US Stock Market Trading

S&P Fib Retracement Level Watch!

2011-08-08T14:30:00.003-05:00

It is very clear where S&P will head!! Most important level to me is 1000 to 1015. My opinion would be if 1000 is broken, it will very likely to test the lows of 2009 and also making new lows for the index. We will see. Also, I would like to this if it crash fast rather than slowly death. It would be the worst if market decide to go south very slowly. We will see!!

Back to where it started?!

2011-08-08T11:30:00.002-05:00

To all beloved readers,

I have been in active for a year because I do not see any good long term bullish call about our nation economy as well as stock market. Only those idiots are still in daydreaming about it.

Officially, I am leaving 488trade and I will try to continue to write my though about the status of our nation economy as well as stock markets. In addition, may I put my opinion about world financial conditions too. Stay tuned.

Please go to 488trade blog

2010-06-30T22:24:00.003-05:00

I thank you to all the people who follow my blog. However, since may this year I have been changing to write my blog to 488trade. Please go to address: http://488trade.blogspot.com/.

Short BIDU here!!

2010-05-11T14:05:00.003-05:00

Just kinda suggest short BIDU here @ price 710!! moment ago. Buying June,2010@600 puts is fine too. It is trading $10.50 for it moment ago!! Just to keep record here for fun. Market should gradually going downward in slow motion here.

Recovery or not?

2010-03-18T09:22:00.002-05:00

3/18/2010

It has been long while I have not publish anything here. Now, I repost one interesting article blog by other blogger:

CAT Co reports retail sales of machines declined 20% y/y in Feb and sales of reciprocating & turbine engines to retail users & OEMs declined 33% y/y in Feb

Another source off the wire has even uglier numbers:

 Caterpillar Inc Reports 3 month dealer statistics;
Dec-Feb sales - filing
- Retail Sales of Machines:

              Feb.10    Jan.10    Dec.09
Asia/Pacific  DOWN 2%   UP 1%     DOWN 12%
EAME*         DOWN 22%  DOWN 35%  DOWN 41%
Latin America DOWN 20%  DOWN 15%  DOWN 24%
ROW*          DOWN 15%  DOWN 19%  DOWN 28%
North America DOWN 30%  DOWN 40%  DOWN 46%
World         DOWN 20%  DOWN 27%  DOWN 35%

Sales of Reciporcating & Turbine Engines
to Retail Users & OEMS by Business Sector

                Feb.10   Jan.10   Dec.09
Electric Power  DOWN 26% DOWN 27% DOWN 27%
Industrial      DOWN 15% DOWN 22% DOWN 44%
Marine          DOWN 23% DOWN 18% DOWN 29%
Petroleum       DOWN 47% DOWN 46% DOWN 46%
Total           DOWN 33% DOWN 33% DOWN 36%

(Hattips to rebeltraders and aztrader)

I thought last February was pretty much "the depths of Hell" when it comes to the economy and heavy industrial orders?

My comment: I 100% agree with this blogger. Remember earlier last year, economy was doomed and supposed to be "The Bottom" according to majority of economists words. Then how come CAT business are still going south compare to last year same period. Why? Why? I do not know. You are the one to judge it the following: "Economy is recovering??" Well, as everyone can see, it seems to be truth only for Wall street but definitely not our nation economy.

Definitely good article to enjoy for Xmas 2009!!!

2009-12-24T08:56:00.002-06:00

12/24/09

Yes,even stock market recover lots this year since March. I am still very bearish for 2010 and later for our economy as well as US stock market. Here is a very good article saying the fact that we are facing(somehow cannot reprint here, please click the link and check it out)

http://www.scribd.com/doc/24470953/Sprott-December

Citibank outstanding Shares

2009-12-19T20:16:00.002-06:00

12/18/09

Folks! Do you wanna own piece of Citicorp or Citibank shares? I know I do not. Simply, go to yahoo finance check out their market cap is about $77 B. Then, check out JPM market cap is about $160 B. So, if Citibank is going to be like JPM. The most reasonable stock price for Citi probably would be around $7. Let's say $7-$10. So, I do not think Citi is good for long term. It is good to treat as trading stock. Good luck if you own this piece of crap.

FDIC broke !!!

2009-11-24T09:59:00.000-06:00

11/24/09

It has been long time since I sign back in and write something. In fact, I rather re-post someone comments on FDIC issue. Yes, it is scary to know FDIC is broke.

Off the wire this morning:

FDIC Deposit fund had negative $8.2B balance in Q3

That's broke. Bankrupt. Kaput. Gone. Poof. Dead. Rotting. A corpse.

Yes, yes, I know, Treasury has their back. But let's not forget - The FDIC does not have a legal "full faith and credit" guarantee from the US Federal Government and Treasury.

It has a "sense of Congress" resolution, but not a formal, legally-binding guarantee.

I am not, by the way, predicting an actual FDIC failure to pay. Should such an event happen it would be tantamount to a declaration of revolutionary war (by the government about to be deposed!) as if there is one thing that would cause Granny to reach for her shotgun, it would be getting screwed out of her life savings after Sheila Bair and everyone else in our government has trotted out how their money is "fully safe" and that "nobody has ever lost a penny of insured deposits and never will" for more than 20 years, including lots of pronouncements of exactly that mantra over the last year.

Nonetheless this outlines the underlying problem the FDIC has - it has willfully and intentionally ignored the fact that banks have mismarked their "assets" to overstate their values, it has refused to demand that accounting be done on a strict "mark to market" basis by bank examiners, and indeed, it has backed the "extend and pretend" commercial real estate "rollover" provisions of recent months, all of which is manifestly unsound and intentionally misleading.

The result?

THE FDIC IS BROKE.

We Americans are Hostage ?!!!

2009-09-15T08:44:00.002-05:00

9/15/09

It has been awhile I write something in my blog. The following is written by a guest blogger and it is very make sense to read.

The American people have been taken hostage to a broken system.

It is a system that remains in place to this day.

A system where bank lobbyists have been spending in record numbers to make sure it stays that way.

A system that corrupts the most basic principles of competition and fair play, principles upon which this country was built.

It is a system that so far has forced the taxpayer to provide the banks with the use of $14 trillion from the Federal Reserve, much of the $7 trillion outstanding at the US Treasury and $2.3 trillion at the FDIC.

A system partially built by the very people who currently advise our President, run our Treasury Department and are charged with its reform.

And most stunningly — it is a system that no one in our government has yet made any effort to fundamentally change.

Like health care, this is a referendum on our government’s ability to function on behalf of the American people. Ask yourself how long you are willing to be held hostage? How long will you let our elected officials be the agents of those whose business it is to exploit our government and the American people at any cost?

As hostages — was there any sum of money we wouldn’t have given AIG?

Why did we pay Goldman Sachs and all the other banks 100 cents on the dollar for their contracts with AIG, using taxpayer money, while we forced GM and others to take massive payment cuts?

Why hasn’t any of the bonus money paid to the CEOs that built this financial nuclear bomb been clawed back?

And more than anything else — why does the US Congress refuse to outlaw the most anti-competitive structure known to our economy, one summed up as TOO BIG TOO FAIL?

It has become startlingly clear that we as a country, and I as a journalist, had made a grave error in affording those who built and ran those banks and insurance companies the honorable treatment of being called capitalists. When in fact the exact opposite was true, these people were more like vampires using the threat of Too Big Too Fail to hold us hostage and collect ongoing ransom from the US Government and the American taxpayer.

This was no unlucky accident. The massive spike in unemployment, the utter destruction of retirement wealth, the collapse in the value of our homes, the worst recession since the Great Depression all resulted directly from these actions.

Even with all that — the only changes that have been made, have been made to prop up and hide the massive flaws on behalf of those who perpetuated them. Still utterly nothing has been done to disclose the flaws in this system, improve it or rebuild it.

Last fall was an awakening for me, as it was for many in our country.

And yet, our Congress has yet to open its eyes, much less do anything about it. In fact conditions have never been better for the banks or worse for the rest of us.

Why is this? Who does our Government work for? How much longer will we as Americans tolerate it? And what, if anything, can we do about it?

As we approach the anniversary of the bailouts for our banks and insurers — and watch the multi-trillion taxpayer-funded programs at the Federal Reserve continue to support banks and subsidize their multibillion bonus pools, we must ask if our politicians represent the interests of America? Or those who would rob America of its money and its future?

As a country, we must demand that our politicians stop serving those whose business models are based on systemic theft and start serving those who seek to create value for others — the workers, innovators and investors who have made this country great.

My comments: I have very strong feeling attach to it. How about you?

Someone has called "Top" !!!

2009-08-27T09:23:00.002-05:00

8/27/09

Here are Doug’s 10 reasons why the rally has run out of steam and has “likely topped:”

1. Cost cuts are a corporate lifeline and so is fiscal stimulus, but both have a defined and limited life.

2. Cost cuts (exacerbated by wage deflation) pose an enduring threat to the consumer, which is still the most significant contributor to domestic growth.

3. The consumer entered the current downcycle exposed and levered to the hilt, and net worths have been damaged and will need to be repaired through higher savings and lower consumption.

4. The credit aftershock will continue to haunt the economy.

5. The effect of the Fed’s monetarist experiment and its impact on investing and spending still remain uncertain.

6. While the housing market has stabilized, its recovery will be muted, and there are few growth drivers to replace the important role taken by the real estate markets in the prior upturn.

7. Commercial real estate has only begun to enter a cyclical downturn.

8. While the public works component of public policy is a stimulant, the impact might be more muted than is generally recognized. There may be less than meets the eye as most of the current fiscal policy initiatives represent transfer payments that have a negative multiplier and create work disincentives.

9. Municipalities have historically provided economic stability — no more.

10. Federal, state and local taxes will be rising as the deficit must eventually be funded, and high-tax health and energy bills also loom.
My comments: It is very make sense!! Good luck if you still think we are in recovery!!

Scared number showing Commerical Loan!!!

2009-08-24T21:51:00.002-05:00

8/24/09

Woo! Wee! Waaah!! Hey, everyone the above list would be your next down leg play for bank sector!! I know it is coming. What do you think??!

Do not be fooled by this "recovery"!!!

2009-08-24T09:38:00.001-05:00

8/24/09

I find out very great article to read:

Andy Xie is a former Morgan Stanley economist now living in China; The following is from the South China Morning Post:

The A-share market is collapsing again, like many times before. It takes numerous government policies and “expert” opinions to entice ignorant retail investors into the market but just a few days to send them packing. As greed has the upper hand in Chinese society, the same story repeats itself time and again.

A stock market bubble is a negative-sum game. It leads to distortion in resource allocation and, hence, net losses. The redistribution of the remainder, moreover, isn’t entirely random. The government, of course, always wins. It pockets stamp duty revenue and the proceeds of initial public offerings of state-owned enterprises in cash. And, the listed companies seldom pay dividends.

The truly random part for the redistribution among speculators is probably 50 cents on the dollar. The odds are quite similar to that from playing the lottery. Every stock market cycle makes Chinese people poorer. The system takes advantage of their opportunism and credulity to collect money for the government and to enrich the few.

I am not sure this bubble that began six months ago is truly over. The trigger for the current selling was the tightening of lending policy. Bank lending grew marginally in July. On the ground, loan sharks are again thriving, indicating that the banks are indeed tightening. Like before, government officials will speak to boost market sentiment. They might influence government-related funds to buy. “Experts” will offer opinions to fool the people again. Their actions might revive the market temporarily next month, but the rebound won’t reclaim the high of August 4.

This bubble will truly burst in the fourth quarter when the economy shows signs of slowing again. Land prices will start to decline, which is of more concern than the collapse of the stock market, as local governments depend on land sales for revenue. The present economic “recovery” began in February as inventories were restocked and was pushed up by the spillover from the asset market revival. These two factors cannot be sustained beyond the third quarter. When the market sees the second dip looming, panic will be more intense and thorough.

The US will enter this second dip in the first quarter of next year. Its economic recovery in the second half of this year is being driven by inventory restocking and fiscal stimulus.

However, US households have lost their love for borrow-and-spend for good. American household demand won’t pick up when the temporary growth factors run out of steam. By the middle of the second quarter next year, most of the world will have entered the second dip. But, by then, financial markets will have collapsed.

China’s A-share market leads all the other markets in this cycle. Even though central banks around the world have kept interest rates low, the financial crisis has kept most banks from lending. Only Chinese banks have lent massively. That liquidity inflated the mainland stock market first, then commodity markets and property market last. Stock markets around the world are now following the A-share market down.

By next spring, another stimulus story, involving even bigger sums, will surface. “Experts” will offer opinions again on its potency. After a month or two, people will be at it again. Such market movements are bear-market bounces. Every bounce will peak lower than the previous one. The reason that such bear-market bounces repeat is the US Federal Reserve’s low interest rate.

The final crash will come when the Fed raises the interest rate to 5 per cent or more. Most think that when the Fed does this, the global economy will be strong and, hence, exports would do well and bring in money to keep up asset markets. Unfortunately, this is not how our story will end this time. The growth model of the past two decades - Americans borrow and spend; Chinese lend and export - is broken for good. Policymakers have been busy stimulating, rather than reforming, in desperate attempts to bring growth back. The massive increase in money supplies around the world will spur inflation through commodity-market speculation and inflation expectations in wage setting. We are not in the midst of a new boom. We are at the last stage of the Greenspan bubble. It ends with stagflation.

Hong Kong’s asset markets are most sensitive to the Fed’s policy due to the currency peg to the US dollar. But, in every cycle, stories abound about mysterious mainlanders arriving with bags of cash. Today, Hong Kong’s property agents are known to spirit mainland-looking men, with small leather bags tucked under their arms, to West Kowloon to view flats. Such stories in the past of mainlanders paying ridiculous prices for Hong Kong flats usually involved buyers from the northeast. In this round, Hunan people have surfaced as the highest bidders. The reason is, I think, that Hunan people sound even more mysterious. But, despite all this talk, the driving force for Hong Kong’s property market is the Fed’s interest rate policy.

Punters in Hong Kong view the short-term interest rate as the cost of capital. It is currently close to zero. When the cost of capital is zero, asset prices are infinite in theory. At least in this environment, asset prices are about story-telling. This is why, even though Hong Kong’s economy has contracted substantially, its property prices have surged. Of course, the short-term interest rate isn’t the cost of capital; the long-term interest rate is. Its absence turns Hong Kong into a futile ground for speculation, where asset prices increase more on the way up and decrease more on the way down.

When the Fed raises the interest rate, probably next year, Hong Kong’s property market will collapse. When the Fed’s policy rate reaches 5 per cent, probably in 2011, Hong Kong’s property prices will be 50 per cent lower.

Andy Xie is an independent economist

My comments:It is much better to hear opinion from Independent economist rather bias hired one from others.

Deficit to the moon again!!

2009-08-21T15:28:00.002-05:00

8/21/09

It is no surprise to see this as news today:

WASHINGTON (Reuters) - The Obama administration will increase its 10-year budget deficit projection to roughly $9 trillion from $7.108 trillion in a report next week, a senior administration official told Reuters on Friday.

The 2010-2019 cumulative deficit projection replaces the administration's previous estimate of $7.108 trillion, said the official, who is familiar with the plans.

"The new forecasts are based on new data that reflect how severe the economic downturn was in the late fall of last year and the winter of this year," the official said.

"Our budget projections are now in line with the spring and summer projections that the Congressional Budget Office put out."

I have no comment. All I know we are going to be so so so broke very soon.

Some figure for Existing Home Sale today!!

2009-08-21T10:53:00.001-05:00

8/21/09

Housing and foreclosure analyst Mark Hanson sends along some more reasons to be a bit skeptical when looking at today's big existing home sales leap.

Here's a few of the internals he cites:

Existing Home Sales would have been negative over June if not for the increase in Northeast Condo sales
Single Family Detached sales were DOWN 5k units m-o-m
In the all-important Western region, existing sales were DOWN 10%.
Last summer selling season, existing sales were up 5 months in a row going into July
Foreclosure activity in July increase by 24k m-o-m - more than existing home sales

My comments: No comment! Time will tell if this is seasonal or not!!

Recession is OVER ????

2009-08-12T10:42:00.003-05:00

8/12/09

Apparently, it's over. Out of 27 economists, not a single one sees GDP falling in 2010. Not sure if that is comforting.

WSJ: After months of uncertainty, economists are finally seeing a break in the clouds. Forecasts were revised upward for every period, with 27 economists saying the recession had ended and 11 seeing a trough this month or next. Gross domestic product in the third quarter is now expected to show 2.4% growth at a seasonally adjusted annual rate amid signs of life in the manufacturing sector, partly spurred by inventory adjustments and strong demand for the "cash for clunkers" car-rebate program.

A better-than-expected employment report for July, where employers cut 247,000 jobs and the jobless rate fell for the first time in 15 months, suggests the worst is over. The unemployment rate is still expected to rise to 9.9% by December, but economists forecast that the economy will shed far fewer jobs over the next 12 months than they had forecast last month.

Warning: Past performance may be an indication of economists' future results.

My comments: I am sure year later, the all 27 economists are going to resign from their post. Yes, we will see!!

Next Wave Down will be bigger !!!

2009-08-11T21:42:00.001-05:00

8/11/09

Bob Prechter "Quite Sure" Next Wave Down Will Be Bigger and March Lows Will Break

In late February, Robert Prechter of Elliott Wave International said "cover your shorts," and predicted a sharp rally that would take the S&P into the 1000 to 1100 range.

With that prediction having come to pass, Prechter is now saying investors should "step aside" from long positions, and speculators should "start looking at the short side."

"The big question is whether the rally is over," Prechter says, suggesting "countertrend moves can be tricky" to predict. But the veteran market watcher is "quite sure the next wave down is going to be larger than what we've already experienced," and take major averages well below their March 2009 lows.

Yes, the late 2007-early 2009 market debacle was just a warm-up to what Prechter believes will be the bear market's main attraction. In this regard, he says the current cycle will echo past post-bubble periods such as America in the 1930s and England in the 1720s, after the bursting of the South Sea bubble.

The 2000 market peak market a "major trend change" for the market from a very long-term cycle perspective, and the downside is going to continue to be painful well into the next decade, Prechter says. "The extreme overvaluation, the manic buying and bubbles in the late 1990s [and] mid-2000s are for the history books - they're very large," he says. "The bear market is going to have balance that out with some sort of significant retrenchment."

My comments: Who is Bob Prechter?! Check out yourself. Hmm, I am well-prepared. How about you?!

Stock markets are technically very overbought !!!

2009-08-11T19:43:00.002-05:00

8/11/09

Please, Please, and please read the following carefully, it is written by one of my favorite technical analysts(not hired by any financial firms)......

And by overbought, I mean WAY overbought.

The relative strength index (RSI) is a metric used to measure the velocity and momentum of a given investment by comparing its upward and downward moves from close-to-close. If an investment is moving up strongly, its RSI is higher. Similarly, if an RSI is low, it means the investment is performing weakly.

Historically, RSI’s of 70 or higher mean an investment is overbought while an RSI of 30 means an investment is oversold. In these situations the market is primed for a “revert to the mean” trade, meaning you could see a quick correction or turnaround rally as the market snaps back to a more reasonably RSI.

Well, have a look at Friday's NASDAQ.

As you can see, the NASDAQ recently hit an RSI of 75. This is the highest reading we’ve seen in nearly two years. In fact, the last time the NASDAQ had an RSI of 75 was October 10, 2007, right before stocks entered their first major leg down in the Financial Crisis, losing 55% in six months.

As soon as I noticed this, I called up Ron Coby, a brilliant portfolio manager based in Medford, Oregon. Ron’s one of the smartest guys I know and when it comes to trading short-term moves, he’s one of the best in the business. What he had to say completely blew me away.

Ron said,“Graham, you won’t believe this, but I went back on the NASDAQ and made a note of every time it hit an RSI of 75. EVERY TIME, the market collapsed soon after. And I don’t mean a “plain vanilla” correction, I mean a full blown CRASH.”

Ron then forwarded me the following chart. Suffice to say, I was floored:

As you can see, the NASDAQ has hit an RSI of 75 or higher five times in the last 12 years. Every time, the market collapsed soon after with an average drop of -22%. In several cases, stocks suffered a full-blown CRASH.

This is a very serious warning for the Bulls. A high RSI doesn’t mean that stocks have to CRASH immediately. But it does indicate that the NASDAQ is more than ready for a serious correction. Again, an RSI of 75 or higher has only been hit FIVE times in the last 12 years. Two of those times were at massive historic bubble peaks. The others were all periods in which stocks were simply far too overbought. And ALL FIVE OF THEM PRECEDED SERIOUS CORRECTIONS.

Be forewarned, if stocks are this overbought, we’re in dangerous territory. If smart money like Ron Coby is worried and shifting to a defensive stance, I’m paying attention.

I suggest you do the same.

My comments:At two weeks before, I have already noticed this overbought condition. Watch out ahead!! Yeah...it is coming!!!

New Toxic Products from our old Banks !!!

2009-08-10T21:14:00.002-05:00

8/10/09

In case everyone miss this frisky news from Business week. I repost it here:

Lenders haven't sworn off risky financial products. They've come up with a slew of new ones

That didn't take long. The economy hasn't yet recovered from the implosion of risky investments that led to the worst recession in decades -- and already some of the world's biggest banks are peddling a new generation of dicey products to corporations, consumers, and investors.

More from BusinessWeek.com:

• The Big Banks Enabled Subprime Lenders

• The Top 25 Subprime Lenders

• Banks: Good News -- and Bad Assets

In recent months such big banks as Bank of America (BAC), Citigroup (C), and JPMorgan Chase (JPM) have rolled out newfangled corporate credit lines tied to complicated and volatile derivatives. Others, including Wells Fargo (WFC) and Fifth Third (FITB), are offering payday-loan programs aimed at cash-strapped consumers. Still others are marketing new, potentially risky "structured notes" to small investors.

There's no indication that the loans and instruments are doomed to fail. If the economy keeps moving toward recovery, as many measures suggest, then the new products might well work out for buyers and sellers alike.

But it's another scenario that worries regulators, lawmakers, and consumer advocates: that banks once again are making dangerous loans to borrowers who can't repay them and selling toxic investments to investors who don't understand the risks -- all of which could cause blowups in the banking sector and weigh on the economy.

Visit the Loans Center

CDS-Linked Corporate Credit Lines

Some of Wall Street's latest innovations give reason for pause. Consider a trend in business loans. Lenders typically tie corporate credit lines to short-term interest rates. But now Citi, JPMorgan Chase, and BofA, among others, are linking credit lines both to short-term rates and credit default swaps (CDSs), the volatile and complicated derivatives that are supposed to act as "insurance" by paying off the owners if a company defaults on its debt. JPMorgan, BofA, and Citi declined to comment.

In these new arrangements, when the price of the CDS rises -- generally a sign the market thinks the company's health is deteriorating -- the cost of the loan increases, too. The result: The weaker the company, the higher the interest rates it must pay, which hurts the company further.

The lenders stress that the new products give them extra protection against default. But for companies, the opposite may be true. Managers now must deal with two layers of volatility -- both short-term interest rates and credit default swaps, whose prices can spike for reasons outside their control.

Making matters more difficult for corporate borrowers: high fees. Banks are raising their rates for credit lines across the board -- but the new CDS-based credit lines cost far more than the old lines. FedEx (FDX) could end up paying $1.9 million to $3.6 million a month if it decides to tap a new line from JPMorgan and Bank of America. On its previous line with JPMorgan, FedEx would have paid about $540,000.

Yet many companies have little alternative. With corporate credit remaining tight, banks increasingly are steering borrowers to the CDS-linked loans. All told, lenders have handed out nearly $40 billion worth this year -- roughly 70% of the total in credit lines extended to borrowers in fairly good standing. That's up from around 14% in 2008. FedEx, United Parcel Service (UPS), Hewlett-Packard (HPQ), and Toyota Motor Credit have all taken the plunge. "It wasn't our idea," says a UPS spokesman. "The banks pulled back from offering set rates."

Big Banks Offering Payday Loans

At the other end of the borrower spectrum, big banks are entering another controversial arena: payday loans, whose interest rates can run as high as 400%. Historically the market has been dominated by small nonbank lenders, which mainly operate in poor urban centers and offer customers an advance on their paychecks. But big lenders Fifth Third and U.S. Bancorp (USB) started offering the loans, while Wells Fargo continues to boost its payday-loan program, which it began in 1994.

More big banks are getting into the market just as a recent flurry of usury laws has crippled smaller players. In the past two years lawmakers in 15 states have capped interest rates on short-term loans or kicked out payday lenders altogether. The state of Ohio, for example, has imposed a 28% interest rate limit. But thanks to interstate commerce rules, nationally chartered banks don't have to follow local rules. After Ohio limited rates, Cincinnati-based Fifth Third, which has 400 branches in the state but also operates in 11 others, introduced its Early Access Loan, with an annual interest rate of 120%. "These banks are skirting state laws," says Kathleen Day of advocacy group Center for Responsible Lending. Says a spokeswoman for Fifth Third: "Our Early Access product fully complies with federal regulations and applicable state regulations."

Lenders argue they offer a valuable service for those who need emergency cash. Wells Fargo says it warns customers using its Direct Deposit Advance that the loan is expensive and tries to offer alternatives. "We have policies in place to prevent long-term usage of the services," says a spokeswoman. U.S. Bancorp didn't return calls.

National regulators are taking notice, however. The Office of Thrift Supervision says it is "looking into" two institutions that are offering the high-interest loans. "We need to make sure there's no predatory lending and also ensure that there are no risks to the institutions," says an OTS spokesman.

Derivatives for Small Investors

On the investing front, too, Wall Street firms are embracing more risk. Big brokerage houses, including Morgan Stanley Smith Barney (MS) and UBS (UBS), are selling new forms of "structured notes," a type of debt instrument. Wall Street sold $15 billion of the products in the second quarter, up from $13 billion in the first, according to StructuredRetailProducts.com. Some of the new notes have a minimum investment of only $1,000.

Structured notes are essentially derivatives for small investors -- and they make sense for some. Basic structured notes let buyers benefit from the growth in stock, bond, or currency prices while offering some degree of loss protection. But many of the latest iterations are highly complex and may not compensate for all the risk. Buyers "have to have the [financial] experience to be able to evaluate the risk," says Gary L. Goldsholle, general counsel at the Financial Industry Regulatory Authority, the securities industry's self-governing organization.

The new debt investments offer attractive rates, sometimes guaranteeing double-digit returns for the first couple of years. But when those teaser rates disappear, investors face huge potential losses over the life of the instrument, up to 15 years. A Morgan Stanley spokeswoman says the firm "services a broad range of products for retail and ultrahigh-net-worth clients," including structured products, and "offers training to financial advisers to assist them in making suitability determinations." UBS declined to comment.

The risks to investors can be tough to tease out of the prospectus. A July offering from Morgan Stanley promises 10% interest for the first two years. After that, it pays 10% when short-term interest rates and the Standard & Poor's 500-stock index both stay within certain ranges. If they don't, the investment pays nothing.

The prospectus says the latter scenario would have been a rare event over the past 15 years. But as the recent market turmoil has shown, historical patterns aren't always reliable. Investors in similar notes got burned last year when Lehman Brothers failed. Says Bob Williams, a broker at Delta Trust Investments in Little Rock who's often pitched on such investments: "I'm not convinced half the brokers in this country, much less their clients, understand these products."

My comments:WTF!! How come our bank regulator let them sell these frisky products to us ??? Are they keep saying need to tighten the standard??? Damn!! You all know why I am still very bearish. Good luck to America. I am totally 100% sure we are going into doom world.

Should you believe what expert analysts predict ??!

2009-08-08T13:22:00.004-05:00

8/8/09

I find out very reliable data about how our so proud Wall Street Analysts have done for their job:

The incomparable James Montier--once of SocGen, soon of GMO--blasts the Efficient Market Hypothesis (EMH) in a recent speech (via John Mauldin). Let's leave the EMH aside for a moment and just focus on one simple point.

Most investment economic analysis is devoted to forecasting the future. Unfortunately, the evidence is in...and it's clear that people can't forecast the future.

In my opinion [trying to forecast the future] is one of the biggest wastes of time, yet one that is nearly universal in our industry. Pretty much 80-90% of the investment processes that I come across revolve around forecasting. Yet there isn't a scrap of evidence to suggest that we can actually see the future at all.

For example, the last chart shows how good economists are at forecasting GDP.

Note that, year in, year out, the forecasts stay very close to the average GDP growth rate. Of course, everyone knows that the economy is cyclical, so forecasting this way is absurd. But economists simply have no ability to forecast the turns:

And how about stock analysts? How are analysts at predicting how stocks will do over the next year?

Terrible. See the middle chart above!!

Analysts just pick targets that are close to the average annual return for the average stock in recent years--then cross their fingers and pray. Of course, stocks are cyclical, too. And once again, analysts have no ability to call the turns.

My comments: Now, you see those called analysts are working for their own company best interest. They are not doing the prudent job to advise or give good idea to us. Period. Also, look at the very first chart I post above. Now, we are at reflective wave. What do you think?

No recovery for consumer spending !!!

2009-08-06T11:17:00.002-05:00

8/6/09

One of every 10 American workers will be without a job by early 2010, economists project, shaking the confidence of those still on payrolls and discouraging spending. It may take as long as 15 years for consumers to fully repair finances battered by the decline in home values, stocks and employment, said Edmund Phelps, winner of the Nobel prize in economics in 2006.

Decreasing pay is not the only hurdle for consumers. Plunging home prices and stocks reduced household net worth by a record $13.9 trillion from the third quarter of 2007 through this year’s first quarter, according to figures from the Fed.

“Households are going to have to do an awful lot of rebuilding of their wealth,” Phelps, a professor at Columbia University in New York, said this week in an interview on Bloomberg Television. “Even if that rebuilding goes on at a pretty good clip, it will take 12 or 15 years for households to get to the wealth level that they had several years ago. Consumer demand is going to take a long time to rebuild to normal levels.”

My comments: It is just opinion by Nobel Prize economist. However, it does make very sense. Just ask yourself, do you spend less compare the time you were one or two years ago?! And, are you going to increase your spending on coming months?! I guess you all know the answer.

Surprise move by Bank of England !!!

2009-08-06T11:04:00.002-05:00

8/6/09

Recent polls by Bloomberg and a Shadow MPC report calling for an end to QE from the Bank of England are way off the mark with the Bank of England announcing this morning that not only will they extend the QE programme, but also double the expected GBP25B addition to GBP50B. This takes the total programme to GBP175B. The MPC has said that the world economy remains in recession, despite increasing signs that the output in the UK’s export market is stabilizing, and that financial markets are still fragile even with noticeable improvements. This has weighed tremendously on Sterling across the board, and could very well set the tone for the day. Rates were left unchanged at 0.50% as expected.

My comments: Wow. Bank of England is increasing the failed move again to put addition money into qualitative easing. That act is telling everyone that they are still in very very bad shape. Also, their view of the world economy is still remains in recession. Will next week our US Fed would catch on the same conclusion? Should we reduce the QE or follow England?? I would say Fed has to keep what they are doing(Even though I think it is not working well), there no interest rate adjust until next year(Actually, I would say they never have a chance to consider to raise interest rate again). They will keep purchase government bonds period!!

Chinese Bubble 2.0 !!

2009-08-06T00:01:00.002-05:00

8/5/09

Recently, I have been putting lots of effort into creating video chinese blog site. Therefore, I wrote less technical stuffs here. The following is catching my attention: ..

Putting aside price charts of the Chinese equity market for now and turning to monetary measures, we can see something rather alarming happening. China’s M2 has enjoyed a constant rate of acceleration as shown in the chart below (in semi log scale). But in late 2008 the rate of acceleration suddenly increased dramatically:

This was a consequence of the massive stimulus plan put into motion by the Chinese government. They pumped unprecedented amounts of liquidity into their economy to offset the world-wide economic slowdown. There would be nothing singularly alarming about that since all central banks around the world, as well as governments in charge of fiscal policy, have orchestrated a collective burst of activity.

What is alarming is that the Chinese economy, stock market and especially real estate market are just now displaying bubble-like characteristics. The government controlled banking sector is a mystery wrapped in an enigma. No one can begin to fathom the amount of non-performing loans on the books. Unlike the US which went through a gut wrenching cleansing - thanks to the largess of the lobby-less taxpayer, the financial sector is once again back in fighting shape (privatized profits, public losses). China has yet to address their toxic assets

As we briefly touched on before, since last year’s low the Shanghai market has now appreciated more than 100%. Once again the stock market has enthralled the average person in China with thoughts of wealth and the possibility of making more in a month than what they earn in a year at their regular job. Speculation in the market is seen as not only a legitimate way to make money but a very lucrative one with low barriers to entry.

A sure sign of a bubble is extreme turnover. Recently, the total Chinese stock market turnover (in one day) reached $63 billion. That’s more than the combined total turnover of $58 billion in London, New York and Tokyo for the same day!

I know we’ve been having an especially humdrum summer (in volume) but also consider that within the $58 billion turnover are billions of dollars worth of Chinese shares and ETFs (traded on North American exchanges).

Morgan Stanley Asian economist, Andy Xie says in a recent research report: “The stock market is in a final frenzy again. The most ignorant retail investors are being sucked in by the rising momentum.”

Turning to the real estate market, there is more bad news. The two rock solid methods of real estate valuation: personal income to price ratio and rental yield to price ratios are beyond extreme.

Although the US per capita income is approximately seven times that of China’s urban per capita income, the price per square feet is almost equal. Rental yields on properties is negligible with most below inflation levels - meaning that the primary rationale for buyers is continued future price appreciation not future rents earned.

Like other bubbles, this will end very badly. That is for certain. What isn’t certain is when exactly the music will stop.

One clue may be the date that many in China are eyeing as the expiration date of a Chinese government underwritten put option: October 1st, 2009 - the 60th anniversary of the National Day of the People’s Republic of China. The general belief is that the government will do everything in its power to not ‘lose face’ before that date so as to not mar the celebration. Of course, whether this is true or not is irrelevant. All that matters is that enough believe it to be so.

The reason I spend so much time thinking and writing about the Chinese economy and financial markets is that they are now a significant part of the global landscape. The precarious nature of this fragile recovery is even more clear when we realize just how pivotal a role China plays. Unless the rest of the world can recover fast enough to back on its feet before China’s bubble bursts, this could get ugly.

You can play this with obvious Chinese ADR shares like Baidu (BIDU) which does a very good job of tracking the Shanghai Stock Exchange composite with an added beta boost. And you can also use Chinese ETFs and closed end funds like the iShares FTSE/Xinhua China 25 (FXI).

You can read more of Andy Xie’s analysis here.

My comments: Oooopps!! It is warning sign now. Yes, if you see something rate of speed going up like crazy..like chinese stock market. You know there is something burning. Let's watch out, folks!!

Who bail out our postman ??!

2009-08-05T10:11:00.002-05:00

8/5/09

The following news is no surprise to everyone in America:

(AP) The post office says it lost $2.4 billion from April to June.

That brings the year's losses so far to $4.7 billion. And the Postal Service expects to be $7 billion in the red when the fiscal year ends on Sept. 30. The stark figures come from a decline in mail volume as people rely more on e-mail, plus a dip in advertising mail because of the recession.

In an effort to reduce costs, the agency has proposed closing several hundred local post offices, has asked Congress for permission to reduce mail delivery to five days a week, and has reduced hours at many offices.

My comments: Well, I guess we will expect huge layoffs from Postal Office. Anyone like to guess how many postman will be out of job before 2010? 10,000, 20,000 or even 30,000 ? I do not see any recovery at my sight for our economy. Even no job growth in Federal government and they are coming about to layoff big time. Mr President: Where can we find the jobs you keep saying or stop eliminating?? Where,...I still do not see it. Do you see any, folks?!

Warren Buffet "Bailout" ?!!

2009-08-05T09:52:00.003-05:00

8/5/09

This chart, which Winkler produced, shows the extent to which Buffett portfolio companies ahve relied on government handouts

Says Winkler:

Without FDIC’s debt guarantee program, even impregnable Goldman would have collapsed.

And this excludes the emergency, opaque lending facilities from the Federal Reserve that also helped rescue the big banks. Without all these bailouts, the financial system would have been forced to recapitalize itself.

Banks that couldn’t finance their balance sheets would have sold toxic assets at market prices, and the losses would have wiped out their shareholder’s equity. With $7 billion at stake, Buffett is one of the biggest of these shareholders.

He even traded the bailout, seeking morally hazardous profits in preferred stock and warrants of Goldman and GE because he had “confidence in Congress to do the right thing” — to rescue shareholders in too-big-to-fail financials from the losses that were rightfully theirs to absorb.

All of what Winkler says is undoubtedly true, though we think Winkler is probably overstating the case a bit. At some point, we'll have to get over the idea that anyone who was rescued during a bank run is stained for the rest of their existence. If these banks all repay the TARP and roll over their government-backed debt into non-government backed debt, does it make sense to keep complaining that during a crisis they had to be rescued.

What's more, Buffett himself did not need a rescue. Sure, he benefitted from the government's intervention, and it's also true that Berkshire Hathaway (BRK) by being too big to fail had implicit backing from the government, if it ever came to that, but it didn't, and we still maintain that the fact that since nobody's found a timebomb lurking in side Berkshire somewhere -- when nearly every other financial company had one -- is a testament to the fact that he's practiced, more or less, what he's preached.

My comment: Hey, no wonder he does asking people buying stocks when Dow is trading at 9,000. When would be my turn to get bail out by goverment?!

No wonder everyone want to be banker ?!!

2009-07-30T11:33:00.002-05:00

7/30/09

From Bloomberg today:

Citigroup Inc. and Merrill Lynch & Co., recipients of taxpayer bailout funds under the Troubled Asset Relief Program, paid out a combined $9 billion in bonuses last year after suffering total losses of $54 billion, according to a report by New York Attorney General Andrew Cuomo.

In the report on “bank bonus culture” published today, the state analyzed 2008 bonuses at nine banks that received TARP financing from the U.S. government. New York-based Citigroup and Merrill, since taken over by Bank of America Corp., received TARP funding totaling $55 billion, Cuomo said in his report.

“When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well,” Cuomo’s office said in the 22-page report. “When the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well. Bonuses and overall compensation did not vary significantly as profits diminished.”

The report also said that Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. paid out a total of $18 billion in bonuses in 2008 while having received a combined total of $45 billion in taxpayer dollars through TARP. Together, the three firms earned only $9.6 billion last year, Cuomo said.

My comments:Who want to be millionaire? Go work in big banks. Oh, I have question about how come some banks they did not even have profit, and they are still getting more money out for bonus??? Are they getting our money to pay those folks bonus??

Insiders are selling like crazy !!!

2009-07-30T10:24:00.002-05:00

7/30/09

Despite more and more people calling this is brand new bulls market and economy is running V-shape turn around. Let's read the following:

""Executives in charge of the largest US companies sent a signal of their concerns by selling far more shares than they bought this month, according to data based on Securities and Exchange Commission filings.

Share sales by so-called company insiders are outstripping purchases so far this month by more than 22 times. TrimTabs, the investment research company, said insiders of S&P 500 listed companies have unloaded $2.6bn in shares in June, compared with $120m in purchases.

“The smartest players in the US stock market – the top insiders who run public companies – are not betting their own money on an economic recovery,” said Charles Biderman, chief executive of TrimTabs.""

My comments: Here you go!! Actually, more insiders are selling into this giant rebound rally and the ratio is even higher than the highs of last bulls market 2007. So, what do you think?! Do those insiders are indeed in deep trouble and in hurry to get cash??! Majority of them are rich people and they make million dollars every year. If people believe this is historical low level to buy stocks, why are they keep selling?! Do you get it make sense at all?? It is very simple that even most of them do not believe their stocks value will go up in next few years and so are their business, also no recovery for us economy as well. Right?! Technically, stock markets are running like super bulls, and fundamentally, it is like running our next year GDP will post 4% or above. However, many economists are now predicting our recovery is very very slow and close to 1% GDP growth at most. Hmmm...well...here you go those damn economists. Make your own thoughts. I do not believe we will see any recovery at all. Good luck!!

Ooops, what was ben bernanke thinking back then???

2009-07-28T23:20:00.002-05:00

7/28/09

http://www.youtube.com/watch?v=HQ79Pt2GNJo

Copy that link and see!! Ben was so damn wrong!!! and now he said...

http://www.marketwatch.com/story/bernanke-explains-crisis-to-average-americans-2009-07-26?siteid=rss&rss=1

Why he still be first chair person to control our nation economy??!! Damn it!! However, majority of economists are also missed judge this mess. Well, what can we say??!

Still consolidate with bullish bias !!!

2009-07-28T22:48:00.002-05:00

7/28/09

Market is still running very bullish!! With huge government bonds sale week, market is still able to keep its bullishness. It is very amazing!!

Record Treasury Yeild !!!

2009-07-27T23:42:00.002-05:00

7/27/09

Let's look at why people over the world keep buying US Government Bonds!!! Or kinda bail us out of this big mess!!

Bloomberg is reporting Real Yields Highest Since 1994 Aid Record Debt Sales.

The highest inflation-adjusted yields in 15 years are helping provide the Treasury with record demand at auctions as the U.S. prepares to sell $115 billion of notes this week.

Treasuries are the cheapest relative to inflation since 1994 after consumer prices fell 1.4 percent in June from a year earlier. The real yield, or the difference between rates on government securities and inflation, for 10-year notes was 5.10 percent today, compared with an average of 2.74 percent over the past 20 years.

The gap helps explain why investors are buying bonds after losing 4.8 percent this year, the steepest decline on record, according to Merrill Lynch & Co. indexes that date back to 1978.

My comment: Wow!! 5.10% for 10 year government bonds. What a very damn attractive interest rate. I would love to park my saving in that, wouldn't anyone??! Are US is going to issue more damn bonds with higher interest rate on the road??! I bet they have no choice. I expect to see more government bonds with much much higher interest rate months later. We will see!!

Gann Analysis Long Term Predict !!

2009-07-27T23:34:00.003-05:00

7/27/09

I expect market will test the primary down trend line, same as 1:2 Gann's time line. The time would be approximate first quarter of 2010. This is my studies by using Gann's theory and E-wave. Believe it or not, it is up to you. I here to declare it probably will happen and market will make new lows. Yes, I still believe we will see DOW 4,000-4,500 next year !!!

Real Estate Quote of the Day and more !!!

2009-07-27T22:45:00.002-05:00

7/27/09

Please check my other blog link:cigstockchart.blogspot.com for technical market analysis.
Folks, check this out, despite we have better New Home Sales number today,...

"National New Home Sales, on a monthly basis, don’t even add up to half of the total foreclosure activity in California alone in a single month.”

Now, is that called "Green Shoot"??! You can choose to believe it or not!

Laughing CNBC website redesign !!!

2009-07-24T10:28:00.001-05:00

7/24/09

Folks, please click to enlarge the content of this interesting redesign cnbc website.

Tick..Tick...Ticking Boom is coming !!!

2009-07-22T19:59:00.002-05:00

7/22/09

It has been awhile I write anything here. However, I find no good news since last time I update my blog. The only good news is stock market running like super bulls market. Let's read the following:

Federal Reserve Chairman Ben S. Bernanke said a potential wave of defaults in commercial real estate may present a “difficult” challenge for the economy, without committing to additional steps to aid the market.

Bernanke, testifying before the Senate Banking Committee today, urged lenders to modify “problem” mortgages to avert defaults. Christopher Dodd, the Connecticut Democrat who chairs the panel, told Bernanke that “some have suggested” the commercial market “may even dwarf the residential mortgage problems” in the U.S.

It “may be appropriate” for the government and Congress to consider “fiscal” steps to support the industry, Bernanke said today. Ideas for fresh support for the market could include government guarantees for commercial mortgages, Bernanke also said today, while noting no proposal on the subject has emerged.

U.S. commercial property prices fell 7.6 percent in May from a month earlier, bringing the total decline to 35 percent since the market’s peak, Moody’s Investors Service said in a report this week. Commercial properties in the U.S. valued at more than $108 billion are now in default, foreclosure or bankruptcy, almost double than at the start of the year, Real Capital Analytics Inc. said earlier this month.

“As the recession’s gotten worse in the last six months or so, we’re seeing increased vacancy, declining rents, falling prices -- and so, more pressure on commercial real estate,” Bernanke said yesterday. “We are somewhat concerned about that sector and are paying very close attention to it. We’re taking the steps that we can through the banking system and through the securitization markets to try to address it.”

One of the main issues for the industry is that the market for debt backed by commercial mortgages “has completely shut down,” the Fed chief said yesterday.

Folks, remember what our Fed Chairman has said since 2005...

In 2005 Bernanke said there was no housing bubble to bust. "[Housing] increases, he said, "largely reflect strong economic fundamentals," such as strong growth in jobs, incomes and the number of new households.
Less than two years ago he said things were contained.
In January 2008, he said housing would improve by the end of the year.

Now, if he said there is a risk about collapse of commercial Real Estate, you bet it will happen. The question is when it will happen. It is now ticking!!! Good luck to America!!!

Market support still held !!

2009-07-08T22:48:00.002-05:00

7/8/09

The support zone 875-880 still held! I expect market will rebound tomorrow. Now, I post little more detail on Chinese blog!

Interesting comments from former assitant Treasury Secretary !!!

2009-07-08T22:44:00.002-05:00

7/8/09

The following is an interesting comments from a very outspoken Former Assistant Treasury Secretary(Craig Roberts) on the bailouts, the dollar, and Goldman Sachs.

Craig Roberts: Bank bailout was a fraud and it won't succeed. Don't not know what sort of stupidity the Treasury Secretary and the Federal Reserve will resort to next.

Max Keiser: Quick question. What should the Treasury Secretary be doing?

Craig Roberts: He should be trying to save the dollar as the world's reserve currency which means stopping the wars, reducing the bailout money, and trying to reduce the trade and budget deficits in order to save the dollar. That's what he should be doing.

Max Kesier: Does the treasury secretary work for the people or does he work for the banking system on Wall Street?

Craig Roberts: He works for Goldman Sachs.

My comment: Even the government former co-worker think our Treasury Secretary is a dump fool!! What a shame for America and us!!

What ??! Pradon Me !! 2nd Stimulus ....

2009-07-07T12:50:00.002-05:00

7/7/09

As I always thought, our government are only keep printing money without solving any issue or helping our economy at all. None!! Period!! As every major news source....

"I think we need to be open to whether we need additional action," said by House of Representatives Majority Leader Steny Hoyer.

And

Laura D'Andrea Tyson, an economic adviser Obama, said on Tuesday in Singapore that the United States should be planning for a possible second round of fiscal stimulus and focused on infrastructure investment.

What?! then consider sunday our vice president admitted:
"we misread how bad the economy was....."

Everybody, let see where they so called experts economists and white house bought us into? They are liable for what their economic policy. Correct!! You cannot just admit "I was damn wrong back then underestimate how bad our economy will go...." those all f*&^ BS stuffs. We are not children, white house, we now all are feeling, seeing, frustrating about our future, fake hope of 2nd half year recovery. I swear to you white house folks:"Recovery your ass" Now, to make us fool again to introduce 2nd stimulus wasting money scheme. Damn. Good luck to us all !!!

Market still hold above key support !!!

2009-07-06T23:57:00.002-05:00

7/6/09

Market is still able holding on above key support 8200 for Dow!! Expect more rebound for tomorrow morning.

Economic reports are rather light this week. Only items worth paying attention to are ISM index and Initial jobless claims for May.

Alcoa will kick off 2nd quarter earnings. Right now, expectations for these earnings is not very high.

Geither (Treasury) and Elizabeth Duke (Federal Reserve) will speak this week.

Group of Eight Summit in Italy is an important event. China has once again proposed a new world currency. This will affect the market mood. However, it is unlikely that such proposal will have any long lasting consequences.

MJ Thriller to Californians !!!

2009-07-02T11:48:00.002-05:00

7/2/09

Let's read the following, do not take it too serious if you are Californian. Actually, our Illinoisian are going to be next.

Dear Californians,

It sucks to be you today, though our weather here in NYC is awful so you might have it better on that front. Nevertheless, a lot of you who in some way are connected to the state are getting paid in IOUs. Some banks will accept them on a case-by-case basis, but good luck buying groceries with them, or paying your auto loan or even your rent.

The good news is that one (1) of you will get some cash today, courtesy of Clusterstock! We're offering to pay one (1) of you $500 (can be via PayPal) for $1,000 worth of bona fide, California state-issue IOUs, provided we can work out the transaction.*

We think $.50 on the dollar is a fair price, and we've love to buy more, but we don't want to be overwhelmed by you desperate Californians looking to unload your worthless paper for our valuable paper (you know, the kind we use in New York, the money capital of the world. It's green, in case you've forgotten. It doesn't tear easily and it's hard to counterfeit. In short, real money is pretty awesome, and if we were you, we'd be happy to get our hands on some)

So send us an email and we'll see what we can work out.

Take it as a joke to laugh for your holiday.

Besure read NY times, they have graphical form to tell you about 30 states are having their budget problem for next fiscal year.

Know more of Non Farm Payroll

2009-07-02T10:06:00.002-05:00

7/2/09

Its tine for everyone’s favorite monthly data point, Non-Farm Payrolls.

For those of you who are relatively new to the site, here is a brief description of how our analysis has evolved over time.

• Weak Jobs Recovery: Following the 2001 Recession, the economic recovery, from a jobs perspective, was rather weak. Indeed, from 2002-07, we had the weakest employment recovery of any post-recession period since World War 2. This data point — widely ignored on Wall Street and MSM — was a warning sign that the recovery was abnormal. It is what sent us looking for what was driving the economy — and the answer was borrowed money.

• Survey Data: There are two employment surveys — Establishment and Household. Establishment works of employment tax data; Household is literally a Q&A survey. They sometimes vary dramatically, but when you control so they measure the same thing, they come pretty close to each other (most of the time).

• Birth Death Adjustment: A major modification to the NFP measure is the Birth Death adjustment. Changes to the BD were proposed in 2001, and implemented a few years later. This attempts to capture early improvements in employment at the start of a recovery was the goal. The trade off is it wildly overstates strength at the end of a cycle. For example, in 2007, approximately 75% of reported new jobs were due to this adjusatment. In 2008, the BD adjustment inexplicably showed lots of job creation in construction and finance.

• Measuring Unemployment: The main measure of Unemployment is the widely reported U3 Unemployment Rate — but my analysis of U3 has been that it significantly understates unemployment. Fortunately, a more complete measure of labor under-utilization is available – the U6 measure. They seem to run parallel, but U6 captures a lot more of the unemployed and under-employed workers than U3 does.

• Leading vs Lagging Indicators: Lastly, economists will tell you that Employment is a lagging indicator, meaning that it lags the economic cycle, getting worse even after the economy begins to improve. And that is mostly true. However, since we are investors by trade, we want o identifty aspects of Employment data that have the qualities of a leading indicator — i.e., they improve before the economy does. There are at least 2 worth paying attention to: Temporary Help, and Hours Worked. Both aspects improve or worsen prior to the a recovery or recession occurring.

My comment: Let's focus on last paragraph, the leading indicator analysis. "Hours Worked". Today it released average work hours are 33 weekly, the lowest record for the series since 1964. It tells me no recovery is in process. Also, how come today figure are way far off economist estimate, actual is lost 467,000 the estimate is 365,000. Damn, what a projection miss !!! Also, open your eye wide to see one of the sector is keep losing jobs which is government sector, it still lose 62,000 jobs for month of June. Come on, are we already passing the stimulus package 4 months ago and Mr. President said it will create 3 to 4 millions job for this and next years ??? Where is the money gone and where is the job being created from? Why our government still laying off 62,000 jobs for month of June. Why?? Why??? Why?? Do you know the answer?? It is so obviously that someone has eaten the money and not doing the job. Now, some folks start talking about the 2nd stimulus package. F*** them !!! I aint see any recovery. How about you?? It is a very good logical question you can enjoy for the Happy national long weekend to all.

Happy July 4th to all!!

Dumb White house economist prediction

2009-07-01T09:27:00.002-05:00

7/1/09

Let's see what NY Times said:

In the weeks just before President Obama took office, his economic advisers made a mistake. They got a little carried away with hope.

To make the case for a big stimulus package, they released their economic forecast for the next few years. Without the stimulus, they saw the unemployment rate — then 7.2 percent — rising above 8 percent in 2009 and peaking at 9 percent next year. With the stimulus, the advisers said, unemployment would probably peak at 8 percent late this year.

We now know that this forecast was terribly optimistic. The jobless rate has already reached 9.4 percent. On Thursday, the Labor Department will announce the latest number, for June, and forecasters are expecting it to rise further. In concrete terms, the difference between the situation that the Obama advisers predicted and the one that has come to pass is about 2.5 million jobs. It’s as if every worker in the city of Los Angeles received an unexpected layoff notice.

There are two possible explanations that the administration was so wrong. And sorting through them matters a great deal, because they point in opposite policy directions.

The first explanation is that the economy has deteriorated because the stimulus package failed. Some critics say that stimulus just doesn’t work, while others argue that this particular package was too small or too badly constructed to make a difference.

The second answer is that the economy has deteriorated in spite of the stimulus. In other words, the patient is not as sick as he would have been without the medicine he received. But he is a lot sicker than doctors realized when they prescribed it.

To me, the evidence is fairly compelling that the second answer is the right one. The stimulus package does seem to have helped. But its impact has been minor — so far — compared with the harshness of the Great Recession.

Unfortunately, the administration’s rose-colored forecast has muddied this picture. So if at some point this year or next the White House decides that the economy needs more stimulus, skeptics will surely brandish that old forecast.

Worst of all, the economy really may need more help.

Now, look at my prediction at 1/1/09 for 2009 outlook:
The S&P 500 will re-test the 750 lows in the first half of 2009, and we will close below 700 by the end of 2009. This bear market will not end in 2009.

Crude oil will stay below $80/barrel for all of 2009.

Gold will break out above $1000/oz.

The VIX will hit over 80 or make new high to 100 for the first time ever.

Unemployment rate will hit over 10.0%. Total Unemployment (U-6) will hit 20%.

Housing prices will keep dropping without finding any bottom.

Commercial real estate values will drop 30-40%. Land development, office space, warehouses, shopping malls, hotels, and resorts will do the worst. Large multi-family properties will do the “best” because they will house all the folks who will lose their homes.

20% of retailers will file for Chapter 11 bankruptcy.

The bailout money will run out in first half of 2009 and the Fed/Treasury will request an additional package…and be denied. This debate will drag on for months and months.

Numerous local municipalities and/or states will go bankrupt. Many states will be unable to pay out full unemployment benefits.

Yes,I am still very bearish. I do not see how our Bear Market(the worst since great depression as I pointed out in early 2008) can last for only 2 years. The last tech bear market lasted for about 2 1/2 years. In addition, the last 9 bear markets after world war II that all did not involve a global credit crisis! So, there are sure more disappointments ahead the hollow secular bear market ever.

My comment: Some of my observation/predictions are correct. Some are still wait to see. For example, even I am not economist, I am still able seeing unemployment rate will higher than 10% 6 months ago. What are those white house economists thinking about??? What do you think? Folks. Are those economists make a good call?? I am laughing loud to them. For such very easy economic data(Unemployment) that they cannot even predict close in range, what do think they are all able to rescue our nation economy? We will hear new unemployment rate tomorrow for month of June. Now, we are sitting 9.4% already, that very far off from those experts prediction. I guess my 10% guess is still too optimisic. Now, I guess we can see 11% at the end of 2009 so easy. Good luck to all!!

AIG ok reverse spilt and say will repay all $$ !!!

2009-06-30T21:35:00.002-05:00

6/30/09

“We believe there is an excellent chance that we can repay the government.”

-AIG Chief Executive Officer Edward Liddy

Why is that doubtful? Well, in 2006, they had revenues of $113 billion and profits of $14 billion — about 25% of her profits were due to AIG FP.

Now, with their reputation in tatters and their revenues cut in half, their “Enterprise Value” at a mere $91 billion, and a market cap at just over $3 billion, they are going to pay back $182.5 billion?

My comment: What do you think? Anyone with common sense know that it is impossible!!

Insiders are selling their ass off this fake rally !!!

2009-06-23T09:25:00.002-05:00

6/23/09

Bloomberg is reporting Insiders Exit Shares at the Fastest Pace in Two Years

Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago.

Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show. Amgen Inc. Chairman and Chief Executive Officer Kevin Sharer and five other officials sold $8.2 million of stock. Christopher Donahue, the CEO of Federated Investors Inc., and his brother, Chief Financial Officer Thomas Donahue, offered the most in three years.

Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects.

“If insiders are selling into the rally, that shows they don’t expect their business to be able to support current stock- price levels,” said Joseph Keating, the chief investment officer of Raleigh, North Carolina-based RBC Bank, the unit of Royal Bank of Canada that oversees $33 billion in client assets. “They’re taking advantage of this bounce and selling into it.”

My comment and so is the other blogger: If insiders don't believe this rally, why should you?
Another hard evidence to show why this is another giant sucker rally as I said few months ago. Period. People, I am much much better than almost anyone you hear, listen and watch. Do not believe those "BS" this is new bull market!!

Green Shoot on housing??! What green shoot??

2009-06-23T09:20:00.002-05:00

6/23/09

The NAR just report:

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.4 percent to a seasonally adjusted annual rate of 4.77 million units in May from a downwardly revised level of 4.66 million units in April, but remained 3.6 percent below the 4.95 million-unit pace in May 2008.
...
Total housing inventory at the end of May fell 3.5 percent to 3.80 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.1-month supply in April.
...
Distressed properties, which declined to 33 percent of all sales in May from 45 percent in April ...

Yun said the appraisal problem is serious. “Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales,” he said. “In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.”

My comment:On Yun's word, Professional appraisaer is doing their honest job nowadays. There is no problem from appraisal. It just means the damn house is still pricing too high compare to reality. So, housing price is still too high compare to current situation, bleak employment, too many distressed house around, many default is coming, lack of demand of new home building around,..... Folks, what do you think? I am laughing the expert Lawrence Yun at what he said.

Bloody Sellf off start !!!

2009-06-22T12:09:00.001-05:00

6/22/09

It is now middle of the trading today. However, we see what I expected and said last week. Did anyone miss it?! Read previous few blogs.

2009 Nation's Housing Report from Harvard University

2009-06-22T12:05:00.001-05:00

6/22/09

The U.S. housing market will rebound eventually, according to a Harvard University report. Demographics and underbuilding are conspiring to up demand and revive home prices.

But that day still is a long way off, perhaps not until sometime after 2010, the university’s Joint Center for Housing Studies said in its 2009 State of the Nation’s Housing report
...
•Read the press release: HERE!
•Read the fact sheet: HERE!
•Read the report: HERE!

My comment:It is very good informative about our nation housing market. We still have long way to see the bottom. It is very good research report from Harvard. Worth to read!!

Who want to be the Fool ??

2009-06-18T21:31:00.002-05:00

6/18/09

Folks, go check out my chinese blog http://www.cigstockchart.blogspot.com. Then add one more good reason on the following:

$165 billion in Treasuries for sale in the next week?

$31 billion in 3-month bills
$27 billion in 7-year notes
$40 billion in 2-year notes
$37 billion in 5-year notes
$30 billion in 6-month bills

Annualized this is $8.58 trillion dollars!

Now obviously they won't keep doing that for the next 52 weeks (one hopes) but you have to be smoking something if you think the market can continue to absorb this sort of supply and shrug it off.

My comment: Opps, big selloff is coming next week!! Watch out folks!!

Cliff Diving of State Personal Income Tax

2009-06-17T23:49:00.002-05:00

6/17/09

Here you go! I find out which states are in trouble receiving Income tax for budget. California isn't the worst, but the state relies heavily on income taxes. Arizona is just getting crushed - and the pain is widespread. There four states has no data. Now, we get more clear on who is going to be next California. Are we going to bail all out?! I do not know. Go figure yourself!!

FDIC just release Big $$$$

2009-06-16T11:47:00.003-05:00

6/16/09

Click to see bigger and clear!! See it and believe it!! The FDIC released the Summer 2009 Supervisory Insights today. The report includes the above table showing all the government support announced in 2008 and soon thereafter. The maximum capacity is $13.9 trillion. Yes, it is no wrong....""$13.9 Trillion"".

My interpertation of recent stock market rally

2009-06-16T09:25:00.003-05:00

6/16/09

Since 3/6/09, us stock market has rallied up about 38% from bottom. A combination of growth or recovery optimism and inflation fear has sprung up asset markets in the past 3 months. Fundamentally, some economic data do seemed bottom. However, there are still some leading indicators are posting slower rate of contraction. Yes, Federal stimulus money is working on its way(It looks like but I do not feel it beside pumping/wasting money into varies scheme).
Technically, after close to 18months declining market, it was time due for technical rebound. The degree of this bear market rally is so intense because it has dropped so severly since Lehman Brother collapsed.
Contrary to all the market noise with different thoeries to explain this rally is real or not, there are no signs of a signifiant economic recovery. So called "green shoots" in the global economy or US economy are mostly due to inventory cycles. Print money resuce efforts may juice up growth a bit for the rest of year. Nothing suggests this is a lasting and sufficient recovery. Global stock markets are trading on imagination.
My conclusion: Do not get trap again despite majority of people saying "Economy has bottomed and we are in the way recovery" I do not believe this "BS" Time will prove those people correct or not. I am expecting another downwave coming near end of this year or beginning of next year.

States Bonds Rating Game!!!

2009-06-15T13:41:00.003-05:00

6/15/09

What would be next to Budget shortfall like California in our so proud nation? Florida, Ohio, Michigan, Nevada, Illinois,...the list is going on. What would you all think if Federal is really going to bail out CA? Would you feel it is fair? And more states to come? Today, Whole world is reduce purchasing our nation government bonds significantly. If this condition is getting worst, who else support our debts? We are just meaning to print more and damn more money. That's it!! Print more money is the one and only one policy that folks in white house is doing. Umm...I vote for Democrat but they seems have no idea what and how to solve this mess.

Famous Financial Fancy ??!

2009-06-15T09:12:00.001-05:00

6/15/09

This weekend's Barron's provided a mid-year update to its annual "Roundtable" report, and as the title of the article suggested, the consensus among panelists was that the market has come "too far, too fast." While that view is certainly not a minority opinion, we are confused with the logic behind it. As noted in the article,

"Many predicted at our Jan. 5 confab that the stock market, oversold and under-loved, was due for a major bounce. Now they think stock prices have overshot corporate fundamentals and a correction is in order."

So on January 5th, when the S&P 500 was at 927, the members of the Barron's Roundtable were looking for a major bounce. Now, with the S&P 500 up 2% since then, they think the market has come too far, too fast?

My comment: We all need to know what is their theory behind those bad calls for stock market?? They are very well known finanical newspaper in nation but majority of their prediction or analysis are damn shit. If you have listen to them, I believe you all always in negative terriority. As I write this, I believe market is about "Time" due for bigger correction.

California Party is over forever ??!

2009-06-11T10:04:00.003-05:00

6/11/09

I know recently I am kinda lazy to write too much here, but I do write analysis on chinese for another blog. Now, it is official:

California officially has a drop-dead date now. State Controller John Chiang told Arnold Schwarzenegger last night that the state has 50 days before it hits a financial meltdown. So in that time, it either needs a bailout, massive budget cuts, or a brand new bubble (green tech, Internet, real estate, something like that).

The tax revenue numbers are not at all good for the green shoots crowd:

Reuters: Underscoring the severity of California's cash crisis, Controller John Chiang, who has previously warned the state's government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.

Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger's budget plan by $827 million, Chiang said.

Of all three outcomes, we'd say the federal bailout is the most likely, since surely a California collapse would kill any recovery.

Were California forced to make significant cuts to its spending, the ramifications could be quite serious. School systems and universities would be endangered (which would threaten the state's long-term economic prospects). Increases in crime, homelessness, and serious poverty would encourage residents to leave. Service cuts could threaten key industries. In short, the recession could grow far more serious in the state than it already is. That would threaten recovery across the nation.

My comments: Let's count down 50days or less. My suggestion if any of you have any stocks, please get out now or before the deadline come. This is probably the cause for next big down leg started. Unless there has big change for the budget problem. However, despite the outcome whether California filed bankrupt or get bail out. It would surely delay any recovery hope for US. Watch out for US dollars...Good luck!! Do we still have any so called "Green Shoots" I do not think so.

Need another stress test?!

2009-06-09T12:18:00.002-05:00

6/9/09

Earlier this morning, TARP panel chair Elizabeth Warren recommended running the stress tests again on US banks, but using a higher unemployment rate and for more years (including 2011 through 2013). This would include these higher commercial real estate defaults that everyone now sees coming.

We just went through a period of time where there was extreme negative emotion. That followed a period of time where there was extreme optimism. The extreme optimism lead to a period of time where stocks were selling substantially higher than their growth rates, but no one cared. When the extreme optimism failed, we had a huge sell off in the stock market.

- Emotion creates oversold phases.

- Emotion creates overbought phases.

Yes, Emotion is the factor. However, what push investors emotion?! Again, I do not see this is the new bull market start. When the optimism failed, market crash again and it happen very quick.

Housing Bottomed ??! Think again !!

2009-06-08T09:18:00.002-05:00

6/8/09

The Past: Losses Mostly Behind Us:

• Wave #1: Borrowers committing (or the victim of) fraud & speculators, who
defaulted quickly. Timing: beginning in late 2006 (as soon as home prices
started to fall) into 2008. Mostly behind us.

• Wave #2: Borrowers who defaulted when their mortgages reset due to
payment shock. Timing: early 2007 (as two-year teaser subprime loans written in early 2005 started to reset) to the present. Now tapering off as low interest rates mitigate payment shock.

The Future: Losses Mostly Ahead of Us

• Wave #3: Prime loans (most of which are owned or guaranteed by the
GSEs) defaulting due to job loss and home price declines (i.e., underwater
homeowners). Timing: started to surge in early 2008 to the present.

• Wave #4: Jumbo prime, second lien and HELOCs (most of which are on
banks’ books) defaulting due to job loss and home price declines/
underwater homeowners. Timing: started to surge in early 2008 to the
present.

• Wave #5: Losses among loans outside of the housing sector, the largest of
which will be in the $3.5 trillion area of commercial real estate. Timing:
started to surge in early 2008 to the present.

Importantly, Whitney and Glenn believe that recent signs of stabilization in the housing market are a HEAD FAKE. Prices still have a 10%-15% to fall and won't recovery quickly.

Rather than representing a true bottom, recent signs of stabilization
are likely due to two short-term factors:

1. Home sales and prices are seasonally strong in April, May and June
due to tax refunds and the spring selling season

2. A temporary reduction in the inventory of foreclosed homes

– Shortly after Obama was elected, his administration promised a new, more
robust plan to stem the wave of foreclosures so the GSEs and many other
lenders imposed a foreclosure moratorium

– Early this year, the Obama administration unveiled its plan, the Homeowner
Affordability and Stabilization Plan, which is a step in the right direction –
but even if it is hugely successful, we estimate that it might only save 20%
of homeowners who would otherwise lose their homes

– The GSEs and other lenders are now quickly moving to save the
homeowners who can be saved – and foreclose on those who can’t

– This is necessary to work our way through the aftermath of the bubble, but
will lead to a surge of housing inventory later this year, which will further
pressure home prices

Here's what will likely drive future losses:

1. The Economy
• Especially unemployment

2. Interest rates
• Ultra-low rates have helped mitigate some of the damage
• But if the recent spike in rates continues, it could lead to an even greater surge
in defaults and losses

3. Behavior of homeowners who are underwater [Approx 30% of mortgages right now]
• Roughly one-fourth of homeowners with mortgages are currently underwater,
some deeply so
• For many, it is economically rational for them to walk – so called “jingle mail” –
but how many will do so?
• There is little historical precedent – we are in uncharted waters
• As home prices continue to fall and homeowners become more and more
underwater, they are obviously more likely to default, thereby creating a vicious
cycle, but what exactly will the relationship be? Have millions of foreclosures led
to a diminution of the stigma of losing one’s home?
• Our best guess is that there will be rough symmetry: for homeowners 5%
underwater, an additional 5% will default due to being underwater; 10%
underwater will lead to 10% more defaults, and so forth…

Whitney Tilson and Glenn Tongue of T2 Partners believe the housing-market collapse will have five distinct phases. In their opinion, we're just finishing up Phase 2 and moving into Phase 3.

My Comments: Even without the knowledge like T2 Partners, it is very common sense to see we have long way to see the real housing bottom. Folks, go to internet, you can find tons of houses around you for sale. Also, you are search there are more still in banks book and not pooling into the current market yet. So, housing bottomed and steady?! Think again.

Here is why bank still in deep trouble !!!

2009-06-04T21:53:00.002-05:00

6/4/09

Bloomberg yesterday:.....

In a move that confirmed the suspicions of many analysts, the agency called off plans to start a $1 billion pilot program this month that was intended to help banks clean up their balance sheets and eventually sell off hundreds of billions of dollars worth of troubled mortgages and other loans.

Many banks have refused to sell their loans, in part because doing so would force them to mark down the value of those loans and book big losses. Even though the government was prepared to prop up prices by offering cheap financing to investors, the prices that banks were demanding have remained far higher than the prices that investors were willing to pay.

Translation:

The banks are still carrying these "assets" at well-above their actual market value. This means their balance sheets are showing them to be healthier than they really are.

The Government, which claimed it was going to "drain the swamp" and get the market moving again, tried everything short of the barrel of an M-16 in the mouth of people like Blankfein and Pandit, but couldn't get them to sell.

But rather than force the recognition of market prices on the balance sheets, which would force these banks to either sell or be FDIC'd (incidentally, the only correct pair of options the banks should have) the government instead is allowing the banks to continue to lie about the market value of these "assets" and carry them above what the market will pay - that is, they are allowing the continuing intentional distortion of so-called "book value", reserve ratios and soundness.

Of course this isn't how the government banking cartel (the same so-called "regulators" that allowed and even encouraged book-cooking when it came to reserves and deposits) sees it:

F.D.I.C. officials portrayed the change as a sign that banks were returning to health on their own.

Baloney. If the banks were returning to health on their own they wouldn't care if the market price was recognized on their balance sheets.

The FDIC is lying.

But some analysts said the banks’ reluctance to clean up their balance sheets meant they were merely postponing their day of reckoning. Indeed, some analysts said government policies had made it easier for banks to gloss over their bad loans.

"Gloss over" is another fancy word for fraudulent accounting practices, all made "legitimate" by our government.

No one knows exactly how many losses are buried in the troubled mortgages on banks’ books, but some analysts estimate that the unrecognized losses total more than $1 trillion. Under accounting rules, banks do not have to write down the value of most mortgages unless they sell them or they fall delinquent.

And, as Wells Fargo did last year, they can change the rules on when something is "delinquent"! That is, it can be 30 days behind today, 60 tomorrow, and three years next week. That's all ok, according to our so-called "regulators."

The Federal Reserve also is pumping hundreds of billions of dollars into mortgage-backed securities, and into other kinds of consumer and business lending. Starting next month, the Fed plans to offer cheap financing for investors who want to buy “legacy” securities backed by mortgages on commercial real estate.

Of course this simply means that the Federal Reserve (that is, you) will eat the loss.

Heh, its only your (tax) money, right?

No banker left behind, no fraud to be punished (ever) indeed.

PS: The deception cannot continue beyond where the cash flow ceases. In the end you can't pay your electric bill with phony capitalized interest that you will NEVER collect! That day, unfortunately, will likely coincide with the collapse of the FDIC, at which point every nickel you have in any bank anywhere will be GONE, courtesy of our government continuing to enable, allow and even participate in raw fraud. Its been going on now for more than two years folks, and the cops have all been bribed!

My comments: Now it seems the so called "regulators" are delaying the PPIP to eat the loss from banks. They bad assets are still in all banks book. It is a ticking bomb until next massive fault is coming anytime, folks, watch out ongoing. Economy and stock market must crash again because of this.

What a foolish dumb action our government keep doing!!

2009-06-03T09:49:00.002-05:00

6/3/09

Read the following:

Yesterday, the 30 year yields closed at 44.89. At the end of December, the 30 year yields were only 25.19 ... that was a significant rise (see the chart below). 30 year mortgage rates got down as low as 4.5%, and yesterday they ranged from 5.25% to 5.375%.

When mortgage rates went to 5.25%, there was a 16% drop in mortgage applications. The point is, that the higher mortgage rates rise, the more a recovery in housing is going to be jeopardized.

So, the rise in mortgage rates has been going on for some time and yesterday .... rising mortgage rates finally got the attention of Washington which is now putting pressure on Bernanke to try and keep rates down.

We expect Ben to throw a lot of money at driving rates down in the short term. Longer term, it is a zero sum game for Ben as he has $300 billion left that is earmarked for keeping rates low and the reality is that he probably needs $1 billion to do the job in the next few months.

Why are rates going up? Part of the reason is that there is not enough money for the Government spending levels.

For every dollar being spent in Washington, only 54% is being funded by taxes. That requires the Government to borrow 46 cents for every dollar spent. (Isn't this the formula that got U.S. consumers over leveraged and in trouble in the first place?)

As reluctance to buy bonds and lend to the U.S. Gov. increases, rates have to go higher to compensate for the higher risks.

[To get an approximation of where interest rates should be relative to the TYX 30 year yields:
Take the TYX and divide it by 10 (44.89/10 = 4.489). Then add .761 to .886 to that number. That will give you a range of 5.25% to 5.375% for yesterday's rates. The .761 to .886 are not set in stone ... they represent the current "spread" that banks are marking up long term rates, on mortgages, so they can make a profit. This spread can have a larger change over different time periods reflecting changing market conditions.]

My comments: Whether the rate is 4% or 5% or 6%. The problem is who will qualify the rate anyway?! And now our stuiped government is trying to control the rate. It only means pushing us closer to the cliffs. Yes, every damn action white house is drawing our blood dry. We will all be doomed and thats 100% for sure. The question is when we will payback. For each corporate, banks, and household, we are overly leverage our spending by borrowing too damn much future$$$. Our government is throwing the proved-fail tactic, means doing exactly that keep spending huge, WTF, spending and printing money is the only thing I see coming from our current administration. I so sorry to be not professional writing the blog here with impication of foul languages. However, I am full of angry how our government doing to avert this mess.

Look who is next ask for Obama bail out??!

2009-06-02T14:29:00.002-05:00

6/2/09

Not surprisingly, look who will be next for Obama bail out? It is the state of California. Read the following:

""Declaring that "California's day of reckoning is here," Gov. Arnold Schwarzenegger said today the state should turn its dire budget straits into an opportunity to make government more efficient.

Speaking to a relatively unusual joint session of the Legislature and other constitutional officers, Schwarzenegger acknowledged the billions of dollars in spending cuts he has proposed to close a $24.3 billion hole in the budget will be devastating to millions of Californians.

"People come up to me all the time, pleading 'governor, please don't cut my program,'" he said. "They tell me how the cuts will affect them and their loved ones. I see the pain in their eyes and hear the fear in their voice. It's an awful feeling. But we have no choice.

"Our wallet is empty. Our bank is closed. Our credit is dried up."

The short-term problem faced by lawmakers is closing the budget gap in time for state officials to go the private investment markets and borrow billions of dollars to get the state through the first months of the fiscal year that starts July 1.

State Controller John Chiang has warned that without such loans, the state's coffers will run dry by the end of July. Chiang said last week that as a practical matter, the budget must be patched up by mid-June in order to give officials time to borrow the money.

To do that, Schwarzenegger has proposed a plan that relies partially on accounting maneuvers and borrowing funds from coming fiscal years, but mainly on deep cuts in nearly every program funded by state government.

Those range from cutting spending on K-12 schools, community colleges, the University of California; releasing some non-violent prisoners a year early; closing 80 percent of the state's parks, and wiping out or paring back on health and social service programs for California's neediest residents. ""

My comments: Are you all ready Mr. President will be the superman again to waste our money to bail out state of California very soon. Whats your bet? I see he will very soon. In term of production measured by territory GDP. Aside state of California's GDP is ranked #5 in whole global world. Yes, you are right. It is even bigger than India, England, France,...whatever countris you can think of. It is another gaint blackhole that our government is going to dump US$$$ away. WTF, WTF......Are we insane??! I am not but white house people do not care. Good luck to everyone especially people living in Sunshine State California. Have you recently enjoy any fruits from CA??!

Now, its official!! Welcome to "Government Motor"

2009-06-01T09:46:00.002-05:00

6/1/09

As everyone expected, General Motor is now officially become "Government Motor". Our government love to own every piece of our living. Indeed, after mortgage gaints, FRE & FNM, insurance leader, AIG, banks like C and BAC, now the GM. What else do we expect our government go to bail out more? We are keep printing more and more $$ to save those garbage companies that should be liquidated. However, it does create very damn good excuse for polictians and companies directors to draw our taxpayers money into their huge piggy bank. Do you expect auto sales will rebounce coming months and years?! Even Toyota has trouble to foresee future. How could GM can reply over$50 billion money back to us?! If so, in 5 years. I do not believe this shit. WTF, another gaint black hole to waste our $$$. I am very pissed off by this non-sense but I cannot do anything rather express my feeling here. Good luck to America and good luck to us. I do not see bright future anymore as our government drawing the deficit higher and higher to no end land. Another Trillion here and there.

Oh? Do Fed need to double down now?

2009-05-27T21:42:00.002-05:00

5/27/09

The Fed has been buying US Treasury because they want the mortgage rate keep floating below 5%. However, the above chart is clearly showing that Treasury is trading against what Fed wishes. Fed has failed?! It would be little early to say so right now. But some economists have predict this will not work. I would say so it does not work because the chart is showing what is going on. Doom to US. Forget to say, GM is going to bankrupt. Also, California is asking US government bail out with its debt of over $41 Billions. Well, if our WTF administration going to bail out California, you all will expect more states, cities.....will ask for the same package. WTF, keep print print print.....US$$. There is no end our national debt for sure.

Look who waste our taxpayer money !!!

2009-05-23T12:18:00.001-05:00

5/23/09

The Administration is starting to face some resistance in Congress about its plan to put GM (GM) into Chapter 11 using Treasury money to sustain the company as it works it way back to profitability. The government put another $4 billion into the car company yesterday. In the process of a government supported bankruptcy, $27 billion in bondholder capital will probably become worthless, GM workers will be laid off, and hundreds of dealers will be closed.

Fundamentally, taxpayer money will be used to restructure GM in such a way that thousands of taxpayers will lose their jobs.

According to the FT, “hopes that GM can follow a similarly rapid path through court are being dimmed by a building backlash from lawmakers, some of whom are claiming that creditors’ rights are being given short shrift while others complain about job cuts and the closure of dealerships.”

The argument by Congressmen who are opposed to the process may get some “traction”. Blue collar workers around the country should be enraged by seeing their peers being thrown out of jobs with support from the Treasury. Local towns and cities will have to support workers at dealerships that close. Financial firms will have to ask themselves if their rights could ever be undermined by a process driven by the financial might of the American government.

Of course the entire GM restructuring process will raise national unemployment.

As the pockets of resistance grow, GM may not has as easy a path through a bankruptcy court has Chrysler has had.

My comment: WTF our government doing??! Another $4 Billion. Another ?Billion there..maybe Trillion...Damn. I know America is going to be broke for sure. We are doomed 100%.

Truth about Option ARM !!

2009-05-20T10:04:00.002-05:00

5/20/09

U.S.

Alt-A active: $469 billion

When we talk about the $500 billion in Alt-A mortgages this is what we are talking about. Last time I checked $469 billion does not mean the problem has gone away. Businessweek came out with a chart only last month showing how Pay Option ARMs will be recasting over the next few years: See above Chart

I’ve added a reference point for all those people who seem to think that Option ARMs and Alt-A loans have somehow disappeared from the market. The game is just starting. Currently, we are seeing less than $2 billion per month of these loans recasting. However, in 2010 we are going to start seeing $8 to $10 billion per month recast, nearly 5 times the current rate. The chart states “months to 1^st reset” but they are referring to recasts brought on by negative amortization. And as you will see, since the majority of these loans are in California the bulk are underwater Jacque Cousteau style.

The above I reprint from other blogger. Folks, the real game is just started. I am expecting more foreclosure coming for whole country with no end in sight. And I do not see our stock market would doing any good later part of year.

Bulls Trap again??

2009-05-18T21:56:00.003-05:00

5/18/09

What do we have today? Another gap up Bulls trading day again. However, it will pullback tomorrow morning hours. The intermediate term high has been reached and I remain bearish. Is this another bulls trap?! These days there are too many bad news going on and I have been very very disappointed about our government action. Good luck.

Sucker Rally!!

2009-05-10T16:46:00.001-05:00

5/10/09

Merrill's economist David Rosenberg left the firm yesterday (planned for several months). And he went out swinging. David has maintained from the beginning that the recent rocket rally off the lows is just a suckers' rally, and he reiterated that view as he walked through the doors.

Some excerpts from his swan song, which was published Thursday:

Market likely to peak the end of the week [Yesterday]. Just as the clock is winding down on my tenure at Merrill Lynch, the equity market is winding up with an impressive near-40% rally in just nine weeks. For those that were still long the equity market back at the March 9 lows, a good ‘devil’s advocate’ exercise would be to ask yourself the question whether you would have taken the opportunity, if the offer had been presented, to have sold out your position with a 40% premium at the time. What do you think you would have said back then, as fears of financial Armageddon were setting in? We haven’t conducted a poll, but we are sure at least 90% of the longs at that point would have screamed “hit the bid!”

Are we at risk of missing the turn? Fast forward to today, and within two months optimism seems to have yet again replaced fear. Are we at risk of missing the turn? What if this is the real deal — a
new bull market? This is the question that economists, strategists and market analysts must answer.

Risk is much higher now than it was 18 weeks ago. The nine-week S&P 500 surge from 666 at the March lows to 920 as of yesterday has all but retraced the prior nine-week decline from the 2009 peak of 945 on January 6 to the lows on March 9. We believe it is appropriate to put the last nine weeks in the perspective of the previous nine weeks. To the casual observer, it really looks like nothing at all has happened this year, with the market relatively unchanged. But something very big has happened because the risk in the market, in our view, is much higher than it was the last time we were close to current market prices back in early January, for the simple reason that we believe professional investors have covered their shorts, lifted their hedges and lowered their cash positions in favor of being long the market.

Employment, output, income, sales still in a downtrend. Considering what transpired from an economic standpoint, the decline in the first nine weeks of the year was rather appropriate in the midst of the worst three-quarter performance the economy has turned in roughly 70 years. The rally of the past nine weeks appears to be rooted in green shoots. While it may be the case that the pace of economic decline is no longer as negative as it was at the peak of the post-Lehman credit contraction, the reality is that employment, output, organic personal income and retail sales are still in a fundamental downtrend.

Need to see an improvement in the first derivative. We have evidence that the consumer, after a first-quarter up-tick that was front- loaded into January, is relapsing in the current quarter despite the tax relief (didn’t we see this movie last year?). Not until improvement in the second derivative morphs into improvement in the first derivative with respect to the important economic data will it really be safe to declare what we are seeing as something more than a bear market rally, as impressive as it has been.

This is a bear market rally that may have run its course. The investing public is still holding tightly to their long-term resolve, but much of the buying power at the institutional level seems to have largely run its course, in our view. That leaves us with the opinion, as tenuous as it seems in the face of this market melt-up, that this is indeed a bear market rally and one that may well have run its course. We have “round-tripped” from the beginning of the year and there is real excitement in the air about how these last nine weeks represent evidence that the economy will begin expanding sometime in the second half of the year.

Growth pickup will likely prove transitory While it is likely that headline GDP will improve as inventory withdrawal subsides and fiscal policy stimulus kicks in, our view is that whatever growth pickup we will see will prove to be as transitory as it was in 2002, when under similar conditions the market ultimately succumbed to a very disappointing limping post-recession recovery. So yes, there may well be some improvement in the GDP data, but it is based largely on transitory factors. We strongly believe it is premature to totally rule out the end of the vicious cycle of real estate deflation – residential and now commercial – that we have been experiencing since 2007. Balance sheet compression in the household sector will continue to pressure the personal savings rate higher at the expense of discretionary consumer spending. This is a secular development, meaning that we expect it will last several more years.

Chances of a re-test of the March lows are non-trivial. To reiterate, it seems to us likely that the risk in the market is actually higher today than it was back at the same price points in early January, and we say that with all deference to the stress tests (which given the less-than-dire economic scenarios, along with the changes to mark-to-market accounting, were destined to reveal healthy results). While the consensus seems gripped with the burden of trying to decide if there is too much risk to be out of the market, we actually still believe that the chances of a re-test of the March lows are non-trivial, especially if the widely touted second-half economic rebound fails to materialize...

The data flow is less relevant this cycle than in the past. This was not a manufacturing inventory cycle, which makes the data flow less relevant than in the past. Real estate values are still deflating and the unemployment rate is still climbing; these are critical variables in determining the willingness of lenders to extend credit. And as we just saw in the Fed’s Senior Loan Officer Survey, while there may be a ‘thaw’ in the financial markets, banks are still maintaining tight guidelines. In fact, the weekly Fed data are now flagging the most intense declines in bank lending to households and businesses ever recorded.

The best case is that this is a bear market rally. All of this has not precluded an elastic band bounce from an egregiously oversold low in the S&P 500, and perhaps we will even test the 200-day moving average of 960 (as the 10-year note yield and NASDAQ just did). But we still do not believe what we are seeing fits the hallmark of a new bull market. In our view, the best case is that this is a bear market rally, but one that clearly has more legs than its predecessors this cycle.

My comment: One more economist join the roll that this is another sucker rally. Folks, this is not bulls market. Period!

Still overbought !!!

2009-05-06T23:12:00.002-05:00

5/6/09

All major stock indexes are still propelling upward even in super overbought condition. However, it is getting closer to have a big correction/pullback. It should not be any buying here unless you are daytrading. Bank Stress testing result will be annoucned after tomorrow market close and there will be non-farm payroll number report on Friday. Would these two factors can give the excuse for sell off??!

My Chinese Blog about technical stock charting !!

2009-05-05T22:13:00.002-05:00

5/5/09

Please go to cigstockchart.blogspot.com. to see the chinese version.

Told y??! Mr. Obama is screwing us the Taxpayer!!

2009-05-05T21:52:00.002-05:00

5/5/09

As we noted this morning, lawyers representing Chrysler said in court yesterday that the government would not be getting its $8 billion of loans back, including about $4 billion in debtor-in-possession financing.

Well that news was so stunning -- so obviously an admission that the bankruptcy itself is a bailout to the union -- that we had a hard time believing it. But it's totally true.

The administration confirmed the news to CNN:

Some of the main assumptions listed by Robert Manzo of Capstone Advisory Group were that the Treasury would forgive a $4 billion bridge loan given to Chrysler in the closing days of the Bush administration, a $300 million fee on that loan, and the $3.2 billion in financing approved last week by the Obama administration to fund Chrysler's operations during bankruptcy.

An Obama administration official confirmed Tuesday that Chrysler won't be repaying the loans. A portion of the bridge loan may be recovered by Treasury from the assets of Chrysler Financial, the former credit arm of the automaker which is essentially going out of business as part of the reorganization.

Wuoooooooo!! Told u all long time ago. However, I am not clever than anyone of you. We are got fcuk up by our own government. Do you all know how much $8 billion worth??! Damn,...I do not want to post any chart or make any comment about stock market.

Head Fake or for real ??!

2009-05-04T21:57:00.002-05:00

5/4/09

I am wrong about this intermediate high was marked on 4/30/09. Well, the last friday action did not confirm the bearish reversal pattern(Evening star) I expected anyway. However, the uptrend is intact and today violent action breaks upper trendline, it could be bearish to going on. Still, I need to see if tomorrow gap down and keep sell off and more to come. Although I am bearish, the short and intermediate term are still bullish. Trade with cautional bullish is essential now. If this bulls can keep on, the next resistance would be 960-970(200 MA area).
The news is out, we got 10 out of 19 banks need raise more capital from WSJ tonight. Ooops, we all know that most banks are insolvent. Let's see how market and government play with those zombie banks!!

WTF our scheme Fed !!!

2009-05-04T12:19:00.002-05:00

5/4/09

Please read closely on the following news from WSJ today:

The Federal Reserve Bank of New York shaped Washington's response to the financial crisis late last year, which buoyed Goldman Sachs Group Inc. and other Wall Street firms. Goldman received speedy approval to become a bank holding company in September and a $10 billion capital injection soon after.

During that time, the New York Fed's chairman, Stephen Friedman, sat on Goldman's board and had a large holding in Goldman stock, which because of Goldman's new status as a bank holding company was a violation of Federal Reserve policy.

The New York Fed asked for a waiver, which, after about 2½ months, the Fed granted. While it was weighing the request, Mr. Friedman bought 37,300 more Goldman shares in December. They've since risen $1.7 million in value.

Mr. Friedman also was overseeing the search for a new president of the New York Fed, an officer who has a critical role in setting monetary policy at the Federal Reserve. The choice was a former Goldman executive.

...............

The message I would like to comment is: Government is OK that Our NY Fed Chairman Mr. Friedman own GS stocks and served to be borad member in GS Corporate borad. What the FXXX??!! Damn, should there occur conflict of interest?! WTF to our Washingston Administration. I am so so angry. Well, it means our government is screwing us up. Period. They have different standards everywhere despite Mr. President "Good Guy" image. Good luck to us all.

Good Forecast from IBD Ads !!!

2009-05-04T11:33:00.002-05:00

5/4/09

I guess anyone have seen this internet ads or TV ads showing off how IBD had forecast the bloody selloff last year. However, if anyone of you has kept followed up with my blog, all of you can remember how I post my point of view on 9/3/08-9/5/08. Here I repost it:

Very bearish ahead

9/3/08

Yesterday the major indexes were withdraw all the gain they had which already told us it was going to be very bearish. Normally, the recent pattern is up after 3 down days in a row. But if we really are looking detail in daily chart of Dow & S&P. We could find out each downtrend started by a determined downward day like yesterday. This Friday we will have non-farm payroll data which would be again ignited another sell off?! I am here to say our intermediate tops are reached as yesterday highs. Be careful, folks, another leg down may be on the way soon. Good luck!

Major move is coming

9/4/08

I guess people could see what is going on next here!? Watch out the S&P 1260 mark. I remain bearish on coming days. Market need to retest the lows of July or this year.

Dow on the way to 10,000

9/5/08

This daily chart of Dow tells me that market is indeed going to retest july lows. Moreover, the pattern may indicate it is more likely going to trade lower. Double top appeared after each intermediate uptrend tops. See once the uptrend line support broken, it followed one distribution day. In order for sure if it has legs down to lower, I need to see at least one more distribution day. Now, it is morning hours of 9/5/08. I will try to analysis more this weekend. BEAR RULES period.

See!! Awesome!!. Anyway, it is just a review. I do recommend people order IBD if they are new to stock market. Wall Street Journal is more likely Journal kinda of Newspaper.

Sell in May, go away??!

2009-05-04T11:14:00.002-05:00

5/4/09

It has been awhile since I last wrote something here. The above is a vision stats. We are just trading the 2nd day of May. It seems this is very strong Bear Market rebound.

25 largest companies in the world!!

2009-04-27T20:25:00.001-05:00

4/7/09

For those interested, below we highlight the 25 largest companies in the world. For each company, we provide its country, sector, price (local currency), year to date change, and market cap in dollars. As shown, Exxon Mobil (XOM) is the biggest company in the world and the only one worth more than $300 billion. PetroChina ranks second and is the only other company worth more than $200 billion. The Industrial and Commercial Bank of China is the world's third largest company, giving China two of the biggest three. Wal-Mart and Microsoft round out the top five. The United States still dominates the list with 12 of the 25 spots. China ranks second with four spots. General Electric used to be the biggest company in the world, but it has slipped all the way down to the 18th spot. Google (GOOG) is also on the list at number 22.

My comment: No question ask!! China is getting faster pace to get closer in charge of world's #1 economical power. Go Go Go.

Who's the lier?!

2009-04-23T23:06:00.002-05:00

4/23/09

Bank of America Chief Executive Kenneth Lewis told the New York attorney general he believed former Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke wanted him to keep quiet about the worsening terms of the bank's acquisition of Merrill Lynch, according to testimony reviewed by The Wall Street Journal.......

Now, folks you know why I kept angry about former Treasury Sec. Henry Paulson and Fed Chairman Bernanke. They are all liers and not to sever us as taxpayer to any agree of benefit. They only care about their own $$$. Always waiting when is best time and how to get more $$$ out of our hard earn tax $$$. The Bush Administartion and so is current one both are playing huge ponzi scheme to us. America is totally fcuk up. I am very very very very very very very very sad about our future with these kind of people running our government.

Cycles of Psychology!!

2009-04-22T11:34:00.002-05:00

4/22/09

I get it from above website describe the Cycles of Psychology. It may not be exact likely the major stock market indexes are going to follow close to the cycle. However, I remain bearish and believe we have another down leg before we see the real bottom.

Uptrend is weakening!!

2009-04-21T21:43:00.002-05:00

4/21/09

Banking stocks do get their rebound today. However, it is little bit short term overbought, I expect there will be pullback at early morning hours. In fact, I am bearish. I guess market will going down more from here. Despite any good or bad earnings from companies, volatility is arrived again.

Intermediate Term High may be reached!!!

2009-04-20T21:45:00.002-05:00

4/20/09

Ooops. Finally, this amazing Bear Market rally might be over!! As CPCE indicated and second bearish evening star(3 day candlestick pattern) is formed today!! Woooo, that it!! Let's see if I call the rally is end here or not. Good luck if you still chase banking stocks.

Which bank is not lending??!

2009-04-20T10:35:00.002-05:00

4/20/09

A new analysis form Wall Street Journal Newspaper seems to confirm the worst nightmares that the government's financial rescue programs would turn out to do nothing more than pour taxpayer money into zombie banks who would hoarde capital rather than lend it into the economy. According to The Journal, Journal, the biggest recipients of taxpayer aid made or refinanced 23% less in new loans in February than they did in October.

Recall that October was the month after the collapse of Lehman supposedly froze the credit markets and it was the month when the government launched Troubled Asset Relief Program.

Some quick data points from the Journal's analysis:

The total dollar amount of new loans declined in three of the four months the government has reported this data.
All but three of the 19 largest TARP recipients originated fewer loans in February than in October.

Why isn't this drop in lending more widely known? Mostly because the way the Treasury calculates the pace of lending understates the problem. The Treasury measures the median performance of the banks. This way of measuring lending from banks winds up missing the zombifying effects of bailouts, where banks are encouraged to hoarde capital in order to bolster their financial health rather than lend out money injected by the government.

Here's how the Journal breaks down the lending from each bank. Notice who is on top with the biggest decline in lending? That's right, Goldman Sachs, the Wall Street firm that suddenly declared it had enough to pay back the TARP.

My comment: Now, you all know what I am so angry about current Washington Administration. They cannot make commercial banks lend out any more $$ to avert forzen credit market or our economy up to date. Fcuk them all.

Review 2000 Bear Market in Chart

2009-04-20T09:55:00.003-05:00

4/20/09

Folks, we have seen this strength bear market rally like mini bulls rally before so many times. However, the 200ma is always acting stone resistance. Therefore, I keep saying this rally is just another sucker rally. That it!!

Resistance is reached!!

2009-04-19T18:18:00.003-05:00

4/19/09

Finally, the thrilling bear market rally has finally reached Feb High around 875-880. Expect larger pullback will be occurred very soon. Moreover, volaility is getting high. Not too much to say. BAC and AXP earning report will be announced tomorrow. Will financial sector help the Bulls one more day??!

Glimmers of Hopes??!Not Yet!

2009-04-17T11:40:00.001-05:00

4/17/09

I repost the commentary from Paul Krugman the 2008 Nobel Economic Winner:

Ben Bernanke ... sees “green shoots.” President Obama sees “glimmers of hope.” And the stock market has been on a tear. So is it time to sound the all clear? Here are four reasons to be cautious....

1. Things are still getting worse. Industrial production just hit a 10-year low. Housing starts remain incredibly weak. Foreclosures ... are surging again. The most you can say is that there are scattered signs that ... the economy isn’t plunging quite as fast as it was. And I do mean scattered...

2. Some of the good news isn’t convincing. The biggest positive news in recent days has come from banks, which have been announcing surprisingly good earnings. But some of those earnings reports look a little ... funny.

Wells Fargo, for example, announced its best quarterly earnings ever. But ... reported earnings ... depend a lot on the amount the bank sets aside to cover expected future losses on its loans. And some analysts expressed considerable doubt about Wells Fargo’s assumptions...

Meanwhile, Goldman Sachs announced a huge jump in profits... But as analysts quickly noticed, Goldman changed its definition of “quarter” ... so that — I kid you not — the month of December,... a bad one..., disappeared from this comparison.

I don’t want to go overboard... Maybe the banks really have swung from deep losses to hefty profits in record time. But skepticism comes naturally in this age of Madoff.

Oh, and for those expecting the Treasury Department’s “stress tests” to make everything clear: the White House spokesman, Robert Gibbs, says that “you will see in a systematic and coordinated way the transparency of determining and showing to all involved some of the results of these stress tests.” No, I don’t know what that means, either.

3. There may be other shoes yet to drop. Even in the Great Depression, things didn’t head straight down. There was, in particular, a pause in the plunge about a year and a half in — roughly where we are now. But then came a series of bank failures on both sides of the Atlantic, combined with some disastrous policy moves...

Can this happen again? Well, commercial real estate is coming apart at the seams, credit card losses are surging and nobody knows yet just how bad things will get in Japan or Eastern Europe. We probably won’t repeat the disaster of 1931, but it’s far from certain that the worst is over.

4. Even when it’s over, it won’t be over. The 2001 recession officially lasted only eight months... But unemployment kept rising for another year and a half. The same thing happened after the 1990-91 recession. And there’s every reason to believe that it will happen this time too. Don’t be surprised if unemployment keeps rising right through 2010. ... Employment will eventually recover... But it probably won’t happen fast.

So now that I’ve got everyone depressed, what’s the answer? Persistence.

History shows that one of the great policy dangers, in the face of a severe economic slump, is premature optimism. F.D.R. responded to signs of recovery by cutting the Works Progress Administration in half and raising taxes; the Great Depression promptly returned in full force. Japan slackened its efforts halfway through its lost decade, ensuring another five years of stagnation.

The Obama administration’s economists understand this. They say all the right things about staying the course. But there’s a real risk that all the talk of green shoots and glimmers will breed a dangerous complacency.

So here’s my advice, to the public and policy makers alike: Don’t count your recoveries before they’re hatched.

Bulls still have power!!

2009-04-16T21:24:00.003-05:00

4/16/09

Major market bulls are still propelling the indexes higher with JPM good earning report. However, more negative divergences developed in term of technical. As show in above SPX chart, watch out the uptrend line.
In addition, tomorrow is April options expiration day. As I post the calls option of SPY, strick 85 and 87 are heavily traded. It is possible S&P will end up between 850-870 area. Let's see if it has good indication about that.

Deflation is check!!

2009-04-15T22:20:00.002-05:00

4/15/09

The above chart I crap it from dshort.com. It is showing we are now just entering the long deflationary tunnel economy. With continue weakness data of PPI, CPI, other economic indicators, everyone is reduce spending. Can we have economic recovery if we are getting worst in deflation??! It is tax deadline date today and have you all file your tax? Stats indicates over 35 us states tax revenue drop most in 50 years. Ooops. Not until states can collect enough tax, there is impossible we have solid economy rebound.

Bearish Evening Star!!

2009-04-14T21:11:00.002-05:00

4/14/09

Despite good earning news from GS, all financial stocks are selling off beside Citigroup. So, market is down today in sync with bad economic data. Bearish evening star is forming in technical chart, it may indicate possible intermediate term high and trend change. I need to see addition price pattern tomorrow to determine if 4/13/09 is out recent rally high.

Lier Banks keep lieing!!!

2009-04-14T13:20:00.003-05:00

4/14/09

One more Lier banks post fake earning report. Last week, we have wondering surprise from Wells Fargo Bank said they are making $3 Billion profit in its first fiscal quarter. How the hell they are able to have record earning in current economic condition when compare with good times few years ago??! No body knows but they just did it. Again, Goldman Sachs are posting profit with $1.8 Billion and they have come up with a way to hide massive losses so wise, they change their fiscal accouting quarter counting this year omitting last year December calender month. GS just report their first quarter earning from Jan to March this year as their first quarter earning. Last December: The Orphan Month. What a clever boys job they did!! Oh, Darm!! Our SEC, government, and Obama administration ...all let our Banks telling us their fake earning profit report for this first quarter. Personally, I do not believe any earning coming from all financial frims for this quarter and next. They are all untrue. They can all report they make money. I would guess Citigroup will report profit too this coming friday instead estimate that they lose money. Fcuking our government, they keep saying it needs to tighten our financial pratice. On the other hand, changing accouting standard not to report "mark to market" rule and let each bank make up their book of business for this fiscal year. I am very very disappoint to our current administration. We are doomed.
By the way, if any folks have time tomorrow, please check out google to find out where you can all participate the "Tea Party" on Tax deadline date parade againist our current government. I may go to Chicago downtown(232 S Dearborn) tomorrow by noon. See you all there!!

All Banks are making $$$?!

2009-04-13T20:46:00.002-05:00

4/13/09

The following I use post by Marty Chenard at stocktiming:

According to Zachs Research, full S&P 500 total net income is expected to be 27.5% lower than last year. Total net income is expected to fall 10.8% for all of 2009, after 19.0% fall in 2008. (For some investors, falling less is "an improvement" worth investing in. Hard to figure isn't it ... last year your personal checking account was minus $19,000, and this year it will be minus another $10,800 ... that's a good thing?)

Are banking problems and the economy fixed? Not by a long shot ... bank balance sheets still have a problem with toxic assets that need to get cleared off. There are still upcoming auto loans, credit cards, and commercial real estate losses that need to be recognized.

Other things not fixed? Last week showed buying in life insurance stocks ... at the SAME TIME the government will open TARP to the insurance industry? - A New York Times story, cited officials involved in the government's stress test as saying that they declared: "all 19 banks undergoing the exams will pass them.” At the same time, William Black, a former senior bank regulator and S&L prosecutor said: “The bank stress tests currently underway are “a complete sham … It’s a Potemkin model. Built to fool people.”

More things not fixed ... The government is telling GM to prepare for bankruptcy. The WSJ reported that Morgan Stanley is facing larger-than-expected losses on some leveraged loans. Berkshire Hathaway just got downgraded from AAA by Moody's, and Steve Eisman of FrontPoint Partners says that GE Capital is sitting on a bad-debt time bomb.

BUT ... we have an oversold rally with a lot of short covering. Some investors are feeling that the train is leaving the station, and they are jumping in to get on board. Contrast that with what Morgan Stanley said last week in a private note to investors ... "They warned that the bear market was not over and regarding the current rally, their decision is to sell into strength now."

Things are not fixed yet, and the most that Obama "can see" is a "glimmer of hope". Regardless, the market has been moving up. In fact, the Banking Index finally broke through a 3 week trading range on the Wells Fargo news last week. As one pit trader commented (about Wells Fargo) ... "Up over 30%? Did everyone just forget that they just took 25 billion in bailout money? Do the math ... the 3 billion they just made is only 12% of what they have to pay back. At 3 billion per quarter, it would take them just over 2 years to pay it back." Still, the Banking Index did break out.

Does all this sound confusing? That is because it is ... that is because investors are confused ... that is because even analysts are confused, that is because the market wants higher bond yields but the Fed is trying to drive them down, that is because Wall Street firms are saying that we will have a 4th. quarter turnaround while Morgan Stanley said (in a private note) that they were selling into the rally.

My comment: No matter how profitable each bank report in this earning season. They all still own toxic asset. It is still in their book. We are building bigger mess afterward. People will see what would it be after this bear market rally.

Major banks earning is on the way

2009-04-12T20:56:00.003-05:00

4/12/09

With surprising or fake record predict earning for WFC last thursday, the market propelled forward positively. Major stock markets are rallying 5 weeks in a row after made fresh new bear market lows on 3/6/09. Short term is still bullish. Intermediate term, I need to see tomorrow action to determine if market still has stream to go up more. Moreover, GS, JPM and C are going to report their earning this coming week. I am guessing they all will post better than estimate earning since "mark to market" standard accounting rule is out of window, and regulator, government are on their side. They just report what they like and do not really need to write down any bad asset. So, it is not very trustworth earning number for banks for this quarter. But, this imply more problem afterward. Also, it gives me more belief that we will heading more several bloodbath selloff after this fake bear market rally. If anyone is making any $$ on stock market, better set tight their stop loss level or about to take your profit now.

VIX chart watch!!

2009-04-09T11:58:00.003-05:00

4/9/09

Are we getting close to another climax run for market? Going up or down. The VIX chart is an indication for floor traders to see how volatility trading in market. It is moving inverted compare to S&P index. Time will tell what we are going. One sure thing is it is getting very close to make a turn.

Intermediate Term High met?!

2009-04-07T21:48:00.003-05:00

4/7/09

Finally, it seems market bulls are running out of stream to go up. CPCE chart is almost making signal change as indicate market has reached intermediate term high. The above S&P index chart is showing 20 & 50 EMA get compressing together in round 800 number. This is very strong support for ongoing bulls. Let's see if it can provide good pullback entry point for this Bear market bounce.

Short term overbought again!

2009-04-05T20:29:00.003-05:00

4/5/09

CPCE chart can determine when it would be intermediate term high. However, we are not there yet and rally continue. Technical does give me an edge but it does not mean it is 100% accurate. Also, We are in phase 2 of this bear market which is giant fake bear rally. Actually, it is normal action if you can see last recession or last bear market. It means major stock market indexes can rebounce to its 200 days moving average before next major down legs begin. The last phase of this bear market would be scarer than last Sept to March of this year. Be careful.

S&P % swing chart

2009-04-03T14:30:00.003-05:00

4/3/09

From The Chart Store, this is really good chart to show the percentage down and up since all time high for S&P back to 10/2007.

Stock market cheap?!

2009-04-03T12:49:00.002-05:00

4/3/09

The above chart is courtey to dshort. As seen on data, we are far from average historical lows if you are fundamentalist. PE ratio is golden key for old folks who believe in fundamental approach to analysize stock market. More evidence support my thought that stock market will be seen below 5000 for DOW.

Gann Square of Nine

2009-04-02T21:48:00.003-05:00

4/2/09

Notice how nicely 2009 year high 944 and bottom 668 are in the above table. Tomorrow, non-farm payroll number will ignite short term pullback?!

Mild bullish day

2009-04-01T22:10:00.003-05:00

4/1/09

It seems bulls is keeping alive.
Let's talk back about the fcuking Geither's toxic assets plan. Now, we have two Nobel Economists said it will be failed. Now, I know the details about the plan and it is totally failure. It needs investors have at least $10 billion amount already invested in toxic securities. How many private investors out there will meet this requirement? And there lots of not make sense stuffs. Now I can declare banking, stock market and US economy is going to great recession. The worst is not over. Yes, we will see new fresh bear low for major stock market indexes in few months.

ADP employment report predict wrost JOB data this friday!!

2009-04-01T10:55:00.002-05:00

4/1/09

It seems market is showing some strength as I write this in morning trading hours. However, earlier ADP Employment report is the ugliest one month decline since half century ago(back to 1949). Oh my goodness. If this could indicate the coming friday non-farm payroll report, it would be the worst decline ever possible. Moreover, unemployment rate would be getting close to 9.0% mark. Who ever said the worst is over will be proved to be wrong again!!

Whipsaw Day

2009-03-31T22:49:00.002-05:00

3/31/09

The support line on above chart is last bulls defense. Would market keep sell off?! I guess the answer yes. However, I would bet the 760-766 can be good support for tomorrow mild pullback.

G.M. stand for?!

2009-03-30T21:47:00.001-05:00

3/30/09

So far, we know that GM stands for:

Government Motors

Gimme Money

Anything else?!

Uptrend losing stream now!!

2009-03-30T21:23:00.005-05:00

3/30/09

I decline to post another important chart to show how market internals said to us last friday(Remember last Thursday I post one about CPCE chart?!). Remember primary trend is our Big Bear Market. Would this indicate the recent rally is another sucker rally??! Time will tell.
Moreover, I hate our President Obama administration. Why force out CEO of GM?! GM is still individual company although it got government aids. However, it is still private company. Why our president say a word about those banks which got the TARP funds?? Are any bank's CEO got forced out?? This is different standard to banks and non-banks. F&^% our current administration. I lost my trust on our current government. So, economical and political are shitty. Good luck to America.

Government has committed over $10 Trillion

2009-03-30T15:17:00.000-05:00

3/30/09

Economy rescue: Adding up the dollars

The government is engaged in an unprecedented - and expensive - effort to rescue the economy. Here are all the elements of the bailouts.

Date Bailout Allocated Spent

December 2007 Term Auction Facility
Lending program that allows commercial banks to unload hard-to-sell assets, including mortgage-backed securities: Fed takes assets as collateral and banks get cash. $600 billion $468.6 billion

February 2008 Economic Stimulus Act of 2008
Tax rebates of up to $600 for individual filers and $1,200 for couples in effort to boost the economy. Businesses received more than $60 billion in tax breaks. $168 billion $168 billion

March 2008 Bear Stearns bailout
Program to guarantee potential losses on Bear Stearns' portfolio; smoothed the way for JPMorgan Chase to buy the failed investment bank. $29 billion $26.2 billion

March 2008 Term Securities Lending Facility
Federal Reserve facility that loans Treasurys to banks against hard-to-sell collateral like mortgage-backed securities. $200 billion $88.6 billion

March 2008 Primary Dealer Credit Facility
Long-time lending facility for commercial banks that was opened to investment banks for first time in March 2008. n/a $61.3 billion

May 2008 Student loan guarantees
Program to purchase federal student loans from private lenders. Aim is to provide financing to companies that provide student loans. $130 billion $9 billion

September 2008 Fannie Mae and Freddie Mac bailout
Cost to the government of taking the mortgage finance companies into conservatorship. $400 billion1 $59.8 billion

September 2008 Foreign exchange dollar swaps
Exchange of dollars to 13 foreign central banks for collateral. Aim is to provide liquidity to foreign financial institutions. Unlimited $327.8 billion

October 2008 FHA housing rescue
Funding set aside for insurance of new 30-year fixed-rate mortgages for at-risk borrowers, tax credits for first-time home buyers and assistance to states and municipalities. $320 billion $20 billion +2

October 2008 Auto industry energy efficiency loans
Low-interest loans to help speed the industry's transition to more fuel-efficient vehicles. $25 billion $0

October 2008

Troubled Asset Relief Program
Financial rescue plan aimed at restoring liquidity to the financial markets. Funds thus far allocated for capital purchases in banks and emergency bailouts.

$700 billion

$323.4 billion

October 2008

Bank capital investments

$250 billion

$198.6 billion

November 2008 Citigroup capital investment
Emergency funding to keep bank afloat; in addition to previous $25 billion capital investment. $20 billion $20 billion

November 2008 Citigroup loan-loss backstop
Funds set aside to backstop potential losses to Treasury from Citigroup loans. $5 billion $0

November 2008 TALF loss provisions
Funds set aside to backstop potential losses to Treasury from purchases of consumer loan-backed securities and mortgage-backed securities. $100 billion $0

December 2008

Auto industry bailout
Program that will provide capital on a case-by-case basis to systemically significant institutions that are at substantial risk of failure.

$29.8 billion

$24.8 billion

December 2008	General Motors Government bailout of automaker to keep company afloat and help it achieve viability for the future. Last $4 billion subject to congressional approval	$13.4 billion	$13.4 billion
December 2008	Chrysler Government bailout of automaker to keep company afloat and help it achieve viability for the future. Last $4 billion subject to congressional approval	$4 billion	$4 billion
December 2008	GMAC Government bailout of auto finance company to which Federal Reserve granted bank holding company status. $5 billion went to GMAC directly and $1 billion to GM to make an investment in the company.	$5.9 billion	$5.9 billion
January 2009	Chrysler Financial Government bailout of auto finance company to which Federal Reserve granted bank holding company status.	$1.5 billion	$1.5 billion
March 2009	Auto Supplier Support Program Program to help stabilize auto suppliers by guaranteeing debt owed to them for shipped products, and providing financing to continue operations.	$5 billion	$0

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January 2009 Bank of America capital investment
Emergency funding to aid Merrill Lynch transaction; in addition to previous $25 billion capital investment. $20 billion $20 billion

February 2009 Foreclosure prevention $50 billion4 $0

February 2009 Public-private investment fund
Taxpayer funds used in partnership with private investment that will buy up at least $500 billion of toxic assets from financial institutions. $100 billion $0

March 2009 AIG common stock investment
Money to help troubled insurer pay off now defunct lending facility set up by Fed in the initial version of the company's bailout. $40 billion $40 billion

March 2009 TALF investment $20 billion $20 billion

March 2009 AIG preferred capital investment $30 billion $0

March 2009 Small business loan-backed securities purchasesFunds to purchase securities backed by SBA loans in effort to unlock credit for small businesses $15 billion $0

n/a Funds left unallocated $20.2 billion n/a

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October 2008 Money market guarantees
Four programs to help money market funds by insuring against losses; financing bank purchases of debt from funds; buying funds’ debt; and lending to funds directly. $659 billion $15 billion

October 2008 Commercial Paper Funding Facility
Purchases of short-term corporate debt aimed at boosting the struggling market and providing critical three-month financing to businesses. $1.4 trillion $241.3 billion

November 2008 Unemployment benefit extensions
Funds to help states expand unemployment benefits. $8 billion $8 billion

November 2008 Citigroup loan-loss backstop
Funds set aside to insure against losses from bank’s mortgage-backed securities investments. $245 billion $0

November 2008 Term Asset-Backed Securities Loan Facility
Program to buy consumer loan-backed securities. Aim is to revive the securitization market for consumer loans like credit cards and auto loans. $1 trillion $4.7 billion

November 2008 GSE mortgage-backed securities purchases
Program to buy mortgage-backed securities held by Fannie Mae and Freddie Mac. Aim is to reduce rates on home loans. $1.25 trillion $236.2 billion

November 2008 GSE debt purchases
Program to buy debt issued by Fannie Mae and Freddie Mac. Aim is to reduce rates on home loans. $100 billion $50.4 billion

November 2008 FDIC Temporary Liquidity Guarantee Program
Guarantees on newly issued bank bonds with maturities of more than three months. Aim is to restore liquidity to the corporate bond market and provide long-term financing to banks. $1.5 trillion $297.1 billion

2008

FDIC bank takeovers
Cost to FDIC fund that insures losses depositors suffer when a bank fails.

n/a

$18.5 billion

January 2009 Bank of America loan-loss backstop
Funds set aside to insure against losses from bank’s Merrill Lynch merger. $97 billion $0

January 2009 Credit Union deposit insurance guarantees $80 billion $0

January 2009 U.S. Central Federal Credit Union capital injection $1 billion $1 billion

February 2009

American Recovery and Reinvestment Act
Infrastructure spending, funding for states, help for the needy and tax cuts for individuals and businesses to stimulate the economy.

$787.2 billion

n/a3

February 2009	Tax cuts for individuals and businesses	$212 billion	n/a
February 2009	Direct spending	$267 billion	n/a
February 2009	Appropriations spending	$308.3 billion	n/a

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February 2009 Foreclosure prevention $25 billion4 $0

March 2009

AIG
Multifaceted bailout to help insurer through restructuring, minimize the need to post collateral and get rid of toxic assets from its balance sheet.

$182 billion5

$129.3 billion5

November 2008	Bridge loan Financing to help company through its restructuring process as it spins off non-core businesses.	$60 billion6	$43.2 billion
November 2008	Collateralized debt obligation purchases Facility to buy private investors' loans on which AIG sold insurance. As the value of loans plummeted, AIG was forced to post more collateral to back up the insurance contracts, known as credit default swap agreements.	$30 billion	$27.6 billion
November 2008	Mortgage-backed securities purchases Facility to buy company’s securities backed by residential loans.	$22.5 billion	$18.4 billion
March 2009	Treasury preferred capital investment Loan to help pay off a now defunct lending facility set up by the Fed in the initial version of the company’s bailout.	$30 billion	$0
March 2009	Investment in ALICO and AIA life insurance units	$26 billion	$0
March 2009	Purchases of life insurance-backed securities	$8.5 billion	$0
March 2009	Treasury common stock investment	$40 billion	$40 billion

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March 2009 U.S. government bond purchases
Federal Reserve will buy up to $300 billion of U.S. debt to support Treasury market and help keep interest rates down for consumer loans. $300 billion $15 billion

2009

FDIC bank takeovers
Cost to FDIC fund that insures losses depositors suffer when a bank fails.

n/a

$2.3 billion

Total: $10.5 trillion $2.6 trillion

1$200 billion set aside in September 2008; $200 billion additional in February 2009
2At least $20 billion
3Estimated budget impact for 2009 is $120 billion
4Making Home Affordable foreclosure prevention program will get $50 billion from Treasury, $20 billion from GSEs and $5 billion from HUD.
5Includes $70 billion from TARP
6Bridge loan allocation to be reduced to not less than $25 billion once government takes stakes in life insurance units

Sources: Federal Reserve, Treasury, FDIC, CBO
Note: Figures as of March 30, 2009

Mortgage Crisis not over yet!!

2009-03-30T13:18:00.002-05:00

3/30/09

The following is someone's comment about "Mortgage Crisis over?!"

Things are going to get a lot wrose. I am more convinced than ever that real estate has another 25% to fall, and best case, it is dead money for another five to ten years. The New York Times produced some insightful data on inflation adjusted home prices for the last 120 years, which baselines at a $100,000 for a single family home in 1890. Few people realize how superheated the recent real estate bubble really got. Past bubbles very consistently peaked at $125,000 in 1896, 1979, and 1989. This last one peaked at $205,000 in 2005, almost double the previous record highs. And while we have dropped 34% since then, to $135,000, we haven’t even fallen to the past all time highs yet. If you look at historical lows, my call for a further 25% slump looks positively bullish. We saw lows consistently around $66,000 in 1920, 1932, and 1942. Postwar lows came in at $105,000 in 1976, 1983, and 1996. These figures suggest the best case low is down a further 28%, and the worst case is down another 51%. I think I’ll go find something else to trade.

The data is produced by NY Times. History is always repeating whether you believe or not. This time is no different. You think home price now is cheap. Think again. I would say house price keep falling to around the end of year 2010 the least. Good luck if you consider to buy your house right now.

Market Value for Global Banks from 1999-2009

2009-03-30T11:58:00.004-05:00

3/30/09

Look at above charts of Now and Then about Market Value for Global Banks have been shifting from US to China. Also, next major industrial sector is going to change is Auto as today that GM and Chryler are about falling the cliff very soon. No doubt China will be stronger nation than US in another 20 years period.

Fib level chart of S&P

2009-03-27T22:09:00.003-05:00

3/27/09

S&P is getting strong resistance at 61.8% Fib retracement zone. I would expect market will be hanging or trading sideway between 38.2% to 61.8% on days and weeks. Just another technical chart need to pay attention.