Sunday, August 29, 2010

Post from American Patriot... Market Moves

From the American Patriot...
At the very core of all of our economic problems is the banking system in the US which has unquestionable acted stupidly, greedily, and abused the trust of the American people.

Had it not been for the securitization (bundling of mortgage portfolios and then splitting them into tranches and offering them as bonds) there wouldn't have been funding for the housing boom and risk would have been retained largely at the banks in which case the banks would have remained conservative in only issuing sound mortgages with 20% or so down payments which itself would have precluded the whole housing mortgage debacle.

We are in a major deflationary spiral and there is nothing whatsoever that the Federal Reserve can do about it. Prices of goods and services must come down relative to people's incomes as that is the core problem with the entire economy where prices have gone up vastly beyond the capability of people's wages to pay for them which is why the economy is slowing.

No amount of additional easing by offering credit will change that as most people quite wisely are not interested in more credit (which means taking on more debt).

There is a great debate now being waged in this country as to what extent the banks should have control over our economy. Once upon a time, a mere 100 years or so ago, the banks were less than 10% of the economy and they were the facilitators of financial commerce. Today, banking and financial services has taken a huge role in our economy and it now accounts for around 34% of our economy. It is clear that banking - particularly money-center centralized banking - has become far too powerful and far too intrusive and far too controlling in the US economy and that needs to change.

The Federal Reserve is indeed part of that problem and its role for the future needs to be carefully considered. It is a creature of Congress and in its very Act of creation by Congress the right to AMEND OR ABOLISH the Federal Reserve was retained by Congress (the people of the United States) exactly as follows:

"Federal Reserve Act"
"Section 31. Reservation of Right to Amend
1. Reservation of Right to Amend
The right to amend, alter, or repeal this Act is hereby expressly reserved."

What restrained many questionable, dubious, and otherwise out-of-control banking practices for over 60 years from 1934 up until 1999 was the GLASS STEAGALL ACT which was a simple, strong, and straightforward 13 page (nearly unimaginable in today's era of 2,400+ page bills) document that clearly separated 1) commercial retail banking, 2) investment banking and brokerage services, and 3) insurance and other financial services.

The Glass Steagall Act was a result of the investigation by the Pecora Commission in 1933-34 in Congress which determined the key causes of the Great Depression and the banking collapses of the early 1930s. I have long advocated that the Glass Steagall Act needs to be implemented today in its entirety without any changes and that what repealed it, the Gramm Leach Bliley "Financial Services Modernization Act of 1999" needs to be fully repealed in its entirety.

Had we as a country kept the Glass Steagall Act in force, we would not be seeing hardly any of the financial messes and problems we are facing today, and we need to look to it as the real solution to get our banking and financial services house back in order and restore our economy.
Market Moves
I am looking at calls on ADM, AKS, and maybe even shares of SPY.  I look for a move up this week and through the end of September... 

Sunday, August 22, 2010

Iran: The Most Dangerous Game... Election Cycles... Market Moves...

Iran:  The Most Dangerous Game
If you feel a bit uneasy about Iran possessing a nuclear power plant, you are not alone. It is scary enough that regimes like North Korea (more affectionately known as China's lap dog) and Pakistan (the most unstable of all nuclear powers) have the ability to enrich weapons grade uranium... However the continued proliferation of radioactive material isn't just dangerous for Israel, and the West. It could in many ways mean the beginning of the end for humanity....  Billionaires Warren Buffet and Bill Gates have listed proliferation as one of their top agendas  for their charitable trusts... Consider the following time-line since 2009 and one can see the writing on the wall.

September 25, 2009 - The IAEA says Iran has told it about a second uranium enrichment plant being built. Construction of the plant began in 2006.

October 1 - Iran meets six world powers in Geneva and accepts a plan to send 75 percent of its low-enriched uranium (LEU) to Russia and France, where it would be made into special fuel for a Tehran reactor making medical materials.

October 25 - U.N. nuclear experts inspect the newly disclosed enrichment plant being built near the Shi'ite holy city of Qom.

October 30 - Iran tells IAEA it wants fresh nuclear fuel for a reactor in Tehran before it will agree to ship some enriched uranium stocks to Russia and France, according to the U.N.

November 18 - Iran says Tehran will not send enriched uranium abroad for further processing but would consider swapping it for nuclear fuel within its borders.

November 19 - U.S. President Obama warns Iran of the consequences of its failure to respond to the nuclear deal.

November 26 - Outgoing U.N. nuclear watchdog chief ElBaradei says Iran's blockage of a plan to divest it of possible nuclear bomb material "disappointing."

November 27 - The IAEA censures Iran for developing the plant near Qom in secret and demands Iran freeze the project.

November 29 - Iran says plans to build 10 more nuclear sites.

January 19, 2010 - Iran rejects key parts of the deal to send abroad for processing most of its enrichment material.

February 2 - President Mahmoud Ahmadinejad says Iran is ready to send enriched uranium abroad, apparently easing his position.

February 9 - Iran begins making higher-grade nuclear fuel, enriched to a level of 20 percent, at its Natanz facility.

February 18 - An IAEA report suggests, bluntly and for the first time, that Iran is actively pursuing nuclear weapons capability.

March 18 - U.S. Secretary of State Hillary Clinton criticizes Russia's plans to start the Bushehr power plant.

-- Russian Prime Minister Putin announces Russia will start up the reactor at the Bushehr plant in summer 2010.

March 25 - The United States, Britain, France and Germany start talks with China and Russia on a U.S.-drafted proposal for a new round of U.N. sanctions against Iran.

April 12 - Obama's drive for tougher sanctions on Iran gains momentum at a two-day summit of nearly 50 countries that Obama has called to highlight the global threat of nuclear terrorism.

April 19 - Iran says it will start work on a new uranium enrichment plant.

April 27 - Brazil offers to mediate to help end the West's standoff with Iran over its nuclear program. May 12 - U.N. resolutions aimed at increasing sanctions against Iran over its nuclear program "are not worth a penny" and Tehran will give no ground to pressure, Ahmadinejad says.

May 17 - Iran, Brazil and Turkey sign a nuclear fuel swap deal. Iran says it has agreed to transfer 1.2 tons (2,646 lb) of its low-enriched uranium to Turkey within a month in return for higher-enriched nuclear fuel for a medical research reactor.

May 18 - The United States hands the U.N. Security Council a draft resolution that will expand U.N. sanctions against Iran by hitting its banking and other industries.

May 31 - A new IAEA report shows Iran's low-enriched uranium stockpile has grown to 2.4 tons, so that even if the 1.2 tons was shipped out now it would still leave Iran enough material for a nuclear weapon if enriched to higher levels.

June 9 - The U.N. votes to extend sanctions against Iran.

June 24 - U.S. Congress approves tough new unilateral sanctions aimed at squeezing Iran's energy and banking sectors, which could also hurt foreign companies doing business with Tehran. They are signed into law on July 1.

July 26 - The EU imposes tighter sanctions on Iran, aiming to block oil and gas investment and curtail its refining.

-- Iran says it is ready to hold talks on a nuclear fuel swap without conditions.

July 30 - Iran says it will never give up its right to enrich uranium, but could suspend higher-level work if a fuel swap can be agreed with foreign powers.

August 6 - The Institute for Science and International Security (ISIS) says Iran is now using a second set of centrifuge machines at its Natanz pilot plant to enrich uranium, stepping up its nuclear work despite sanctions.

August 13 - Russia announces it will begin loading nuclear fuel into the Bushehr reactor on August 21.  (1)
The unfortunate fact is that the U.S. has squandered a portion of its political capital on Iraq and Afghanistan. While we have not been an honest broker in helping solve long-standing Middle East Peace Issues, the opportunity to bring a more peaceful resolution to this matter has passed. Chances are that Israel will have to take matters into their own hands. This time, the stakes are a bit higher with Russian supervisors on the ground at Iran's nuclear facility.  An old U.S. Ambassador once told me that armed conflict happens when diplomacy fails. Should diplomacy fail, look for gold and oil to make a hard move North... and the rest of the financial markets to move the other direction...

Election Cycles...
In his latest op. ed. piece Thomas Friedman not so gently suggested that Obama and Congress are politicizing an ever frail economy.  He puts forth a reasonable argument suggesting that Obama's timing on a national healthcare program was poorly timed in lieu of the ever deepening Federal debt. Meanwhile, Republicans can do no better that develop schemes to ensure that the top 1% of Americans retain their tax cut. 

What seems to be missing is a general concern to get things done... get people back to work... and address the bigger problems that are facing our nation. Friedman's suggestion that Obama invite top Democrat and Republican leaders to Camp David to hammer out some type of a plan sounds good in theory. However, the political atmosphere in D.C. could be as polarized now as it was under W. Bush... if that is possible.

Market Moves...
I took a 34% profit on ADM selling the contract as a limit order at .59 cents.  I also added another position of YRCW (at .25) to my portfolio as the word on the street is that the workers and drivers are working as much overtime as they want. The economic calendar this week has more than one potential pitfall. The question is whether these poor numbers have already been figured into the market. BTW YRCW just gained a strong working-relationship with Teamsters Union.
 MarketWatch consensus (2)

Aug. 24Existing home sales4.78 mln5.37 mln
Aug. 25Durable goods orders2.5%-1.0%
Aug. 25New home sales339,000330,000
Aug. 26Jobless claims495,000500,000
Aug. 27GDP revision1.4%2.4%
Aug. 27Consumer sentiment68.569.6

Monday, August 9, 2010

Response to Immigration and Anchor Babies... Stock Moves....

August 9, 2010

Dear Mr. Davis: 

             Thank you for contacting me concerning the Birthright Citizenship Act of 2009, H.R. 1868. It was good to hear your perspective on this piece of legislation.

             As you may be aware, H.R. 1868 was introduced by Nathan Deal of Georgia on April 2, 2009. This legislation will amend section 301 of the Immigration and Nationality Act to clarify classes of individuals born in the U.S. who are nationals and citizens at birth. The bill was referred to the House Judiciary Committee where it has been referred to the Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law for further review and consideration. I do not have the privilege of serving on either of these committees.

             As you may recall, during the 109th session of Congress, the House and the Senate approved different versions of legislation to address the problem of illegal immigration. I supported the House bill which forces employers to verify that their workers have come to the U.S. legally, calls for the erection of security fencing with lights and cameras along the southern border, and mandates stricter punishment for individuals who violate immigration laws.

             I do not support illegal immigration. Nor do I support rewarding those who have entered this country unlawfully. I will not lend my support to any bill that offers amnesty to illegal immigrants. I believe that Congress must continue its task of developing legislation that will address the enforcement problems inherent to our current immigration policies. I believe that securing our borders is foremost in this task.

             Once again, thank you for taking the time to contact me. Should you have any questions, please do not hesitate to contact me again. I remain,

                                                                 Very truly yours,

                                                                 Steven C. LaTourette
                                                                 Member of Congress

Stock Moves
I entered into a pricey contract on ADM 12/35s at .39.  Methinks we will get a heavy bounce in agriculture as increased global demand has reared its ugly head...  Let's face it, the U.S. can still boast of being the world's bread basket...

NEOP breached 2.10 today.  I picked up my first purchase at .73 but have been leery to increase my position unless it is done with monies from my ROTH... and the lion's share of those are...

Part of a turn-around effort at YRCW.  This is a bit of a gamble which, at .78 cents will double a portion of my little Robin's sized egg.  I lowered contribution to a retirement account to fund some of my own plays on the open market.  As of now, I am down mildly on this play with an entry price at .39.

D never ceases to amaze me.  This stock was channeling for a considerable period in which today it hit and successfully crossed through a key resistance point.

I successfully doubled my money on a 8/55 HBC play with a buy-in at .11 where my limit breeched .23 and doubled my money.  However, I did not knock with one dead as AX did on the BBB

Below C level...
I am soaked at a few smaller plays as of now, and am looking for one of these lovelies to be ITM before expiration, as it will make up for the losses on the other two.  Worst case scenario I will look to exit these positions if and only if it becomes economically feasible.

C 9/5s

HBAN 1/9s

CLWR 1/12.5s

Covered Calls... Going Twice...
As of yet, I still have procrastinated on entering into a more aggressive... yet less risky strategy of covered calls. I have been tempted to purchase SPY or something which reflects the market as in XLI, or even HP which in my humble opinion became a value stock as of today with the outing of Hurd.  I may even certificate D shares to increase my leverage and returns on OTM covered calls...  More to follow here.