Published Monday through Friday about 8 AM Central Time Except Holidays Depending on my mood...

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As the Economy Sinks

I wasn't going to do an update this morning, but because so much happened (and didn't, in the final hour of trading Friday), I thought "OK, just one hour on an update before getting back to work on this weekend's Peoplenomics.com piece.   So one hour only on this morning's update...

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First off, according to a well-read source in the Pacific Northwest, as the economy in general sinks, people in the boating capitol of the world (Puget Sound through the BC Gulf Islands) are apparently taking matters into their own hands with 'creative solutions' to nagging boat payments:  Scuttling their boats and then letting insurance worry about the payments.  And not just in the South Sound area, where reportedly an article has already appeared this week in the Daily Olympian  ('the daily zero' to locals), but it seems to be a coast-wide phenomena.

 

And a check of the boat listings in the Pacific Northwest shows that indeed, there's no shortage of boats for sale if Santa wanted to lay a nice large liveaboard sailboat on someone.  But it's the new, too-small (or not seaworthy enough to be much use) kind that are really dropping - and now actually sinking - in value.

 

How to Play Risk

One of the problems the G-20 (Circus du 20, as we call it) will be grappling with today is if there's going to be a 'global response' to the globalist's dream blowing up, perhaps one way to start would be to come up with some kind of 'global risk map' and try to use it as a tool to sort things out.

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This is precisely the kind of 'too little, too late' thinking that I would expect from gathering political leaders together.  Nope, ain't a gonna work.  here's why:

 

A globally intertied economy economy is more like what:  A three or four dimensional computer model (such as the predictive linguistics guys use) or a flat piece of paper?

 

In other words, unless the German's really meant to say "We're going to build a sophisticated neural network and try to get ahead of the problem by probabilistically estimating which synapses in the network pose the most risk x number of iterations out, then I'd say they oughta stick to building Porsches and Krups appliances (You seen that ever-so-cool Krups Beer Tender?  Fine really fine German engineering!) and let the global economy implode because it's like trying to 'manage' a nuclear explosion.  With a 'risk map' all you get the illusion of control, but only for a bazillionth of a second and then it all blows up and hurts really bad anyway.  I'm just saying...well, you know:  the difference between blown to smithereens and blown into hyperinflation is what?

 

So Where Now Dow?

After the final hour grand slam on Friday, a number of folks I know, including the financially illuminated CS - a long time Longwaves reader from years back - are convinced that we've seen the start of the next big downturn in the markets.  Me?  No.  I'm still thinking that there will be enough nominally 'good news' out of the G-20 (like they only talk) that we will see a continuation of the rally that began mid=-session Thursday, on Monday (mid-session to late, and then we get the Big Decline starting from about the middle of next week.

 

"Oh no, that's not the right wave count..." my very smart (and he's got more money than me, so he's may be right...) friend.    He figures that the action Friday was the start of the next BIG turn down, but until we see a close that's below the intraday low of Thursday I'm staying skeptical.  Talking with Robin Landry after the close on Friday, his proprietary stew of indicators supports my case, but like I say, CS makes money, too.

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The great thing about having a friend taking the 'other side' of a trade like this is that I don't mind being wrong, because if I am, I'll look at it as supporting my friend, who is, in the large scheme of things, getting my money.  If, as I hope, the trade goes my way  (and we rally early next week, and I load the boat on put options), then I'll look at the market as forcing him to make a small contribution to my Carrera fund. 

 

My Carrera fund in my view of economics is way more practical than a 401(k) because how's CONgress gonna repo a Porsche, right?  401(k)'s?  There I don't trust 'em...

 

More Monday because we should get an early glimpse of the futures and see if the politicians do anything more than talk a good game.  I'm banking on it.

 

Clinton for What???

A headline over at Dick Morris' web site sums it up pretty well (along with his hip use of the term Clintonistas) "Hillary for Secretary of State -- is he Kidding?"

 

Well, er, actually, I don't think he is.  See, this 'change' stuff' is only talk till it's set on the table before us.

 

OO7 to $70.0?

Speculation runs that the new Double Oh Seven flick will post a $70-million weekend.  I'm planning to wait for the crowds to dissipate a bit, but definitely good entertainment.  The rework of Casino Royale was good, so why not more?  Presactly what the formulistic baroons of the film industry look  for; repeatable revenue.  Just ask Harry.

 

Call "Q"

The headline that the Pentagon has cleared a 'flying car' project for takeoff.  Definitely goes on the "You gotta get me one of these for Christmas, Elaine..." list.  But not till next Christmas maybe.. and if it's like most government backed things, maybe not for several years.  Still....

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But is this great technology or what?  Admittedly, I  think of it as the Pentagon OK'ing something that seems likely to get even worse mileage than a  big Hummer....friggin' geniuses.

 

AIDS Cure?

The medical community is all abuzz with talk that a bone marrow transplant may have actually cured an AIDS case.  This is something normally done in leukemia cases, so bears watching.  Otherwise, lots of interest in gene therapy.

 

Wouldn't it be interesting if it wasn't the marrow, but some blood factor that did the trick of curing?  Looking for a lot more research down this promising avenue.

 

Mooned

India has become (and I know you keep a running total on your refrigerator of this kind of thing) the fifth nation to land a probe on the moon.

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Boy, if there really were aliens (I mean besides the border-running kind, and the one's that pull strings behind the scenes in major world capitols) I'd sure be looking at Earthlings as a 'disease vector' that needs to be contained.  If you see a bunch of dolphins rising from near coastal waters singing  'So long and thanks for all the fish', might wanna duck...

 

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Coping:  A Warning About Frankenfoods/ Our Prion Eyes

This is the kind of email I really appreciate folks sending us to share:

"Hi George:

(I'm a retired Ph.D. biophysical chemist who is author or co-author of some 70 peer reviewed publications in respected scientific journals. I believe this study should get the widest possible publicity.)

Next time you eat any corn product made with GM corn (as most all are these days) best think very long and very hard. Check out this study... it seems a quite well done study to me.

Some science first... one of the introduced genes codes for a toxin made naturally by Bacillus thurengenesis. When insect larvae are infected with this bacteria the toxin gets secreted into the gut of the larvae. The toxin affects the plasma membrane of the cells lining the gut of the larvae in a way to cause massive leakage of water and salts from the cell into the gut, killing the larvae. I've used this bacillus for several uses on corn silks, for example. It appears not to infect mammals.

Now proteins that naturally burrow into cell membranes are funny creatures, capable of doing a lot of weird things.

So here is my conjecture: I'm guessing that this toxin may be resistant to being digested in the acid milieu of the stomach, and when in the small intestine gets into the cells lining the small intestine. It may well even escape from those cells into the bloodstream and cause mischief lord knows where.

There is an analogy here; mad cow disease and its related diseases. the infectious agent is a small polypeptide called a prion. When cows (and other mammals) are fed even well cooked meat from mad cows the prion escapes digestion, gets into the bloodstream, and gets into the brain. Quite a feat.

I'd say Monsanto is about to be road kill.

I'm sure Monsanto never bothered with animal safety tests. They just assumed that eating Bt toxin was harmless. Just like the food manufacturers assumed trans-fatty acids in hydrogenated vegetable oils were harmless.

I'm throwing out all my remaining store bought corn meal. I can make all I want from my own heirloom Bloody Butcher corn which does not have the Bt gene.

Austrian Government Study Confirms Genetically Modified (GM) Crops Threaten Human Fertility and Health Safety  Advocates Call for Immediate Ban of All GM Foods and GM Crops IMMEDIATE RELEASE (November 13, 2008) (Los Angeles, CA.) - A long-term feeding study commissioned by the Austrian Agency for Health and Food Safety, managed by the Austrian Federal Ministry of Health, Family and Youth, and carried out by Veterinary University Vienna, confirms genetically modified (GM) corn seriously affects reproductive health in mice. Non-GMO advocates, who have warned about this infertility link along with other health risks, now seek an immediate ban of all GM foods and GM crops to protect the health of humankind and the fertility of women around the world.   Feeding mice with genetically modified corn developed by the US-based Monsanto Corporation led to lower fertility and body weight, according to the study conducted by the University of Veterinary Medicine in Vienna. Lead author of the study Professor Zentek said, there was a direct link between the decrease in fertility and the GM diet, and that mice fed with non-GE corn reproduced more efficiently.   In the study, Austrian scientists performed several long-term feeding trials over 20 weeks with laboratory mice fed a diet containing 33% of a GM variety (NK 603 x MON 810), or a closely related non-GE variety used in many countries. Statistically significant litter size and pup weight decreases were found in the third and fourth litters in the GM-fed mice, compared to the control group.     The corn is genetically modified with genes that produce a pesticidal toxin, as well as genes that allow it to survive applications of Monsanto’s herbicide Roundup. A book by author Jeffrey M. Smith, Genetic Roulette, distributed to members of congress last year, documents 65 serious health risks of GM products, including similar fertility problems with GM soy and GM corn: Offspring of rats fed GM soy showed a five-fold increase in mortality, lower birth weights, and the inability to reproduce. Male mice fed GM soy had damaged young sperm cells. The embryo offspring of GM soy-fed mice had altered DNA functioning. Several US farmers reported sterility or fertility problems among pigs and cows fed on GM corn varieties. Additionally, over the last two months, investigators in India have documented fertility problems, abortions, premature births, and other serious health issues, including deaths, among buffaloes fed GM cottonseed products.   The principle GM crops are soy, corn, cottonseed and canola. GM sugar from sugar beets will also be introduced before year’s end.   Mr. Smith, who is also the Executive Director of the Institute for Responsible Technology says, “GM foods are likely responsible for several negative health trends in the US. The government must impose an immediate ban on these dangerous crops.” He says, “Consumers don’t need to wait for governmental action. They can download a free Non-GMO Shopping Guide at www.HealthierEating.org.”   Monsanto press offices in the UK and USA were unable to provide a comment on the findings for journalists yesterday.   The Institute for Responsible Technology’s Campaign for Healthier Eating in America mobilizes citizens, organizations, businesses, and the media, to achieve the tipping point of consumer rejection of genetically modified foods.   The Institute educates people about the documented health risks of GMOs and provides them with healthier non-GMO product choices.   The Institute also informs policy makers and the public around the world about the impacts of GMOs on health, environment, the economy, and agriculture, and the problems associated with current research, regulation, corporate practices, and reporting.                ### Institute For Responsible Technology Media Contact: NJ Jaeger Expert Contact: Jeffrey M. Smith Email: njmail@cox.net Phone: +1-310-377-0915 Austrian Agency for Health and Food Safety Corporate Communication: Univ.-Doz. Ingrid Kiefer Tel: +43 50 555-25000; E-Mail: ingrid.kiefer@ages.at  Links Austrian Study: http://www.ages.at/ueber-uns/presse/pressemeldungen/klarstellung-zu-neuen-er Institute for Responsible Technology: http://responsibletechnology.org  Non-GMO Shopping Guide: http://www.responsibletechnology.org/DocumentFiles/144.pdf  Genetic Roulette: http://www.geneticroulette.com

If I catch a Monsanto response to the study, I will pass it along, but about the only thing Monsanto-ish are stories like "Monsanto bolsters investment in Jerseyville facility" and such.  I'm anxious to read their side of it, so we can keep up on this.  As I near 60, I'm not too worried about my sperm count, but I've had severe allergic reactions to corn products in the past and it makes me wonder "Was that natural?"

 

And Just For fun

Cat fixes printer video...

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Send snip and save items to george@ure.net

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(Not bad for a one-hour effort, including proofing and publishing, huh?  More of that new dark roast, if'n you please?  Now, back to looking at the used sailboat ads in 48-Degrees North and gimme a hearty Saturday ,"Argghhh...  " matey... They can't scuttle 'em all, arrgghhh..)

 

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"Live on $10,000" Updated

What?  You haven't ordered the ebook "How to Live on $10,000 a year -- or less"?  Suit yourself.  We're all going to live it shortly, anyway.  I just thought you might like a heads up by reading about how to do it before you get pink-slipped.  But, suit yourself OR visit www.liveontenthousand.com or, click one of the following button:

 

 

 

Yep - still possible.  I also took a bit of additional material that was pertinent from recent issues of Peoplenomics and included them.  The whole thing runs about 65 pages, but it gives you a vision of how to not only live on the aforementioned dollar amount, but also how to migrate up the economic foodchain if you make a little more than that and do some active savings...  Click here for the page with more details on it.

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 Last week's report is here.    For back issues of this site, click here.  (Goes back to 1997!)

 

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Friday November 14, 2008

Not A Bad Call

Several people have sent in emails asking essentially "How the hell did you know there was going to be a market rally at mid-session Thursday?" and "OMG Do you know how much money you didn't make on those call options you were going to flip between Thursday and Monday cuz your wire hasn't hit your eTrade account yet?" 

 

Well, yeah, sure, being a financial sadist I have penciled it out - 10 to 12  large, but thanks for asking...But seriously since the value of paper assets is really a free-falling safe, it doesn't worry me and I don't loose any sleep over it.  I do much better at market timing when I just don't get emotionally involved - involvement with the sparklies feed monkey-mind and once you hand it one-too-many bananas, one of three things happens to traders:  They become overly analytical in which case 'analysis causes paralysis' sets in.  Or, they get so anxious to hit a target that they get cowardly, or their lust for dough just causes plain old dumb decisions.

 

After the close on Thursday, I chatted with Robin Landry, my friend who's the best broker/analyst I know, and his outlook & mine are synched up.  The mid-session lows of Thursday were likely a small (4) finishing (in Elliott Wave counting), and based on how long this latest series of small waves have been running, I should have time after my latest wire transfer hits my eTrade account Monday to set up for what I expect will be a 'rousing decline' (if you don't my the contradiction in concepts ;-)) which I expect when we get around to (5) come the middle to latter part of next week.

 

THIS IS NOT FINANCIAL ADVICE (See my disclaimer), but depending on what happens with the G-20 this weekend, I expect to 'load the boat' with index puts with tight stops and I've got my two entry points mapped out, depending on how the rally fares.

 

All of which gets us to considering the November 14th predictive linguistics expectation that 'something big' will be happening either today or right around this time period.  My best guess (and this is my interp, not the time monk's) is that the G-20 this weekend really is going to lay the groundwork for a new global currency system.  Don't know if you caught Larry Edelson's piece on Thursday about "The G-20's Secret Debt Solution" but it's a very good article and well worth reading.

 

My 'best guess' is that when the G-20 meets this weekend, they will announce something - and I don't know what, further special meetings maybe, but it would seem (from a wave count perspective) to be something that would be enthusiastically received on Monday morning at the open.  However, as soon as the real deeper meaning of the G-20 sinks in, that would set up the beginning of wave (5) and THAT means a trip to Dow 7,200 or worse, 5,800 in short order.  Like by Christmas as I outlined in last week's "Dow 4,000 for Christmas" article.

 

In that piece, I said my 'grand strategy' would be to play the low from yesterday into Friday's or Monday's high coming up, then load up on put options and make money on a decline with the S&P, the as soon as a semi-solid looking bottom is in, wire what would be a nice down payment on a Carrera over to my commodity guy, JB, and put slightly out of the money gold calls for next summer.  I don't need to tell you that could make a whole boatload of money.  But, again, that's just grist for monkey-mind.  Still, I don't mind me daydreaming over whether my new Porsche GT-3 should be triple black or anthracite.  Decisions, decisions, decisions...Plus there'd be a huge tax bill because it would all be short-term gains.  But the commodity gains would push into 2009, so not too bad and that would give me a year to net things out.  Whew!  Ain't delusions fun?

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I'm NOT the only one who may be sizing things up this way.  A report on the Peter Cooper blog Thursday says  (be sitting down when you read this) that "Saudi Arabia buys $3.5 billion of gold in two weeks."  Maybe the Turbo isn't off the table after all.

 

Especially with reports that "China expected to shift reserves into commodities and gold."

 

OK, anthracite then.

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Fulcrum Asset fund chairman Gavyn Davies, writes in The Guardian's op/ed pages that "We must start thinking like South American dictators:  An economy on the brink of deflation needs to jettison the orthodoxies of prudence - in favour of a license to print money."

 

Can someone tell him that's exactly what we're doing over here in the Colonies with the Bankster bailouts and soon, the car bailouts?

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In the preopen today, the market was looking to book some gains off yesterday's zoom.  once done, I expect one more flight upward to hit my S&P targets just over 1,000, but hopefully not till Monday mid-session.  regular rims are fine, thanks - nothing fancy.

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One sharp-eyed reader noticed the S&P close Thursday: "...how really freaky strange...spx closed today at...911.29 (9/11 + 1929 scrambled)..."

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But hope (or is that denial?) springs eternal.  The NY Post attributes yesterday's action to "Bottom fishing: Surprise rally sends stocks soaring; Dow up 552".  It'll be interesting to see if this headline still makes sense in, oh, three or four weeks...

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Meantime, a note from my friend Roger Reynolds caught my eye as something you might find worthy...

"SOME OBSERVATIONS: 1)When Irving Fisher wrote in the mid 30's people would default on debt like falling dominos, he was correct on how depressions evolve. Yesterday an interview with a los angeles scrap metal dealer showed how it is starting. In that business contracts are by phone or handshake. But, his mid summer verbal contracts with the chinese were not honored by the chinese when the ship loads arrived. he said it was the first time in 40 years a contract had not been honored. 2)Then locally. The local ******ist home has folks buy an annuity which allows them to live at the home for the remainder of their lives. Big cash up front payment. Yet, recently the managements told several couples to pay more or move out. WHY??? Stock market problems. 3)The car companies threaten to default on their debts and declare bankruptcy. They say it will destroy the economies of some towns. BUT, all three companies could build a car for 5 to 8,000 less IF they could rid themselves of excessive debt, excessive union contracts, and some retirement burdens. In my opinion, even IF the govt loans them money they will still hit bankruptcy as the foreign companies expand without the previous burdens. Remember---about 10 years ago ford determined they could NOT profitably build a small, high gas mileage car. Yet, peak oil says that the world's major oil fields are depleting so fast that world production will drop by 1/3 in 5 to 6 years. There will be a need for high gas mileage cars. 4)In the book, A WORLD IN DEBT, published in about 1935, the author says at the height of booms people turn their money over to "middlemen" not the local banker or broker. So, they have NO real idea of what they are buying. This week National Public Radio reported: A wisconsin school district borrowed 200 million through a canadian broker from the irish subsidary of a german bank. They invested(?) the money in a collateralized debt obligation in order to earn a one percent spread and pay more health insurance for their teachers. The insured bonds included fannie and freddie and AIG, etc. The reporter says the contract is about 3 inches thick. The investment(?) is now worth about 25 million, and the Irish and german bank have to have govt bailouts. Meanwhile, the irish bank became trustee on many insured muni bonds. When the insurance companies failed and the bonds were downgraded, then a contract provision said the trustee bank had to become a "standby bidder" for bonds. They have bought a lot of bonds. BUT, in having to do so, they triggered muni offering provisions that turn 25 to 30 year bonds into early forced payoff 7 to 10 year bonds. Hundreds of muni's around the USA now have much bigger annual payoffs HURTING local finances. 5) early today, several gold/silver stocks, filled in gaps made in late october. This could be very bullish.

Click here to sign up for his free emails - almost always worthwhile and no ads...

 

This is Too Much, Alright Department

"Bush warns against 'too much' government in Markets" says a Bloomberg headline.

 

So let me get this right:  We print up waaaay over a trillion dollars and lay it on the backs of the taxpayers and now he's got the cheek to says 'too much government'?  Hand me that bottle of nitrous, wouldja?

 

The Line Up Continues

The nation's big city mayors are lining up for the federal easy money programs.  They would like at least $50 billion worth reports Yahoo.  bet me that won't inflate faster than bread prices in Zimbabwe?

 

Bush Behind Bars?

A post on the Democratic Underground featuring "Justice After Bush" with come current administration folks cartooned in jail has created quite a buzz.

 

Retail  or Re:Tale

Retail sales out this morning were almost universally expected to come in on the weak side.  So how did they come in?  Read for yourself:

"The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for October, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $363.7 billion, a decrease of 2.8 percent (±0.5%) from the previous month and 4.1 percent (±0.7%) below October 2007. Total sales for the August through October 2008 period were down 1.3 percent (±0.5%) from the same period a year ago. The August to September 2008 percent change was revised from –1.2 percent (±0.5%) to –1.3 percent (±0.3%).

Retail trade sales were down 3.1 percent (±0.5%) from September 2008 and were 5.0 percent (±0.7%) below last year. Motor vehicle and parts dealers sales were down 23.4 percent (±2.1%) from October 2007 and sales of furniture and home furnishings stores sales were down 13.5 percent (±3.3 %) from last year. "

 

Layoffs coming

"Mayor Daley: Prepare for Mass Layoffs" in the windy city...

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Hey, speaking of layoffs and such - had an email recently from a reader in one of the Top 10 markets who is putting in a $30-million apartment complex.  He's been hearing some rumbles that the bank which is backing the project may delay payments to subs.  Traditionally, in the construction industry, when this happens, the subs are the ones that get screwed.

 

So managing this big project he asked me "What's the right thing to do here?  Tell my subs that the bank may be late or freeze the project, or don't tell the subs and get the job as far along as fast as possible?"

 

Tough one, but simple when you remember some basics.  "Subs" are humans with lives they put on the line and they deserve first consideration when compared to  paper legal entities that are designed to shield owners from liability.

 

I wrote to him that 10-years from now you're not going to run into a corporate entity in some dark alley when you've been out for a few pops on Friday night.  A disgruntled sub?  One you screwed out of thousands and destroyed his family knowing that he was about to get stiffed and didn't shoot straight with 'em?

 

Not uncommon for humans to carry grudges over a whole lifetime.  Humans first.  Corporate entities last.  I've only done what in today's dollars would be a million-five in commercial space build-outs, but good subs are worth their weight in gold and then some when you need extra effort to hit a timestone.  (That's the timely hitting of a project milestone if you're not used to my language.  Why project managers insist on 'milestones' being used is linguistically dead wrong.)

 

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Coping: Good Writing

I've often been taken to task for my writing style because in the 'corporate' world, it's not...er...flat and dull enough sometimes.  being an exceptionally slow learner, I just keep banging away at the keys, hoping that every once in a while, something entertaining will come out of the fingers.

 

Still, nothing begets good writing like reading good content.  In my case, I like darn near anything written by Clive Cussler, Alistair McLean's novels, original Ian Fleming, and Jack du Brul.

 

There's good writing in magazines, too.  Favorites include The Atlantic Monthly, and the essential Playboy After Dark - definitely my kinda humor.

 

If you ever need to write something for business (a big presentation, or whatever) I recommend getting some of your favorite content.  Immerse yourself in someone else's style that you find appealing and then take up your task at hand.  Words will flow much easier.

 

Two other tips on writing:  if you're working on ad copy for almost any product, save those direct mail pieces that flood the mailbox once you've lived someplace more than a few weeks.  Read them for style (keep your credit card in another room so you're not tempted to use it).  Masters of the 'call to action'.

 

Two other great sources of entertaining writing - and these are somewhat unexpected.  www.woot.com is a website that had a killer sense of humor and writing style.  Coupled with their nearly famous "shipping is always just $5" they have some deals which are totally unbeatable (the heavier items).

 

Another unlikely is www.lindsaybks.com where you can get all kinds of 'old technology' books and some unlikely self-help notes.  "How to Extract your head from Your Butt" for example has a fine product write-up.

 

Back when I was teaching aspiring reporters how to write, I drove home the point (to their endless dismay) that people think in images and that good writing comes from the careful selection of words that create images in people's heads.

 

The more entertaining the images - or the more evocative if you're writing news copy, the better the overall effect.

 

Unless you're in the 'old paradigm defenders' fold, in which case, uniformity of thought (group think) is just was the doctor ordered.  think of the most bland and boring words you can.  Arrange them in the most boring manner possible, and you too can become a corporate PR type.  If you get really 'over-the-top' with the 'incomprehensibility quotient' of your writing, apply to the nearest law school.

 

Group-Think At the World Economic Forum