General Musings Reported As Ordered


I bid you greetings from Opa restaurant in Los Altos, where it’s happy hour and I sit alone, drinking my wine and looking at my charts. Surely there is no blogger on the planet more devoted to his beloved readers (I would also tip my hat, if I were wearing one – – which would be rather rude indoors, but I digress – – to SocialTraders, who continue to push the web site to unprecedented success).

Where was I? Oh, yes, charts.

Even though The Powers That Be pushed the market higher at the close, I was pretty pleased with how the day went. My portfolio was profitable for most of the day – – although a lovely five-figure profit dwindled to a two-figure profit (!) by day’s end – – but the point is that my portfolio hugely outperformed the market (on an inverse basis since, as you’ve probably guessed, I was so short I could jump off a nickel). I remain positioned for a fall.

1022-finalChannel

Recall my Path of the NAZ post from a few days ago. Here was the chart; take note of the highlighted prediction:

1022-finalQQQ

Using the NQ, I’ve highlighted the same “prediction zone” below. The key, of course, is that this thing fall into the bowels of hell soon. If it does, I shall declare myself The King of All Charts.

1022-finalNQ

Critical to this, of course, is that AAPL cooperate. They report their earnings after the close on Thursday (errr, assuming RR Donnelly doesn’t screw up and release them hours too early). Apple pretty much has to blow the doors off every car on the planet in order to justify its price. The notion of them zooming to $1,000/share is laughable.

1022-finalAAPL

The Russell 2000 is at a crucial crossroads. It formerly had broken above resistance away from a somewhat-tilted basing pattern (tinted in yellow). It then failed beneath this “neckline” (roughly speaking) and has been treating it as resistance over the past week or so (tinted in green). The crucial “break” is of the trendline at which it is currently resting. If we can break this trendline, God willing, then it’s party-time.

1022-finalRUT

It’s pretty simple, really: if we can get a break of the supporting trendlines – – which would take very little additional weakness at this point – – we can gather together and profit from a medium-sized drop in the intermediate-term. Some kind of failure on AAPL’s part will make this easy.

The Fed comes on stage this Wednesday (which, by virtue of the mopping-up crew that will be required, will promote new employment), and with QEinfinity in place, the only thing they can do at this point is to vomit up an even greater figure than the $85 billion they are conjuring up out of thin air every stinking monthly of the year. (More radical plans, such as printing up billions of dollars of new money to buy stocks like Facebook and Amazon in the open market could come later, but we’re not there yet).

I imagine Bernanke & Company will simply puke up the same language they spouted last time, since their plans need time to prove themselves (which will lead to inevitable failure, but again, I digress). I am as sure that the equity markets are ultimately going to undergo a vicious collapse as I am the the sun will rise tomorrow morning, and Bernanke will ultimately be villified as a short-sighted idiot. But the future isn’t here yet, and for now, he’s Our Hero, and we have to live with him and his ostensibly-egalitarian policies, surely conjured up to benefit the good working people of America.

Thus Spoke Zarathustra.

Romney-Obama III: 'The Brawl In Boca' Live Webcast


This evening’s main event (well aside from the baseball and the football), taking place in beautiful Boca Raton, Florida will be fought over six rounds focused on the ‘never-a-dull-moment’ topic of Foreign Policy. After last week’s STFU stare on the Benghanzi bungle, we expect the incumbent from the blue corner to come out swinging (on his experience). The challenger from the red corner, will likely keep his distance early on as general items such as ‘America’s role in the world’ are discussed but once his jab has been measured, and the debate switches to ‘The changing face of the Middle East’, we would expect the haymakers to start to be thrown. Let’s get ready to deeeeebbbaaaatttteeeee! And may the first person to point out where the Straits of Hormuz are on a map, win!

 

These topics will appear in the following order:

  1. America’s role in the world
  2. Afghanistan and Pakistan
  3. Red Lines – Israel and Iran
  4. The changing Middle East and the new face of terrorism — Part 1
  5. The changing Middle East and the new face of terrorism — Part 2
  6. The rise of China and tomorrow’s world

 

For the Undecideds among you (or those that prefer to jeer or cheer), here are the latest and greatest videos from Thomas “Socialism Sucks” Peterffy:

 

and Morgan “challenges met, competitors bested, obstacles overcome” Freeman:

 

Here is ABC’s pre-debate discussion:

 

and The Live stream:

 

Image via MAD

Decision 2012: Bears-Lions, Giants-Cardinals; Or Romney-Obama


The nation is facing an extremely difficult decision; the outcomes of which could well be career-defining for the protagonists. We are of course talking about the dilemma that the nation faces in choosing Monday Night Football, NLCS Game 7, or the third Presidential Debate. In order to help focus public opinion, we offer the debate drinking game, live-stream scoring, and suggest readers invest in Picture-in-Picture (or have their edible iPad on their lap as the sports get under way this evening). For those who prefer to ‘hedge’: Obama is 67% likely to win the debate, Detroit are just favored to beat Chicago, and the Giants are favored (on momentum) to beat Arizona – so it seems like the debate is the most one-sided affair (though we suspect will be more contentious).

 

Via DebateDrinking.com

Previous Scores – Republicans Lead 2:1

Presidential Debate 1:

Vice-Presidential Debate 1:

 

Presidential Debate 2:

 

Tonight’s Presidential Debate 3 rules

 

Live Stream Scoring:

 

 

 

An alternate Drinking Game (via Buzzfeed) for the light-beer

BBBeauty Is Certainly In The Eye Of The BBBeholder


A mere nine years ago, California’s governator uttered his now infamous words that his opponent’s income tax loophole was wide enough to drive his Hummer through. Now in 2012, Bloomberg’s Chart of the Day has found another glaringly wide ‘loophole’ in common financial wisdom. As Sebastian Boyd and Ye Xie note, Ireland and Kazakhstan both belong to the same BBB-rated S&P cohort and yet have debt/GDP loads of 106% and 11% respectively. While debt/GDP is not the sole arbiter of credit quality (ask the Americans) it seems the market is more than willing to effectively differentiate based on this as is clear from CDS levels; but the growing pile up of sovereign nations in this edge-of-the-cliff rating bucket suggests two things to us: 1) “The entire rating system is flawed” as Bloomberg notes; and 2) The self-destroying (or reflexive) nature of a non-investment grade rating shift is now seemingly totally politically motivated (as opposed to quantitatively defined) – perhaps nowhere better signaled than an unwillingness to downgrade Spain yet willingness to downgrade its regions. For your risk comprehending pleasure, we present – the BBBs!

 

A smorgasbord of BBB-rated sovereign nations – ranked by debt/GDP ratio…

For both collateral-constrained and mandate-driven reasons, a non-investment grade rating ha sfar greater import (it seems) than its actual credit spread… though the market is better at differentiating credit quality, ratings remain ‘important’ – but with the market itself in some ofthe peirpheral European bonds becoming increasingly illqiuid and easily manipulated by the sheer size of domestic interests, the ‘winning’ answer it would seem – once again – is not to play (as market levels have lost their signaling capability via intervention and ratings have become increasingly politicised).

 

 

Source: Bloomberg

Japanese Government Demands BOJ Do QE 9 One Month After Failed QE 8


 

Almost exactly a month ago, the BOJ surprised most analysts with an unexpected increase in its asset purchase agreement by JPY10 trillion bringing the total to JPY80 trillion. There was one small problem though: the entire impact of the additional easing fizzled in under half a day, or 9 hours to be precise. This was, as Art Cashin summarized the following day, Japan’s failed QE 8. It is now a month later, and with nothing changed in the global race to debase status quo, the time has come for the BOJ to attempt QE 9. Or that’s the case at least according to the toothless Japanese government, which has formally demanded that Shirakawa do a nine-peat of what has been a flawed policy response for over 30 years now, this time with another JPY 20 trillion, or double the last month’s intervention. Because according to Japanese Senkei, it is now Japan’s turn to pull a Chuck Schumer and demand even mor-er eternity-er QE out of monetary authority of the endlessly deflating country. In reverting to the Moore’s law of failed monetarism, we expect that a QE 9 out of Japan will have the same halflife as QE 8, if indeed the program size is double the last. At which point it will again fizzle.

From Senkei via Bloomberg:

  • Govt. is asking Bank of Japan to increase its asset-purchase program by 20t yen, Sankei reports, citing an unnamed government official.
  • Program would be increased to 100t yen from current 80t yen: Sankei
  • Increased fund likely to be used to purchase long-term JGBs, ETFs and J-Reits: Sankei
  • BOJ is expected to lower economic growth, inflation forecasts in an economic report due Oct. 30: Sankei

In other words, “Get to work, Shirakawa-san.” One of these days the trillions and trillions in new fiat injected will actually “work”- at that point Japan will look back at its days of deflation as a fond memory when living through the alternative.

But at least nobody pretends anywhere, anymore that the central bank of a country is apolitical: neither the ECB, which is openly using its various monetary programs to finance insolvent countries, nor the Fed, which is buying up all gross Treasury issuance longer than 10 Years, and now the BOJ, which is openly taking requests from politicians who are totally helpless to do anything to the Japanese economy on their own.

The good news is that the Keynesian singularity, where QE XYZ+1 has to take place every nanosecond just to keep the world in one place (courtesy of the magic of a closed fiat loop in which devaluation is always relative to everyone else, and is limited only by the speed of the central printer and toner inventory), is getting ever closer and closer…

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