Tuesday, September 29, 2009

Hege Fund Legend, Julian Robertson, Paints The Case For Gold – Serious Inflation + US Armageddon If China/Japan Stop Buying Debt

The Myth of Sideline Cash

A quick look a chart on Money Market Funds shows belies the common belief that “cash on the sidelines” is what powers markets higher.

As the chart below reveals, the Market goes up, and as we saw in the 1990s and from 2005-08, so too MMF goes up.

This is evidence against the standard sideline cash argument.

Indeed, rather than investigating these common aphorisms, if you trade on them at face value, you will be disappointed. Unless you thoroughly data verify and prove/disprove ANY AND ALL Wall Street myths, rules of thumb, or standard trading phrases, you are going to a) develop a false belief system and 2) that will eventually lose you lots of money.

A new Magna Carta for our times

“Magna Carta (1215) was the first document forced onto an English King by a group of his subjects (the barons) in an attempt to limit his powers by law and protect their privileges.” (www.wikipedia.org)

Let us think of President Obama in the place of the English King, and the Group of G-20 meeting in Pittsburgh, Pa. this week as Obama’s Barons.

The present-day Barons – the Presidents of the G-20 countries – are restless.

They are not happy with the conduct of affairs of their King, Obama. (more)

Most enduring change may be the permanent loss of millions of jobs

Going to work may never be the same again.

The Great Recession has reshaped the American workplace and work force in ways that will last years, if not longer.

The work force is graying as college graduates can't find jobs, young workers get laid off and older workers delay retirement. People in white-collar jobs are feeling increasingly vulnerable to economic downturns, an insecurity that blue-collar workers have known for years. (more)

U.S. auto sales in September slump post-"clunkers"

U.S. auto sales likely fell in September back to the nearly three-decade lows of early 2009 without government incentives to spur buying, leaving in doubt the timing and pace of a recovery for the battered industry.

Nearly 700,000 new cars and trucks were bought by U.S. customers through the government "cash for clunkers" incentive program from late July through the first three weeks of August, a leap from recession-stunted sales earlier in 2009.

The massive jump in buying versus earlier in 2009 depleted the stores for all the major auto manufacturers, leaving industry inventories at historically low levels. (more)

Schiff: Dollar is the New Peso

The U.S. dollar will continue weakening, and investors may borrow it to invest in higher-yielding assets, says Peter Schiff, president of Euro Pacific Capital.

“I don’t know when (the dollar) is going to strengthen,” Schiff told CNBC.

“The dollar isn’t the new yen, it’s unfortunately the new peso.”

A weak dollar and low U.S. interest rates push the greenback toward becoming a carry trade currency, which, like the yen for many years, attracts investors to borrow it cheaply to invest elsewhere. (more)