How to Trade With Better Than 50/50 Odds

When does a 50/50 bet not have even odds? If your answer is any betting game in Las Vegas, you are right. In the casino, the odds favor the house. If you can find a bet in Las Vegas (or Atlantic City or Macau) that pays better than even odds take this advice: Don’t tell anyone, and play that game small as often as you can until you are rich.

In the option trading world, these types of trades are also few and far between. Like gambling in a casino, if you find a stock or options trade that pays better than 50/50 odds, keep it to yourself, trade small over and over until you are rich.

While these types of true arbitrage trades almost never happen, sometimes there are opportunities to put on trades that seem to have better than 50/50 odds. This is because options are multi-dimensional. When purchasing an outright call or put, the trader is making a bet that the market (or stock) is going to move in the preferred direction AND that the implied volatility (IV) will hold stable or increase. The same holds true for shorting options.

We are currently in a cycle that has the implied volatility of S&P 500 (SPX) options falling. This makes sense considering realized volatility is very low as well. Does this mean that owning options is a bad idea? Sometimes, YES! However, there are moments where it can make a ton of sense to buy options. On Nov. 24, the day before Thanksgiving, I actually bought a few puts. (more)

Euro Debt Crisis Bankruptcy Bailout Queue, Protect Savings & Deposits From Banks Going Bankrupt!

The global banking system that publicly went bankrupt during September 2008 prompting government interventions in the form of capital injections, buying of toxic assets, insurance of bad debts and even outright nationalisation's has started to bankrupt the states that bailed them out, starting with the smaller states with Iceland setting the ball rolling, and this year the bailiffs came knocking on the doors of the Eurozone club members, with first Greece, and now Ireland requiring a Euro-zone bailout (German) to prevent debt default bankruptcy, where if one falls then soon would all of the dominos tumble.

The Euro 200 billion bailout out of Greece and Ireland is in the form of a series of loans set at a 5% interest rate, against which one can measure the relative credit risks in the market as theoretically 5% should be seen as a cap with the view that market rates should be below the 5% bailout rate. However the bond markets are NOT responding positively to Ireland's bailout as they had done during May's Greece bailout, which is evidenced by the yields on 10 year euro-zone sovereign bonds rising across the board:

Greece's 10 year yield continues to trade at a high 12% despite the Euro 110 billion bailout at 5%, because Greek bond holders continue to discount a highly probable eventual debt default / restructuring as a deflating economy has sent public debt to GDP soaring to 135%. (more)

Mr. VIX’s Wild Ride What do the VIX rally and subsequent sell-off mean for traders?

No sooner did we return from our turkey-induced coma than we found our beloved VIX commencing a pretty robust pop that began Friday, and to levels north of 23 no less.

Now I realize that may not sound like much, but it’s a two-month high and a break above the recent range of 18-22 that has bounded us since early October. What’s more, this puts the VIX more than 10% above its 10-day simple moving average (SMA) and above the standard 20,2 Bollinger band. In other words, the VIX actually was a tad overbought.

But this didn’t last long. By today’s close, the VIX had given it all back and then some. So was there any signal from this action?

There are two schools of thought regarding such a move in the VIX. A contrarian would point out that an overbought VIX equals an oversold market, and would look to fade it. That is, he would make some bullish market plays (or bearish VIX plays).

A “smart money” VIX adherent would say that the options market has spoken, and it expects rough waters ahead. He would consider a VIX pop an ominous sign of a market break ahead and look at bearish plays, or at least buy protection on a bullish portfolio.

So who’s right? (more)

Chart of the Day: Comparing Federal Deficits: Bush Vs. Obama

Ireland: From rags to riches to rags

How the tiny island country managed to stage a meteoric economic rise only to fall in a similarly spectacular fashion.

It wasn't long ago that U.S. multinational corporations entering European markets would almost always make tiny Ireland their first stop.

The draw of what used to be called the "Celtic Tiger" or the "Celtic Miracle" was obvious: Relatively low taxes and regulations, combined with a fairly young, smart, and English-speaking workforce. And because the island state is a member of the European Union, this meant that selling goods and services to other European countries was relatively cheaper and easier.

But Ireland wasn't always so market friendly. And, on Sunday, as leaders dealing with the country's huge banking crisis were offered an $89.4 billion bailout from European nations to keep its economy afloat, it's worth reflecting on the country's long history of peaked ups and downs.

For most of the 20th century and even well into the late 1980s, Ireland's economy was pretty dismal, marked by high unemployment and huge government debts. It was viewed as a backwater economy, at least by European standards. The poor and hungry fled to America and other parts of the world, while much of its workforce worked jobs in agriculture. Unemployment in 1987 was at about 18%, while debt relative to GDP rose to 120%. There was even some talk of a possible default. (more)

A Quick Profit With This Trade

My systems, along with almost all of my forecast charts, are screaming "short, short, short!"

But, my fundamental analysis of the "Big Bernanke Experiment," where he is dumping $100 billion into the market every month, is screaming just as loudly, "too much risk to short!"

However, there are some global events brewing; particularly the Korean peninsula conflict, which could play a role in the upcoming week. I believe that as long as we don't get too carried away with shorting, there might be an opportunity to pick up a solid +5% on this week's Trade-of-the-Week.

Take a look at my CycleProphet chart for the Dow Jones Industrial Average, below: (more)

Cutting the Deficit: Sacrificing Workers to Save the Rich

“There’s class warfare, all right, but its my class, the rich class that’s making war and we’re winning” Warren Buffet

The most important and popular social and tax programs in the United States are threatened by a self-styled “Bipartisan National Commission on Fiscal Responsibility and Reform”. Appointed by President Obama on February 18, 2010, co-chaired by two longstanding champions of Wall Street: ex Senator Simpson (R, WY) and former Clintonite White House Chief of Staff Erskine Bowles. The Commission Report issued November 10 proposes to slash social security payments, reducing recipients to poverty, raise the retirement age to 69 ensuring that millions of workers will die before they can retire, or enter retirement in ill health; reduce or freeze cost of living increases through inflation indexes which understate by half the rises in food, gas, hospital and education. The Commission proposes deep cuts in Medicare, increased Medicaid co-pays and slashing $54 billion from graduate medical education. The Commission proposes to eliminate tax breaks including deductions for home mortgage interest payments while taxing employer provided medical insurance.

The same Commission Report proposes to reduce capital gains and income taxes for the rich by up to 24%.

President Obama and the Republican leadership praised the Commission and wants “to give them space to work on it”. (more)

Quantitative Easing Explained

WikiLeaks’ Julian Assange Wants To Spill Your Corporate Secrets

In a rare interview, Assange tells Forbes that the release of Pentagon and State Department documents are just the beginning. His next target: big business.

Early next year, Julian Assange says, a major American bank will suddenly find itself turned inside out. Tens of thousands of its internal documents will be exposed on Wikileaks.org with no polite requests for executives’ response or other forewarnings. The data dump will lay bare the finance firm’s secrets on the Web for every customer, every competitor, every regulator to examine and pass judgment on.

(For the full transcript of Forbes’ interview with Assange click here.)

When? Which bank? What documents? Cagey as always, Assange won’t say, so his claim is impossible to verify. But he has always followed through on his threats. Sitting for a rare interview in a London garden flat on a rainy November day, he compares what he is ready to unleash to the damning e-mails that poured out of the Enron trial: a comprehensive vivisection of corporate bad behavior. “You could call it the ecosystem of corruption,” he says, refusing to characterize the coming release in more detail. “But it’s also all the regular decision making that turns a blind eye to and supports unethical practices: the oversight that’s not done, the priorities of executives, how they think they’re fulfilling their own self-interest.” (more)

The 10 Best Stock Picks of the 10 Richest Hedge Funds

Ever wish you could make $4 billion a year? That wish came true in 2009 for the most successful hedge fund manager, and once again this year, those hedge fund managers who aren't getting subpoenas for insider trading -- as SAC Capital Advisors did on Nov. 24 -- have much to be thankful for.

Now, thanks to some assistance from a former hedge fund research manager, you can consider whether to follow the investing lead of the richest hedge funds. Below, we present a list of the 10 best stock picks of the 10 highest-paid hedge fund managers.

According to AR Absolute Return, the 10 highest-paid hedge fund managers of 2009 were: (more)

Stocks stage an afternoon comeback

(CNNMoney.com) -- After tumbling early Monday morning, stocks bounced back to end the session still down, but much closer to breakeven.

The Dow Jones industrial average (INDU) fell 40 points, or 0.4%, closing the session at 11,052, according to early tallies. The S&P 500 (SPX) fell 2 points, or 0.1%, and the Nasdaq (COMP) lost 9 points, or 0.4%.

Stocks had fallen nearly 1.5% earlier in the session, sending the Dow temporarily below 11,000, but they bounced back from those lows late in the afternoon.

"I think this is a trader's market. It was a little bit sleepy this morning, but now stocks are going to come back the other way," said Rich Ilczyszyn, a market strategist with futures-broker Lind Waldock.

Ilczyszyn expects stocks to be stuck in a tight range for the last few days of the month, as traders look to close out their bets, with as much profit as possible. (more)

David Morgan on the gold/silver ratio

U.K. Home Prices Decline as Property Demand Drops Most in Almost Two Years

U.K. house prices fell for a fifth month in November as demand for property dropped the most in almost two years, Hometrack Ltd. said.

The average cost of a home fell 0.8 percent from October to 155,000 pounds ($242,900), the London-based property researcher said in an e-mailed statement today. Demand for homes, measured by the change in new buyers registering with real-estate agents, fell 4.3 percent, the biggest decline since January 2009.

The report adds to evidence of a weakening property market after Rightmove Plc said on Nov. 15 that home sellers cut asking prices by the most since 2007 this month and U.K. banks approved the smallest number of mortgage since 2009 in October. The government has announced the biggest budget squeeze since World War II and officials have warned the cuts may harm the recovery.

“Concerns over the economic outlook on the back of recent spending cuts, together with widespread expectations that house prices are set for a period of retrenchment, are driving the continued weakness in demand,” Richard Donnell, Hometrack’s director of research, said in the statement. “In the near term we expect demand to remain weak and this will continue to put downward pressure on prices.” (more)

David Rosenberg Video Interview – Deflation Period Ahead

Excellent video interview with David Rosenberg, Gluskin Sheff’s Chief Economist. David Rosenberg shares his economic and market outlook with Consuelo Mack of Wealthtrack, plus advice on how to invest in it.

Richard Russell - Stocks Repeating 1930, Gold Building Base

With the stock market showing weakness and gold still consolidating gains, earlier in the week, the Godfather of newsletter writers Richard Russell stated, “Yesterday the Dow declined. If this market decline continues, it's going to catch a lot of bullish economists and bullish stock-holders shocked, and on the wrong side of the fence. From the Russell perspective, the stock market is duplicating where it was in April of 1930. The market is telling us that despite the rosy expectation, hard times lie ahead.”

Russell continues:

“Ironically, just as the stock market was ready to fall, the North-South Korea altercation hit the news wires. This gave the public "a clear and obvious reason" for the market to fall. But the forces behind the fall were more serious than the Korean fight. The stock market was looking ahead; and it was discounting an ominous future.

What I think we are seeing is the early break-up of the huge market top, the top that began forming in February of 2010. This is probably the biggest top I have seen in more than half a century of dealing with markets.

Over the past year, I've done my best to get my subscribes out of common stocks. I've asked (begged, beseeched, scolded, insisted, demanded) that my subscribers be out of common stocks (all except precious metal mining issues). I want my subscribers to be in precious metal items along with some cash -- cash will be handy and serviceable as long as it is accepted. We pay our rent, our restaurant bills and our taxes with cash. And we buy gold with cash. (more)

Following Hungary And Ireland, France Is Next To Seize Pension Funds

If the recent Hungarian "appropriation" of pension funds, and today's laughable Irish bailout courtesy of domestic pension funds sourcing 20% of the "new" money was not enough to convince the world just how bankrupt the entire European experiment has become, enter France. Financial News explains how France has "seized" €36 billion worth of pension assets: "Asset managers will have the chance to get billions of euros in mandates in the next few months for the €36bn Fonds de Réserve pour les Retraites (FRR), the French reserve pension fund, after the French parliament last week passed a law to use its assets to pay off the debts of France’s welfare system. The assets have been transferred into the state’s social debt sinking fund Cades. The FRR will continue to control the assets, but as a third-party manager on behalf of Cades." FN condemns the action as follows: "The move reflects a willingness by governments to use long-term assets to fill short-term deficits, including Ireland’s announcement last week that it would use the country’s €24bn National Pensions Reserve Fund “to support the exchequer’s funding programme” and Hungary’s bid to claw $15bn of private pension funds back to the state system." In other words, with the ECB still unwilling to go into full fiat printing overdrive mode, insolvent governments, France most certainly included, are resorting to whatever piggybanks they can find. Hopefully this is not a harbinger of what Tim Geithner plans to do with the trillions in various 401(k) funds on this side of the Atlantic.

More from FN on how first France, and soon every other socalized pension regime, will continue to plunder a nation's life saving to fund short-term deficits: (more)

Technically Precious with Merv

FREE weekly precious metals investment newsletter, click here

S & P - Go To The Mattresses!

"Go to the mattresses," from the movie "The Godfather," describes a war mode, and the S&P is in just that kind of mode. Less important is describing the two factions, natural market forces, and the well documented Federal Reserve manipulation through Permanent Open Market Operations, aka POMO.
Ultimately, market forces will prevail, even when temporarily distorted through intervention. Unfortunately, the impact is most often exacerbated when eventually resolved.

Rather than attempt to divine the meddling of the Fed, it is always best to stick to what the market says.
It may not always be clear, but the market never lies. Even when the picture from the charts is equally unclear, we go back to basics. Start with the higher times frames and work lower.

The two horizontal lines on the monthly chart show a band of resistance between 1253 on the upper line to 1221.25 on the lower line. To the weekly... (more)

3 Stocks That Should Rally Nicely in the Next Year

by David Sterman

The S&P 500 is back near where it was a month ago. A surge into November has been met by recent profit-taking as we head into the Thanksgiving holidays. In pullbacks like these, I like to scan the lists of losing stocks to see if any bargains get uncovered. I found three, all of which hit 52-week lows this week, and all of which are still solid long-term plays. The pullback in these names should set the stage for a much better 2011.

NuVasive (Nasdaq: NUVA)
I recommended this stock two weeks ago as part of a paired trade play against Intuitive Surgical (Nasdaq: ISRG).

Since then, Intuitive Surgical has fallen roughly -10% while NuVasive has barely moved. That's logical: in a tough trading environment, the short end of paired trades is likely to play out better than the long end. Even as Intuitive Surgical comes back down to earth, the real story here is NuVasive's eventual upward move. It won't come quickly -- few near-term positive catalysts exist -- but as 2011 unfolds, investors are likely to see that NuVasive's recent quarterly missteps are more of a function of an unsettled health care environment than any company-specific troubles.

As the dust settles, the fact that NuVasive's technology leads to improved patient outcomes and lower total healthcare costs is likely to again be the focus of health care insurers -- and investors. Shares trade for less than 20 times next year's earnings for the first time in the company's history (going back to 2004). A forward multiple closer to 30 still seems justified in the context of long-term growth -- that means +50% upside in 2011. (more)

Cool Products and Services You Can Get for Free

From entertainment and financial advice to health care and technology.

The battered economy has taken the stigma out of bargain-hunting. Some might even say that saving a few bucks is in style.

We're not talking about buying nine cups of coffee and getting the 10th free--we're talking about free entertainment, financial advice, health care, technology and more.

Look hard enough and you can find a bevy of 100% discounts, especially online. "Facebook is a great source of freebies right now, as so many brands try to attract fans and establish themselves," says Julia Scott, who runs the popular blog BargainBabe.com.

We went freebie fishing and filled the net. Read on for a sampling.

A word of warning, adds Scott: "There are probably more scams out there than there are legit offers, so it is important to be careful." Her advice: When you see a deal that looks too good to be true, always look for customer service e-mail, telephone number and a promised delivery date. Also look for eligibility requirements (by age or residence) or other exclusions; their absence lends a whiff of impropriety.

Among the legitimate goods you can get gratis: (more)

US Economic Calendar for the Week

Date	Time (ET)	Statistic	For	Actual	Briefing Forecast	Market Expects	Prior	Revised From
Nov 30	9:00 AM	Case-Shiller 20-city Index	Sep	-	1.0%	1.0%	1.7%	-
Nov 30	9:45 AM	Chicago PMI	Nov	-	58.0	59.8	60.6	-
Nov 30	10:00 AM	Consumer Confidence	Nov	-	52.0	52.0	50.2	-
Dec 1	7:00 AM	MBA Mortgage Applications	11/26	-	NA	NA	2.1%	-
Dec 1	7:30 AM	Challenger Job Cuts (y/y)	Nov	-	NA	NA	-31.8%	-
Dec 1	8:15 AM	ADP Employment Report	Nov	-	60K	58K	43K	-
Dec 1	8:30 AM	Productivity-Rev.	Q3	-	2.2%	2.4%	1.9	-
Dec 1	8:30 AM	Unit Labor Costs	Q3	-	-0.4%	-0.4%	-0.1%	-
Dec 1	10:00 AM	ISM Index	Nov	-	56.0	56.4	56.9	-
Dec 1	10:00 AM	Construction Spending	Oct	-	-0.8%	-0.5%	0.5%	-
Dec 1	10:30 AM	Crude Inventories	11/27	-	NA	NA	1.03M	-
Dec 1	2:00 PM	Auto Sales	Nov	-	NA	3.71M	3.68M	-
Dec 1	2:00 PM	Truck Sales	Nov	-	NA	5.35M	5.59M	-
Dec 1	2:00 PM	Fed's Beige Book	Dec	-	-	-	-	-
Dec 2	8:30 AM	Continuing Claims	11/20	-	4200K	4200K	4182K	-
Dec 2	8:30 AM	Initial Claims	11/27	-	415K	423K	407K	-
Dec 2	10:00 AM	Pending Home Sales	Oct	-	0.0%	0.0%	-1.8%	-
Dec 3	8:30 AM	Nonfarm Payrolls	Nov	-	150K	130K	151K	-
Dec 3	8:30 AM	Nonfarm Private Payrolls	Nov	-	175K	140K	159K	-
Dec 3	8:30 AM	Unemployment Rate	Nov	-	9.7%	9.6%	9.6%	-
Dec 3	8:30 AM	Hourly Earnings	Nov	-	0.2%	0.1%	0.2%	-
Dec 3	8:30 AM	Average Workweek	Nov	-	34.3	34.3	34.3	-
Dec 3	10:00 AM	Factory Orders	Oct	-	-2.0%	-1.2%	2.1%	-
Dec 3	10:00 AM	ISM Services	Nov	-	53.0	54.5	54.3	-

HES Radio: World Financial Report

The World Financial Report brings you timely information on the worlds most exciting markets like oil, precious metals, currencies, commodities and hard money markets like very rare color diamonds and collectibles. The World Financial Report makes predictions and gives investment advice and has been very successful in identifying trends in the marketplace.

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The Economist - 27 November 2010

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Why low interest rates do not help the housing market and heavily benefit investment banks – 40 percent of Americans have mortgage rates higher than 6

Poverty is an anomaly to rich people: it is very difficult to make out why people who want dinner do not ring the bell. –Walter Bagehot Over the weekend it was leaked that US authorities were gearing up to bring insider trading charges against investment banks, consultants, and a wide net of Wall Street players. We’ve gone down this road a few times since the crisis started and many of the crony banking institutions merely settled out of court paying the government off with taxpayer money. It’ll be interesting to see that going on our fourth year of the crisis whether anyone will be charged criminally for what has become the biggest Ponzi apparatus known to humankind. Wall Street simply doesn’t understand how so many people can be angry about their record profits as they push people out of their homes through rocket dockets like those in Florida. If you are poor or middle class then not paying your bills is sufficient for you to be “thrown out on the street with prejudice” but for the big banking system it merely means more generous bailouts. And those being thrown out are also selected with bias; for example how is it that many non-payers in expensive California homes have more leeway to ignore paying their mortgage while a person in Florida with a $90,000 loan is ushered out in a McDonalds like court system? If you can rewind to 2007 when the proverbial debt hit the fan, most of the bailouts were pushed with the pretext of “saving” the housing market. If that was the mission, it has been an abject failure. (more)

Next Debt Crisis May Start in Washington: Bair

The US needs to take urgent action to cut its debt in order to prevent the next financial crisis, which may start in Washington, Sheila Bair, chair of the Federal Deposits Insurance Corp. (FDIC) wrote in an editorial in the Washington Post.

The federal debt has doubled over the past seven years, to almost $14 trillion, and the growth is a result of both the financial crisis and the government's "unwillingness over many years to make the hard choices necessary to rein in our long-term structural deficit," Bair wrote.

Retiring baby boomers will impact government spending heavily and this year, combined spending on Social Security, Medicare and Medicaid are expected to make up 45 percent of primary federal spending, compared with 27 percent in 1975, she explained.

"Defense spending is similarly unsustainable, and our tax code is riddled with special-interest provisions that have little to do with our broader economic prosperity," Bair wrote. "Overly generous tax subsidies for housing and health care have contributed to rising costs and misallocation of resources." (more)

Currency Crisis! So What Happens If The Dollar And The Euro Both Collapse?

Some analysts are warning that the U.S. dollar is in danger of collapse because of the exploding U.S. government debt, the horrific U.S. trade deficit and the new round of quantitative easing recently announced by the Federal Reserve. Other analysts are warning the the euro is in danger of collapse because of the very serious sovereign debt crisis that is affecting nations such as Greece, Portugal, Ireland, Italy, Belgium and Spain. So what happens if the dollar and the euro both collapse? Well, it would certainly throw the current world financial order into a state of chaos, but what would emerge from the ashes? Would the nations of the world go back to using dozens of different national currencies or would we see a truly global currency emerge for the very first time?

Up until recently, the idea of a world currency was absolutely unthinkable for most people. In fact, the notion that all of the major nations around the globe would agree to a single currency still seems far-fetched to most analysts. However, if enough "chaos" is produced by a concurrent collapse of the U.S. dollar and the euro, would that be enough to get the major powers around the world to agree to a new financial world order? (more)

A Hedge Fund Republic?

Earlier this month, I offended a number of readers with a column suggesting that if you want to see rapacious income inequality, you no longer need to visit a banana republic. You can just look around.

My point was that the wealthiest plutocrats now actually control a greater share of the pie in the United States than in historically unstable countries like Nicaragua, Venezuela and Guyana. But readers protested that this was glib and unfair, and after reviewing the evidence I regretfully confess that they have a point.

That’s right: I may have wronged the banana republics.

You see, some Latin Americans were indignant at what they saw as an invidious and hurtful comparison. The truth is that Latin America has matured and become more equal in recent decades, even as the distribution in the United States has become steadily more unequal. (more)

Surge Of Inexplicable After Hours Selling Takes Gold Volatility Index To All Time Low

In addition to the rout in the ES, VIX and GC which we pointed out earlier, there were some additional fireworks behind the scenes in today's after hours session. The CBOE Gold Volatility Index, the ^GVZ plunged by the most in over a year, as the index hit an all time low of 15.92 without the underlying making much of a notable move. The most curious aspect of the trade was that the entire dump occured in the AH session. Many were left scratching their heads over what caused this monstrous unwind in long vol positions: was this the unwind of a massive long ES/short GC arb? We don't know, although if rumors that a major fund is planning to stand for delivery of Dec gold turn out to be true, then obviously someone got confirmation today. Keep a close eye out on the GVZ. Should this price level persist on Monday, then the front futures contract will likely surge. (more)

US Dollar Collapse Unlikely: Rising Dollar In The Short Term

There’s been a lot of talk about the death of the U.S. Dollar lately.

Ben Bernanke’s seemingly endless money printing campaign may indeed spell doom for dollar holders in the long run. In fact, some investors are convinced the dollar is going the way of the do-do bird.

Famous investors Jim Rogers, Marc Faber, and Peter Schiff think the dollar is eventually headed down the economic toilet.
Judging by recent currency trading action, they may be right…

U.S fiscal uncertainty put the greenback under pressure for most of the summer. The U.S. Dollar Index has been sliding steadily from June all the way through early November.

But that’s just part of the story…

The falling dollar has pushed commodity prices skyward. Precious metals are surging and oil was pushing $90 not long ago. Since the dollar is the reserve currency, nearly everything priced in it has seen quite a jump.

Given all the negative news, one would think a dollar collapse is imminent. Such a scenario would send the price of nearly everything into the stratosphere in a matter of weeks. (more)

China Commodity Bourses Raise Fees to Curb Farm-Product, Metal Speculation

China, where the world’s four biggest agricultural contracts are traded, will raise costs to buy and sell farm-product and metals futures as part of a government effort to limit speculation and tame inflation.

The Dalian Commodity Exchange said today it will scrap a measure that lets some investors pay half the normal fees for contracts bought and sold on the same day and will cease all other discounts as of Jan. 1. The Zhengzhou Commodity Exchange and Shanghai Futures Exchange said they will extend fees now levied on some contracts to other products.

The government has pledged to use price controls and may raise interest rates a second time this year to slow inflation that rose last month to a two-year high and to curb food costs that jumped 10.1 percent in October. Chicago-based CME Group Inc. and other U.S. and European commodity exchanges also are charging more to trade some raw materials after prices jumped.

“Raising fees to be active on the exchange is a predictable move to try to calm down speculative investment,” said Gary Mead, an analyst at VM Group in London. “But high futures prices reflect both speculative investment and fundamental supply-demand factors.” (more)

Bloomberg Businessweek - 5 December 2010

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Buy Gold: It’s the Only Way to Combat Government Spending

By The Mogambo Guru

I tried to tell my boss that my unexplained absence was because I was so Completely Freaked Out (CFO) that I didn’t know what to do all weekend except hide like a little crybaby coward in the Big, Beautiful Mogambo Bunker (BBMB) waiting for the inevitable collapse of the entire world order because of the massive over-creation of money by the foul Federal Reserve, where I whimpered and cried in fear because We’re Freaking Doomed (WFD) and there is nothing – repeat, nothing! – that can be done.

Naturally, I lost track of time, and so my absence is completely understandable and not my fault, but is, instead, the fault of the foul, filthy Federal Reserve creating so much money, for so long, that the US economy has been turned into a bloated, cancerous, twisted, bloated, government-centric grotesquerie that has almost destroyed us.

I didn’t tell her that through the mist of my bitter tears, though, I still managed to get a good laugh from the quixotic earnestness of Erskine Bowles and Alan Simpson, chairmen of some idiotic National Commission on Fiscal Responsibility and Reform trying to craft a plan to reduce government spending in an effort to reduce the national debt. (more)

3 Great Stock Buys for Black Friday

American consumers will begin to show their true colors when they make an appearance at their favorite mall or retail outlet this Black Friday - the official kick-off to the holiday shopping season.

The Friday after Thanksgiving marks the day when many retailers can count on high store traffic as consumers hit shopping malls and web sites around the country. The big question this year is whether or not the American consumer will show up on Black Friday.

Investors of all stripes should be cognizant of what the consumer is doing right now, and soon the data will reveal exactly how financially healthy American's really are. I believe we'll see a stronger consumer emerge this Friday, and while I think they'll be looking for value, I also expect they'll be looking to loosen the purse strings a little bit.

A quick run-down of the retail industry revealed some great buys. First, Kohl's (NYSE: KSS) looks great after breaking out past $54 resistance. It should keep running to $60 before any kind of substantial pull back. This is a great long above $54.50. (more)

The middle men making a killing out of Facebook

Whether you are in Silicon Valley or on Wall Street – or anywhere with a portfolio of shares and some money to spare – the hottest topic in investment has long been, when will Facebook float on the stock market? But for some rich individuals, and cast of brokers and other middlemen, there is no patience for finding out. They want a piece of Facebook now – and they're getting it.

While the social networking site is firmly embedded in the culture, with more than 500 million users worldwide, its young founder, Mark Zuckerberg, is still trying to work out a way to generate profits commensurate with its social influence and with the huge financial hopes pinned on him.

Shares in the company have been given to only a small gaggle of employees, past and present, and to the firm's early venture capital backers, but that hasn't stopped a feeding frenzy in which they are changing hands at higher and higher valuations on private markets. In recent weeks, some stock has sold at a price that values the company at $41bn (£26bn), suggesting it is the No 3 most valuable internet business after Google and Amazon. (more)

European Banks ‘Nearly Bust’ If Euro Collapses, Evolution Says

The European banking system would be “nearly bust” if the euro were to be abandoned which means the 16-member currency “cannot and should not go,” Evolution Securities Ltd. said.

“If the euro is abandoned, and we go back to the peseta, lira, escudo, drachma etc., devaluations would follow immediately,” said Arturo de Frias, head of bank research at Evolution in a note to investors today, adding the industry is a “great buying opportunity.” Devaluations mean write-offs “of a size that would render the whole European banking system completely insolvent.”

Contagion from Europe’s sovereign debt crisis is spreading to Spain, sparking concern that the European rescue fund set up in May isn’t large enough. French, German and U.K. banks could lose 360 billion euros ($479 billion) if the euro collapsed, assuming a 30 percent devaluation in the wake of the restoration of national currencies, said de Frias. (more)

Is A Twenty Year Low On The Real (Not Nominal) S&P Approaching?

The fact that looking at market performance on a nominal basis (i.e., unadjusted for the decline in purchasing power, or the increase in hard asset prices) is foolish, has recently been understood by even some of the most garish financial tabloids. That said, Ben Bernanke could not be happier if the general public remained broadly dumb about the so-called Zimbabwe phenomenon: i.e. when the stock market goes up by a billion percent, yet purchasing power drops by a trillion. Which is why today we present a visual projection by Sean Corrigan of Diapason Securities, which looks at the S&P on a trade weighted basis, and which looks at the various market cycles not so much from a stock/PE boom-bust basis, but from the view of monetary strength of the underlying currency backing the US stock market, namely the dollar. Corrigan says: "Remember that it never does to get carried away by nominal prices, meaning one should always try to adjust for either or both of currency changes and alterations in the purchasing power of the cash in which an asset is quotes. On that first reckoning, asll you triskaidekaphobes might want to review the prospects for the S&P500, where a 50% loss of dollar-adjusted value over the next year or two, would just be neurologically exact for words." Why 50%? As the chart below shows, a 50% real retracement in stock prices is precisely where the downward channel of the lower lows of the S&P would take us. What that wouold mean is that by October 2012, the S&P will hit approximately a 20 year low. Considering all the monetary fornication that the chairman has embarked on vis-a-vis the middle class and the US currency, we will be lucky if in 2 years the market IS down just 50% adjusted for the amount of KY poured down (or as the case may be, up) the appropriate middle class orifice. (more)

Hungary Follows Argentina in Pension-Fund Ultimatum, `Nightmare' for Some

Hungary is giving its citizens an ultimatum: move your private-pension fund assets to the state or lose your state pension.

Economy Minister Gyorgy Matolcsy announced the policy yesterday, escalating a government drive to bring 3 trillion forint ($14.6 billion) of privately managed pension assets under state control to reduce the budget deficit and public debt. Workers who opt against returning to the state system stand to lose 70 percent of their pension claim.

“This is effectively a nationalization of private pension funds,” David Nemeth, an economist at ING Groep NV in Budapest, said in a phone interview. “It’s the nightmare scenario.”

Hungary is rolling back pension changes implemented more than a decade ago as countries from Poland to Lithuania find themselves squeezed by policies designed to limit long-term liabilities by shifting workers into private funds. Now the cost is swelling debt and deficit levels at a time when the European Union is demanding greater fiscal discipline. (more)

BNN: Top Picks

Paul Harris, Partner and Portfolio Manager, Avenue Investment Management, shares his top picks.


click here for video

UBS Sees U.S. Stocks Rising Into 2011

The Standard & Poor’s 500 Index could fall as much as 3 percent in coming weeks, representing a buying opportunity for investors, as the U.S. benchmark gauge will rally into 2011, according to technical analysts at UBS AG.

Zurich-based Michael Riesner and Marc Mueller wrote in a report dated yesterday that a new support level, or floor limiting declines, for the index is between 1,155 and 1,145, a 2.2 percent to 3 percent decline from yesterday’s 1,180.73 close. The S&P 500 has slipped 0.2 percent so far this month and is headed for the first monthly decline since August as concern escalated that Europe’s debt crisis will spread.

“Another one or two weeks of consolidation should bring us into position for another bull run,” Riesner and Mueller wrote. The analysts see the first resistance level, or ceiling limiting gains, for the S&P 500 at 1,227, a 3.9 percent increase compared with yesterday’s close. “We are gaining conviction for a mid- December low projection, which finally opens the way for a classic Christmas/yearend rally.”

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. UBS is ranked as the top bank for equity technical analysis and charting according to a 2010 Thomson Extel survey.

‘The Euro Game Is Up! Who the hell do you think you are?’ – Nigel Farage MEP

Mounting Unemployment in America: Poverty and "Social Explosion" by Bob Chapman

The social net has become a bit more frayed. Soon extended unemployment benefits will cease and 2 million Americans will have to dip into their savings, if they have any. This is an outgrowth of the effects of free trade, globalization, offshoring and outsourcing. We have lost 8.5 million jobs over the last ten years to this destructive process. We have seen more than 42,000 manufacturing plants leave the country as well. There are now more than 17 million Americans unemployed and the U6 official government unemployment figures 17%. If you remove the bogus birth/death ration, the real figure is 22-5/8%. Over that ten-year period we have lost about 5.5 million manufacturing jobs or about 1/3rd of that labor force. As recent as 1985, 25% of output was in manufacturing, now it is close to 11%. America’s physical infrastructure is in a shambles, so that transnational conglomerates can bring us cheap goods to suppress inflation and bring these companies mega-profits, which they keep stored offshore to bypass taxation. They presently have $1.7 trillion in such profits.

This in part has been caused by deficit spending and the creation of money and credit since August 15,1971, when the US left the gold standard. It is not surprising as a result that 81% of the US economy is considered in poor shape and that the IMF fears a social explosion. You could call this a financial death spiral. There is no question the economy is moribund and the next stage could be dead in the water and that is after QE1 which saw $2.5 trillion enter the economy. The first installment of QE2 is in process and that $600 billion will grow to another $2.5 trillion, to be followed by Q3 and a further injection of another $2.5 trillion. There are those who say QE2 should be eliminated. We wonder if they realize that if it is, that the American economy, and most of the world’s economy will collapse. If we had allowed a severe recession to play itself out in the early 1990s all this would have never happened, but that is not what Wall Street and banking wanted. We should have bitten the bullet three years ago, but the elitists wanted to take the problem at least one step further to be sure the final result would bring about one-world government. Readers, that is what this is really all about.(more)

Peter Schiff : The Irish Should Default On Their Debt, Not Become Slaves To Bankers

Happy Thanksgiving

Canadian Business - 23 November-06 December 2010

Canadian Business – Insight and fresh ideas have never been more essential to success, and the new Canadian Business is a magazine all about those ideas. With more topical stories, more original reporting and more compelling voices, every issue of Canadian Business provides business leaders with the analysis and perspective on the issues, trends and personalities that are shaping the future of our economy.

read more here

McAlvany Weekly Commentary

Ireland, the Euro, & the Future: An Interview with Ambrose Evans-Pritchard

Posted on 24 November 2010.

Ambrose Evans-Pritchard is the international business editor of the Daily Telegraph. A long-time opponent of the EU’s constitution and monetary union, he was the Telegraph’s Europe correspondent in Brussels from 1999 to 2004.

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China, Russia quit dollar

China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.

Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.

"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.

The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.

The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.

"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.

Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation. (more)

Martin Armstrong: Show Me The Money

If you wish to eliminate the noise that we have been going through in the Irish euro manipulation, I suggest you print out Armstrong’s October 15th article titled "Show me the Money."

His discussion of each important currency is done with a long term chart and technical discussion. Take each currency and staple the two pages together.

Each week review the currencies in terms of the technical discussions and implications.

click here to read

U.S. Jobless Claims Decline to 407,000, Lowest Since July 2008

Applications for unemployment benefits in the U.S. fell more than forecast last week to the lowest level since July 2008, reinforcing evidence the labor market is healing.

Jobless claims declined by 34,000 to 407,000 in the week ended Nov. 20, Labor Department figures showed today in Washington. The median projection of economists surveyed by Bloomberg News called for a drop to 435,000. The total number of people receiving unemployment insurance decreased to the lowest in two years, and those on extended payments also fell.

Fewer firings lay the groundwork for a pickup in job creation that will generate incomes and spur consumer spending, which accounts for 70 percent of the economy. Even with companies firing fewer workers, unemployment will be slow to decline, according to the Federal Reserve’s latest forecast in which policy makers also lowered their growth projections. (more)

Stocks jump on upbeat data with stocks in tight range

(Reuters) - Wall Street rallied as stock investors put aside worries about swirling global problems on Wednesday, turning to improvement in the labor market and signs consumers are ready to open their wallets ahead of the biggest shopping day of the year.

New claims for unemployment benefits hit their lowest level in more than two years last week while consumer spending rose for a fourth straight month in October, suggesting the economy is nearing a self-sustaining recovery.

The data boosted enthusiasm in the consumer sector, which has outperformed all year, as Black Friday, a key date for retailers and the traditional kickoff to the year-end shopping season, approached. (more)

BUY Rubicon Minerals (RBY)

This gold stock is in a bullish trend, rising 12% last week, and outperforming the rest of the sector.

RBY now looks poised to break out of a weekly symmetrical triangle. Our first target is $6. If the stock can take that out, our next target is $8-$8.50 within the next few weeks.

3 Top Stocks For Gold $1500

click here for you 10 page free report

Insider Selling To Buying Ratio Approaches Five Digits, Hits Record 8,280x In Week Ending November 19

In the first full week of the latest iteration of post-QE2 POMO, which was supposed to see a dramatic ramp in stocks, the only thing we have seen is the biggest insider buying to selling imbalance since the data has been tracked. Overall, selling by S&P500 insiders was 8,279.5x times greater than buying (per Bloomberg). There were 5 insider buys for a total of $150,673, and 117 sales for a total of $1,247,500,249. There is no point to even discuss what this data point indicates.

U.S. Stocks Decline for Second Day on Korea Clash, European Debt Crisis

U.S. stocks dropped for a second day after fighting broke out among North and South Korea and concern grew that Europe’s debt crisis and China’s efforts to tame inflation will slow the global economic rebound.

PulteGroup Inc. and D.R. Horton Inc., the two largest U.S. homebuilders, slumped at least 3.4 percent after a report showed existing home sales trailed estimates. Adobe Systems Inc. slipped 3.4 percent after Morgan Stanley said analysts’ estimates for the first half of fiscal 2011 may be too high. Brocade Communications Systems Inc. tumbled 10 percent as the biggest maker of switches for data-storage networks forecast earnings that missed analysts’ predictions.

The Standard & Poor’s 500 Index slid 1.4 percent to 1,180.73 as of 4 p.m. in New York, and earlier fell 1.8 percent, the most since Aug. 11. The Dow Jones Industrial Average lost 142.21 points, or 1.3 percent to 11,036.37. Stocks also declined as the fallout from a federal probe of Wall Street insider trading continued into a second day. (more)

Chart of the Day: Rare Earth Price Charts

Gold ETFs hold nine years worth of U.S. Supply

Gold’s 24% surge this year to a record is proving no deterrent to George Soros, John Paulson and Paul Touradji, whose investments signal more gains for the longest winning streak in at least nine decades.

Securities and Exchange Commission filings this month by Soros Fund Management LLC, Paulson & Co. and Touradji Capital Management LP listed investments in gold as their biggest holdings. Exchange-traded products own 2,088 metric tons, equal to nine years of U.S. mine supply, data compiled by Bloomberg show. Precious metals will produce the best commodity returns in the next year, Goldman Sachs Group Inc. said in a Nov. 9 report.

The purchases show how investors are snapping up hard assets as governments and central banks led by the Federal Reserve pump more than US$2 trillion into the world financial system. Gold in exchange-traded products, as much as half of which may be held by individual investors according to BlackRock Inc., is equal to more bullion than the official reserves of every country except the U.S., Germany, Italy and France. (more)

Jay Taylor: Turning Hard Times Into Good times

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8 Thanksgiving Option Trades Retailers, food companies should be among the season's winners

We hope this Thanksgiving holiday finds you in good company, good health and good spirits. And we’d like to give you a few more reasons to be thankful this year.

The holiday season is shaping up to be bountiful for a number of retailers and food companies (and not so plentiful for others). The best way to leverage the moves in these stocks will be with options. So here are eight option trading picks we know you’ll be thankful for.

Amazon.com, Inc. (NASDAQ: AMZN) recently bounced strongly off support and is heading toward our price target of $180 per share. If the news continues to be strong. We think the AMZN Dec 175 Calls are a good way to profit from the Black Friday rally. This call is out of the money and there is not much time before expiration, but we don’t expect that traders will need to hold the position for very long. Plus, this setup will keep the cost of entry low. (more)

10 Fascinating Facts About U.S. Currency

We work for it. We wish for it. We save it. We spend it. We gain it. We lose it. Above all, we need it. Yes, money certainly does make the world go round.

In America, that money takes the form of paper bills (printed by the U.S. Bureau of Engraving and Printing) and coins (produced by the U.S. Mint). However, the coins that jingle in your pocket and the bills you stuff in your wallet today are far different from the ones originally produced in the late 1700s.

As you would expect, over the last 200+ years our currency has seen many, many changes -- both big and small. That's a lot of U.S. money trivia to keep up with! So, WalletPop set out to uncover the most interesting tidbits about American currency and share our favorites with you.

Read our questions and answers to discover 10 fascinating facts about U.S. currency.

1. What is the typical lifespan of a dollar bill?
That depends on the denomination of the note. Here are the average lifespans according to the U.S. Bureau of Engraving and Printing (or the BEP):

$1 bill - 22 months
$5 bill - 16 months
$10 bill -18 months
$20 bill - 24 months
$50 bill - 55 months
$100 bill - 89 months

Bills that get worn out from everyday use are taken out of circulation and replaced. Coins usually survive in circulation for about 25 years. (more)

Irish PM Dissolves Government; Spanish Banks Face Debt Challenge; Greece May "Shut-Down"; Meaning of "Guarantee"; Should Ireland Ditch the Euro?

Things continue to simmer in Europe with problems appearing on multiple fronts in Ireland, Spain, Portugal, and Greece.

Here are a few of highlights: Irish Prime Minister Brian Cowen announced he would step down once a series of fiscal packages and budgets were in place next month; Portugal Struggles to Meet Deficit Goal; High Frequency Economics Ltd. says Greece May ‘Shut Down’ on Cash Shortage.

After a look at a few articles I take a look at suggestions for Ireland to abandon the Euro, and a critical look at the meaning of "guarantee".

Irish Leader to Dissolve Government After Budget Passes

The New York Times reports, Irish Leader to Dissolve Government After Budget Passes. (more)

$500 Silver & Imminent Price Explosion

In Bailouts, Spain Will Be 'the Biggie': Strategist

The biggest bailout the European Union will have to do if it comes to it will be Spain and it is worrying that there is not a set mechanism on how to go about it, Cornelia Meyer, CEO & Chairman, MRL Corporation, told CNBC Monday.

At the weekend, euro zone financial ministers and Irish officials agreed on a bailout of under 100 billion euros ($137 billion) for Ireland, sending stocks in Europe and the euro higher, as investors breathed a sigh of relief.

But the next in line for European Union and International Monetary Fund money may be Portugal, and then Spain, analysts said.

"We're getting near the end-game in terms of Ireland, and that was a good bailout, and we did all the right things; but hot on the heels of Ireland we have Portugal and then Spain, and Spain will be the biggie," Meyer said.

She predicted that a Spanish bailout would likely cost up to 500 billion euros; but there is no "real mechanism" to deal with it, Meyer added. (more)

China raises reserve requirement ratio

The People's Bank of China raised the reserve requirement ratio for its banks by a half-percentage point on Friday in an attempt to control the flow of new money and combat inflation.

China's increase is the second such move in days. The central bank also increased the reserve requirement ratio by 50 basis points on Nov. 10.

But China's central bank didn't touch interest rates. There has been much speculation around the world about a possible rate hike by China, and that has some investors on edge.

The reserve ratio increases are one method China can use to keep its strong economy from overheating.

But China's tightening comes as the Federal Reserve plans for more quantitative easing. The Fed plans to inject money into the economy by buying $600 billion in long-term Treasuries over the next eight months.

The Fed's plan has been attacked by many politicians and economists as a program that effectively undermines the value of the dollar. At the same time, U.S. officials have also been critical of China for keeping its own currency, the yuan, artificially low.

4 Stocks Poised to Benefit as Investors Pile Into the Market

Here's a fairly simple investment premise: if the stock market rises +10% or 15% in the next six months, one sector will rise +30% or even +50%. That's because a rising stock market tends to bring out increased interest from individual investors. And they bring lots more business to online brokers. Indeed, I just wrote how individual investor sentiment is now at its highest level in nearly four years, and these folks are getting bullish simply because the market has been on the rebound since late August.

Need more proof? The major online brokers just reported an impressive sequential spike in trading volume, as measured by Daily Average Revenue Trading (DART). E*Trade (Nasdaq: EFTC) and TD Ameritrade (Nasdaq: AMTD) just saw +14% to +15% sequential spikes in October, while Charles Schwab (Nasdaq: SCHW), Interactive Brokers (Nasdaq: IBKR) and TradeStation (Nasdaq: TRAD) saw mid single-digit sequential increases. (more)

Lear Capital: Could An Ounce Of Gold Be Worth Trillions One Day?

In a really bizarre moment in history, a single American dollar was actually worth 4.2 trillion German marks.

It really happened. To fund its mega-expensive World War I effort, Germany severed the tie between its mark and gold -- something that's always happened, sooner or later, with government-generated currency.

Today there are no gold-backed currencies in the world.

After 1914 in Germany, the mark became just another fancy piece of worthless paper. No longer tied to gold, there were no longer any limitations on how many marks could be printed. But no worries, either -- the patriotic German populace somehow believed everything would work out fine as long as Germany won the war. Because the winners of wars, everybody knew, always dictated the terms of surrender, including -- and especially -- the economic terms.

The trouble was:

GERMANY LOST THE WAR

By the end of the war in 1918, Germany was a real mess. The Treaty of Versailles imposed steep war reparations, and that did nothing to strengthen a German Reichmark no longer backed by gold or anything else for that matter. (more)