Can you believe that? They are paying $1165 for an ounce of gold!
When I said that the only way to play this game that makes sense to me is by going long USA and shorting everything else, other players called me a US supremacist or said, "sure, China looks a bit frothy, but aren't there good European companies to buy for the long term". Well, here goes your European investment: [more]
As GS trades below $160, many traders must be tempted to buy, and who can blame them? After all, it's only slightly above the $130 mark where it was trading when Buffett famously purchased the warrants. [more]
All bearish talk has died down. There is a deafening silence among the bears, not unlike the deafening silence among the bulls on Mar 9, 2009. In addition, the debt on the debt clock has stopped growing. I have noticed that market rallies tend to coincide with the periods when the debt increases rapidly, and pullbacks tend to happen when the debt clock stalls.
So the state of Arizona is going to repeat the fate of Rome, so to speak, unless they criminalize the Hunnish invasion? How about instead if you just try, heresy of heresies, to actually carry out the laws that already exist? These laws already give you all the full power to deport the illegals, whose names, addresses, and driver licence numbers you know very well but choose to pretend that you don't know. [more]
As every European merchant knows since 17th century at the very least, tribe chiefs have no use for gold, but admire shiny glass beads and rusty nails. Tribe leader Putin is no exception. He loves to see rusty heaps of metal on the shiny surface of the sea. And if such a heap can also be polished on the outside to make it shine like glass beads, the GULAG chieftain feels as exultant as Borat Sagdiyev in front of a picture of naked Pamela Anderson. [more]
A random fluke that sent oil prices to bubble levels has produced a very small dead cat bounce of his GDP, making him think it was not because he was simply lucky. Sure, comrade colonel (or, should I rather say, citizen colonel :), it was not because you were simply lucky but rather because you were extraordinarily lucky. Here's hope that if oil goes to $150, the economy will eke out another 3.1% growth under your wise leadership. [more]
If Lloyd Blankfein is doing God's work, then withholding Wells notices from shareholders must be a part of God's job responsibilities. Apparently, God failed to hide the notice well enough so Blankfein had to take on this task. [more]
So GS gets their comeuppance from the SEC. Nobody should cry for GS if they are fined for their lies and misrepresentations. But what about their counterparties? They lost $1 billion because GS did not tell them that Paulson felt bearish about their CDOs? Excuse me, but these people were not some Norwegian fishermen. They were professional financiers who should have known how to analyze securities. So how exactly were they defrauded of their money? Because GS forgot to tell them that security prices can go in both directions? Give me a break. [more]
I found one stock that is relatively cheap, and that is a pseudo-stock. My today's choice is TIP. It gives you exposure to government TIPs with the average maturity of about 9 years. Unlike other expensive junk, it hasn't rallied at all this year. But the reason to own it is very compelling. Stock market is telling us that it expects huge inflation, otherwise stock valuations don't make sense. But the TIPs market disagrees, suggesting inflation on the order of 3%. [more]
"Is it my fault that my family is so large?"
(Kurmanbek Bakiyev, the ex-president of Kyrgyzstan, in response to a reporter's question about nepotism in his government).
Morgan Housel has a good article about accounting gimmicks at banks. In this connection, I would like to make a simple suggestion how to end the practice once and for all. Pass a law saying that the top 10 banks must report to shareholders on the same day. That should be it because then on the reporting day the banks will have no one to sell their assets to. [more]
I looked at my stock screen today and realized that the last stocks whose valuations one could justify have disappeared this week, and many of them are now even more expensive than they were in the summer of 2008. While the market could easily go still higher, buying at this point would be merely a speculation. So the buying stage is now over.
There is nothing left to buy. Everything is overvalued.
When will these idiot politicians learn the meanings of words they use? Sure, it's OK for a Republican leader to be allergic to "Socialism", or even to see the image of the dreaded S word in the most pro-corporate piece of legislation that Republicans always dreamed about but were afraid to ask. It is much harder to see why Gingrich would have any trouble with the other S word, "secular". According to Wikipedia, "secularity is the state of being separate from religion." Wikepedia further explains: "Most businesses and corporations, and some governments, are secular organizations. All of the state universities in the United States are secular organizations (especially because of the First amendment of the United States Constitution)". [more]
An interesting article, which provides some insight into the thinking of GS's top brass. The interesting thing is, how easy it is to hide one's real thoughts by using hedges. I even think Blankfein & Co must half-believe their own fairy tales. Because a company may stay invested in a bubble for a variety of reasons (for example, they think they have Hank Paulson to back their bets, or their TA tells them the bubble could still last for a while), Goldman's net exposure to subprime MBS does not tell us what they really thought about that market. However, when they need to please the angry public, a hedged strategy proves to be a wonderful multifaceted thing which can be used in any imaginary scenario. They accuse of you of being bearish on MBS securities? Here is the proof that you had a net long position, you only hedged it a little bit to diminish the risk. They accuse you of being bullish? Then you take your hedges out of the hat and demonstrate that you have always felt bearish. They accuse you of spending too much on hedges? Then you produce a hedge against your hedges to show that you never felt good about hedging. A heavily hedged portfolio is like a clock with 24 hands that will always show the time that you want to see at the moment. The truth is, we will never know what they really thought, and even they may not know it 100%. [more]
In Russia, defending yourself again bogus charges can be notoriously difficult. The typical trial looks as follows. They read the accusation to you which says something like, "At an unspecified time, in an unspecified place, an unspecified group of people committed unspecified actions which violated an unspecified article of the criminal code". You then choose your lawyer and do your best to prove that you always did not commit the actions they accuse you of. Most of the time you fail to prove that, because of the nebulous nature of charges, which, as Pauli once said on a different occasion, are not even wrong. [more]
So 12 out of 29. That makes the percentage of government members implicated in, or otherwise related to, criminal cases, equal to 41%. This is much better than during the last tour of presidential elections, when the fraction of presidential candidates who had trouble with the law was 2 out of 2, or 100%. [more]
This whole currency manipulation debate leaves me scratching my head and wondering who is the greater fool here: the Chinese government or the American congressmen. Where did they get the idea that China ever benefits from cheap currency in the first place? [more]