Only a Handful of Stocks are Up the last Five Days

There have been few hiding places over the last five trading days. The major indices are down sharply and all sectors are also down. As the Sector Market Carpet shows, stocks in the utilities and consumer staples sectors were down the least, while technology and energy stocks were down the least. The red box to the right shows the top five gainers and losers. 

Shaza sent me this from the blog Some Assembly Required

Problems are distorted by the lens used to examine them.

Dead On Arrival: Never mind the details of the IMF's new 'Precautionary Credit Line' proposal, the IMF does not have the money to fund it adequately (estimated at $3 to $4 trillion) and it will require the support of the GOP to get the 'contribution' it would require from the US.

Balance Beam: Attempting to position itself as a support of democracy and human rights in the Middle East without upsetting the dictatorships it has and continues to support, the US has called for “restraint on all sides” in the ongoing confrontation between armed police and unarmed demonstrators in Egypt. For example, the demonstrators shot by the police should ideally die quietly and off camera.

http://ckm3.blogspot.com/

And this:

The winners circle for 2011 (so far)

Richard HemmingNovember 18, 2011


Fossicking for gold

As the year draws to a close, it's worth noting some of the hits and misses of this column.

The big hits, as it turns out, include many of the gold stocks.

All but one or two of the gold stocks this column has written favourably on over the past eight or so months have done well, some more than doubling.
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These include Norton Gold Fields (ASX code NGF), Red Five (RED), Northern Star (NST), Papillon Resources (PIR), Doray Minerals (DRM), Troy Resources (TRY) and Resolute Mining (RSG).

http://www.theage.com.au/business/the-winners-circle-for-2011-so-far-20111118-1nm0d.html

Oil heading for $US200 a barrel?

David Lee SmithNovember 22, 2011

In May 2008, as crude oil steamed toward an all-time high of $US147 per barrel, a Goldman Sachs group predicted that the price could move as high as $US200 within the following 24 months.

Instead, during the second half of the year its price rolled over and began a free fall to near $US30 as December brought the eventful year to a close.

It now appears, however, that Goldman might just have been early in its prediction rather than simply wrong.
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Oh, I know, light, sweet crude is currently trading near $US100 a barrel, and it would require a host of major events to drive it to double that level, especially during 2012.

http://www.theage.com.au/business/oil-heading-for-us200-a-barrel-20111122-1ns4b.html

European Commission Staff Threatens Strike; Would Anyone Notice?

The Eu Observer reports EU staff to go on strike

EU staff unions have re-iterated their threat to go on strike after negotiations with the European Commission failed to produce an agreement on a new package of pay and pension changes.

“If Sefcovic does not reopen the negotiations, we will go on strike,” said Felix Geradon, secretary-general of the Union Syndicale, the biggest of the eleven within the institutions.

Earlier this month, the unions gave the commission a strike notice, giving warning that they are prepared to down tools for one day any time between 23 November and 17 December, a move that would practically shut down the European Commission.

Would Anyone Notice?

The key to answering that question is found in the preceding paragraph: the strike "would practically shut down the European Commission".

If true, people might notice a stunning improvement in productivity, fewer stupid rules as described in EU Bans Claim "Drinking Water Can Prevent Dehydration" Expect More Such Stupidity if European Nanny-Zone Fiscal Union Forms, and a general overall improvement in economic confidence.

Unfortunately, such a productivity-improving strike would likely not last long enough for people to notice the EC is (at best) totally useless, and at worst economically damaging in a major way.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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IMF Announces New "Precautionary and Liquidity Line"; Fed Discusses More Stimulus; Both Much Ado Over Nothing; Expect Continued Bull Market in Meaningless Headlines

The market spurted higher mid-morning over new and improved credit lines by the IMF, and another never-ending discussion by the Fed about increasing liquidity.

Bloomberg reports IMF Revamps Credit Lines to Lure Nations

The Washington-based IMF today said the new instrument, the Precautionary and Liquidity Line, can be tapped by countries with strong economies currently facing short-term liquidity needs. Countries with potential needs can also apply, as they did in the past under the Precautionary Credit Line that the new instrument replaces.

“The reform enhances the Fund’s ability to provide financing for crisis prevention and resolution,” IMF Managing Director Christine Lagarde said in an e-mailed statement. “This is another step toward creating an effective global financial safety net to deal with increased global interconnectedness.”

The changes, which enable countries that pre-qualify to request IMF funds without having to make as many policy changes as with traditional loans, come as Europe’s crisis threatens to spread to Spain and France. The IMF is co-financing bailouts in Greece, Portugal and Ireland and is preparing to send a team to Italy for an unprecedented audit of the country’s efforts to cut its debt.

The Standard and Poor’s 500 Index pared losses after the report.

Not Big News

Via email, Bank of America / Merrill Lynch says "This is Not Big News"

• The IMF has announced some easier access to their limited supply of funds (as below). Despite the eye catching headlines, BofAML do not think that this is particularly new news, nor that financially impactful, unfortunately except possibly for smaller countries and even that is unclear.
 
• Thanos (ex-IMF): Thinks the IMF's PLL is in no way a game changer by itself. The PLL could be used in east Europe. It could also be used in Italy and Spain, but more for its conditionality than for its limited firepower compared to funding needs. And in any case, an SBA or even an EFF would be better for Italy and Spain, as such arrangements have more conditions linked to reforms.
 
• Laurence Boone (Head of Euro Econ): Thinks this does not necessarily mean more money. It means easier access to IMF money. In 2008/09 euro national central banks lent about $75bn to the IMF, a repeat of this lending is something they may or may not be able to repeat this time.
 
• Ardash (BofAML APAC): Points out the PLL was flagged during the G20 summit and mentioned in its communique - officials have already suggested it would be more appropriate for financing needs of smaller countries, rather than the big fish (Italy and Spain).. even 10x quota is simply not enough, let alone judging whether they are committed to "sound policies".

Expect Continued Bull Market in Meaningless Headlines

Note the market continues to move on meaningless headlines. Also note the duration of each move higher keeps getting shorter. That means we can expect a huge bull market in meaningless headlines as EU officials, Eurozone officials, and the IMF keep searching for things to say to placate the markets.

"Lure" the Perfect Word

By the way, Bloomberg's headline title is near-perfect. The phrase "lure nations" is appropriate. "To their economic death" needs to be added.

This is what I think of the IMF as noted in To Ireland With Love.



IMF's Trojan Horse Gift to Ireland

I believe we have all heard the story and know how it ends.


Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Three Easy Steps to Getting Rich Quick in Bear Markets

Here is a humorous chart from a nice E-Wave site called Pretzel Logic's Charts and Analysis.

Nasdaq 100 Index

click on chart for sharper image

The above chart is from SPX 1000 Here We Come (Right Back Where We Started From) in which Pretzel writes ...

The NDX just completed a major top formation. On Thursday, the support level of this top was broken, and on Friday, the NDX spent all day unable to rally back above it. The chart also has some helpful hints on how to "get rich quick" in a bear market -- assuming you have enough capital to move the market, that is.

Those of you who are into technical analysis in general, and E-Wave in particular, may wish to check out Pretzel. He has many e-wave charts in the above link and lays out the technical case for a big downdraft quite nicely, complete with an alternate bullish possibility.

Three Easy Steps to Getting Rich Quick

Those of you not into technical analysis but with a proven ability to move the markets, please note these three "easy" steps toward guaranteed profits.

• Step 1: Generate quick run up off the lows, using shorts as fuel.
• Step 2: Distribute as much of your overvalued inventory as possible to retail investors. Schedule press release "New Bull Market"
• Step 3: Let the market go again. Buy back your old inventory at much lower prices. Rinse and repeat.

More seriously, on a fundamental and technical basis, this is not a market to be messing with unless you know how to hedge. Moreover, if you don't know how to hedge, this is not the time to learn how.

Odds of a big market breakdown are both high and rising.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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UK Prime Minister "Our Plan to Cut Debt is Failing"; Plans to Cut Debt Fail Nearly Everywhere; One Success Story

Plans to cut debt have failed nearly everywhere I look.

• Greece is obvious enough and a government collapsed over it.
• Spain is obvious enough and a government collapsed over it.
• Italy is obvious enough and a government collapsed over it.
• Portugal is obvious enough and a government collapsed over it.
• US is obvious enough and the failure of the super-committee to come to agreement is proof enough

In the UK, news is just as "reassuring" as Prime Minister David Cameron says "Our Plan to Cut Debt is Failing"

David Cameron and his senior ministers have admitted for the first time that there is a danger they will not be able to tackle borrowing on time.

The Prime Minister on Monday conceded that tackling Britain’s debts was “proving harder than anyone envisaged”, raising the prospect that the Coalition would be unable to close the deficit by 2014-15.

That would rule out any significant tax cuts before the next election. It also raises questions about the Coalition’s fundamental purpose.

Departing from the deficit-reduction timetable could raise fears that Britain will face rising borrowing costs as bond markets take fright.

Debt is “a drag on growth”, Mr Cameron told business leaders. “We are well behind where we need to be,” he said.

Kenneth Clarke, the Justice Secretary, has warned that the global economy is “in a devil of a mess”, which is “bound to have an effect” on the Coalition’s plans to clear most of the deficit before the next election.

The candid remarks pave the way for George Osborne, the Chancellor, to admit next week that his target will be missed and the structural deficit will not be erased until at least 2015-16.

The odds Cameron will succeed by 2016 are the same as the odds he would succeed by 2014. Zero.

At least the UK admits failure. In the US we have a situation best described as Mission Accomplished: Nothing; Kerry Says No Problem "Lawmakers Have a Year"; Boehner's, Pelosi's "Moral Obligations" Fly Out the Window

Mission a Brilliant Success, Achieves 100% of Its Goals

The Super Committee accomplished nothing, as expected, and more importantly, as designed. Neither political party really wanted to do anything about the deficit (because it would cost them votes). By D.C. standards this mission was a "brilliant success". It achieved its purpose, which was to do nothing. Both parties got the smoke-and-mirrors delay they wanted, while pointing fingers at the other side.

One Success Story

Those looking for a success story can find it in Iceland. It truly is different in Iceland because Icelandic citizens were actually give a chance to vote on what to do, and vote they did against the wishes of parliament, to tell the IMF and EU to go to hell (twice I need to add, because incompetent politicians were hell-bent on stopping default following the first vote).

Iceland defaulted. The result has been spectacular. Iceland is well on its way to recovery.

Meanwhile, PIIGS flounder around like fish out of water, shoved bales of austerity and ordered by outsiders and unelected officials to breathe.

The current situation is hopeless. Politicians either need to accept that fact, or put things to a vote like Iceland did.

Serious restructuring and a breakup of the Eurozone is the only solution.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List