Mr. Limm Likes Cash!
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We’re getting another mini-rally in the greenback, thanks largely I believe to the perceived death of Obamacare and the attendant printing those increased expenditures would have brought with them. Of course, there are trillions in deficits rolling down the pike with or without socialized medicine on the table, so I don’t expect this dollar bounce to be particularly long lived.
Let’s have a look at our dollar proxy [[UUP]] to see what we might expect. First the daily chart:
As you can see, we gapped up pretty significantly yesterday, but we’ve been turning up for over a week now, stochastically speaking. I don’t think it’s a major coincidence that the dollar rebound coincided with the increasing possibility of the Dem’s losing their filibuster-proof Senate and the markets perhaps getting the notion that spending might slow. That said, there’s already many wheels in motion on the spending front, and I think perhaps this move reflects more “hope” than reality for the currency markets.
As you can see, on the dailies we’re running into some decent resistance at both the $23.20 mark and then at the 200-day EMA at $23.32. We’ll have to see if those levels hold, but looking at the weekly chart, you might think they will not. The coil on the various oscillators seem to indicate we’re not done with this rebound yet:
As you can see, my near term weekly target at the 34-week EMA ($23.21) coincides with my above daily targets. However, if that level is breached, it looks like the next levels of serious resistance will be $23.75 or so — which is a mile in terms of overall market, and especially commodity reaction.
So be prepared to gird your loins if the dollar continues to strengthen. For my part, I will be laying in wait to accumulate back more of the silver and gold names I dis-horded in December. I added more Silver Wheaton Corp. (USA) [[SLW]] under $16 yesterday, and began buying Fronteer Development Group Inc. (USA) [[FRG]] for the first time at $4.87. I like how it pulled back to the breakout area from the mid $5.20’s, as I had hoped it would.
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In the mean time, it’s seems the banks really like this dollar move, as our favourite (sic) bank index (that Jeremy won’t fix the price indicator for) [[BKX]] has been cheering on this dollar move like they use them for inventory or something.
What’s wacky is that President Obama is currently jaw-boning the hell out of the banks with a threatened “extra-tax” to “pay back the American people” (despite the American people being paid back very favorably for TARP by all but the worst Congressional satraps at Fannie, Freddie, GM and Chrysler who, needless to even mention, are not included in aforesaid punitive tax).
Could it be that everyone is whispering to one another and saying “he’s bullshitting us?” Maybe. Could it also be that this just today new threat from Goldman’s Favourite President about “limiting the size of banks” is going to end up yet another barrier to entry which will — soo-prize! soo-prize! — end up benefitting the largest banks by limiting competition?
Would Congress really do something like that?? (Stifling laughter)
Well, whatever the cause, the banks are off to the races like a drunken Irishman on Derby Day (or “like Jake”) in the last two days, even in the teeth of an overall market downdraft. Check out the Index That Shall not Be Displayed — $BKX :
“What the horse,” no?
And now look at a current Jake Favourite, as I’ve been mentioning on The PPT for these last few days, Southern Powerhouse BB&T Corporation [[BBT]] :
Looking good, no Cisco?
Here’s the weekly for the longer term play:
You can see my ultimate target on this one is $38, and if things continue as they have been, I don’t think that will be a long wait. For the gamblers out there’s Pacific Capital Bancorp [[PCBC]] which Ragin’ Hat Tipped me towards a couple of weeks back at $1.08. It’s been berry berry good to me. I also like Huntington Bancshares Incorporated [[HBAN]] for the potential buy-out and PNC Financial Services [[PNC]] and UBS AG (USA) [[UBS]] for “best survivors” status. For large banks, I continue to think JPMorgan Chase & Co. [[JPM]] will end up on top.
Best to you all.
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Holy crap, PCBC!!
THANKS RAGE!
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I believe the Obama moves will hurt the trading financials such as MS,BAC (Merrill),GS, etc as they make bundles on trading income. GS is actually a bank holding company now (I believe)(bought an insolvent bank about 10 minutes from my house) but it’s phony.
The smaller regionals (FITB,Bank Hawaii, etc) are gonna be okay.
Killing it with GRNB & BPFH … got some SUPR too.
added BANR @ 3.15 … $25 cash/sh & BV $15 with 35% of float short
TC — Blowbama (and more importantly, next Senate Head Chuck the Schmuck Schumer) will do nothing to hurt the big banks that bankroll their campaign coffers.
Pay no attention to the sideshow — it’s bullshit.
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Jake:
The new rules and the limitations on size has just fucked up the banks. The purple lipped moron is now constricting the banking system that will of course lower lending trajectories.
He’s a total fucking disaster.
Just think of Obama as the green-headed “Wizard” projection at the end of the MGM Version of “The Wizard of Oz” and Chuck the Schmuck Schumer (among others) as “the man behind the curtain.”
The Man Behind the Curtain has wallet stuffed with Big Bank I.O.U.;’s — ain’t no way he lets the Big Purple screw the pooch on his election fund.
Watch the sleight of hand, and watch the BKX and KRE.
Anyone get any BBT yet?
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“lower lending trajectories”
Your post is pure nonsense.
Not if you know the lingo, kid.
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Purdy: Why don’t you take your bed wetting liberal fucking ass away from the Fly’s perfection…….. I do love the fact you get shredded on a daily basis. Perhaps you should venture to where your kind roam………….. the pig pen!
Jakester,
GLD and SLV and the metals have taken a crap. So what do you think? Correct down to 95 (gld)? I like Hussman’s letter on inflation, so I think there might be some protection to be had in the PMs, though, in principle, I do not believe in putting money into inert substances. They do not work, and that is anti-capitalistic, as far as I’m concerned. And the (“store of value” stuff is pure nonsense). They are only a store of value in times of stress in the financial markets.
I’m very grateful for this post.
But just curious — what would you consider a “store of value?”
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Wow, that’s weird Spooky, because I see it as almost opposite as you do. Gold is really the only real store of value in my mind. Well, gold and Leon Russell, that is.
http://www.youtube.com/watch?v=r7MoZuP3JBo&feature=related
Jake, I so want to buy FRG now, but I bought a huge position in SVM the last couple of days, based on a rumor that they had discovered a fantastical vein of silver under the Great Wall of China. We’ll see.
I had sent a thank for you looking into Great Panther, but my posts keep getting eaten for some reason. Thought I was banned or something.
Chanci: ask yourself the following question: Let’s say you had to choose between owning farmland and owning gold coins. Which would you rather own? To my mind, there’s simply no question that farmland is by far the better “store” of value….
Farmland can go bust if you overwork it without tending it carefully. There are droughts, floods, pests, etc.
However, if I traded you that farmland for three gold coins, I could exchange those coins for almost anything at roughly the same equivalent rate… forever.
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there are risks in those three gold coins, just as there are risks in owning farmland. But farmland will be farmland a 100 years from now, and it will grow–barring pollution, I guess–more or less the same amount of food. Gold on the other hand won’t necessarily have the same value. A million things can happen. Central banking can change. Currency policy can change. Trade policies can change.
Well, gold has pretty much held its value for 5,000 years, so I guess I’d take my chances.
Plus, you forget portability. Not only is gold the perfect “real” medium of exchange, it can be brought with you to your place of purchase.
Try folding up your ten acres of corn and putting them in your pocket.
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Um, that’s called a futures contract!
Oh yeah, futures contracts are a great “store of value.”
LOFL. Stop now, you are almost to Chiner (sic).
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The only “real” store of value–unless there’s an official gold standard, that is, and even then, it’s only a store of value by decree–is… well, duh… profits. You can also say the following: there is no “real” store of value because value is a product of contractual relationships… But that only leads back to answer number 1. Value is produced through WORK, but because work isn’t always in demand (say, work on cars in 2009), it’s a relation to other elements.
Right, but like a battery stores energy, gold stores “production.”
This is not rocket science.
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I think that was disproven by the collapse of PM prices when everything else fell last year. As production collapsed, gold did not “store” it. TLT, on the other hand, spiked up sharply. I played that trade and did very well.
What’s not rocket science is that the price of gold is a function of demand, and that includes CB demand related to the realignment of the reserve currency, and a host of other issues….
Over the long term, the price of gold relative to inflation has held pretty much constant.
I’m not saying its right for “All times” — just “these times.”
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If there is a rule against starting 3 paragraphs in a row with “as you can see”, then you sir, are breaking it. Keep up the good work.
Yeah, that is pretty odd isn’t it? What I get for doing half of this thing last night…. (couldn’t keep my eyes open, so had to shut it down…)
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Caution — you are in danger of being re-monikered “Dr. Emo.”
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Great post Jake ; like FTBK and RF here
I would say it’s interesting here that the regionals are being bid sky high while PMs aren’t. How’s that for store of value?!;)1
It’s a function of the dollar. The dollar increases in value, so gold — which only reflects value in dollars for us — decreases in nominal value.
Again, not rocket science.
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OMG, or how about this one. This makes me feel like calling up my husband and asking him to come home early. Does everybody remember slow dancing to this, back in the day?
Put this on tonight and dance with your lady or man tonight. I bet it gets you lucky.
http://www.youtube.com/watch?v=5xDyq_RcSo8&feature=related
Jake,
So, in the context of our discussion yesterday, would you say that Obama targeting the banksters represents a move to the right or a populist move. I said months ago on this board that there would have be public hangings in order to restore the balance of things in the Republic. I do believe that the congressional show trials last week were just the first step. Why do I say this? Well, it’s because the financial crisis has opened a real wound in the body politic. And those kinds of wounds, as the Old Testament teaches us, can only be repaired by means of the spectacle of sacrifice. The banksters here function as virgin beauties…
Now, I’m not entirely happy with this situation, as sacrificial economies that seek to repair what real economics has torn asunder represent chthonian forces that, once unleashed, cannot really be controlled. This is also happening on the international level with the trade spat with China. That, too, has the potential to become nasty. All in all, the decade is starting out with some deteriorating “fundamentals,” as it were–i. e., the breach of the social contract both nationally and internationally…
Obamba needs to get Scott Brown and his humiliating loss on healthcare off the headlines, that’s all.
He’s pulling a Hugo Chavez in a country with people far more educated than the hoi polloi Hugo’s got snowed.
His major problem, aside from Chuck the Schmuck and Hildabeast being Goldman’s personal Senator and Secretary of State, respectively, is that he is AGAIN protecting HIS constituencies (ie, Auto Unions @ GM & Chrysler, Fannie and Freddie) while selectively torching others.
That’s not going to go unremarked upon, and it’s EXACTLY what killed him on the healthcare issue (ie, Nebraska, Louisiana, Cadillac Union policy protection).
Seems he’s a lot dumber than I expected.
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He’s dumber than I expected too, but not because of his staging a fight with the banks. This is a good distraction and good politics for him right now …and it doesn’t kill anyone as did your guy’s distractions.
No, you’re right, he’s giving the guys bent on killing us lawyers.
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JG, looks like I was a day early (at least) on my jacksonian buys yesterday. I’m kicking myself somewhat because before i bot, i went back and looked at your “Six Sick Picks” post to refresh my memory as to what you had recommended as buy triggers (it was the 13-week ema, i believe.) After the sell-off yesterday morning, I wasn’t so sure we would get back that far thinking we dove pretty low and things looked to be on the “K-Mart-olive-green-suit-missing-sleeves-and-one-shortened-pant-leg” sale rack. So i jumped in thinking i got a bargain.
Well, wouldn’tcha know. We’re swimming in 13-week lines all over the place today.
the lesson, as always, …I’m an idiot.
Patience is the hardest thing to learn in this game. I struggle with it every day.
Get yourself some BBT, and some other nice banks. Take advantage of the bullschiess parade.
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I’ve had CFNL for a coupla depressing years. Made me gun shy on the whole small bank thing. But maybe i’ll give it another try.
Jake-
Do you think there’s a chance we get a major correction here or are you of the opinion that this will be a short lived one on the way to further gains. TIA
Depends on what the dollar does. I can only tell you what I’m doing which is buying in increments… just got another 2k of SLW at 15.20 today, for example.
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I’ve about 50% of my portfolio invested in miners right now…I’ve kept a good amount of powder dry for this type of scenario, but this panic selling is making me very nervous. I’ll more than likely add these-SLW, PAAS, EXK, ANV, EGO, SSRI (Maybe not this one…Down 20% in one week!)
I shoulda known…Tim Knight claimed he was going to go majorly long in PM’s over the holidays, one of his 2010 goals posts.
Yes, bad omen.
ANV looks incredibly cheap here, might grab some tomorrow. You have to be somewhat disciplined, though, because these things can get unbelievably volatile.
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I wanted to bring this over to your spot. Are you telling me you support 100% what Goldman and the other “proprietary trading” ibanks do in being able to borrow interest-free from the Fed and generate exorbitant returns by dumping this free money into treasuries and such? Then, of course, they get to pay themselves big fat million dollar bonuses. They don’t loan the money out or provide anything more than a very remote benefit to the economy (unless you count making their share prices rise). Furthermore, the responsible people out there who actually have SAVINGS end up having to accept pitiful returns from fixed income CDs and bonds (since unlike banks we can’t borrow interest-free), or else dump their money into the casino we call the financial markets. I’m hardly a communist, but you don’t think thats bullsh*t at all, huh? Good to know where you stand I guess.
No, I think it’s bullshit, but I don’t think Goldman is the source of it, although they certainly benefit from this low interest rate policy.
What I think is Bullshit is Obama playing political theater with the situation, which shows he either doesn’t understand what’s really going on (that the Fed is creating another bubble) or worse, he wants to play hide the ball while your tax dollar goes down the shithole into his personal satraps — GM, Chrysler and the GSV’s (Fan & Fred, etc).
THAT”s what you should be bullshit about… since what Goldman is doing is not taking money out of your pocket (save via inflation).
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Did you object to the whole “political theater” that has been called the Iraq War? The housing boom. Obama’s political theater–which is redundant, since politics is and has always been theater–is a noble and necessary step, whether or not it’s also designed, quite ably, might I add, to change the conversation away from the poster-boy.
Anyway, have to run see the kids!
LOL.
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Commodities are really taking it on the chin today–PMs hit surprisingly hard. All due to fears that China will begin to reign in lending to battle inflationary pressures? I just can’t imagine the Chinese pulling the plug in any meaningful way while it is clear that the American/European economies are still in bad shape.
The Chinese do not have the reserve currency… we do.
They are looking to pop some bubbles in their speculative markets, for sure.
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No, the moves are primarily due to the un-caging of the one person on the planet who has inflation-fighting cred – Volker.
Theater.
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Funny and timely
http://twitpic.com/z4b84
I like this one too:
http://twitpic.com/y9v4w
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LOL
I am enjoying the discussion here and elsewhere on this site today.
btw- I agree that Obama’s announcement is more about capturing the news cycle.
I am thinking we are going to get a nice bouncy bounce tomorrow…
Developing….
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You rock!!!!!!
nice post and thread…good info and thought provoking.
what happens to the market if (while still unlikely) Bernanke does not get re-confirmed?
As Bush I said, as voiced by Dana Carvey:
“Nah Gon’ Happen”
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Are those bourbon barrels?? If so, YOU rock!
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