THE DOT - if this turns orange or red be alert

Monday, January 24, 2011

Monday brainstorming - part 1

1. Both comments below are identical with my observations - Gold has a temporary high as retail rushes in by all means and a pullback to the 1000-1100 is very likely. At tops inter-market divergences for stock indices do build up (currently the NDX and DOW) and lead to a change in portfolio risks. Going forward this will increase sharply - the free ride part is over for the long campaign of the FED.


Morgan Stanley Sees Recent Market Conditions As Reminiscent Of August 2007 Quant Crash As "Don't Fight The Fed" Groupthink Trade Fizzles

Something scary this way comes from Morgan Stanley's Quantiative and Derivative Strategies: "market conditions over the last two weeks are somewhat reminiscent of that during the August 2007 ‘Quant Crisis’. In only a few days, a number of quantitative long-short equity funds experienced unprecedented losses in seemingly ‘normal’ market conditions.We do not suggest here that the magnitude of hypothetical losses match those from 2007, however, there is little question that the rotation has drawn attention of many quant investors." In other words, the massive groupthink trade that we have been warning about for months may be about to claim its first mass casualties. The just released report by author Charles Crow elaborates what many have been suspecting, yet few dared to voice: "Recent substantial factor movements in Europe have contributed to portfolio volatility and, in some cases, abrupt performance degradation. Portfolios positioned to take advantage of prevailing factor trends may have suffered substantially over the last two weeks." Is the groupthink trade about to end? If so, does that mean the funds will be forced to stop "not fighting the Fed" as this is really the only factor-driven trade that has made sense. If so, we have reached the critical point where being aligned alongside the Fed has no incremental marginal returns, at least for the non-Primary Dealers. This could promptly transform to a watershed event, especially since as Morgan Stanley adds, the market currently has "relatively low liquidity" to absorb the fringe moves.

Tyler Durden's picture

Doug Kass Calls For Gold $250 Lower: Puts Pop Before the News

Gold Options activity took a turn towards the bizarre late Friday. Between the hours of 2pm and 4pm Eastern, put buyers came out of the woodwork. We are almost certain that Doug Kass's interview on Fast Money was the sole cause of this activity. He was interviewed at 5pm. The put buying frenzy came in a full 2 hours beforehand on a Friday....What we are focusing on is the option activity that occurred before his interview.

2.Something weird is going on and DC is preparing for the outburst of it - plenty earthquakes recently and not to forget an increasing number of UFO media presence. We may be up for a surprise soon.

"They're Buying What???!!!"

Before we get into the short-term outlook for markets (can you say 'tepid'?) the very first thing we ought to be thinking about is why is the federal government floating a request for information about buy "prepackaged commercial meals" for deployment in the New Madrid Earthquake Zone. See the highlight for the big damn question with alarm bells going off in my head....

The Federal Emergency Management Agency (FEMA) procures and stores pre-packaged commercial meals to support readiness capability for immediate distribution to disaster survivors routinely. The purpose of this Request for Information is to identify sources of supply for meals in support of disaster relief efforts based on a catastrophic disaster event within the New Madrid Fault System for a survivor population of 7M to be utilized for the sustainment of life during a 10-day period of operations. FEMA is considering the following specifications (14M meals per day):

- Serving Size - 12 ounce (entree not to exceed 480 calorie count); - Maximum calories - 1200 and/or 1165 per meal; - Protein parameters - 29g-37g kit; - Trans Fat - 0; - Saturated Fat - 13 grams (9 calories per gram); - Total Fat - 47 grams (less than 10% calories); - Maximum sodium - 800-930 mg;

Requested Menus to include snacks (i.e. fruit mix, candy, chocolate/peanut butter squeezers, drink mix, condiments, and utensils). All meals/kits must have 36 months of remaining shelf life upon delivery. Packaging should be environmentally friendly.

- Homestyle Chicken Noodles - Potatoes - Vegetarian Pasta - Green Pepper Steak w/Rice - BBQ sauce w/Beef and diced - Chicken w/Rice and Beans - Chicken Pasta

The following questions are put forward to interested parties:

1. Please specify the type of organization responding to the questions (i.e. small business, large business, industry association, etc.) If a small business, please specify all Small Business Administration socioeconomic programs under which your organization qualifies.

2. Does your organization have a product available that meets all the specifications above? If the answer is "Yes:" What is the country of origin? If the answer is "No:" (a) Can your organization produce such a product? (b) What would be the product lead time? (c) What country are the manufacturing plants located in?

3. Can your organization delivery the product to a specified location within a 24 hour period

4. Please provide an implementation plan for critical delivery orders and delivery surge orders.

5. What states do you already have contracts in place with to provide these types of products?

6. Please detail the type of meals and quantities you can provide for each day following a disaster.

7. Please provide alternatives to the meal specifications that your organization can provide.

8. What type of delivery schedule would your organization recommend for the meals?

9. Does your organization have the capabilities to deliver products directly to FEMA's CONUS Distributions Centers?

10. Can your organization track deliveries from point of origin to point of delivery?

11. What is your lead time for delivery once FEMA has placed an order?

Interested parties may also provide brochures, web links, or other literature about their cots available for the specified users. Responses to this RFI are not considered offers and cannot be accepted by the Government to form a binding contract.

Doing a little math here comes up with some mighty big damn numbers: 14-million meals a day and a 10-day supply pushed out to 140-million meals.

Yikes! Just to kinda ballpark this, seems that what? $3.50 a meal? So this is up in the half a billion dollar range. That's a whole bunch of food and makes our meager stores look like budget dust. And 36-months? Sure as hell seems someone knows something they're not talking about!

Still, this bring up a really interesting question: WHY? I mean we know that one of the big exercises was to plan for a major New Madrid kind of disaster, but half a billion is real dough to be spending. Since MRE type meal storage times are based on temperature, we also have to wonder where they're going to be stored.

But unanswered this: What drove the 7-million survivor number and how many in their modeling didn'tsurvive overt what area? And since FEMA's got entre to the best brains out there, what's going on that isn't showing up in the press?

Two possibly related items: One is that the ground at Yellowstone is showing a very large amount of displacement.

Second point is that (as I reported on the Peoplenomics side Saturday) there was a 5.4 earthquake less than 200-miles northwest of the HAARP facilityh in Alaska last week and you really might want to read up on a phenomena of radio waves called 'backscatter'.

Couple of possibilities? One is that another nation is targeting the central US - which might explain the north-south orientation of the bird kills along a line approximately from Wisconsin where 200 cattle died, down through the Arkansas bird and fish kills and then on down to near Baton Rouge. And, yoiu remember the Haiti quake and the Gulf of Mexico leak might be arguably on fault line extensions to the south.

Quakes in the St. Lawrence River area might be important precursors, so we'll keep an eye up thataway.

Not to freak out, but since most MRE's have a 10-year life (depends on storage temp, again) whatcould be interpreted as a real sense of urgency is clearly implied by this requisition by FEMA.

What do they know that they're not saying yet? And why not? Choices are likely a) Economic stimulus, b) 2012 type events foreseen, c) We're under attack by scalar earthquake weapons, or d) fill in something else.

WTF? We're on high alert for explanations and more info on this...

One more thought? Could a mega quake in the Midwest be the cause of the data gap due to begin next month? More in the next Shape report due out tomorrow (more on that in a sec...)

Oh, and toss in 210-million bottles of water while you're at it?

1 comment:

Anonymous said...

You are on to something here. Keep asking these questions.

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