Offshore Accounts a Risky Business
As reported by Reuters today, some of the rich clients of UBS are rolling over and trying to make good with the U.S tax authorities after the IRS cracked down and had a former UBS banker indicted.
The WSJ characterized it as a sign that the U.S. efforts to battle offshore tax evasion is having some effect.
Whether the tax authorities will ultimately be successful or not, lawyers are the winners so far. The UBS clients are hirin tax attornies and scramblin to cover their collective through the Internal Revenue Service (IRS) voluntary disclosure program which would give them amnesty.
The amnesty program allows U.S. citizens to avoid criminal prosecution if they acknowledge evasion and agree to pay taxes and penalties.
Recently U.S. and Swiss governmental authorities have increased discussions with UBS with the threat of releasing information on the holders of offshore accounts held by U.S. taxpayers.
It's thought that UBS had as many as 20k United States citizens utilizing their private banking services to minimize their taxes.
The IRS is pondering a bulk settlement that would speed up the process for former and current UBS clients to seek amnesty.
The settlement would likely be something like the 2003 landmark offshore credit-card and tax-fraud deal only leveling harsher punishment. The reason may be that the Swiss government could be excluded from any such deal where US citizens voluntarily came forward and gave up their bank secrecy by giving up their own private bank information.
The threshold in Switzerland which defines tax evasion fraud is more narrow than in the United States. As a result, the Swiss will not engage in exchanging account data with foreign authorities unless they can prove tax fraud.
U.S. authorities have requested UBS release information on thousands of offshore accounts at UBS in order to conduct their investigation.
Monday, November 24, 2008
Sunday, November 23, 2008
What Now?
I've been a bit "out of pocket" recently, and haven't posted too much to this blog.
Longer-term, financially I see nothing that dramatically changes my thesis ("we're all doomed!") :)
In the short run, even though we hit new lows last week, we have a TON of people calling for a new "up leg" in the markets that could last 2-4 months (!) -- I'm not totally buying it yet.
Here is how I would recommend playing it:
I would only enter new positions if you're a crazy trader type.
If you've been stuck long in your 401k or whatever, use any bounce as a chance to get more defensive, but give it some weeks to play out and recover what you've been losing.
If you're short, and NOT leveraged you can ride it out, but beware, bear market rallies (times when the stock goes up even though it has been and will continue to go down) can be fast and furious -- being caught short with lots of leverage or an option contract that will expire to fast can be dangerous to your financial health.
Sorry for the macro look here, but i'm expecting to be very busy as i might be relocating here in the next few weeks and have lots of prep work to do -- like figuring out where we're gonna live (!)
UG
Longer-term, financially I see nothing that dramatically changes my thesis ("we're all doomed!") :)
In the short run, even though we hit new lows last week, we have a TON of people calling for a new "up leg" in the markets that could last 2-4 months (!) -- I'm not totally buying it yet.
Here is how I would recommend playing it:
I would only enter new positions if you're a crazy trader type.
If you've been stuck long in your 401k or whatever, use any bounce as a chance to get more defensive, but give it some weeks to play out and recover what you've been losing.
If you're short, and NOT leveraged you can ride it out, but beware, bear market rallies (times when the stock goes up even though it has been and will continue to go down) can be fast and furious -- being caught short with lots of leverage or an option contract that will expire to fast can be dangerous to your financial health.
Sorry for the macro look here, but i'm expecting to be very busy as i might be relocating here in the next few weeks and have lots of prep work to do -- like figuring out where we're gonna live (!)
UG
Thursday, November 20, 2008
Zeitgeist
When you're an expat with spotty slingbox coverage you get some extra time to tune into the "fringe" element on the internet.
I've probably seen every youtube/googlevideo conspiracy nutjob video on the planet -- along with some really good educational stuff.
Well, the last couple of days my slingbox was fritzing again so i was cut off from enjoying my "dancing with the 70's tv stars after extreme makeovers" reruns and i got to watch Zeitgeist.
Zeitgeist (2hrs ish) and the addendum (another 2 hours) is a total and complete tour de force.
If you've seen or read aaron russo, the illegality of the fed and the federal income tax, the nutjob from austin who heckles the bilderburg people, loose change, money as debt, this wraps everything up in a relatively neat ball and serves it up. freakin' brilliant. makes oliver stone look pretty hackish in comparison -- of course there is no joe pesci in this -- so oliver has that going for him.
anyways, the 1st version is here:
http://video.google.com/videoplay?docid=-594683847743189197
and the "addendum" can be found here:
http://video.google.com/videoplay?docid=7065205277695921912
if there are any criticisms i can level it is this:
a little too much crap at the front end of both that might disuade the casual viewer...give each of them 10 minutes to get started (or fast forward if you have to).
and, the second part of the addendum is a little too focused on some group offering the "solution" to all this with some real crack smoke ideas about society without profit motive being enabled by "technology" if we'd just stop manufacturing scarcity where everyone is freed up to do deep thinking and (i guess) nearly all crime melts away as an evil learned behaviour and not something inherent in man. apparently we'll all be living in space agy houses that look vaguely like the sydney opera house as well and scooting around on floating train tracks that i guess were made for the good of man by fellow men with no profit motive and no state intervention (?)
anyways. that aside, the other 3:00 hours is just simply outstanding. there are even some useful nuggets in the last hour although the pie in the skyers were a little short on substantive details to be taken too seriously (by me).
enjoy!
UG
I've probably seen every youtube/googlevideo conspiracy nutjob video on the planet -- along with some really good educational stuff.
Well, the last couple of days my slingbox was fritzing again so i was cut off from enjoying my "dancing with the 70's tv stars after extreme makeovers" reruns and i got to watch Zeitgeist.
Zeitgeist (2hrs ish) and the addendum (another 2 hours) is a total and complete tour de force.
If you've seen or read aaron russo, the illegality of the fed and the federal income tax, the nutjob from austin who heckles the bilderburg people, loose change, money as debt, this wraps everything up in a relatively neat ball and serves it up. freakin' brilliant. makes oliver stone look pretty hackish in comparison -- of course there is no joe pesci in this -- so oliver has that going for him.
anyways, the 1st version is here:
http://video.google.com/videoplay?docid=-594683847743189197
and the "addendum" can be found here:
http://video.google.com/videoplay?docid=7065205277695921912
if there are any criticisms i can level it is this:
a little too much crap at the front end of both that might disuade the casual viewer...give each of them 10 minutes to get started (or fast forward if you have to).
and, the second part of the addendum is a little too focused on some group offering the "solution" to all this with some real crack smoke ideas about society without profit motive being enabled by "technology" if we'd just stop manufacturing scarcity where everyone is freed up to do deep thinking and (i guess) nearly all crime melts away as an evil learned behaviour and not something inherent in man. apparently we'll all be living in space agy houses that look vaguely like the sydney opera house as well and scooting around on floating train tracks that i guess were made for the good of man by fellow men with no profit motive and no state intervention (?)
anyways. that aside, the other 3:00 hours is just simply outstanding. there are even some useful nuggets in the last hour although the pie in the skyers were a little short on substantive details to be taken too seriously (by me).
enjoy!
UG
Saturday, October 25, 2008
U.S. Stocks & A Concerned Populace
I was answering a general question on another board, when vista decided to install an update on my PC and reboot. My blowhard, wordy response was lost. Since it's a general question I see frequently, I'll attempt to recreate my arrogance here on this medium, since blogger has autosave :)
the question (edited slightly):
"Anyone care to share their thoughts on this debacle? I have lost over 40% of my portfolio and need to decide whether I should pull out at the next rally or hang in while things go back up.
In 1929, the stock market fell by more than 80% over 3 years. Is today's market a repeat or will various measures in place stop that from happening again.
Will the emerging economies rescue us from the downward momentum? And can a company lose 80% of its stock and still function? I mean stock value is not an integral part of a company, is it?
I think (please enlighten me if wrong) it is a collective idea of the company's worth which goes up and down according to the collective's sentiment. Therefore, stocks could go down 80% and the companies would still exist but the stocks would be worthless. Is this a fact? What would you do and why? "
three things:
1.) there's a difference between investing and speculating
2.) it's the credit markets not the stock market
3.) a "random walk" -- I'm calling "b.s."
INVESTING VS. SPECULATING
first, there is a difference between investing and speculating.
most people don't like the word "speculator", but if you are buying with the hope of selling later at a higher price (or vica versa) you're speculating.
if you are buying a stock to harvest the dividends (or hoped for divvies) for life you're an investor. ditto with houses -- flipping is speculating and landlording for rent or farming is investing, imo.
the reason that BOTH (and alot of other 'assets' are overvalued is because they only make sense as speculations, not investments. therefore there is no fundamental floor under the price of these items when/as the sh&t hits the proverbial fan.
i have developed a bias against stock speculations primarily because of what i've seen in the corporate world, and money-management world. corporate management was allowed OBSCENE pay and benefits packages due to a large percentage of stock owners being institutions. the money management/pension fund world (with a few notable exceptions) has been very lax (along with government) at rooting fraud, deceiptful practices, and looting of organizations by managments, in concert with boards of directors -- those supposedly tasked with overseeing their behaviours on behalf of the "owners" -- the shareholders.
this charade was allowed to continue -- along with the residential real estate bubble -- and the private equity investment farce -- by really really lax global credit standards and the liquidity that followed. (as we've discussed here and everyone "knows" by now).
A stock can continue to function with it's stock at or near zero. after the IPO, most companies can function without access to the equity markets. many (today) cannot function without access to the credit markets however. a stock price near zero, in most cases, will be a reflection of the company's ability to function -- which at times will be dictated by access to credit. credit market is the dog, equity market is the tail, as Karl Denninger likes to say.
IT's THE CREDIT MARKETS
it's my opinion that the world reached the cusp of "peak debt" -- or max debt.
in other words, we reached the point where the debt overhanding the market was meeting or exceeding the assets' ability to service said debt.
this is/was going on at all levels:
personal
corporate
government
personal: on the personal level, the housing bubble and subsequent deflation is the most obvious example of this. every manner of instrument was developed in an effort to forestall the inevitable, however, in the end, the buyers' ability to service ever increasing mortgages on flat incomes was doomed to fail.
corporate: if you are a speculator, the limits of debt availability to corporations means less m&a activity and probably less levered balance sheets. many many companies have built access to short term, cheap credit into their business models (banks, for instance borrow short and lend long and pocket the difference). lots of other companies, fund the time between getting an order, building it, shipping it, paying salaries (etc) and getting paid on an invoice with short term credit as well. these companies could have problems in the near future (those that aren't already in trouble that is).
government: this is the most disturbing probably. we all know that debt levels in government are insane. but what happened in the last several months is truly disturbing.
as lack of faith (due in large part to lack of transparency in companies' balance sheets) started to seep into the market, the government got into the business of guaranteeing everything.
interbank lending, corporate short term credit, bank deposits, money market funds, insurance companies, etc etc etc.
unfortunately, what this did was create a "vacuum" where people who rely on credit and don't have government guarantees are being starved for money....or having to pay WAY up for it.
why?
well, if you have money to loan, who will you loan it to? well, the place with the highest return for the least risk. so, if you believe that you have a gov guarantee on one class of debt and not the other, you'll migrate to the guaranteed money.
governments, around the world, trying to keep funds from fleeing their country started guaranteeing everything. every other government was forced to follow suit. the problem is, that the sheer volume of debts being backstopped by some of the more marginal countries is beginning to outstrip the governments realistic ability to backstop the debts.
So what's the problem with this?
well, we are running a very high risk of having cascading sovereign debt defaults. if this happens it will only make personal and corporate debt harder to obtain without paying higher premiums.
so, we're effectively living through a deflationary credit unwind -- while the government does everything in its power to reflate -- short of demanding and enforcing truth in balance sheets (including their own) .
A RANDOM WALK
a random walk in prices postulates that stock prices move in a "predictably unpredictable" fashion....brownian motion, where each "tick" in the market is detached from the last tick. in this fantasy world we can plot the probability of price distribution in a classic bell curve.
b.s.
as we've seen, prices are VERY dependent on what has happened in the immediate past. they do NOT follow a standard distribution and trends in motion tend to stay in motion -- in large part because the price move tends to have influences on the very system that is determining the price (reflexivity as soros puts it).
for example, if the price goes down by a lot, people holding that position LONG on margin will be faced with margin calls, exascerbating the downward pressure. same thing can happen in reverse.
IN SUMMARY:
I think (and have thought for some time) there is still a very high risk of an equity market crash.
This may be brought about by sovereign defaults, a 'extraneous event' or a butterfly wing -- there's no telling.
I'm selling any pop I see in this market still.
This strategy, like any followed with religious zealotry and/or too much leverage will occasionally get me killed (like today), so please don't consider this trading advice. This is just my way of *finally* answering her question.
I think it's over when median home values are no more than 3x median acheivable incomes (and no looming local tax crunch), and balance sheets are transparent and believable. and to get to that point means a lot more "delevering/pain" in the pipeline.
Aren't those cheery thoughts :)
UG
the question (edited slightly):
"Anyone care to share their thoughts on this debacle? I have lost over 40% of my portfolio and need to decide whether I should pull out at the next rally or hang in while things go back up.
In 1929, the stock market fell by more than 80% over 3 years. Is today's market a repeat or will various measures in place stop that from happening again.
Will the emerging economies rescue us from the downward momentum? And can a company lose 80% of its stock and still function? I mean stock value is not an integral part of a company, is it?
I think (please enlighten me if wrong) it is a collective idea of the company's worth which goes up and down according to the collective's sentiment. Therefore, stocks could go down 80% and the companies would still exist but the stocks would be worthless. Is this a fact? What would you do and why? "
three things:
1.) there's a difference between investing and speculating
2.) it's the credit markets not the stock market
3.) a "random walk" -- I'm calling "b.s."
INVESTING VS. SPECULATING
first, there is a difference between investing and speculating.
most people don't like the word "speculator", but if you are buying with the hope of selling later at a higher price (or vica versa) you're speculating.
if you are buying a stock to harvest the dividends (or hoped for divvies) for life you're an investor. ditto with houses -- flipping is speculating and landlording for rent or farming is investing, imo.
the reason that BOTH (and alot of other 'assets' are overvalued is because they only make sense as speculations, not investments. therefore there is no fundamental floor under the price of these items when/as the sh&t hits the proverbial fan.
i have developed a bias against stock speculations primarily because of what i've seen in the corporate world, and money-management world. corporate management was allowed OBSCENE pay and benefits packages due to a large percentage of stock owners being institutions. the money management/pension fund world (with a few notable exceptions) has been very lax (along with government) at rooting fraud, deceiptful practices, and looting of organizations by managments, in concert with boards of directors -- those supposedly tasked with overseeing their behaviours on behalf of the "owners" -- the shareholders.
this charade was allowed to continue -- along with the residential real estate bubble -- and the private equity investment farce -- by really really lax global credit standards and the liquidity that followed. (as we've discussed here and everyone "knows" by now).
A stock can continue to function with it's stock at or near zero. after the IPO, most companies can function without access to the equity markets. many (today) cannot function without access to the credit markets however. a stock price near zero, in most cases, will be a reflection of the company's ability to function -- which at times will be dictated by access to credit. credit market is the dog, equity market is the tail, as Karl Denninger likes to say.
IT's THE CREDIT MARKETS
it's my opinion that the world reached the cusp of "peak debt" -- or max debt.
in other words, we reached the point where the debt overhanding the market was meeting or exceeding the assets' ability to service said debt.
this is/was going on at all levels:
personal
corporate
government
personal: on the personal level, the housing bubble and subsequent deflation is the most obvious example of this. every manner of instrument was developed in an effort to forestall the inevitable, however, in the end, the buyers' ability to service ever increasing mortgages on flat incomes was doomed to fail.
corporate: if you are a speculator, the limits of debt availability to corporations means less m&a activity and probably less levered balance sheets. many many companies have built access to short term, cheap credit into their business models (banks, for instance borrow short and lend long and pocket the difference). lots of other companies, fund the time between getting an order, building it, shipping it, paying salaries (etc) and getting paid on an invoice with short term credit as well. these companies could have problems in the near future (those that aren't already in trouble that is).
government: this is the most disturbing probably. we all know that debt levels in government are insane. but what happened in the last several months is truly disturbing.
as lack of faith (due in large part to lack of transparency in companies' balance sheets) started to seep into the market, the government got into the business of guaranteeing everything.
interbank lending, corporate short term credit, bank deposits, money market funds, insurance companies, etc etc etc.
unfortunately, what this did was create a "vacuum" where people who rely on credit and don't have government guarantees are being starved for money....or having to pay WAY up for it.
why?
well, if you have money to loan, who will you loan it to? well, the place with the highest return for the least risk. so, if you believe that you have a gov guarantee on one class of debt and not the other, you'll migrate to the guaranteed money.
governments, around the world, trying to keep funds from fleeing their country started guaranteeing everything. every other government was forced to follow suit. the problem is, that the sheer volume of debts being backstopped by some of the more marginal countries is beginning to outstrip the governments realistic ability to backstop the debts.
So what's the problem with this?
well, we are running a very high risk of having cascading sovereign debt defaults. if this happens it will only make personal and corporate debt harder to obtain without paying higher premiums.
so, we're effectively living through a deflationary credit unwind -- while the government does everything in its power to reflate -- short of demanding and enforcing truth in balance sheets (including their own) .
A RANDOM WALK
a random walk in prices postulates that stock prices move in a "predictably unpredictable" fashion....brownian motion, where each "tick" in the market is detached from the last tick. in this fantasy world we can plot the probability of price distribution in a classic bell curve.
b.s.
as we've seen, prices are VERY dependent on what has happened in the immediate past. they do NOT follow a standard distribution and trends in motion tend to stay in motion -- in large part because the price move tends to have influences on the very system that is determining the price (reflexivity as soros puts it).
for example, if the price goes down by a lot, people holding that position LONG on margin will be faced with margin calls, exascerbating the downward pressure. same thing can happen in reverse.
IN SUMMARY:
I think (and have thought for some time) there is still a very high risk of an equity market crash.
This may be brought about by sovereign defaults, a 'extraneous event' or a butterfly wing -- there's no telling.
I'm selling any pop I see in this market still.
This strategy, like any followed with religious zealotry and/or too much leverage will occasionally get me killed (like today), so please don't consider this trading advice. This is just my way of *finally* answering her question.
I think it's over when median home values are no more than 3x median acheivable incomes (and no looming local tax crunch), and balance sheets are transparent and believable. and to get to that point means a lot more "delevering/pain" in the pipeline.
Aren't those cheery thoughts :)
UG
Tuesday, October 14, 2008
Silly Rabbit....
...Trix are for kids....and people who want their poop to turn green :)
Being one that occasionally reviews his fecal matter, I noticed a disturbing correlation between eating Trix cereal and disturbingly green poop.
It doesn't quite turn "fubarrio.com" green, more an army olive drab...but definately GREEN. spooky.
Being entrenched in the processes or rigorous science, however, I was not too quick to attach causation to a phenomenon in which we could only apply correlation.
But what to do? I couldn't very well clone myself to create a "control group" -- even if I could get past the minor technological speed bump or two in order to create my clone, I would probably need TWO clones, and then I'd need to wait 39 years for them to reach my age.
Ignoring of course that their medical histories would be nearly impossible to keep consistent with mine growing up -- and dietarily, where could I even *find* "Tab" anymore? Not to mention, the cancer-scare red m&ms...
...Even if it were possible to create and cultivate two identical clones for my experiment, it was clear that a clone of me, raised on my diet, wouldn't stand for being in the control group. Trying to restrain a "me" from those awful, oversugared, puffed corn nuggets, dyed in colors not found anywhere else in nature -- well the "control clone" would obviously revolt.
The clone deprived of Trix would obviously need to be restrained after throwing a cereal bowl filled soggy ass flakes filled with "Total", or some equally atrocious "healthy"(er) alternative, through the one-way observation glass of the experiment room.
No, there was just no way to feasibly pull off this experiment.
Then, I had a BREAKTHROUGH!
The INTERNET!
Everyone knows that everything on the Internet is true. So, I immediately waddled over to my computer and typed in "Trix Green Poop", and the good folks at www.PoopReport.com (I'm not making this up) were kind enough to answer my question (although in this particular study, he is consuming kool-aid):
"The dye used in purplesaurus Rex is FDA Blue #5, and dye-lake red. Turns out that when metabolized in sufficient quantity, the blue dye combines with bile, and forms a brilliant green. "
OK...in this story he goes on to describe his use of the scientific method -- then in one of the comments someone reports the same thing when their daughter eats the TRIX yogurt :)...another one from fruity pebbles, etc.
you can check out the "science" behind this and the "anecdotal" evidence mounting from commenters. :)
http://www.poopreport.com/Intellectual/Content/Dye/dye.html?from=420&comments_per_page=140
UG
Being one that occasionally reviews his fecal matter, I noticed a disturbing correlation between eating Trix cereal and disturbingly green poop.
It doesn't quite turn "fubarrio.com" green, more an army olive drab...but definately GREEN. spooky.
Being entrenched in the processes or rigorous science, however, I was not too quick to attach causation to a phenomenon in which we could only apply correlation.
But what to do? I couldn't very well clone myself to create a "control group" -- even if I could get past the minor technological speed bump or two in order to create my clone, I would probably need TWO clones, and then I'd need to wait 39 years for them to reach my age.
Ignoring of course that their medical histories would be nearly impossible to keep consistent with mine growing up -- and dietarily, where could I even *find* "Tab" anymore? Not to mention, the cancer-scare red m&ms...
...Even if it were possible to create and cultivate two identical clones for my experiment, it was clear that a clone of me, raised on my diet, wouldn't stand for being in the control group. Trying to restrain a "me" from those awful, oversugared, puffed corn nuggets, dyed in colors not found anywhere else in nature -- well the "control clone" would obviously revolt.
The clone deprived of Trix would obviously need to be restrained after throwing a cereal bowl filled soggy ass flakes filled with "Total", or some equally atrocious "healthy"(er) alternative, through the one-way observation glass of the experiment room.
No, there was just no way to feasibly pull off this experiment.
Then, I had a BREAKTHROUGH!
The INTERNET!
Everyone knows that everything on the Internet is true. So, I immediately waddled over to my computer and typed in "Trix Green Poop", and the good folks at www.PoopReport.com (I'm not making this up) were kind enough to answer my question (although in this particular study, he is consuming kool-aid):
"The dye used in purplesaurus Rex is FDA Blue #5, and dye-lake red. Turns out that when metabolized in sufficient quantity, the blue dye combines with bile, and forms a brilliant green. "
OK...in this story he goes on to describe his use of the scientific method -- then in one of the comments someone reports the same thing when their daughter eats the TRIX yogurt :)...another one from fruity pebbles, etc.
you can check out the "science" behind this and the "anecdotal" evidence mounting from commenters. :)
http://www.poopreport.com/Intellectual/Content/Dye/dye.html?from=420&comments_per_page=140
UG
Monday, October 13, 2008
Markets SURGE -- Caution is Still Warranted
The numbers are staggering...
biggest move in the up in the dow since 1932, s&p moved up over 10%, etc etc etc.
On Sunday I said, "i do believe we see *some* firming of prices over the next little while."
hahahahha...yeah, i guess that was "some". No, I didn't turn into a British gentleman over the weekend, with a mastery of "understatement". The speed of the advance was just further and faster than even I imagined.
In fact, the s&p met and exceeded my interim technical target of 1000 in one day.
the original idea, put forward by elliot wave theorists was that we're moving into a quick "up, down, up" corrective move on the markets. So, what I'm saying is that we'll see a move up in prices, a small rest then another move up...
The original idea was that this entire 3 wave corrective move would take *at least* a week to complete, but the speed of ascent has been pretty breath-taking so far...if this were to continue at this pace (it won't) we'd be threatening our declining trendlines before options expiration at the end of this week.
So what should you do?
If you can't use futures, can't hedge with options, or set stop losses and you are already out of the market, you should probably stay out. yes, you will miss some gains, but the potential for things to get ugly again fast is very very real.
If you are in stocks and have been holding for quite some time, you could possibly use this 3 wave up movement as a selling opportunity.
Why do I say this? Are you supposed to buy once the market starts moving in your direction?
Yes, but only when it's moving along your primary trend. If your investing horizon is the next few years, and you feel overleveraged to stock price movements, the next few days or short weeks could be your last chance to get out whole.
I will doing my utter best to not hold ANY positions overnight that I can't afford a 50% haircut on....this can be challenging in some securities and accounts, but just beware there is still a risk of a MAJOR bond market dislocation, and governments guaranteeing bank transactions that in some cases (in the EU mostly) dwarf the size of their national economies is a recipe for disaster.
it is like tying an anvil around your waist as you attempt to tread water and wait for the tide to come back....
if we start seeing some more major credit defaults of sovereign debt these "guarantees" are going to come under suspicion -- and then what? TEOTWAKI.
On the bright side, it may be our last best chance to get rid of the FED. :)
UG
biggest move in the up in the dow since 1932, s&p moved up over 10%, etc etc etc.
On Sunday I said, "i do believe we see *some* firming of prices over the next little while."
hahahahha...yeah, i guess that was "some". No, I didn't turn into a British gentleman over the weekend, with a mastery of "understatement". The speed of the advance was just further and faster than even I imagined.
In fact, the s&p met and exceeded my interim technical target of 1000 in one day.
the original idea, put forward by elliot wave theorists was that we're moving into a quick "up, down, up" corrective move on the markets. So, what I'm saying is that we'll see a move up in prices, a small rest then another move up...
The original idea was that this entire 3 wave corrective move would take *at least* a week to complete, but the speed of ascent has been pretty breath-taking so far...if this were to continue at this pace (it won't) we'd be threatening our declining trendlines before options expiration at the end of this week.
So what should you do?
If you can't use futures, can't hedge with options, or set stop losses and you are already out of the market, you should probably stay out. yes, you will miss some gains, but the potential for things to get ugly again fast is very very real.
If you are in stocks and have been holding for quite some time, you could possibly use this 3 wave up movement as a selling opportunity.
Why do I say this? Are you supposed to buy once the market starts moving in your direction?
Yes, but only when it's moving along your primary trend. If your investing horizon is the next few years, and you feel overleveraged to stock price movements, the next few days or short weeks could be your last chance to get out whole.
I will doing my utter best to not hold ANY positions overnight that I can't afford a 50% haircut on....this can be challenging in some securities and accounts, but just beware there is still a risk of a MAJOR bond market dislocation, and governments guaranteeing bank transactions that in some cases (in the EU mostly) dwarf the size of their national economies is a recipe for disaster.
it is like tying an anvil around your waist as you attempt to tread water and wait for the tide to come back....
if we start seeing some more major credit defaults of sovereign debt these "guarantees" are going to come under suspicion -- and then what? TEOTWAKI.
On the bright side, it may be our last best chance to get rid of the FED. :)
UG
Sunday, October 12, 2008
The Russian Online Casino Scam and Bank Guarantees
This post is going to be a little bit about the proposed government guarantees for deposits, interbank lending, commercial paper and mortgages.
Beyond the risk of encouraging carelessness on the part of the bankers, there is a gaping hole forming for the a truckload of fraud coming your way....which is appropriate i guess....in every postapocalypitc mad-max-type movie, you need an evil sadistic criminal overlord of some kind controlling the assets that would let people live better lives. i guess this would explain how the criminals get so loaded on the way towards armageddon. :)
But first, a story.
I was talking to a friend of mine I used to be in the online casino business with about credit card processing -- a thorn in the side of the offshore, online casino operators since 2000.
He said that a lot of credit card processors were "once bitten twice shy" because of shady operators in the recent past. I asked him what he meant, and he said, "Russians" -- I'm sure other nationalities had figured this out as well, but he made it sound like there was some degree of organized crime involved in this scam.....at first, i thought it was the players he was talking about, but as i came to find out it was actually the casinos themselves.
Here is how the simple scam works:
You set up a gambling house, and "customers" come in and buy virtual chips and gamble in your casino. Some win, some lose....you pay out to the winners and the losers are out of luck.
After about 6 months of growing the business, the casino suddenly folds up shop and disappears into the night -- miraculously, the processor is still holding a bunch of the casino's winnings -- to make good on a reasonable amount of chargebacks and fraud, etc. that usually comes in with any online enterprise -- especially casinos.
The holdback rates (typically 8-10%) and rolling reserve, which often takes as much as 6 months to completely liquidate back to the casino from the processor is usually plenty -- Unless the casino was purposely processing fraudulent cards -- duh.
After the casino disappears into the night, the chargebacks (from the losing players) start rolling in, in extraordinary numbers, and the processor is left holding the bag with a rolling reserve not adequate to payout the chargebacks.
The defaulting customer and institution were obviously "in on the scam" together and stuck it to the processor.
Now, imagine that you are of the criminal mindset and you've just been told the US, UK and EU govts are basically guaranteeing payments on pretty much anything and everything.
Do you suppose that you might be creating a "moral hazard"? Do you suppose that you're leaving the proverbial keys in the ignition of a brand new mazarati, top down, on a street where the local inhabitants have very little to lose and little compunction about swiping your auto?
How will the markets take this news? Quite probably, they will view these events as positive in the short term for equities prices. If you've been stuck in a losing retirement portfolio use the run-up to get ready to sell. I don't believe we've seen the bottom of this bear market yet, unfortunately --- however, i do believe we see *some* firming of prices over the next little while.
enjoy your sh&t sandwiches taxpayers!
Beyond the risk of encouraging carelessness on the part of the bankers, there is a gaping hole forming for the a truckload of fraud coming your way....which is appropriate i guess....in every postapocalypitc mad-max-type movie, you need an evil sadistic criminal overlord of some kind controlling the assets that would let people live better lives. i guess this would explain how the criminals get so loaded on the way towards armageddon. :)
But first, a story.
I was talking to a friend of mine I used to be in the online casino business with about credit card processing -- a thorn in the side of the offshore, online casino operators since 2000.
He said that a lot of credit card processors were "once bitten twice shy" because of shady operators in the recent past. I asked him what he meant, and he said, "Russians" -- I'm sure other nationalities had figured this out as well, but he made it sound like there was some degree of organized crime involved in this scam.....at first, i thought it was the players he was talking about, but as i came to find out it was actually the casinos themselves.
Here is how the simple scam works:
You set up a gambling house, and "customers" come in and buy virtual chips and gamble in your casino. Some win, some lose....you pay out to the winners and the losers are out of luck.
After about 6 months of growing the business, the casino suddenly folds up shop and disappears into the night -- miraculously, the processor is still holding a bunch of the casino's winnings -- to make good on a reasonable amount of chargebacks and fraud, etc. that usually comes in with any online enterprise -- especially casinos.
The holdback rates (typically 8-10%) and rolling reserve, which often takes as much as 6 months to completely liquidate back to the casino from the processor is usually plenty -- Unless the casino was purposely processing fraudulent cards -- duh.
After the casino disappears into the night, the chargebacks (from the losing players) start rolling in, in extraordinary numbers, and the processor is left holding the bag with a rolling reserve not adequate to payout the chargebacks.
The defaulting customer and institution were obviously "in on the scam" together and stuck it to the processor.
Now, imagine that you are of the criminal mindset and you've just been told the US, UK and EU govts are basically guaranteeing payments on pretty much anything and everything.
Do you suppose that you might be creating a "moral hazard"? Do you suppose that you're leaving the proverbial keys in the ignition of a brand new mazarati, top down, on a street where the local inhabitants have very little to lose and little compunction about swiping your auto?
How will the markets take this news? Quite probably, they will view these events as positive in the short term for equities prices. If you've been stuck in a losing retirement portfolio use the run-up to get ready to sell. I don't believe we've seen the bottom of this bear market yet, unfortunately --- however, i do believe we see *some* firming of prices over the next little while.
enjoy your sh&t sandwiches taxpayers!
Thursday, October 09, 2008
Do I Have Your Attention Yet?
In case you're one of those that just doesn't open your 401k statement when stocks are selling off, newsflash:
Government Intervention into Markets Doesn't F'ing Work
and, to be quite honest that is about the only thing that can be predicted when you the govt starts meddling in systems that are far too complex and interrelated to truly understand.
They banned (BANNED!) short selling cause that's what was causing this.
They promised to save our financial system if we'd only give them 850B dollars.
They've pumped perhaps over 1T into the system by 'backdoor' methods
They've had a coordinate multi-country 1/2 point rate cut
Guess what? We have literally *crashed* on all indices since then, and some very very disturbing things are starting to crop up in the debt markets.
Short term? I'm out of the markets 'cause we hit my intermediate downside target of 975 on the S&P and found a bid there (finally).
Technicians are calling for a relief rally. Bond market watchers are still VERY nervous we could get a continuing dislocation in us gov treasuries. I can't handicap it, so until i can, i'm pushin back my chair and cashing out for the moment.
btw, the "short ban" on financials is being lifted tomorrow....these stocks TANKED without shorts to offer bids in a falling market -- just as i said they would and counter to popular belief...in keeping with that theme i wouldn't be shocked to see the day they reinstitute short selling to have a counter intuitive green day....maybe even a return to normalcy where people can actually hedge their bets without paying through the nose for puts. what a concept!
it's time to stop believing that these fools in government:
1.) know what they are doing
2.) don't have huge conflicts of interest
3.) are protecting YOUR best interests
ciao,
UG
Government Intervention into Markets Doesn't F'ing Work
and, to be quite honest that is about the only thing that can be predicted when you the govt starts meddling in systems that are far too complex and interrelated to truly understand.
They banned (BANNED!) short selling cause that's what was causing this.
They promised to save our financial system if we'd only give them 850B dollars.
They've pumped perhaps over 1T into the system by 'backdoor' methods
They've had a coordinate multi-country 1/2 point rate cut
Guess what? We have literally *crashed* on all indices since then, and some very very disturbing things are starting to crop up in the debt markets.
Short term? I'm out of the markets 'cause we hit my intermediate downside target of 975 on the S&P and found a bid there (finally).
Technicians are calling for a relief rally. Bond market watchers are still VERY nervous we could get a continuing dislocation in us gov treasuries. I can't handicap it, so until i can, i'm pushin back my chair and cashing out for the moment.
btw, the "short ban" on financials is being lifted tomorrow....these stocks TANKED without shorts to offer bids in a falling market -- just as i said they would and counter to popular belief...in keeping with that theme i wouldn't be shocked to see the day they reinstitute short selling to have a counter intuitive green day....maybe even a return to normalcy where people can actually hedge their bets without paying through the nose for puts. what a concept!
it's time to stop believing that these fools in government:
1.) know what they are doing
2.) don't have huge conflicts of interest
3.) are protecting YOUR best interests
ciao,
UG
Wednesday, October 08, 2008
.50 point coordinated rate cut announced
Gosh, and they did it before market opened too....
This whole game would be alot more fun if it wasn't so predictable, huh?
The "problem" is these fools already made shorting almost everything illegal -- so they won't even be able to engineer a short squeeze out of this...s&p futures hopped up to 1040 in the first minute of the release -- a huge jump.
Now I'm looking to put my shorts back on :)
the "suprise" announcement is here:
For release at 7:00 a.m. EDT Joint Statement by Central Banks Throughout the current financial crisis, central banks have engaged in continuous close consultation and have cooperated in unprecedented joint actions such as the provision of liquidity to reduce strains in financial markets. Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices. Inflation expectations are diminishing and remain anchored to price stability. The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability. Some easing of global monetary conditions is therefore warranted. Accordingly, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, Sveriges Riksbank, and the Swiss National Bank are today announcing reductions in policy interest rates. The Bank of Japan expresses its strong support of these policy actions.Federal Reserve ActionsThe Federal Open Market Committee has decided to lower its target for the federal funds rate 50 basis points to 1-1/2 percent. The Committee took this action in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures. Incoming economic data suggest that the pace of economic activity has slowed markedly in recent months. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit. Inflation has been high, but the Committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability. Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 1-3/4 percent. In taking this action, the Board approved the request submitted by the Board of Directors of the Federal Reserve Bank of Boston.
UG
This whole game would be alot more fun if it wasn't so predictable, huh?
The "problem" is these fools already made shorting almost everything illegal -- so they won't even be able to engineer a short squeeze out of this...s&p futures hopped up to 1040 in the first minute of the release -- a huge jump.
Now I'm looking to put my shorts back on :)
the "suprise" announcement is here:
For release at 7:00 a.m. EDT Joint Statement by Central Banks Throughout the current financial crisis, central banks have engaged in continuous close consultation and have cooperated in unprecedented joint actions such as the provision of liquidity to reduce strains in financial markets. Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices. Inflation expectations are diminishing and remain anchored to price stability. The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability. Some easing of global monetary conditions is therefore warranted. Accordingly, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, Sveriges Riksbank, and the Swiss National Bank are today announcing reductions in policy interest rates. The Bank of Japan expresses its strong support of these policy actions.Federal Reserve ActionsThe Federal Open Market Committee has decided to lower its target for the federal funds rate 50 basis points to 1-1/2 percent. The Committee took this action in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures. Incoming economic data suggest that the pace of economic activity has slowed markedly in recent months. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit. Inflation has been high, but the Committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability. Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 1-3/4 percent. In taking this action, the Board approved the request submitted by the Board of Directors of the Federal Reserve Bank of Boston.
UG
Seeking Safety in the Storm
My feeling is that you could see a short term technical bounce in the markets tomorrow.
I'll pulled 2/3's of my shorts yesterday.
Still looking for intermediate term support at 975 s&p and if we see it and any the downward pressure relieves at all may be tempted to pull the last 1/3.(that's only about 2.5% down from right here)
In short, it's dangerous times. The rate cut I thought they might try didn't happen. Instead they've flooded the market with liquidity via other means....and so far it didn't work. There is tons of government intervention and changing of the rules of the game (in the middle of said game), so ......Big swings in either direction can happen right here, and if you're bothered by that, decrease your exposure/leverage.
Don't consider this trading advice. I'm not qualified to give it. yadi-yada.
Stay Safe,
UG
I'll pulled 2/3's of my shorts yesterday.
Still looking for intermediate term support at 975 s&p and if we see it and any the downward pressure relieves at all may be tempted to pull the last 1/3.(that's only about 2.5% down from right here)
In short, it's dangerous times. The rate cut I thought they might try didn't happen. Instead they've flooded the market with liquidity via other means....and so far it didn't work. There is tons of government intervention and changing of the rules of the game (in the middle of said game), so ......Big swings in either direction can happen right here, and if you're bothered by that, decrease your exposure/leverage.
Don't consider this trading advice. I'm not qualified to give it. yadi-yada.
Stay Safe,
UG
Monday, October 06, 2008
Rate Cut Warning
be advised, the tin-foilers among us think that things are shaping up for a potential "suprise" inter-meeting rate cut....i'm not entirely sure it will help however.
stay tuned.
UG
stay tuned.
UG
Saturday, October 04, 2008
What's On Your Mind?
This is part one of what will probably be a multi-part series regarding what's on my tiny cadre of readers minds.
Every now and again I check out google analytics' stats to see how people stumble on this site -- usually after getting reader emails or commentary that don't know the first thing about Uruguay. I'm curious how someone would find this site since I don't actively promote it.
Here is a list of some things that have been on your mind in the last few days:
Offshore Account in Uruguay
funny how a crisis tends to sharpen the mind huh? well, this one kind of makes sense...i do write about offshore occasionally, and sometimes I even write about Uruguay :) another popular one along that same vein is: bank account in uruguay -- of course this brings up an article where i skewer BROU -- maybe this will disuade a few folks!
Let's see what else our avid readership is searching for on this site:
Ocular Penetration, and in particular the Ocular pentration restriction act
who said this site wasn't informative, huh? I'm not the first person to blog about this, and i don't even show up on the first page of google for this...who is going to the second page, frustrated they didn't get enough ocular penetration information in the first 15 links? who knows?
In addition, one that is rising in the ranks fast:
Depression
Oops I guess the sheeple are waking up. I guess it's never too late, right? (wrong). Better late than never though. This is accompanied by lots of variations like: Depression inflation or deflation, and "Depression Deflation", and the ever popular depression vs. deflation
In addition to all the doom and gloomer stuff on my site I also spice it up with some levity with me as the butt of most jokes. In one I concede and claim the title as the worlds worst forex trader and relate some stories of woe
Midnight Forex
As it turns out, people are arriving at my site after searching on midnight forex. Bizarre I thought, so i went and looked in google and apparently there is a site of that name -- and i rank as number one above him. Even more bizarre. His site must be relatively new.
Uruguay
And of course, there are always a few people interested in my country of residence, Uruguay. This is usually expressed as Uruguay Blogs, cost of living uruguay, cost of living montevideo, or uruguay real estate.
Trading terms
Of all the trading crap I've written about probably the most popular reoccuring search that brings visitors to the site (outside of price of gold, inflation, deflation etc.) is the inverted cup and handle, aka reverse cup and handle or cup with handle..what i found funny is that there is actually a guy with a website called invertedcupwithhandle.com :) how much more can you say about it that i said in my posts (?) oh well.
And then there's these...
And then, there are things that I happen to title a post as just because I thought it was cute, or referenced some genx pop-culture. like Eddie Murphy's Grandma from his "it's cold....what time is it?" routine....and barber barber shave a pig...probably by some poor preschool teacher researching nursery rhymes, only to be assaulted with my random musings on the precious metals markets in 2006.
Florianopolis Women
In addition there seems to be an incredible demand for "information" on Florianopolis Women -- because I say almost nothing about them in a random post on our trip to Floria last year and I still get tons of searches landing on my site looking for pictures of brazilian women no doubt. sorry to disappoint.
And Last but not Least
and of course, there is the occasional search for fubarrio or fu barrio -- which suprisingly enough manages to find me. ;) Who'd of figured that a blind bald failed trader dog would become more popular in death than in life?
ciao,
UruguayGuy
Every now and again I check out google analytics' stats to see how people stumble on this site -- usually after getting reader emails or commentary that don't know the first thing about Uruguay. I'm curious how someone would find this site since I don't actively promote it.
Here is a list of some things that have been on your mind in the last few days:
Offshore Account in Uruguay
funny how a crisis tends to sharpen the mind huh? well, this one kind of makes sense...i do write about offshore occasionally, and sometimes I even write about Uruguay :) another popular one along that same vein is: bank account in uruguay -- of course this brings up an article where i skewer BROU -- maybe this will disuade a few folks!
Let's see what else our avid readership is searching for on this site:
Ocular Penetration, and in particular the Ocular pentration restriction act
who said this site wasn't informative, huh? I'm not the first person to blog about this, and i don't even show up on the first page of google for this...who is going to the second page, frustrated they didn't get enough ocular penetration information in the first 15 links? who knows?
In addition, one that is rising in the ranks fast:
Depression
Oops I guess the sheeple are waking up. I guess it's never too late, right? (wrong). Better late than never though. This is accompanied by lots of variations like: Depression inflation or deflation, and "Depression Deflation", and the ever popular depression vs. deflation
In addition to all the doom and gloomer stuff on my site I also spice it up with some levity with me as the butt of most jokes. In one I concede and claim the title as the worlds worst forex trader and relate some stories of woe
Midnight Forex
As it turns out, people are arriving at my site after searching on midnight forex. Bizarre I thought, so i went and looked in google and apparently there is a site of that name -- and i rank as number one above him. Even more bizarre. His site must be relatively new.
Uruguay
And of course, there are always a few people interested in my country of residence, Uruguay. This is usually expressed as Uruguay Blogs, cost of living uruguay, cost of living montevideo, or uruguay real estate.
Trading terms
Of all the trading crap I've written about probably the most popular reoccuring search that brings visitors to the site (outside of price of gold, inflation, deflation etc.) is the inverted cup and handle, aka reverse cup and handle or cup with handle..what i found funny is that there is actually a guy with a website called invertedcupwithhandle.com :) how much more can you say about it that i said in my posts (?) oh well.
And then there's these...
And then, there are things that I happen to title a post as just because I thought it was cute, or referenced some genx pop-culture. like Eddie Murphy's Grandma from his "it's cold....what time is it?" routine....and barber barber shave a pig...probably by some poor preschool teacher researching nursery rhymes, only to be assaulted with my random musings on the precious metals markets in 2006.
Florianopolis Women
In addition there seems to be an incredible demand for "information" on Florianopolis Women -- because I say almost nothing about them in a random post on our trip to Floria last year and I still get tons of searches landing on my site looking for pictures of brazilian women no doubt. sorry to disappoint.
And Last but not Least
and of course, there is the occasional search for fubarrio or fu barrio -- which suprisingly enough manages to find me. ;) Who'd of figured that a blind bald failed trader dog would become more popular in death than in life?
ciao,
UruguayGuy
Wednesday, October 01, 2008
Tuesday, September 30, 2008
End of Day Market Analysis Sep 30, 2008
OK. Yesterday I said that I thought after the stunning decline that we could see a positive day in the broad US equities markets.
I was right. We were up somewhere in the vicinity of 4-5% depending on what market you were looking at.
So, where do we go from here? Good question. While yesterday it "just seemed ripe" for a rebound, today I have to give credit to "Genesis" at tickerforum.org for pointing this out.
Here is what he pointed out, and I'm also seeing setting up technically - by "technically" that means that i'm just looking at price and volume action and ignoring all the "news items" and fundamental factors because:
1.) i don't have time to parse and sort them
2.) i don't believe them anyways since they are all filtered through entities with ulterior motives (i know that sounds tin-foily, but trust me, when you are a trader you can hear the bias in the voices of the news anchors and their comments really really easily -- especially if your trade happens to be on the other side of their bias)
First an Introduction to Elliott Waves.
You could hold my knowledge of Elliott wave in a thimble. My understanding is about as deep as a parking lot puddle. But i'm going to tell you what i think i know nonetheless. :)
The basic idea (i think) is based on fibonacci mathematics, the symmetry (and ubiquity) of the spiral in nature and the mathmatical ratios that it produces.
In that theory it predicts that the market will move in "waves"
To make a long story short, 5 waves in the direction of a main move, and 3 wave "retracements"
In what length? (you might ask)
where this is where it gets tricky. In any length, basically. Like the spiral in nature, the theory is that the math is fractal in nature -- meaning you'll see the same pattern at any degree of "zoom" that you care to look at the markets.
What's this Have to Do with the Markets Today?
Click on and zoom in on the following image. This is the ES (s&p futures) since Sunday night. Each bar represents 1/2 hour of trading.
I tried to label these to make it clearer but i'm a doofus with my charting package so squint and maybe you can make out 1,2,3,4,5 and also a 1A, 2B, and 3B at the minor turns this candlestick chart shows.
Coming off the top as futures opened on Sunday night, you can see that the market did wave 1 (down), wave 2 (up) before the announcement that the bailout bill would not pass. After the bill failed, we saw wave 3 (down) , wave 4 (sideways), and wave 5 down before the closing bell.
Happy Trading,
Uruguay Guy
I was right. We were up somewhere in the vicinity of 4-5% depending on what market you were looking at.
So, where do we go from here? Good question. While yesterday it "just seemed ripe" for a rebound, today I have to give credit to "Genesis" at tickerforum.org for pointing this out.
Here is what he pointed out, and I'm also seeing setting up technically - by "technically" that means that i'm just looking at price and volume action and ignoring all the "news items" and fundamental factors because:
1.) i don't have time to parse and sort them
2.) i don't believe them anyways since they are all filtered through entities with ulterior motives (i know that sounds tin-foily, but trust me, when you are a trader you can hear the bias in the voices of the news anchors and their comments really really easily -- especially if your trade happens to be on the other side of their bias)
First an Introduction to Elliott Waves.
You could hold my knowledge of Elliott wave in a thimble. My understanding is about as deep as a parking lot puddle. But i'm going to tell you what i think i know nonetheless. :)
The basic idea (i think) is based on fibonacci mathematics, the symmetry (and ubiquity) of the spiral in nature and the mathmatical ratios that it produces.
In that theory it predicts that the market will move in "waves"
To make a long story short, 5 waves in the direction of a main move, and 3 wave "retracements"
In what length? (you might ask)
where this is where it gets tricky. In any length, basically. Like the spiral in nature, the theory is that the math is fractal in nature -- meaning you'll see the same pattern at any degree of "zoom" that you care to look at the markets.
What's this Have to Do with the Markets Today?
Click on and zoom in on the following image. This is the ES (s&p futures) since Sunday night. Each bar represents 1/2 hour of trading.
I tried to label these to make it clearer but i'm a doofus with my charting package so squint and maybe you can make out 1,2,3,4,5 and also a 1A, 2B, and 3B at the minor turns this candlestick chart shows.
Coming off the top as futures opened on Sunday night, you can see that the market did wave 1 (down), wave 2 (up) before the announcement that the bailout bill would not pass. After the bill failed, we saw wave 3 (down) , wave 4 (sideways), and wave 5 down before the closing bell.
Click on the image above to get a better view.
Now, overnight, the troops rallied, floated some rumors, started working on a new bill, announced possible accounting changes (cuz we really need more lies and leverage- NOT) and got the president to speak.
From Monday's close on you can see wave 1A (up), 2B (down) and wave 3C (up).
Now, remember what i said about Elliott Wave -- 5 waves in direction of movement and 3 in retraces.
But what about direction changes?
ah...that's the problem....until this resolves to either go ABOVE 1179'ish or below 1154'ish with conviction (with volume during trading hours) we won't know for sure if the three wave retracement is over and time for another big leg down
OR
there is one more (5th wave) up.
So, what to do?
Notice that these breakout price points are also the predicted fibonacci retrace numbers of 38.2 and 61.8%--amd further notice we closed out the day almost dead on a 50% retrace of yesterday's move.
A reasonable trade is to go short or long at a break through of those points and to set a stop a point or so under it in case you're wrong.
At times this doesn't work and you get whipsawed, but right now the S&P market is "counting" from an elliott perspective pretty well it would seem....even with all the news/"event risk" out there.Happy Trading,
Uruguay Guy
Minor Market Meltdown
There was some fear and loathing in the markets yesterday (it's now after midnight in uruguay).
Unfortunately, there is so much more to write about this than I can possibly do at this juncture.
Suffice to say, today's action in the equity markets will undoubtedly get the headlines. The real tells are in the credit and foreign exchange markets however.
In a day riddled with financial news that on any other day would have been "stories of the year", they threw a fast-ball by you (high and tight).
I've taken the liberty of copying it from Bloomberg below.
My take on the markets tomorrow -- who knows -- I think that the powers that be would like to see some more tankage to stoke the fear while the house is off and turn up the heat on them getting a deal (any deal) done.
HOWEVER, if we get as low as 1070 on the s&p (we were down about 95 points to 1115-ish today) there is huge technical support there for now. I know this sounds crazy, but right now i'm expecting a dead cat bounce tomorrow and possible close above yesterday's -- not playing heavily either way.
from Bloomberg -- this creates artificial demand for dollars, btw...keeping commodities priced in dollars low and the dollar itself high. when this trade unravels....look out.
Sept. 29 (Bloomberg) -- The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression. The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide.
The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities. The Fed's expansion of liquidity, the biggest since credit markets seized up last year, came hours before the U.S. House of Representatives rejected a $700 billion bailout for the financial industry.
The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone. ``Today's blast of term liquidity will settle the funding markets down, and allow trust to slowly be restored between borrowers and lenders,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. On the other hand, ``the Fed's balance sheet is about to explode.'' The MSCI World Index of stocks in 23 developed markets sank 6 percent, the most since its creation in 1970.
Credit markets deteriorated further as authorities tried to save more financial institutions from collapse. European Rescue European governments have rescued four banks in two days and the Federal Deposit Insurance Corp. said today it helped Citigroup Inc. buy the banking operations of Wachovia Corp. after its shares collapsed. The Standard & Poor's 500 Index fell 3.8 percent and the cost of borrowing dollars for three months rose to the highest since January. The rate for euros hit a record.
``If people think the authorities may give in to fears, they are wrong,'' Financial Stability Forum Chairman Mario Draghi said today in Amsterdam, where the international group of regulators and finance officials is meeting.
``There is willingness and determination on winning the battle to restore confidence and stability.''
Banks and brokers have slowed lending as they struggle to restore their capital after $586 billion in credit losses and writedowns since the mortgage crisis began a year ago. The bankruptcy of Lehman Brothers Holdings Inc. also sparked fears among banks they wouldn't be repaid by counterparties, driving up the cost of short-term loans between banks. Funding Risk
``By committing to provide a very large quantity of term funding, the Federal Reserve actions should reassure financial market participants that financing will be available against good collateral, lessening concerns about funding and rollover risk,'' the central bank said.
The Bank of England and the ECB will each double the size of their dollar swap facilities with the Fed to as much as $80 billion and $240 billion, respectively. The Swiss National Bank and the Bank of Japan will also double their dollar swap lines, while the central banks in Australia, Norway, Sweden, Denmark and Canada tripled theirs. All the banks extended their facilities until the end of April 2009.
The Fed is also increasing the size of its three 84-day TAF sales to $75 billion apiece, from $25 billion. That means the Fed will make a total of $225 billion available in 84-day loans. The central bank will keep the sales of 28-day credit at $75 billion. Special Sales In addition, the Fed will hold two special TAF sales in November totaling $150 billion so banks can have funding available for one or two weeks over year-end. The exact timing and terms will be determined later, the Fed said. The TAF program began in December, totaling $40 billion.
The bank-rescue plan being debated by Congress today would give the Fed more power over short-term interest rates by providing authority as of Oct. 1 to pay interest on reserves held at the central bank by financial institutions. That would make it easier for the Fed to pump funds into the banking system. Paying interest on reserves puts a ``floor'' under the traded overnight rate, which would allow a central bank ``to provide liquidity during times of stress'' without affecting the rate, New York Fed economists said in a paper last month.
Unfortunately, there is so much more to write about this than I can possibly do at this juncture.
Suffice to say, today's action in the equity markets will undoubtedly get the headlines. The real tells are in the credit and foreign exchange markets however.
In a day riddled with financial news that on any other day would have been "stories of the year", they threw a fast-ball by you (high and tight).
I've taken the liberty of copying it from Bloomberg below.
My take on the markets tomorrow -- who knows -- I think that the powers that be would like to see some more tankage to stoke the fear while the house is off and turn up the heat on them getting a deal (any deal) done.
HOWEVER, if we get as low as 1070 on the s&p (we were down about 95 points to 1115-ish today) there is huge technical support there for now. I know this sounds crazy, but right now i'm expecting a dead cat bounce tomorrow and possible close above yesterday's -- not playing heavily either way.
from Bloomberg -- this creates artificial demand for dollars, btw...keeping commodities priced in dollars low and the dollar itself high. when this trade unravels....look out.
Sept. 29 (Bloomberg) -- The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression. The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide.
The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities. The Fed's expansion of liquidity, the biggest since credit markets seized up last year, came hours before the U.S. House of Representatives rejected a $700 billion bailout for the financial industry.
The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone. ``Today's blast of term liquidity will settle the funding markets down, and allow trust to slowly be restored between borrowers and lenders,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. On the other hand, ``the Fed's balance sheet is about to explode.'' The MSCI World Index of stocks in 23 developed markets sank 6 percent, the most since its creation in 1970.
Credit markets deteriorated further as authorities tried to save more financial institutions from collapse. European Rescue European governments have rescued four banks in two days and the Federal Deposit Insurance Corp. said today it helped Citigroup Inc. buy the banking operations of Wachovia Corp. after its shares collapsed. The Standard & Poor's 500 Index fell 3.8 percent and the cost of borrowing dollars for three months rose to the highest since January. The rate for euros hit a record.
``If people think the authorities may give in to fears, they are wrong,'' Financial Stability Forum Chairman Mario Draghi said today in Amsterdam, where the international group of regulators and finance officials is meeting.
``There is willingness and determination on winning the battle to restore confidence and stability.''
Banks and brokers have slowed lending as they struggle to restore their capital after $586 billion in credit losses and writedowns since the mortgage crisis began a year ago. The bankruptcy of Lehman Brothers Holdings Inc. also sparked fears among banks they wouldn't be repaid by counterparties, driving up the cost of short-term loans between banks. Funding Risk
``By committing to provide a very large quantity of term funding, the Federal Reserve actions should reassure financial market participants that financing will be available against good collateral, lessening concerns about funding and rollover risk,'' the central bank said.
The Bank of England and the ECB will each double the size of their dollar swap facilities with the Fed to as much as $80 billion and $240 billion, respectively. The Swiss National Bank and the Bank of Japan will also double their dollar swap lines, while the central banks in Australia, Norway, Sweden, Denmark and Canada tripled theirs. All the banks extended their facilities until the end of April 2009.
The Fed is also increasing the size of its three 84-day TAF sales to $75 billion apiece, from $25 billion. That means the Fed will make a total of $225 billion available in 84-day loans. The central bank will keep the sales of 28-day credit at $75 billion. Special Sales In addition, the Fed will hold two special TAF sales in November totaling $150 billion so banks can have funding available for one or two weeks over year-end. The exact timing and terms will be determined later, the Fed said. The TAF program began in December, totaling $40 billion.
The bank-rescue plan being debated by Congress today would give the Fed more power over short-term interest rates by providing authority as of Oct. 1 to pay interest on reserves held at the central bank by financial institutions. That would make it easier for the Fed to pump funds into the banking system. Paying interest on reserves puts a ``floor'' under the traded overnight rate, which would allow a central bank ``to provide liquidity during times of stress'' without affecting the rate, New York Fed economists said in a paper last month.
Monday, September 29, 2008
Train From Cuzco
Well, I was in the middle of telling you about my trip to Peru when the The End of the World as we Know it happened.
Now, that that's over :) I'll get back to the story about our trip.
So, after skipping the city tour in Cusco, and getting hopped up on coca tea we were ready for the sojourn to the main event. While the *real* travellers do the 4 day walk along the Inca trail from Cusco to the monument, we aren't quite that hearty....nor did I have that much vacation :)
Instead we opted for the "4 hour" train ride from Cusco to the Mountain.
The train left relatively early (8 a.m. if I remember right). Accomodations were rather comfortable -- only the seats did not recline....which became an issue later on that day.
Golden Lotus who suffers from debilitating motion sickness was hopped up on dramamine, had her sea-band bracelets on, and was sipping hierba mate -- a south american tea that tastes like a blend of green tea and cigarette ashes -- through her metalic bombilla.
The train steward, who was a bit of a bitch, wasn't pleased at all by the loose mate grounds staining his white linen tablecloth :)
The train ride starts out leaving cusco and is still on the western side of the Andes....As the train moves toward the monument it descends into the Amazon basin and there is a dramatic difference in the scenary, flora, and fauna.
Views in parts of the ride are truly spectacular. I can assure you that the fotos won't be able to capture the dramatic steepness of the cliff faces, etc. But, I will post some here nonetheless to give you an idea.
We spent a majority of the trip speaking broken spanish to other South American tourists and even spoke some English to a family out of New Jersey.
Once we arrived at the foot of the monument, we were still a short (but very winding) bus trip up the side of the mountain to the "main event" of our trip.
UG
Sunday, September 28, 2008
Steaming BM
Golden Lotus and I actually left (gasp!) the apartment during the middle of the week this last week and went to lunch.
This is a bit of a rarity for me, as I often end up working through my lunch hour and stopping only for a moment later in the afternoon when i can't stand it anymore to eat.
But, the sun came out for a minute (yah!) and we launched a redesign of the site at work we'd been working on for far too long (double-yah!) and decided to venture outside.
Our neighborhood is Punta Carretas. Now the venerable punta caretas has an upscale mall at its core (yeah i know upscale mall is an oxymoron, but work with me here). ever since this prison was converted to a mall it's kind of been a retail mecca of sorts for the city. realestate values exploded and a lot of the higher end restaurants setup shop in this neighborhood.
However, there aren't a lot of good lunchtime options for food.
I'm not sure if it's because retail employees don't have the money for "upscale" (read: not chivitos) lunch and the "fancier" residents who live here are all busy working in other neighborhoods or what....also the mall and the "food court" maybe add some "supply" to the market that outstrips native demand...i'm not entirely sure.
Let's just summarize by saying there are alot more places to eat dinner than lunch.
So, GL and I hopped a cab to the puertito de buceo for what we hoped would be an outdoor lunch at el italianito -- a casual outdoor, mostly seafood restaurant between buceo and neuvo pocitos on the coast.
Unfortunately, they were closed for winter and/or improvements, so we wandered up the road towards montevideo shopping (another mall) and looked at some of the restaurants we never ate at while living in that same neighborhood.
GL chose a small, very casually appointed cafe called BM Bistro.
Not wanting to ruin GL's lunch I kept my mouth shut regarding what the initials BM stood for in English, but laughed out loud when I saw the logo was a "steamer" :)
That said, the food was really really good by Montevideo standards.
Huge quiches, tortas, salads, wraps, all the food seemed to be very very colorful and interesting. The chef, I believe was classically trained somewhere else or had cooked at a large hotel in UY perhaps...I didn't ask.
When it came time for desert, a plateful of different dessert options came out that were ALL head and shoulders above the typical UY stuff. Both of our desserts were very very well done, appropriately moist (they ahve a problem where they don't like to add eggs to cakes or something here which can leave them disappointingly dry if you're used to northern tastes).
Overall, I'd have to put BM Bistro (despite the unfortunate name, logo and deceptively "country casual" furnishings) right near the top of the MVD food scene.
Ciao,
UG
Friday, September 26, 2008
Chinese told to Halt Lending
it's late.
i have a more complete analysis of what's happening, but i wanted to get this out there...another straw in wind. From Reuters:
BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.
The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.
"The decree appears to be Beijing's first attempt to erect defences against the deepening U.S. financial meltdown after the mainland's major lenders reported billions of U.S. dollars in exposure to the credit crisis," the SCMP said.
A spokesman for the CBRC had no immediate comment. (Reporting by Alan Wheatley and Langi Chiang; editing by Ken Wills)
>>>>>>>>
If true, this is either:
1.) really big, or
2.) the chinese working to spread the panic so we can ram the bailout bill down the throats of americans, or
3.) they've secured an agreement to be able to invest in us financials in return for continuing to fund the us govt, and would like to pick up a few at lower prices
on reuters, the news was so big, it was 5th down the list of stories for the day after a fluff piece "Gay stars thriving but await a-list company" / sarcasm
glad to see that everyone realises the relative importance of this development.
ciao,
UG
i have a more complete analysis of what's happening, but i wanted to get this out there...another straw in wind. From Reuters:
BEIJING, Sept 25 (Reuters) - Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.
The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.
"The decree appears to be Beijing's first attempt to erect defences against the deepening U.S. financial meltdown after the mainland's major lenders reported billions of U.S. dollars in exposure to the credit crisis," the SCMP said.
A spokesman for the CBRC had no immediate comment. (Reporting by Alan Wheatley and Langi Chiang; editing by Ken Wills)
>>>>>>>>
If true, this is either:
1.) really big, or
2.) the chinese working to spread the panic so we can ram the bailout bill down the throats of americans, or
3.) they've secured an agreement to be able to invest in us financials in return for continuing to fund the us govt, and would like to pick up a few at lower prices
on reuters, the news was so big, it was 5th down the list of stories for the day after a fluff piece "Gay stars thriving but await a-list company" / sarcasm
glad to see that everyone realises the relative importance of this development.
ciao,
UG
Saturday, September 20, 2008
It's a Kleptocracy Komrades!
The newsflow coming out the financial sector has clearly overwhelmed my ability to post any kind of coherent summary, much less analysis of it.
However, let's address the most recent in a recent string of atrocities being contemplated.
The Treasury Secretary and the Federal Reserve Chairman briefed some high ranking members of congress. In that meeting, they basically said that he financial system (as they know it) was getting ready to have a major dislocation. The congressional leaders are reported to have been very scared coming out of that meeting.
Mission Accomplished!
Be Afraid! Be VERY Afraid! Because that's how we get you to make stupid decisions without thinking, much less discussing the ramifications -- that benefit "us" -- you see?
Is the US Congress so stupid that they forget how they rammed the Iraq war down their throat? (don't answer that - it was rhetorical)
Interestingly, it wasn't really a *danger* until Goldman Sachs (the company that the Treasury Secretary used to head up) came under the attack of the short sellers...People betting that their balance sheet was full of falsehoods and misrepresentations which would preclude their ability to raise additional capital or merely buy back their own now "undervalued" stock (yeah right).
You see, Goldman (ball)Sachs used to be private. During the last boom (1999) they foisted that turd off on the public.
In return they got some capital to allow them to "expand" (read: liquify their principals).
So, in theory, if the stock ever got down to their original price, it's no problem right? They've been using the money they got to expand operations into profitable lines of business for the now owners (the stockholders) and the corporate entity is now worth far more than in 1999, right?
What's that? They've been spending 10's of Billions in MASSIVE bonuses to management and corporate insiders and they haven't really been keeping that value in the institution to benefit the owners?
Oops.
Guys, this fear mongering by Hank and Ben are nothing more than utter b.s. YES, there is a massive dislocation in the financial markets. However, in this case the suggested medicine is worse than the disease.
And, it's, once again, just more socialism for the rich. It's a way for them to get their assets out of the fire while pensioners, taxpayer and the other bag holders get ready to "swing".
Don't believe me?
In addition to this little bit of treason being foisting onto the public, they (temporarily) made it illegal to short a stock -- illegal to bet that a stock will go down in price (temporarily). However, not just any stock. Just financial stocks.
Some misguided people think that a stock goes up the company gets more money....WRONG. They got their money the day they sold a tranche to the underwriters. After that, stock price moves only enable secondary offerings and stock options -- both of which dilute existing "investors".
I've already given the "speech" that anyone who is buying a stock with the intent on selling it later for a higher price is really "speculating" -- even if they think they are investing. An investor intends to hold the stock forever and collect money from the dividends only.
Ever bought a stock with no dividend?
Ever bought a stock with the intent on selling it for more money later?
If so, you're a speculator.
What makes speculating long vs. speculating short more righteous? I'll tell you. Because it keeps the monied elite in their positions at these overleverage financial firms in a position to continue to leech from you....long enough to push this crap debt they benefited from selling over the years, onto the national debt for you and your kids to pay for in the form of higher taxes, lower levels of services, and a less valuable dollar.
"But spending 700 Billion now on a hasty plan giving Hank Paulson carte blanche to do what he wants with the funds and no oversight is better than the alternative."
Really?
Why are we so afraid of a "downturn" in the business cycle?
I know some people's lives and livelihoods are tied to models that demand constant growth. But a ponzi scheme by mathematical definition is doomed to failure.
Is it really better that we "put a floor under home prices" when salaries in many areas don't allow people to afford the homes at the price they sell for?
I'll grant you that this has been a rambling, incoherent, message at best. But I wanted to say this in summary:
There is no "magic money machine". No "free energy device". No "free lunch". Someone pays for it. In this case, they are suggesting it should be you rather than the wall street elite.
Wake up.
This does NOT stop a crash from happening.
Illegalizing shorts does NOT stop a market crash from happening. It does NOT suddenly make these firms solvent. It does NOT suddenly raise the value of shaky assets.
I predict this will be pushed through congress quickly (like all the other bailouts). Once again, they will realize they've solved nothing. I'm guessing that by then, they hope, the election will be decided already and all their wall street piglet friends will have already gotten their affairs in order.
My suggestion is to vote out each and every congress person who votes for this and prepare yourself for an even Greater Depression.
ciao,
Uruguay Guy
However, let's address the most recent in a recent string of atrocities being contemplated.
The Treasury Secretary and the Federal Reserve Chairman briefed some high ranking members of congress. In that meeting, they basically said that he financial system (as they know it) was getting ready to have a major dislocation. The congressional leaders are reported to have been very scared coming out of that meeting.
Mission Accomplished!
Be Afraid! Be VERY Afraid! Because that's how we get you to make stupid decisions without thinking, much less discussing the ramifications -- that benefit "us" -- you see?
Is the US Congress so stupid that they forget how they rammed the Iraq war down their throat? (don't answer that - it was rhetorical)
Interestingly, it wasn't really a *danger* until Goldman Sachs (the company that the Treasury Secretary used to head up) came under the attack of the short sellers...People betting that their balance sheet was full of falsehoods and misrepresentations which would preclude their ability to raise additional capital or merely buy back their own now "undervalued" stock (yeah right).
You see, Goldman (ball)Sachs used to be private. During the last boom (1999) they foisted that turd off on the public.
In return they got some capital to allow them to "expand" (read: liquify their principals).
So, in theory, if the stock ever got down to their original price, it's no problem right? They've been using the money they got to expand operations into profitable lines of business for the now owners (the stockholders) and the corporate entity is now worth far more than in 1999, right?
What's that? They've been spending 10's of Billions in MASSIVE bonuses to management and corporate insiders and they haven't really been keeping that value in the institution to benefit the owners?
Oops.
Guys, this fear mongering by Hank and Ben are nothing more than utter b.s. YES, there is a massive dislocation in the financial markets. However, in this case the suggested medicine is worse than the disease.
And, it's, once again, just more socialism for the rich. It's a way for them to get their assets out of the fire while pensioners, taxpayer and the other bag holders get ready to "swing".
Don't believe me?
In addition to this little bit of treason being foisting onto the public, they (temporarily) made it illegal to short a stock -- illegal to bet that a stock will go down in price (temporarily). However, not just any stock. Just financial stocks.
Some misguided people think that a stock goes up the company gets more money....WRONG. They got their money the day they sold a tranche to the underwriters. After that, stock price moves only enable secondary offerings and stock options -- both of which dilute existing "investors".
I've already given the "speech" that anyone who is buying a stock with the intent on selling it later for a higher price is really "speculating" -- even if they think they are investing. An investor intends to hold the stock forever and collect money from the dividends only.
Ever bought a stock with no dividend?
Ever bought a stock with the intent on selling it for more money later?
If so, you're a speculator.
What makes speculating long vs. speculating short more righteous? I'll tell you. Because it keeps the monied elite in their positions at these overleverage financial firms in a position to continue to leech from you....long enough to push this crap debt they benefited from selling over the years, onto the national debt for you and your kids to pay for in the form of higher taxes, lower levels of services, and a less valuable dollar.
"But spending 700 Billion now on a hasty plan giving Hank Paulson carte blanche to do what he wants with the funds and no oversight is better than the alternative."
Really?
Why are we so afraid of a "downturn" in the business cycle?
I know some people's lives and livelihoods are tied to models that demand constant growth. But a ponzi scheme by mathematical definition is doomed to failure.
Is it really better that we "put a floor under home prices" when salaries in many areas don't allow people to afford the homes at the price they sell for?
I'll grant you that this has been a rambling, incoherent, message at best. But I wanted to say this in summary:
There is no "magic money machine". No "free energy device". No "free lunch". Someone pays for it. In this case, they are suggesting it should be you rather than the wall street elite.
Wake up.
This does NOT stop a crash from happening.
Illegalizing shorts does NOT stop a market crash from happening. It does NOT suddenly make these firms solvent. It does NOT suddenly raise the value of shaky assets.
I predict this will be pushed through congress quickly (like all the other bailouts). Once again, they will realize they've solved nothing. I'm guessing that by then, they hope, the election will be decided already and all their wall street piglet friends will have already gotten their affairs in order.
My suggestion is to vote out each and every congress person who votes for this and prepare yourself for an even Greater Depression.
ciao,
Uruguay Guy
Wednesday, September 17, 2008
Gold Biggest One day Move Ever
Gold had its biggest one day move every supposedly today!
Check out my post from yesterday where I say that Gold still has one more leg down...hahahaha, nice call, huh? We'll see what happens over the next week to see if it continues going up, but so far it's lookin flat wrong.
That said, when I turned on CNBC over the lunch hour goldman sachs and morgan stanley were running in the "Bug" where their quotes were rotating as part of the market indicators -- like the DJIA or price of oil.
I don't know what it's like these days, but back when I lived in the US, that was the usually the sign that a trade was "over".
I'm not sure if the trade is over on morgan and goldman (short) BUT even it is is, there is still a bunch of truth that still has to come out of these financial institutions' balance sheets.
UG
Check out my post from yesterday where I say that Gold still has one more leg down...hahahaha, nice call, huh? We'll see what happens over the next week to see if it continues going up, but so far it's lookin flat wrong.
That said, when I turned on CNBC over the lunch hour goldman sachs and morgan stanley were running in the "Bug" where their quotes were rotating as part of the market indicators -- like the DJIA or price of oil.
I don't know what it's like these days, but back when I lived in the US, that was the usually the sign that a trade was "over".
I'm not sure if the trade is over on morgan and goldman (short) BUT even it is is, there is still a bunch of truth that still has to come out of these financial institutions' balance sheets.
UG
Tuesday, September 16, 2008
Daily Musings - GOLD!
Hey Everyone,
It's been awhile since I talked about gold as a speculation -- I wanted to jot off this note though since I've been talking privately with folks about it, but haven't really come out into the public in a definitive way and given people my thoughts.
(I'm writing this during my lunch hour, so I may have to double back with appropriate charts to make my points more clear this evening.)
Pretty much all of the commodities have been getting slammed.
Without getting into a deep analysis of "why" (plenty of "reasons" could be cited as potential contributory reasons) let's just accept that "it is what it is". So, what to do?
If you're long gold stocks, ETFs, Silver, Miners of either, Platinum, etc you've been enduring a great deal of pain. Technically speaking it looks like you are in a small recovery phase off a recent low, which an Elliot wave theorist would say is the 4th of 5.
The Five waves predict: wave one, down, wave two up, wave three down, four up, and five down to complete the five wave movement.
So far, when looking at the chart, a case can be made that we still need to have one more wave down.
If you are looking at the volume vs. price indicators on a daily you'll see (as well) that as the price is recovering slightly here, you see the volume going down. That is to say, as the price increases there is less interest in trading -- that's usually a sign that more downward price pressure is coming as well.
So how low could it go?
Assuming what I just said predicts more downward pressure in the price, it could break 700 on the downside and go into the mid-600's pretty easily. While that sounds horrific if you are holding precious metals or mining shares as a speculation, a move like would have me looking very closely for a "turn" back northward in price.
All of this could be a bunch of hogwash obviously, but if you are NOT already *in* and contemplating a jump in "because it's cheaper" beware the potential for a fifth wave down....right now, you have so many moving parts that it makes "fundamental" analysis pretty useless....while theoretically a rate cut or more liquidity tricks by the fed and treasury to prop things would be supportive of precious metals, there is a lot of counterparty risk and hedge fund (etc) deleveraging which will be driving the price action. In situations like this it's better to be late (buying) than early.
my 2 cents.
Uruguay Guy
p.s. if you're already holding physical as a hedge or as "insurance" don't be freaked out. Tis much better to never have to cash in your insurance, right?
It's been awhile since I talked about gold as a speculation -- I wanted to jot off this note though since I've been talking privately with folks about it, but haven't really come out into the public in a definitive way and given people my thoughts.
(I'm writing this during my lunch hour, so I may have to double back with appropriate charts to make my points more clear this evening.)
Pretty much all of the commodities have been getting slammed.
Without getting into a deep analysis of "why" (plenty of "reasons" could be cited as potential contributory reasons) let's just accept that "it is what it is". So, what to do?
If you're long gold stocks, ETFs, Silver, Miners of either, Platinum, etc you've been enduring a great deal of pain. Technically speaking it looks like you are in a small recovery phase off a recent low, which an Elliot wave theorist would say is the 4th of 5.
The Five waves predict: wave one, down, wave two up, wave three down, four up, and five down to complete the five wave movement.
So far, when looking at the chart, a case can be made that we still need to have one more wave down.
If you are looking at the volume vs. price indicators on a daily you'll see (as well) that as the price is recovering slightly here, you see the volume going down. That is to say, as the price increases there is less interest in trading -- that's usually a sign that more downward price pressure is coming as well.
So how low could it go?
Assuming what I just said predicts more downward pressure in the price, it could break 700 on the downside and go into the mid-600's pretty easily. While that sounds horrific if you are holding precious metals or mining shares as a speculation, a move like would have me looking very closely for a "turn" back northward in price.
All of this could be a bunch of hogwash obviously, but if you are NOT already *in* and contemplating a jump in "because it's cheaper" beware the potential for a fifth wave down....right now, you have so many moving parts that it makes "fundamental" analysis pretty useless....while theoretically a rate cut or more liquidity tricks by the fed and treasury to prop things would be supportive of precious metals, there is a lot of counterparty risk and hedge fund (etc) deleveraging which will be driving the price action. In situations like this it's better to be late (buying) than early.
my 2 cents.
Uruguay Guy
p.s. if you're already holding physical as a hedge or as "insurance" don't be freaked out. Tis much better to never have to cash in your insurance, right?
Monday, September 15, 2008
AIG A-OOOGA A-OOGA DIVE, DIVE!
Things are really moving faster than I have time to process and blog about it.
Big thing on deck is AIG -- Huge liquidity problems. They've been downgraded by Moody's and S&P.
I turn on CNBC and FIRST thing I see is an AIG ad....15/mo for 250k worth of coverage for someone 40 years old. You can tell I'm getting old -- I'm actually thinking to myself -- "hmm interesting"...then I hear the voice over -- "and AIG is the company strong and stable enough so you KNOW they'll be there when you need them most"
(that commercial must have been shot a while ago, huh?)
They cut to the show and all the daytime anchors have been pulled in for an evening session. These fools are everywhere on the show calling for the Fed to supply them with liquidity. These guys are an insurance company, right? This is getting a little ridiculous, but they are saying that they need something like $70B
CNBC at this point is begging for the govt to step in and save these guys. Another chapter in the u.s.s.a.
Gotta tell you, I would be SHOCKED if the markets are allowed to open tomorrow without some kind of intervention by the govt, or an institution backed by the govt.
We are VERY VERY close to an all out capitulation event -- CNBC talking heads are up into the evening in the studio for the second straight night....VIX (volatility index) is shooting the moon -- only two ways it goes -- government saving rich people with taxpayers' money OR market tanks.
I'm betting gov. save, and fed "suprise" rate cut.
We'll see.
UruguayGuy
Big thing on deck is AIG -- Huge liquidity problems. They've been downgraded by Moody's and S&P.
I turn on CNBC and FIRST thing I see is an AIG ad....15/mo for 250k worth of coverage for someone 40 years old. You can tell I'm getting old -- I'm actually thinking to myself -- "hmm interesting"...then I hear the voice over -- "and AIG is the company strong and stable enough so you KNOW they'll be there when you need them most"
(that commercial must have been shot a while ago, huh?)
They cut to the show and all the daytime anchors have been pulled in for an evening session. These fools are everywhere on the show calling for the Fed to supply them with liquidity. These guys are an insurance company, right? This is getting a little ridiculous, but they are saying that they need something like $70B
CNBC at this point is begging for the govt to step in and save these guys. Another chapter in the u.s.s.a.
Gotta tell you, I would be SHOCKED if the markets are allowed to open tomorrow without some kind of intervention by the govt, or an institution backed by the govt.
We are VERY VERY close to an all out capitulation event -- CNBC talking heads are up into the evening in the studio for the second straight night....VIX (volatility index) is shooting the moon -- only two ways it goes -- government saving rich people with taxpayers' money OR market tanks.
I'm betting gov. save, and fed "suprise" rate cut.
We'll see.
UruguayGuy
Sunday, September 14, 2008
Lehman Brothers Bankrupt
LEH is BK
I had a short dated put on these clowns that I got "chickened out" of when gov/fed/treasury interventions sent the financials (lehman included) soaring.
What I "learned" was that shorting financial companies is very dangerous -- they are experts at raising additional money and manipulating their share prices. In the longrun, there is no "free lunch" and physics will take over. The "problem" is, predicting when exactly rationality, truth, and accounting laws will be inforced is pretty difficult in this environment.
If you're going to bet on one of these fools going down it's best to catch them in a period of relative calm (when the implied volatilities are low) and buying long dated puts (LEAPs).
Of course, that's not exactly 100% safe either. Witness what happened to Merril Lynch today. Bank of America came in and paid up a 70% premium to buy them out. This is baffling that you would pay such an absurd premium for a company that was going to be a single digit midget as soon as the shorts were done with Lehman and turned their sites on the next weakest link....Be interesting to see how many of the bad debts are backed by BAC and how many of them they attempt to foist off onto another organization
UruguayGuy
I had a short dated put on these clowns that I got "chickened out" of when gov/fed/treasury interventions sent the financials (lehman included) soaring.
What I "learned" was that shorting financial companies is very dangerous -- they are experts at raising additional money and manipulating their share prices. In the longrun, there is no "free lunch" and physics will take over. The "problem" is, predicting when exactly rationality, truth, and accounting laws will be inforced is pretty difficult in this environment.
If you're going to bet on one of these fools going down it's best to catch them in a period of relative calm (when the implied volatilities are low) and buying long dated puts (LEAPs).
Of course, that's not exactly 100% safe either. Witness what happened to Merril Lynch today. Bank of America came in and paid up a 70% premium to buy them out. This is baffling that you would pay such an absurd premium for a company that was going to be a single digit midget as soon as the shorts were done with Lehman and turned their sites on the next weakest link....Be interesting to see how many of the bad debts are backed by BAC and how many of them they attempt to foist off onto another organization
UruguayGuy
Friday, September 12, 2008
Where was I? Oh yeah, Cuzco, Peru
Ok...back to the Peru trip.
We were slated to stay in Cuzco, Peru for a day and a half before taking off on the next leg of our journey.
It's really a funky city and unfortunately, I wasn't in the mood for taking the "city tour" and didn't bring my camera the few times we went out. There really were some spectacular cathedrals and squares in the town as well as a historical society that keeps vast portions of it "authentic" looking. We even found a legit vegetarian restaurant near the plaza de armas -- which is pretty rare for much of south america.
In addition, there is just a natural tendancy not to paint large portions of it that give the entire city in the outskirts the look of "mud" (the color of the locally produced bricks used for building)
Aside from the amazing historical arch, and the new-ager and backpacker tourists, the locals were kind of interesting....the more "indigenous" locals would carry their babies wrapped in handwoven multi-colored blankets (often on their backs) and often with peruvian skull-caps with ear flaps -- the kind of hat that landing in the north american snow skiiing and snow-boarding scene in the mid-late 80's
Since I didn't have my camera out in cuzco a whole lot, I pulled down some pictures off the web to give you a flavor. Enjoy. Don't worry, I brought my camera out on the next leg.
ciao,
UruguayGuy
Wednesday, September 10, 2008
Whoo hoo, Wamu is KaPut, imo
(note: i tried to post this last night and blogger was f-ing up. so now you have one less day to act!)
I've been telling friends and family privately for some time that our friends at Washington Mutual are probably finished.
While it's true some combination of government intervention, relaxation of acctg rules, looking the other way, and capital infusions (or buyouts) could (and has) kept this turd swirling in the bowl after repeated flushes, I think the party is about over for these guys.
The irony is I've been a Wamu customer for years....and for the last several, much to my chagrin
It started out in the mid - late 90's. Seattle at the time, was basically run by an outfit called "SeaFirst". Well, SeaFirst sucked. Their customer service was hideous. And along came Wamu a former thrift (I believe) with an aggressive and humorous ad campaign to attract retail banking clients.
As their footprint expanded, one noticed that, "hey, these guys are a lot better at customer service than SeaFirst" A lot of people switched. SeaFirst as bought out by Bank of America (I believe) and throughout the west coast Wamu was going toe to toe with Wells Fargo.
Wamu expanded retail operations everywhere and was aggressively growing their homelending operations to match Wells' position in the marketplace.
Those were the salad years.
Around 2001, I slowly started to notice the changes in Wamu. They were no longer a pleasure to do business with. Aggressive expansion to deal with huge numbers of poor retail clients and an aggressive push that focused on "no-fees" for many of the services other banks were charging for meant they had to get aggressive at automating systems (I guess).
And that's about they point where banks stop being useful to me. When the process becomes more important than ME.
While the examples are numerous -- almost too numerous to count, I'll recount the LATEST in a litany of b.s. I've dealt with with these clowns.
I live off my ATM card here. I pay a fee of 1% to withdraw money, but BROU makes WAMU look first class. I pay some bills from my US bank, it's tied into my brokerage acct for transfers, and I setup a joint account with my father, so i could get money to him easily/quickly -- quick online transfer. Also, in a pinch I could have him send a wire if needbe from the joint account because you cannot fax in a wire order and they have zero intl' presence (both big problems)
My ATM card was expiring and I couldn't reach my former roomate. I had left my address as my old CA address since they have zero Intl presence.
I finally gave up and went in to change the address to my parents' address so they could get the new card and forward it to me. I did this all online - nice. I called to order a new card and/or order my old card lost in the mail.
Well, because i had changed the address I had to talk to a supervisor..."we can fwd you a new card in mvd, but when we do your existing card will stop working"
"uh, can I wait then, because i am leaving for peru in two days and i need my card while I'm there"
"certainly, just call when you return to pick this up where we left off"
...well, already having had problems with wamu from south am i was nervous. but i went to peru, came back, called and as expected there was a problem. they couldn't replace the card for 30 days after the change of address...even though the previous supervisor had apparently found a way, the new one insisted that the "system" merely locked her out and it was impossible.
So, I pulled all the money out I could before my card expired, and asked when i could reorder....I would have to wait two weeks until the 10th of September to reorder. I explained she would be hangin me out to dry in a foreign country with no acccess to my money -- wasn't there something she could do? they give a sh*t. they are about systems not service.
So I called again today and reordered and it all went very smoothly...they system handled it i guess.
The "rub"? I'm pretty curious at this point (seriously) if they last until i get my card and can use it to withdraw the cash that's in there.
I think it's on the brink of going to the Feds.
While it's *possible* that they could be purchased, or ??? why not just wait until it's in receivership at this point. It gets really scary too in that I think a WAMU failure forced the FDIC to go back to the taxpayers to support them -- the premiums they've been collecting all these years are NOT going to be enough if WAMU crashes and burns. I think that would just about "tap" their reserves at that point.
So...do they make it past this Friday?
Rumours are pointing to the 19th -- a week after this Friday. But, in the end, who really knows with any certainty. God knows, more undercapitalized banks have been allowed to operate longer (indymac). I just think the latest fannie/freddie craptastic "stick save" has made it almost impossible for these schmucks to raise more capital in another preferred offering.
The only *other* out is some kind of forced marriage where the taxpayer guarantees any exposure in the wamu portfolio...otherwise some enterprising ceo looking to add retail outlets could quite possibly be putting an anvil through the floor of their vessel if they try to absorb wamu in a takeout / takeunder / takeover.
The only way I see it surviving is in receivership (on taxpayer dime) or in a buyout that is backstopped by more taxpayer money.
Could I be wrong? Sure. But, it's looking more likely by the day that I'm going to get an up close lesson in what it's like to have your funds at a failed bank.
They are a huge employer and employ one of my friends, so hopefully he ends up on his feet if this all goes down.
If you're a depositor and you have more than 100k, get it out TOMORROW. If you have any money you need in the next couple of weeks and don't need the headache -- seriously think about withdrawing it tomorrow.
ciao,
UruguayGuy
We'll see if I end up eating those words.
Monday, September 08, 2008
Spanish is Spoken
One of the more refreshing things about this latest trip to Peru is that they speak Spanish in Peru....As it turns out they speak it throughout MOST of latin america as well. :)
Although it's been 20 years since I formally studied Spanish, I've managed to retain quite a bit -- and subsquent exposure to the language has helped as well....living in California, couple of trips to costa rica, some visits to mexico, meeting a cab driver in taiwan who spoke spanish, etc.
Notice that I did NOT say, "Living in Uruguay" for the last 2+ years.
Now, granted, I work, and live, and think in English. This is NOT the stuff of Spanish language immersion
However, that said, I have managed to talk to a few Uruguayos since I arrived. While it's clear that it is NOT English they are speaking, the only other thing that I'm sure of is that it is Spanish either!
Granted, they will tell you it's Spanish, but to the uninitiated, the peculiarities of the "rio platense" "Spanish" they speak here is nearly unintelligible to my ears. As always, the less formal (more street/uneducated) the utterances the more bewildering for the foreigner.
So what makes the language they speak in this part of South America so hard to understand? Well, the following is a short list of the things I find the most bewildering
1.) probably the most obvious -- and easiest to get used to is the pronounciation of "LL" and "Y" with the "sh" sound. in SPAIN it sounds a lot more like an english 'y'
calle (street) is Ca-Ye in Spain
in Uruguay and Argentina it sounds like Ca-shjay -- not sure my attempt at phonetics really help, but once you hear it you'll know what i mean.
2.) slightly less obvious and a little harder to get used to is the "chopping" of the 's' sound. Pescado (fish) becomes "Pe'cado" -- in cases where you are already vocab challenged this often makes you think you are hearing a new word (when it goes by too fast) and can confuse.
the lights went out in our apartment and we had to get the power company out to fix the meter at the street....a week later, our doorman, who hails from teh interior asked me:
"como esta la lu' "? (how is the 'lu' )
huh?
"como esta la lu' "?
(is he talking about the bathroom???)
so i finally ask, "que es 'lu'? "
he clarifies, "luZ, luZ" (light)
oh...well, why didn't he just use the Z the first time he asked? :)
3.) the most challenging thing for MOST speakers of spanish are that there are a LOT of verb conjugations and even subjects that don't exist in English -- making even more verb conjugations. On top of that there are a lot of "irregular" verbs -- or verbs that don't follow the rules of conjugation -- and on top of that there are "tenses" that don't exist in english either -- like an "ongoing past" (used to be in some state for an extended period of time), and subjunctive (which i'm not even sure i can explain other than to say that it's outcome is not certain yet).
Well this is compounded (dramatically for me) by the popular use of the noun "vos" here. In Spanish they already have two different ways to say "you" -- Usted (is formal) and Tu (is more casual/familiar). Each of these, of course, conjugates all of the verbs around it differently.
So to make things more Challenging down here they decided to create another one called "vos" -- which is basically MORE casual than "tu" -- and of course it's got it's own set of conjugations....some of which i've eventually figured out -- most of which baffle me to this day.
If one is moving here and wants to learn spanish with the intent of just living a more integrated life or working down here then doing some form of formal study here will probably help with the accent. I'm not sure if the formal schools will even teach vos and all of its conjugations of verbs....but having some friends and going out and chatting with them frequently will get you in the swing of things quickly....just don't expect the rest of the world to undestand your funny accent very well :)
The bellhop in Lima was baffled as GL was asking him if they had "sherba" (roughly translated as tea) in Lima...after the third time she asked he finally decyphered it...ah, "Yerba" ....and confirmed that they had it.
The shocking thing for me was that I understood EVERYONE on the trip that spoke to me in Spanish. Had long long conversations with people who didn't speak a lick of English....As soon as I got on the flight from Santiago back to Montevideo the stewardess came up and said something to us and I had to ask GL, "what did she say?".... felt like home :)
adios,
UruguayGuy
Although it's been 20 years since I formally studied Spanish, I've managed to retain quite a bit -- and subsquent exposure to the language has helped as well....living in California, couple of trips to costa rica, some visits to mexico, meeting a cab driver in taiwan who spoke spanish, etc.
Notice that I did NOT say, "Living in Uruguay" for the last 2+ years.
Now, granted, I work, and live, and think in English. This is NOT the stuff of Spanish language immersion
However, that said, I have managed to talk to a few Uruguayos since I arrived. While it's clear that it is NOT English they are speaking, the only other thing that I'm sure of is that it is Spanish either!
Granted, they will tell you it's Spanish, but to the uninitiated, the peculiarities of the "rio platense" "Spanish" they speak here is nearly unintelligible to my ears. As always, the less formal (more street/uneducated) the utterances the more bewildering for the foreigner.
So what makes the language they speak in this part of South America so hard to understand? Well, the following is a short list of the things I find the most bewildering
1.) probably the most obvious -- and easiest to get used to is the pronounciation of "LL" and "Y" with the "sh" sound. in SPAIN it sounds a lot more like an english 'y'
calle (street) is Ca-Ye in Spain
in Uruguay and Argentina it sounds like Ca-shjay -- not sure my attempt at phonetics really help, but once you hear it you'll know what i mean.
2.) slightly less obvious and a little harder to get used to is the "chopping" of the 's' sound. Pescado (fish) becomes "Pe'cado" -- in cases where you are already vocab challenged this often makes you think you are hearing a new word (when it goes by too fast) and can confuse.
the lights went out in our apartment and we had to get the power company out to fix the meter at the street....a week later, our doorman, who hails from teh interior asked me:
"como esta la lu' "? (how is the 'lu' )
huh?
"como esta la lu' "?
(is he talking about the bathroom???)
so i finally ask, "que es 'lu'? "
he clarifies, "luZ, luZ" (light)
oh...well, why didn't he just use the Z the first time he asked? :)
3.) the most challenging thing for MOST speakers of spanish are that there are a LOT of verb conjugations and even subjects that don't exist in English -- making even more verb conjugations. On top of that there are a lot of "irregular" verbs -- or verbs that don't follow the rules of conjugation -- and on top of that there are "tenses" that don't exist in english either -- like an "ongoing past" (used to be in some state for an extended period of time), and subjunctive (which i'm not even sure i can explain other than to say that it's outcome is not certain yet).
Well this is compounded (dramatically for me) by the popular use of the noun "vos" here. In Spanish they already have two different ways to say "you" -- Usted (is formal) and Tu (is more casual/familiar). Each of these, of course, conjugates all of the verbs around it differently.
So to make things more Challenging down here they decided to create another one called "vos" -- which is basically MORE casual than "tu" -- and of course it's got it's own set of conjugations....some of which i've eventually figured out -- most of which baffle me to this day.
If one is moving here and wants to learn spanish with the intent of just living a more integrated life or working down here then doing some form of formal study here will probably help with the accent. I'm not sure if the formal schools will even teach vos and all of its conjugations of verbs....but having some friends and going out and chatting with them frequently will get you in the swing of things quickly....just don't expect the rest of the world to undestand your funny accent very well :)
The bellhop in Lima was baffled as GL was asking him if they had "sherba" (roughly translated as tea) in Lima...after the third time she asked he finally decyphered it...ah, "Yerba" ....and confirmed that they had it.
The shocking thing for me was that I understood EVERYONE on the trip that spoke to me in Spanish. Had long long conversations with people who didn't speak a lick of English....As soon as I got on the flight from Santiago back to Montevideo the stewardess came up and said something to us and I had to ask GL, "what did she say?".... felt like home :)
adios,
UruguayGuy
Is Anyone Suprised?
"All your GSE are Belong to Us!"
Good grief.
The only thing more disturbing than the corruption is apathy I guess. Fannie and Freddie were declared solvent and strong enough to stand on their own what -- two months ago??
Interestingly, the Russians who wrote about the collapse of communism reported that those that did the best (mentally, emotionally) were often the most apathetic of the bunch. Those that thought they could make a difference and tried to "rally the troops" became the most despondant and had the most difficult time avoiding washin their mouths out with buckshot.
I refer to these after hours "news events" (announcements and frequent subsequent interventions) as "tape bombs" and "stick saves" -- I can't take credit for the genesis of these terms -- just parroting them here in case you haven't been exposed. The "stick saves" are coming with disturbing regularity anytime that markets approach or god-forbid pierce important technical levels on the downside. It's almost like they are trying to "manage" (manipulate! cough) the markets on the way down.
It's the reason that a huge portion of my retirement portfolio -- the portion that i'm not allowed to play futures with -- is in cash.
You see, if one only puts their money in the markets they are precluded from reacting to these "tape bombs" and "stick saves".
The futures open on Sunday night and allow you to get out of the way of oncoming locomotives whether short or long....at the very least allow you to hedge off price movements in positions you can't unwind while the market is closed.
I've been noticing a lot of "relative strength" in financials in the last couple of weeks. Friday, to those that were watching market internals closely ( i wasn't ) it was obvious that a "fix was in"....the fannie/freddie weekend announcement was obviously known (or miraculously predicted) by some. I'm guessing the former, not the latter.
short term, this is likely to be very bullish for financials and us equities. what kind of damage this does to the country and the faith in our markets is anyone's guess. i'm rapidly rounding apathy and heading directly for "cabin in woods" territory myself.
ciao,
Uruguay Guy
Good grief.
The only thing more disturbing than the corruption is apathy I guess. Fannie and Freddie were declared solvent and strong enough to stand on their own what -- two months ago??
Interestingly, the Russians who wrote about the collapse of communism reported that those that did the best (mentally, emotionally) were often the most apathetic of the bunch. Those that thought they could make a difference and tried to "rally the troops" became the most despondant and had the most difficult time avoiding washin their mouths out with buckshot.
I refer to these after hours "news events" (announcements and frequent subsequent interventions) as "tape bombs" and "stick saves" -- I can't take credit for the genesis of these terms -- just parroting them here in case you haven't been exposed. The "stick saves" are coming with disturbing regularity anytime that markets approach or god-forbid pierce important technical levels on the downside. It's almost like they are trying to "manage" (manipulate! cough) the markets on the way down.
It's the reason that a huge portion of my retirement portfolio -- the portion that i'm not allowed to play futures with -- is in cash.
You see, if one only puts their money in the markets they are precluded from reacting to these "tape bombs" and "stick saves".
The futures open on Sunday night and allow you to get out of the way of oncoming locomotives whether short or long....at the very least allow you to hedge off price movements in positions you can't unwind while the market is closed.
I've been noticing a lot of "relative strength" in financials in the last couple of weeks. Friday, to those that were watching market internals closely ( i wasn't ) it was obvious that a "fix was in"....the fannie/freddie weekend announcement was obviously known (or miraculously predicted) by some. I'm guessing the former, not the latter.
short term, this is likely to be very bullish for financials and us equities. what kind of damage this does to the country and the faith in our markets is anyone's guess. i'm rapidly rounding apathy and heading directly for "cabin in woods" territory myself.
ciao,
Uruguay Guy
Friday, September 05, 2008
Next Stop -- Cuzco Peru
After Chilling at the Hotel and neighborhood of MiraFlores for a day and half we were off on the next leg of the journey -- Cuzco Peru.
Believe it or not, I think I heard something about Cuzco being the old capitol of Peru -- or at least where the royalty used to hang out in Incan times.
As one flies into Cuzco, to be honest it's not much to look at. Nearly every abode is the color of mud bricks (sans paint) and it looks relatively dry and rugged (at least in August). It's inland quite a ways from Peru and it's at a pretty screaming altitude....of course the whole time there it was being quoted in meters and I was too lazy to convert to feet and figure out if it was anything to worry about.
wiki.answers.com says it's 11,600 ft. I guess that's pretty high.
Being a total lowlander since I left West Texas (ions ago) it seemed pretty intimidating.
The airport is pretty small and as I was walking to the baggage claim I was slow footing it so I wouldn't be caught out of breath. They had some crazy getup near the baggage claim -- "free oxygen" with some asian chick laying down and taking a hit.
The travel agent that got us from A/P to hotel gave us the advice to just rest the first day and drink some of the coca tea -- the natives were fond of chewing on the leaf. I guess making a tea out of it seemed more civilized.
My friend assures me it certainly makes it a little more palettable....or potable in the case of the tea.
The hotel we stayed in was pretty nice. It was obviously geared towards foreigners and reminded me a little bit of a spa in the high desert of southwestern US. Maybe Northern AZ.
At this point, I'm still listening to all the "warnings" about the altitude, so I'm diligently drinking my coca tea. We decided to have a nice quiet night relaxing at the hotel. I also tell the travel agent to bag the "city tour" the next day. We'll check things out on our own.The whole town had sort of a cool vibe to it. There were some spectacular old churches and structures left behind from the Spaniards occupation, as well as a couple of different "squares" with fountains, and surrounding shops and archetecture that the zoning commission had gone a long ways to maintain...No drivethrough burger joints to satisfy the tourists.
While there were a lot of tourists, many of the tourists probably consider themselves "new age" or somehow more "spiritual" than others -- after all, they were in the mountains of Peru, right? That tended to keep the "obnoxious" factor that you get around alot of popular tourist attractions to a minimum.
Alas, we didn't bring our camera out on the town, but I'll google up some images to show you what we saw later.
..stay tuned.
Uruguay Guy
Peruvian GOLD
GOLD!, I say....
although i've been a littel lukewarm for the yellow metal as a speculation recently. that's pretty much just the charts being an utter disaster.
BUT
...being in the actual physical presence of gold got my fever going. It turns out, that upscale mall had an exposition they were putting on -- on loan from the national museum -- of peruvian gold crafted by the Incas.
we paid a couple of bucks and put on some headphones -- English was available it turns out. For the next 45 minutes or so we were treated to a lecture on the Incan way of life, their uses for precious metals, their fabrication techniques, the status they conveyed, etc. etc. etc.
.... i didn't really retain any of it. i just remember they had GOLD! :)
artifacts and stuff.
the pics we had to take with out little digital with the flash off. this of course, necessitates walking up to the GOLD and taking a picture without your paws twitching -- while the shutter is open long enough to get adequate exposure -- or whatever digital cameras call 'exposure'. anyhow, i was all in a twitter with all that gold, so the pics that came out without any blur were mostly taken by Golden Lotus while my eyes turned into little swirls, like in 70's cartoons.
it was pretty spectacular -- especially near the end where they displayed some guy's previously "private" collection.
The incans liked to put compounds on the gold to change the color -- (what were they thinking?) so at times the "booyah" "gold fever" effect that you get when you see, for instance, the king tut exhibit, isn't there, but there are some fabulous pieces nonetheless.
obviously, the photos barely do these things justice and it's hard to capture scale at times -- but enjoy nonetheless.
adios,
Uruguay Guy
Wednesday, September 03, 2008
'Lima Bean Good to Me'
We finally got in the van and on the way to the touristic neighborhood of Miraflores in Lima.
Since we arrived around midnight, my initial impressions of Lima were as viewed through the "late night" lense.
My first impression was that it appeared to be much more US-centric than Montevideo. It wasn't just that there were a lot more cars (and broad roads built to handle them) it's that places of business were built with parking lots.
In addition, some of chain restaurants from the US had migrated as far south as Peru and would make an appearance on the roadside with startling regularity.
Pizza Hut
McDonalds
KFC
Dunkin Donuts
Dominos
Burger King
Subway
Chili's
and several others that i'm sure i forget. In addition to the North American eating establishments, the other things that immediately struck me about Lima were:
1.) an asian influence (believe it or not), and
2.) the ubiquity of casinos, bingo halls, and gambling establishments
MiraFlores is the "upscale" neighborhood in Lima (I guess). While not pristine (by North American standards), by *lima* standards you could tell just driving down the streets that it was considered the "good" neighborhood.
MiraFlores has a nice park that sits on a cliff overlooking the ocean a couple of blocks from our hotel. Then, underneath the park, into the cliff overlooking the ocean they built an upscale outdoor mall.
The pictures are a little weak because the marine layer whites everything out on my camera. Trust me, it was a lot nicer than anything in MVD though. There was a nice/upscale Chinese AND Japanese restaurant, Tony Romas (lol), Hooters (lmfao), and a Dunkin Donuts (not laughing now -- i ate lots of those :))
There were also a number of local stores selling upscale baby alpaca "wool" items of clothing and some other stores geared towards the well-off Peruvian or Foreigner/Expat. The mall was quite crowded everytime we went there for to eat in our four days in Lima.
Ok...further adventures/details/and pics coming in the next installment.
UG
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