Stock Market September 2010

[MetalMeister]

I sure don't see this USD love affair lasting several more years.

The Chinese are easing their holdings now.  They are getting close to March 2009 levels at the bottom of the US Market.  Others are slowly following suit.

They are just tightening the noose around the U.S. neck.

All it takes is a couple of failed bond auctions before the world panics and the US has to implement austerity measures and worse.

All we need is a US/Iran/Israel/Syria war in the Mideast and our creditor nations say "no way".  Then it is up to war to make the world's decisions.

It is close to "no way" now.  How long can we expect all this credit while nations will decide to get much more on their investment elsewhere?

The US will continue to import virtually the same amount of stuff but it will come at a higher price.  This jig is virtually up.

http://oilprice.com/Finance/the-markets/Its-Official-China-is-Unloading-its-Treasury-Bonds.html

[sunseeker]

Hi YC
Your link didn't work (bad protocol). This one will work:
http://oilprice.com/Finance/the-markets/Its-Official-China-is-Unloading-its-Treasury-Bonds.html

From the same site (All is not as it seems):

http://oilprice.com/Finance/the-markets/American-Investors-Absorb-$4-Trillion-in-Treasuries-and-Remove-Chinas-Financial-Leverage.html

“China's "nuclear option"--selling its vast stash of U.S. Treasuries to wreak havoc on the U.S. economy and interest rates--has been downgraded by the flood of U.S. investors who have exited stocks in favor of Treasury bonds.”

“But a funny thing happened to the "nuclear option" story": American investors have absorbed almost $4 trillion in U.S. Treasuries, making domestic owners the largest holders of Treasuries. China's holdings, as vast as they are, are now a modest percentage of domestic owners--as little as 25%.”

Can a nation in  “deficit” really solve its problems, and create wealth for the country merely by stimulating internal demand?

Or by dumping stocks in companies. The same wealth creating companies that provide the necessary stimulus the US economy needs now more than ever.

Can the US address its problems and deficits by looking inwards?

CONSIDER THIS.......

I have a house to sell.
Someone from the UK buys the house.
I sell it for £500K.
The purchaser pays me my £500K.
That's £500K out of his account, and £500K into my account.
As far as the UK economy is concerned zero wealth has been created or destroyed.

However if I sell my house to Yellowcaked and he pays me the USD equivalent of £500K
The UK is now £500K richer (Especially after UK tax, Estate agent, and legal fees.    Job creation too.) but the US is now a USD equivalent £500K poorer.
 
Unless YC chooses to re-market my property at a higher price minus any costs, and banks the proceeds back in the US (minus UK tax etc.). 

Wealth created by buying then adding value to goods or/and services, so that they can be sold on at a good profit.

Work your way out of problems.
Don't work your way into further problems.

ATB 

[MetalMeister]

Maybe that is what China is doing is working it's way out of problems (USD) ?  

So, does it seem plausible that as the US investors flee equities into Treasuries that some other countries, besides China, will rush to prop up equities so that we won't have yet another crash?  Or do we just sell of some assets to prop ourselves up?

I get the article's point of view but I think we are on the verge of something catastrophic, like war, that will change all the rules.

I'm just funnin' with ya - I have no idea how all this plays out but I think it plays out sooner rather than later...  

I think that if "something" forces upwards the cost of goods from China then Americans and Europeans will still buy almost as much from China, they will just buy less in their own countries to make up the difference.

Could be a really wicked circle of the food chain.  

Your link didn't work either.  Seems only half of it got in the url:

http://oilprice.com/Finance/the-markets/American-Investors-Absorb-$4-Trillion-in-Treasuries-and-Remove-Chinas-Financial-Leverage.html

Work your way out of problems.
Don't work your way into further problems.

[pinetree]

Tony Robbins put out an economic warning recently...

pt. 1 - http://www.youtube.com/watch?v=XOfRLINVqcg

pt. 2 - http://www.youtube.com/watch?v=7ZlQDdLCgJk

I love Tony but never went to him for economic advice before LOL.  Can't really disagree with anything he's saying though.  Should be nothing to new to any readers of BHSH or Sidewinders View but thought Tony was a surprising place to start hearing this.

I just trade it day by day without any care for long-term direction but it can be fun to listen to other peoples predictions.

[sidewinder]

American investors have absorbed almost $4 trillion in U.S. Treasuries, making domestic owners the largest holders of Treasuries. China's holdings, as vast as they are, are now a modest percentage of domestic owners--as little as 25%

The greatest loss of wealth in the '29 crash was in the bond market.

The US doesn't want to default on the Chinese.  But Me thinks defaulting on the American public is more appealing.  After all, we were willing to make Goldman and co. whole on the AIG deal, making us the perfect patsy.  Through government action etc. the average investor has no reason to save or buy a CD, the rates are about nil.  The equity markets pay almost no dividend and the treasury has been the traditional safe haven.  Only now, with the amount of debt the risk of sovereign default is higher than I can ever remember.  A lot of this stuff is short term and it will be interesting to see how many buyers are attracted when they have to come up with more money. 

No doubt this is gonna get interesting.     

[MetalMeister]

Very interesting insight.  I had not looked at it that way.

[MetalMeister]

PT,

I was actually skeptical of even watching TR because I have never found him interesting to me.  But I was surprised.  Made me wonder if this is something he put out there for his private paid audience and someone put it up on YouTube or if he put it out there for free. 

Robbins is obviously talking about Nassim Taleb referring to the 1987 crash and all the money Taleb made predicting that crash.

Might be a good time for everyone to go back and review the Black Swan thread.

Thanks PT.

Tony Robbins put out an economic warning recently...

pt. 1 - http://www.youtube.com/watch?v=XOfRLINVqcg

pt. 2 - http://www.youtube.com/watch?v=7ZlQDdLCgJk

I love Tony but never went to him for economic advice before LOL.  Can't really disagree with anything he's saying though.  Should be nothing to new to any readers of BHSH or Sidewinders View but thought Tony was a surprising place to start hearing this.

I just trade it day by day without any care for long-term direction but it can be fun to listen to other peoples predictions.

[sunseeker]

American investors have absorbed almost $4 trillion in U.S. Treasuries, making domestic owners the largest holders of Treasuries. China's holdings, as vast as they are, are now a modest percentage of domestic owners--as little as 25%

The greatest loss of wealth in the '29 crash was in the bond market.

The US doesn't want to default on the Chinese.  But Me thinks defaulting on the American public is more appealing.  After all, we were willing to make Goldman and co. whole on the AIG deal, making us the perfect patsy.  Through government action etc. the average investor has no reason to save or buy a CD, the rates are about nil.  The equity markets pay almost no dividend and the treasury has been the traditional safe haven.  Only now, with the amount of debt the risk of sovereign default is higher than I can ever remember.  A lot of this stuff is short term and it will be interesting to see how many buyers are attracted when they have to come up with more money. 

No doubt this is gonna get interesting.     

Very well put SW

Then there's this:

http://globaleconomicanalysis.blogspot.com/2010/09/goldman-marks-top-in-municipal-bond.html

“Goldman Sachs Group Inc. is about to start selling municipal bonds directly to mom and pop.

The New York company plans to enter a partnership this week with Chicago securities firm Incapital LLC to sell bonds issued by U.S. states, cities and towns to individual investors, according to a person familiar with the situation.”

 
The latest Bank Participation Report:

http://www.cftc.gov/MarketReports/BankParticipationReports/index.htm

To quote from the e-mail from:
http://www.roadtoroota.com/public/10.cfm

The CFTC just released the latest Bank Participation Report and it's a DOOZY!
 
 
After months of reducing their huge concentrated short position in silver...THE BAD GUYS HIT A WALL. Once they got the price of silver down to $18/oz they could not rig the price further down to cover positions so they started pulling the same old stunt by shorting the rise back up.
 
This latest report shows that in the rise from $18 to $20 the banking cabal sold short about 28M oz of silver. Just imagine what would have happened to the price if they had NOT sold all that paper silver!
 
The Bad Guys are trapped and they know it. The Good Guys know it. Other traders know it. The CFTC knows it. Even YOU know it.
 
Watch for the MAJOR fireworks to come as we slide into the abyss.
 
Have a nice restful weekend...I know the Bad Guys won't!

Silver is looking good.

EXTRA
A program that allows you save clips from “Youtube” etc. before they disappear.

http://www.freemake.com/free_video_converter/

Enjoy.

ATB 

[pinetree]

PT,

I was actually skeptical of even watching TR because I have never found him interesting to me.  But I was surprised.  Made me wonder if this is something he put out there for his private paid audience and someone put it up on YouTube or if he put it out there for free.  

Robbins is obviously talking about Nassim Taleb referring to the 1987 crash and all the money Taleb made predicting that crash.

Might be a good time for everyone to go back and review the Black Swan thread.

Thanks PT.

Yeah YC, I was skeptical at first too.  Never heard of him giving market warnings, but if as you suspect he's getting this from Taleb that makes it more interesting.

I'm not a Tony disciple but he was of some benefit to me.  I remembered his infomercials from way back and thought he was full of it but I read his book Unlimited Power a few years after I got out of college and it helped improve my attitude quite a bit.  It got me to start focusing on the opportunity in life's challenges, rather than focusing on the roadblocks as most average people do.  Once in a while I re-read parts of it if I catch myself falling into negative thinking.  David Elliott has a friend Patrick who uses the same techniques to help people with trading.

[sidewinder]

You know, SS Funny you should put up the info about Goldman getting into selling treasuries.  That even makes me more alert and causes more angst. 

Marty Armstrong has been very candid and has held back little when it comes to Goldman and one of their guys Alan Cohen.  According to Armstrong it was Cohen who is at the base of much of his problems with the government.  Cohen he says, lied to the court about there being possibly more victims after Republic and HSBC agreed to criminal restitution to make all victims whole in his case.  As I understand it, Cohen was some sort of trustee for Princeton Economics (Armstrong’s firm) while employed by Goldman and wanted the computer models Armstrong used.  The result was Armstrong was held for another 5 years while Cohen and friends profited by seizing Princeton’s research.  Then he has this to say about the recent case against Goldman.  Keep in mind the predictive powers of Armstrong’s research led CFTC and others to claim Martin was “controlling” markets.
 
Quote:  “Now comes this case.  For the CFTC and others who were in the pocket of the New York banks, and listened to their bullshit that I manipulated the world economy because nobody can possibly predict a single day in advance for highs and lows as the model has done for decades well,  try this one on for size.

The very transaction that Goldman has been charged with FRAUD itself, was put together and the prospectus is dated the precise day of the high for the Mortgage ABX market with the model – February 26, 2007. 

ABACUS 2007-ACI , $2 Billion Synthetic CDO was sold by Goldman the very day of the high of the model.  Did they have the model?  Did they have the model through Alan Cohen?  Or is this just me manipulating the world including Goldman from a cell.” 

“The point is simply this.  I do believe that Mr. Cohen turned over proprietary research to Goldman Sachs.  I believe he did his best to manipulate the courts and to keep me in prison on civil contempt with no lawyer, all funds frozen, constantly argued I had no rights as all to be heard in any court on appeal as if this whole process was a throw back to medieval days.”



Apparently it would seem that Goldman sold this shit knowing full well what was about to happen and in fact shorted against it's own clients (suckers).  I guess we will never know because I think this case settled with Goldman paying $600 million with no admission of anything. 

So, my point is if they are eager to sell US treasury's why should I not suspect that they will know the numbers on all the buyers and in fact short against the very thing they are selling the public. 

The relationship between GS and the government should be enough to scare the bejesus out of anyone who has the slightest cognitive ability and looks into the history. 

This could turn out just awful for the American public.  With government setting the stage to drive mom and pop along with the managers of pension funds into bonds it is just to easy to see catastrophe looming at some point in the future.  This all has the potential to clean out whats left of the public's life savings.  Then where will we be.  Ripe for dictatorship, anarchy, or in the least civil disturbance. 

I am not a professional analyst nor do I pretend to be but somethings rotten in Denmark as they say.     

[sidewinder]

This is rich.

http://www.businessinsider.com/erin-burnett-michael-pento-2010-9

Erin just needs a spanking. 

Then the dumbest quote of the century by this guy Joe Balestrino when he says "Nothing is in a bubble when people want to  buy it"

He was speaking about the treasurys which are on their way to bubbledom.   

Erin gets upset with Mike Pento from Euro Pacific Capital (Peter Shiff's firm) I guess because he won't bend over for CNBC and Immelt's cheerleader squad.  anyway I only watch them because I want Erin and that lazy eyed, dirty blond Becky on the early AM show to have a go at each other on a 20 minute steamy video.  That I would pay for.  Notice Erin rarely gives a profile shot .... that babe has a honker on her that would rival Jimmy Durante. 

[MetalMeister]

market up and cash outflows out of the market up.

What's wrong with this picture?

http://www.zerohedge.com/article/stocks-surge-celebreate-unprecedented-19th-sequential-equity-outflow-10-billion-september-re

[onlooker]

September Happenings

This past Monday, September 20, a private “think tank” organization, the National Bureau of Economic Research based in New York, published an article stating that technically, the U.S. economy has exited a recession in June 2009 and entered into recovery. 

See: 

In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month.

http://www.nber.org/cycles/sept2010.html

There was a recovery?  Really?

The NBER must have overlooked the many “signs of the times” which show that an economic recovery has not yet occurred in 2010.

One “signs of the times” event is that of midnight shoppers at Walmart silently buying products with government assistance money. 

See: 

JDH’s September 22 posting:

No, the recession isn't over; just ask Walmart and their midnight shoppers: http://dld.bz/wBn4

Or in contrast, there is the well publicized prime time television show, The Apprentice 2010.  It has been altered to reflect the current economy realities.

Now, it showcases 16 contestants, all been hit hard by the current economic downturn.  And instead of high-flying rewards for the winning teams as given in previous seasons, The Donald will award the winning Project Managers with one-on-one meetings with some of American’s business leaders and CEOs.  The ultimate prize will be a job with a six-figure salary within the The Trump Organization.

IMO, the contestants are all Type A plus plus personalities.  See the contestants’ bios:  http://www.nbc.com/the-apprentice/candidates/

So … if the many driven job seekers such as these contestants have not been able to obtain employment in the recovery period defined by the NBER; then I will assume that an economic recovery has not occurred.

~    ~    ~

On The Apprentice 2010

On the first show, I saw more than the usual cut-throat, undermining, bulling, scrape-goat activities going on.  I saw the first failed Project Manager unceremoniously throw under the bus by all of her other very un-team-like players.  Some “signs of the times” bad behaviour?

I think that for the overtly ruthless contestants, their personal goal to participate on The Apprentice 2010 for the purpose of landing future employment will backfire on them.  I assume that many corporations (an exception could be Goldman Sachs) will not hire them after they have seen them on The Apprentice 2010.

[MetalMeister]

I have and will continue to contend that we are and have been in a depression as great or greater than the 1930s.

If there were no unemployment payouts (like there were not in the 30s) then unemployment would be in the high twenties, maybe higher.

The US government has successfully, so far, managed to make it look like just a bad recession.

For unemployed people to get 99 weeks of free checks is ludicrous socialism.  People should have to pay into an unemployment system that is underwritten by an insurance company with rates that reflect a 99 week possibility.

What is going on now is fraud and robbing the people with jobs.  Charity should be taking care of those without jobs, homes, or whatever, but on a volunteer basis out of the goodness of one's heart not forced down the taxpayers throat as it is now, by default.  Not paying their bills with fake money and all of our futures.

Imagine is those millions on the unemployment payrolls had nothing but their savings, 401ks, investments with which to CYA themselves?

There would be a whole lot more saving going on and frugality in financial matters.

Will be interesting to see if the slimy Republicans that take over Congress will actually have the balls to make the necessary changes or just give way to the pressures of the mainstream greed and consumption.

From the Pledge to America they made today, it seems they are going to do very little.


http://pledge.gop.gov/resources/library/documents/pledge/a-pledge-to-america.pdf

[onlooker]

Hi YC:

YC quote:

The US government has successfully, so far, managed to make it look like just a bad recession.

Yeah, I agree with you that the almighty US government has successfully made its current economic turndown appears to be a recession. 

I suspect that so far, the DOW is able to re-energize itself again and again and again… due to interventions from the US government.

Could be that this charade will not change until after the upcoming US November elections are over, and the victors are known.