We had a great entry point shortly after this reversal took place using my low risk setup strategy.

Falling bond prices are considered to have a negative impact on equities because it implies that interest rates may start rising which means more investors will pull money out of stocks and put that money into a safe interest earning investment. You will typically see bonds change direction before equities. That being said the chart below is an inverse fund, so when this bond fund goes up, it means actually indicates bond yields are falling. I will admit these inverse funds really throw my brain for a loop at time… I prefer the good old days, buying long and selling short… so simple and clean…

UUP – US Dollar Index Fund

This fund moves with the dollar and allows equities traders to take advantage of currency trading. This chart below shows a possible trend reversal for the dollar. If the dollar continues to rally then it’s also a good sign that interest rates could be rising in the near future and it also means more downward pressure on equities.

SDS – Inverse SP500 Index Fund

These bear funds make it possible for traders and investors to profit from a falling market using a regular buy and sell strategy. They can also be traded in retirement accounts making them a golden investment for those willing to play a falling market.

This chart moves the same as the SP500 index only flipped. As the SP500 falls this fund rallies.

The strategy we just used to play the recent rally is the same strategy we will use during a bear market, but instead of trading the SPY, we are trading this fund.

It is important to note that while bull market rallies tend to drag out; bear markets typically have faster movements. Fear is much more powerful than greed which is why the stock market drops quicker than it goes up.

GLD – Gold Exchange Traded Fund

Gold also looks to be topping and could actually be starting to form a Head & Shoulders reversal pattern.

Mid-Week Trend Trading Conclusion:

In short, understanding inter-market analysis is crucial for traders/investors to know. Not understanding how they affect one other can be very costly in the long run. Remember that volatility and volume rise together at the end of a trend. You can view the recent volatility index (VIX) to see its price action also. Volatility changes also make for great low risk options trades if options are your thing. Focus on trading with the trend, bounces in a down trend are typically muted or trade sideways making is very difficult to make money buying in a falling stock market.

Get My Daily Pre-Market Trading Analysis Videos, Intraday Updates & Trade Alerts Here: www.GoldAndOilGuy.com

Chris Vermeulen

Read more here:
Bonds, Dollar, SP500 & Gold Have Changed Direction – Are You Ready?




Chris Vermeulen is a full time daytrader and swing trader specializing in trading (NYSE:GLD), (NYSE:GDX), XGD.TO, (NYSE:SLV) and (NYSE:USO). I provide my trading charts, market insight and trading signals to members of my newsletter service. If you have any questions feel free to send me an email: Chris@TheGoldAndOilGuy.com This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Commodities, ETF, OPTIONS

A Cluster of Support

November 18th, 2010

Last week in Looking for SPX Support Levels, I introduced a chart which highlighted two areas in which stocks had traded in a narrow range for about two weeks before breaking the deadlock and moving higher. I referred to these two areas as congestion areas and highlighted them in red ovals in the cart below.

The higher of the two congestion areas, which spans roughly SPX 1175-1185, represents what I consider to be the first of two tipping points. Last week I described 1175-1185 as a “line of demarcation between a minor pullback and a bearish counter trend.” So far this area of congestion has managed to muster sufficient support to halt the decline, but has yet to inspire enough buying to turn stocks back upward.

The chart below updates the two congestion areas through today’s closing data. Note that the 50-day moving average of 1167 is about to come into play as well, even as technical factors take a back seat to issues in Europe and China.

Related posts:


Uncategorized

A Cluster of Support

November 18th, 2010

Last week in Looking for SPX Support Levels, I introduced a chart which highlighted two areas in which stocks had traded in a narrow range for about two weeks before breaking the deadlock and moving higher. I referred to these two areas as congestion areas and highlighted them in red ovals in the cart below.

The higher of the two congestion areas, which spans roughly SPX 1175-1185, represents what I consider to be the first of two tipping points. Last week I described 1175-1185 as a “line of demarcation between a minor pullback and a bearish counter trend.” So far this area of congestion has managed to muster sufficient support to halt the decline, but has yet to inspire enough buying to turn stocks back upward.

The chart below updates the two congestion areas through today’s closing data. Note that the 50-day moving average of 1167 is about to come into play as well, even as technical factors take a back seat to issues in Europe and China.

Related posts:


Uncategorized

4 ETFs to Benefit from the World’s Nuclear Power Needs

November 18th, 2010

Since typical retail investors can’t take custody in Uranium and other fissile materials (nor would they want to), the next best thing to play on the future need for nuclear power would be in the companies involved in nuclear power generation and nuclear material mining companies.

(URA) – Last week saw the launch of the most concentrated Uranium-themed ETF, Global X Uranium.  With an expense ratio of 0.69%, URA will seek to capitalize on demand for the nuclear material itself by way of holding shares in leading miners.  URA has holdings in just 23 companies, with over 3/4 of the companies located in Canada, Australia and the US.  Top holdings include Cameco (CCJ), Uranium One (UUU.TO) and Paladin (PDN.TO).  These names are surely familiar to investors seeking the best Uranium plays in the past, but with this newly launched ETF, there’s now a relatively low-cost option to diversify risk across companies and regions.  URA is not off to a very good start, off about 10% since launch, following the downtrend in commodities miners globally.

(NLR) - The Market Vectors Nuclear Energy – With an expense ratio of 0.63%, NLR seeks to replicate the DAX Global Nuclear Energy index which holds some of the larger generation names you’re probably familiar with in addition to miners like Exelon (EXC), Constellation Energy (CEG) as well as some lesser known names like Fronteer Gold (FRG) and USEC (USU).  NLR is up 2% YTD.

(PKN)PowerShares Global Nuclear Portfolio ETF – With an expense ratio of 0.75%, PKN seeks to replicate the return of the WNA Nuclear Energy Index – focused more so on Uranium miners.  Primary holdings include Areva (CEI.PA), Shaw Group (SHAW) and surprisingly, Thermo Fisher (TMO) given their expertise in instrumentation for the nuclear industry. PKN is up 7% YTD.

(NUCL) - iShares S&P Global Nuclear Energy Index – With an expense ratio of 0.48%, this ETF holds 24 companies, but has a heavy reliance on Japan and the US.  In recent trading, the volumes have been quite thin, thus leading to a high bid/ask ratio.  Given the other more liquid ETFs, this one may not be worth pursuing.  NUCL is off 2% YTD.

The macro case for nuclear power generation and materials procurement is strong.  Much of the world is emerging from obscurity into modern living and fossil fuels simply cannot satiate the appetite of the new demand coming on line.  Green energy and renewable energy are unproven and can’t handle the capacity needed as well.  While it may be years until governments and societies start to overcome the “not in my back yard” mentality, reactors are already going up rather quickly in China and Europe is more reliant upon nuclear energy than many assume as well.  Since markets anticipate future demand years in advance, it may be high time to consider nuclear ETFs as a secular alternative investment.  This map demonstrates global status of nuclear reactor use and new builds:

source: Wikipedia

With the launch of URA and the recent fanfare associated with the new Rare Earth Metals ETF, the demand for common equity shares of miners especially, should remain strong.  It shouldn’t come as a surprise to continue to see more similar ETFs launched and funds flow in that direction as we see the bond bubble bursting, gold losing its luster, and deficit fears rattling markets.  Who knows, if the global economic expansion in the developing world continues and fossil fuels become further constrained, perhaps nuclear will be the Black Swan Investment of this decade?

Disclosure: No position in any ETFs or equities referenced in this article.

Commodities, ETF

4 ETFs to Benefit from the World’s Nuclear Power Needs

November 18th, 2010

Since typical retail investors can’t take custody in Uranium and other fissile materials (nor would they want to), the next best thing to play on the future need for nuclear power would be in the companies involved in nuclear power generation and nuclear material mining companies.

(URA) – Last week saw the launch of the most concentrated Uranium-themed ETF, Global X Uranium.  With an expense ratio of 0.69%, URA will seek to capitalize on demand for the nuclear material itself by way of holding shares in leading miners.  URA has holdings in just 23 companies, with over 3/4 of the companies located in Canada, Australia and the US.  Top holdings include Cameco (CCJ), Uranium One (UUU.TO) and Paladin (PDN.TO).  These names are surely familiar to investors seeking the best Uranium plays in the past, but with this newly launched ETF, there’s now a relatively low-cost option to diversify risk across companies and regions.  URA is not off to a very good start, off about 10% since launch, following the downtrend in commodities miners globally.

(NLR) - The Market Vectors Nuclear Energy – With an expense ratio of 0.63%, NLR seeks to replicate the DAX Global Nuclear Energy index which holds some of the larger generation names you’re probably familiar with in addition to miners like Exelon (EXC), Constellation Energy (CEG) as well as some lesser known names like Fronteer Gold (FRG) and USEC (USU).  NLR is up 2% YTD.

(PKN)PowerShares Global Nuclear Portfolio ETF – With an expense ratio of 0.75%, PKN seeks to replicate the return of the WNA Nuclear Energy Index – focused more so on Uranium miners.  Primary holdings include Areva (CEI.PA), Shaw Group (SHAW) and surprisingly, Thermo Fisher (TMO) given their expertise in instrumentation for the nuclear industry. PKN is up 7% YTD.

(NUCL) - iShares S&P Global Nuclear Energy Index – With an expense ratio of 0.48%, this ETF holds 24 companies, but has a heavy reliance on Japan and the US.  In recent trading, the volumes have been quite thin, thus leading to a high bid/ask ratio.  Given the other more liquid ETFs, this one may not be worth pursuing.  NUCL is off 2% YTD.

The macro case for nuclear power generation and materials procurement is strong.  Much of the world is emerging from obscurity into modern living and fossil fuels simply cannot satiate the appetite of the new demand coming on line.  Green energy and renewable energy are unproven and can’t handle the capacity needed as well.  While it may be years until governments and societies start to overcome the “not in my back yard” mentality, reactors are already going up rather quickly in China and Europe is more reliant upon nuclear energy than many assume as well.  Since markets anticipate future demand years in advance, it may be high time to consider nuclear ETFs as a secular alternative investment.  This map demonstrates global status of nuclear reactor use and new builds:

source: Wikipedia

With the launch of URA and the recent fanfare associated with the new Rare Earth Metals ETF, the demand for common equity shares of miners especially, should remain strong.  It shouldn’t come as a surprise to continue to see more similar ETFs launched and funds flow in that direction as we see the bond bubble bursting, gold losing its luster, and deficit fears rattling markets.  Who knows, if the global economic expansion in the developing world continues and fossil fuels become further constrained, perhaps nuclear will be the Black Swan Investment of this decade?

Disclosure: No position in any ETFs or equities referenced in this article.

Commodities, ETF

Investments, Pensions and Government Guarantees

November 17th, 2010

Back to Venezuela. Yesterday, we noted that old Hugo is promising to give investors guaranteed returns from government owned industries (including those recently expropriated from private owners).

Well, if you want to make a lot of money by investing in foreign markets you should put your money where blood flows in the streets. And maybe Venezuela is getting close. It is the most mismanaged economy in the Western hemisphere – with the possible exceptions of Haiti and Cuba. In the past 12 years, it has exported nearly half a trillion dollars’ worth of oil. Yet, by all indications, the Venezuelan economy is falling apart.

Chavez has not been able to deliver on his promises. Key indicators – poverty rate, literacy, etc. – have generally improved, but not as much as in Mexico and other Latin American countries. And expropriations and continued rabble-rousing has scared off foreign investment.

Voters seemed to turn against Chavez in last month’s legislative elections, so the man has turned on the heat. More expropriations. More threatening rhetoric. More nonsensical policies.

We have not followed prices on the Venezuelan stock market, but brave investors might want to have a look.

But hey, if Hugo Chavez can guarantee investment returns, why not the US government?

It’s coming, dear reader.

Once again, we are grateful for the opportunity to see in real time such spectacularly stupid things as must make the gods weep. Or laugh.

When governments become desperate for money, they take it wherever they can get it. It’s probably just a matter of time before they begin to eye the American retirement system. They’ve been living on “excess” Social Security contributions for many years. That is, people paid more into the system than they got out of it. Until this year. Now the system is in deficit.

So, they’re bound to look at 401(k) and other retirement programs.

It was reported in the press that there was a proposal to seize these private retirement plans. Not so. But on October 7th, Teresa Ghilarducci, a professor at the New School for Social Research in New York, proposed to Congress that they introduce a program where workers could “swap their 401(k) assets…for a Guaranteed Retirement Account…that would be composed of the equivalent of government bonds that pay a 3% real return.”

How about that? A guaranteed return of 3%. Wait, is that AFTER inflation? Hmmm. Yep. That’s what the proposal calls for.

Another crackpot idea…but just wait. The feds will pitch it as a solution to the problem of negative returns in 401 k plans. After inflation, deflation, maybe even hyperinflation, and a bear market…these GUARANTEED returns will sound like a good deal. A guaranteed 3% ain’t bad.

This is, effectively, what Argentina did. It nationalized private pension plans to protect retirees! Could the US do it too? You bet.

Regards,

Bill Bonner
for The Daily Reckoning

Investments, Pensions and Government Guarantees originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Investments, Pensions and Government Guarantees




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Investments, Pensions and Government Guarantees

November 17th, 2010

Back to Venezuela. Yesterday, we noted that old Hugo is promising to give investors guaranteed returns from government owned industries (including those recently expropriated from private owners).

Well, if you want to make a lot of money by investing in foreign markets you should put your money where blood flows in the streets. And maybe Venezuela is getting close. It is the most mismanaged economy in the Western hemisphere – with the possible exceptions of Haiti and Cuba. In the past 12 years, it has exported nearly half a trillion dollars’ worth of oil. Yet, by all indications, the Venezuelan economy is falling apart.

Chavez has not been able to deliver on his promises. Key indicators – poverty rate, literacy, etc. – have generally improved, but not as much as in Mexico and other Latin American countries. And expropriations and continued rabble-rousing has scared off foreign investment.

Voters seemed to turn against Chavez in last month’s legislative elections, so the man has turned on the heat. More expropriations. More threatening rhetoric. More nonsensical policies.

We have not followed prices on the Venezuelan stock market, but brave investors might want to have a look.

But hey, if Hugo Chavez can guarantee investment returns, why not the US government?

It’s coming, dear reader.

Once again, we are grateful for the opportunity to see in real time such spectacularly stupid things as must make the gods weep. Or laugh.

When governments become desperate for money, they take it wherever they can get it. It’s probably just a matter of time before they begin to eye the American retirement system. They’ve been living on “excess” Social Security contributions for many years. That is, people paid more into the system than they got out of it. Until this year. Now the system is in deficit.

So, they’re bound to look at 401(k) and other retirement programs.

It was reported in the press that there was a proposal to seize these private retirement plans. Not so. But on October 7th, Teresa Ghilarducci, a professor at the New School for Social Research in New York, proposed to Congress that they introduce a program where workers could “swap their 401(k) assets…for a Guaranteed Retirement Account…that would be composed of the equivalent of government bonds that pay a 3% real return.”

How about that? A guaranteed return of 3%. Wait, is that AFTER inflation? Hmmm. Yep. That’s what the proposal calls for.

Another crackpot idea…but just wait. The feds will pitch it as a solution to the problem of negative returns in 401 k plans. After inflation, deflation, maybe even hyperinflation, and a bear market…these GUARANTEED returns will sound like a good deal. A guaranteed 3% ain’t bad.

This is, effectively, what Argentina did. It nationalized private pension plans to protect retirees! Could the US do it too? You bet.

Regards,

Bill Bonner
for The Daily Reckoning

Investments, Pensions and Government Guarantees originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Investments, Pensions and Government Guarantees




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Buying Gold for Buoyancy as US the Credit Rating Sinks

November 17th, 2010

Alvaro Vargas Llosa is quoted in The Independent Institute’s newsletter, The Lighthouse, as saying that the new “$600 billion in 6 months” QE2 program (and $900 billion with re-investments) of the evil Federal Reserve is, “The biggest load of stinking monetary policy crap in the history of the United States, and we should all follow the lead of the Incredible Mogambo Guru (IMG) and buy gold, silver and oil in those few, rare moments when we are not Screaming Our Guts Out (SOGO) in anger at the Federal Reserve for its treachery, and likewise not Screaming Our Guts Out (SOGO) in fear of the inflationary horror that is guaranteed – guaranteed! – to befall us because this Federal Reserve monetary insanity is to – as ridiculous as it sounds – enable the despicable federal government to monstrously deficit-spend $2 trillion a year, every year from here on out, to enlarge its suffocating self and expand its long roster of dependents which total, currently, half the freaking population of the Whole Freaking Country (WFC), and thus will be constantly expanding the money supply as this new money pours into the economy at rates of growth even beyond the horrifying 14% rate that is happening right now, which is the raw feedstock of the ‘inflationary horror’ mentioned earlier in this very wonderful sentence of mine.”

Okay, I admit that he did not write that. I wrote that. And I lied when I said that he wrote it. And I wrote it because I am a pathetic loser who craves attention, and if I don’t get it, then I’ll lie to make other people look as stupid and crazy as I am.

Mostly, however, I wrote it mostly because I have sunk down to the clogged drains in the sub-basement of ethics, where my very soul rots from the anger, and the hatred, and the outrage, and the fear of a horrible, terrifying, inflationary “unknown” where all that is known is that it is unknown except for that it will be inflationary, and it will be horrible and terrifying in a sinister kind of non-specific way that makes it all the scarier.

And if you are one of those neo-Keynesian dorks who thinks that deflation is So, So Bad (SSB) that you would rather have inflation, then prepare to be instructed to the contrary, moron: Already commodities are rising 20%, 30% – and some more than 100% in the last year! – and soon these wholesale price increases will fully seep into retail prices, so that when you go to the grocery store, the place is crowded with mobs of looters and desperate, starving people, and things are on fire, and shots are ringing out, and all you wanted was some Italian bread and some milk, but they only had the un-sliced bread left, which means you have to slice it yourself, which is such a hassle, just adding to the overall misery, as you can probably imagine for yourself.

And it won’t stop, either, because the torrents of new money necessary to make inflation roar will not stop, as we see when we read what Mr. Llosa actually said. The quote was, “The United States is doing what every protectionist government does – trying to make its economy competitive by devaluing the currency, a perverse mechanism for making what comes in artificially expensive and what goes out artificially cheap.”

And with import prices rising, it will be highly inflationary since we already have a merchandise trade deficit of $57 billion, and a trade balance deficit of $621 billion over the last 12 freaking months!!

Mr. Llosa makes no mention of the use of double exclamation points ending the previous sentence or any of the many ramifications of such punctuation, and instead notes, “The many protests heard around the world on the eve of the G-20 meeting in South Korea signal the strong possibility that other major powers will eventually respond in kind.”

Perhaps like Dagong Global Credit Rating Co downgrading US debt from AA, to A+, and with a “negative outlook” commentary attached?

Then, from marketnews.com we learn that “Moody’s Investors Service upgraded the Chinese government’s bond rating to Aa3 from A1 and is maintaining its positive outlook.” Hahaha!

I was not surprised that nothing was reported about the bad news contained in the new report from the Mogambo Investors Service (MIS) that “Ah-oogah! Ah-oogah! Dive! Dive! This is an emergency bulletin to buy gold, silver and oil, as much as you can, as often as you can! Stragglers will be eaten alive by inflation, or maybe by ravenous wolves, or sharks, but eaten by something, nonetheless, and maybe all three!”

The only “good news” was found later in the MIS bulletin, where it read, “Those who do buy gold, silver and oil, as much as they can, as often as they can, will not be eaten, but will eat, and indeed wax prosperous while happily exclaiming, ‘Whee! This investing stuff is easy!’”

The Mogambo Guru
for The Daily Reckoning

Buying Gold for Buoyancy as US the Credit Rating Sinks originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Buying Gold for Buoyancy as US the Credit Rating Sinks




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

Buying Gold for Buoyancy as US the Credit Rating Sinks

November 17th, 2010

Alvaro Vargas Llosa is quoted in The Independent Institute’s newsletter, The Lighthouse, as saying that the new “$600 billion in 6 months” QE2 program (and $900 billion with re-investments) of the evil Federal Reserve is, “The biggest load of stinking monetary policy crap in the history of the United States, and we should all follow the lead of the Incredible Mogambo Guru (IMG) and buy gold, silver and oil in those few, rare moments when we are not Screaming Our Guts Out (SOGO) in anger at the Federal Reserve for its treachery, and likewise not Screaming Our Guts Out (SOGO) in fear of the inflationary horror that is guaranteed – guaranteed! – to befall us because this Federal Reserve monetary insanity is to – as ridiculous as it sounds – enable the despicable federal government to monstrously deficit-spend $2 trillion a year, every year from here on out, to enlarge its suffocating self and expand its long roster of dependents which total, currently, half the freaking population of the Whole Freaking Country (WFC), and thus will be constantly expanding the money supply as this new money pours into the economy at rates of growth even beyond the horrifying 14% rate that is happening right now, which is the raw feedstock of the ‘inflationary horror’ mentioned earlier in this very wonderful sentence of mine.”

Okay, I admit that he did not write that. I wrote that. And I lied when I said that he wrote it. And I wrote it because I am a pathetic loser who craves attention, and if I don’t get it, then I’ll lie to make other people look as stupid and crazy as I am.

Mostly, however, I wrote it mostly because I have sunk down to the clogged drains in the sub-basement of ethics, where my very soul rots from the anger, and the hatred, and the outrage, and the fear of a horrible, terrifying, inflationary “unknown” where all that is known is that it is unknown except for that it will be inflationary, and it will be horrible and terrifying in a sinister kind of non-specific way that makes it all the scarier.

And if you are one of those neo-Keynesian dorks who thinks that deflation is So, So Bad (SSB) that you would rather have inflation, then prepare to be instructed to the contrary, moron: Already commodities are rising 20%, 30% – and some more than 100% in the last year! – and soon these wholesale price increases will fully seep into retail prices, so that when you go to the grocery store, the place is crowded with mobs of looters and desperate, starving people, and things are on fire, and shots are ringing out, and all you wanted was some Italian bread and some milk, but they only had the un-sliced bread left, which means you have to slice it yourself, which is such a hassle, just adding to the overall misery, as you can probably imagine for yourself.

And it won’t stop, either, because the torrents of new money necessary to make inflation roar will not stop, as we see when we read what Mr. Llosa actually said. The quote was, “The United States is doing what every protectionist government does – trying to make its economy competitive by devaluing the currency, a perverse mechanism for making what comes in artificially expensive and what goes out artificially cheap.”

And with import prices rising, it will be highly inflationary since we already have a merchandise trade deficit of $57 billion, and a trade balance deficit of $621 billion over the last 12 freaking months!!

Mr. Llosa makes no mention of the use of double exclamation points ending the previous sentence or any of the many ramifications of such punctuation, and instead notes, “The many protests heard around the world on the eve of the G-20 meeting in South Korea signal the strong possibility that other major powers will eventually respond in kind.”

Perhaps like Dagong Global Credit Rating Co downgrading US debt from AA, to A+, and with a “negative outlook” commentary attached?

Then, from marketnews.com we learn that “Moody’s Investors Service upgraded the Chinese government’s bond rating to Aa3 from A1 and is maintaining its positive outlook.” Hahaha!

I was not surprised that nothing was reported about the bad news contained in the new report from the Mogambo Investors Service (MIS) that “Ah-oogah! Ah-oogah! Dive! Dive! This is an emergency bulletin to buy gold, silver and oil, as much as you can, as often as you can! Stragglers will be eaten alive by inflation, or maybe by ravenous wolves, or sharks, but eaten by something, nonetheless, and maybe all three!”

The only “good news” was found later in the MIS bulletin, where it read, “Those who do buy gold, silver and oil, as much as they can, as often as they can, will not be eaten, but will eat, and indeed wax prosperous while happily exclaiming, ‘Whee! This investing stuff is easy!’”

The Mogambo Guru
for The Daily Reckoning

Buying Gold for Buoyancy as US the Credit Rating Sinks originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Buying Gold for Buoyancy as US the Credit Rating Sinks




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

Three ETFs Influenced By Fed’s Stress Tests

November 17th, 2010

In an attempt to ensure that US financial institutions are financially stable, the Federal Reserve recently announced a new round of stress tests, influencing the Financial Select Sector SPDR Fund (XLF), the iShares Dow Jones US Financial Sector Index Fund (IYF) and the Vanguard Financials ETF (VFH).

These tests are expected to prove a financial institutions ability to withstand another economic recession, in that they would illustrate enough capital reserves to absorb potential losses over the next two years.  As a result of this, large financial institutions that are overseen by the Federal Reserve, like Bank of America (BAC), Wells Fargo (WFC), JP Morgan Chase & Co. (JPM) and Citigroup will likely have to forego significant increases in dividend payments to shareholders to keep cash on their balance sheets.    

At the end of the day, these stress tests are being used to ensure that the large financial institutions have enough capital to absorb the anticipated wave of foreclosure losses and the fees that are likely to come along with them over the next 24 months and are being put in place to prevent a catastrophic financial meltdown. 

As mentioned above three ETFs which are heavily allocations to financial institutions that will be influenced by the new stress test include:

  • Select Sector SPDR Fund (XLF), which allocates more than 54% of all assets to its top 10 holdings which include JP Morgan Chase, Wells Fargo and Bank of America.
  • iShares Dow Jones US Financial Sector Index Fund (IYF), which allocates more than 40% of its assets to its top 10 holdings which include JP Morgan Chase, Citigroup, Bank of America and Wells Fargo
  • Vanguard Financials ETF (VFH), which allocates more than 42% of its assets to its top 10 holdings which also include JP Morgan Chase, Bank of America, Citigroup and Wells Fargo.

Disclosure: No Positions

Read more here:
Three ETFs Influenced By Fed’s Stress Tests




HERE IS YOUR FOOTER

ETF, Uncategorized

Three ETFs Influenced By Fed’s Stress Tests

November 17th, 2010

In an attempt to ensure that US financial institutions are financially stable, the Federal Reserve recently announced a new round of stress tests, influencing the Financial Select Sector SPDR Fund (XLF), the iShares Dow Jones US Financial Sector Index Fund (IYF) and the Vanguard Financials ETF (VFH).

These tests are expected to prove a financial institutions ability to withstand another economic recession, in that they would illustrate enough capital reserves to absorb potential losses over the next two years.  As a result of this, large financial institutions that are overseen by the Federal Reserve, like Bank of America (BAC), Wells Fargo (WFC), JP Morgan Chase & Co. (JPM) and Citigroup will likely have to forego significant increases in dividend payments to shareholders to keep cash on their balance sheets.    

At the end of the day, these stress tests are being used to ensure that the large financial institutions have enough capital to absorb the anticipated wave of foreclosure losses and the fees that are likely to come along with them over the next 24 months and are being put in place to prevent a catastrophic financial meltdown. 

As mentioned above three ETFs which are heavily allocations to financial institutions that will be influenced by the new stress test include:

  • Select Sector SPDR Fund (XLF), which allocates more than 54% of all assets to its top 10 holdings which include JP Morgan Chase, Wells Fargo and Bank of America.
  • iShares Dow Jones US Financial Sector Index Fund (IYF), which allocates more than 40% of its assets to its top 10 holdings which include JP Morgan Chase, Citigroup, Bank of America and Wells Fargo
  • Vanguard Financials ETF (VFH), which allocates more than 42% of its assets to its top 10 holdings which also include JP Morgan Chase, Bank of America, Citigroup and Wells Fargo.

Disclosure: No Positions

Read more here:
Three ETFs Influenced By Fed’s Stress Tests




HERE IS YOUR FOOTER

ETF, Uncategorized

Two Dates to Remember for the Municipal Bond Market

November 17th, 2010

Yesterday was a “risk off” day. The dollar index floated above 79. Stocks and commodities got hammered.

Still, since our mind tends to wander away from the herd, we were struck by another sell-off that began earlier this month, and accelerated big-time on Monday…

1-Year Performance of the Nuveen Municipal Value Fund

That’s just one example among many municipal bond funds that were humbled in a biblical way. They recovered a bit yesterday, but not enough to regain their former hubris.

In fact, Monday was the worst day for municipal bonds since the Panic of ’08, the yield on 10-year AAA debt blowing out from 2.75% to 2.93%.

That prompted several issuers to hold off on new financing plans. For instance…

  • Orange County, Calif., postponed the sale of $160 million in Build America Bonds (about which more below). “The bond market has been pretty volatile and flooded with new issues,” says county controller Mike White
  • Cleveland’s public hospital system postponed the sale of $100 million in bonds intended to refinance existing higher-interest debt.

“Yields rose in such a way that our refunding didn’t make sense anymore,” says president Mark Moran of MetroHealth System in Cleveland. Heh, if he thinks yields are high now, and it doesn’t “make sense” to enter the credit markets, he’s in for a rude shock.

The Great Recession cratered revenue for states and municipalities all across the nation. Desperate to make ends meet while still maintaining existing levels of services, they did the logical thing: They cried to Washington, DC.

Of course, as we’ve been observing in excruciating detail, Washington came through – big. Unfortunately, that milk and honey was flowing from a dry teat.

Thus, with morose trepidation, we forecast this morning that the municipal bond market is facing a double whammy day of reckoning, on the two following dates:

  • Dec. 31, 2010: Funding for Build America Bonds runs out. These bonds were part of the “stimulus” bill passed early 2009, subsidizing municipalities’ costs for public works projects to the tune of $150 billion.

About a quarter of all muni issuance this year has been Build America Bonds. Unless the lame-duck Democrat-controlled Congress moves quickly, this money goes bye-bye in six weeks

  • June 30, 2011: Still more federal aid expires on this date – some of it authorized by the “stimulus” bill, more under the “jobs” bill passed last summer, totaling another $150 billion to date. Without this money, states would have already slashed a host of programs, including unemployment benefits and Medicaid.

The likelihood the new Republican-controlled House will extend this aid ranges between slim and none. We saw Slim at the train station this morning…he’s leaving town.

Days of reckoning are never “fun” per se. Least of all will these be for the savers and retirees who’ve purchased municipal bonds because they’ve been deemed a safe source of tax-free retirement income for, well, ever.

The iceberg looming beneath the surface: A host of corporate and state pension plans rely on munis too.

Addison Wiggin
for The Daily Reckoning

Two Dates to Remember for the Municipal Bond Market originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Two Dates to Remember for the Municipal Bond Market




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

Two Dates to Remember for the Municipal Bond Market

November 17th, 2010

Yesterday was a “risk off” day. The dollar index floated above 79. Stocks and commodities got hammered.

Still, since our mind tends to wander away from the herd, we were struck by another sell-off that began earlier this month, and accelerated big-time on Monday…

1-Year Performance of the Nuveen Municipal Value Fund

That’s just one example among many municipal bond funds that were humbled in a biblical way. They recovered a bit yesterday, but not enough to regain their former hubris.

In fact, Monday was the worst day for municipal bonds since the Panic of ’08, the yield on 10-year AAA debt blowing out from 2.75% to 2.93%.

That prompted several issuers to hold off on new financing plans. For instance…

  • Orange County, Calif., postponed the sale of $160 million in Build America Bonds (about which more below). “The bond market has been pretty volatile and flooded with new issues,” says county controller Mike White
  • Cleveland’s public hospital system postponed the sale of $100 million in bonds intended to refinance existing higher-interest debt.

“Yields rose in such a way that our refunding didn’t make sense anymore,” says president Mark Moran of MetroHealth System in Cleveland. Heh, if he thinks yields are high now, and it doesn’t “make sense” to enter the credit markets, he’s in for a rude shock.

The Great Recession cratered revenue for states and municipalities all across the nation. Desperate to make ends meet while still maintaining existing levels of services, they did the logical thing: They cried to Washington, DC.

Of course, as we’ve been observing in excruciating detail, Washington came through – big. Unfortunately, that milk and honey was flowing from a dry teat.

Thus, with morose trepidation, we forecast this morning that the municipal bond market is facing a double whammy day of reckoning, on the two following dates:

  • Dec. 31, 2010: Funding for Build America Bonds runs out. These bonds were part of the “stimulus” bill passed early 2009, subsidizing municipalities’ costs for public works projects to the tune of $150 billion.

About a quarter of all muni issuance this year has been Build America Bonds. Unless the lame-duck Democrat-controlled Congress moves quickly, this money goes bye-bye in six weeks

  • June 30, 2011: Still more federal aid expires on this date – some of it authorized by the “stimulus” bill, more under the “jobs” bill passed last summer, totaling another $150 billion to date. Without this money, states would have already slashed a host of programs, including unemployment benefits and Medicaid.

The likelihood the new Republican-controlled House will extend this aid ranges between slim and none. We saw Slim at the train station this morning…he’s leaving town.

Days of reckoning are never “fun” per se. Least of all will these be for the savers and retirees who’ve purchased municipal bonds because they’ve been deemed a safe source of tax-free retirement income for, well, ever.

The iceberg looming beneath the surface: A host of corporate and state pension plans rely on munis too.

Addison Wiggin
for The Daily Reckoning

Two Dates to Remember for the Municipal Bond Market originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Two Dates to Remember for the Municipal Bond Market




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

Copyright 2009-2015 MarketDailyNews.COM

LOG