Archive - Nov 2009

Courtesy of Finviz, the latest top insider transactions indicate that the increasingly artificial equity market still provides a very good opportunity for insiders who are looking for overeager momentum chasers and those managing idiot money for the likes of Fidelity, Putnam et al who read and do whatever reports by Goldmand and Bernstein tell them to do, to gobble up insider shares at ridiculous market valuations. Case in point: Mr. Bill Gates, who is so thrilled about the early sales performance of Windows 7 he can't wait to offload that equity exposure on unwitting non-insiders.

As Zero Hedge speculated recently, the latest participant on the gold bandwagon is now officially Russia, which last month was said to be considering a sale of up to 25 tons of gold. That posturing did not last too long. Not only that, but Russia is now also actively participating in the dollar intervention market, buying more than $1 billion of dollars to keep the ruble low. Due to moderating inflation and arapidly appreciating ruble, the country is now considering diversification in the same way that India and China presumable are: by shifting into dollars. Look for much more upside pressure on Gold as more and more countries become disgusted with the way Bernanke is treating both American's citizens and the country's currency.

"If the USA were to go back to a 40% ratio of gold reserves to money supply (using the monetary base), where it was a century ago when the Fed was first created, from 17% currently, that would equate to three years’ supply of bullion, and alone take the gold price up to $2,750/ounce, based again on our research on price sensitivities to central bank buying activity." - David Rosenberg

The famous contrarian shares his thoughts on what we (should) have learned from the most recent financial collapse, yet have promptly already forgotten. Something tells us Chanos will be forced to pull out this exact same presentation in one or two years and just change the date. And nobody will listen then either.

Look for the next batch of CRE numbers to be the worst ever as Tishman and BlackRock move the loan backing Stuyvesant Town to special servicing, in essence throwing in the towel, and pushing the affordable home complex into default. According to Fitch the property's worth has plunged from $3 to $1.8 billion. This means that not only Tishman and BlackRock have lost all their value, but Fortress and SL Green who own a $1.4 billion mezz loan in the property are also wiped out. Also, as Fannie and Freddie are the largest holders of the securitized mortgage, look for another set of requests for governmental bailouts out of the nationalized GSE's.

Even as China loses 1% of the value of its dollar foreign reserves overnight, the real question is whether Geithner feels lucky. The problem: the ability to push the price of gold lower is now completely lost as gold hits all time high after all time high - at last read gold is at $1,110 and rising.

• Rosenberg: unemployment to hit 13% (Bloomberg)
• Wall Street record bonuses return as Big 3 may pay $30 billion (Bloomberg)
• Tackling the US economic data manipulation: Economists seek to fix a defect in data that overstates that nation's vigot (NYTimes)
• Kraft makes new, lowered bid for Cadbury (AP)
• Citigroup asset guarantees may cost US taxpayers, panel says (Bloomberg)
• Geithner saying "be like Buffett" can't make JPMorgan lend more (Bloomberg)

• Asian stocks gain on G-20 stimulus, Axa takeover; treasuries, dollar fall.
• China may “soon” issue measures to limit the use of debt in real-estate purchases.
• Crude oil rises above $78/bbl as Hurricane Ida entered the Gulf of Mexico.
• Gold surged to records (hits $1,105.11/oz) on a weakening dollar.
• House health bill unacceptable to many in Senate
• India will pull back on its easy fiscal stance next year, sees 7+% growth next year:PM
• Treasuries fall as Asian stocks rose, US prepares to sell record $81B of debt this week.

Yes, you've been Bamboozled! Hoodwinked! You're being taken for suckers that not only can't count, but whose memories have been washed away by threats of swine flu and reality TV shows. Do not fret, though. What I have is PROOF of the great Banking Bamboozle, for all to see. Now, armed with this proof, all I need for you is to go out and do something about it.

Upgraded Failflu v2.0 spreads in Ukraine, Americans too stupid to buy a gold Maple for $50, windbag Chavez prepares for war against Columbia, Pelosi's health insurance bailout includes jail terms for Americans, Damon Vickers claims US Dollar Will be Utterly Destroyed

... the 'fixed period drop-off effect,' the differences between moving average methodologies, the true nature of the term “fractal” as applied to the structural composition of trading systems, the 'four basic qualities of great technical indicators' and a practical nuance within stochastic calculus that can help you anticipate what others are about to think.

The head of Goldman Sachs literally said he's doing "God's work" with his banking activities.

The head of Barclays also recently told his congregation that banking as practiced by his company was not antithetical to Christian principles.

Are they right? Is big banking as practiced by the giant banks in harmony with Christian principles?

Another representation of what will likely become a prevalent topic in upcoming days: the Exter pyramid. When the system works, the various layers are in equilibrium. When the system is broken, like it is now, the Fed and all Central Banks try to refill the pyramid from the bottom-up with every single dollar they print. The current temporary calm is all Bernanke can hope to achieve before $2 quadrillion of liquidity collapses onto whatever truly tangible assets exist. They don't call it a pyramid scheme for nothing. And by assets, we are not talking about the crap that the Fed collateralizes against in its Discount Window and Primary Dealer Lending Facility taxpayer handouts. And for the goldbugs: $2 quadrillion (mythical liquidity) collapsing into $2 trillion (hard assets): can you spell $1 million an ounce of gold?

In addition to PPT or other gaming of the stock market, here is another reason it can go up while jobs are crashing downward ...

With the dollar preparing for another day of Uncle Ben inspired self-flagellation, gold is already enjoying a flying start at north of $1,100. The complete multiasset melt up appears to be at most days away.