gold mining issues - here come the majors, goodbye to the minors

exploration spending will clock in at $11.5 billion read more here

for those of you who don't understand owning GOLD

People don't own gold because they want to, they own it because they feel they have to. It's called self defense.

The Hindenberg Omen is nigh

1 That the daily number of new 52 Week Highs and the daily number of new 52 Week Lows must be greater than 2.2 percent of total issues traded that day.
2 That the smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126). This is not a rule but more like a checksum. This condition is a function of the 2.2% of the total issues.
3 That the NYSE 10 Week Moving average is rising.
4 That the McClellan Oscillator is negative on that same day.
5 That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs). This condition is absolutely mandatory.
On 8/12/2020, all five conditions were satisfied.
June 2008 was another such reconfirmed event, and as Barron's pointed out then, "there's a 25% probability of a full-blown stock-market crash in the next 120 days. Caveat emptor." Boy was the emptor caveating within 120 days (especially if said emptor was named Dick Fuld). Which brings us to the present: should the Omen be reconfirmed within 36 days, all bets are off.

on the subject of AIG and what should have happened . . .

Barry Ritholz writes

AIG ? There never was an implicit government guarantee that all counter-parties dealing with AIG-Financial Products — a giant leveraged structured finance hedge fund hiding under the skirt of the regulated insurer — would be made whole. But the Bush/Paulson/Bernanke bailout created one. Instead, AIG-FP should have been carved out for dissolution/wind down, while the insurer could have continued to exist on its own. AIG would have had the liability for the government’s costs, but the counter parties? They would have gotten zero. If you go to Vegas and shoot craps in the alley way behind the casino, don’t expect the gaming commission to collect your winnings. But that is what we did with AIG.

read his whole take on the subject here, it's fascinating and really good

Insider Trading . . . the political kind

Every knows (or should know) that once elected officials "retire" they immediately go to work in the private sector peddling influence . . . you know, "special interests". Read about what Nassim Taleb is railing about now . . .

"Think about it a bit further: the more complex the regulation, the more bureaucratic the network, the more a regulator who knows the loops and glitches would benefit from it later, as his regulator edge would be a convex function of his differential knowledge. This is a franchise. (Note that this franchise is not limited to finance; the car company Toyota hired former U.S. regulators and used their "expertise" to handle investigations of its car defects). "

to read the whole story click here

Does the Fed really know what it's doing and why we should care

Because, what the Fed announces it's going to do and what it does somehow affects people's emotions about the economy and their pocketbooks, etc. But should it?

As the WSJ article points out, it was only about four months ago that the Fed thought it could exit its quantitative easing program, and now it is looking for ways to restart the process.

Deflation ???

Folks had better be prepared for more food inflation, as the price of grains has been going wild, along with various other items such as chocolate and hogs. It's a good thing food and energy are excluded from the inflation/deflation debate.

What the heck is going on with the markets?

I have felt for sometime that "the market" doesn't behave like it used to, I couldn't quite put my finger on it but as a trader, I've felt that news and earnings and whatever just didn't seem to matter anymore or did it? Clearly the "market" is much more of a casino that it ever has been with computer programs overshadowing fundamentals (except that so many corporations are able to engineer their quarterly reports to "surprise or meet expectations" of analysts so as to make the fundamentals less important than years ago) and all you had to do to be successful was be a little ahead of the programs and you could ride each wave . . . . yes, figuring out what the computer programs are going to do isn't easy but that's where having a sense of tug and push or market wave action comes in, it isn't easy to develop this sense but many years ago I heard Ed Sakota (arguable one of the greatest traders in history) say that all you had to do was go down to the ocean and watch the waves come in and go out and you could learn about how markets go up and down . . . . it was the most important lesson I've ever learned in my trading education and I always love to go to the ocean and watch it do it's thing and remind my self that the randomness and flow of it is what I have to be aware of when trading . . . anyway, here is Bill Fleckenstein's (www.fleckensteincapital.com) comment from today . . . somewhat confirming what I've felt. I have been able to be in sync with the market (excuse me, computer programs) for sometime now.

C

Not Your Grandfather's Panic Liquidation Now I'd like to take a stab at making sense of the recent tanking of the stock market. To me, the decline of the last week or so has been different than any I've seen in my 30-year investment career -- in that it was led by the indices and not individual stocks.

When we have seen what looked like panic liquidation in the past (1987, 1990, 2000-2001, 2008, etc.), that always came nearer to the end in terms of time (though not price); and after stocks -- individually and collectively -- had been roughed up beforehand for quite some time, for very understandable reasons. One reason why I failed to see a decline of this magnitude coming: It did not evolve in a way that showed problems bubbling to the surface, but rather with the indices (and perhaps ETFs) leading the charge lower. This was like the '87 crash in reverse, whereby the panic in the indices happened first.

What I don't know is, what this decline means, whether stocks generically are now vulnerable to a wipeout, or that it's just indicative of the environment we're in -- with so many quants and hedge funds treating everything about the stock market like some kind of a trading sardine. (A derivation of today's electronic, quant-driven markets may be why the market doesn't seem to discount anything anymore, a point which I have made many times in the last 10 years.) It's not clear to me what may come next, other than that if stocks do get pounded from here, I am certain that more Fed liquidity will be forthcoming. (PS: Its balance sheet hit a new high this week, for those keeping score at home.)

Volatile Markets

I left around 11 am yesterday morning for Parkfield to be there for the opening act of the Parkfield Bluegrass Festival and didn't return home til late today. On the way I home I listened to the NPR news at 6PM PDT to learn of the chaos in the markets over the last 2 days! Unbelievable. And thankfully I wasn't at my computer watching the action as I might have made some mistakes but alas all turned out well as I was pretty short the market when I left . . . whew.

Michael Burry on Alan Greenspan

In his own words, Michael Burry recounts how he forecast the demise of the subprime market and how he made a fortune because of it . . . . disavowing any of the Alan Greenspan's ridiculous comments that no one "saw it coming". Click here for the NY Times op-ed piece.

the state of the world of investing today

"a cynic knows the price of everything and the value of nothing" anonymous

Investing Advice from a real pro

"The world is a lot different now. Nobody with any brains buys an asset based on what it's done. All intelligent investors buy for the future." Bill Fleckenstein

What were the real losses at Madoff??

By the end of his multi-decade fraudulent run, the final account statements (November 30 2008) issued to all his “clients” totaled the sum of $73.1 billion dollars. The people conned by Madoff believed they were worth a collective $65 billion dollars more than their accounts were worth. The initial amount of cash put up was $20 billion dollars, beginning in the early 1960s and continuously from there forward.

The bankruptcy court in this case has made the basic determination that the losses were ONLY the cash that was initially given to Madoff & Co. The extra $45 billion was a fictitious part of Madoff’s fraud. Therefore, it represents funds that were not actual investment losses, and are not covered by SIPIC insurance. So there . . .

Gold

Today, IMF made a splash by announcing plans to sell the remaining 191 tons (about $7 billion' worth) of its gold.

Grubonics - Uppatacious

Uppatacious is a word Bill uses to describe someone who is way too found of himself and doesn't deserve to be that conceited. The person also does things to try to impress others for the sake of it and the behavior is obnoxious.

What's the true story on Chinese individual income?

here is an excerpt from the Seeking Alpha blog challenging Jim Chanos assertion that China is in a bubble about to burst . . .

"If anything, incomes are grossly under reported in China. A simple look at how accounting works will show why. Whereas in the U.S. individuals must report their income to the Internal Revenue Service every year, in China all individual tax is reported and paid for by companies, except for that of high earners. Many Chinese companies limit the tax they pay by reporting low salaries and then paying their employees higher amounts while accounting for the difference as business expenses like phone bills. The employees are happy because they make every bit as much as they were promised, and the companies are pleased to lower their tax exposure.

Also, many companies pay for housing and cars for their employees, a holdover from the old system of state-run businesses. Most Western economists don't count those expenses as income, but they should. Deceptive accounting of income is so widespread that the government has announced plans to tax some business expenses in state-run enterprises--the kinds of expenses that let executives pay taxes on earnings of $300 a month while living in multimillion-dollar homes and driving Mercedes." to read the whole thing click here

Major Foreign Holders of Treasury Securities

Ever wonder who and how much foreign countries own US debt obligations??? Yeah, I know you've wondered . . . well, click here and find out from the Treasury Dept directly.

Still lot's of debt - too much to get the economy moving

"With all of the talk of the difficult borrowing environment and de-leveraging, very little debt is actually gone, despite massive write-offs by banks," Andy Matthes, portfolio manager at Matthes Capital, wrote in a recent letter to investors, a copy of which was obtained by MarketWatch. Most of this debt mountain is still tied to the fragile, government-supported housing market. At the peak of the real estate boom in 2006, U.S. households owed $9.8 trillion in mortgage debt. By the end of September, that had climbed to $10.3 billion.

Such high debt levels leave households with less cash available to spend on other things. With consumers typically accounting for two-thirds of U.S. gross domestic product, this situation should dent economic growth. However, personal consumption currently makes up more than 70% of GDP, well above the average of 66% since 1929, according to Matthes.

Consumption has likely remained high because of government transfer payments, which help people who have fallen on hard times through the social welfare system.

Is the Gerrymandering finally going to be over in California?

Go this link and see We Draw the Lines

Patience

Patience before acting is far more important than patience after acting.