Monday, January 3, 2011
1/4/11 Layla/ First Pitch
What'll you do when you get lonely
And nobody's waiting by your side
You've been running and hiding much too long
You know it's just your foolish pride
I can be superstitious when it comes to trading. A +0.25 open in CSCO? I had to swing for a solid base hit. A low 4-figure gain the first trading of the year gives me something to smile about as I think back to Opening Day over the next 12 months.
Didn't get a chance to trade using the Droid, but having it with me allowed me to leave my desk for lunch.
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Mark- I 'predict' that we will all be snarled in bearish sentiment before the month is out. So a short in AA may work out.
ReplyDeleteMy perspective on the countertrend trade has changed a bit- I try to picture a freight train. I can (and occasionally do) play chicken on the tracks, but of course the smart play is to board after it reverses course and I have momentum on my side.
S&P, Q's, R2000 all gaped up and held.
ReplyDeleteMetals and mining, aluminum, rare earths all strong.
You have to ask...do you short stocks in strong sectors? Do you fight the trend?
Short at your own risk! NOT ME.
I'm up pretty good to start the year.
I posted CAVM a while back. Entry at 38.35. Up over 5% as of today. Closed at 40.30.
FTK started out great, finished weak. Sold some early (couldn't help it) Reloaded some at the close.
SIRI at new highs.
CYD up big in the AM, closed flat.
XL up nicely.
Moved up a few stops.
At some point there will be a pullback with more set-ups.
A few shorts listed, not advised at this time.
The big blue arrow points up.
Craig- Why is it a blue (as opposed to say green) arrow- does it change color when it points down?
ReplyDeleteShouldn't the arrow be Umber on the way up, Sage in a sideways market, and Dun on the way down?
ReplyDeleteI get so confused by TA...
AA- I just thought the AH action was extreme.
ReplyDeleteI'm with Craig. I'm not going to try and step in front of this thing. Did that last year and got run over...twice.
AA- Not really. It hit 16.20 earlier this morning, so 16.24 after hours doesn't qualify as extreme. Hard to believe it was 10 in late August.
ReplyDeleteIt closed today @ 15.79. That's a 5% AH's move on no news after trading 41M shares today.
ReplyDeleteHeck I don't know why! I'm just an apprentice.
ReplyDeleteIt takes years of practice to draw those arrows!
(just kidding!)
Dave says it's blue. That works for me.
Maybe it just rhymes with Dew ;)
ReplyDeleteI'm going to have to play it one day at a time until the trend reverses, or the indexes grind sideways long enough to work off the 'overbought.' I like Tatro's description of De Porre waiting as long as it takes for the right pitch.
That's entirely possible, he does love the Mt. Dew. That stuff must be something like rocket fuel. I prefer coffee.
ReplyDelete"You have to ask...do you short stocks in strong sectors? Do you fight the trend?
ReplyDeleteShort at your own risk! NOT ME."
I'm not suggesting an attempted short on REE (yet), my point is SHZ isn't in that category. Go long SHZ at your own risk, not with my money!
I do suggest a careful examination of SHZ's financial statements, I think you'll have second thoughts.
BTW, same auditor as CDII, SHZ has marginally better financial strength.
"Molycorp May Double Planned Rare-Earth Metals Output to Meet Global Demand
ReplyDeleteBy Pimm Fox, David Wilson and Simon Casey - Jan 3, 2011 8:18 PM ET
Molycorp Inc., owner of the world’s largest rare-earth deposit outside of China, may double its planned production to help meet global demand after China cut export quotas.
The Greenwood Village, Colorado-based company’s board asked its management to take a “very hard” look at raising 2012 output to 40,000 tons from 20,000 tons, Chief Executive Officer Mark Smith said yesterday in an interview on Bloomberg Radio. Production will be 3,000 to 5,000 tons this year, he said."
http://www.bloomberg.com/news/2011-01-04/molycorp-says-it-s-considering-doubling-rare-earth-metals-output.html?cmpid=yhoo
FWIW- I will close my SSO tomorrow. That was a Fri-Tue trade only.
ReplyDeleteI'll slide back into the cafe with 2nd. I'd rather wait.
CP- I heard that interview today in the truck. Guy made a good case. Still, I can't run that train down. Just not my style, for better or worse. ( I know your not advocating it.)
ReplyDeleteBTW..How the hell did Stanford #4 wind up playing # 13 VT anyway??
ReplyDeleteSFRD/VT - I think I heard something about that one, can't remember the detail though.
ReplyDeleteGo VT!
SHZ built a decent base and broke out forming a classic cup and handle. It might be a buy on a pullback of a couple bucks.
ReplyDeleteYou *know* I don't confuse the issue with facts.
Some of the best runs in stocks have been in companies with no fundamentals whatsoever.
1999 and 2009 are proof of that concept, as are most IPO's. Geez, look at Freddie and Fannie or AIG. Essentially bankrupt but that didn't stop their stock. How about the banks? what's on their books? Yet the stocks run....
I never look at financial statements. I'm NOT buying a company, I'm *trading* the stock.
Warren Buffett looks at financial statements....but he buys entire companies.
I am not Warren Buffett and neither is anyone on this list.
I repeat. Stocks do not trade on fundamentals. They trade on the perception of fundamentals.
They trade on emotion, period.
See AAPL from January 22, 2008 to February 2008, after Steve Jobs reported "the best quarter EVER, with the highest revenue and earnings in Apple's history".
How many times have we seen companies report great earnings and watched the stock plummet or vice-versa? Fundamentals and earnings don't matter. YES they need to have some earnings at some point of they close the doors, but the perception of earnings (greed and fear) is what drives stock price. Otherwise there is no way for you to explain how SHZ went from .25 to 8.30, is there? How does that happen?
This is an interesting exercise. Not that I read much into it, but this one seems less strident than most:
ReplyDeletehttp://www.businesswire.com/news/home/20110103005612/en/Byron-Wien-Announces-Ten-Surprises-2011
Just some charts updates.
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=$SPASX200&p=D&yr=1&mn=0&dy=0&id=p94193502472&a=210103821
http://stockcharts.com/h-sc/ui?s=$CPCE&p=D&yr=1&mn=0&dy=0&id=p14664111662&a=217542525
http://stockcharts.com/h-sc/ui?s=$CPC&p=D&yr=1&mn=0&dy=0&id=p08358441793&a=217323306
http://stockcharts.com/h-sc/ui?s=$VIX&p=D&yr=1&mn=0&dy=0&id=p35859431455&a=198074052
Interesting chart [SPX next target 1293?] http://4.bp.blogspot.com/_SRSTWZ5iCVs/TSI8GDJHw0I/AAAAAAAAGH4/MFkXVL0Q2us/s1600/fibfan.png
Kim - nice charts. Really liked the fibfan. If you take the 1025-lvl (roughly the main-body low of the early July candlestick) and the 1563 (again main body of Oct 07 high) then the 50% level is ~1294. So that's probably a good target.
ReplyDeleteLandry-
ReplyDeleteRandom Thoughts:
I think the market speaks for itself.
Traders came back in a buying mode. This action obviously keeps the indices at multi-year highs and in uptrends.
Most sectors are also doing well. Even areas such as the Banks and REITS which have been lagging have come back as of late.
Since the methodology requires a pullback, there aren't a lot of new setups. Therefore, focus mostly on managing what you already have. Take partial profits as offered and trail your stops higher.
MOTR, has pulled back.
ReplyDeleteLong MOTR
t3d
Anyone looking at SLW?
ReplyDelete2nd - Hell yes. Watching the SLW pullback & AVL
ReplyDeleteHL too - but it's the same correlation w/ SLV that SLW provides
ReplyDeleteClosed out my SPY puts for a whopping $200 gain. I get the sense that this pullback is all we'll get today.
ReplyDeleteSilver is a 'tell.' Should SLW break 36, I will take it as one sign a market reversal is imminent.
ReplyDeletetof- I think we're headed down, bro.
ReplyDeleteVad had some rules he put out for his group re. thin holiday trading w/ the intent of reducing 'rinses' like the one AVL just delivered now...
ReplyDelete[09:19] {Threei} guys, so we save time later, I want to explain what I want to try to do today
[09:19] {Threei} you noticed of course unusually high percentage of rinses last few days
[09:20] {Threei} so, unless a setup is very clean, I want to:
[09:20] {Threei} 1. let the trigger go,
[09:20] {Threei} 2. wait for a rinsing move under the intended stop,
[09:21] {Threei} 3. enter in setup original direction around the stop level
[09:21] {Threei} clear?
[09:22] {Threei} this is thin pre-holiday trading, not much happens anyway
[09:23] {Threei} so might just as well adjust on daily basis
2nd - you may be right. my FCX short looks good and short other metals look good.
ReplyDeleteclosed short FCX at $118.7
ReplyDeleteI wonder if today will finally be the day that RAS breaks out. it is trading nicely with decent volume.
ReplyDeleteFib confluence at 1267.70ish
ReplyDeleteCome on RAS! Volume looks really good today so far. Almost half of daily volume already.
ReplyDeleteT3D- Yeah, I've been eying that one too.
ReplyDeleteSLW headed toward filling the gap from morning of 28th???
ReplyDeleteummm yeah why didn't i hold my FCX short?
ReplyDeleteSLW is just below S2. I'd be careful.
ReplyDeleteThe Silver Surfer/ SLW newSubmitted by 2nd_ave (5129 comments) on Tue, 01/04/2011 - 11:01 #77066
ReplyDeleteLes- My (simple) take on SLW would be to short the stock on a break below 36, and to buy the stock should it bounce off 36.xx and resume its climb.
RBY - Are you on sale today?
ReplyDeleteGL. At the close...
ReplyDeleteSLW S3 is 36.08...at this rate...
ReplyDeleteSHZ - Of course this one's flying again...
ReplyDeleteBought a whopping 6 x SPY $126 Calls at $1.15 that expire on Friday just for shits and giggles in case we bounce.
ReplyDeleteby the way, BBY looks really good here.
ReplyDeleteLosses well over $100k for the day so far. All cash now in. Was lucky to have taken some chips off on the spikes, but didn't act quickly enough or sell enough.
ReplyDeleteThat's what happens when you expect something to go up.
I guess the good news is that everyone I know has abandoned their gold stocks in hopes of buying them back cheaper, and I haven't seen even one remotely positive comment all day.
Time to go to the couch permanently. Adios.
Nothing goes straight up! I guess it's always a good idea to draw the line somewhere. Obviously a buying opportunity opening up, not exactly sure where yet, kinda looks like PM's, could be metals and energy in general (anti-dollar) once this little bout of selling subsides.
ReplyDeleteRestaurants going high-tech in move to APPL tablets?
NLY - Finally a break, it's been quite a while... probably won't last?
I don't think this is reasonable cause for alarm, it's just a growth indicator, not dilution:
"InPlay: Annaly Mortgage prices 75 mln share common stock offering at $17.20/share for gross proceeds of approximately $1.3 bln before expenses"
ATNI down but relative vol up, I assume that indicates buyers are snapping up shares here.
ReplyDeleteZSL/SLW - another push down on silver. let's see if we get a DB in SLW @ 36.50
ReplyDelete100 steps forward, 99 backward...
ReplyDeleteSLW below S3
ReplyDeleteArgh there goes my RAS gains. Last off the dance floor just in time for a selloff. Still holding though. Same with CHGI.
ReplyDeleteRemind me again why I sold my SPY puts and my FCX short. Oh that's right...I'm impatient.
I'd like to short SLW on a bounce, but I don't have the guts.
ReplyDeletePullback in SPY was right to the top of the level for 2010 (126.2). Let's see if it can use that as support.
ReplyDelete2nd - Yea, just as soon as you short it, Bill will come in w/ a big buy order & you'll be screwed.:-)
ReplyDeletePKX - SEOUL – "Posco, the world's No.3 steelmaker, said on Monday that it will develop resources in Africa, Siberia and polar areas to achieve 200-trillion won ($177,5-billion) in total group sales in 2020.
ReplyDeletePosco - South Korea's No.6 group in terms of assets with 58 subsidiaries -- said it aimed to achieve 120-trillion won of the total target from its steel business, 60-trillion won from energy, chemical, engineering and construction, and the remainder from new sectors, including environment-friendly business.
"To achieve these targets, Posco businesses will be expanded into Africa, Siberia and polar regions by focusing on resources development on top of Southeast Asia and America, where the group has a steel business foothold," CE Chung Joon-yang said in a New Year speech."
http://www.miningweekly.com/article/posco-to-tap-africasiberiapoles-for-resources-chairman-2011-01-03
Added 4 x SPY Calls at $0.94 for a total of 10. Avg is 1.06.
ReplyDeleteKyle- It would be interesting to map the links between posts and traders who fade them.
ReplyDeleteSHZ - Hard to ignore, LOL!
ReplyDeleteXOMA moving too
ReplyDeleteJust sold all my 1250 shares of TWM at $12.55 and placed buy stop limit order for 1500 shares at $12.60/$12.61. Most of such sharp market declines with a V-shape reversal have not dropped below the original low during the day, and so I think the chances are better than 50-50 of the rebound continuing through the day.
ReplyDeleteUnless, of course, this time is different, in which case I would want to actually increase my TWM position.
ReplyDeleteI thought Charlie Rose's Brezhnev interview last night was pretty interesting, helped confirm and expand on my interpretation of where the US/China relationship might eventually lead.
ReplyDeleteHopefully sooner rather than later, but we all know how that goes...
I'm going to avoid posting on CC today- guessing 90% of readers are in a bad mood right now.
ReplyDelete2nd - I gotta say I find it funny that people on that say advocate metals stocks that have risen astronomically yet abhor buying tech stocks/high fliers/the market in general. Aren't they one and the same (i.e., equities that have risen dramatically in part on wishful thinking)?
ReplyDeleteI would imagine readers on CC were in a jovial mood this morning, thinking their bearish economic outlook might come true after all?
ReplyDeleteHopefully by now their host has made an effort to set them straight on what that entails for PM prices... I finally figured it out the hard way.
sorry...meant to say on that site.
ReplyDeletecc - check out #77051 and #77092
ReplyDeleteGS - That's been a nice run off the mid-year lows, hasn't it? I don't see how this company could ever fail considering the expansive tool set they own and have access to...
ReplyDeleteLooks like my guess about the pullback being over for the day did come true. TWM collapsed below my sales price (12.55) and now I moved down my buy stop limit order to $12.55/$12.56 if by some chance the market decides to go down after all.
ReplyDeleteGosh, wonder who the anti-QE2 militants are? They wouldn't happen to be a jovial bunch of FED critics, would they?
ReplyDeleteI can't believe no one called that clown analyst65 on his #77082, bragging about his short call. Never mind that he makes this same call from August at least! Haven't posted in months while market was steamrolling over his dead body, but jumped out on the first red day.
ReplyDeleteZZZZZZZZ....Up a whopping $261 bucks in the trading account. IRA doing well though. 100% RAS.
ReplyDeleteTOF- RAS is coiled big time. Which way is the question.
Maybe analyst65 finally had help from the TSA with locating his g-spot?
ReplyDeleteKim- Nice call on oil. You still short?
ReplyDeleteJust re-entered 1500 shares of TWM at $12.45, after selling all my 1250 shares at $12.55.
ReplyDeleteMy reasons for re-entering TWM: IWM has retraced about 50% of its daily loss AND halted its recovery at the $78.50 level, which was its previous 2-week support and now became the resistance. Bill mentioned that the safest entry on the short side is after a reflexive rebound to the previous support level, which I just did.
ReplyDeleteCSCO - Wonder how much longer we'll have to wait for that $16 target to materialize, maybe after earnings?
ReplyDeleteFF thx for posting the Landry webinar. Not sure if it's an exact fit but I picked up some TBT today thinking TBT is at the bottom of an up channel.
ReplyDeleteport2013
Now I'm up exactly $1
ReplyDeleteGet back to work port ;)
ReplyDeleteLong 4 x BBY Jan $33 Calls at $2.35. $34.50 was a breakout level. The stock came back and tested that level yesterday and is now clearly above it. I think this has room to $37 in the short term.
ReplyDeleteport2013 -- in case you missed my posts yesterday, I have also entered TBT at $37.60 for 4% of my port. It was not only at the bottom of its rising channel, but it also had a fake bearish move on Friday (a la Quint Tatro) to shake out the weak hands and then it started rebounding on Monday.
ReplyDeleteMark > RAS chart is pointing up so a coil should result in a breakout up. Not that I'm biased what with my huge position in the stock.
ReplyDelete"Now I'm up exactly $1"
ReplyDeleteI know it's hard, but try not to let it tempt you!
CHGI has withstood a lot of volume (i.e., selling) and not gone below $2. I suspect it goes higher.
ReplyDeleteFD: I'm long 5400 shares from yesterday.
2nd, if I'd sold GMO earlier when you'd suggested, I probably would've bought it back today but I didn't, so I couldn't... ;)
ReplyDeleteGuys, check this out: commodities and Russell 2000 are strongly underperforming the market today. Is not a sign of the risk attitudes changing and money starting to flow toward safety?
ReplyDeleteBesides, the strong volatility yesterday and today, after a prolonged move up, is often a sign of the trend changing. The same thing happened in April 2010 just before the May collapse.
David, I agree, it's something that's worth noting however, this morning's weakness appears associated with the FED minutes and a cooling off consolidation period for commodities really isn't out of the question considering the recent run?
ReplyDeleteThese surges seem to come from nowhere and they just keep on repeating, I'm not quite ready to call a top.
At the bar!!
ReplyDeleteBesides, as long as the FED keeps the pedal to the metal, commodities prices should stabilize at some future equilibrium value, do we have reason to believe that would be appreciably lower than here, or perhaps a bit higher?
ReplyDeleteDespite all the fear, my port closed green and even beat Mark's $1!
ReplyDeleteI'm unfamiliar with the house rules, does the Tuesday winner or loser pay for drinks?
Mortgage interest write-offs - Has congress begun debating this subject yet?
ReplyDeleteCP, the paradox of our situation is that the FED is NOT keeping the pedal to the metal. The FED is NOT giving banks any new money to invest in equities. The FED is simply keeping the cash level at banks flat, buying from the banks each month 75B of Treasuries that the banks are buying monthly from the US Treasury. The whole QE2 rally is based just on Bernanke's *words* about him *wanting* to generate the wealth effect, but he is NOT doing anything real to generate it. At some point the market will see that "the king has no clothes" and the whole rally will evaporate.
ReplyDeleteAnother good reason for the rally to evaporate is if we do get some economic recovery. Bill Gross's team has already explained a couple of times that risky assets are much more sensitive to interest rates than to the real economy, and so the prospect of economic recovery that is possibly pushing the bond yields up (or maybe the yields are going up because bond vigilantes see that US is not doing anything to keep its deficit under control, but who cares -- the yields ARE going up) will be detrimental to the risk assets that have enjoyed the greatest rally -- commodities and small caps.
Make no mistake about it -- the latest stock market rally is a straw house with no foundation.
I agree with CP.
ReplyDeleteThe S&P still closed above the year end close.
After December some profit taking had to be expected, especially after yesterday.
The indices remain in uptrends and a lot of issues were bought on the dip. If I were trading every zig and zag like I used to I would have stopped out of a few holdings that ended the day higher then yesterday. I used to nickle and dime myself to death and miss the big moves. Not anymore. One day at a time.
If the market hits my stops now, then it is probably a real move, or at least a substantial correction.
I have met the enemy....in the mirror!
Okay, so let's say the economy is doomed.
ReplyDeleteI started reading BC (when was that 2nd? 2005-2006? 2004?) and way back then Bill was telling everyone exactly the same thing, the economy was built on a straw foundation and it would drop to 10,000.
In the meantime Hank Paulson was made Treasury Secretary and the markets rallied for another three years. THREE YEARS!!!
Even if we agree about the economy, it has almost nothing to do with the stock markets or if stocks rally or not. At SOME point the chickens (excuse the inference) come home to roost but like many other periods in history the markets can rally higher or go down longer than anyone expects. Bill's 10,000 call became 6,000 and it took a long time to happen.
Then we had 2009 and a lot of people stayed on the sidelines expecting it to go down even more while it rallied 70-80%. Was the economy better? NO! The economy and the stock markets are two separate things. At one point C was .97!
Today the S&P didn't even touch the 10 day MA.
How can we even think of jumping ship, let alone going short, when we are still in an uptrend?
Hell, the MA's didn't even budge like they did in November! what happened then? BOING.
Honestly, I used to do this stuff and then within days of going all cash the market would leave my sorry ass at the station. This is why I hired someone to help me.
Believe me, you all are my friends. I listen to a report every night from someone who is a professional and doesn't get chased out on every zig and zag. I NEED that discipline.
It MAY happen that we get a big correction, but if we aren't 100% invested (im not by a long shot) it is likely an opportunity. If it rolls over enough to generate some short signals I will post them here.
There were two shorts listed over the last few weeks, with the admonishment that Dave wouldn't suggest going short in an uptrend. He does expect that at some point that will happen...it always does, but so far not yet.
Is it hard to sit and watch days like today? Are you fricking joking me? YES!!!
But around mid-day I was glad I SAT and didn't do anything irrational. Did I want to cut and run? You bet your ass I did. But I didn't.
I have stops designed loose enough for the market to decide, not me. I'm a weak lizard brain.
Example: CAVM (bought at 38.35)was down from the 40.30 close last night (down to 39.46). I was still up, but heck if I wanted to give it back! CAVM closed at 40.49. If I had sold I would have lost $$$.
I lost a little on XL and I lost a little on CYD, but I'm still well above my basis and still well above the stops. As Livermore said, he made most of his big profits sitting. It's Fing hard, but I know if I'm weak, the market won't take it, I'll give it to them.
Look back at the last of October/first part of November. Now compare that to today.
No problemo.
If I get a heads up i'll post it here ASAP.
My bet is this will be seen as a decent pullback for set-ups.
"Make no mistake about it -- the latest stock market rally is a straw house with no foundation."
ReplyDeleteSo I wonder what banks are doing with their proceeds from treasury securities sales, are they loaning it out(risk?) or buying risk?
Obviously the straw house caught fire some time ago, burning the kitchen completely to the foundation (initial reports indicate grease fire on stove) and there's still smoke coming from the attic area, but I'm not quite convinced the foundation was totally destroyed, perhaps portions of it, we just don't know the extent of the damage until after a thorough postmortem is completed?
The last fire was completely papered over once the studs were replaced and dry wall was patched and the painting party began in full force immediately afterward, some would say during, repairs. ;)
CYD - That thing was bumping up against the upper trend line at last night's close after a nice run from a retrace to $30. It has yet to break out to the upside of it's ascending channel in a spectacular way, but what a meaningful channel it is, beautiful rate of rise.
ReplyDeleteJust sayin'....
It's possible they are still re-capitalizing from RE. But why would they lend it if they make basically risk free returns in the current currency juggling scheme?
ReplyDeleteRemember the beginning of 2009 when we were all speculating how the Fed would get out if this and we all agreed they had to be more or less perfect?
Well we are still there. We still don't know if this experiment will work or not. Either it does and we jump from PM's to short bonds, then long bonds, or it doesn't and we stick with PM's and hard assets. As somebody once said, 'we aren't in the room'.
So we have to stick with whatever the banks use. They are the ruling class, so it's unlikely they will commit Seppuku, and if we use their plan, we may live on too. The bastards.
"So I wonder what banks are doing with their proceeds from treasury securities sales, are they loaning it out(risk?) or buying risk?"
ReplyDeleteCP -- the banks don't have any proceeds left over, since whatever money Bernanke gives them they have to spend on buying fresh Treasuries issued by US Treasury. Bernanke is simply monetizing the government debt, that's all.
If you are wondering whether the banks are beginning to lend whatever cash they have accumulated in the past, the answer is possibly, but VERY carefully. Here is a chart that proves it:
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=BUSLOANS&s[1][range]=5yrs
If you want to skip the industrial loans and focus on consumer loans, here is a similar chart:
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=TOTALSL&s[1][range]=5yrs
Those graphs are updated monthly, but the latest daily data shows that the little rebound in consumer spending after QE2 was announced was very short lived:
http://www.consumerindexes.com/index.html
I guess part of my suspicion is banks are buying risk, PM's, commodities and equities are my guess, while throwing in a scare here and there on which to capitalize.
ReplyDeleteI suppose at some point they'll have to sell in order to realize gains but that's probably sometime after the economy regains self-sustenance before these vampires can resume feeding from warm-blood hosts?
Meanwhile it's strictly food delivered from reserves in the blood bank.
What choice do they have, it's not like there's a sister planet somewhere in the universe where they can go feed while the rest of us mere mortals pick up the pieces and resurrect our lively-hoods? Emerging market yes, and we can be sure they're working on that plan as well.
"Bernanke is simply monetizing the government debt, that's all"
ReplyDeleteWell that theory also yields the same result, does it not? I don't see a difference, devaluing the currency is the reality, no?
"the banks don't have any proceeds left over, since whatever money Bernanke gives them they have to spend on buying fresh Treasuries issued by US Treasury."
ReplyDeleteDon't forget about the spread, they're borrowing at 0% interest and collecting considerably more than that somewhere else. In fact, the gain on spread may as well be infinite, for all intensive purposes b/c the amount of currency borrowed could in theory be beyond imagination.
This is why so many people are terrified of the QE plan in the first place, isn't it, trying to comprehend how it can all be unwound without ill effect?
The destroyed value has to come form somewhere and from someone. If it is politically unfeaseable for bankers to take their losses then they are 'socialized'. The only way to socialize the losses, aside from taxation which we know the gutless politicians can't exercise as it's their life blood and they work for the wealthy/ruling class who we know won't pay, then it's via devaluation. So on days like today when regular work-a-day grunts think gold is getting clobbered, the wealthy and the bankers load up. That MUST be the plan. Is there a choice besides hard assets and producers of hard assets? Rare earths indeed.
ReplyDeleteWhoever doesn't or can't participate get's slaughtered by inflation. It has always been so.
"So on days like today when regular work-a-day grunts think gold is getting clobbered, the wealthy and the bankers load up."
ReplyDeleteExactly!
HEK - If this one were a snake, it would've bitten me by now...
ReplyDeleteDBB - Kinda looks like there's a coupla' bucks left in this one that might materialize pretty soon.
ReplyDelete