Wednesday, January 7, 2009

DOW technical outlook

The markets turned as expected this week but it will be a little more tricky as we go forward. The VIX indicator is not finished yet ( we did not produce the 13 counts)and we should see a retest of the highs respectively for the VIX of the lows once again. Interesting is that on the first real trading day all gains of the hyped little rally disappeared so easily. The Dow on the left hand shows that we are basically in a sideways consolidation without the window dressing holiday season markets would have barely markets did what I thought they would do so far reached those level any way. Markets behaved as expected so far and the earnings season will basically drag the market down again and as earnings is through we start another strong rally up from a lower level. It will either test the 8000 level in DOW terms or make a retest of the lows around 7500. I am not sure yet about the magnitude for the short term - we have to see how the markets behave around 8000 DOW and it might depend on factors which are hard to time as the geopolitical risks are increasing. We can figure it out going forward as we will go in a tricky period with Mercury turning retrograde on the 11th for 3 weeks will makes good analysis harder.

Reality kicks back in after the upside manipulation

We are getting closer to the earnings season real start and have already 3 warnings from Icons like Intel ,Time Warner and Alcoa. The point even might be that companies do not show the made up earnings and go for bad ones as the new tax ruling might benefit the ones with steep losses as the can recoup the taxes they paid within the last 5 years. That might be counter productive as they will suck in money which will never find its way in a rising economy but finance the former pathetic stock buybacks which are all losses and wee part of the market upside manipulation. The other negative effect will be that the PE downside spiral will drive valuations of markets lower at some point. Especially after the stimulus packages prove to be not really helping. The other big effect to come is that the insane levels of government bond yields will burst and start the next level of this downturn cycle.

Excerpt from CNBC

Early Warnings Signaling An Ugly Earnings Season

By: Jeff Cox, | 07 Jan 2009 | 12:25 PM ET

If the plotline for 2009 was to start the year with an optimistic bang, corporate America doesn't seem to be following the script.

CNBC.com

Before anyone had the chance to soak in the early-year rally, a slew of big companies have come along with earnings warnings to temper the enthusiasm.

The warnings—from giants Alcoa, Intel and Time Warner—were a big factor in the selloff in stocks on Wednesday.

Moreover, these early warnings are expected to be just the first few rumbles in an avalanche of dour outlooks to come.

"It's going to be ugly," said Tom Higgins, chief economist at Payden & Rygel in Los Angeles. "We're certainly not through the thick of it...I think you're going to see a horrible earnings season."

Analysts expect consumer-sensitive areas such as retail and parts of technology to be among the hardest hit as rising unemployment squelches consumer spending and hurts revenue and earnings. Even President-Elect Obama's plan for a massive stimulus package isn't expected to have much impact until later this year.

"While we do anticipate that monetary policy will gain traction over the course of 2009, I don't think you'll see any impact on consumer spending and business spending that would make optimistic about equity prices at this point," says Higgins, who sees consumer spending rebounding perhaps in the third or fourth quarter this year.

Tuesday, January 6, 2009

EURYEN - A CLEAR INDICATOR FOR STOCKMARKETS DIRECTİON

THE EURYEN WEEKLY CHART HAS A STRONG MESSAGE

The 50 week Ma is about to cross the 200 week Ma as you can see on this chart that signal produced severe trends in the past 10 years and for many reasons we can take this as a strong signal stocks remain in big trouble. That is in timing terms not so efficient as it still can takes plenty weeks to get the trend going but it will happen. The EURYEN has to dive to 110 the least and against the Dollar at least 85 but as the yen is basically or fundamentally overvalued but as we still have to unwind some leverage the signal is clear that a major momentum is still rolling with big steam. This is a strong warning to fall for snake oil salesman bull camp this days. As all real bottoms happened around a 8 times trailing earnings level that is around 400- 500 SPX based on data we have now going forward that might even be lower. This little rally is for regular investors a good chance to lighten up on stocks if not get rid of all .

Some sentiment indicators confirm short term top

The Rydex has risen to insane levels all though there must be clearly some problem in the calculation as you can see yourself by the sudden rise and drop to unseen levels but even at current levels we are rather at crash level.

http://www.schaeffersresearch.com/streetools/market_tools/rydex_nu.aspx

More importantly is the MA's on the ISEE Put/Call ratio's reached levels there the market usually turns around. the 10 day MA is close to 150 but we have a little tolerance as the 20 day can also reach that level being currently at 134.

The VIX counts a 12 Combo today getting into the likely turn around zone of 35-38

More and more bullish market calls on the market get published -lıke Goldman reiterating 1100 SPX today - just to remind their calls were dead wrong the last years ( at least the ones they made for the puplic).

Do not fall for this fools game they play right now and the talking heads making the noise to get you in the mood. Spx target is rather 600 than 1100-200 for end of 2009. The little spark the Obama and other nations aid packages make will be short lived and you can do the math yourself. Obama calls for 775 bil. in 2 years over 300 bil of it will be Tax rebates who will vanish without almost ne effect. The remaining close to 500 bil. spread over 2 years is nothing really in a contracting deep recession or very likely depression. America is a 14 tril economy so the half of 500 bil matches 2 % of that economy that might smooth the process on paper but as soon as the Bond bubble bursts and interest rates go higher that will do much more harm than this printed money can do good.

Healing Cancer can not be done with an 'Aspirin' and we all have learned that Chemo-therapy is a painful process and does not guarantee the result - that matches more the problem we have globally right now.

Why do Iran (Hamas) and Israel (Rockefeller and some Russian Oligarchs) might have an interest in getting the Gaza war going

We always assume Oil is an Arabian or Muslim product but that is far from reality as Russia has an equal weight as OPEC (which is not entirely Muslim anyway). That are partly the source owners of the commodity and the Russian Oligarchs who are in a desperate situation are Jewish in their heritage. The Rockefellers who own the biggest stake in EXXON are Jewish as well just to name a few examples why the influential Jewish world has the same interests in getting higher Oil prices.
The Hamas in under control of Iran and they do definitely want higher Oil prices as well and The Russians like Putin have a high interest in higher prices as well - its not a coincidence that they at the same time as Israel attacks Gaza do make this big fuss about Ukrainian supply and cut off the supply for Europe (from Germany to Turkey ) to get more momentum under rising energy prices. It sounds cynical to claim that those lives lost in this area used to gather profits but that is easily explained if your scrupulous enough. Around 80 mil barrel a day the difference of 10 Dollar makes a difference of 800 mil dollar per day. Israel claims it lost around 50 mil Dollar in those 10 days - lets remember they get at least 10 bil aid from America per year and that the people who make now 800 mil per day more profit can easily compensate for that 'loss'.
Furthermore this has another purpose as its a complex operation, Mark Faber said correctly we are at the brink of WW3 as the attack on Hamas wi,ll trigger a reaction from Iran who had claimed months ago an intrusion in Hamas territory would trigger retaliation. As we had read in an Israel Newspaper Bush had asked Israel not to attack Iran under his term. This intrusion of the Gaza is very likely the preparation of a nuclear strike against I ran sometime soon as they do advance in their development of Nuc weapons and only can be stopped by a severe distruction of the production facilities which will be well protected and only extremely strong weapons have a chance to destroy them.

A strike on Iran would at least double oil prices as you can imagine easily and I can tell by astrology and other sources that something very destructive can/will happen around end of Q3/early Q4 this year

Excerpt Bloomberg

Russian Dispute With Ukraine Worsens, Hitting Europe (Update1)

By Daryna Krasnolutska and Rachel Graham

Jan. 6 (Bloomberg) -- Russia’s natural gas dispute with Ukraine worsened, shutting off fuel shipments to Europe for the first time in three years and driving energy prices higher.

Russia and Ukraine blamed each other for the cuts as gas shipments from OAO Gazprom through Ukraine plummeted and deliveries to the Balkans were halted at the Romanian border.

The dispute, a repetition of a 2006 conflict, caused U.K. gas for immediate delivery to jump as much as 18 percent and led Bulgaria to call for emergency limits on fuel use. Three years ago Russia turned off all Ukrainian gas exports for three days, causing volumes to fall in the European Union, while it also cut shipments by 50 percent in March during a spat over debt.

“Gazprom does not have much of a pressure mechanism left except for further cuts,” Eugen Weinberg, senior commodity analyst at Commerzbank AG in Frankfurt, told Bloomberg Television. He said Ukraine is in a “comfortable” position. “Their gas reserves are enough for them to keep functioning.”

Gazprom Deputy Chief Executive Officer Alexander Medvedev told Bloomberg Television that Ukraine shut three export pipelines and said “unilateral action of the Ukrainians” caused the shortfall. NAK Naftogaz Ukrainy spokesman Valentyn Zemlyanskyi said Gazprom cut shipments to Europe through Ukraine to 74 million cubic meters, compared with about 300 million normally.

Bulgarian Supplies

The moves came after Russia and Ukraine agreed yesterday to resume talks on their dispute and as Gazprom warned that Ukraine risks amassing a debt of “billions of dollars” if the conflict continues. Russia, which supplies a quarter of Europe’s gas, cut shipments to Ukraine on Jan. 1. Naftogaz Chief Executive Officer Oleh Dubina said he would travel to Moscow on Jan. 8 for talks on the dispute.

Russian gas flows to Bulgaria, Turkey, Greece and Macedonia were halted at the Ukrainian-Romanian border, Bulgaria’s Energy and Economy Ministry said.

Gas shipments at the Ukraine-Romanian border were stopped at 3:30 a.m. today, the Bulgarian ministry said. Gazprom pumps 17.8 billion cubic meters of gas a year through Bulgaria to the four countries under a 30-year contract signed in 2006. Bulgaria consumes about 3.5 billion cubic meters of that volume.

Bulgaria raised supplies from its only gas storage facility at Chiren today to 4.3 million cubic meters and called for emergency measures, the ministry said. Russian gas flows through Ukraine and then Romania to the southern Balkan states.

German Cuts

U.K natural gas for immediate delivery gained 18 percent to 70 pence a therm, a two-month high, as of 10:11 a.m. London time, according to broker Spectron Group Ltd. That’s equal to $10.29 a million British thermal units. A therm is 100,000 Btus. Gas for tomorrow climbed 14 percent to 69 pence. Gas for delivery tomorrow jumped 15 percent, also to 70 pence a therm.

Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies, predicted the dispute will be resolved by Friday while saying in a phone interview a resolution is “unlikely” before then because of a national holiday in Russia.

E.ON Ruhrgas AG, the natural gas unit of Germany’s biggest utility, said it would experience “significant” cuts in gas deliveries, with Russian supplies piped through Ukraine forecast to fall to zero at the Waidhaus gas transit point on the German- Czech border in the course of the day.

Austrian Shortfall

The utility said it would still be able supply clients as it sourced the fuel from and through other countries. Germany’s BDEW energy industry group said today that the same is true of its rivals. Russia, which supplies a quarter of Europe’s gas, cut shipments to Ukraine on Jan. 1.

“Our options will also reach their limits if these drastic supply cuts continue and temperatures stay at their very low level,” Bernhard Reutersberg, Chief Executive Officer of E.ON Ruhrgas, said in a statement.

OMV AG, central Europe’s biggest oil company, reported a “significant” cut in Russian gas supplies today. It said Russia warned overnight of a 30 percent to 40 percent reduction in supplies to the Baumgarten hub today, and further cuts in the early hours of this morning meant 10 percent of Russian gas was being delivered. It said supplies to Austrian customers were unaffected for now.

Czech Prime Minister Mirek Topolanek said a dispute between Russia and Ukraine on gas prices is becoming “more serious” and the effects are spreading across Europe.

Monday, January 5, 2009

Strange choices of the next prresident - allthough Pandetta could be interesting

Obama picks keep being disappointing and amazingly uncreative - picking all the Clinton people is weird as some of them have obscure track records ( chief of stuff Emmanuel earned multi million dollar bonus being 3 years with Dresdner Kleinwort Benson - no prior banking experience and that's about what the top people in wall street earned that years who did make hundreds of millions for their firms, or Mr :Geithner who 's lack of supervision helped to produce hundreds of billions of losses in wall street) - I am not referring to Mr Panetta as being obscure. He actually switched from the Reps to the Dems and established civil rights under Nixon against his resistance - that makes him not the ideal candidate for being the boss of the CIA ironically. The whole thing sounds as Ms. Clinton is the next president

Excerpt WSJ

By SIOBHAN GORMAN

In a surprise move, President-elect Barack Obama has picked Leon Panetta, a former congressman and chief of staff under President Bill Clinton, to be the next director of the Central Intelligence Agency, according to Democratic officials. His appointment is expected to be announced later this week.

The pick was unexpected because many of the names discussed for the job had been intelligence professionals. Mr. Panetta, whose background is in politics and government, has not worked for an intelligence agency.

He was selected for his management experience, one Democratic official said, citing Mr. Panetta's tenure as chief of staff and director of the Office of Management and Budget in the Clinton administration's first term. In those posts, Mr. Panetta was involved in setting the intelligence budget and handling key foreign-policy issues such as the Bosnian conflict, the official said.

View Interactive

Obama's Advisers

See who has been appointed to the cabinet so far.

Another key factor in the selection of Mr. Panetta, a Democratic official said, is Mr. Panetta's reputation for centrism. "He's someone who is known as being even-handed and bipartisan," the official said.

A former Democratic congressman from California from 1977 to 1993, Mr. Panetta is currently the director of the Leon & Sylvia Panetta Institute for Public Policy, a nonpartisan think tank based at California State University, Monterey Bay. He was also a director of the New York Stock Exchange and a member of the bipartisan Iraq Study Group, which assessed U.S. Iraq policy and provided recommendations in late 2006.

Mr. Obama is also expected to announce soon the nomination of retired Adm. Dennis Blair as director of national intelligence, the top intelligence post.

The VIX indicator is getting close to a signal

As the VIX clearly marked the high (low in the markets) around 80 with a 13 count - we are now nearing a low for the VIX and hence the high of this engineered rally as we count an 11 today. Level wise in the 35-38 zone this market should make a severe low and volatility should start rising again. As next week the earnings season kicks off the scenario for such an change of market volatility is very likely. Since we will likely get a similar price pattern for the markets like Oct 2002 and Mar 2003 - a double bottom pattern as all severe bottoms have that kind of patterns usually and the market is clearly overvalued. We have had a clear window dressing show down so far and a kick start buying marketing campaign. The other best first trading day by the way was the Jan 2003 event.

The tax game (legal robbery) for wall street ( sponsored by Obama) was the motive for Indy Mac buyers

One reason why the Goldman connection buys Indy Mac might be this tax offering from Obama as I wrote in earlier blogs the reason for some purchases of banks by banks was the tax game to recoup the last 5 years taxxes paid by writing off big chunks of assets hence the taxpayer pays again for the 'drunken wall street ' as any cent wall street payed in taxes in the last 5 years will return to them. This part of the Obama tax benefits wall street firms as other did not have deep losses so far. This is a misconcept and shows that he is already contaminated as those tax refunds will have no effect whatsoever on mainstreet or the economy. This might be the motive for the buyers of Indy Mac as they can recoup the rich tax payments of Indy Mac so the purchase price combined with a backstop for losses by the government is just the coverup for the taxpayers money.

Obama Eyes $300 Billion Tax Cut

By JONATHAN WEISMAN and NAFTALI BENDAVID

WASHINGTON -- President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion of tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs.

The size of the proposed tax cuts -- which would account for about 40% of a stimulus package that could reach $775 billion over two years -- is greater than many on both sides of the aisle in Congress had anticipated. It may make it easier to win over Republicans who have stressed that any initiative should rely more heavily on tax cuts rather than spending.

Getty Images

President-elect Barack Obama and congressional Democrats are crafting a plan to offer as much as $310 billion of tax cuts.

The Obama tax-cut proposals, if enacted, could pack more punch in two years than either of President George W. Bush's tax cuts did in their first two years. Mr. Bush's 10-year, $1.35 trillion tax cut of 2001, considered the largest in history, contained $174 billion of cuts during its first two full years, according to Congress's Joint Committee on Taxation. The second-largest tax cut -- the 10-year, $350 billion package engineered by Mr. Bush in 2003 -- contained $231 billion in 2004 and 2005.

Republicans and business leaders hadn't seen specifics of the proposals Sunday night, but welcomed the idea of basing a bigger proportion of the stimulus plan on tax cuts. Their response suggests the legislation could attract relatively broad support, and it highlighted the Obama team's determination to win backing from varied interests.

Some Republicans, including Senate Minority Leader Mitch McConnell (R., Ky.), have warned against a careless stimulus plan that enables unfettered spending.

The largest piece of tax relief in the new plan would involve cuts for people who pay income taxes or who claim the earned-income credit, a refund designed to lessen the impact of payroll taxes on low- and moderate-income workers. This component would serve as a down payment on the "Making Work Pay" proposal Mr. Obama outlined during his election campaign, giving a credit of $500 per individual or $1,000 per family.

On the campaign trail, Mr. Obama said he would phase out a similar tax-credit proposal at around $200,000 per household, but aides said they haven't settled on an income cap for the latest proposal. This part of the plan is similar to a bipartisan initiative launched in early 2008, which sent out checks worth $131 billion.

Economists of all political stripes widely agree the checks sent out last spring were ineffective in stemming the economic slide, partly because many strapped consumers paid bills or saved the cash rather than spend it. But Obama aides wanted a provision that could get money into consumers' hands fast, and hope they will be persuaded to spend money this time if the credit is made a permanent feature of the tax code.

As for the business tax package, a key provision would allow companies to write off huge losses incurred last year, as well as any losses from 2009, to retroactively reduce tax bills dating back five years. Obama aides note that businesses would have been able to claim most of the tax write-offs on future tax returns, and the proposal simply accelerates those write-offs to make them available in the current tax season, when a lack of available credit is leaving many companies short of cash.

A second provision would entice firms to plow that money back into new investment. The write-offs would be retroactive to expenditures made as of Jan. 1, 2009, to ensure that companies don't sit on their money until after Congress passes the measure.

Another element would offer a one-year tax credit for companies that make new hires or forgo layoffs, which could be worth $40 billion to $50 billion. And the Obama plan also would allow small businesses to write off a broad range expenditures worth up to $250,000 in 2009 and 2010. Currently, the limit is $175,000.

Sunday, January 4, 2009

Goldman (Rothschild boys) connection buys INDY MAC

Lots of Goldman involved in this deal - new to me is Michael Dell in this circle - but more amazingly I have no clue what they are after since Indy Mac is a mortgage bank and I do not see the point other than people might want to have the advantage of '0' financing .The government will cover part of the losses but no details on that so far. Its a weird deal as they pay 13.2 bil. to start with but get some loss voverage on the other. In my book the deal makes no sense at all but they must have a hiiden agenda which will show over time.

Mnuchin Leads Private-Equity Funds to Buy Failed IndyMac Bank

By Zachary R. Mider and Ian Katz

Jan. 3 (Bloomberg) -- Private-equity investors led by Steven Mnuchin, a former Goldman Sachs Group Inc. executive, agreed to buy IndyMac Bank from the Federal Deposit Insurance Corp. and inject $1.3 billion in cash, a rare purchase of a failed financial institution by non-bank buyers.

The sale to a group of firms run by ex-Goldman bankers as well as hedge-fund managers John Paulson and George Soros was the least costly option, the FDIC said in a statement yesterday. The FDIC agreed to share losses with the group on a pool of IndyMac loans.

The FDIC, which seized the Pasadena, California-based institution in July after a bank run, was forced to open bidding to non-bank investors after failing to find a buyer among the lender’s stronger rivals. The current market for selling assets is “challenging,” the agency said in the statement. Regulators closed 25 banks last year.

“I am not impressed with the amount of capital being put in,” Bert Ely, chief executive officer of Ely & Co. Inc., a financial institutions consultant in Alexandria, Virginia, said in an interview after the announcement. “Why didn’t any bank buy it? IndyMac doesn’t strike me as a very viable bank.”

The investor group and the FDIC signed a letter of intent for the transaction, which the agency said in a fact sheet was valued at about $13.9 billion. The investors will inject about $1.3 billion in cash into the new company when the deal closes, later this month or in early February, the agency said.

Mnuchin Becomes CEO

The FDIC agreed to share some losses on a portfolio of loans, with the new company assuming the first 20 percent, the agency said.

FDIC spokesman David Barr declined to comment beyond the statement.

Mnuchin, 46, a former Goldman Sachs executive vice president, will be chairman and chief executive officer of a new holding company to run IndyMac, the FDIC said. Mnuchin founded Dune Capital Management LP with former colleagues from Goldman Sachs, David Neidich and Chip Seelig, after a stint at billionaire Soros’ hedge fund. Dune’s investments included stakes in Viacom Inc.’s DreamWorks LLC film library, and the 802-room Hyatt Regency hotel in San Francisco.

“We will inject significant private capital into IndyMac so that it can once again effectively serve its customers and communities,” Mnuchin said in a statement yesterday.

The FDIC has since 1991 infrequently sold failed institutions to buyers without a bank affiliation. In 1993, it sold shares in Brooklyn-based CrossLand Federal Savings Bank to institutional investors in an initial public offering that raised $332 million. Two years earlier, the FDIC’s sale of Boston’s failed Bank of New England to Fleet/Norstar Financial Group involved a $283 million minority investment by Kohlberg Kravis Roberts & Co., the New York-based private equity firm.

Flowers, Stone Point

Several other IndyMac investors have connections to Mnuchin through Goldman, the New York-based investment bank. J.C. Flowers is run by former Goldman banker J. Christopher Flowers; Stone Point Capital’s chairman is Stephen Friedman, Goldman’s former managing partner; and Silar Advisors LP was founded by Robert Leeds who used to trade mortgage bonds at Goldman.

Flowers, 51, specializes in investing in banks, insurance companies, and other financial firms. One of his previous bank investments, in Japan, has been hailed by David Rubenstein, co- founder of the Carlyle Group buyout firm, as perhaps the most successful private equity deal in history.

Flowers bought the Long-Term Credit Bank of Japan Ltd. for 121 billion yen ($1.1 billion) in 2000, renaming it Shinsei. The group sold two-thirds of the company in 2004 for 532 billion yen.

Paulson, Soros

The buyers also include Paulson, the hedge-fund manager whose bet against the U.S. housing market helped earn him an estimated $3.7 billion in 2007, and a fund controlled by Soros. MSD Capital LP, a fund that manages money for Michael Dell, the founder and CEO of personal-computer maker Dell Inc., also is investing.

The deal could still fall through, Ely said. “Usually when the FDIC announces a deal, it’s a done deal,” he said. “This is a letter of intent.”

The FDIC seized IndyMac after unpaid mortgages left the lender short of cash, triggering a run by depositors that drained $1.3 billion in the 11 days before the July 11 takeover. The bank was among 25 to collapse, the highest toll since 1993.

IndyMac’s failure will cost the deposit insurance fund, which is financed by fees paid by banks, about $8.5 billion to $9.4 billion, the agency said. The agency insures deposits at 8,384 institutions with $13.6 trillion of assets.

Friday, January 2, 2009

Oil technical outlook - bottom is in as expected

Oil weekly chart has made a medium term low and is now heading to 80. The same is true for the CRB Index and we can expect material stocks to outperform as one core sector on the sunny-side. The first confirmation will be a close above 50 and the whole move will be shaping in an ABC correction as we are in month 7 of the decline we might even see a retest of the lows within 2 months. The best quarter of this year for the bull-camp overall should be Q2 as the fatal earnings season of Q4 will trigger down revisions of the upcoming earnings and more negative market bias with a retest of the Nov. lows ( rather new ones) might drag oil down as well. Since we might have a severe Dollar top by then as well. Buying oil in weakness is the way to go for the next weeks as a rally to 60 is the least we should see in wave A

behind-the-matrix

THE DOT - if this turns orange or red be alert