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.