<font color=red>DAILY DOO-DOO FROM THE GOLDEN DOG PORCH</font>
Put on your Golden glasses and sit in your Golden porch chair. The Golden stray pooch was yappin a bit more today.
"Consumer sentiment sinks in October to 80.5
Consumer sentiment dropped sharply in early October, according to media reports on the University of Michigan consumer sentiment index. The index fell to 80.4 in October from 86.2 in September. The current conditions index dropped to 92.9 from 95.8 while the expectations index sank to 72.4 from 79.9 in September. Economists were expecting a smaller drop in the index to around 85.7
these fools rallying the S&P are just leading a cover rally
GE offers bad news, GE offers good news, GE offers bad news, GE offers good news
IBM was down to 55, now over 60, oversold condition now gone
the retail news was interesting
Sept was down 1.2% sequentially (meaning from August)
but not down as badly as expected !!!
and therefore good news ???
how about instead -- next three months will SUCKKKKKKKK
Back-to-School season was real bad, harbinger of poor Christmas
combined with horrrrrrrible Consumer Sentiment numbers just now,we have the conditions for a Perfect Storm in Retail
rally rally rally... why?
because oversold conditions created an opportunity to cover those shorts (but not panties), thus creating an improved liquidity environment from which to sell to lower levels
RRussell put it very well yesterday...
we are bleeding lower and lower without anything closely resembling an increase in fear or remotely panic
therefore, when the 90% downvolume days come, we will conclude AT MUCH MUCH LOWER LEVELS
the widespread relative complacency indicates the bear market first leg will be more brutal than otherwise expected
party on, fools
he emphasizes watching Dow Transports closely here
Dow Utilities already indicate a deep recession
Trannys bounced off critical support yesterday
if Dow Transp goes below 2000, then look out, confirmed LongTerm Bear !!
meanwhile, despite growing evidence of deflation, e.g. PPI today flat as pancake, gold is holding up reasonably well in the #315-325 range
treading water below the Walls of Jericho
a tidbit borrowed from Strictly Drilling II
Sinclair warned that we should watch for rising gold lease rates
(interest rates charged by corrupt borrowing of gold, for the purpose of dumping on the gold market, and selling gold which Manhattan BlueBloods believe they still own)
---1M ------ 2M ------ 3M ----- 6M ----- 1Yr
0.180% 0.225% 0.290% 0.430% 0.597% Oct 10
0.457% 0.545% 0.644% 0.681% 0.902% Oct 11
they have risen more than double !!!
something is brewing
rumors swirling that Microsoft is considering a hostile takeover of Siebel Systems, hmmmm"
AND:
"To The Gold Community, from Jim Sinclair (general message)
The present reaction in gold and gold shares coming so soon on the heals of the June-September experience has caused many of you, most certainly those new to this field, significant discontent. I understand that. However, I stake my 43 years of experience and my hard won reputation on what I am about to say to you.
Take heart. This decline is short-term and only a natural reaction in gold shares which will run its course on the downside, IMO, by October 19th to October 23rd. Many of these share will establish new highs thereafter. Four of the five required fundamentals are in for a long term gold bull market. I am convinced that the "5th Element," a long-term top in 30-year US Treasury bonds will join before much longer.
IMO, having not acted to reduce your exposure by 1/3 on my 9/23 VIP on this site, you should hold your fully paid cash positions in gold equities. I say this because I believe it and I am concerned by your many messages to me seeking my help. My advice to you is my advice to myself.
Regards,
James E. Sinclair
October 10, 2002
me:
two major pillars are holding up this economy
AUTO SALES, HOUSING
today a big deal was made to put the best face on lousy retail sales by removing the weakening auto sales, which now are being widely recognized as weakening
(even Ford Motor is being threatened now)
so ex-autos, retail sales was ONLY down 1.2% over last month
THAT SUCKS, THAT IS SHITTY AS HELL
YESTERDAY UNDERWEAR SMELL BETTER THAN THAT !!!
next will be further weakening in housing
spin spin spin ... what bullshit"
AND:
"for many of these credit card banks, expanding business equates to offering more credit lines to more unworthy customers, possibly even much worse customers
but growth is growth, right?
no way
these guys are stepping in deep shit
RoseyBabes,
XAU is threatening its 200MA
so is the HUI
a break below for either is mui bad
a break below for both is mui mui bad
that be kindergarten of technical analcyst
unlike LittleJoe's pessimism, I look to two signals on gold
strong Jap Hammers on HUI and several key golds yday
gold lease rates just doubled overnight
(indicates unwillingness to lend to JPMorgo !!!)
days like today seem to be saying
as Ron Insana of CNBC likes to say (message of the market)
THE NUMBERS ARE ALL REAL BAD, BUT WE ARE GONNA RALLY TODAY
WHY? BECAUSE WE CAN, AND WE ARE TIRED OF DAILY DECLINES
today only serves to set up the next leg down, or legs down
serious badass wicked shitful mighty declines are coming
today helps to rebuild COMPLACENCY"
AND:
"not only are XAU,HUI oversold, but check volumes
I just checked my usual dozen gold/silver WATCH LIST
at least six of them have volume running about 50% of avgdaily
a couple have volume running about 20-30% of avgdaily
only one (Kinross=KGC) had higher than avg volume
by "running" I mean accounting for the pace during the day,
and the fact that the day is half over
"on pace for" ...
this is a typical feature of the end of downdraft corrections
sure is oversold on golds
they are clearing a path for JPMorgo to cover large quantities of gold
standard practice when times turn dark gloomy ominous
I have tried to coalesce various opinions on GOLD recently
Sinclair has strong views on the dollar crisis and gold's role as a tempering force of stability... he is losing patience with the absurdly illiterate masses who dont understand much of anything financial, regard gold stocks much like tech fast movers... but now he is attempting to calm folks down
Russell very confidently states his strong views that all paper-based assets will be threatened, including TrezBonds, and gold will be the best performing asset on the planet soon, like when the 90% downvolume days occur... he mentions a perceived 3.0% target for TENS yield... he makes no mention of how bad a storm we might get, never talks about derivative events... he concludes that investors are not yet ready for gold, implying they will, since all signals point to a deepening recession
Puplava is unflappable about the unfolding of a PERFECT STORM, and sees evidence everywhere he looks... he cites the new trend of rising commodity prices... he cites rising risk of damaging derivative events... he is confident that gold will be soon pursued vigorously, and never seems to show much emotion such as impatience... very patient
Jim Grant doesnt make it to my table much, when he does, his message is that gold will soon be widely regarded as the best performing asset, while the world financial crisis worsens... he impugns Greenspam regularly as a charlatan
Jim Willie likes gold nearterm and longterm... he accumulates regularly over time... he gets discouraged from time to time... he sees rising storm clouds thru the ENTIRE financial sector... he expects gold to become pursued eventually, and when it does, to be pursued by THE ENTIRE WORLD SIMULTANEOUSLY... he will be putting $20 bills in garter belts before the next decade... he remains a jackass of unprecedented proportions, realizing that accurate self-awareness is the key to wisdom"
AND:
"some observations on big tickets
gold is flat at #316, not reacting negatively to an absurd cover Dow +300 pt rally... seeing nice support reasonably close to the dangerous ground at #325... as long as it stays within shooting distance of #325, it will eventually crease, crush, and move higher
USdollar is flat at 107.25, not benefitting from this Dow rally... so two big updays has lifted the buck from 106.9 to barely over 107, pathetic... indicative of a domestic disturbance within the US shores, or shall I say a "CIRCLE JERK BETWEEN HEDGE FUNDS AND HOUSES", with retail investors paying up for the rights to see how big their shlongs are
HUI and XAU are each up about 3%, punctuating the end to inverse correlation between Dow, S&P and HUI, XAU... so a decent episode of support at the 200-day Moving Avgs
Dow Transports give the major indexes a reprieve from LongTerm bear confirmation, with a refusal to make new lower lows than seen in July... so far Dow has made lower lows, but S&P has not really... tells me that mutual funds are seeing massive redemptions, with managers seeking greater liquidity cash flows in the high volume Dow stocks
yeah, plenty of hidden stress with banks... I suspect the stories behind the bank failures will not see the light of daytime newspapers, FOR THE GREATER GOOD... which extrapolates to a realization that JPMorgo might fail, and we wont hear about it, until after its obligations are assumed by the Fed
hmmmm
JPMorgo getting a stay of execution yday/today, up to 17.7... big effing deal... way below the magic 18-20 critical levels... my guess is they are buying mui mucho gold short futures contracts back, supporting gold... a likely scenario is for continuation of this support for several weeks, or months, if they survive that long"
AND:
"below is a section taken from Roach on consumers
Modigliani makes an outstanding point, highlighted in bold
this lower rate REFI phenomenon will backfire on lenders
(just when we are focused on the homeowner benefits)
this lower rate environmt will backfire on certain consumers
(just when we think it helps them)
very intriguing, more than mere ideas, but macro thinking
if money is coming too easy to borrowers, like in REFI's, then the loss comes from someone's or some company's hide
NAMELY MORTG-BACKED SECURITY HOLDER, BANKERS, MGIC INSURERS
according to Dept Commerce, for 2001,
$1090 B/yr in interest income verus $590B in interest expense paid
so lower rates are subsidizing the younger indebted homeowners at the expense of the older retired citizens living off interest and dividends
wow, well put, parts already known, but now succinctly clear
so banks and bondholders will be weakened further
so older consumers are hurt, offsetting young overconsumers
net damage to the economy on both counts
that is a major reason why lower rates beget even lower rates
and the Liquidity Trap acts like a BLACK HOLE !!!
Roach concludes a major adjustment is coming for American consumers
just a matter of when
the relevant passages:
We also spent some time discussing the latest rage in Wall Street consumer theories -- that low interest rates would provide a windfall to household income that would keep the consumer afloat. The record refinancing bonanza now under way certainly seems to hint at just such an outcome. But Professor Modigliani sounded a note of caution on this count as well. "For every borrower who gets a boost in purchasing power, there is a lender who loses." He went on to add that "they may be different people (borrowers and lenders), but it is the net effect that matters for the macro economy."
At that point, a light bulb went on in my own atrophied brain. Years ago, my research revealed that there was a certain perversity to the response of US consumers to fluctuations in interest rates -- rising rates didn't seem to hurt nearly as much as most of us thought. It turns out that's because consumers are net lenders to the rest of the economy -- their interest income is well in excess of their interest payments. That still holds true today. For example, in 2001, US Commerce Department data show that households received some $1,091 billion in interest income, well in excess of the $592 billion paid in interest expenses. In other words, while refis help in a lower interest rate climate, those dependent on interest income -- especially retirees -- are hurt. And to the extent that the consumer sector has more interest income than debt service, it may simply be wrong to conclude that surging refis are always accompanied by booming consumption.
In my opinion, the combination of these two theories sends an unmistakable message: The carnage of a popped equity bubble spells a major adjustment for the saving-short American consumer. It's just a matter of when."
AND:
"Goldman Sachs, Under U.S. Probe, Fights SEC Proposal (Update5)
By Neil Roland (Oct. 10 )
Washington, (Bloomberg) -- Goldman Sachs Group Inc., which employs 300 analysts covering 2,000 companies worldwide, said researchers shouldn't be held personally responsible for their stock recommendations.
The Securities and Exchange Commission wants analysts to certify the integrity of their research as part of an effort to boost investor confidence after accounting scandals at Enron Corp., WorldCom Inc. and other companies. Goldman Sachs is among a dozen financial services firms under investigation for allegedly recommending stocks to win investment-banking business.
Goldman said the SEC's plan doesn't consider changes made to analysts' reports by their supervisors, which may mean that stock selections and commentary don't reflect the views of researchers. Goldman's position contrasts with rivals, such as Citigroup Inc., Merrill Lynch & Co. and Credit Suisse First Boston, which have endorsed the SEC proposal.
The certification ``of personal views' doesn't take into account the ``fact that the firm may legitimately influence the views of the analyst in a report,' Goldman Sachs General Counsel John W. Curtis wrote in a Sept. 23 letter to the SEC.
The SEC proposal should be changed to make analysts certify their work ``subject to supervision policies of the broker or dealer applicable to all research published by it,' Curtis said.
Goldman Chairman Henry Paulson has been working on a Wall Street plan to end federal and state investigations of securities firms. Congress, the SEC and state regulators, including New York Attorney General Eliot Spitzer, are probing whether brokerages promoted shares of clients and gave executives shares from initial public offerings to win investment-banking fees.
Shares Plunge
The shares of securities firms plunged this year amid the investigations and slumping demand for firms' services. Bloomberg's Wall Street Index has dropped 38 percent. Goldman shares, down 34 percent this year, rose $1.81 to $61.07 at 12:52 p.m. in New York Stock Exchange composite trading.
``Our letter is a legitimate response on the merits to an important proposal, and has no bearing on the SEC's investigations,' said Goldman spokesman Lucas Van Praag. ``It seems bizarre that anyone would criticize us for responding to a letter we were asked to comment on.'
Banks had ``difficulty insulating the research analysts from the problems, both real and perceived, resulting from the relentless and sometimes intense pressure' coming from clients, Paulson told the Committee on the Investment of Employee Benefit Assets in Washington, the Financial Times said today.
Salomon has already put the SEC recommendation in place. Salomon General Counsel Marcy Engel said in a Sept. 27 letter to the SEC that supervision of analysts shouldn't prevent researchers from certifying the accuracy of reports.
``The analyst can properly certify that the research report accurately reflects his or her views, even if those views have changed as part of the supervisory process,' Engel wrote.
Little Influence
The Goldman letter, which was issued during the SEC's public comment period, may have little influence on the SEC's deliberations, a legal expert said. ``Goldman's political capital with the SEC is at a low ebb,' said Adam Pritchard, a visiting Georgetown University law professor who was a senior SEC lawyer.
SEC spokesman John Heine declined to comment. The SEC has said its proposal seeks to ``bolster investor confidence in the quality of research.' The plan ``creates an incentive for analysts to examine, even more carefully, the basis and foundations' for their views, the SEC said in its proposal.
The SEC comment period ended Sept. 23. Agency staff will review the letters and decide whether to recommend any changes in the proposal before commissioners cast a final vote.
``It's an awkward time for Goldman to raise these issues,' Southern Methodist University law professor Alan Bromberg said. ``But it's their chance to make reasonable points and try to influence a rule. And it puts the SEC on notice about the defense Goldman would offer if any of their analysts are charged.'
Merrill Fine
Merrill Lynch agreed to pay $100 million earlier this year to settle an investigation by Spitzer, who released e-mails showing analysts disparaging stocks that they publicly touted.
Spitzer also released e-mails and memos from Salomon Smith Barney that showed former telecommunications analyst Jack Grubman criticizing investment banking clients while issuing favorable research reports at the behest of Salomon bankers.
Massachusetts regulators this week uncovered Credit Suisse First Boston e-mails that they said showed the company used analyst recommendations to win banking business.
A group of state regulators expressed doubt that the SEC analyst rule would enhance the integrity of stock research. The Securities Industry Association, which represents large firms, said certification should be required only of the lead analyst on a report, not everyone who worked on it." |
