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Monday - Mubarak's Mood May Move Morning Markets
Monday - Mubarak's Mood May Move Morning Markets
Is it safe?
I asked that question at the end of November in "Timid Tuesday - Is It Safe" and here we are, 60 days later and up 7.5% and, on the whole, feeling less safe than we did then, when only a few people seemed concerned about rapidly rising global inflation and sovereign default risks. Although we were playing the market bullishly, with our aggressive $10,000 Portfolio (check out our brand new $25,000 Virtual Portfolio that begins today with a $100,000 goal by December 31st) we decided to try to take from $26,000 to $50,000 by Jan 21st (we only made $35,000), our Breakout Defense Plays (5,000% in 5 Trades or Less) and our Secret Santa's Inflation Hedges - it was with one hand always on the exit door. As I said at the close of Timid Tuesday's article: "This house of cards is teetering folks – please be careful out there!"
That was 60 days ago. We're a lot older now and have learned a lot about the World since then. We learned that China, Japan and the IMF are all ready, willing and able to buy the bonds of various EU nations. We learned that the Dollar can still fall 5% (was 81.44 on November 30th) further down despite Europe's very obvious problems and Japan's MASSIVE 200% Debt to GDP ratio. We learned that Uncle Ben will never stop printing money (until forced) and we learned that commodities can rise much faster than even our aggressive "Secret Santa" plays anticipated, with every one of our hedges (XHB, XLE, DBA and XLF) already over our year-end targets, all on track for gains well over 100%.
After watching our Alpha 2 pattern break (as predicted on Monday morning), we went a lot more bearish on Thursday in that morning's post:
Keep in mind that gold and silver are our defensive plays. In Member Chat yesterday, Jromeha mentioned he’s 80% in cash and 85% short the market on the 20% in play and I said I thought that was an excellent way to play what I felt was a blow-off top after the Fed. We added 2 disaster hedges yesterday, a TZA spread that pays 500% if we get to $17 by April and a QID play looking for a quick 66% if they hit $11 by March. That’s in addition to our very short play on the Dow so we are SHORT in the short-run – DESPITE all the foolishness out of the Fed.
This is what hyperinflation looks like folks - you're not supposed to pick 4 commodities and make over 100% in 60 days on what were not even particularly risky trade ideas. If everyone can make this kind of money, what good does it do you as it's just funny money being spit out by a broken system that will, eventually, become meaningless once that money begins to circulate again and people begin to realize just how much of it there really is flowing around (and how relatively worthless that makes it).
In this week's Stock World Weekly, Elliott and Ilene ask if The Bernank has cried "Havoc" and let slip the dogs of hyperinflation:
These are strong words, no question. But on January 5 the Food and Agriculture Organization of the United Nations released a report that shows the “FAO Food Price Index” going from 167 in July 2010 all the way to 215 as of December 2010, an increase of over 25% in just five months. If we accept the International Accounting Standards Board’s definition of hyperinflation as being 26% per annum over three years, then we are arguably seeing the beginnings of genuine hyperinflation, at least in the price of staples such as foodstuffs.
Many people around the world spend 40% or more of their income on food, so increases in food prices significantly affect their lives. Many are already struggling with the problems of unresponsive governments, rampant corruption and cronyism, and weak economies. Skyrocketing food prices may be the proverbial “straw that breaks the camel’s back.” In just three weeks, over one hundred people died in violent riots in Tunisia and over one hundred were reported dead in Egypt, as the regime struggled to maintain control of an unhappy populace.
Look at that chart! We are PAST the point where they broke the World last time! Also in Stock World Weekly (You don't subscribe??? REALLY?), we have this lovely map, giving us a nice visual representation of the RESULTS of these rising food prices with riots, protests and Government troop actions spreading like wildfire across Asia and Africa and knocking right on Europe's door, much as Genghis Kahn's army did 800 years ago.
At the time - the "modern" Europeans of the 13th Centrury probably never imagined that riotous looters in Asia and the Middle East would ever affect their daily lifestyle but Giovanni de Plano Carpini, the Pope's envoy to the Mongol Great Khan, traveled through Kiev in February 1246 and wrote:
"They [the Mongols] attacked Rus, where they made great havoc, destroying cities and fortresses and slaughtering men; and they laid siege to Kiev, the capital of Rus; after they had besieged the city for a long time, they took it and put the inhabitants to death. When we were journeying through that land we came across countless skulls and bones of dead men lying about on the ground. Kiev had been a very large and thickly populated town, but now it has been reduced almost to nothing, for there are at the present time scarce two hundred houses there and the inhabitants are kept in complete slavery."
Why then, are the first 3 trade ideas for the $25,000 Portfolio bullish ones? Well, as I said to Members in last night's Alert, at the opening of the Asian markets: "It’s a busy data week (see Stock World Weekly) with tons of earnings. Not too much to be made of the early trading other than to say that it doesn’t look like anyone is panicking but we’re not hitting Egypt’s sphere of influence yet so it’s up to Europe to carry the ball in a few hours."
Well, here we are, a few hours later (8 actually) and Europe did just what we wished on Friday that the markets would do today - a sharp spike down at the open to test our 2.5% lines (FTSE and CAC) and bouncing back sharply. That was all it took for the Hang Seng to get a nice "stick save" into the close, jumping up 150 points right on the EU open (3am), almost as if there was some kind of program that triggered a buy on all the international markets simultaneously - AMAZING! At the same time (coincidence I'm sure) the dollar got mugged and fell from 78.3 all the way down to 77.8 - something we used to call an amazing move in the currency markets for a week but what we now call --- Monday morning.
So, why do we make bullish bets when it looks like the New World Order is hanging by a thread? Because we're not stupid! We know it's a joke of a fixed market so we play the very funny fixed-market game. You can argue that the markets aren't fixed and this is a great coincidence but our premise that the markets are fixed and our actions based on that premise seem to work out pretty darned well. So we'll stick with that theory until the evidence no longer fits our assumptions. Which could be a while the way things are looking...
I was going over the news and data this weekend and wondering why "THEY" would want to be jacking up commodities with Egypt on fire and many other nations reaching the boiling point. We figure "THEY" are the Gang of 12 (GS, MS, JPM, DB, CS, etc - picture by Elaine at EMSNews.com) working hand in hand with their top 1% clients and their pet Governments so why would they want this level of instability to the point were they jacked oil back to $90 on Friday, up 5% in a single day?
Could they WANT violent revolution? Could they WANT political instability? Could they want war, starvation and death? Wow, you really do need a history lesson if you think they don't! That's where you make all the money people! Chaos, instability, panics, market distortions - it's a party to the IBanks! While we reserve the right to morally condemn them for their actions - we certainly aren't going to bet against them and, as I cautioned in Wednesday's post, where I noted that the Government/Gang of 12 plan was to screw the bottom 99%:
In conclusion – you’d better be out there making an assload of money because you’ll need it to keep up with rising prices for things you buy and declining values of your US assets. We aren’t going to be able to afford to retire/run away to the Caymans if we have to count on US dollars to support us unless we have an obscene amount of them!
It's only 3 trading days later - I haven't changed my mind about that. It's all going according to plan, even though the plan is HORRIFYING and it's up to you to choose whether to play the hand that is being dealt, or watch from the sidelines while monkeys with a dartboard can rack up trades that make them 100% in 60 days while the dollars you keep "safe" in your bank or tied up in Dollar-denominated assets, drop another 5% in the next 60 days.
We remain nimble and ready to go either way. Friday we went, as planned, very short in the morning with QID and TZA plays in the Morning Alert to Members (also published for free on Seeking Alpha as we didn't want our readers to get burned by the drop) that are obviously already doing well but we cashed out our short-term DIA puts, kept our long-term ones, took a long play on F (buying the F'ing dips!), a short one on NFLX (we're with you Whitney!), a long on IWM (selling this weekly puts - very aggressive) and added/reiterated an EDZ hedge so we're playing both sides and not ashamed of it!
It's going to be a crazy week - be careful out there.
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send em up huey
When Oil hits 150/barrel, how will the US commuter go from suburbia to work? Anybody for sun powered bicycles?
there is going to be political chaos in the middle east if Mubarak goes. The Army knows this, so it's going to be brutal - hence the frantic airlifts out.
Markets: stocks south and hard plus risk crosses getting slaughtered, oil: 3 to 5 jump, UST's bid, USD bid.
From the CIA Fact Book. In 2010, Egypt imports 40% of its food, 60% of its wheat or 7 million tons.
Russia has cancelled all wheat exports and will not deliver about 600,000 tons for Sept delivery.
Egypt's population has grown 21% in the last 10 years and every woman has an average of 3 kids.
Egypt's debt is 84% of GDP.
Egypt is becoming a net importer of both oil and natural gas and does not have the foreign exchange to pay.
81 million hungry people in need of gas and oil sounds serious.
The protests started when the Govt tried to reduce food and energy subsidies to the poor. These subsidies have been restored.
The cost of bread in Egypt is the cheapest in the world with the subsidies and Egypt is rated quite high as distributing its wealth to the poor.
When all else fails find some facts. The facts indicate that Egypt needs population control and can't afford to feed all these people. Who is going to pay? Where will the wheat and oil come from to keep all these people alive? This is not about social networking.
Excellent as always Phil. Thanks for sharing w/ ZH!
After reading William Engdahls books, A Century of War-Anglo-American Oil Politics and the NWO, followed by Full Spectrum Dominance-Totalitarian Deomocracy in the NWO. I watched the unfolding in Egypt with a different eye. The book Full Spectrum Dominance discusses long-term goals to obtain this goal. "Methods include the use of propaganda, use of NGO's for regime change, Color Revolutions to advance Nato eastwards, and a vast array of psychological and economic warfare techniques"." All this is explained in his Full Spectrum Dominance. One newer method is called swarming. It involves the use of new technologies to create a swarm of civil unrest. This is what the Rand corporation has been working on. They are using people and technology as a giant social experiment in order to obtain regime change in strategic areas.
http://www.engdahl.oilgeopolitics.net/
http://rt.com/news/color-revolution-sophisticated-technology/
http://rt.com/usa/news/democracy-promotion-usa-regime/
unfortunately we in the US seem to be getting better news from the Russian Times.
Meanwhile grown men are reduced to tears on the streets of Cairo. While paid thugs are doing all the looting. I can no longer bear to watch but will continue to read the news as long as I have electricity and cable. Big storm coming our way.
Everyone who is involved with Facebook (there is a reason Goldman wants in on it) and the Tea Party (Tunisia's revolution is Jasmine, apparently they've run out of colors) needs to pay attention to this. They are studying us and playing us. Dont think that it wont happen in the US. They have been practicing this and honing their craft. My heart and prayers go out to the people of Egypt.
As written above -
« Could they WANT violent revolution? Could they WANT political instability? Could they want war, starvation and death? Wow, you really do need a history lesson if you think they don't! ... Chaos, instability, panics, market distortions - it's a party to the IBanks! While we reserve the right to morally condemn them for their actions - we certainly aren't going to bet against them ...»
Phil and Ilene, you are on top of it. Great to face the moral factors as they are, while also accepting that we need to make a living and assemble and protect assets. And terrific how you also directly confront the investment timing issues.
Entertaining posts, too. Look forward to trying a few trades with you when I recover my far-flung centimes ...
Investors in denile. No, seriously.
Egypt/Israel...The Enemy of My Enemy Is My Friend...
http://seenoevilspeaknoevilhearnoevil.blogspot.com/2011/01/enemy-of-my-enemy-is-my.html
Ah, fiddling while Rome burns...our economic policymakers really don't give a damn about the long term health of markets or our currency. The hypocrisy is staggering. I pulled a copy of Obama's speech on Saturday regarding the protests in Egypt just to see how crazy things have gotten. Nowhere in the speech does Obama acknowledge runaway commodities prices and the role that they are playing in civil unrest...nor does he seem to have a clue that the same thing may happen here. (Comments in the following text are mine.)
1/29/11
Good evening, everybody. My administration has been closely monitoring the situation in Egypt, and I know that we will be learning more tomorrow when day breaks. As the situation continues to unfold, our firstconcern is preventing injury or loss of life. (How? Are you going to recall all of the USA made weapons and tear gas canisters?) So I want to be very clear in calling upon the Egyptian authorities to refrain from any violence against peaceful protestors (It is OK, however, to shoot 'violent' protesters. We shall refer to these elements of the population as 'rioters' so that the press can better explain your actions.).
The people of Egypt have rights that are universal. (Death and taxes) That includes the right to peaceful assembly and association, the right to free speech, and the ability to determine their own destiny. (Or as we refer to here in the states; "The American Dream.") These are human rights. (And animal rights with the borders of our National Parks.) And the United States will stand up for them everywhere. (So long as it is in our economic interests. Otherwise, you will note that we conveniently ignore such rights...)
I also call upon the Egyptian government (aka Hosni Mubarak's kingdom) to reverse the actions that they’ve taken to interfere with access to the Internet (so the Nasdaq bubble can continue to inflate), to cell phone service and to social networks (before Facebook and Groupon go public) that do so much to connect people in the 21st century (Because, as you know, 'consumers' aren't shopping if they have to "connect" in person.).
At the same time, those protesting in the streets have a responsibility (LOL) to express themselves peacefully (refrain from shouting or throwing stones). Violence and destruction will not lead to the reforms that they seek (The beatings will continue until morale improves. Two wrongs don't make a right. Violence and destruction are paths to the dark side. Yada yada yada...)
Now, going forward, this moment (5-days) of volatility (populos demands for FREEDOM!) has to be turned into a moment (perception) of promise (ya' know, kind of like "hope."). The United States (State Department and military leadership) has a close partnership (quid pro quo) with Egypt and we’ve cooperated on many issues (Iraq, Iran, Israel, Lebanon, Syria, Libya, Turkey, Sudan, Kuwait, Saudi Arabia. Yeah, we'll eventually get to the plight of the Egyptian people too.), including working together to advance a more peaceful region (see Middle East). But we’ve also been clear (as mud) that there must be reform — political, social, and economic reforms that meet the aspirations (VERY VERY low, of course) of the Egyptian people (and Wall Street).
In the absence of these reforms (lack of basic human rights!), grievances (outrage) have built up over time (30-years). When President (tyrant/dictator) Mubarak addressed the Egyptian people tonight, he pledged (lied) a better democracy (not that one really existed in the first place) and greater (because it can't get much worse) economic opportunity. I just spoke (via Skype) to him after his speech (slap in the face of the Egyptian people) and I told him (advice) he has a responsibility to give meaning (by appearance, anyway) to those words (what 'words', exactly?), to take concrete steps (Egypt prefers pink granite) and actions that deliver on that promise (NOT to leave the country).
Violence will not address the grievances (basic lack of human rights) of the Egyptian people. And suppressing ideas (aka pipe dreams) never succeeds in making them go away. What’s needed right now are concrete steps that advance (promise) the rights of the Egyptian people: a meaningful dialogue (one sided) between the government and its citizens (huh?), and a path (road to nowhere) of political change (kind of like a shift of power from the Democrats to the Republicans) that leads to a future of greater freedom (ROFLMAO) and greater opportunity (for Pepsi and PizzaHut) and justice (jailing and torture of 'extremists') for the Egyptian people.
Now, ultimately (after this generation of young protesters people have died) the future of Egypt will be determined by the Egyptian people (kickin' the political can). And I believe that the Egyptian people want the same things that we all want (big screen TVs and free internet porn) — a better life for ourselves (oops, freudian slip) and our (American) children, and a government that is fair and just and responsive (keeps the Egyptian people quiet!). Put simply, the Egyptian people want a future that befits the heirs to a great and ancient civilization (No, they only want Mubarak on a plane that is headed to Switzerland!). The United States always will be a partner (advisor and military supporter) in pursuit of that future (I know, I know. This is some funny stuff!). And we are committed (because of the Suez canal) to working with the Egyptian government (old friends) and the Egyptian people (the brainwashed ones) — all quarters (25%) — to achieve it (continuation of our geopolitical status as an empire).
Around the world (such as in Miami, OH) governments (city council) have an obligation to respond to their citizens (consumers). That’s true here in the United States (see Miami, OH); that’s true in Asia (see...uh...err...next!); it is true in Europe (Geneva, Switzerland); it is true in Africa (LOL); and it’s certainly true in the Arab world (<facepalm>), where a new generation of citizens (troublemakers) has the right to be heard (<rolling eyes>).
When I was in Cairo (that place where the pyramids are), shortly after I was elected (more votes than McCain and Palin) President, I said that all governments must maintain power through consent (absence of riots), not coercion (ignore my continued campaigning-style of teleprompter pep rally governance). That is the single standard (because there are no other measures of success) by which the people of Egypt will achieve the future they deserve (we refuse to publicly acknowledge what they ACTUALLY WANT).
Surely there will be difficult days to come (fingers crossed that Dow doesn't drop). But the United States will continue to stand up (provide ambiguous rhetoric) for the rights of the Egyptian people (and other stuff) and work with their government (non-elected officials) in pursuit of a future that is more just, more free, and more hopeful. (Yes they can!!!!)
Thank you very much.
"The Barak"
That was good. As a YouTube video it'd proly go viral.
..."almost as if there was some kind of program that triggered a buy on all the international markets simultaneously"...
coordinated interventions? crazy thought.
http://www.businessinsider.com/quant-trader-arrested-for-allegedly-stealing-goldmans-secret-formula-2009-7
BI wishes they could steal TD's quant, pink fight club brand of coolness soap. Never.
What happened to Wikileaks Assanges January 2010 release of a US Major Bank's emails?