Thursday, February 25, 2010

U.S. Senator Says Debt-Driven Debacle Coming

from FT:
The US is heading for a debt-driven “financial meltdown” within five to seven years, according to Judd Gregg, the outgoing Republican senator for New Hampshire.
In a robust and at times testy video interview for the Financial Times’s View from DC series, Mr Gregg also complimented China for showing rising alarm about the US’s mounting levels of public debt.
“We have had China say that they are looking for other places to put their reserves and that is probably a smart decision on their part,” said Mr Gregg, who will not seek re-election in November. “So the warning signs are pretty clear and the path is unsustainable and, at this point, unless we take different actions, unavoidable.”
But the senator...said he doubted that the two parties would get together to tackle it.

"Profitability is found in the friction between perception and reality" - Todd Harrison

Harrison continues:
"the question is therefore begged, has the former finally caught up to the latter? While I foresee the inevitable consequences of our cumulative imbalances, I’m humble enough—and seasoned enough—to respect the motivation of cornered and scared animal spirits."

Wednesday, February 24, 2010

Shorts Increase in February

Short-selling rose at the New York Stock Exchange and the Nasdaq Stock Market during the first half of February.

But the SEC also voted today to impose new short-selling rules.

Treasury Bubble Theory Gets Boost From China

Treasuries are mostly unchanged today.

from Ambrose Prtichard-Evans at Daily Telegraph:

Evidence is mounting that Chinese sales of US Treasury bonds over recent months are intended as a warning shot to Washington over escalating political disputes rather than being part of a routine portfolio shift as thought at first.

A front-page story in the state’s China Information News said the record $34bn sale of US bonds in December was a "commendable" move. The article was republished by the National Bureau of Statistics, giving it a stronger imprimatur.

It follows a piece last week in China Daily, the Politburo’s voice, citing an official from the Chinese Academy of Sciences praising the move to "slash" holdings of US debt. This was published on the same day that US President Barack Obama received the Dalai Lama at the White House, defying protests from Beijing.

January U.S. New Home Sales Drop to Record Low

But the news is being drowned out by Bernanke's congressional testimony today. He's promising to keep rates artificially low and blow more bubbles. Stocks are nearly 100 points higher.

WASHINGTON (MarketWatch) -- Sales of new U.S. homes plunged 11.2% in January to a seasonally adjusted annual rate of 309,000, the lowest rate on record dating back to 1963, the Commerce Department estimated Wednesday.
The third-straight drop in sales on a month-to-month basis was unexpected. Economists surveyed by MarketWatch forecast sales to rise slightly, to a pace of 355,000, with buyers taking advantage of a new federal tax credit.
"The housing market remains very, very distressed," wrote Dan Greenhaus, chief economist for Miller Tabak & Co.
"There may have been some weather-related issues playing havoc with the sales data but clearly, these results are extremely unnerving," wrote Jennifer Lee, an economist for BMO Capital Markets. "There is nothing positive to glean from this report."
Sales of new homes are down 6.1% compared with January 2009's 329,000 units, which was the previous record low.

Tuesday, February 23, 2010

Heights of Cotton Prices Know No Bounds

Feb. 22 (Bloomberg) -- Cotton rose to the highest price in almost 20 months on speculation that export demand will remain strong while global supplies will be limited. Orange juice fell.
U.S. exports of the fiber this year have surged 93 percent compared with the first six weeks in 2009, U.S. Department of Agriculture figures show. World cotton consumption is expected to climb 4.9 percent to 115.5 million bales in the year through July, the USDA said on Feb. 9. Stockpiles will reach 3.3 million bales, the lowest amount since 2004, the USDA said.
“The market is kind of caught in a tight situation,” said Jack Scoville, a vice president at Price Group Inc., a broker in Chicago. “Demand has really been good.”

Beans (Grains) Reverse, Give Up Gains

Wow! Who ever would have thought we'd close lower despite strong demand! The consumer confidence figures have hit the broader market with a bit of a gut punch today. I'm surprised stocks aren't even lower!

Natural Gas Back in Downtrend

from FT:
US natural gas prices dropped sharply on Monday as weather forecasts predicted temperatures in the US north-east would moderate after recent severe winter weather.
Natural gas prices have dropped 12.7 per cent this year and some traders believe that winter will end with gas stocks, currently about 2,025bn cubic feet, at record levels. 

Francisco Blanch, head of global commodities research at Bank of America Merrill Lynch, said demand for gas from US industry had remained very depressed.

Soybeans Rise on Strong Demand

from Arlan:
Consumer confidence # knocked trader confidence early, but beans providing stability based on demand; corn dn 2, beans up 3, wht dn 5

This is surprising given that stocks have taken a strong dip today.

Consumer Confidence Slides, Hits Stocks

NEW YORK (MarketWatch) -- U.S. stocks tumbled Tuesday after a measure of consumer confidence fell by much more than expected in February, raising concerns about the outlook for consumer spending.
The declines piled on quickly after the Conference Board, a private research group, said its index of consumer confidence plunged more than 10 points this month to 46.0. Economists surveyed by MarketWatch had been looking for a slight drop, to 55.5 points from January's previously reported level of 55.9.

The present situation index, a gauge of consumers' assessment of current economic conditions fell to 19.4, its lowest point in 27 years. See full story on confidence.
Investors said the plunge was unexpected and did not portend well for retailers and other businesses that rely on consumer spending.
"There's disappointment that we just haven't been able to create jobs yet and that that may now be starting to undermine consumer buying attitudes," said Jeffrey Kleintop, chief market strategist at LPL Financial.
Especially with government programs run by the U.S. Federal Reserve and the Treasury slated to expire this spring, consumers may not be able to support the recovery unless the labor market improves, he said.
Many retailers who opened the session trading up after posting strong earnings, quickly slid into the red following the consumer confidence data.

in other news:
WASHINGTON (MarketWatch) -- Home prices in 20 major U.S. cities fell a not-seasonally adjusted 0.2% in December compared with November, according to the Case-Shiller home-price index released Tuesday by Standard & Poor's.
"The pace of deterioration has stabilized for now," said David Blitzer, chairman of the S&P index committee. "However, the rate of improvement seen during the summer of 2009 has not been sustained." 

The Psychology of Winners

from Dr. Brett:

Last year I gave a talk at a conference of traders and concluded the session by giving out my email address and phone number and inviting the attendees to contact me for any help they might need. I made it clear that I would not be soliciting them as commercial clients for coaching and that I would not charge them for time spent with them.

One of the participants approached me at the end of the session and expressed surprise that I would make myself so widely available at no charge. He noted that there were over 100 traders in the session and that I could easily be swamped with calls.

I smiled and simply said, "We'll see."

Within a two week period, I counted all the contacts that resulted and tracked who initiated them. It was a very easy task, because there was only one contact. It was from a very successful independent trader. No one else followed up.
And that's the way it usually is: Of the people with professed trading passions, only a fraction will sustain keeping any kind of journal or performance record; of those, only a fraction will use the journal and performance data to set and pursue concrete goals; of those, only a fraction will reach out for assistance in achieving those goals.

On the whole, people fail to reach high levels of success because they are not doing the things that successful people do: they are not on a path that can possibly lead to success. Traders can repeat positive affirmations and invoke positive images, but nothing replaces the hard work associated with preparation, practice, and focused work on oneself and one's craft.

The motivation to trade? Everyone has that. The motivation to be more than who you are: that's what makes winners. 
And by the way, that one guy who did follow up and call me? He made well over $1,000,000 last year.

And he still calls.


Turning Goals Into Habit Patterns

What Turns Goals Into Performance

Sunday, February 21, 2010

Euro Slump to Worsen

Feb. 22 (Bloomberg) -- Derivative traders are signaling that the euro’s slump to a nine-month low will continue even if European Union leaders bail out Greece.

Reuters: State Budgets to Worsen

WASHINGTON (Reuters) - The already gloomy conditions of states' economies are set to worsen, according to preliminary survey findings from the National Governors Association released on Saturday.
"The situation is fairly poor for a lot of states around the country. In fact, most states," Vermont Governor Jim Douglas, who is chairman of the association, said at a press conference at its annual meeting.
"What we're finding out from a fiscal standpoint is that the worst is yet to come," Douglas said.