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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (66996)	7/28/2006 1:41:38 PM
From: ild	Read Replies (1) \| Respond to of 110194

@MRB, NSU -- trotsky, 13:22:16 07/28/06 Fri strong buying in MRB today. both MRB and NSU were highlighted by Steve Saville as potential take-over targets yesterday. you may recall that i have also pointed out in the past that these two fit the bill as potential targets. they are vastly undervalued relative to their underlying assets, for reasons that strike me as either transitory (in MRB's case, it's the Mexican stand-off regarding a blasting permit) or a bit misguided (NSU's 'political risk' discount). at current prices, the risk/reward in both stocks seems very compelling - with the usual caveat that they can be expected to be volatile and that the metals themselves need to remain reasonably strong. Hambone@pms -- trotsky, 13:09:57 07/28/06 Fri i'm not averse to your misgivings, but i note that the broad stock market sentiment indicators have ALSO recently hit extremes that suggest the current rally could have some more legs. for instance, the AAII bear percentage recently hit a high seen only two times in the past 20 years (at the 1990 low and the early 2003 low), and the CBOE put/call 10-dma actually hit an all time high (not just a 17-year high as i reported yesterday). in short, considering that the gold shares are currently correlating positively with the Dow, and that gold stock sentiment indicators ALSO look bullish, the current rally could go on for a while. one possible scenario i'm considering is: up for a few more weeks (into late August/early September), then down with the general market into the 4-year cycle low in November to retest the June lows, and then the beginning of a new uptrend , as by that time, the yield curve should be reverting to steepening mode (a big decline in stocks and commodities would definitely set that process into motion).

To: orkrious who wrote (66996)	7/31/2006 3:12:48 PM
From: ild	Read Replies (1) \| Respond to of 110194

frustrated@rents -- trotsky, 14:51:39 07/31/06 Mon what you are witnessing is a perverse side-effect of sliding house prices - in the initial stages, rents are pushed UP as more and more people postpone buying and decide to rent instead. after all, who wants to catch a falling knife? so while house prices are bginning to DEflate, CPI is likely to continue to exhibit a considerable lag and will keep rising for a while - owner-equivalent rent is its largest component, iow., the Fed remains in the box of its own making. oh well, this happens when you allow a bunch of bureaucrats to centrally plan money - they can NEVER know what the 'natural' interest rate is, which in fact shifts around constantly, not least BECAUSE of their interventions (they're chasing their own tail all the time iow). thus, whatever they do, it's bound to turn out to be a mistake - it simply CAN'T BE DONE. central economic planning is not feasible, and never will be. then again, central banks do NOT exist because anyone really believes in the feasibility of such planning. they exist mainly to assist the State in its main business - highway robbery. @NCEM -- trotsky, 13:29:55 07/31/06 Mon NCEM earnings are out today, and the stock is pulling back as they reported lower eps. however, the lower eps are only due to the creation of an income tax provision - in reality, the earnings report contained the following nuggets: "Revenues and equity in earnings of joint venture for the company for the three-month period ended June 30, 2006 increased 283% over the same period in the prior year. Revenues and equity in earnings of joint venture for the company for the six-month period ended June 30, 2006 increased 245% over the same period in the prior year." since there's some volume in the stock today, this pullback presents an opportunity, imo. dyodd, etc. NCEM quarterly biz.yahoo.com Hambone@DROOY and NSU buy -- trotsky, 16:00:44 07/28/06 Fri well, w.r.t. NSU, you know my opinion - under-rated, undervalued, lots of potential. DROOY is a bit more difficult due to the propensity for things to go wrong there. however, there's no denying that the stock is absurdly cheap. its discount to other mid tier producer valuations is like the Grand Canyon - vast. the stock would have to be at $3 to reach fair value (that is, fair value, including a 'things-often-go-wrong' discount). as Frustrated has mentioned, the convert issue is out of the way for now. they had to offer better terms for the bond holders, but got an extension that allows them to get the company back into growth mode. with the unbubdling mulled by HMY and the recent buying up of WAR shares by HMY, GFI and indirectly, Aflease, SA's gold mining industry goes into the next phase of corporate action. i expect a few crumbs from the table will land in DROOY's lap. Pyrite@stocks replacing houses -- trotsky, 13:45:20 07/28/06 Fri i don't see it, mainly because falling house prices coupled with the ARM reset wave will strain consumer budgets to the limit - and the mutual fund cash to assets ratio is ALREADY hovering close to an all time low. in short, unless mutual funds get fresh inflows from passive individual investors, there is no buying power from that quarter. on the contrary, it is far more likely that they will pull money OUT, which would produce forced selling to meet those redemptions. so to my mind, the current rally is mainly based on a technical confluence of factors, namely the fact that a relatively minor break in the market has produced excessive bearish sentiment - this has stopped more downside to eventuate in the short term, and when it stops falling, it soon reverts to rising. underneath this technical rally, the fundamental situation continues to deteriorate. the market tries to dicount a 'best case' scenario that has very litle chance of becoming a reality, imo.