NDX tech update

Tricky price swings will be the nature for most of Sep. but the overall bias will be down. The risk to the upside is very limited as we have not the momentum to break above that resistance and a consolidation is at hand. The odd part is that its broadly expected hence we can expect a trading range of 1500 -1650 until last week of Sep but the potential extension is rather to the downside especially in Oct – we should see 1350-1400 at some point within the next 8-10 weeks before another upside attempt towards yearend should follow. So for now sell any strength that is as I said ealier a very discriminating game as some sectors and stocks will still do well.

Friday brainstorming

First off all sorry for the part one thing with no follow through but we have serious connectivity problems now for a few days nw still lasting. (Mercury retrogade is always a stressful period)

1. Lets start with the never ending miracle of 550k new jobless claims per week and only 219k of lost jobs for the whole month. They do a lot of manipulation with their birth/death spin and other gimmicks to lie to the public. The real number is rather above 20% and while the IMF which was the only one to call for a depression on the way down is again qıick to upgrade economic groth today -have a hard time to see how they dare to through around numbers after so many bad calls.

Excerpt

Real Unemployment Rate Hits 16.8%

Submitted by Tyler Durden on 09/04/2009 08:22 -0500

As markets digest the worse, yet somehow better, than expected 9.7% unemployment, the real state of the labor market is much worse, as indicated by the U-6 number, which has hit a recent record of 16.8% on a seasonally adjusted basis. As a reminder, the “U-6 represents total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.” In other words, in reality the U.S. labor market is likely about as bad as Spain in terms of undoctored jobless data.

And while pundits were touting the inflection point in June when U-6 hit 16.5% and started to retrace, the most recent monthly data has crashed yet another green shoot in the great propaganda game.

2. Some good insights into one of Buffett’s top holdings Wells Fargo – which seems to be quite disastrous when it comes to their balance cheat risks. In any case the foreclosure siuation is getting worse as the underlying job situation keeps deterorating

excerpt from zerohedge

The fine folks over at WLMLab Bank Loan Performance have done a great job at updating FDIC loan data by various banks. Some of their conclusions:

• Total US Loans outstanding have dropped by another $110 billion QoQ
• Yet, there is an ever increasing mountain of charge offs coming in 1-4 Family First Liens
• At the same time CRE early stage delinquencies have dropped from 1.37% to 1.17%

Yet the most significant observations is the ticking time bomb that is Wells Fargo’s 1-4 Family 90+ past due loans.

WFC’s Construction & Development portfolio is also on the verge of implosion.

Conveniently, these loans are low on Non-Accrual rates, meaning that net interest income is not currently affected (and leading to a falsely high EPS number), yet once everything hits the fan, the bank will be forced to charge off a staggering amount of debt at much higher principal amounts. Perhaps any and all rumors about WFC’s viability should be evaluated very carefully going forward.

3. The tricky part for markets has started now with the Mercury retrogade almost through all Sep. and it will not be easy to trade as the bias will be down but too many expectations for a decline will make it a tough ride for bears and bulls. We have confirmed the top of last week by this weeks price action and as I wrote earlier the manipulators will screw the quadruple expiration in 2 weeks either way. The obama admin is leaning towards a follow through as they want to earmark a positive year end so they can credit themselves with turning around the recession. So far nothing really has been accomplished except some obscure data -trying to pull the rabbit out of the hat.

Its amazing to listen to all this Goldilock pundits who always come up with the same old fairy tail which is not earnings is important but the stockvaluation – well if that story had any backbone the Nikkei would trade at 40000. There are no magic smarter numbers than earnings but you have to think for yourself as todays earnings are realy cooked my many parameters and need to be discounted basically. Stocks are expensive right now and all forward expectations for the economy cannot be true as we have a global zero interest rate situation – never had that before and we have a good reason for that. Can not recall the name of the movie but the basic story line is 2 students find a dead houseowner in his fancy beach-house and pretend he is alive to get their good thing going ( girls and party) – that is exactely the situation with the banks and economies. So much debt has been accumulated on all levels the system needs a deep cleansing which has not happened yet. One part is reducing debt the other is to eliminate the insane risks still on bank books. Obama and the other Bilderberger puppets have done nothing so far to solve any of these problems and the big crash is still due or a slow but permanent death ( the Japanese version).

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Brainstorming Thursday – part 1

1. What is not mentioned in this analysis is that all troughs occured at a PE below 10 Around 8), which was not the case so far we turned around at a PE of 12 approx. – what brings me back to my assumption that we are in wave 4 up and wave 5 down will bring earnings trough statistics back on track. we also have to keep in mind that we have extrodinary factors pushing earnings up on the bank side which we explained who make the earnings suspicious. That leads to an eve higher PE is the earnings do occur do accounting changes which were not the same as on former earnings – giving an obsure factor to the whole comparrison.

Excerpt zerohedge

Current Market Move Is Third Biggest PE Multiple Expansion Recorded In Shortest Time Ever

Submitted by Tyler Durden on 09/02/2009 22:04 -0500

Some historical observations: while readers may continue scratching their heads over just what the causes may have been for the torrid 5 month rally we have witnessed, two main things distinguish it among the last ten recessions stretching all the way back to 1953:

• While the S&P has increased by 50% to the (to date) peak, it has done so on a -6% decline in actual EPS, implying the rally has been one of PE expansion, 66% to be precise. As the chart below demonstrates this is the third largest recorded PE expansion in history, with only the 72% PE expansion recorded in 1982 and the 78% in 1974 surpassing the current market.
• Yet, what is unique about this market, is that while both 1974 and 1982 achieved their move higher in about a year (11 months for the trough to peak PE move in 1982, 16 for 1974), the S&P has hit its current PE peak a mere 5 months after the trough. This is an unprecedented record in the history of US recessions, and demonstrates just how much of a push influence Obama’s stimulus and Bernanke’s QE have had on the PE multiple alone, if not on actual EPS.

Another observation is that at a 19.9x PE through the current market peak, the market is almost 3x turns more expensive compared to the historical peak PE average of 17.1x, and was cheaper at the peak than just the recessions of 1961 (22.7x), and 1990 (21.6x). Any claims that the market is cheap at current earnings are outright lies.

At this point hope is exhausted (in the form of the PE multiple having plateaued), and any further gains will all have to come from an actual improvement in earnings. Yet for that to happen, more than just overhead will have to be cut: actual revenues will need to increase. However, with the record amount of slack still in the system, and the under investment in corporate CapEx, the probability of revenue growth at this point (and this EPS growth) is slim to none.

The graph below provides a convenient way to illustrate this. The past 5 recessions all attained their PE peak at 17x within a yea, at which point it was the Earnings turn to pick up. However, this is precisely where the risk of a double dip occurs: all the growth so far has been one-time in nature, due to various stimuli and subsidies. There is no continuous upward trendline that will encourage EPS growth as discussed above. This likely means that the market will exhaust its “hope” promptly and the current PE of 20x will collapse long before the EPS growth phase is initiated, resulting in either a double dip, a W, or whatever other soundbiting definition one wants to attribute to what the market will look like over the next 6 months.

Data from Morgan Stanley

2. One right step but I doubt it will end as it should since the rating agancies have commited fraud and still are but the implications of them being officially sentenced would be too big too let it happen for the government who has failed to regulate all this entities.

excerpt

M. Stanley, Moody’s, S&P Must Defend Fraud Claims

A U.S. federal judge ruled that Morgan Stanley and two credit rating agencies must defend fraud charges in a class-action lawsuit accusing them of masking the risks of an investment linked to subprime mortgages, and which eventually collapsed.

U.S. District Judge Shira Scheindlin on Wednesday rejected efforts by Morgan Stanley // [MS 27.09 --- UNCH (0) ]// , Moody’s // [MCO 26.10 --- UNCH (0) ]// Moody’s Investors Service and McGraw-Hill’s // [MHP 32.31 --- UNCH (0) ]// Standard & Poor’s to dismiss fraud claims brought by the plaintiffs, Abu Dhabi Commercial Bank and King County in Washington state.

She dismissed the plaintiffs’ remaining claims, and all claims against a fourth defendant, Bank of New York Mellon // [BK 27.95 --- UNCH (0) ]// , while granting permission for the plaintiffs to amend their complaint.

Scheindlin’s ruling could affect other lawsuits brought by pension funds and other investors, seeking to hold banks and credit raters responsible for hyping the value of complex debt to win fees and causing investor losses as the debt collapsed.

Euro update

The Euro trades in sink with the close correlated risk taking approach. It still might need a little spike towards the 1.44 before the decline towards 1.20 starts. After so many ‘gurus’ declared the Dollar to be poised for a extended drop we can be quite sure that first we will see the other side of the Moon. The German elections may enforce more Euro weakness as the sure thing of ‘Iron Lady’ (that was how the economist described her far from any truth) Merkel is now getting obviously less sure and trouble ahead is the only sure thing going forward. Germany is plunging back to the Weimarer Republic syndrom of the 30’s in perfect sink with the markets. The only reason we have Dollar weakness anyway is because America has an competitive advantage and therefor let it drop to a certain degree which keeps all foreign investors from running for the exits. The weekly chartdoes give a clear time frame of another 10 days before the downside move should start. Start selling any strength of the Euro going forward.

Brainstorming Tuesday – part 1

1 Defcon 1 for longs as I put out the red alerts the last 2 weeks the picture gets overall more fragile as even ‘good news’ start to get ignored and we have strong after hour selling action. The tricky part will be as stated earlier that the move in Sep will be limited due to a big anticipation but the overall correction ( new lows) will take its course over the next 6-9 months.

Excerpt 1
from zerohedge

Repeat after me: There is nothing wrong with buying all day, gunning into close, then dumping insane volume after hours… There is nothing wrong… etc

2. The dimensions of the OTC derivative markets nuke potential is described by the simple fact that some banks make outstanding profits on broking them ( the usual suspects Goldman, JP Morgan etc. ) but will not be the ones who clean up the mess after the next explosion. If Obama does not make a bold move as exactely this instruments caused most of the current 1.5 tril of official losses he even did not understand the problem ( every second grade can work that out ) or he is a manchurian candidate. Since he made it through Harvard on his own merits we can assume he has the intellect.

Excerpt
Wall Street Stealth Lobby Defends $35 Billion Derivatives Haul

Aug. 31 (Bloomberg) — Wall Street is suiting up for a battle to protect one of its richest fiefdoms, the $592 trillion over-the-counter derivatives market that is facing the biggest overhaul since its creation 30 years ago.

Five U.S. commercial banks, including JPMorgan Chase & Co., Goldman Sachs Group Inc. and Bank of America Corp., are on track to earn more than $35 billion this year trading unregulated derivatives contracts. At stake is how much of that business they and other dealers will be able to keep.

“Business models of the larger dealers have such a paucity of opportunities for profit that they have to defend the last great frontier for double-digit, even triple-digit returns,” said Christopher Whalen, managing director of Torrance, California-based Institutional Risk Analytics, which analyzes banks for investors.

The Washington fight, conducted mostly behind closed doors, has been overshadowed by the noisy debate over health care. That’s fine with investment bankers, who for years quietly wielded their financial and lobbying clout on Capitol Hill to kill efforts to regulate derivatives. This time could be different. The reason: widespread public and Congressional anger over the role derivatives such as credit-default swaps played in the worst financial crisis since the Great Depression.

Brainstorming Monday

1. The same Mr Olmert once said that America was actually run by Israel

Excerpt

Olmert Indicted in Corruption Cases

By JOSHUA MITNICK

TEL AVIV — Israel’s state prosecutor indicted former Prime Minister Ehud Olmert on multiple counts of fraud and breach of public trust in connection with a trio of corruption scandals spanning his terms as mayor of Jerusalem and as minister of trade and industry from 2002 to 2006.

Mr. Olmert will be the first former Israeli prime minister to be put on trial on criminal charges here. He was forced to resign in September 2008 amid political fallout from the police investigation into alleged corruption.

Representatives for Mr. Olmert weren’t reachable to comment. A spokesman for Mr. Olmert told Israel’s Channel 1 public-television news that the indictment is filled with inaccuracies and contradictions. “We are sure that when we arrive in court, things will look differently,” said the spokesman, Amir Dan.

In the introduction to the 61-page indictment submitted Sunday to a Jerusalem district court, the state accused Mr. Olmert and his office manager, Shula Zaken, of exploiting Mr. Olmert’s position to reap “ongoing and systematic financial favors” through “acts of fraud against public institutions and bodies, as well as the state and its employees.”

In one instance, Mr. Olmert is accused with overcharging Israeli government ministries and American and Israeli nonprofit groups by $92,164 to fund personal and family travel abroad. He is charged with intentionally double-billing U.S.-based Jewish charities such as the Indianapolis Jewish Federation, the Simon Weisenthal Center, and Israel Bonds.

In a separate instance, Mr. Olmert is charged with failing to report accepting hundreds of thousands of dollars, allegedly in cash-filled envelopes in some instances, from U.S. businessman Morris Talansky.

Mr. Olmert also is charged with ignoring conflicts of interest in policy decisions when he was trade and industry minister under Prime Minister Ariel Sharon that affected companies who had hired a former legal partner and political adviser of Mr. Olmert’s, to represent them.

The state prosecutor also alleged that Mr. Olmert tried to cover up the scandals by falsifying corporate documents and by fraudulent nondisclosure of income.

The charges relate to Mr. Olmert’s dealings from 2002 to 2006.

2. Uranus /Saturn opposition shows again its earmarks after allowing the first (half)black president to occur now in Japan we have a dramatic change as well the DPJ takes over after 50 years.

Excerpt

Rise of a New Era in Japan

A 50-Year Dominance Ends as Voters Oust LDP; Rivals to Spend More, Weigh U.S. Ties

TOKYO — Japanese voters overwhelmingly rejected the party that has largely ruled their nation for most of the past half a century, choosing instead an untested rival to grapple with an enfeebled economy and an aging society.

The historic change in government could usher in a new era for Japanese politics that replaces the staid consensus that guided Japan in its postwar boom years with a more fractious, competitive environment. The upstart Democratic Party of Japan and the establishment Liberal Democratic Party share similar positions on a number of issues. But the more-liberal DPJ is pushing an ambitious and expensive domestic spending agenda with an eye toward reigniting Japan’s economy.

3. We can add one more indicator for a top – Chinese Investors are not the smartest (even are contraindicators) like Japanese investors it seems – they have recently decided to get into Hedge Funds and Private Equity again. They earmarked the top with the very interesting timing of Blackstone’s IPO and their big purchase , which was almost exactely at the high.

Also the sentiment factors are getting closer

INVESTOR SENTIMENT READINGS

High bullish readings in the Consensus stock index or in the Market Vane stock index usually are signs of Market tops; low ones, market bottoms.

Last Week

2 Weeks Ago.

3 Weeks Ago

Consensus Index
	Consensus Bullish Sentiment	47%	43%	49%
Source: Consensus Inc., P.O. Box 520526,Independence, Mo.
Historical data available at (800) 383-1441. editor@consensus-inc.com
AAII Index
	Bullish	34.0%	34.1%	51.0%
	Bearish	48.5	40.0	33.0
	Neutral	17.5	25.9	16.0
Source: American Association of Individual Investors,
625 N. Michigan Ave., Chicago, Ill. 60611 (312) 280-0170.
Market Vane
	Bullish Consensus	49%	47%	47%
Source: Market Vane, P.O. Box 90490,
Pasadena, CA 91109 (626) 395-7436.
FC Market Sentiment
	Indicator	53.3%	53.2%	53.6%
Source: First Coverage 260 Franklin St., Suite 900
Boston, MA 02110-3112 (617) 303-0180. info@firstcoverage.com

FC Market Sentiment is a proprietary indicator derived from actionable sell-side trade ideas sent by the sell-side to their buy-side clients over the First Coverage platform. Over 1,000 institutional sales people at more than 250 firms participate on the First Coverage platform and have contributed hundreds of thousands of ideas since inception. Each Idea is associated with a ticker or sector and is tagged bullish or bearish by the creator. This data is aggregated at the sector, industry and market level. The FC Market Sentiment score ranges from 0-100 (0=most bearish, 50=neutral, and 100=most bullish) and represents a completely objective, real-time view into what advice the sell-side is providing to their buy-side clients

Citigroup Panic/Euphoria Model

Oil tech update

Oil is still heading for the high target at 78/80 and it should take another 3-4 weeks to get there. Confirming my sector choice that oil stocks have still to go a bit higher against all odds but they look really cheap in comparison to other sectors. Thereafter we should see a sharp pulback towards the 60 level. The BDI (Baltic Dry Index) clearly points to an sharp decline in global activity and oil is again not driven by fundamental demand but the same manipulation we had 2 years ago to the biggest fraction of the equation but its also an expression that real inflation is creeping into the commodities as a result of the excessive money printing of global central banks.

Brainstorming Wednesday

0. Some unusual and contradicting activities make me think

a) for a few days the ISE -Index produces unusual high put activity for a top which confirms on one hand that we are not done yet as too many are waiting for a correction. That is also puzzling as in the forward VIX future we have a lot of buying activity as it trades at a rich premium – that is not good for the top scenario (except the case that Goldman and JP Morgan are buying).

b) on the other hand we had unusual activity at the low as well as extreme call buying just one day before the low started ( very unusual I have never seen such a thing in over 20 years).

c) Some sentiment indicators are contradicting with Investor Intel at a top level now but Rydex and ISEE MA’s not confirming yet as they are rather neutral.

1. The BDI is an early indicator as it seems turned around in DEC and peaked in June – thats a 3 month lag for the stocks – hence another hint for the SEP top.

The Baltic Dry Index, not exactly a phrase that rolls off an investor’s tongue, is signaling plenty of caution these days about the global economy.

Elaine Thompson / AP

As a gauge of shipping activity along 20 of the world’s busiest routes, the BDI is a leading economic indicator used by market insiders to gauge demand for goods.

But while it remains a somewhat arcane measure, the recent sharp drop in the index has drawn increased attention, despite the dramatic rise in US equity markets and the accompanying hopes for economic recovery.

It’s been a rough summer for the index, which is not a measure of activity in the Baltics but rather an instrument that traces its name to 1744 and the Virginia and Baltick coffeehouse in London’s financial district. The index is weighted toward activity in the Pacific.

The BDI has tumbled about 43 percent since peaking on June 3. That followed a stunning upturn off a low of 663 on Dec. 5, 2008 to the June 3 high of 4,291.

2. The Obama admin against all this upbeat Goldman like Wallstreet bull market pushers have lowered their economic outlook as they have to win the mid term elections and are getting cautious on blowing out to rosy pictures. I saw Hatzius ( chief economist of Goldman) now the last 2 times on Bloomi TV with his upside revisions and although I am not an expert in reading people it was quite obvious to me that he was very uncomfy with what he said like people who are forced to lie and can not really deal with it.

Excerpt

Economy In Much Worse Shape Than Expected: White House

Published: Tuesday, 25 Aug 2009 | 11:22 AM ET

The US economy will shrink far more than expected this year and will rebound much more slowly than forecast after that, according to a bleak new assessment by the White House Budget Office.

The federal government also faces exploding deficits and mounting debt over the next decade, far worse than what the Obama administration had estimated just a few months ago.

The revised estimates project that the economy will contract by 2.8 percent this year, more than twice what the White House predicted earlier this year.

Obama economic adviser Christina Romer projected that the economy would expand in 2010, but by 2 percent instead of the 3.2 percent growth the White House predicted in May. By 2011, Romer estimated, the economy would be humming at 3.6 percent growth.

Figures released by the White House budget office foresee a cumulative $9 trillion deficit from 2010-2019, $2 trillion more than the administration estimated in May.

3. If the true test of the FED is the market they have failed big time M(o)r(on) Geithner as the market has lost big time the last 10 years – he is really a disgrace for this post as many Obama choices are. The FED is one of the major reasons for this crises and needs to be audited together with all dealings of the Treasury the last 3 years in a full fledged investigation.

Excerpt

Geithner: “Fed Audit Would Be Problematic For The Country”

Submitted by Tyler Durden on 08/25/2009 14:34 -0500

It is the esteemed Treasury Secretary’s opinion, that anything that has to do with demystifying why the Fed is hell bent on destroying the US dollar, killing the middle class, and allowing Lloyd Blankfein to purchase Larry Ellison’s yacht collection, is squarely in the “problematic for the country” camp. Never mind that more than half the country (in fact almost two-thirds) have indirectly voiced their support for HR 1207. But at least it is good to know where Geithner’s allegiances lie, and even better to see how good at totally perverting facts (not just taxes) the SecTres is.

And the punchline: “The true test of the Fed is the market.” Is there a way to give Mr. Geithner an economics test because it seems he might have graduated with a biz-econ degree from Devry.

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NDX – market update

The NDX is in the final stage of building this top and selling is highly recommended for longs – one can even start to build a short position slowly at these levels as some indicators besides the price action do give signals and one segment which is barely represented here is coming to a top as well the XBD and BKX are about to reach tops. The strong resistance line matches the 200 week MA which can be recognised as the invincible barrier for the next 2-3 months. A pullback to the 1350 -1400 zone is the least we should expect in Q4 but within Q1-Q2 next year new lows are the real deal one should trade for. The tricky part as stated before is that even bulls are waiting for a correction soon but with a very limited scope no one sees the lows being tested or even new ones. Tough times are unfortunately ahead as the basic problems have not been solved and the Obama admin has proven the can not handle it but that is also true for almost all governments.

Sentiment update – the top factor is improving but not ready yet

Excerpt
INVESTOR SENTIMENT READINGS

High bullish readings in the Consensus stock index or in the Market Vane stock index usually are signs of Market tops; low ones, market bottoms.

Last Week

2 Weeks Ago.

3 Weeks Ago

Consensus Index
	Consensus Bullish Sentiment	43%	49%	52%
Source: Consensus Inc., P.O. Box 520526,Independence, Mo.
Historical data available at (800) 383-1441. editor@consensus-inc.com
AAII Index
	Bullish	34.1%	51.0%	50.0%
	Bearish	40.0	33.0	35.2
	Neutral	25.9	16.0	14.8
Source: American Association of Individual Investors,
625 N. Michigan Ave., Chicago, Ill. 60611 (312) 280-0170.
Market Vane
	Bullish Consensus	47%	47%	48%
Source: Market Vane, P.O. Box 90490,
Pasadena, CA 91109 (626) 395-7436.
FC Market Sentiment
	Indicator	53.2%	53.6%	53.6%
Source: First Coverage 260 Franklin St., Suite 900
Boston, MA 02110-3112 (617) 303-0180. info@firstcoverage.com

FC Market Sentiment is a proprietary indicator derived from actionable sell-side trade ideas sent by the sell-side to their buy-side clients over the First Coverage platform. Over 1,000 institutional sales people at more than 250 firms participate on the First Coverage platform and have contributed hundreds of thousands of ideas since inception. Each Idea is associated with a ticker or sector and is tagged bullish or bearish by the creator. This data is aggregated at the sector, industry and market level. The FC Market Sentiment score ranges from 0-100 (0=most bearish, 50=neutral, and 100=most bullish) and represents a completely objective, real-time view into what advice the sell-side is providing to their buy-side clients

Citigroup Panic/Euphoria Model

Brainstorming Tuesday

1. Interesting FED day as a bit suprisingly for me Obama gave Bernanke an undeserved second term ( thats why he was in such a good mood). Well still better than Summers probably choosing between 2 evils. Same time a court ruled that the FED has to …

Excerpt zerohedge

Just out from Bloomberg:

Aug. 24 (Bloomberg) — The Federal Reserve must make public reports about recipients of emergency loans from U.S. taxpayers under programs created to address the financial crisis, a federal judge ruled.

This is in relation to a lawsuit filed by Bloomberg LP against the Federal Reserve on November 7, 2008, in Southern District of New York (08-09595), in which Bloomberg sought material loan and collateral data in relation to emergency loans released by the Fed, and which were previously claimed to be non-FOIAble.

This is a large blow against the Fed and specifically against organizations using FOIA loopholes from providing critical information, particularly in cases involving trillions of taxpayer dollars bailing out huge, systematically and politically embedded financial organizations (which lately is pretty much all of them).

The conclusion from the order just issued by District Judge Loretta Preska is as follows:

The Board’s Motion for Summary Judgment is DENIED, and Bloomberg’s Motion for Summary Judgment is GRANTED. Specifically:

1. The Board shall produce forwith the Remaining Term Reports within five business days of the date hereof;

2. The Board shall search forthwith records at the FRBNY that constitute “Records of the Board” within the meaning of 12 C.F.R. # 231.2(i)(1); and

3. The parties shall confer following their review of the results of the search and inform the Court by letter no later than September 14, 2009 how they propose to proceed.

2. Goldman’s insider ring gets investigated

Excerpt zerohedge

First the Fed, now Goldman Sachs. Hot off the presses:

Examiners at the Financial Regulatory Authority, the industry self-regulatory body known as Finra, and the Securities and Exchange Commission intend to ask Goldman for more information on these weekly get-togethers, people familiar with the matter said.

This of course is in relation to the article that the WSJ printed yesterday on advance research looks that Goldman was providing to its preferential clients.

The huddles currently aren’t disclosed in Goldman’s long-term research, although the firm Monday discussed adding disclosure on its client Web site about the service. Some other firms, such as Morgan Stanley, also give stock ideas to clients, but disclose the service in their longer-term research and on their Web site.

Securities laws require firms such as Goldman to engage in “fair dealing with customers” and prohibit analysts from issuing opinions that are at odds with their true beliefs about a stock. Research reports can often cause a stock to rise or fall.

Can someone please explain how FINRA and the SEC would actually chase the perpetrators of market injustice if it wasn’t for the occasional articles in the mainstream media and the blogosphere providing them with the blueprints from A to Z of exactly how the big, “entrenched” firms game the “efficient” markets day in and day out?

Last time we checked, the SEC’s 2009 budget was almost $1 billion. What the hell does this money go for aside for covering up massive market malfeasance and catching an occasional Ponzi after decades of ignoring incriminatory materials?

It is time to analyze whether the US public has any use for such worthless and expensive organizations as FINRA and the SEC, if at the end of the day the only way to fix a broken system is via a thousand “citizen’s” cuts and bypassing Schapiro’s utterly useless enterprise, whose only purpose is to serve as a springboard for cushy Wall Street General Counsel jobs.

3. Murdoch will loose plenty readers to say the least when he goes through with his plan to charge fee’s – since thr blogger world is anyway the better choice going forward but here a real good piece of mind and example

Excerpt from Larry Flynt’s post at Huffington Post – must read

The American government — which we once called our government — has been taken over by Wall Street, the mega-corporations and the super-rich. They are the ones who decide our fate. It is this group of powerful elites, the people President Franklin D. Roosevelt called “economic royalists,” who choose our elected officials — indeed, our very form of government. Both Democrats and Republicans dance to the tune of their corporate masters. In America, corporations do not control the government. In America, corporations are the government.

This was never more obvious than with the Wall Street bailout, whereby the very corporations that caused the collapse of our economy were rewarded with taxpayer dollars. So arrogant, so smug were they that, without a moment’s hesitation, they took our money — yours and mine — to pay their executives multimillion-dollar bonuses, something they continue doing to this very day. They have no shame. They don’t care what you and I think about them. Henry Kissinger refers to us as “useless eaters.”

But, you say, we have elected a candidate of change. To which I respond: Do these words of President Obama sound like change?

“A culture of irresponsibility took root, from Wall Street to Washington to Main Street.”
There it is. Right there. We are Main Street. We must, according to our president, share the blame. He went on to say: “And a regulatory regime basically crafted in the wake of a 20th-century economic crisis — the Great Depression — was overwhelmed by the speed, scope and sophistication of a 21st-century global economy.”

This is nonsense.

The reason Wall Street was able to game the system the way it did — knowing that they would become rich at the expense of the American people (oh, yes, they most certainly knew that) — was because the financial elite had bribed our legislators to roll back the protections enacted after the Stock Market Crash of 1929.

Congress gutted the Glass-Steagall Act, which separated commercial lending banks from investment banks, and passed the Commodity Futures Modernization Act, which allowed for self-regulation with no oversight. The Securities and Exchange Commission subsequently revised its rules to allow for even less oversight — and we’ve all seen how well that worked out. To date, no serious legislation has been offered by the Obama administration to correct these problems.

Instead, Obama wants to increase the oversight power of the Federal Reserve. Never mind that it already had significant oversight power before our most recent economic meltdown, yet failed to take action. Never mind that the Fed is not a government agency but a cartel of private bankers that cannot be held accountable by Washington. Whatever the Fed does with these supposed new oversight powers will be behind closed doors.

Obama’s failure to act sends one message loud and clear: He cannot stand up to the powerful Wall Street interests that supplied the bulk of his campaign money for the 2008 election. Nor, for that matter, can Congress, for much the same reason.

Consider what multibillionaire banker David Rockefeller wrote in his 2002 memoirs:

“Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure — one world, if you will. If that’s the charge, I stand guilty, and I am proud of it.”

Read Rockefeller’s words again. He actually admits to working against the “best interests of the United States.”
Need more? Here’s what Rockefeller said in 1994 at a U.N. dinner: “We are on the verge of a global transformation. All we need is the right major crisis, and the nations will accept the New World Order.” They’re gaming us. Our country has been stolen from us.

Journalist Matt Taibbi, writing in Rolling Stone, notes that esteemed economist John Kenneth Galbraith laid the 1929 crash at the feet of banking giant Goldman Sachs. Taibbi goes on to say that Goldman Sachs has been behind every other economic downturn as well, including the most recent one. As if that wasn’t enough, Goldman Sachs even had a hand in pushing gas prices up to $4 a gallon.

The problem with bankers is longstanding. Here’s what one of our Founding Fathers, Thomas Jefferson, had to say about them:

“If the American people ever allow private banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and the corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their father’s conquered.”

We all know that the first American Revolution officially began in 1776, with the Declaration of Independence. Less well known is that the single strongest motivating factor for revolution was the colonists’ attempt to free themselves from the Bank of England. But how many of you know about the second revolution, referred to by historians as Shays’ Rebellion? It took place in 1786-87, and once again the banks were the cause. This time they were putting the screws to America’s farmers.Daniel Shays was a farmer in western Massachusetts. Like many other farmers of the day, he was being driven into bankruptcy by the banks’ predatory lending practices. (Sound familiar?) Rallying other farmers to his side, Shays led his rebels in an attack on the courts and the local armory. The rebellion itself failed, but a message had been sent: The bankers (and the politicians who supported them) ultimately backed off. As Thomas Jefferson famously quipped in regard to the insurrection: “A little rebellion now and then is a good thing. The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.”

Perhaps it’s time to consider that option once again.

I’m calling for a national strike, one designed to close the country down for a day. The intent? Real campaign-finance reform and strong restrictions on lobbying. Because nothing will change until we take corporate money out of politics. Nothing will improve until our politicians are once again answerable to their constituents, not the rich and powerful.

Let’s set a date. No one goes to work. No one buys anything. And if that isn’t effective — if the politicians ignore us — we do it again. And again. And again.

The real war is not between the left and the right. It is between the average American and the ruling class. If we come together on this single issue, everything else will resolve itself. It’s time we took back our government from those who would make us their slaves.

Brainstorming Monday

1. Wonder why the Birinyi thesis did not work out in many other cases like 1930 to give the most significant sample or Japan had plenty rallies after 1990 – I rather say the rally from 2003 to 2007 was not based on reallity but that is not really important afterall as we see it purely from the perspective of an investor. What we need as we buy stocks at 1035 SPX is to have it go up to 1200 within 12 months and not falling more than back to 980 in the same period as a good investment should not carry more than a 1:3 ratio risk reward profile. Lets assume we really go up to 1200 for a moment I would bet any amount that in the same 12 months we alos see a pullback of 10 % from current levels plus as we reach 1200 no one will exit anyway. As no one in investor terms does exit tops ever even gurus like Buffett did not – he even went along and wrote big amounts of puts close to the highs. When you bought the highs of the year 2000 you need the SPX now to go up to 2440 to break even with someone who sold at 1500 SPX investing in a 5 % coupon 10 year bond (interest reinvested).

see video below for the thesis

http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/v37H4DYLPAzc.asf&vCat=/av&RND=972458452&A=

2. Read this good piece from zerohedge about Goldman’s special treatment for preferred clients

Excerpt

Zero Hedge has long been discussing the impact of selective informational disclosure, be it in the context of trading or research asymmetries, which promote a two-tiered market, where privileged accounts of major broker dealers receive “tips” ahead of “everyone else.” The quid’s pro quo is that these “privileged” few end up executing the bulk of their trades with the broker-dealer, thus ramping up riskless agency revenues. In essence the clients’ capital risk is mitigated, while the return to the “perpetrator” is augmented by collecting a disproportionate share of the bid/offer spread in the given security. Whether this tiering mechanism occurs via Flash orders, SLP provisioning, actionable IOIs, advance selective notice of a large flow order, a phone call, a limited Bloomberg blast, or an Instant Message, the ethics of the practice are undoubtedly shady, and potentially borderline criminal. But no one is the wiser, as both sender and receiver of information know to keep their mouth shut. Until today, when the WSJ blows one aspect of this practice out of the water, by focusing on Goldman’s selective informational disclosure to preferred clients, and is likely to create much more headache for Goldman’s PR department and its staunchest CNBC-based prosecutor-turned-supporter and soon to be Sellout author.

In a long-overdue article titled “Goldman’s Trading Tips Reward Its Biggest Clients” author Susanne Craig brings much of the firm’s dirty laundry to the front page. While a must read for anyone interested in how Goldman Sachs “cultivates” its key client relationships, the summary is as follows:

Goldman Sachs Group Inc. research analyst Marc Irizarry’s published rating on mutual-fund manager Janus Capital Group Inc. was a lackluster “neutral” in early April 2008. But at an internal meeting that month, the analyst told dozens of Goldman’s traders the stock was likely to head higher, company documents show.

The next day, research-department employees at Goldman called about 50 favored clients of the big securities firm with the same tip, including hedge-fund companies Citadel Investment Group and SAC Capital Advisors, the documents indicate. Readers of Mr. Irizarry’s research didn’t find out he was bullish until his written report was issued six days later, after Janus shares had jumped 5.8%.

This pretty much summarizes the “magical” performance that many hedge funds generated in Wall Street’s golden age: Goldman (and other firms, many of which however now are defunct) treated several clients preferentially, creating a “club” in any given name, running it up, then releasing what the club already knew to the broader investing public, as the club unloaded its positions to the witless majority. And this went on for many years, and in many aspects, still does.

Critics complain that Goldman’s distribution of the trading ideas only to its own traders and key clients hurts other customers who aren’t given the opportunity to trade on the information.

Securities laws require firms like Goldman to engage in “fair dealing with customers,” and prohibit analysts from issuing opinions that are at odds with their true beliefs about a stock. Steven Strongin, Goldman’s stock research chief, says no one gains an unfair advantage from its trading huddles, and that the short-term-trading ideas are not contrary to the longer-term stock forecasts in its written research.

Not contrary indeed, just useful, selective, tongue-in-cheek hints that provide a 10% front-running riskless arbitrage to those lucky enough to trade hundreds of millions of [stocks/bonds/CDS/options/fx/treasuries/munis] with the 85 Broad Financial Holding Company.

Ed Canaday, whom Zero Hedge respects very much for always proferring accurate and unspun information, is prompt in explaining this situation:

Goldman spokesman Edward Canaday says the tips are “market color” and “always consistent with the fundamental analysis” in published research reports. “Analysts are expected to discuss events that may have a near-term or short-term impact on a stock’s price,” he says, even if that is a different direction from an analyst’s overall forecast. Goldman’s published research reports include a disclosure that “salespeople, traders and other professionals” may take positions that are contrary to the opinions expressed in reports. But the firm doesn’t disclose the trading huddles.

Mr. Canaday says analysts are told that any comment at a meeting that could result in a change in a rating, earnings estimate or stock-price target “must be published and disseminated broadly to all clients.” He adds, however, that it is rare that tips arising from the meetings reach that threshold.

Rare, last time we checked, had a special judicial meaning, that was almost on par with never. But not quite. Mr. Canaday elaborates further:

The tips usually go to top clients who have expressed interest in having the information and have short-term investment horizons, he says. Goldman doesn’t want to overload other clients with information that isn’t relevant to them, he says. “We are not in the business of serving thousands of retail customers,” he says.

Indeed- the firm is purely in the business of making sure the several dozen multi-billion hedge funds it does serve make practically risk free returns by taking advantage of the gullibility of John Q. Public, who is not relevant enough to be addressed by Goldman’s massive trading floor, yet whose bail out is more than welcome when the firm’s stock price is in the mid $50’s, and about to hit $0.

So what does the law say about this:

“The spirit of the law is twofold,” says Eric Dinallo, who in 2003, when serving as a deputy to former New York Attorney General Eliot Spitzer, helped negotiate a $1.4 billion stock-research settlement with 10 major Wall Street firms, including Goldman. “Analysts should give consistent advice to all their customers, be they small investors or big trading clients.” Any views that differ from an analyst’s published rating but are “worth sharing with certain customers,” he says, should be made “available to everyone.”

Mr. Cuomo, we hope you read this (we know you are).

Yet, most entertaining, in this little transgression is the presence of who else than the Federal Reserve:

The research business is considered a loss leader at most firms, despite persistent attempts by Goldman and other securities giants to squeeze more revenue from it. Goldman was looking for a leg up on rivals when it started the trading huddles in 2007. That year, Goldman ranked ninth in Institutional Investor magazine’s annual list of the best equity analysts, as determined by a survey of big institutional investors. Goldman was rated eighth in last year’s competition.
The huddles began in earnest around the time Goldman’s research department got a new boss, Mr. Strongin. He came to the firm in 1994 from the Federal Reserve Bank of Chicago, where he had been director of monetary-policy research.

The great confluence of the two greatest things in the world, the Fed, and Chicago-style goal pursuit, sure got the job done:

Mr. Strongin, 51 years old, set out to improve Goldman’s research operations. The firm asked important clients for suggestions. One idea that took hold was giving certain customers and traders more access to stock tips.
The idea was controversial with some Goldman research staffers. “I am not sure we should be giving recommendations that go against our research,” said one Goldman employee at a meeting where the trading huddles were discussed, according to one attendee.

Institutional memory truly is short – certain customers getting privileged information a mere 4 years after the settlement: have we gotten your attention now Mr. Cuomo?

So just who are the proud nominees of Goldman’s insider club:

Documents reviewed by the Journal indicate that anywhere from six to 60 clients are contacted, depending on the investment. For example, clients specializing in financial stocks are given recommendations about that sector. Each call typically includes comments about the overall market and the kinds of investors Goldman believes are propelling it, and ends with a stock tip.

And lest someone think that Goldman’s ubiquitous prop trading group is somehow exempt from benefiting in this backdoor arrangement, read on:

The meeting where Mr. Irizarry suggested that Janus shares were worth buying, held on April 2, 2008, was attended by Goldman’s financial-research analysts and traders who handle customer orders. It also included another class of traders called “franchise risk managers,” who sit with and advise the traders handling customer orders — and make bets with Goldman’s money.
Typically, traders who wager firm capital are walled off from those handling customer orders so that they don’t take advantage of information about client trading, which securities regulations forbid. Goldman says its franchise risk managers don’t trade on client information and must first share trading-huddle tips with clients before acting on the tips themselves.

“Typically”, just like “rare”, are two of legal counsel’s favorite expressions. But at least we have Goldman’s affirmations that everything at the big firms runs according to regulations. After all, in numerous prior transgressions that company has “neither admitted nor denied guilt” – why should this change now?

And as for the regulators: it is good to know that at least they are on top of this scheme.

Last year, the Financial Industry Regulatory Authority, the industry’s self-regulatory body, proposed new rules meant to clarify existing disclosure obligations under the rule requiring “fair dealing” with all clients. Firms could issue contradictory ratings as long as clients were told that such inconsistencies were possible.

A Finra spokesman said the agency still is reviewing comment letters filed in response to the proposal. Goldman hasn’t commented on the proposed rules.

SPX red alert- investors should head for exits

target zone 1030-50The SPX has (almost) reached the – time to sell substantial portions the next days. One only needs to be very discriminating as some sectors will still have some scope as oil related stocks might still do better we have not reached my target of 78/80 yet.Ironically also some financials have some margin left but with a far bigger risk. But that are not trades for investors – the tricky part will be that we are not really ready for a big retreat yet as some of my indicators are not at the levels they need to be and quite some people looking for a correction (even bulls) makes it tougher not to run into the trap that this manipulation pool wants to create. They will let the market retreat a bit and lift it back up so we should see a kind of double top around 1035/50 over the next 3 weeks and we will see an intermarket divergence as the NDX will have the top earlier as China had.

Brainstorming Friday

1. The 1000  SPX blow off with the New Moon goes as expected and a close above the 1018/20 will trigger follow through fools rush in action – not talking about traders but people who think they get much higher prices going forward. I am afraid if you have a gift you might squeeze out some if you catch the right sectors as we will have hefty sector rotation. But its going to be a painful trip as we already at Tuesday / Wednesday may start a volatile correction for the rest of the week. The days towards month end and Labour day will be to the upside again but starting the 8th Sep people will be very nervous for any setback as many are looking for a correction. Volatility will rise in any case and a nerve wrecking trading time will frustrate bulls and bears for the most of Sep.

2. Existing Home Sales rose due to deep discounts and the pressure of the final weeks of the first buyer perks from the government – this is a one time special effect creating this effect and has nothing to do with sustainable economic activity. After Nov we can expect existing home sales to retreat again as the subsidies will be off.

Excerpt
Sales of previously owned U.S. homes in July notched their fastest pace in nearly two years, an industry survey showed Friday, the strongest sign yet that housing was pulling out of a three-year slump.

The National Association of Realtors said that sales jumped 7.2 percent to an annual rate of 5.24 million units, the highest since August 2007, beating market expectations for a 5 million unit pace.

…

The median sales price was $178,400, down 15 percent from $210,100 in the same month last year.

3. Finally Prof. Stiglitz came out with the goal as he urged to create a reserve currency which is the agenda of the Bilderberger as the groundwork to create a global central bank – all milestones of the New World Order. It appears as Talebi said recently noone with a tie and a suit can be trusted. I do not see any benefits of an artificial currency which can be even more manipulated as their is no natural demand and flow.

4. Bernanke upbeat about the recovery of the global economies, trying to tout his own horn – Summers will take over as Obama could have announced his renewed term long ago. Besides none of his economic calls have turned out to be right as his P/L is as poor as it gets as a depression’ specialist’. Summers will not be any better though but he can use the old trick to blame all on Bernanke once he takes over but lets remember he is a close protege of Rockefeller and does not work for Mainstreet hence no improvement can be xpected rather a more evil brain will run the FED then.

5. Most important criteria to be hired for Bloomi TV seems to be stupidity beyond bearable levels – they should offer Bush a job as anchorman – he would fit right in – Clinton might love to join him as he could chase all the young pretty chicks. They are reporting all day that one off the biggest criminals of this century D. Fuld sold his appartment for 26 mil. – still believe he belongs in one cell with Madoff.

6. Lipsky one of the opportunistic puppets of the IMF called chief economist just said that they might even inrease the positive outlook after it turned out as theey anticipated – you guys must be kidding – 6 months back they were screaming depression. This experience gets very obvious in extreme times as the magnitude of error is so shameful of this so called acedemics – I am not really sure how they ever got the myth of being superior to anything since any dart throwing monkey beats a regular CFA,MBA,Ph.D money manager from any ivy school.

Brainstorming Thursday

1. The new CEO ( Benmosche) of AIG seems to be even a bigger moron than all the others – his first action on the job is to fly out on a vacation but even worse he says from that place in Macedonia that AIG will repay the government funds – is this guy just another Goldman pupett or brain dead to make such a false claims.

2. New Moon effect at work markets rising on fake statistics and claims but the idea seems to be pretty much 1000 expiration settlement.

3. Barron’s since Murduch took over has been in a degeneration or quality crash the called GM around 10 a buy and declared a few weeks ago EK would go to zero just to give 2 examples of their plenty horror calls.

4. The real metric to see where we are is the housing situation since the crisis was triggered and caused by the insane bets nade in this field as the banks did not take the marks as required they sit on ever imploding assets and FDIC is already out of money – more trouble ahead.

Delinquencies shooting through the roof now with even increasingly prime borrowers they do not include foreclosures they come on top.

Excerpt

The delinquency rate breaks the record set last quarter. The records are based on MBA data dating back to 1972. The delinquency rate includes loans that are at least one payment past due but does not include loans somewhere in the process of foreclosure.

The percentage of loans in the foreclosure process at the end of the second quarter was 4.30 percent, an increase of 45 basis points from 3.85 percent the first quarter of 2009 and 155 basis points from 2.75 percent one year ago.

SPX – market update

The screwing around the 1000 comes to an end as today’s New Moon in Leo opposite Neptun ( faking people) should start the blow above 1000 right after expiration. The only thing troubling me is too many people are looking for a correction in Sep which is always a bad omen. Therefor I tend to think that for the big expiration in Sep we will see another screwing – we will get definitely more volatility as the Index should oscillate in a 10% range at least but even 20% is possible but be followed by a sharp upswing confirming the ‘uptrend’ charade. Expect a drop to 930 from 1030-50 in the late Sep another upside attempt followed by a second downwave in Oct to 830. That would still be considered a healthy correction from the bullish crowd – now everything will depend on the fact if the Obama admin pulls the last joker a second stimulus package to save the year for Wallstreet since they need a plus year – although they could make a killing by trading the yield curve as a sinking stock market would bring in big profits with zero financing – driving bonds higher.Problem they would not have the moral grounds to pay themselves big bonuses with a weak stock market as the public would be upset. The only way they could achieve that would be by bringing the SPX to 1000 at year end and Obama wants to be able to drew a 1 year bottom line picture on the hero side as well so he will support a short lived illusion.

Wednesday brainstorming – Berlusconi special

0. Sony came up with quite a coup as they not only lowered the price more than most asked for but came up with a big improvement on the console itself at 299$ it will be one of the top selling items for Christmas – will have a look of the charts to see how much potential/scope is left.

1. Bloombergs very manipulative and false reports as they claim China has entered a bear market in August – fact is the whole world is still in a major bear market within an economic depression cycle. The fact that mass media and politicians try to deny that does not change the reality. All other markets will follow Chişna’s move shortly as the stocks are completely overpriced. Goldman just 4 months ago insisted earning for 2010 SPX would be around 42 $ around the lows now at the highs they come up with 70$ – that speaks volumes with me commenting it. Never forget Bloomberg total income resource are banks who need bull markets to make money hence Bloomberg will always participate naturally in a very manipulative upside scam.

Excerpt
China Stock Index Plunges, Briefly Enters Bear Market

Aug. 19 (Bloomberg) — China’s stocks fell, briefly driving the benchmark index into a so-called bear market, on concern tighter lending will damp economic growth.

The Shanghai Composite Index lost 4.3 percent to 2,785.58, as China Shenhua Energy Co., the nation’s largest coal producer, sank 6.8 percent, the most since Feb. 18, and Citic Securities Co., the biggest brokerage, sank 7.8 percent.

The gauge has slumped 19.8 percent since this year’s high on Aug. 4, after more than doubling from November’s low as China rolled out a 4 trillion yuan ($585 billion) stimulus package. A plunge in new bank loans in July, disappointing earnings and concern the government will seek to damp property market speculation has sapped confidence.

2. Interesting is that Berlusconi is suddenly in the center of sex scandals – not because he is a decent man as his bias for the ladies is obvious and I have no doubt he participated or organized wild parties – if you ever have seen the movie ‘Eyes wild shut’ – that were not fantasies but pure reality of the escapades the elite is having. Those kind of things never changed through history- ancient Egyptians did is as the Romans and slavery is a common practice again where Manhattan is full of imported child slaves working for families as ’servants’. Degeneration and perversion of societies signal the end of those and are very common in those stages. Even Obama could not help to look after a juicy young lady at the Italian Summit. Coming back to the Berlusconi situation I think that he is having powerful people playing him into the foul zone as he always has done what he does know but that it is pulled out to the open means he must have fallen to disgrace within their ranks. After Berlusconi graduated University a bank gave him a big credit to start a real estate company right away. The bank which did that was famous for being the Mafias hub and his father was a director at this bank. He was never a real businessman just the camouflage puppet to develop legal ‘Mafia’ business. Interesting is that his biggest official enemy in mass media is the ‘Economist’ – fully owned by Rothschild’s as we have here to competing forces – one is the Jewish bank and oil gang Rothschild,Rockefeller and their opponent the Vatican right wing gang – who are 2 of a handful powerful secret rulers of this planet now for a few hundred years. Interestingly communism was invented by this Jewish Banker families to destabilize the old rulers in kingdoms power and they were quite successful in that operation over centuries. The current attack on Berlusconi could be an attempt to weaken the right wing competitors influence over Italy which is their home turf.

Excerpt

Clear record up to now

Silvio Berlusconi has an extensive record of criminal allegations, including mafia collusion, false accounting, tax fraud, corruption and bribery of police officers and judges. Berlusconi has been tried in Italian courts in several cases. In three of them accusations were dropped by the judiciary because of the laws passed by Berlusconi’s parliamentary majority shortening the time limit for prosecution of various offences and making false accounting illegal only if there is a specific damaged party reporting the fact to the authorities.^[78][79] In all of them, but one, he was acquitted, either by a court of first instance or on appeal, or when proceedings came to a halt because the statute of limitations had expired. Therefore he has a clear record up to now. Berlusconi claimed that “this is a manifest judicial persecution, against which I am proud to resist, and the fact that my resistance and sacrifice will give the Italians a more fair and efficient judicial system makes me even more proud”,^[80] and added that “789 prosecutors and magistrates took an interest in the politician Berlusconi from 1994 to 2006 with the aim of subverting the votes of the Italian people” reeling off statistics that he said have constituted a “calvary including 577 visits by police, 2,500 court hearings and 174 million euros in lawyers’ bills paid by me”.^[81][82][83] Berlusconi has always been able to afford top lawyers, for example Nicolas Sarkozy was one of his french top advocates.^[84][85][86] Some of his former prosecutors are members of the parliamentary opposition. Some of his attorneys are also members of parliament.

Main article: Trials involving Silvio Berlusconi

Delaying tactics

The Italian legal system allows the statute of limitations to continue to run during the course of the trial. Consequently, the delaying tactics adopted by Berlusconi’s attorneys (including repeated motions for change of venue) have served to nullify pending charges on many occasions. Some of Berlusconi’s close collaborators, friends and firm managers have been found guilty of related crimes, notably his brother, Paolo, who in 2001 agreed to pay 100,000,000 Italian Liras (52,000 Euros) as a plea bargain for various charges including corruption.

False testimony regarding membership of the “Propaganda 2″ (P2) masonic lodge

Receipt for membership of Silvio Berlusconi to “Propaganda 2” (P2) masonic lodge

In 1981, a scandal arose after the police discovery of Licio Gelli’s secret freemasonry lodge Propaganda 2 (P2), which aimed to change the Italian political system to a more authoritarian regime to oppose communism. The list of people involved in P2 included members of the secret services and some prominent characters from political arena, business, military and media. Silvio Berlusconi, who was then just starting to gain popularity as the founder and owner of “Canale 5” TV channel, was listed as a member of P2.^[87][88] The P2 lodge was dissolved by the Italian Parliament in December 1981 and a law was passed declaring similar organizations illegal, but no specific crimes were alleged against individual members of the P2 lodge.^{[citation needed]}.

Berlusconi later (in 1989) sued three journalists for libel for writing articles hinting at his involvement in financial crimes. In court, he declared that he had joined the P2 lodge “only for a very short time before the scandal broke” and “he had not even paid the entry fee”. Such statements conflicted with the findings of the parliamentary inquiry commission appointed to investigate the lodge’s activity, with material evidence, and even with previous testimony of Berlusconi, all of which proved that he had actually been a member of P2 since 1978 and had indeed paid 100,000 Italian liras (52 Euros) as an entry fee. In 1990 the court of appeal of Venice found Berlusconi guilty of false testimony in front of the Court of Verona, however the court did not proceed to sentence because the wrongdoing had been extinguished by an amnesty passed in 1989.^[89]

Some political commentators claim that Berlusconi’s electoral programme followed the P2 plan.^[90]

“Jowellgate”/David Mills bribery case

The link between him and the difficulties of British Culture Secretary, Tessa Jowell, has attracted less media attention in Italy than in the United Kingdom, where the media has sensed a whiff of something scandalous (or at least hypocritical and embarrassing) for the government. David Mills, lawyer husband of the British cabinet minister in the Blair government, had acted for Berlusconi in the early 1990s and has been accused by Italian prosecutors of money laundering and of accepting a gift from Berlusconi in return for friendly evidence given as a prosecution witness against Berlusconi. However, Mills has asserted that the money in question did not come from Berlusconi but from another client. No formal indictment has yet been issued but on 10 March 2006 it was reported that prosecuting magistrates in Italy had submitted evidence to a judge, seeking an indictment for bribery against Berlusconi and Mills²⁷: all parties vehemently deny wrong-doing and Berlusconi commented that the timing showed that the prosecution is political. Berlusconi denied meeting Mills. The British media have not yet unearthed anything to warrant Jowell’s resignation or which proves the guilt of Mills, Berlusconi or their intermediaries. Mills separated from his wife around this time. On 17 February 2009, Mills was found guilty of accepting a bribe of about 400,000 Sterling Pounds, allegedly from Silvio Berlusconi. Mills was sentenced to four-and-a-half years in prison. Appeal still pending. [14]

Main article: Tessa Jowell financial allegations

Controversies

The debate about motives

According to journalists Marco Travaglio and Enzo Biagi, Berlusconi entered politics to save his companies from bankruptcy and himself from convictions.^[91] From the very beginning he said it clearly to his associates. Berlusconi’s supporters hailed him as the “new man“, an outsider who was going to bring a new efficiency to the public bureaucracy and reform the state from top to bottom.

While investigating these matters, three journalists noted the following facts:

• Mediobanca’s annual report about the 10 biggest Italian companies showed that, in 1992, Berlusconi’s media and finance group Fininvest had about 7,140 billion lire of debts, 8,193 billion lire of assets (with 35% of liquidity) and a net worth (that is, assets minus debts) of 1,053 billion lire. The asset-debt ratio represented a patrimonial situation bordering on bankruptcy.^{[citation needed]}
• Between 1992 and 1993, Fininvest was investigated several times by prosecutors in Milan, Turin and Rome. The investigations regarded: alleged bribes (to political parties and public officials with the aim of getting contracts), alleged fake invoicing by Publitalia, the financing of political congresses and abuse of television frequencies.
• On the other hand Dr. Bruno Vespa notest that “In January 1994, Silvio Berlusconi was under no proceedings. Two members of the staff from the Ministry of the Finances were charged to be corrupted for a minor episode by a Fininvest manager, but the accusation would have later fallen. Aldo Brancher, who was working with Fininvest at the time, was charged for having financed some stands at the “Feste dell’Unità” and “L’Avanti!”, and he would have been declared fully not guilty only in 2004. Paolo Berlusconi [Silvio Berlusconi's brother] was instead arrested [...] after the Cavaliere went into politics.” After having decided to enter the political arena, Berlusconi was investigated for forty different inquests in less than two years. ^[92]

Bettino Craxi

Berlusconi’s career as an entrepreneur is also often questioned by his detractors. The allegations made against him generally include suspicions about the extremely fast increase of his activity as a construction entrepreneur in years 1961-63, hinting at the possibility that in those years he received money from unknown and possibly illegal sources. These accusations are regarded by Berlusconi and his supporters as empty slander, trying to undermine Berlusconi’s reputation of a self-made man. Frequently cited by opponents are also events dating to the 1980s, including supposed “favour exchanges” between Berlusconi and Bettino Craxi, the former Socialist prime minister and leader of the Italian Socialist Party indicted in 1992-94 for various corruption charges. Berlusconi acknowledges a personal friendship with Craxi.

On some occasions, which raised a strong upheaval in the Italian political opposition, laws passed by the Berlusconi administration have effectively delayed ongoing trials on him. Relevant examples are the law reducing punishment for all cases of false accounting and the law on legitimate suspicion, which allowed defendants to request their cases to be moved to another court if they believe that the local judges are biased against them. ^7,8 Because of these legislative actions, political opponents accuse Berlusconi of passing these laws on the purpose of protecting himself from legal charges; Berlusconi and his allies, on the other hand, maintain that such laws are consistent with everyone’s right to a rapid and just trial, and with the principle of presumption of innocence (garantismo); furthermore, they claim that Berlusconi is being subjected to a political “witch hunt”, orchestrated by certain (allegedly left-wing) judges ¹¹.

For such reasons, Berlusconi and his government have an ongoing quarrel with the Italian judiciary, which reached its peak in 2003 when Berlusconi commented to a foreign journalist that judges are “mentally disturbed” and “anthropologically different from the rest of the human race”, remarks that he later claimed he meant to be directed to specific judges only, and of a humorous nature¹². More seriously, the Berlusconi administration has long been planning a judiciary reform intended to limit the flexibility currently enjoyed by judges and magistrates in their decision-making, but which, according to its critics, will instead limit the magistrature’s independence, by de facto subjecting the judiciary to the executive’s control. This reform has met almost unanimous dissent from the Italian judges ^13,14 and, after three years of debate and struggle, was passed by the Italian parliament in December 2004, but was immediately vetoed by the Italian President, Carlo Azeglio Ciampi ¹⁵, who said some of the passed laws were “clearly unconstitutional”.

Berlusconi has also been indicted in Spain for charges of tax fraud and violation of anti-trust laws regarding the private TV network Telecinco, but his status as a member of the European Parliament allowed him to gain immunity from prosecution until 2005.¹⁶ All the accused have been acquitted by the Spanish “Corte de Casacion” in July 2008.^[93][94]

Alleged links to the Mafia

Silvio Berlusconi has never been tried on charges relating to the Mafia, although several Mafia turncoats have stated that Berlusconi had connections with the Sicilian criminal association. The claims arise mostly from the hiring of Vittorio Mangano, charged for Mafia association, as a gardener and stable-man at Berlusconi’s Villa San Martino in Arcore, a small town near Milan. It was Berlusconi’s friend Marcello Dell’Utri (convicted of extortion in association with Cosa Nostra in 2004) who introduced Mangano to Berlusconi in 1973. ^[95][96] Berlusconi denied any ties to the Mafia. Marcello Dell’Utri even stated that the Mafia did not exist at all.

Heated debate on this issue emerged again in 2004 when Dell’Utri, the manager of Berlusconi’s publishing company Publitalia ‘80 and a Forza Italia senator was sentenced to nine years by a Palermo court on charge of “external association to the Mafia”,^[96][97] a sentence describing Dell’Utri as a mediator between the economical interests of Berlusconi and members of the criminal organization. Berlusconi refused to comment on the sentence.

In 1996, a Mafia informer, Salvatore Cancemi, declared that Berlusconi and Dell’Utri were in direct contact with Salvatore Riina, head of the Sicilian Mafia in the 1980s and 90s. Cancemi disclosed that Fininvest, through Marcello Dell’Utri and mafioso Vittorio Mangano, had paid Cosa Nostra 200 million lire (100 000 euro) annually. The alleged contacts, according to Cancemi, were to lead to legislation favourable to Cosa Nostra, in particular the harsh 41-bis prison regime. The underlying premise was that Cosa Nostra would support Berlusconi’s Forza Italia party in return for political favours. ^[98] After a two-year investigation, magistrates closed the inquiry without charges. They did not find evidence to corroborate Cancemi’s allegations. Similarly, a two-year investigation, also launched on evidence from Cancemi, into Berlusconi’s alleged association with the Mafia was closed in 1996.^[95]

According to yet another mafia turncoat, Antonino Giuffrè – arrested on 16 April 2002 – the Mafia turned to Berlusconi’s Forza Italia party to look after the Mafia’s interests, after the decline in the early 1990s of the ruling party Christian Democracy, whose leaders in Sicily looked after the Mafia’s interests in Rome. The Mafia’s fall out with the Christian Democrats became clear when Salvo Lima was killed in March 1992. “The Lima murder marked the end of an era,” Giuffrè told the court. “A new era opened with a new political force on the horizon which provided the guarantees that the Christian Democrats were no longer able to deliver. To be clear, that party was Forza Italia.” ^[99] Dell’Utri was the go-between on a range of legislative efforts to ease pressure on mafiosi in exchange for electoral support, according to Giuffrè. “Dell’Utri was very close to Cosa Nostra and a very good contact point for Berlusconi,” he said.^[100] Mafia boss Bernardo Provenzano told Giuffrè that they “were in good hands” with Dell’Utri, who was a “serious and trustworthy person”. Provenzano stated that the Mafia’s judicial problems would be resolved within 10 years after 1992, thanks to the undertakings given by Forza Italia.^[96][99] Giuffrè said that Berlusconi himself used to be in touch with Stefano Bontade, a top Mafia boss, in the mid 1970s. At the time Berlusconi still was just a wealthy real estate developer and started his private television empire. Bontade visited Berlusconi’s villa in Arcore through his contact Vittorio Mangano.^[101] Berlusconi’s lawyer dismissed Giuffrè’s testimony as “false” and an attempt to discredit the Prime Minister and his party. Giuffrè said that other Mafia representatives who were in contact with Berlusconi included the Palermo Mafia bosses Filippo Graviano and Giuseppe Graviano.^[102] The Graviano brothers allegedly treated directly with Berlusconi through the business-man Gianni Letta, somewhere between September/October 1993. The alleged pact with the Mafia fell apart in 2002. Cosa Nostra had achieved nothing.^[103]

Dell’Utri’s lawyer, Enrico Trantino, dismissed Giuffrè’s allegations as an “anthology of hearsay”. He said Giuffrè had perpetuated the trend that every new turncoat would attack Dell’Utri and the former Christian Democrat prime minister Giulio Andreotti in order to earn money and judicial privileges.^[101]

The Economist

One of Berlusconi’s strongest critics in the media outside Italy is the British weekly The Economist (nicknamed by Berlusconi “The Ecommunist”), which in its issue of the 26 April 2001 carried a title on its front cover, ‘Why Silvio Berlusconi is unfit to lead Italy’.^[104] The war of words between Berlusconi and The Economist has gained notoriety, with Berlusconi taking the publication to court in Rome and The Economist publishing letters against him.^[105] The newspaper claimed that the documentation contained in its article proves that Berlusconi is ‘unfit’ for office^[106] because of his numerous conflicts of interest. Berlusconi claimed the article contained “a series of old accusations” that was an “insult to truth and intelligence”.

According to The Economist‘s findings, Berlusconi, while Prime Minister of Italy, retained effective control of 90% of all national television broadcasting. This figure included stations he owns directly as well as those over which he had indirect control by dint of his position as Prime Minister and his ability to influence the choice of the management bodies of these stations. The Economist has also claimed that the Italian Prime Minister is corrupted and self-serving. A key journalist for The Economist, David Lane, has set out many of these charges in his book Berlusconi’s Shadow.^[107]

Lane points out that Berlusconi has not defended himself in court against the main charges, but has relied upon political and legal manipulations, most notably by changing the statute of limitation to prevent charges being completed in the first place. In order to publicly prove the truth of the documented accusations contained in their articles, the newspaper has publicly challenged Berlusconi to sue The Economist for libel. Berlusconi did so^[108], losing versus The Economist, and being charged for all the trial costs on 5 September 2008, when the Court in Milan issued a judgment rejecting all Mr Berlusconi’s claims and sentenced him to compensate for legal expenses.

Tuesday brinstorming

1. Somebody has to fire some Bloomberg Barbie’s for false presentation or how perverse can statistics be put, brings things into wrong perspective. One of this ladies just said the biggest rally in 7 decades we are seeing right now – that is pretty much a typical way of screwing facts as they call anything that moves a drop or rally not to mention a fart some one makes is called a breaking news these days.
Journalism has been reduced to noise and propaganda – I saw ‘Good night and good luck’ a movie based on facts by G. Clooney this weekend – highly recommended. Its true they screwed whatever was left from Journalism to pure propaganda or distraction channels.

2 Another strange things which I noticed was the dramatic change of the ISEE put call statistics as on Friday close we had a ratio of 224 ( on 100 puts 224 calls were bought) this data which I copied into my post was changed to 122 yesterday – would like to know who screwed what here as that are dramatic numbers and or changes.

3. Yesterdays little sell off was exactly on the T-square of Mars to Uranus/Saturn which was a small taste of the things to come but as I stated earlier this will be just a little trap to screw around the bears and we are in expiration week. Nevertheless it showed that bulls are reluctant but also not able to keep up the chase for no little disturbance. Generally my hunch that Bloomberg works for Goldman gets stronger.

watch this Prechter clip he is catching the basic idea quite well of the things to come

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A similar tech view

Almost nothing I can add to this analysis except I do not agree on the NDX as I still think we will get an intermarket divergence which is a classic for big tops and troughs

Excerpt

August 14 2009 CNBC SQUAWKBOX EUROPE

LET’S LOOK AT THE S&P 500 INDEX DAILY CHART

We have been using the price zone of 1008 to 1053 as the price objective for this trend. The index has just butted up against that price zone. The best “time” for a high is August 22^nd then September 9^th both +- a day. The early September date is much more powerful. This consolidation has been tight or the range has been small indicating support at a high level. So another thrust up is possible.

Consensus or the number of bulls and bears has hit a level that indicates caution towards this trend. In fact consensus has hit a level that would turn the index down had it been in a bear trend. But since the index is not in a bear trend it can move higher against those readings. The early September date appears the stronger of the two. Remember this is a 5 year bear cycle and the low for that cycle will be the first week in January 2013 and will look very similar to the decade of the 1930s as shown on Squawk Box two weeks ago.

NOW LET’S LOOK AT THE NASDAQ

Last week I showed the amazing similarity to this index and the Dow from 1929 to 1942. Using that road map the price targets are 2150 to 2250. This index is still a distance from that objective while the S&P is just into the lower level of that zone. Either my calculations are wrong or there will be one last bit of speculation to drive the NASDAQ higher.

THE NEXT CHART IS THE DOLLAR INDEX

The dollar index is showing something unusual. You can see the first two legs down were vertical. This leg is currently struggling down with little downside momentum. There is a clear 5 wave structure down which can indicate a completed movement. Consensus in the dollar is at extremes with everyone bearish. Although consensus in currencies is not as reliable as stock indexes as extreme reading can go on for quite some time. The point I am trying to make is the form of this last leg down could be setting up as a significant low. Please understand there is nothing yet to confirm that scenario but we all need to keep an eye on currencies this next month or two.

Brainstorming Friday

1. Still wondering what happened to this 140 bil in treasuries found with 2 Japanese at the Italian border a few weeks back – that story was buried right the next day and never heard anything about it

2. Crazy things are going on ISEE options ratio (thats the netted one unlike CBOE just new buys are counted on the call and put side) around 250 usually that marks a high but it can be for a few days. That was also the number at the 666 low against all odds heavy call buyers (Goldman, JPM – just my guess) but we are not done yet. As I said earlier they will screw with the bears around 1000 SPX.

3. Economic data starts to deteriorate slowly ( even the fake numbers) again – cash for clunkers and the first buyer program producing a ‘fume’ of activity but that kills coming purchases do not create real new demand. Only this are tax sponsored hence people act on the illusion they get a benefit but that will not raise the consumption overall.

4. We really need an invasion from Mars to get change it seems – and people do not learn -
exact the same bullshit Japan did once again by the governments around the world. The Arabs and Chinese can not save the world with their sovereign funds as they rather do act not really smart – Qatar’s purchase of VW is again a clear overpriced transaction.

Actually this is a comment I got today – its really funny

A bit of hmour with an touch of …

Goldman Sachs in Talks to Acquire Treasury Department – Borowitz Report

Sister Entities to Share Employees, Money

In what some on Wall Street are calling the biggest blockbuster deal in the history of the financial sector, Goldman Sachs confirmed today that it was in talks to acquire the U.S. Department of the Treasury.

According to Goldman spokesperson Jonathan Hestron, the merger between Goldman and the Treasury Department is “a good fit” because “they’re in the business of printing money and so are we.”

The Goldman spokesman said that the merger would create efficiencies for both entities: “We already have so many employees and so much money flowing back and forth, this would just streamline things.”

Mr. Hestron said the only challenge facing Goldman in completing the merger “is trying to figure out which parts of the Treasury Dept. we don’t already own.”

Goldman recently celebrated record earnings by roasting a suckling pig over a bonfire of hundred-dollar bills.

Elsewhere, conspiracy theorists celebrated the 40th anniversary of NASA faking the moon landing.

And in South Carolina, Gov. Mark Sanford gave his wife a new diamond ring, while his wife gave him an electronic ankle bracelet.

DOW red alert for the longs

The DOW has reached the target zone but has small potential left up to 9750. We should see him above 9500 next 1-3 weeks but thats a selling level which should be used to lighten up dramatically on stocks. We are at least up for a drop back to 8000 but I suspect it might even be more but that we can only determine closer early November. We had some noise about a pullback or correction but as it will not appear that fast people might get more nervous to rush in. I do believe though that the big expitration in Sep for options will be used to frustrate the bears so it can be rather tricky in Sep as many are looking for some sort of pullback. I suspect we will get some wild swings in Sep but the real downside action comes at a later stage. As today for example we have quite some put activity with some guys hedging for that event. In any case sell above or around 9500 DOW!

Brainstorming Thursday

1. Statistics are purely a bullsh.. ( interesting how close bullish and bullshiting can be) game these days – as Europe joined the liars game with the introduction of the Euro inflation numbers were suddenly much lower and as inflation is being brought down the growth rate is bogus as well since it is literally inflated. The surprise growth quarter of Germany is fine tuned by the interest of a government which wants to win elections and as we had in one former quarter last year the same tricks at work massive government spending creates the illusion of growth which was created by many one time events which will take away either later purchases like in cars or the government spending will vanish after the election. Plus this quarters growth is measured against last quarters deep slump which makes it very relative anyway.

Excerpt

Gross domestic product rose a seasonally adjusted 0.3 percent from the first quarter, Germany’s Federal Statistics Office in Wiesbaden said today. The French economy also expanded 0.3 percent, Finance Minister Christine Lagarde said. Economists predicted contractions of 0.3 percent in Germany and a 0.2 percent in France, Bloomberg News surveys showed. The euro climbed half a cent to $1.4262.

2. Elizabeth Warren said in an testimony and more explicit in an interview what everybody ignores although everybody knows. The toxic assets have not been removed and are booked in the balance cheats on fairy tail levels. Anybody claiming that Bernanke or Geithner doing a good job is a paid liar or brain dead. The bottom line is the real problems are not solved like in Japan 20 years ago and will lead to the same consequences a systematic decline of US wealth as taxpayers will have to throw more trillions at this banks while they still sack in their billions of bonus ( rob ) payments. This Obama admin is even worse than the former as they can not say they did not know but after all they are the same bunch of corrupt thieves as most politicians are these days around the world. Problem is rather that people do not kick their ass and instead people with an obscure reputation can sit as chairman’s in those finance committee’s and help Wallstreet to steal even more money. Check the video out at zerohedge

Excerpt

http://www.zerohedge.com/article/elizabeth-warren-we-have-real-problem-coming

Elizabeth Warren, head of the Congressional Oversight Panel, which yesterday released quite a sobering report on the true state of the banking industry, explains what is really going on with the increasingly irrelevant balance sheets of the bailout banks (all of them). Once again underscores what a farce the stress test was, the complicity of the accountants in making the transparency initiative a sham, and why the banks are still as underwater as they ever were.

3. I just heard on Bloomi that Asia is reluctantly bullish and they pray for lower prices to get a chance to get into this market – well they will get lower prices soon lets see how they like the tasty of dropping knives. Sometimes I think I am in the twilight zone but on the other hand the euphoria expressed now in many instances and cases around the world confirms my basic assumption that we will see new lows.

SPX outlook

The SPX screwing around the 1000 level and I hear the SPX the worst month Sep. story now on an hourly basis makes it even more tricky. Though people are convinced only an overdue correction is up not a retest of the lows – well within the next 6-9 months we will see even new lows is my call made 9 months ago but I also took the liberty to call this rally up to 1000 in March. The point is as Mr Steinhardt remembered me yesterday the big picture remains the same. As also Astrology suggested we had the fake hope phase for a few months and the market was extremely oversold in March hence this is just the normal reflex sucker rally. What you can see by many means as the fundamentals are the worst in 60 years at least and we trade at 20 times trailing PE and made a bottom at 13 times? The most essential fundamentals are still deteriorating like the houseprices and related negative mortgage complex implications. All what the governments did so far is pretty much the same Japan made 20 years ago and that’s what the market does as well. Now 20 years later we are around 10000 Nikkei matching SPX value is 3700 which is a value we will see overtime as the real deleveraging has to start and the cleansing of the system. We still have the same rotten banking system and the FED is throwing free money at them keeping the bubble alive but the systematic problems in the banks have not be resolved. same is true for all western societies to much debt which never can be repaid and we are getting closer to the Baby Boomer implosion point. Fact is that the systems are bankrupt and a big systematic crisis is needed to bring the inevitable changes. Debt is not the solution but the way to be enslaved to a point there it has to break one or the other way. The FED and other central banks bought some time and acted for Wallstreet claiming to handle the affair of Mainstreet but the economy is Mainstreet and they know where we are heading deep down. The market will reflect that soon and later and another manipulation effort is likely towards the end of the year but that’s the final one as no one will give them any credit after that one failed as well.

Brainstorming Wednesday

1. Jim O’Neill the chief economist of Goldman had an interview at Bloomi TV and its amazing how many incredible bad calls this guy makes. We are on the same page when it comes to a bad call on The Dollar as we both shared a positive outlook around 1.25. I said in Feb that China would be my favorite play on the long side for a retracement trade and that they would be the beneficiaries of this crisis. He comes now at the top to say exactly that at the wrong price and time. What ultimately disqualified him was to mention some other emerging markets as good plays and one of the names he mentioned was Turkey – well that’s is completely bulls… as I happen to have plenty of inside into that country at it is just another manipulation story or as Boves said on banks just ‘Fumes’ – Turkey has the biggest contraction and is rising taxes and other thinks like gasoline prices which will undermine any growth if such a green shoot was ever to develop. China story on the upside is done and the worst part for global economies is still ahead. O’Neill never called for the Recession/ Depression scenario – he is rather the advocate of the BRIC story which is not turning out the way he meant it to be.

2. The Bloomberg confidence index at 22 month high – that means that even higher than at the time the crash started and the pretty lady claims on Bloomi TV that that makes/ will make people buy stocks – I am rather scared by such sentiment but confirms my overall top scenario which we are building right now.

Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.
- Albert Einstein

3. JP Morgan wants to make a huge sale of office space – would they do that if they really believed we are just at the start of the recovery or the worst is behind us
Excerpt
JPMorgan Chase is looking to sell 23 office properties in what may be the country’s largest office real estate sale this year, the Wall Street Journal said in a report on its Website on Tuesday.
That goes in line with heavy insider selling in stocks in general as I said 2 years ago the Olympics and a prominent IPO like Blackwater would mark the high ( that was not a coincidence).

4. Fibonacci, Golden Cross its a disgrace to hear the talking heads to throw around those words as they not really understand what they might mean – if Michael Bloomberg would be not ashamed he would make them strip while they speak although he slowly moves into that direction but at least they do not have the same morons like on CNBC who obviously are a real propaganda machinery as they have 2 Goldman’s working there with ever wrong but noisy Cramer as the most prominent example.

5. VAT (Value added tax) is the biggest government robbery scheme exploited more in Europe and some emerging markets right now but now they think to introduce it to America is well. Just the concept is pervers as you have to pay taxes again after your income has been taxed already whenever you consume. The real nasty part is that it effectively only hits lower to middle class as the wealthy players just buy everything through their companies and have the VAT returned to them as an expense. This robbery through governments has to be stopped since what do they finance through such taxes the bailouts of Wallstreet or the purchase of hundreds of billions of weapons which were never used but made some guys really rich.