Friday, May 28, 2010

Update 5/28

First and foremost, this is Memorial Day weekend; it is meant for more than BBQ's and beer. It is meant to honor those who died fighting for this country. On Memorial Day, President Obama won't be able to make it to Arlington Cemetary, as nearly all other Presidents have done; apparently the Chicago Bulls are playing and he's got front row tickets, and this quite obviously takes precedence. I can't tell you how disgraceful that is and how angry I am. It says all you really need to know about the man.

Moving on to economics, the last few days in the markets have been relatively normal; one day the bulls win, the other the bears. No central bank interventions, no crashes. On the surface of it, all appears to be back to normal, and perhaps it is; I think the wolves are a little more careful after the central bankers mauled them a couple times in the last couple of weeks. But there are still troubling signs; first and foremost the LIBOR, which is a measure of the interest rate at which banks lend to each other, is creeping up to amber levels this week, though not quite red alert levels, and higher levels than when the Euro bailout was announced. It's essentially a sign that banks are increasingly wary of lending to each other out of fear. A number of commentators (all of whom are noted bears it must be said) have come out and given the "run for the hills" alert this week. I'm going to be keeping an eye out on the LIBOR; it could just be that this is a lagging indicator, but in the past it has, in fact, proven to be a good fear indicator. I think that the failure (well, forced mergers) of a number of good sized Spanish banks this week is whats spooking the LIBOR, and well it should. Second, the money supply in the US (the M3 measurement) is contracting, which is something Bernanke hates; if it gets too far, I look for Big Ben to suddenly announce another QE, perhaps in the form of a lending facility for businesses. Here's Eric Sprott, who runs one of Canada's biggest hedge funds, on Monday:

As for me, I'm going to leave my IDX and DRR trades intact (two cent stops); I have a feeling next week could see some good volatility and my trades have short trailing stops just in case of a drastic move one way or the other. Just in case all hell does break loose, I'm going to be putting in an order to buy one hundred of the short S&P etf SPXU at 36.00, one hundred more t 37.50 and one hundred more at 39.00 with a two cent stop loss. Given the volatility I think is coming, trading commodities is just a tad dangerous, and so for the meantime etf's are my answer.

Update 5/30

Apparently Obama went to the national cemetary in Illinois today to lay wreaths. For me, this is just fine; it was my understanding he was simply going to blow it off. He did not; sorry to any offended by my incorrect opening post. I'll be more careful with the facts next time I decide to blow a gasket on a public blog.


  1. Glad that somebody else remembers the REAL meaning of Memorial Day. My last name is carved on the Vietnam War Memorial as a testament to the fact that Memorial Day is about more than just sports, barbecue and a paid day off.


  2. Mammoth it is only to those families that are affected. A sad day for all of us so many lives wasted. Good people who believed in what they were doing was making the world a better place for everyone. Bless them all. There has to be a political reason why Hopey Obama is going to Chicago for the hockey game as opposed to Arlington. BTW it is the Chicago Blackhawks not the Bulls (NBA) as if that matters.

    Mr. K Shaza has posted a reply to you on The Hive. She has been very sick.

  3. I was a hospital corpsman in the Navy and did a training stint in the Naval Hospital in San Diego. One part of the training was in the burn unit, where I saw young guys my age mangled and burned. We always went to the beaches after work and it struck me how carefree and happy the beach kids were; but very few of those beach kids knew of the sacrifice made on their behalf by others. I remembered.