Whuz Up Out There?

U.S. stocks helped by health-care sector is the headline on Marketwatch. "The rally in health-care stocks came as voters headed to the ballot box in a surprisingly tight race to replace the late Edward Kennedy. Democrats would lose their filibuster-proof, 60-seat majority in the U.S. Senate if Republican candidate Scott Brown wins. That could pave the way for legislative compromises that could defer more to the private sector. Read more about the contentious race." I'm sure you all know all about that now, but it deserves to be rehashed as this is a HUGE event. The irony that the bill that Sen Kennedy wanted so bad would be destroyed from his seat. Something tells me the HC stocks will win either way as we really have not other options and this administration (nor any other) is going to do anything to curb the cost of medical care. There is simply too much money in the business and they'll keep our faithful representatives stoked with cash to ensure nothing changes. The peripherals surrounding this election are enormous and what gets slammed thru congress in the next week may have your head spinning (Bernanke re-appointment?).

Why do I believe there will be a big P3? Cause what we have sewn will come to roost and the ensuing cover-up has only made issues worse and is simply delaying the inevitable. Oh, The Truth Is The Banks Are Insolvent? (Still) from the Market Ticker states, "The bottom line?  The banks are still insolvent, Treasury is still lying, the banks are still refusing to recognize losses that have already happened as a direct consequence of their intentional and outrageous conduct and all of this together will prevent any meaningful recovery the broader economy from taking hold." I can not agree more and thus the next Japan we will be. When QE is done, the jobless rate remains constant, the consumer savings rate spikes, the accounting fraud ends, taxes are raised across the board, how the heck are we gonna recover? 

The Pragmatic Capitalist found a doozie that I liked.GURU OUTLOOK: FELIX ZULAUF & THE SECULAR BEAR MARKET it is always a pleasure when you find a "guru" that agrees with your opinion. “we are in the early stages of a deleveraging process, which is marked by a shift from maximizing profits to minimizing debt. It is a multiyear process. The U.S. consumer is in bad shape, and the U.K. consumer is even worse.”  You go Felix! 

FT has a good post on How the big banks rigged the market. "The next stage must be scrutiny of the structural distortions that allow these institutions to rack up such huge profits. Broadly speaking, the leading players in at least three areas of investment banking – wholesale markets, underwriting and mergers and acquisitions – have been operating natural oligopolies." Control, control, control OF EVERYTHING. Lehman was whacked and the smaller competition is being weeded out. I would not be surprised to see them busted up in the future (if and only if we get some sort of honest representation). Until then, I believe it has been proven beyond any doubt that they run the show. 

The Big Picture brings us The Anti-Fed Fact Sheet please read this.

A number that flew under the radar as the markets soared today was NAHB: Builder Confidence Declines in January (aside from the C report this am - how many billions did they lose?).

Look out for the banksters earnings in the am. Should be an interesting day. Before the bell we'll have BAC, MS, WFC and STT just to mention a few. Earnings calendar here.

I have no clue what happened to the font. blogger acted up the whole post and was a pain to deal with. Sorry.

Up In Smoke?

Somehow I never saw this one coming. Hit me like a truck smack in the face.California Grows A Brain? from The Market Ticker is a breath of fresh air (well, laced with THC that is). Bravo Karl! "Specifically, hemp makes an excellent biofuel feedstock, it is suitable for very high-quality paper production at lower cost than made from trees and the fiber is useful for a whole host of industrial and consumer end product uses, yet it is virtually impossible, given the insane "public policy" view toward the plant, for any of this to be exploited." You see, Karl gets it. It IS a viable plant that can assist society. Thomas Jefferson devoted 40 acres to growing this industrious plant. I assume some lobby that wanted to corner the paper market and a few other industries and were behind the illegalization of this plant. I now also assume Monsanto will be a leading seed developer and will have a patent on every form of DNA to the plant making it illegal to grow without them getting a cut of the action in about 10 years.

Up in smoke will go this bubble as well. Housing Bubbles, Global Household Leverage, Why Fed's Reflation Efforts Will Fail Mish delivers "Not only did the Fed enable the credit bubble, it blew the policy response. All it takes to prove that is another stock market plunge and credit crunch. Both are coming, we just don't know when."
  
Calculated Risk has Option ARM Recast Update - Thought you may have put this one on the back burner so let's shine some light back on the subject. Uh, bad. Really bad. They can not raise rates or the housing market collapses. It is that simple. Uh, it may collapse anyway when the next round of arms rolls thru anyway, so WTF right?

If you do not know who William Black is, you should. thanks to naked Capitalism for digging this one up. William Black” “Anti-Regulators: The Federal Reserve’s War Against Effective Regulation” William has been around the block a time or two and I'd say any analysis he does on regulatory failure is far better than you will get anywhere else.  

US Will Hit 94% Debt to GDP Ratio Next Year, Surpassing the Level Where Debt Starts Reducing Economic Growth so what's above 100%?

Economist: Bubble Warning The Big Picture dug this one up. I point it out because 7 out of 10 sights I have visited so far have something related to a "top" article on them. Either everyone is starting to figure this game out or a lot of people are wrong. Can't make that call till after the fact. Earnings season is upon us and the numbers will tell the story. Will the beat the number, but miss on revenue story again be enough to satisfy the market? Well, that is a mute point, cause GS is the market and they will direct it wherever they want it to go with your money via the Fed. 

Do you remember the recent problems with Greece? Guess what - Greece condemned for falsifying data  when it rains it pours and since Greece is a tiny little gnat on the global scale I expect them to the lion's share of the punishment (only to distract us from the troubles here at home).  Pay attention to the right hand. That's it look over here. No, no, no; don't look at the left hand. Look at the right hand. Gooood.

There you have it. Another wonderful day in the neighborhood. Can anyone point out what is missing from this post? No, not a rant or 4 letter words. Should be obvious. 

Have a great evening.

More Good News!

My favorite story of the day from Zero Hedge: CNBC Viewership Plunges 50% In October. The inverse of the market's numbers (but worse). I guess bad news really does sell more than good news. Hmmm, I guess ratings will be up again soon.

Denninger keeps harping on the unrealistic actions of our government as they continue to operate from Fantasy Land in More Arrogation Of Power? Arrogation is a big word for me. This one is good highlighting the Fed and treasury's illegal actions early in the game. "The Fed created this mess. "Loose money" along with willful blindness to reasonable regulatory requirements and in fact black-letter statutory requirements under the law to apply "prompt corrective action", along with wanton and reckless refusal to supervise and impose controls on firms levered 20 or even 30:1, especially given that Henry Paulson lobbied the SEC to remove the investment bank leverage limits in 2004, were the actual and proximate cause of all the failures." LOL, we sheeple are so lacking in any viable representation it is totally ridiculous.

Mish has some great P3 material. It appears that there is an outside possibility of some major cities having to file for bankruptcy (why they did not do Birmingham I don't know). In City of Houston is Bankrupt (So are California, Oregon, and Pension Plans in General) Mish highlights Houston, California, Oregon and Pension Systems country wide as in deep trouble. "It is highly likely that nearly every pension plan in the country is busted. The solution is for every city and municipality in a predicament to "pull a Vallejo" and declare bankruptcy. Please see Judge Rules Vallejo Can Void Union Contracts for details." It is coming folks. The ball busting fall is coming. 2008 may have been a cakewalk for what I expect to come.

Prag Cap (as well as ZH) have the BILL GROSS: “ALMOST ALL ASSETS APPEAR TO BE OVERVALUED” post. LOL, PIMPCO, weren't they just dumping some positions last week (at our expense if I am not mistaken)? Guess that is not included in the insider selling numbers I posted yesterday. "Bill Gross, arguably the most powerful money manager in the world, has joined the ranks of Jeremy Grantham in saying stocks have risen due to artificial influences and are now substantially overvalued." When the hell are some of my readers going to come around and face the facts that this market is manipulated as all hell and when it lets go, all hell will break loose. I know, Shanky you are bashing America and our spirit. Uh, no, I'm bashing the fact that everything has been stolen from us by the banks and our government let it happen. WE had nothing to do with it and if WE don't get off OUR asses, WE will have nothing left to bitch about.

Mary Shapiro obviously went to a Dr., and he's prescribed some sort of testosterone rub for her and it may be working. The FT reports in SEC head urges fresh securities laws that, "US securities laws are outdated and legislation is needed to govern new investment products that blew up during the financial crisis, the Securities and Exchange Commission chairman told an industry gathering on Tuesday." ROFLMAO, what brainiac figured this out TWENTY YEARS AFTER THE FACT. Oh, that's right, Greenspan is out of the picture now, so hang Ben out to dry and you go to cut his fiscal legs out from under him and the economy. Don't expect anything other than rhetoric for at least 10 years.

That is enough for tonight. Don't forget the morning post. Thanks for tuning in.

(Unmask The Fed)

ISM, SEC , EEM, China and Super Rally In The News

Yes, I can do more than chart. You see, I have this bi-polar issue where the blog gets chart heavy then news heavy, sorry bout that. It has a lot to do with time available.

The Pragmatic Capitalist has an article that you EEM investors may be interested in, TRADE OF THE DAY: BIG MONEY BETS AGAINST EMERGING MARKETS "A massive chunk of put options purchased on the emerging markets fund this afternoon flies in the face of the 1.5% rally in shares during the session to $39.20. Approximately 95,000 put options were purchased at the November 35 strike for an average premium of 73 pennies per contract." Hmmm, maybe a look at EEV would be worth it.

Barry Rithholtz at the Big Picture comes to the SEC's rescue (as far as blog persecution goes) in Giving the SEC Teeth. So how does one go about fixing the SEC? First there is the soft, almost apologetic, Barry's way...

And then there is the apparently more effective, down to earth, no apologies accepted Zero Hedge Way, More Pain For Humiliated SEC After Disclosure It Ignored Moody's Whistleblower Warnings. "As if the SEC could be humiliated any more, another piece of disclosure now highlights that Mary Schapiro's useless organization was unresponsive to whistleblower overtures by former Moody's employees attempting to warn the regulator "about Moody's weak compliance department and ratings process."" I prefer the ZH manner of addressing the issues with the most inept government subsidized regulatory unit.

Mish does a good job of covering the unexpectedly horrible PMI number this morning (did someone mention unemployment surprise today as well?). Reflections on the Unexpected Negative Surprise in Chicago Purchasing Index PMI highlights some of the rosy, green shoot bullshit reports that try to gloss over the number and then Mish delivers, "Fundamentally and technically the market is prime for a huge correction. Sentiment is extreme and the viewpoint expressed by William Dwyer above is consensus. However, it is important to keep in mind that as long as the corporate bond market stays healthy, stocks will likely have a bid. How much longer that remains is anyone's guess." Tomorrow's national ISM # and the non-manufacturing on Monday may be more fuel for the bear's fire (if you don't get your reports from Liesman on CNBS).

Bloomberg brings us U.S. Stocks Fall, S&P 500 Trims Best Two-Quarter Gain Since ’75. "“We’re in the faith part of the economic cycle,” said Ralph Shive, manager of the $1.3 billion Wasatch-1st Source Income Equity Fund, which has beaten 96 percent of competing funds over the past five years. “All of us to some degree are guessing how strong the recovery is or how long it will take. Market prices have anticipated a decent recovery at this point. At some point we need to see earnings turn.” " Look, I don't need to be messing with Ralph, but he needs to be spilling the beans. Earnings suck and will get worse IMO because they can't squeeze any more blood out of the turnip. Unemployment is getting "better" cause businesses are as lean as they can get. When you have dumped 16% of the workforce on their ass, you can't cut much more. It is only a matter of time before the reflated bullshit recoveryless recovery comes full circle.

The financial Times has a good one on China to cut back industrial expansion. "But over the past three months many government officials have begun to publicly warn that the credit binge could create overcapacity in heavy industry, which could produce a new round of bad bank loans."
Remember, they have built empty malls and bridges to nowhere to no end. LOL, and you thought our reinflation efforts were screwed up? Well, since you can not trust anything coming out of big red (much less here for that matter), I would say they are gunning for implosion #2. The only difference with them is they did not protect their banks in round one. Big trouble in little China lies ahead IMO, and that may have a direct influence on their deposits here.

I'm looking forward to the ISM numbers tomorrow and Monday. The market is topping (or has topped). When they lose the market they lose the public. When the public goes ape, it is all over. That is all that is left. I can't say when this will happen, but both you and I can see the pressure building. They are one slip or one "external" event from this collapsing in a dramatic fashion. If you have not noticed, everything is happening at such a rapid pace and there are so many balls in the air that something will be dropped and the house of cards will come crumbling down. Don't you wonder about the dollar, deflation, the lack of regulatory actions, monetization, TARP transparency, the Fed, and on and on? Tick, tick, tick....

Mind Boggling News Events Continue To Boggle The Mind

Let's start with the HufPo's Priceless: How The Federal Reserve Bought The Economics Profession. This one will blow your mind and is a must read. "Even the late Milton Friedman, whose monetary economic theories heavily influenced Greenspan, was concerned about the stifled nature of the debate. Friedman, in a 1993 letter to Auerbach that the author quotes in his book, argued that the Fed practice was harming objectivity: "I cannot disagree with you that having something like 500 economists is extremely unhealthy. As you say, it is not conducive to independent, objective research. You and I know there has been censorship of the material published. Equally important, the location of the economists in the Federal Reserve has had a significant influence on the kind of research they do, biasing that research toward noncontroversial technical papers on method as opposed to substantive papers on policy and results," Friedman wrote." ROF LMAO - they own 'em ALL. No one on the payroll or with any thought of advancing in the field will ever speak against them. the funniest part, how the 220 PHD's on staff all missed this one coming. Simply mind boggling.

The FT brings us, Court rejects SEC settlement with BofA Judge Rakoff holds serve and sends 'em to court in February of 2010. "In Monday’s order, Mr Rakoff wrote that the settlement “does not comport with the most elementary notions of justice and morality, in that it proposes that the shareholders who were the victims of the bank’s alleged misconduct now pay the penalty for that misconduct”." What is mind boggling about this one is that justice may actually be served and may be gaining momentum.


Calculated risk has Failed Banks and the Deposit Insurance Fund. this is a real gem that hits home to me. "The cumulative estimated losses for the DIF, since early 2007, are now over $42.5 billion.Regulators closed three more banks on Friday, and that brings the total FDIC insured bank failures to 92 in 2009. At the recent pace, regulators will probably close around 150 banks this year - the most since 1992." That is a mind boggling $42.5 billion they are now in the hole and possibly hundreds or thousands of more banks to fail? Heloooo?

And from Pragcap.com - DAVID TICE: THE S&P IS GOING BELOW 400 You know I could not resist this one. "David Tice is undeterred by the 50% rally in stocks. In his latest interview he says the market will fall over 60%." There is a link to the full interview there. Nice to hear one realist out there with a mind boggling prediction the pundits at CNBS can not fatham.

And last but not least our friends at Zero Hedge dug this up at Bloomberg: China Probes ‘Unfair Trade’ in U.S. Chicken and Auto Products. Mind boggling to think that China is complaining about fair trade practices. "Chinese industries complain that they’re being hurt by “unfair trade practices,” the nation’s Ministry of Commerce said on its Web site yesterday. The dumping investigation relates to poultry alone, a spokesman said in Beijing today. The ministry didn’t specify the value of imports of the products."

GL trading.

Is Thar Gold In Them Thar Hills?

Too early to tell. I do have a H&S labeled in this chart with a target of 126, but not counting on it or calling it (yet). The weekly vol is picking up which is good, but the indicators have not busted yet to my satisfaction. The triangle it is popping out of now is worth around 10pts to 1003 to 1005. The daily RSI is already at 70 and the S Sto is almost topped. It did gap perfectly thru the upper trendline and has set a series of higher highs and lower lows. I'm gonna wait and see what happens around 1003 and the neckline in black. Sho nuf looks good tho. Maybe a little too good if you know what I mean. It is set up to bust a nut, but proceed with caution.

From the FT - Gold edges nearer $1,000. "The dollar’s recent slide against other currencies has helped underpin gold. Nevertheless, traders and analysts were doutbtful about the prospects of a substantial rally in the gold price beyond $1,000."

Interesting article I found on Steve Quayle's site (yes, I look in strange places for stuff). The 1-3-6 Rule and Gold Begins to Move by John Galt at Shenandoah.

UNG getting bitch slapped this am. Ouch.

GL Trading

Chart better viewed HERE.