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CARTEL CAPITULATION WATCH
The DOW soared 159 to 10,118 and the DOG soared also to 1965, up 42. Every time the US stock market is ready to really get slapped, it roars back for no apparent reason.
Jesse’s opinion on why the US stock market took off today:
This is what today is all about IMHO. They want to unload this pig and they need a favorable market in which to do it. Given that Friday and Monday were the slowest days of the year, it’s fairly easy to for them to float the market up. The real tell was that the Put to Call ratio was expanding with the rise in the indices. They are hedging the pump.
So far today 29,849,900 GNW shares have traded today and the price is 19.35.
Genworth Has Troubled Debut
Tuesday May 25, 2:02 pm ET
By TSC Staff,
The biggest initial public offering of the year, the General Electric (NYSE:GE - News) insurance unit being split off as Genworth (NYSE:GNW - News), was under water Tuesday despite being priced conservatively by underwriters grappling with volatile markets.
One hundred forty-five million shares were priced at $19.50 Monday night through underwriters led by Morgan Stanley and Goldman Sachs, below the price-talk range of $21 to $23 a share. The deal, in which a roughly 30% stake in the business was sold, raised about $2.83 billion.
The stock was recently down 19 cents, or 1%, at $19.31.
GE subsequently reaffirmed its full-year 2004 profit estimate of $1.54 to $1.60 a share, or $1.59 to $1.65 a share before items, and said it expects to receive net proceeds of $2.5 billion to $2.9 billion from the offering, which also included a series of convertible and preferred shares.
Genworth, the remainder of which GE will sell over the next five years, has segments that sell life insurance, group life and health insurance for small companies, mortgage insurance and annuities.
Others were much more perplexed:
Bill,
I love the quote from the Dow Jones newswire titled "Market Talk:"
CME traders scratching their heads as to why the market is rallying, with no news seen inciting buyers. "Even though oil is down, it was up Monday and we still gained ground, so that’s not really much of an explanation," trader notes.
(Three guesses as to the cause!)
W
The US economic news was mixed:
May 25 (Bloomberg) -- Confidence in the U.S. economy rose less than expected in May as gains from a pickup in hiring were restrained by rising gasoline prices and news from Iraq, a private survey found.
The New York-based Conference Board's consumer confidence index rose to 93.2 this month, from a revised 93 in April. The gain came from increased optimism about the future direction of the economy. Assessments of current conditions fell.
May 25 (Bloomberg) -- U.S. sales of previously owned houses rose 2.5 percent in April, an industry report showed, as forecasts for further increases in interest rates spurred buying.
Resales rose to 6.64 million houses at an annual pace last month from 6.48 million in March, the National Association of Realtors said in Washington. Sales first exceeded 6 million in July and have held at or above that level for ten consecutive months, including a record 6.68 million in September.
GATA’s Mike Bolser (whose overall explanation of the DOW action these past many months is as good as any out there):
Hi Bill:
The Fed added no temporary repos today but the posted yesterday's permanent open market numbers at $.783 Billion.
The pool is still well below its 30-Day moving average and sitting at the lowest point away from the target line in the series. This is an interesting moment and must be watched carefully throughout the rest of this week and into the next. The Fed seems content to let the DOW fall a bit (Or at least not rise). This continues to fit with a weakness in the bonds market noted by Dan Norcini and other readers.
The red 30-day ma for the repo pool has been in the same up slope angle since Feb so the Fed appears to be on a kind of repo "cruise control", content with larger DOW swings.
The bond market yields sit at recent highs but it appears there is a ceiling on them. The Ten-year at 3.5% or so and the 30-year at 5.5%.
Gold will rebound this week and into the next (Through $415) with the dollar falling again but not too far.
Mike
Café member Lois Ringel has sent us insightful tidbits for a long time. Here is another one of them:
read this site several times a month (for many years) to monitor oil and gas-have never seen them with any mention of Gold!
Click here: EnergyPulse - Insight Analysis and Commentary on the Global Power Industry
The price of gold could exceed $600 an ounce (versus $400 now) as the value of the dollar continues to decline against most of the major world currencies, and: (1) the Federal Reserve sharply increases interest rates in an attempt to stabilize the value of the falling dollar; (2) a record number of individuals file for personal bankruptcy in 2004 in the U.S. only to be exceeded by the rate in 2005; (3) more companies reduce pension benefits to retirees and existing employees; (4) the government announces a massive bailout of the agency overseeing the pension funds of failed companies much like the bailout of the S&L’s a decade earlier; (5) one or more major U.S. airlines file for bankruptcy, in part due to higher fuel costs; (6) world economic growth, except for China, slows to a crawl; (7) tuition at public universities increase at a double digit rate; and (8) health care costs continue to rise at a double digit rates.
On the $6 Rule:
May 25, 2004
Hi Bill:
I am a new subscriber of Le Metropole Café (since the beginning of this year). I am intrigued by your $6 rule. Where did you get it? Was it based on observation? On statistical analysis? ? ? ?
Well, I don’t know the answers to these questions, but long before I became a subscriber, I have been interested in the deviation in the price of gold over time. Early last year, I calculated the standard deviation of the closing price of gold from the first day in 1997 to the current date at that time, in February 2003. The standard deviation was $2.756. (Multiply that by 2, Bill, and you get about $5.50, and for simplicity we could round that off to, let’s say, $6.)
Today, I recalculated the standard deviation but for a longer period, from the daily close at the beginning of 1995 to yesterday’s close. Much to my surprise it came out to $2.757.
Well, Bill, I don’t know where you got the $6 rule, but it is an interesting one, and it makes a lot of sense to me in terms of the standard deviation.
Keep up your great work.
Charlie McCarthy
One of the reasons apartment rents in Sydney are in "free-fall."
Hi Billy
One of the main catalysts causing Sydney apartments to fall is the fact that it is now law that all persons bidding on auctions have to register prior to auction.
The stooges that the agents used to take bids from can’t bid anymore. Conspiracies seem to be everywhere – bring back the inquisition!!!
james
A heads-up from Jesse:
An interesting excerpt from Porter Stansberry
" Total margin debt has hit a new high since the bubble. Folks were betting $191.5 billion in borrowed money on stocks in March at NYSE and NASD firms. Richer, wiser and more experienced investors, not surprisingly, spent their spring "cleaning" rather than collecting. Corporate insiders sold $14.4 billion in the
first four months of the year. David Coleman, editor of Vickers Weekly, which has been tracking insider figures since 1971, says sales from insiders have never been larger.
In regard to the never-ending tug-of-war between inflation and deflation, it seems to be a race between individual and national irresponsibility. Sure, it's hard to bet against the Baby Boomers, who love to borrow more than they love to repay. But, compared to democracies and their track record with paper money, today's individual credit card junky is a skinflint.
Evidence? While personal bankruptcy filings (a force of deflation) rose the last 12 months by 2.8%, the price of milk--not to mention lots of other things--has doubled (inflation). Whole milk prices in the Northwest United States hit $5.00 per gallon last week, up 100% in the last year. Unfortunately for the government, there's no cartel of evil-looking, Middle Eastern men dressed in sheets to blame the milk problem on. Few people yet suspect the strange surge in gas, milk, meat, industrial metals, shipping, the price of gold and foreign currencies could possibly be related to the correspondingly large increases in the supply of U.S. dollars. Someone has even hinted, darkly, that perhaps an increase in dollars would help the government to avoid raising taxes because it would tend to move more citizens into higher tax brackets, while at the same time making the government's debts easier to repay."
by Porter Stansberry
More on the gold loan issue from GATA’s Mihaly in the Netherlands:
Hi bill,
here are the gold 'holdings' of Australia:
2003 annual rapport
Page 94
Gold loans 1 333
Gold holdings 17
total AU$ 1350
http://www.rba.gov.au/PublicationsAndResearch/AnnualReports
/AnnualReport2003/2003_annual_report.pdf
The RBA lends gold to financial institutions participating in the gold market. Gold loans are secured to 110 per cent of their market value by Australian dollar denominated collateral security. Interest on gold loans is accounted for on a standard accrual basis.
Reserves Management
Foreign currency reserve assets and gold are held primarily to support intervention in the foreign exchange market. In investing these assets, priority is therefore given to liquidity and security, in order to ensure that the assets are always available for their intended policy purposes.
***
So Australia lend almost all their gold....which is almost 80 tonnes according to http://www.gold.org statistics..
greetz
mihaly
This means Australia, Norway, Canada, the Philippines and Portugal have very little if any gold left in their vaults. None of this is taken into consideration by the IMF or gold world establishment.
Chris Powell and I received the following note from world renowned author Arthur Hailey last evening and I’d like to share it with you. Not only is Arthur one of the great novelists of the 20th century (Hotel, Airport, Moneychangers, etc.), he is a former RAF fighter pilot. For newer Café members, he has also been one of GATA’s staunchest supporters from the very beginning and was instrumental in our efforts in taking on the anti-gold company, Barrick. During the Denver Gold Group Conference in the fall of 1999 he denounced Barrick publicly (at the conference via an open letter and all over the internet) and announced he had sold all of his considerable shares in the company and reinvested in those gold producers who were not hedging. Since then, Barrick has foresworn hedging (after an eventual $170 rally) and run for the hills - from GATA too. We thank this gracious man for helping us when we most needed it and when few in the mainstream world would give us the time of day.
Dear Bill and Chris:
Came across something this weekend that, in a way, seemed timely, though I wrote it in 1978 for one of my own books – Overload.
What struck me in re-reading those almost forgotten lines was that at this present time it could be an ode directed at those who will simply not commit themselves to accepting that gold is an absolute major commodity to be invested in right now, financially and deeply in other words, committed – as I am, along with our family – and certain that a year from now, probably less, others who could have done the same, but didn’t, will have enormous regrets – too late!~
Anyway…..
The moving finger sometimes does go back,
Not to rewrite but to reread;
And what was once dismissed, derided, mocked,
May, in the fullness of the moon or two,
Or even years,
Be hailed as wisdom,
Spoken forthrightly at that earlier time,
And having needed courage
To face the obloquy of others less perceptive,
Though burdened with invective.
Dear Nimrod!
Remind yourself; A prophet’s seldom praised
Before sunset
Of the day on which he first proclaimed
Unpalatable truths
In time become self-evident,
Their author vindicated,
Be, at that harvest moment, forgiving, gracious
Broad of mind, large purposed,
Amused by life’s contrariness.
For not to all, only the few,
Are presbyopic gifts: long vision, clarity, sagacity,
By chance through lottery at birth,
Bestowed by busy nature.
***
The best,
Arthur
The gold shares rose quietly again, but this time the HUI sold off late. After reaching 199.18 with around 20 minutes to go, profit taking set in (or something more sinister) and it fell back to close at 196.85, up 2.18. The XAU managed a 1.41 gain to 88.41.
It just gets worse and worse when it comes to Wall Street, New York/Washington spin and what many in the establishment are doing to America. Some reasons why in my opinion:
*For a year it is been VERY apparent the Bush Administration was fudging the CPI numbers, preventing the elderly in the US from receiving their fare share of retirement income, which is based on that number. For further reference on this, go to http://www. Prudent Bear.com and Richard Benson’s Using the Consumer Price Index to Rob Americans Blind :
http://www.prudentbear.com/archive_comm_article.asp?ca
*The reasons for going to war in Iraq were fabricated, no matter how you look at it. As a result of this ill-conceived war, 800 American soldiers are dead and many thousands have been injured. For what?
*Either bozos are conducting the war (one only need ask the highly regarded General Zinni), or we have the "Gang Who Couldn’t Shoot Straight" for an intelligence operation – maybe its both? With all the acknowledged screw-ups not one higher-up has been held accountable to date by the Bush Administration.
*The porno scandal in the Iraq prison is almost unbelievable, not even acceptable for a B Movie story line. More facts continue to surface. The latest has General Sanchez (2 steps away from Rumsfeld) going to visit the torture prison 3 times. All of a sudden, it is announced he is going to be shipped out in a month and that his removal had nothing to do with these revelations (sure).
*President Bush goes on TV to make an address to the nation and the major networks yawn and don’t even bother to carry it, preferring the likes of the Reality TV shows instead. Anything to dumb down the people.
Now this, which is an indictment not only of Dick Grasso, but of the most influential and wealthy on Wall Street who sat on the Board of the NYSE:
GRASSO THE SNAKE
By PAUL THARP
NY Post
May 25, 2004 -- Dick Grasso was more underhanded than many suspected - using spies, doctored records, rigged votes and intimidation to suck almost every penny of profit at the New York Stock Exchange, crusading New York Attorney General Eliot Spitzer charged yesterday.
Spitzer outlined a pattern of greed, bullying and conflicts of interest in a four-year secret plan by Grasso to award himself more than $187.5 million as he prepared to retire from the NYSE.
Spitzer said Grasso's "unsavory, self-dealing and fraudulent" acts were especially troubling because they are a "template of a much larger problem throughout the corporate structure that must be confronted."
Spitzer filed a suit seeking to reclaim for the NYSE as much as $120 million of Grasso's controversial first payment of $139 million in compensation. Grasso said he would fight the suit and was "disappointed" Spitzer intervened in "what amounts to be a commercial dispute between my former employer and me. I look forward to complete vindication in court."
Spitzer's lawsuit and exhibits implied that Grasso personally shot down early attempts to crack down on Wall Street firms' use of phony analyst research - just to win support for his big paychecks. Wall Street execs most vulnerable over research also sat on NYSE boards that approved more than $30 million of Grasso's disputed pay.
Grasso held "enormous power" over the compensation committee members, picking them himself, and on occasion even confronted panel members who wouldn't buckle under to Grasso's straw boss on the pay panel, investor Ken Langone. Spitzer wants Langone to fork over at least $18 million in disputed Grasso pay that Langone allegedly pushed through the board for approval.
"Rigged votes," rigged gold market – that’s Wall Street for you.
Grasso is one thing. How about those on the NYSE Board of Directors who agreed to pay the guy? If Grasso did wrong, they did worse. They paid him that obscene amount.
For years MIDAS has called Wall Street a "SEWER." A number of Café members thought this sort of commentary was "over the top" I am sure. However, I don’t think descriptions such as that one even begins to touch the surface on how bad things really are. Remember the commentary after Enron and the other NASDOG scandals and how these scandals and efforts to clean them up would change how business is done on Wall Street. Horse Manure!
Which brings us back to perhaps the biggest scandal of all when it all unfolds, the gold fraud. When the gold derivatives neutron bomb goes off, or related interest rate derivatives do, its ramifications are going to affect most everyone and it won’t be pretty. Your average Joe and Jane in America are going to be stunned by the financial market and economic fallout.
Meanwhile, the arrogants in The Gold Cartel are so haughty they don’t seem to even care about being caught because no one will punish them. Sell the HUI big time in the last 10 minutes with nothing going on, gold tanks the next day. Do it again, same thing. Buy the HUI big time in the last 15 minutes and gold comes in $4 higher the next morning. Can collusive trading be more blatant? It is an OUTRAGE. Therefore, I will continue to document these goings-on for the future Congressional committee formed to investigate the coming gold scandal. They will know what to look for and on what day!!!
It would be fair to ask why I rant about all of this and don’t just walk away. The answer is very simple. GATA knows the most historic trade of all time is coming and it involves gold, silver and the precious metals shares. We know the bad guys are running out of enough physical to continue this scam. It is inevitable the price of gold (and silver) is going to go ballistic and will do so when The Gold Cartel implodes. We just don’t know when The Gold Cartel is going to hit the wall. Might be next month, maybe next year, maybe two years. The longer it takes, the bigger the eventual move.
In the process, when The Gold Cartel is carried out on GATA’s stretchers, more money will be made in a few weeks than most make in a lifetime, if one is positioned properly. It will be a sight to behold. If you annualize this sudden and dramatic bonanza over a number of patiently waiting years, you will know why I and many others are focusing on the donut and not on this short-term hole.
GATA BE IN IT TO WIN IT!
