Thursday, February 11, 2010

What the Federal Reserve and Seattle Security Guards Have in Common

After Fed Chairman Helicopter Ben spoke on Wednesday, investors were again confused about the direction the Fed is leading them. There was a lot of talk (Joe Seattle Security Guards into their walkie talkies), but not a lot of action, (Joe security guards, watching while the poor girl's head was getting stomped on) and seemingly not even a plan of action for the future. (Joe Seattle Transit General Manager Kevin Desmond, who said the security guards were not trained for combat, but might be in the future) Indeed, the Fed and Seattle Security Guards have a lot in common.
  • Both stand still as beatings happen right in front of their eyes
  • Both have names that are misleading
  • Both appear to the uneducated/unsuspecting sheeple as if they're performing a service
  • Both are condoning criminal behavior
  • Both turn their backs on the little guy
  • Both are siphoning public money
  • Both should be immediately closed down and thrown in jail
Investors were looking for more information regarding the Fed's exit strategy from so-called "quantitative easing" or easy and cheap monetary policies. Security Guards all over Seattle are also looking for an exit strategy, or a rock behind which to hide, or a hole in which to jump.......where they'll have to be careful not to trip over other Seattle Security Guards (Joe oxymoron) who may have found the best hiding places first.

Moving on, since the market dropped 80 points after Helicopter Ben's speech, could it be that the market actually wants a rate increase? Could it be that investors are "Fed" up with the Fed coddling big banks and blowing asset and debt bubbles? YES! The Fed is creating a win-win-win for big banks, giving them cheap money with which to chase high yield bonds at no risk because we keep bailing out failing institutions. They're off the hook with taxpayer freebies so why not chase high risk bonds. (Greece, Portugal, Ireland, Spain, etc) For more depth on a previous post, click here.

And speaking of debt bubbles, where are the credit rating services when you need them? (I don't know Joe, where were the Seattle Security Guards when you need them?) Yes, these same credit rating agencies that stood by as subprime mortgages were getting sliced up and sold all over the world with AAA ratings. The same credit agencies that told us Bear Stearns had plenty of liquidity weeks before they crashed. Yes, these agencies that are supposed to protect us are again turning their backs as bubbles are getting blown all around us.

What does this mean for Joe? Joe, who is currently trying to get JoAnn to settle down with him in Joetown, reminded JoAnn that there has never been a head stomping incident in bus terminals in Joetown -never mind the fact that there are no bus terminals in Joetown, OH. Regardless, Joe also informed JoAnn that he'd never behave cowardly like a Seattle Security Guard and watch while 15 year old girls get their heads stomped in bus terminals. Indeed, Joetown is a safe place. Seattle apparently is not - not only do you have to worry about the Federal unReserve Banking Cartel and blind credit agencies, but ALSO head stompers and defunct security agencies.
Artwork courtesy of

Saturday, February 6, 2010

How to Play the Coming Copper Plunge

They say Copper is the metal with the Phd since it seems to be an excellent economic indicator. (They also say Joe Shareholder is the investor with the Phd since he's an excellent economic predictor) Since mid March Copper has more than doubled in price (Joe Toyota, stuck accelerator pedal) as investors geared up for what they were misled to believe would be a robust economic recovery. Well this is a warning to anyone who's invested in FCX and JJC for copper prices. SELL NOW (Joe Toyota, stuck brake pedal). Not only sell, short it like it's going out of style. Not only short it like it's going out of style, leverage short it 2X, 3X, 4X, or whatever you can. Not only that, borrow money from your mom, dad, grandmother, grandfather, brother, sister, in-laws (then give them advice so they can make money shorting copper too), neighbors, child's piggy bank, kids college fund, your dad's 401K, etc. Sell your car, house (if you're not underwater), have a garage sale, list crap on ebay, etc. Whatever you can do to SHORT COPPER. I looked for a triple short copper ETF, but there's nothing in the US. Ticker symbols FCX and JJC should be a good start, however. See the attached article from purchasing magazine predicting copper will crash down to $1 from where it stands now at about $3.

Buyers' Alert: Copper price could collapse
Traders sees "catastrophe" for copper suppliers
Tom Stundza -- Purchasing, 2/3/2010 12:13:20 PM

World copper prices, which more than doubled last year from $1.46/lb in January to $3.17 in December, are set to plunge as speculators unwind positions and global inventories expand, according to David Threlkeld, president of metals trader Resolved Inc. in Scottsdale, Ariz.
In an interview with Bloomberg, the veteran copper trader, says producers "are going to see a catastrophe in the market," and drop to less than $1/lb. That's about 67% less than this week's London Metal Exchange (LME) average of $3.07/lb.

Some 90% of copper buying in recent months "has been from speculators," says Threlkeld, who has traded the market for more than 40 years. "Whether they are exchange-traded fund speculators or China pig farmer speculators it doesn't really matter, because that buying is going to come back to the market."

Three-month copper futures on the London Metal Exchange, which surged 140% last year after several governments spent billions of dollars to lift their economies out of recession, traded yesterday at $3.12/lb-as compared with spot at $3.11.

China, the world's largest user, imported a record 3.2 million metric tons of the refined metal in 2009, up 119% from the previous year, and says it consumed about 5 million metric tons. However, there are about 3 million metric tons of unreported inventories in China, says Threlkeld, which has kept the price inflated.

"The way the figures are being reported (by the government) is anything that's shipped to China is assumed to be consumed, which is clearly ridiculous," Threlkeld says, noting that stockpiles monitored by the Shanghai Futures Exchange this week are more than three times the level a year ago.

Thursday, January 28, 2010

GDP Chocolate Bunny

Tomorrow morning at 8:30 Eastern Time the Q4 GDP numbers will be released. All indications suggest we'll have positive growth again after a 2.2% increase in Q3. Some economists are suggesting even a 5.5% growth for Q4. This would be the most powerful growth rate since 2006! Great news right? Well, not so fast. (Joe, who licked the Chocolate off of your bunny?) Nobody, Joe's bunny still has its chocolate intact, but he's just a bit skeptical about anything being reporting right now during this depression which is raging stronger now every day. Let's take a look under the hood of this 5.5% growth engine.

1. The US Dollar was extremely weak during the fourth quarter, so everything we made domestically was cheaper abroad, and this likely boosted exports and decreased imports. Since net exports (exports-imports) is a component of GDP, then of course stronger exports will sweeten the GDP.

2. The Federal Government has been auctioning Treasury bills and notes like crazy and the "Federal and UnReserved Banking Cartel" has been cranking up its toys like a kid on Christmas morning. Since Government spending is also a component of GDP, and Congress is more than willing to spend it, we'll likely see a few percentage points due to government spending. Just today Hail Mary Harry's (Joe lame duck) Senate voted to raise the debt ceiling by 1.9 trillion to a staggering 14.3 trillion dollars. This was just raised a month ago by the Senate. What will it be raised to next month?

3. Inventories have been replenished after a long drought for most of 2009. For more on this click here.

What does this mean for Joe? Joe understands this GDP number could look very pretty on the outside, but on the inside it could be quite hollow. (Joe Chocolate Bunny, and it's not even Easter) While a GDP of 5.5% would seem to suggest the economy is nice and solid, a few cracks and the whole bunny could crumble to pieces. (Joe Chocolate Bunny - in the outdated clearance shopping cart a month or two after Easter) Investors have priced in a GDP number of about 5.5%, so if the GDP is less than that, expect another down day tomorrow. A close look at inventory positions within the GDP report will also be quite telling of what we can expect ahead. If inventories are high, look out for a low to negative Q1 growth rate to be reported next time around.

Tuesday, January 26, 2010

Market Dives 5% in Three Days - Only the Beginning?

Last week US stocks got taken out behind the woodshed for a 5% thrashing in only three days. Why did this happen? Two reasons:

1. Fooled Investors feared Bernanke wouldn't be retained as FED Chairman when the Senate votes on Thursday or Friday, or whenever Hail Mary Harry calls for the vote to take place. Remember, Bernanke's POA to defeat this depression is to print fiat confetti/monopoly money and blow it around like an Oklahoma twister. Dollar drops, stocks go up. So do nominal earnings of international companies because their overseas' sales translate into more US Dollars here. (which is what is happening right now during earnings season. The US Dollar was extremely weak in the 4th quarter) Real value however? Forget about it. We're still knee deep in a depression.

2. Obama, hotter than a cheap pistol over the Massachusetts election and subsequent ego bruising, came out swinging wildly at the banks like a late round amateur cage fighter in a Vegas casino. This troubled investors because some of his proposals include limiting bank trading activities and equity positions. Investing has been a major source of income for banks in this latest earnings round and many analysts are concerned that more regulations on banks will limit earnings potential and stock performance.

What does this mean for Joe? Is there reason for Joe to worry? Yes of course, because a Bernanke removal is not in the cards. (Joe, can't you just get another deck of cards?) Nope, the dealer of this card game is Ben Bernanke, and the influential players who put him in office are more powerful than Congress. So just like when embattled Merrill Lynch was force FED to Bank of America, and just like when the US taxpayer was force FED 180 billion AIG debt in the famous Goldman Sachs backdoor bailout, and just like when we were force FED TARP casserole, the FED will have its way and Bernanke will be reappointed. As for Obama and the banks? This is any one's guess. Most likely increased regulation will have a negative impact on banks' earnings and stock performance. Keep your family and friends close, and your stop orders closer.....before not only the house of cards falls, but the entire table collapses with it.

Monday, January 18, 2010

What can Brown do for you?

What can Brown do for you? (Joe UPS) How about deliver (Joe pun intended) a blow to Health Care Reform and send Coakley packing. Brown (R) v Coakley (D) tomorrow in Mass. Brown's now leading in the polls if you haven't been tracking. Looking for an on-time delivery from Obamacare? Then you're hoping Brown dispatches of Coakley. Think UPS. As in, if Brown wins, market goes ups on the good news.

Thursday, January 14, 2010

Joe Shareholder Signs ColdandHaten' Treaty

It's been so cold outside this week, Joe Shareholder saw Obama and Harry Reid with their hands in their own pockets! 27 degrees in Miami! Snow in Orlando! Low teens in Houston, Dallas, and Jacksonville? Tea Party anyone? That'll keep you warm.

Anyway, Joe recently traveled to Reykjavik, Iceland to take part in this year's Coldandhaten' Treaty. For those of you who are not familiar with the Coldandhaten' Treaty, at this treaty the developing countries blindly pledge hundreds of billions of dollars to the developed countries so the developed countries can increase their CO2 output in order to induce Global Warming. Obama won't be attending this year. Neither will Reid. Nor will Pelosi. Joe invited JoAnn to come also, but she declined because Q4 earnings season is just getting started, and earnings season brings increased volatility - a trader's paradise. Hmmm, that was her excuse anyway.......I'm sure she was telling the truth.....or was she just being.....cold? Nah.

Speaking of earnings season, Alcoa officially kicked it off (Joe, no Superbowl pun intended) with a chilly 277 million dollar loss, which cooled global equity markets a few degrees on Tuesday. The markets will bounce back though, as the Federal and UnReserved Banking Union starts reporting on Friday (JP Morgan Chase) and into next week (Goldman, Citi, BAC). Click here for a complete list of the Federal Reserve's Federal and UnReserved member banks.

Speaking of chilly, frigid, glacial, sub-zero ice caps, the Federal Reserve, which has specialized in pouring ice water down the backs of investors for almost a full century now (Joe winning football coach, which, this year will probably be a cold weather team....sorry Arizona) the form of bank bailouts, and in the form of housing bubbles, and in the form of future commodity bubbles, and emerging market bubbles, etc - yes, that same Federal Reserve Bank recommitted itself this week to near zero interest rates for the foreseeable future. In other words, the Fed is going to keep blowing bubbles. Here's to hoping the foreseeable future for the Fed is similar in visibility to a windshield in Miami that has yet to be defrosted - because we all know that when bubbles freeze, they usually burst.

Thursday, January 7, 2010

Geithner Hides AIG Bailout Funds

After Time Magazine named Ben Bernanke person of the year, we decided to award him with the wool puller of the year award (here). Honestly, It was difficult to narrow the contest down to just one wool puller among the two well qualified finalists with so much experience - Ben Bernanke and Tim Geithner. (Yes, Tiger Woods was third) It turns out we may have underestimated Turbo Tax Tim Geithner's wool pulling abilities and secrecy as the recent breaking news proves he's just as capable a candidate. Click here for a good explanation of what happened in the Federal Reserve/AIG coverup.

Anyway, turns out the taxpayer bailout money which was supposedly used to help AIG because it was "too big to fail", was simply pipelined right over to Goldman Sachs and other banks. (Joe Backdoor Bailout) Here's how it works. Goldman invests heavily in equities and commodities, then insures its purchases through buying equity insurance from AIG in the form of Credit Default Swaps. Then the market crashes so Goldman outstretches it hand to collect. (Joe Governator) Only problem is AIG doesn't have it, so they get bailed out by the US Taxpayer (Joe Governator again) while we have the AIG-is-too-big-to-fail wool scarf wrapped firmly around our eyes....... er, necks maybe? Yes, there's a lot of sheep shearing going on. The Fed keeps a herd of sheep out back, with three pronged outlets all over the place for heavy duty electric clippers.

I know, you were already aware that the money was funnelled over to Government Sachs and others. We've even blogged about it (here). But what we didn't know is how the Fed ensured Goldman got 100% of what they were owed when everyone else took a haircut, and also that the New York Fed, headed by Geithner at the time, advised AIG to remove this 100% language from the public filing just before it was released. See Below.

What's the problem with this? US Taxpayers own AIG whether we like it or not, and deserve to know where the money is (JoePS), how the money is spent, (Joe idiots guide), and perhaps most confusingly, where the money is sent (Joe Budget Czar with two kids, a pregnant hobby on the side, and a fiance at the same time).

So, what does this mean for Joe? It's extremely cold outside this winter. It's below freezing from Joetown, OH down to the Gulf of Mexico right now. If Joe wants a wool scarf or hat to keep warm while trying to figure out the Federal Reserve Bank, he'd better get one now before the wool is all gone. What else does it mean? It means JoAnn would need some other form of warmth with all the scarves and hats gone (Joe Silver Lining).