By Jake Towne, the Champion of the Constitution. "As always, unlike the NFL, the author grants full permission to allow any accounts of, rebroadcasts, retransmissions, repostings of this article to your blog or anywhere else in order to promote the Restoration of our Republic."
"Banking was conceived in iniquity and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create deposits."
– Josiah Stamp, President of the Bank of England in the 1920s
[This article is updated with more infomation and the March 2009 figures released from this February article in response to a couple press requests. The figures were calculated from the FED data here, using the same method described here.]
So, who owns the Federal Reserve? Well, it certainly is not the US government, as many would suppose. In fact, I have found that quite a few – including myself last year – who are roughly aware of how the FED works but believe that the owners of the FED is a secret. Well, it is not. The FED’s Purposes and Functions (page 21/146) reads:
"As of March 2004, of the nation’s approximately 7,700 commercial banks approximately 2,900 were members of the Federal Reserve Systema – approximately 2,000 national banks and 900 state banks. Member banks must subscribe to stock in their regional Federal Reserve Bank in an amount equal…
As Cap and Trade races through Congress, here is a question – Who will benefit? The environment and us or Government Sachs?
Courtesy of Jake Towne. "As always, unlike the NFL, the author grants full permission to allow any accounts of, rebroadcasts, retransmissions, repostings of this article to your blog or anywhere else in order to promote the Restoration of our Republic."
Last week the House voted 219-212 to pass HR 2454, the American Clean Energy and Security Act of 2009, whose intent is to "create clean energy jobs, achieve energy independence, reduce global warming pollution and transition to a clean energy economy." I’ve only had time to browse the 1,092 page bill and sincerely believe it will not achieve a single one of its purposes.
The creation of clean energy jobs is very vague and the parts that are clear center not on industry but on educating people about global warming – this appears to signal the creation of a new class of bureaucrat-teachers, not industrial jobs.
Energy independence? Transition to a clean energy economy? Get real, there is nothing of substance in the document that details such a plan, and this is a pipe dream for government to create this. What will you ask? Only a free market, driven by the consumer and free from government interventions can do so, in my opinion.
"Reduce global warming pollution?" Somehow I missed the scientific debate where the global warmers square off against the global coolers and those who believe that ‘the weather just changes, weather you want it to or not’ as I suggested here "Anthropogenic Global Warming or an Ice Age, Which Is It? (PART 2/2)". Is carbon dioxide really a pollutant? Don’t plants need it to live and don’t we all respire it? It would be a lot cheaper and a lot more useful than HR 2454!
My own private analysis of HR 2454 can be summarized up with:
Inefficient energy sources will instead be propped up and buffered from free market competition by the government.
The taxed companies will pass down the taxes to We the People, and energy costs will rise for us, the consumers.
The State will subsidize and hence sponsor, mandated education that "global warming" is fact, stifling debate.
Wall Street will have a great time doing all the carbon credits trading using
This is outrageous. Do what you can, there are numbers at the bottom to call to voice your opinion. Update: Here’s a subsequent note from ZH – The NYSE Responds to Zero Hedge - I read but did not understand it. Update 2: It seems they are proposing another type of tracking with no details.
In a move set to infuriate and send many Zero Hedge readers over the top, the NYSE has taken action to make sure that nobody will henceforth be able to keep track of the complete dominance that Goldman Sachs exerts over the New York Stock Exchange. This basically ends our weekly Program Trading updates disclosed every Thursday indicating that Goldman has singlehandedly captured all of NYSE’s program trading.
The New York Stock Exchange LLC (“NYSE”) will be decommissioning the requirement to report program trading activity via the Daily Program Trading Report (“DPTR”), which was previously approved by the Securities and Exchange Commission (the “Commission”).1 The last trade date for which member organizations will be required to file the DPTR with the Exchange will be July 10, 2009 and therefore the last required date to submit the DPTR will be July 14, 2009.
In the 2007 rule filing, the Exchange proposed to eliminate DPTR. The 2007 filing noted that there was some duplication between the DPTR data and the audit trail information that member organizations provide to the Exchange via account-type indicators at the time that they submit program trades to the Exchange… [A]fter consulting with the SEC, the Exchange announced that it would delay implementation of the two redefined account type indicators, and pending such implementation, member organizations would be required to continue filing the DPTR with the Exchange. The current delayed implementation date of the redefined J and K account type indicators is June 30, 2009. Accordingly, the Exchange still requires member organizations to submit DPTR.
The Exchange has filed with the SEC to implement the decommissioning of the
For someone who gets a kick out of volatility, the arrival of triple ETFs has been a little bit like manna from heaven. Of course the launch of the Direxion triple ETFs back in early November just happened to coincide with the highest VIX readings in history. There is nothing like record volatility, except perhaps record volatility times three.
But a lot has changed since November. The VIX traded in the 80s the month it was launched; today it was as low as 25.02. At the moment the VIX is exactly 1/3 as high as it was when it peaked in November at 81.38. For those who have been selling options, the ride down the volatility slide has been an unusually profitable one. In fact, it is likely that some of the premiums harvested in the last nine months or so will turn out to be the most bloated we will see in our trading lifetimes.
My personal interest in the triple ETFs notwithstanding, these vehicles have received mixed reviews, largely because their suitability as buy and hold investments degrades rapidly after just one trading session – with the problems exacerbated by increases in volatility. On the flip side, the recent decrease in volatility has taken some of the tracking and compounding errors out of leveraged ETFs. In fact, in the current environment, the 3x and -3x ETFs are starting to look somewhat tame relative to their history. The two charts below show the (30 day) historical volatility (purple line) and implied volatility (gold line) of the most popular financial sector ETF, XLF, and the 3x financial sector ETF that has taken the trading world by storm, FAS. While there are a number of interesting conclusions to be drawn from these charts, the point I wish to make is that current historical and implied volatility for FAS (top chart) is hovering around the 100 mark, which is about where HV and IV were for XLF (bottom chart) in February, March and April. In other words, the 3x ETF FAS is no more volatile or has more uncertainty in its stock price now than XLF did during the period from October through April. Tracking error aside, FAS is now effectively the ghost of XLF.
Here is more from Dylan Ratigan’s new show on MSNBC. Arianna Huffington and Eliot Spitzer were guests. They all have noticed that Barack Obama has spent an inordinate amount of political capital and money on the financial services sector without showing any stomach for serious all-encompassing reform. Why is still unclear, but Huffington suspects capture via Geithner and Summers.
The video is below. The more I hear the newly semi-rehabilitated Eliot Spitzer, the more impressive I find him.
I’ve been a long time investor in the solar space (circa late 06) and one thing that has really irked me over the years is the complete lack of differentiation. Much like the market as a whole nowadays, its "all or nothing" in this space. The one exception has been First Solar (FSLR) – an American "thin film" (different technology than most solar companies) producer. The Chinese names have especially all been thrown together in one pot and when its time to run up solar, they all go up together (in varying degrees) and when solar is out of favor they all get pole axed. Hence doing any due diligence is really a waste of time.
Yingli Green Energy (YGE) and a company that has cost me many real (and virtual) dollars over the years, Trina Solar (TSL) are 2 of the Chinese solar markets with good size, and the most integrated production models. This should have differentiated them over the years – but as I said above, not in American investors eyes. We like "big easy to understand, sweeping themes" – i.e. oil up, solar good. And that’s as comprehensive as it seems to get.
We are seeing some nice action in both these names today, on the back of an analyst report which is alluding to the advantages the two companies have. Now that silicon (which is the main cost component on the material side) has swooned after bottlenecks plagued the industry for 3+ years, the other main cost is labor. And you are not going to compete with the Chinese on labor costs…
Both Trina Solar (TSL) and Yingli Green Energy(YGE) shares are trading higher today following upgrades by Morgan Stanley analyst Sunil Gupta. He thinks both companies are going to take market share in the solar sector from U.S.-based and European rivals. Here are the details
Late last year, I predicted that China, as a major exporter to the West, would feel a huge impact from the meltdown in the global economy, taking it’s growth rate down to 2% (See Top ten predictions for the 2009 global economy). Forgetting about the fact that data are highly suspect in China, I see that prediction as very unlikely to come true due to huge fiscal stimulus in China. The Chinese government is very much wedded to it’s 8% growth target and will do whatever it takes to come close to that target – including flooding the domestic banks with a wall of money to lend.
However, preventing a downturn with easy money is a dangerous way to reflate the economy. The likely malinvestment will be large, something about which Andy Xie has recently warned. Moreover, despite the implosion in house prices and shares in the Chinese market during the acute phases through to November 2008, a bubble has re-asserted itself there. In a recent post, “Does Ben Bernanke blow bubbles too?,” I referred to research by James Montier, now at GMO, which indicated that large increases in liquidity can and will reinflate bubbles even in the face of investors who feel chastened by a previous downturn. This seems very much to the point in China, where equity prices have risen some 60-odd percent since the trough in November.
Of course, all of this can continue for quite some time. And the Chinese are pulling out all the stops as the recent note by Marc Chandler, Chief Currency Strategist at Brown Brothers Harriman, attests.
There are several developments to note in China.
First, with deflationary forces still gripping the economy (year-over-year CPI has been negative by more than 1% since Feb), weakness in exports, Chinese officials are unlikely to allow the yuan to appreciate very much during the second half of the calendar year. The pricing of the non-deliverable forward implies expectation for less than 1% appreciation against the dollar over the next 12-months, the smallest expected gain in a couple of months. Next month will be the one year anniversary of the Chinese decision that in essence appears largely tantamount to re-pegging the yuan to the greenback. It has been
Americans are saving and paying off credit card debt at levels not seen in years, but where’s that money coming from? Increasingly, it’s not coming from work. As today’s chart (via David Rosenberg) demonstrates, a staggering proportion of American personal income now comes straight from government transfer payments — welfare, unemployment, etc.
And thus the process of household debt becoming government debt takes place.
Confidence among U.S. consumers slipped unexpectedly in June, reflecting a weak labor market.
The Conference Board’s sentiment index decreased to 49.3 from a revised 54.8 in May, the New York-based research group said today. The figure was still above a record low of 25.3 reached in February. Another report showed home prices fell at a slower pace in April than in the previous month.
“The optimism that started to build over the last few months may be starting to fade,” Michael Gregory, a senior economist at BMO Capital Markets in Toronto, said before the report. “Labor markets are sort of stabilizing in terms of job losses, but the big issue is people are having a hard time finding a job.”
We continue to receive requests for updates to the "Best Stock Market Indicator", which used to be a regular guest post from John Carlucci. Here is an update of the "Carlucci" indicator along with a summary of John's explanation on how he uses it.
As John described it: "The $OEXA200R (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to find the "sweet spot" time period in the market when you have the best chance of making money."
Great Britain’s decision to extricate itself from the EU has consequences that are at once far-reaching and unknown. By Friday morning, no market was immune. Great Britain’s currency, the pound, had fallen to its lowest levels since 1985, and the FTSE (an index of the London stock exchange) and DAX (a German stock index) plummeted. In the U.S., markets opened in the red, gold (a co...
I have mixed feelings about Brexit today. Clearly the European institution need reforming. The addition of so many countries in the last 20 years has created a top heavy administration. The Euro adds more complexities to the equation as the ECB policies cannot fit every country's problem. On the other hand, a unified Europe has advantages as well – some countries have benefited from the integration.
For Britain, it's hard to say what the final price will be. My guess is that Scotland might now vote for independence as they supported staying in Europe overwhelmingly. Northern Ireland might be tempted to leave as well so possibly RIP UK in the long run. I was talking to some French people and they were saying that now there might be no incentive for France to stop immigrants from crossing over to the UK like they do now and simply allow for travel there and let the UK deal with them. The end game is not clear to anyone at the moment....
One week ago, when bitcoin first crossed above $700 on the seemingly insatiable Chinese buying which we forecast last September (when bitcoin was trading at $230) would take place as a result of China's capital controls (to much pushback by the "mainstream" financial media), we tried to predict what may happen next. We said that "it could go much higher. That said, anyone who bought last September when the digital currency was trading at $230 may be advised to take some profits, and at least make...
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After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at firstname.lastname@example.org with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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