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B4 the Bell Fryday, Aug 27, 2004


Guest yobob1

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Guest yobob1

Welcome to B4 the Bell. Our version of Reality TV, except we don't have to eat the cockroaches. However playing in a pit full of poisonous vipers, or stock trading, is expected. No rules other than respecting other's opinions (even if they are stupidly wrong :lol: ) and during trading hours off topic posts should be relatively brief.

 

Polls used to be utilized to ascertain the population's expected actions. Now they are designed to sway those actions. A poll can have any desired outcome if you ask the right questions in the right way to the right group of people. I give little credence to any polling.

 

As we approach the end of Summer, lets' see where we are on the ole Yobob timeline. Retailing has been soft all Summer and appears to trending more strongly in that direction. Expected and on time. Real estate is stumbling around looking for one more for the road almost regardless of rates. Check. Unemployment, once all of the BLS and Bush election mythical adjustments are removed, is actually on the rise and future hiring plans are being curtailed. Check.

 

What I'm calling the POR is a sea change in consumer psychology. The recognition that times are not good and they had better save a little instead of buying that bauble on credit. A reinforcement to that process is dropping prices such as we have seen in the auto industry. After a while they'll simply decide to wait and see if prices drop further and when they do, they'll wait some more. Many have already been stung by buying a car and finding out that 30 days later they could have saved another $1000 after the incentives were increased. Get enough of that going and pretty soon they won't buy anything that they absolutely don't have to.

 

I think the rising gasoline prices are ending up on credit card balances. I think the cavalier attitude towards those prices is shifting as the sheeple see their balances rise on their monthly statements. Just a WAG on my part.

 

Basically we are pretty much on schedule for our meeting with the sheeple POR within the next six months or year end give or take a couple of months. The elections (or non-election if Bushco get's it's way) are going to muddy the waters, but should clear up post November 2nd depending on whether Kerry or Bush has been more generous with their promises to Diebold.

 

Right now only construction, real estate and the mortgage industry stand between the sheeple and the abyss. Looking at my local numbers in terms of permits, the trend has already turned down as compared to last year. That's all that is really necessary. A crash has to start somewhere slowly and gain some momentum before the velocity becomes apparent. When you take an industry like construction, the number of people involved must grow to handle the additional volume. More plumbers, landscapers, electricians, roofers, etc. When the volume declines, initially what you get is competitive underbidding as everyone tries to maintain volume to keep their people busy. This leads to the weak getting culled as cash flows fail to generate enough revenue to cover expenses. I'm seeing this now as some of the small players (who didn't exist 3 or so years ago) in various trades are going under and the rest are complaining of work volume declines and low pricing required to get work. This will ripple quickly. If you don't know the nature of "construction" workers, I'll give you a little clue. They tend to be hand to mouth and borrow heavily when times are good. They seem to save nothing for a rainy day. They're also somewhat nomadic, always searching for the illusive hot market. Bad news guys, the cooling is likely to be widespread and the hot markets may not exist for much longer.

 

As I watch the local trustee sales notices a clear trend has been emerging over the last year. The date of loan originations is getting closer to the date of default and the loan amounts are rising. Almost none of the defaults are occuring on loans dated before 2000. This has been in spite of all of the "options" the mortgagers have offered to the mortgagees. The clock is ticking on this one. All that has been accomplished in most of these cases has been a delaying of the ultimate failure date and I think we'll see a sharp rise in failures coming into 2005 and beyond.

 

Housing inventory statistics are the result of the actual supply and the sales rate. In noting the rather sharp increases in inventories I can only conclude that supply is still increasing while sales are weakening. I also note locally I'm observing properties being taken off the market as real estate signage is removed without a "SOLD" placard having ever been posted.

 

I see people in here stabbing at Hypertiger for missing his projected dates. Well sorry, he's a hell of a lot closer to reality than 99.9% of the economists out there who know that they cannot stray from consensus. While my projections are not as dire as Hyper's, I don't find a lot to argue with either. Mostly it's a difference of timing and possible divergences as allowed by timing. I'm slowly learning that mental projections are lightening quick but the reality is glacial by comparison. Like watching the second hand on the clock, reality occurs one tick at a time. At the end of the day you wonder where the last eight hours went. When the history is written about this era, I think the decline will look remarkably speedy, but for those of us now living it, it feels slow.

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As we suspected earlier this week, the foreign central bank ?dollar pool? operators have continued to buy US Treasuries - at a rate of $450 billion per year in the 5 weeks ending on August 25. This was all done stealthily and with almost no comment from the lapdog Wall Street press. Surprisingly purchases at a lesser $300 to $400 billion annual rate through most of the first quarter was sufficient to get long term rates reduced enough to generate a mini-refinancing boom. No such luck as far as refinancings go this time, but it has helped produce somewhat of an unexpected rally in the bond market.

 

The after-effects of those first quarter CB buying binges still linger in the form of accelerating inflation. The newest wave of world money expansion may have the same result, but domestic deflationary forces are increasing. The credit bubble is not growing fast enough to increase the money supply, with money supply indicators stagnating for 10 weeks now. The Fed has some recognition of its dilemma, and has more aggressively increased the monetary base - i.e. repos and open market purchases. In late 2003/early 2004 the combined CB actions saved the economy - but will they this time? The Fed and other CBs will have to move all the faster now to out run the inflation they unleashed earlier.

 

From Through the Looking Glass (Carroll 1872):

 

"Now, here, you see, it takes all the running you can do to keep in the same place"

 

MOSCOW, Aug. 27 -- Russian investigators said Friday that they found traces of explosives in the wreckage of one of the two planes that crashed almost simultaneously earlier this week killing 89 people. It was the strongest indication yet that terrorists were behind the twin tragedies.

 

A Russian analysis turned up signs of the explosive hexogene in the fragments of a Tu-154 passenger jet that smashed into a remote area of southern Russia near the city of Rostov-on-Don, the Federal Security Service announced.

 

Traces of Explosives Found in Wreckage of Russian Plane

post-20-1093605151_thumb.jpg

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Guest yobob1

The 3 AM boner is looking a little flaccid

 

globex.png

nasdaq.png

 

Uncle Bucky is coughing a little but not spitting blood.

 

history.gif?s=NYBOT_DXY0&t=l&w=15&a=50&v=d12

 

Uncle Earl is climbing back towards $43.50 No oil Shock? I don't know about you but I find the doubling in price of anything shocking. Of course we all know oil is no problem until it hits $50. No make that $60. Do I here a $100?

 

history.gif?s=NYMEX_CLV4&t=l&w=15&a=50&v=dmax

 

 

 

The PMs are directionless for the moment. I do like the looks of this one though.

 

ag3650nys.gif

 

No that there is anything to complain about here either. Unless you bought in 1994 that is.

 

au3650nyb.gif

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Why hasn't the Nasdaq "stock market" thought of this --

 

Social workers in Winnipeg have begun handing out ?high-quality? crack pipes and instructions to addicts on the city's streets, part of a harm-reduction strategy put in place by local health officials.

 

The kits are not handed out to just anyone who asks, she stressed, but are given to crack cocaine users who have been assessed by trained social workers, who in many cases have had multiple interactions with those users.

 

Using makeshift or poorly-made crack pipes can cause oral cuts or burns ... the ?safer crack use kit' is designed to minimize these dangers. It is intended for use by a single person only and includes a good-quality glass pipe less likely to injure users. It also includes metal screens, alcohol swabs (for those users who do end up sharing), pipe cleaners, matches, lip balm, at least one condom and information about where addicts can get help. It also includes instructions on how to use the kit.

 

Ain't jus' blowin' smoke

 

Options Clearing Corp., please copy! :lol:

 

If you need a login/password for the Globe and Mail, you can get one from --

 

http://www.bugmenot.com/

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At the end of the day you wonder where the last eight hours went. When the history is written about this era, I think the decline will look remarkably speedy, but for those of us now living it, it feels slow.

 

Agonizingly slow to me.

 

It recalls, however, descriptions I heard of the Thai Baht crisis.

 

Some said it was a slow motion trainwreck - 3 months or more were available to see it coming and adjust. People had plenty of time to adjust currency positions, take out cash, etc.

 

Most never saw it coming. It was as if two French TGV trains going in opposite directions hit head on. Most got clobbered. Many completely wiped out.

 

I, for one, am glad about this clueless factor. It will buy me all the time I need for the 'final run to Costco'.

 

Even when we here are gnashing our teeth and pulling our hair at the unexpected 6% drop in the USD in a single hour or the frightening 120 bp uptick on the 5 yrs, I will not be able to convince my sister that anything is out of the ordinary.

 

Oh well, there's something to be said for a blissful round of Kumbayah in the back of the bus.

 

:D

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Basing For More

 

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The most hyped growth story on the planet -- Japan -- is in deep sheet:

 

The unemployment rate rose from 4.6 per cent in June to 4.9 per cent last month, household spending dropped 2.5 per cent in July compared to June, the third straight month of decline, and nationwide consumer prices dropped 0.2 per cent compared with the same period last year.

 

Patch of wet concrete

 

Ay yi yi -- I hope that 2.5% drop in household spending is annualized, but it doesn't sound like it. In America that would provoke a Declaration of National Emergency -- all citizens please assemble at the shopping mall for further instructions.

 

Of course, the requisite soothing words from Matrix "experts" have been appended:

 

"Today?s releases are reasonably disappointing, although nothing to panic about in the context of the strong export figures seen yesterday,? said Richard Jerram, economist at Macquarrie.

 

In Matrix-speak, "nothing to panic about" means you have from a few days to a few minutes to save yourself.

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MH and HB

 

What are you doing? There was no gas line explosion in Iraq, oil is flowing at the highest rate since we liberated those poor bastards and gave them their first taste of freedom, and there not only was no terrorism or foul play involved in the crash of those two planes...in fact...there was no plane crash.

 

Get with the program.

 

In related news...there is NO Osama Bin Laden, there never was an Osama Bin Laden, and there never will be a recovery of Osama Bin Laden...therefore I leave it to you to contemplate who was actually behind the atttacks attributed to this mythical 6'7" figure who does not exist now, and never did...and for what reason those atttacks really occured.

 

The price of oil appears to have done quite well in the interim, and the demonization of the Arab world, combined with the continuing disruption of oil flows from Iraq, utter chaos in the middle east and no solutions on the horizon, everything appears to be perfectly on plan for the greatest wealth redistribution plan ever conceived. The actor who plays Bin Laden on TV was visited in a Saudi hospital by a spook prior to 9/11...you do the math.

 

Conoco Phillips acquiring 25% of Yukos? Nicely arranged by Dick Cheney after we bought Putin. I wonder what the commissions are on that deal?

 

Just look at your favorite oil company chart yesterday to determine for yourself what time in the morning THE BOYS got word of the true nature of the oil supply disruption...which coincides nicely with the denials of same in the major US media:

 

http://139.142.147.26/GifChartEngine.dll?i...4&refreshrate=0

 

 

http://money.cnn.com/2004/08/27/markets/oil/

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It recalls, however, descriptions I heard of the Thai Baht crisis.

 

Some said it was a slow motion trainwreck - 3 months or more were available to see it coming and adjust.  People had plenty of time to adjust currency positions, take out cash, etc.

The Matrix line during Summer 1997 was that the crisis was "specific to Thailand." It was "contained." It was not "contagious."

 

Wrong, wrong and wrong.

 

Not only were numerous other Asian countries affected, but the crisis culminated in a 554-point whack to the DJIA on 27 OCT 1997 -- the largest point loss ever.

 

We can expect more of the same when Uncle Al's multi-trillion-dollar bond/dollar pool starts to teeter. All the cracks and creaks will be dismissed as "isolated incidents." But they won't be ...

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