The Contrarian's View s published 11 times per year on a mostly-irregular schedule, and the views expressed are those of the author and editor, Nick Chase. Because nobody can predict the future, results of past suggestions or recommendations are no guarantee of future results. My own material in this publication may be freely quoted provided proper attribution is given to its source; quotes from other people are subject to fair-use copyright restrictions. Subscription rate: Free on the Internet. Using your favorite Web-browsing program, open URL http://onashi.org. Former paid subscribers to the printed version are now receiving LIFETIME subscriptions, and subscriptions to the printed version are no longer being accepted. Unsolicited material sent to us by UPS or by courier other than the postal service is refused and returned to sender! ISSN 1536-4429 Phone: (508) 757-2881
But in observing what appears to be the Fed's (and the world's other central banks') efforts to keep toxic debt from collapsing the system, it's easy to lose sight of what the Fed's real objective is.... namely, to arrest, or at least slow down in a controlled manner, the collapse of the housing bubble. The shadow of Big Al Greenspan still looms large at the Fed.... remember, it was Greenspan's idea that "the system" would be better served (less damage would be done) if bubbles were allowed to occur, then the Fed would come in and clean up the mess afterward.
The Fed's main tool is the lowering of interest rates. Here it has had some success.... adjustable-rate mortgages are generally keyed to Treasury or LIBOR interest rates, and these have been dropped to the point where a majority (maybe most) adjustable-rate mortgages up for reset over the next few months and which are past their "teaser rate" periods will have their monthly payments lowered.... meaning, the homeowners (or maybe I should say, home-renters) might be able to afford to stay in their homes longer.... for as long as the prices of their homes don't crater so far that it would make financial sense to walk away. That gives the mortgage market a little breather, until 2009 and 2010 when the "liar's loans" advance beyond their teaser rates. Remember, these liar's homes are where the mortgagees could never really afford to own them in the first place.... they have no skin in the game (no equity) and will walk away as soon as it is cheaper to rent.
The Fed's secondary tool is to take dodgy debt onto its balance sheet in exchange for AAA-rated Treasuries.... from only its favored partners, of course. (Enterprises not so favored can go suck eggs.) This prevents the debt from being marked to market, and the remaining toxic stuff on banks' balance sheets, or offloaded onto the balance sheets of its subsidiaries, becomes zombie debt.... nobody really knows what it's worth because it isn't marked to market, and everybody is afraid to find out, and nobody is going to try. The word "mortgage" is derived from medieval French meaning "dead weight". How appropriate.... the subprime, alt-A and other mortgages that never should have been written, along with all of their derivative products, are truly a dead weight on the system, where lending remains largely frozen because debt is not marked to market and lenders are afraid they won't be paid back.
The Fed's efforts to prop up zombie debt means that houses are also not properly priced to market (because the zombie debt tied up in each house is, on paper, worth more than the house would sell for in an unencumbered market). So, we are winding up with zombie houses, which clog the market until banks are willing to do short sales or until the houses are foreclosed. And the supply of eligible buyers continues to shrink (because lending standards are being tightened) as the number of foreclosed, empty or never-occupied houses on the market continues to rise. You would think that with the politicians' cries for more "affordable housing", they would let house prices fall until ordinary folks can again afford them. But no, this logical solution eludes them.... they promulgate policies which prod people to remain in overpriced homes, to prevent houses from being marked to market, and to keep homeowners indentured as debt slaves to the banking system. So, exactly, whose interests are being protected here? For a clue, look at your congresscritter's support from lobbyists.
The Fed's tertiary tool is to buy government bonds from the Treasury or on the open market with money it prints, and swap that debt for its primary dealers' dodgy debt. This is clearly inflationary.... a step of last resort.... and it hasn't done that yet (so far, its moves have been largely "sterile"), but I have no doubt it will if it exhausts the supply of Treasury assets on its balance sheet and subsequently panics. Once you see the Fed printing money to buy bonds, it's all over.... hyperinflation lies directly ahead, even while the asset deflation (in real terms) proceeds unencumbered.
You may recall that in the 1990s Japan was severely criticized for allowing banks to carry zombie debt (and Japan, consequently, also had zombie commercial real estate). So, inquiring minds want to know: Why are doing the same stupid thing? Well, look at the Fed's choices: (1) Allow assets to be marked to market; (2) bring on the zombies; (3) print money. Choice 1 is perceived to lead to systemic collapse. Choice 3 leads to hyperinflation. So the Fed has chosen #2, because it appears to the Fed to be the least destructive.... and, not coincidentally, allows the Fed managers to keep their vise-like grip over the lifeblood of the economy.
Japan's stock market is now, 20 years after its
bubble popped, beginning to show signs of life. We
are in the eighth year after our stock bubble popped
(March 2000). If history is a guide, there's only 12
more years to go.
Many inquiring minds have been asking for an update of this pool. I am pleased to present a new screen shot of the same Alt-A pool. Once again, thanks go to "CS" for the screen shot.
The pool data just keeps getting uglier and uglier.
Month REO 60+
10-2007 0.00% 11.53%
11-2007 0.04% 13.30%
12-2007 0.64% 16.83%
01-2008 1.83% 19.32%
02-2008 3.56% 22.69%
60 day delinquencies or greater has been rising at a nice steady pace of 2.5% to 3.5% or so every month since August 2007. The Real Estate Owned (REO) number is now a whopping 3.56% of the pool.
Inquiring minds may be asking about lines 7 and 8 as well as the GEO lines at the bottom of the screen shot.
* Line 7 is the sum of lines 3 through 6 (anything
60 days late or greater plus all previous foreclosures
and REOs)
* Line 8 is the sum of lines 4 through 6 (anything
90 days late or greater plus all previous foreclosures
and REOs).
* The GEO lines (geographic distribution) show
this pool is 48% California and 14% Florida.
Cesspool Bottom Line
22.69% of a pool that was 92.6% rated AAA is 60 days delinquent or worse. 3.56% of that pool is REO. That's an amazing performance for an AAA pool whose issue date was May, 2007. At the current rate of progression it would not be surprising to see 30% of this pool get to REO status.
And the underlying facts denote a company in a death spiral:
* Even excluding non-recurring items, Ambac's losses were $6.93 per share, more than quadruple the losses that Wall Street expected.
* Ambac's writedowns of bad collateralized debt obligations (CDOs) and mortgage-backed securities were massive - $5.2 billion.
* Its revenues from its credit insurance plummeted by 87%.
* Its new policy business plunged to virtually zero.
* The net worth of its bond insurance unit, Ambac Assurance, fell below the minimum required to maintain a $400 million credit line - cash the company may need in a pinch.
* The company's shares, which had already lost 93% of their value last year, promptly tumbled another 43% on the news.
* And perhaps most telling of all, the cost of credit swaps on the company - derivatives designed to insure Ambac's guaranteed bonds against default - went through the roof. Just to insure investors for $10 million for five years, it would now cost $1.1 million in upfront premiums plus an additional $500,000 per year. Total cost: a whopping $3.6 million. (Imagine a $10 million life insurance policy costing a man $3.6 million in premiums! Not exactly a vote of confidence in his life expectancy.)
With all this happening - devastating losses, its entire business model on the rocks, a cash squeeze and even questions being raised about its future solvency - you'd expect Wall Street's rating agencies to immediately announce deep downgrades in one fell swoop. But they did precisely the opposite. On Wednesday, Standard & Poor's announced that Ambac's triple-A is "solid," and on Thursday, Moody's also reaffirmed its Aaa rating of the company.
Meanwhile, New York insurance commissioners, while saying they're trying to protect the public, have not only been endorsing the inflated ratings, but actively pleading with the rating agencies not to issue potentially fatal downgrades. Even as recently as last week, New York insurance superintendent Eric Dinallo echoed the mantra of the agencies that the bond insurers are "within the stress scenarios."
How does the CEO of an S&P or a Moody's look himself in the bathroom mirror each morning? You'd have to have a Ph.D. in both psychology and finance to figure it out. But let me at least point out some of the symptoms of the psychosis:
First, while doing absolutely nothing to alter the ratings, they find all kinds of alternate devices to communicate to the world that they're not dumb, that they know the companies are, indeed, in trouble. They put the company's rating on "negative outlook," which is supposed to send the message that, although they may not be doing anything, they're at least "thinking about it." Or they try to sound like rational analysts by actually saying some pretty negative things about the company.
In fact, Reuters reports that the rating agencies have explicitly expressed concern that Ambac "did not have enough capital to cover both a bond default and the crumbling of the securities relying on mortgages." And even S&P's own insurance analyst, Cathy Seifert, said: "The risk is that if [Ambac] can't regain the confidence of the marketplace. Then it's game over."
The rating agencies seem to attribute great import to their commentary and conditional statements surrounding their triple-A ratings. But they're apparently not important enough to include with bond offerings to investors, who typically see only the three letters: S&P's AAA or Moody's Aaa.
Second, the CEOs of the rating agencies rationalize that their deceit, no matter how obvious and egregious, is actually "a public service" in disguise. They know that the entire business model of bond insurers like Ambac is predicated on their triple-A ratings. They know that if they take away the triple As from the bond insurers, they could destroy their business and even possibly doom them to failure.
They know that the bond insurers cover hundreds of thousands of municipal and state governments. So if the bond insurers went under, the entire market for municipal bonds would collapse, threatening the finances of hundreds of thousands of local and state governments throughout the nation. And they also know that their own firms - the rating agencies themselves - derive a big chunk of their revenues by rating those same local governments. So if they downgrade the bond insurers, they are, in effect, threatening the future of their own business.
Result: While their own ratings analysts scream internally for immediate downgrades, the CEOs jury rig the process, override the analysts' conclusions and force-feed the triple-A.
Needless to say, calling this a "public service" is a futile rationalization. The truth will come out no matter what and it's only a matter of time before the rating agencies must cave in to reality, downgrade the bond insurers, and finally face the day of reckoning they've tried so hard to postpone.
The only lasting consequence of the rating agencies' delay tactics is to allow time for more people to get trapped in bad investments and more local governments to borrow money they can't repay. End result: Bigger shock waves on Wall Street and more damage to our economy than it would have suffered otherwise.
We've been around the block a few times, and we can take the bad news like adults - when it happens and as it happens. It's when they cover it up, let it fester and then compulsively lie until their noses are longer than Pinocchio's that they create conditions ripe for panic.
But Ambac's triple-A is just one example of this pattern. We also see very similar circumstances at MBIA, FGIC and every major bond insurer in the country.
With minor variations, it's a similar pattern with S&P, Moody's and even Fitch. (Fitch did downgrade Ambac and MBIA, but has kept their ratings at a still-lofty double-A.)
Nor is this the first time America's top rating agencies deliberately hid the truth, inflated ratings and trashed the savings of Americans ...
In the late 1980s and early 1990s, every one of Wall Street's leading rating agencies consistently gave large life and health insurers their top ratings - even as they themselves recognized the companies were taking on huge risks. The end result was a catastrophe that should have forever taught them a lesson ... but, unfortunately, has long been forgotten.
I've told this story in my book, The Ultimate Safe Money Guide. But to make sure you're not among those who forget it, let me tell it again now - this time in juxtaposition to today's bond insurance cover-up.
The problems began with three, initially small life insurers that based their entire business plan on junk bonds - Executive Life of California, Fidelity Bankers Life and First Capital Life. With Executive Life in the lead, all three invested heavily in junk bonds to pay super-high, guaranteed yields on fixed annuities and other policies. They contracted with large Wall Street brokerage firms to sell their policies through their extensive branch networks. They lured in millions of investors. And they transformed themselves into giant junk bond insurance companies.
The keys to their rapid growth were twofold: First, they had to hide the dangers of junk bonds from their customers. And second, they had to play on the faith people still had in the inherent safety of insurance. But to make the scheme work, they needed two more elements: the cooperation of the Wall Street rating agencies and the blessing of the state insurance commissioners.
The cooperation of the rating agencies was relatively easy. Indeed, for years, the standard operating procedure of the leading insurance company rating agency, A.M. Best & Co., was to "work closely" with the insurers. If you ran an insurance company and wanted a rating, the deal that Best offered you was very favorable indeed. Best said, in effect: "We give you a rating. If you don't like it, we won't publish it. If you like it, you pay us to print up thousands of rating cards and reports that your salespeople can use to sell insurance. And subsequently, if we downgrade your rating or you change your mind, we'll take the rating out of circulation, hiding it in one of our 'non-published' categories. Tails you win; heads they (your customers) lose."
Three newer entrants to the business of rating insurance companies - Moody's, Standard & Poor's and Duff & Phelps (later bought by Fitch) - offered essentially the same deal. But instead of earning their money from reprints of ratings reports, they simply charged a large flat fee for each rating - anywhere from $20,000 to $40,000 per insurance company subsidiary, per year. And later, A.M. Best decided to change its price structure to match the other three, charging the rated companies similar upfront fees.1
Not surprisingly, the rating agencies gave out good grades to almost all comers, especially if they were big and willing to pay the fattest fees. At A.M. Best, the grade inflation got so far out of hand that no one in the industry would be caught alive buying insurance from a company rated "good" by Best. Everyone (except the customers) knew that Best's "good" actually meant bad.
Soon, the grade inflation even began to infect Best's "excellent" grades. The decision makers at Best were so committed to working with the companies, and so afraid to hurt their business with a downgrade, that they continually reaffirmed their top ratings even when it was obvious that the insurers' junk bond portfolios were sinking.
The executives at Best faced exactly the same dilemma as the CEOs of Wall Street's rating agencies face today: If they downgraded the companies, they would destroy their customers' business model. But if they didn't do or say something to reflect the obvious reality, they'd look like dumb fools.
So instead of downgrading, Best's executives told their analysts to start using small, lower case letters next to their "A" grades - cryptic "moderators" that only Best could fully understand. They had "w" for "watchlist," "c" for "conditional" and others.2 Best insisted that these footnotes were "very important." But at the same time, Best allowed the insurance companies to continue advertising the "Excellent" ratings to the public without the footnotes. In effect, Best had two sets of ratings - one for the customers and one as a butt-covering device for professionals.
Pinocchio would be proud.
Over at S&P, however, the noses were even longer. Fred Carr, the head of Executive Life, was not satisfied with his rating from Best and went to Standard & Poor's to get an even better rating. Typically, S&P charged a large insurance company about $40,000 per year to give it a rating. And just like the deal with Best, if the insurance company didn't like the rating, S&P wouldn't publish it. But along with junk bond king Michael Milken, Fred Carr cut an even better deal. Milken paid an extra $1 million under the table and, in exchange, got a guaranteed AAA for his junk bonds and for Fred Carr's insurance company. And all this despite a business model that was predicated largely on junk bond investing!3
Moody's, the least liberal of the established rating agencies, was shell-shocked and a bit pissed. They couldn't believe Executive Life's Carr got an AAA from S&P. So they did something they rarely do. They decided to go ahead and rate Executive Life with no request from Carr and no payment, giving them a grade of "A1," which was still OK, but not superlative.
Carr couldn't care less. By that time, he had gotten everything he needed from the insurance ratings agencies. He knew he could leverage the AAA rating from S&P - combined with his high guaranteed yields - to get filthy rich. And he did just that.
Initially, getting the blessing of insurance regulators was not quite as easy. In fact, the state insurance commissioners around the country were getting so concerned with the industry's growing investments in junk bonds - and unrated bonds - they decided to set up a special office in New York, called the Securities Valuation Office, to monitor the situation.
What was the definition of a junk bond? It should have been the same standard definition that the rating agencies themselves had already established - any bond with a rating from S&P and Moody's of double-B or lower. But the insurance companies didn't like that definition. "You can't do that to us," they told the insurance commissioners. "If you use that definition, everybody will see how much junk we actually have." The commissioners struggled with this, but amazingly, they finally obliged.
It was like rewriting history to suit the new king. Rather than use the widely accepted standards, the insurance commissioners actually invented a brand new, cockamamie bond rating system of their own that conveniently misclassified the bulk of the junk bonds as "secure bonds."4
Result: The insurance companies kept buying more and more junk, more investors got trapped into shaky annuities, and no one had any way of knowing how bad the situation really was - not even the regulators. Pinocchio would be green with envy.
This went on for several years. Finally, however, after a few of us screamed and hollered about the sham, the insurance commissioners realized they simply could not be a party to the cover-up any longer. They decided to bite the bullet. They adopted the standard double-B definition and reclassified more than $30 billion in "secure" bonds as junk bonds. It was the beginning of the first scene in the final act for the junk bond giants.5
The New York Times was one of the first to pick up the story. Newspapers ran it all over the country. And the cover-up was over. But unfortunately, for millions of investors, the fire had barely begun.6
Large junk bond insurance companies were falling like dominoes - Executive Life of California with 452,000 policyholders, Executive Life of New York with 102,000 policyholders, Fidelity Bankers Life with 373,000, First Capital Life with 268,000 - each and every one dragged down by large junk bond holdings.7
These were the same junk bonds that were bought with people's keep-safe insurance money, hidden away by the deceptive insurance companies, covered up by the rating agencies and blessed by the state insurance commissioners. Like today's rating agencies and regulators, they knew they were hiding the truth, but they rationalized it as a "public service" to prevent a negative reaction by investors. In reality, they were merely helping to create the conditions for the very panic they sought to avoid.
One day, everything seemed to be just fine. Then the truth came out and all hell broke loose. Junk bonds went sour. Institutional investors in the insurers immediately demanded their money back. Insurance companies ran out of cash to meet their demands. And their house of cards came crashing down.
At one company after another, the insurance
commissioners marched into the headquarters, took
over the operations and declared a moratorium on all
cash withdrawals by policyholders. How many
policyholders? We checked the records. The failed
companies (including Mutual Benefit Life, which
was caused primarily by real estate speculation) had
exactly 5,950,422 policyholders, including
individuals and groups. Among these, 1.9 million
involved a cash value.8
If you were among these 1.9 million policyholders,
your money was frozen. They wouldn't let you
cancel your policy. They wouldn't even let you
borrow on your policy. If you had a life-and-death
emergency and you needed your money immediately
for medicine or surgery, you had to beg and grovel
before a state bureaucrat to prove that your emergency was more desperate than everyone else's
"emergency."
The state insurance guarantee associations, which were supposed to make policyholders whole in case of an insurance company failure, choked and then went limp. Reason: They had no money. Unlike the FDIC, the insurance guarantee association in your state usually doesn't have money in the kitty ahead of time; it raises the money from surviving insurance companies after a failure. That works when just a few small companies fail. But when the failures are large, where are they going to get the money? The guarantee system itself fails.9
The authorities put their heads together and came up with a "creative" solution. To avoid invoking the guarantee system, they just decided to change the definition of "when a failed company fails." Instead of declaring the bankrupt companies "failed," they decided to call them "financially impaired" or "in rehabilitation." That way, the guarantee mechanism was not triggered and the cashless state guarantee associations saved face, while the freeze on all policyholder assets continued - for months.
Finally, the authorities created new companies with new, reformed annuities yielding far less than the original annuities. They offered policyholders two choices: Either you "opt in" to the new company and accept a loss of yield for years to come. Or you "opt out" and we give you your share of the cash we have available for you right now. How much? In most cases, policyholders got back no more than 50 cents on the dollar. It was the greatest disaster in the history of insurance.
As with the bond insurers of today, the life insurers of the 1990s took excessive risks. Then it was in junk bonds. This time it's in mortgage-backed securities.
Like then, the rating agencies covered up the risks and were paid handsomely to do so. Then it was A.M. Best, S&P, Duff & Phelps and, sometimes, Moody's. Now, it's S&P, Moody's and, to a lesser extent, Fitch.
Both then and now, the rating agencies devised various gimmicks to forestall downgrades while still giving their analysts some vehicle for covering their butts. Then it was ratings footnotes that the companies said were important for professionals but not needed when presenting the ratings to the public. Now, they've dropped that particular practice but use other descriptive devices like "negative outlook" that's maintained for months, keeps getting more and more negative, but is still not reflected in the grades that the public sees.
And in both cases, the primary agenda of the regulators, at least initially, is to "protect the public from the truth" and effectively give their blessing to the cover-up.
The biggest problem of all: This time, the damage could be far greater.
How many retirees have placed their faith in the ratings of hundreds of thousands of tax-exempt bonds that could collapse in value? How many municipal employees and their families are counting on the ability of local governments to roll over their debts in a muni bond market that could be largely obliterated? How many more Americans, already hurting from the housing bust, mortgage meltdown, credit crunch and recession, will be impacted by the shock waves emanating from a muni bond disaster?
I'm afraid it could be many more than the six million with policies in the failed insurers of the 1990s. And I'm afraid that the great bond insurance cover-up, although temporarily postponing the inevitable, will just compound their woes.
Our recommendation: Build a wall of protection around your investment portfolio. Seek alternative markets that are far away from the turmoil of the U.S. credit crisis. And above all, stay safe. Good luck and God bless!
Notes
1 For a discussion of the amounts that each rating
agency charged companies they rate, see "An
Expanded Watch List of Life-Health Insurance
Companies," Insurance Forum, November 1994, pp.
110- 111. Insurance Forum, Inc., Box 245 Ellettsville,
IN 47429 or www.insuranceforum.com.
2 Eric Berg, "New Ratings For Insurers Are Disputed,"
New York Times, April 30, 1991.
3 In 1986, Michael Milken of Drexel Burnham
Lambert, the leading proponent of junk bonds on Wall
Street, persuaded several local governments around the
country to issue municipal bonds for purported public
purposes, raising $1.85 billion from investors. The
investors, based on the disclosures furnished, thought
they were buying municipal bonds for use in public
projects. But they were really buying junk bonds in
disguise: Their money was invested in Guaranteed
Investment Contracts (GICs) with Executive Life
Insurance Company. Executive Life, in turn, put most
of the money into junk bonds. Except for one isolated
transaction, none of the $1.85 billion was used for any
announced public purpose. Fred Carr and Executive
Life made out like a bandit, paying 8% to 9 1/2% for
funds and earning 15% from the junk bonds they
bought through Milken. In at least one documented
case (the Memphis Housing Authority), it was agreed
that S&P would be paid a $1 million fee to rate each
of the municipal bond issues involved in the deal -
apparently a lot more than their normal fee. S&P rated
the bond in Tennessee, plus two issues in Louisiana,
two in Texas, one in Nebraska and one in Colorado.
They all received an AAA rating. Because of the way
the deals were structured, it appears that the AAA
rating was a precondition to the underwriters
completing the transaction. If S&P failed to rate them
AAA, it would have killed the deal. Second, it was
agreed ahead of time that S&P would also give
Executive Life an AAA. Documents in the case
indicate that, when the S&P analysts asked Executive
Life President Fred Carr what he intended to do with
the money, he simply refused to answer them. That
alone should have set off alarm bells and whistles. But
it didn't. S&P went ahead and gave Executive Life the
AAA rating anyhow.
4 The Securities Valuation Office established the
following four bond classes: "YES," "NO*," "NO**,"
and "NO." The first category, "YES," was the one
considered to be investment grade, while the three
"NO" categories were considered junk bonds.
However, the "YES" category actually included billions
of dollars of bonds rated BB or lower (junk) by the
leading rating agencies.
5 Based on the faulty definition of junk bonds used
until 1989, the insurance commissioners reported that
First Capital Life had $842 million, or 20.2% of its
invested assets, in junk bonds at year-end 1989.
However, based on the correct, standard definition of
junk bonds which the commissioners finally began
using in 1990, it turned out that First Capital actually
had $1.6 billion in junk bonds, or 40.7% of its
invested assets. Fidelity Bankers Life's junk bond
holdings, previously reported at $639 million or
18.3% of invested assets, jumped to $1.5 billion or
37.6% of invested assets. All told, the industry's junk
bond holdings surged from $51 billion at December
31, 1998 to $84 billion on December 31, 1990, with
virtually the entire increase attributable to the change
in definition.
6 Eric Berg, "Insurers Forced to Report More
Investments As 'Junk'," New York Times, April 30,
1991.
7 Martin D. Weiss, "Toward A Full Disclosure
Environment In The Insurance Industry," testimony
before the U.S. Senate Committee on Banking,
Housing & Urban Affairs. See especially Chart 1.
8 Ibid., Chart 2.
9 For more on the failure of the guaranty association
system following the large insurance company failures
of the early '90s, see "G.A.O. Finds Pension Risk in
Funds Shifted to Insurers," New York Times, April 22,
1993 and "GAO Hits Guaranty Funds' Gaps," National
Underwriter, May 3, 1993.
[Nick's note: Articles from Weiss Research may
be republished when they include the following
message: This investment news is brought to you by
Money and Markets. Money and Markets is a free
daily investment newsletter from Martin D. Weiss and
Weiss Research analysts offering the latest investing
news and financial insights for the stock market,
including tips and advice on investing in gold, energy
and oil. Dr. Weiss is a leader in the fields of investing,
interest rates, financial safety and economic
forecasting. To view archives or subscribe, visit
http://www.moneyandmarkets.com.
A hustler walks into a Klondike gold camp with a dozen eggs. This camp has had slim pickings and because there is little gold to be had, the hustler could not sell his eggs for more than a nickel each. The hustler then schleps down to the next camp where they've struck it rich. He sold his eggs for ten dollars each. Lesson: Little money, deflation, low price. Lots of money, inflation, high price. The price is a reflection of the money supply relative to the available goods and services. You can now conceptualize monetary theory. The rest is nothing but understanding the mechanical procedures. This is done through the process of going to some business graduate school and getting a Master's Degree in Fed babble. - Thomas Henning
I received an email containing a nostalgic look back at the era of the '60s, and it starts off with the interesting facts that in 1960 the average salary was $4,743, a teacher's salary was $5,174, the minimum wage was $1.00 per hour, a first-class postage stamp was 4 cents, a gallon of gasoline was 31 cents, popcorn at the movies was 20 cents and a soda was 10 cents, and a brand new Chevrolet cost $2,529. In short, things now cost roughly ten times or so what they did 48 years ago, which comes out to about 5% inflation per year. The funny part was, if you are the sort of person who thinks that monetary insanity and the economic calamities it creates is funny, that the National Debt was only $286.3 billion in 1960, and now it is $9,300 trillion, which is not a comparable 10 times higher, but 32 times higher! Hahaha! We're freaking doomed! - Richard Daughty
The primary reason for funding the Bear/JPM deal was to prevent Chapter 11 for Bear. In Chapter 11 Bear would be released from its liabilities with residual assets distributed. That would mean that the specific performance obligations required of Bear on the structured products they were principal to (their inventory) would no longer be obligatory as that is a liability discharged. That would mean not only the $30 billion going publicly up in smoke, but the entire web of obligations written against them would also go up with it. That smoke would take the form of a financially nuclear mushroom cloud. It is estimated that thousands of counter-parties would be engulfed in that mushroom cloud of financial destruction. No major investment bank, insurance company or other financial entity which has major commitments in the OTC derivative market will be allowed to go Chapter 11. This will cost the Fed huge amounts of money - well beyond what you have seen so far. The Fed balance sheet will become garbage on the asset side with growing and in most cases undetermined liabilities. Central banks cannot go broke as they have a blank check they can use to print all the funds required. What a central bank can do is DESTROY THE CURRENCY they represent. The tool for that destruction is a combination of inflation and balance sheet deterioration, the path we are now clearly on. - Jim Sinclair
While Bernanke talked about the underlying strength of our economy, he claimed necessity in saving Bear Stearns from bankruptcy as it would have brought down our entire financial system. How sound can our economy be if the failure of one investment bank could topple it? Does this now mean that no more major banks or brokerage firms will be allowed to fail? Since we routinely accused Japan of practicing "crony capitalism" what do you suppose we should call our version? - Peter Schiff
No wonder consumer confidence has dropped to record lows. The trust is gone. Working people have been hoodwinked one too many times. They don't need lectures on saving money; they need a raise. The big-wigs who scuttled Bear Stearns are still dining on crab-cakes at the Four Seasons while the working slob is just trying to make his way through Greenspan's nuclear winter living on beef jerky and Big Gulps. Where's the justice? - Mike Whitney
Bear Stearns was bailed out, huh? If so, they why are they dead? Why are half of their employees losing jobs? Why are their employees losing life savings? Why was its office building set for a fire sale? No, Bear Stearns was raided, its assets taken by its main creditor, JPMorgan. This was a clear case of JPMorgan being bailed out by the USFed, in order for its credit derivatives not to blow up. JPM cut off Bear Stearns on credit, and killed them with the blessing of the USFed and credit extended by the USFed. They averted a blowup of JPM that would have been an order of magnitude more disastrous than the Long Term Capital Management fiasco of 1998. In fact, the story is worse. By endorsing the raid, the USFed has given a green light for any bank or investment bank to raid any competitor or client that does NOT have access to USFed lending facilities.... We are therefore witnessing an ugly extension to the Mussolini Fascist Business Model toward a consolidation phase of mega bankers. If a competitor or client threatens a big banking institution, conspire with the USFed, deny it credit, raid its assets, and kill it. This is street fighting in three-piece suits. - Jim Willie
With the Federal Reserve System's latest proposal, presented to the public by Secretary of the Treasury Henry "Goldman Sachs" Paulson, the Fed is asking the United States government to make it the Great Protector of Capital.... The new proposals will centralize power over finance in the hands of an agency that is officially run by the government but in fact is run by agents of the largest fractional reserve banks ....Regulation by tenured staff economists will not make the system less fragile. It will make it more top-heavy and less flexible.... Some version of this plan will probably pass in the next Congress. No matter whether it does or does not, the direction is the same: Toward an economy controlled by the federal government in conjunction with titular private ownership of the means of production, that is, toward fascism. - Gary North
The main result of the Paulson Plan will be increased government power over capital markets and their institutions. Certain large players will be cartelized under the enhanced regulatory umbrella. They will be under the government's thumb. In subsequent crises, the government will move further toward capital controls and find it easier to do so. To be totalitarian, a State needs to control investment, that is, the allocation of capital. Controlling the direction of finance is a means to control investment. That is the ultimate stopping point of government control over capital markets. - Michael S. Rozeff
The net effect of all this new funding has been to pump hundreds of billions of dollars into the financial system and bail out banks whose poor decision making should have caused them to go out of business. Instead of being forced to learn their lesson, these poor-performing banks are being rewarded for their financial mismanagement, and the ultimate cost of this bailout will fall on the American taxpayers. Already this new money flowing into the system is spurring talk of the next speculative bubble, possibly this time in commodities. Worst of all, the Treasury Department has recently proposed that the Federal Reserve, which was responsible for the housing bubble and subprime crisis in the first place, be rewarded for all its intervention by being turned into a super-regulator. The Treasury foresees the Fed as the guarantor of market stability, with oversight over any financial institution that could pose a threat to the financial system. Rewarding poor performing financial institutions is bad enough, but rewarding the institution that enabled the current economic crisis is unconscionable. - Ron Paul
Who will bail out the Fed? In reality, we already know the answer to this. It lies in the record high gasoline prices, record high food prices, and either record or near-record prices in almost everything else. You and I will bail out the Fed. Not with money, but by a loss in our standard of living caused by the debasement of our money which is necessary to perpetuate the status quo and bail out a woefully ill financial sector. - Andy Sutton
Markets dependent on credit-based paper money produce increasing levels of debt until the amount of debt becomes unsustainable. This is where we are today. The growth, contraction and coming collapse of debt based credit markets is Friedman's legacy, not free markets. Friedman's theories gave bankers the intellectual cover they needed to indebt America beyond its ability to repay and indeed survive. Hailed as the champion of the free market, Milton Friedman was, instead, its leading assassin. - Darryl Robert Schoon
The Soviet Union didn't crumble. Seems some part of it moved lock-stock-and barrel to Washington where we are now implementing the new State-run 'planned economy' complete with interventions to make sure that there's never too much pain, and that banks which are too big to fail are effectively bought at the behest of the PTB so that those who should lose money because of poor/greed-driven investment decisions never have to face their day of financial reckoning. Instead, we regular taxpayers are treated to more Fed BOHICA (Bend over, here it comes again) and the soundness of our money is massively diluted by the printing presses, run by folks making 6% a year for managing the nation's money, since CONgress abdicated in 1913 its Constitutional mandate to ensure sound money. Bitter? me? Not hardly. Just very disappointed. - George Ure
....Rob Arnott told the audience at my conference that he recently spoke to approximately 200 academics in the area of finance. He asked them how many of them believed in the Efficient Market Hypothesis.... Not one of the academics raised his hand. Then Rob asked how many of them use EMT in their research and assumes it to be true, and nearly every hand was raised. Is it any wonder we have raised a generation of financial engineers who approach leverage and finance with casual hubris? Is it any wonder that so many quantitative funds have blown up? The foundational theory for them and for the CDOs which bought subprime mortgage securities is just wrong. - John Mauldin
....when TV economists open their yaps, they dangerously subtract from the sum of human knowledge. Their mothers should have thrown them away and raised the storks. - Malcolm Berko
The recession is not the Fed's problem. It's the government's. The Fed's job is to defend the currency and fight inflation - exactly the opposite of what this Fed is doing. - Paul Volcker
Regardless of what the Fed is thinking, a rational person would conclude that banks and broker dealers will pawn off as much garbage on the Fed as the Fed is willing to take. And so the Fed's own balance sheet is ballooning with garbage.... Today [April 24], another $75 billion will be added to the swap-o-rama total. That will make the Fed's balance sheet look something like this: $394 Billion Garbage to $473 Billion Treasuries. One additional swap will make the Fed's balance sheet more than 50% garbage. Is this supposed to restore confidence in the Fed? In the banking system? In the US dollar? Is this supposed to make institutions want to lend? Is the fact that the Fed is holding garbage instead of the banks supposed to make the securities more valuable? - Mike Shedlock
But rescues are becoming much more common, largely - we contend - because central bankers are causing more accidents. Central bankers have allowed what business analysts call "mission creep." They used to be concerned only with protecting the value of the currency itself. As for the rest, it was up to businessmen, investors and bankers to look after themselves. But now, there's a central banker directing traffic on every street corner. Full employment, re-election, trade balances - soon, they will be helping kittens down from the trees - while the currency goes to hell. - Bill Bonner
When you add up all the Level II assets by just the eight largest holders in the U.S.... it comes to a staggering
$5 trillion - nearly half the size of the economy. Level III assets are nearly $600 billion.
Is the Fed big enough to bail out all these assets? My best guess is probably not, and more firms will fail. If
the loans and economy both don't start performing, these failures will happen more quickly, which is why my
firm continues to avoid credit risk. It's not hard to envision an acceleration of this process if the market starts
to believe the special loan facilities and other funding processes artificially created to deal with this mess cease
to work. The Fed is slowly becoming the dumping ground for dealers and banks - members of the 'Moral
Hazard Club.' It's is running out of capital, and quickly. The problem assets (at least the ones we know
about) are way too large for the Fed to completely absorb. It's waiting and hoping the economy and credit
markets stabilize before it runs out of ammunition. - Bennet Sedacca
When millions of people are going hungry, it's a crime against humanity that food should be diverted to biofuels. - Palaniappan Chidambaram [Indian Finance Minister]
It's too bad the current presidential candidates have been unable to address the unfolding economic nightmare.
Their collective silence on the matter suggests that they don't have a clue what to say about it. As the
nightmare plays out and black swans flock in to blot out the sun, and the hedge funds come a'tumbling down,
and more big banks blunder into black holes, and businesses big and small across the land shutter up their
operations, and the unemployment rolls swell, and families are thrown out of their houses even when bailouts
are supposed to be saving them (but the bureaucracy can't get the paperwork done in time) -- well now, they
are going to be one pissed off bunch of people. What will they do at the conventions? Our outside the
conventions? - James Howard Kuntsler
I told him I had been on the other side of this, warning for almost a year in advance of the risk of a general systemic failure of derivatives, but nobody would listen. (They're listening now.)
He said they're now trying to guess if we've seen the worst, or if more damage lies ahead. I offered him my opinion.... that the failures will return - worse, probably much worse, but he'll get a "reprieve" of a few months' time.
And this view is also reflected in my opinion of the behavior of the stock market for the next several months. As more and more investors form the opinion that the worst of the partial systemic collapse has been seen, they will grow more confident of the future and will bid up stock prices, particularly financial shares (except for the occasional surprise casualty, where a misstep causes the company to be taken out and shot).
I expect this misplaced enthusiasm to peak in the fall somewhere near election time.... more likely, I think, sometime in October, before the elections. The bear market will resume by year's end or early in 2009 as a new presidential term, the defaulting of "liar's loans" in the home mortgage marketplace, increasing defaults on commercial real estate, and demographics all converge to reassert the primary trend. Don't be confused by nominal prices. The stock market as measured in gold, oil or most anything of tangible value (except real estate) shows an ongoing vicious downdraft.
I currently give odds for a systemic collapse (by
which I mean a near-total freezup of bank lending, a
global stock-market collapse [30+ percent] and the
onset of a true depression) at about 15%, and I
expect these odds not to change much until the fall.
A. "Inheritance" - real (normalized) "dividend and interest distribution" portfolio:
SUMMARY - "Inheritance":
Original cost: $100,000.00 (normalized)
Present value: $126,401.27 (see below)
Increase: $26,401.27 [+26.40%]
COMMENT on "Inheritance": Since the last issue I have added a second 100 shares of Citizens Communications, when its price dipped near $10 per share. (A name change to Frontier Communications is likely soon for CZN.) I have also started nibbling at FelCor Lodging Trust, which owns 80-plus upscale hotels in various cities in the US and Canada, mostly near airports or in tourist areas.
FelCor recently has been shedding lesser-performing properties, and extensively renovating others.... just in time for the recession, which is why its stock price is so depressed. During the last (2002-03) recession the dividend was suspended, and this could happen again; the dividend is indeed at risk. So I'm taking a chance here, but the stock capitalization is considerably less than the value of the underlying properties, and with Ben "Printaholic" Bernanke at the helm of the Fed, I don't doubt that eventually those asset values will work their way higher and that this will be reflected in the price of the stock when the recession clears and those assets earn a decent rate of return.
The portfolio cost (normalized) is $119,051.27 with $12,822.37 currently in cash or near-cash.
B. "Professors' Investment Group (PIG)" - investment club portfolio.
SUMMARY - "PIG":
Original cost: $10,699.00
Present value: $22,165.91
Increase: $11,466.91 [+107.18%]
COMMENT on "PIG": There is no change from the last issue.
C. Roth IRAs - real portfolio:
SUMMARY - Roth IRAs:
Original cost: $30,466.19
Present value: $40,622.20
Increase: $10,156.01 [+33.34%]
COMMENT on Roth IRAs: There is no change since the last issue.
D. TIAA/CREF 403(b) and (non-Roth) IRA retirement plans: My TIAA-CREF and Fidelity non-individual-stocks retirement investments, both the part from which I am making monthly withdrawals and the parts that are "resting", are invested as follows: TIAA traditional, 79.40%; money-markets, 0.02%; inflation indexed bonds, 13.19%; TIAA real estate, 2.26%; MLPs, 4.84%; TIAA-CREF High-Yield II, 0.29%.
TIAA-CREF values, 29Apr2008: stock, 248.82; equity-index, 94.88; MM, 25.15; bond, 84.95; inflation-indexed bond, 52.83; real estate, 313.87; TIAA current yield in SRA, about 4.8%. COMMENT on NYSE "Timer's Trend": We are currently on a BUY signal of April 3, 2008.
____________________________ NYSE TIMER'S TREND _______________________________
Mon 5 Nov 07 # . I . |13543.40 | - *
Tue 6 Nov 07 . I #. |13660.94 | - *
Wed 7 Nov 07 # . I . |13300.02 | . - *
Thu 8 Nov 07 #. I . |13266.29 | . - *
Fri 9 Nov 07 # . I . |13042.74 |*-~~~~~~~~~~~~~~~~~~~~~~~~~~
Mon 12 Nov 07 # . I . |12987.55 | . - *
Tue 13 Nov 07 . I# . |13307.09 | . - *
Wed 14 Nov 07 #. I . |13231.01 | . - *
Thu 15 Nov 07 # . I . |13110.05 | . - *
Fri 16 Nov 07 #. I . |13176.79 | . - *
Mon 19 Nov 07 # . I . |12958.44 | . - *
Tue 20 Nov 07 # . I . |13010.14 @| . - *
Wed 21 Nov 07 # . I . |12799.04 @| . -*
Fri 23 Nov 07 . I# . |12980.88 | . - *
Mon 26 Nov 07 # . I . |12743.44 @| . *
Tue 27 Nov 07 .# I . |12958.44 | . - *
Wed 28 Nov 07 . I # |13289.45 | .- *
Thu 29 Nov 07 .# I . |13311.73 | - *
Fri 30 Nov 07 . I # |13371.72 |-. *
Mon 3 Dec 07 # I . |13314.57 |-. *
Tue 4 Dec 07 # . I . |13248.73 |-. *
Wed 5 Dec 07 . I # |13444.96 |-. *
Thu 6 Dec 07 . | . # |13619.89 + . *
Fri 7 Dec 07 . | .# |13625.58 |+.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Mon 10 Dec 07 . | . # |13727.03 | + *
Tue 11 Dec 07 # I . |13432.77 | .+ *
Wed 12 Dec 07 . & . |13473.90 | + *
Thu 13 Dec 07 # . I . |13517.96 + . *
Fri 14 Dec 07 # . I . |13339.85 | - *
Mon 17 Dec 07 # . I . |13167.20 |~.~*-~~~~~~~~~~~~~~~~~~~~~~~
Tue 18 Dec 07 # I . |13232.47 | . - *
Wed 19 Dec 07 # . I . |13207.27 @| . - *
Thu 20 Dec 07 # I . |13245.64 | . - *
Fri 21 Dec 07 . I #. |13450.65 | . - *
Mon 24 Dec 07 . | .# |13549.33 |-. *
Wed 26 Dec 07 . |# . |13551.69 |-. *
Thu 27 Dec 07 # . I . |13359.61 |-. *
Fri 28 Dec 07 #. I . |13365.87 |-. *
Mon 31 Dec 07 # . I . |13264.82 | - *
Wed 2 Jan 08 # . I . |13043.96 | . - *
Thu 3 Jan 08 #. I . |13056.72 | . - *
Fri 4 Jan 08 # . I . |12800.18 @|~.~*-~~~~~~~~~~~~~~~~~~~~~~~
Mon 7 Jan 08 #. I . |12827.49 @| . - *
Tue 8 Jan 08 # . I . |12589.07 @| . - *
Wed 9 Jan 08 # I . |12735.31 @| . - *
Thu 10 Jan 08 . & . |12853.09 | . - *
Fri 11 Jan 08 # . I . |12606.30 | . - *
Mon 14 Jan 08 . I# . |12778.15 | .- *
Tue 15 Jan 08 # . I . |12501.11 | .- *
Wed 16 Jan 08 #. I . |12466.16 |~.~-*~~~~~~~~~~~~~~~~~~~~~~~
Thu 17 Jan 08 # . I . |12159.21 | . -*
Fri 18 Jan 08 # . I . |12099.30 @|~.~*-~~~~~~~~~~~~~~~~~~~~~~~
Tue 22 Jan 08 # . I . |11971.19 @| . - *
Wed 23 Jan 08 .# I . |12270.17 @| . - *
Thu 24 Jan 08 . #I . |12378.61 | . - *
Fri 25 Jan 08 #. I . |12207.17 | . - *
Mon 28 Jan 08 . | #. |12383.89 | - *
Tue 29 Jan 08 . | # |12480.30 |-. *
Wed 30 Jan 08 . #| . |12442.83 |-. *
Thu 31 Jan 08 . | #. }|12650.36 + . *
Fri 1 Feb 08 . | . # |12743.19 |~+~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Mon 4 Feb 08 . |# . |12635.16 | + *
Tue 5 Feb 08 # . | . [|12265.13 +~.*~~~~~~~~~~~~~~~~~~~~~~~~~
Wed 6 Feb 08 # . I . {|12200.10 |-. *
Thu 7 Feb 08 .# | . |12247.00 | - *
Fri 8 Feb 08 # | . |12182.13 | .- *
Mon 11 Feb 08 . #| . |12240.01 | . - *
Tue 12 Feb 08 . | #. |12373.41 | - *
Wed 13 Feb 08 . | #. }|12552.24 |-. *
Thu 14 Feb 08 #. I . {|12376.98 |-. *
Fri 15 Feb 08 #. I . |12348.21 |-. *
Tue 19 Feb 08 . I# . |12337.22 |-. *
Wed 20 Feb 08 . | #. |12427.26 |-. *
Thu 21 Feb 08 # I . |12284.30 | - *
Fri 22 Feb 08 . #I . |12381.02 |-. *
Mon 25 Feb 08 . | . # }|12570.22 + . *
Tue 26 Feb 08 . | . # |12684.92 |+. *
Wed 27 Feb 08 . | #. |12694.28 |+. *
Thu 28 Feb 08 .# | . |12582.18 |+. *
Fri 29 Feb 08 # . I . {|12266.39 + . *
Mon 3 Mar 08 #. I . |12258.90 | - *
Tue 4 Mar 08 # . I . |12213.80 | . - *
Wed 5 Mar 08 . #I . |12254.99 | . - *
Thu 6 Mar 08 # . I . |12040.39 @| . - *
Fri 7 Mar 08 # . I . |11893.69 @|~.~*-~~~~~~~~~~~~~~~~~~~~~~~
Mon 10 Mar 08 # . I . |11740.15 @| . - *
Tue 11 Mar 08 . & . |12156.81 | . - *
Wed 12 Mar 08 #. I . |12360.58 @| . - *
Thu 13 Mar 08 .# I . |12145.74 | . - *
Fri 14 Mar 08 # . I . |11951.09 | . - *
Mon 17 Mar 08 # . I . |11972.25 | . - *
Tue 18 Mar 08 . I# . |12392.66 | . - *
Wed 19 Mar 08 # . I . |12099.66 | . - *
Thu 20 Mar 08 . #I . |12361.32 | . - *
Mon 24 Mar 08 . I .# |12548.64 |~-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~*
Tue 25 Mar 08 . | #. |12532.60 + . *
Wed 26 Mar 08 .# | . |12422.86 |-. *
Thu 27 Mar 08 # I . |12302.46 + . *
Fri 28 Mar 08 # . I . |12216.40 |-. *
Mon 31 Mar 08 . #I . |12262.89 | - *
Tue 1 Apr 08 . | . # |12654.36 | - *
Wed 2 Apr 08 . | # |12605.83 |-. *
Thu 3 Apr 08 . | .# }|12626.03 |+. *
Fri 4 Apr 08 . | .# |12609.42 | .+ *
Mon 7 Apr 08 . #| . |12612.43 | .+ *
Tue 8 Apr 08 . | . # |12576.44 | .+ *
Wed 9 Apr 08 . | # |12527.26 | .+ *
Thu 10 Apr 08 . | .# |12581.98 | .+ *
Fri 11 Apr 08 . | .# |12325.42 | .+ *
Mon 14 Apr 08 # | . |12302.06 | + *
Tue 15 Apr 08 . |# . |12362.47 |+. *
Wed 16 Apr 08 . | . # |12619.27 | + *
Thu 17 Apr 08 . | # |12620.49 | + *
Fri 18 Apr 08 . | . # |12849.36 | .+ *
Mon 21 Apr 08 . | # |12825.02 | . + *
Tue 22 Apr 08 . #| . |12720.23 | .+ *
Wed 23 Apr 08 . #| . |12673.22 | + *
Thu 24 Apr 08 . | #. |12848.95 | + *
Fri 25 Apr 08 . | .# |12891.86 |+. *
Mon 28 Apr 08 . | # |12871.75 |+. *
Tue 29 Apr 08 . #| . |12831.94 |+. *
--------------------------------------------------------------------------------
COMMENT on NASDAQ "Timer's Trend": We're on a BUY signal of April 16, 2008.
____________________________ NASDAQ TIMER'S TREND _____________________________ Mon 5 Nov 07 # . I . | 2795.18 | .- * Tue 6 Nov 07 .# I . | 2825.18 | .- * Wed 7 Nov 07 # . I . | 2748.76 | . - * Thu 8 Nov 07 # . I . | 2696.00 | . - * Fri 9 Nov 07 # . I . | 2627.94 @| . - * Mon 12 Nov 07 # . I . | 2584.13 @| . - * Tue 13 Nov 07 . I# . | 2673.65 @| . - * Wed 14 Nov 07 #. I . | 2644.32 | . - * Thu 15 Nov 07 # . I . | 2618.51 | . - * Fri 16 Nov 07 # I . | 2637.24 | . - * Mon 19 Nov 07 # . I . | 2593.38 | . - * Tue 20 Nov 07 # . I . | 2596.81 @| . - * Wed 21 Nov 07 # . I . | 2562.15 @| . - * Fri 23 Nov 07 . #I . | 2596.60 | . - * Mon 26 Nov 07 # . I . | 2540.99 @| . - * Tue 27 Nov 07 . #I . | 2580.80 | . - * Wed 28 Nov 07 .# I . | 2662.91 | . - * Thu 29 Nov 07 .# I . | 2668.13 | .- * Fri 30 Nov 07 .# I . | 2660.96 | .- * Mon 3 Dec 07 #. I . | 2637.13 | .- * Tue 4 Dec 07 # . I . | 2619.83 | . - * Wed 5 Dec 07 . #I . | 2666.36 | .- * Thu 6 Dec 07 . I #. | 2709.03 | .- * Fri 7 Dec 07 . #I . | 2706.16 | - * Mon 10 Dec 07 . |# . | 2718.95 |-. * Tue 11 Dec 07 # . I . | 2652.35 |-. * Wed 12 Dec 07 .# I . | 2671.14 |-. * Thu 13 Dec 07 #. I . | 2668.49 | .- * Fri 14 Dec 07 # . I . | 2635.74 | . - * Mon 17 Dec 07 # . I . | 2574.46 @| . - * Tue 18 Dec 07 # I . | 2596.03 | . - * Wed 19 Dec 07 # I . | 2601.01 | . - * Thu 20 Dec 07 . #I . | 2640.86 | . - * Fri 21 Dec 07 . I #. | 2691.99 | .- * Mon 24 Dec 07 . | # | 2713.50 |-. * Wed 26 Dec 07 . | # | 2724.41 + . * Thu 27 Dec 07 # . I . | 2676.79 + . * Fri 28 Dec 07 #. I . | 2674.46 |-. * Mon 31 Dec 07 # . I . | 2652.28 | - * Wed 2 Jan 08 # . I . | 2609.63 | . - * Thu 3 Jan 08 #. I . | 2602.68 @| . - * Fri 4 Jan 08 # . I . | 2504.65 @| . - * Mon 7 Jan 08 # . I . | 2499.46 @| . - * Tue 8 Jan 08 # . I . | 2440.51 @| . - * Wed 9 Jan 08 #. I . | 2474.55 @| . - * Thu 10 Jan 08 .# I . | 2488.52 @| . - * Fri 11 Jan 08 # . I . | 2439.94 @| . - * Mon 14 Jan 08 .# I . | 2478.30 | . - * Tue 15 Jan 08 # . I . | 2417.59 | . - * Wed 16 Jan 08 # . I . | 2394.59 | . - * Thu 17 Jan 08 # . I . | 2346.90 @| . - * Fri 18 Jan 08 # . I . | 2340.02 @| . - * Tue 22 Jan 08 # . I . | 2292.27 @| . - * Wed 23 Jan 08 #. I . | 2316.41 @| . - * Thu 24 Jan 08 . #I . | 2360.92 @| . - * Fri 25 Jan 08 # . I . | 2326.20 | . - * Mon 28 Jan 08 . #I . | 2349.91 | . - * Tue 29 Jan 08 .# I . | 2358.06 | .- * Wed 30 Jan 08 # . I . | 2349.00 | .- * Thu 31 Jan 08 . #I . | 2389.86 | .- * Fri 1 Feb 08 . |# . | 2413.36 | - * Mon 4 Feb 08 # I . | 2382.85 | - * Tue 5 Feb 08 # . I . | 2309.57 | . - * Wed 6 Feb 08 # . I . | 2278.75 | . - * Thu 7 Feb 08 # I . | 2293.03 | . - * Fri 8 Feb 08 .# I . | 2304.85 | . - * Mon 11 Feb 08 .# I . | 2320.06 | . - * Tue 12 Feb 08 # I . | 2320.04 | . - * Wed 13 Feb 08 . |# . | 2373.93 | - * Thu 14 Feb 08 # . I . | 2332.54 | .- * Fri 15 Feb 08 # . I . | 2321.80 | . - * Tue 19 Feb 08 # . I . | 2306.20 | . - * Wed 20 Feb 08 # I . | 2327.10 | . - * Thu 21 Feb 08 . #I . | 2299.78 | . - * Fri 22 Feb 08 #. I . | 2305.35 | . - * Mon 25 Feb 08 . & . | 2327.48 | .- * Tue 26 Feb 08 . & . | 2344.99 | - * Wed 27 Feb 08 . #I . | 2353.78 | - * Thu 28 Feb 08 # . I . | 2331.57 | .- * Fri 29 Feb 08 # . I . | 2271.48 | . - * Mon 3 Mar 08 # . I . | 2258.60 | . - * Tue 4 Mar 08 # . I . | 2260.28 @| . - * Wed 5 Mar 08 .# I . | 2272.81 @| . - * Thu 6 Mar 08 # . I . | 2220.50 @| . - * Fri 7 Mar 08 # . I . | 2212.49 @| . - * Mon 10 Mar 08 # . I . | 2169.34 @| . -* Tue 11 Mar 08 . #I . | 2255.76 | . - * Wed 12 Mar 08 # . I . | 2243.87 @| . - * Thu 13 Mar 08 # I . | 2263.61 | . - * Fri 14 Mar 08 # . I . | 2212.49 @| . - * Mon 17 Mar 08 # . I . | 2177.01 @| . - * Tue 18 Mar 08 . & . | 2268.26 | . - * Wed 19 Mar 08 # . I . | 2209.96 @| . - * Thu 20 Mar 08 . #I . | 2258.11 | . - * Mon 24 Mar 08 . I #. | 2326.75 | .- * Tue 25 Mar 08 . #I . | 2341.05 | - * Wed 26 Mar 08 # . I . | 2324.36 | .- * Thu 27 Mar 08 # . I . | 2280.83 | .- * Fri 28 Mar 08 # . I . | 2261.18 | . - * Mon 31 Mar 08 .# I . | 2279.10 | . - * Tue 1 Apr 08 . | #. | 2362.75 | . - * Wed 2 Apr 08 .# | . | 2361 40 | .- * Thu 3 Apr 08 . #| . | 2363.30 | - * Fri 4 Apr 08 . |# . | 2370.98 |-. * Mon 7 Apr 08 .# | . | 2279.10 |-. * Tue 8 Apr 08 . | #. | 2362.75 |-. * Wed 9 Apr 08 .# | . | 2361.40 |-. * Thu 10 Apr 08 . #| . | 2363.30 |-. * Fri 11 Apr 08 . |# . | 2370.98 |-. * Mon 14 Apr 08 # . | . | 2275.82 | - * Tue 15 Apr 08 # | . | 2286.04 | .- * Wed 16 Apr 08 . | #. }| 2350.11 | - * Thu 17 Apr 08 #. | . [| 2341.83 | - * Fri 18 Apr 08 . | # ]| 2402.97 | - * Mon 21 Apr 08 . #| . | 2408.04 |-. * Tue 22 Apr 08 # . | . [| 2376.94 | - * Wed 23 Apr 08 . #| . | 2405.21 | - * Thu 24 Apr 08 . #| . ]| 2428.92 | - * Fri 25 Apr 08 .# | . | 2422.93 | .- * Mon 28 Apr 08 . # . | 2424.40 | - * Tue 29 Apr 08 . #| . | 2426.10 |-. * --------------------------------------------------------------------------------"Timer's Trend" is based on 4% and 10% exponential moving averages of the New York Stock Exchange or NASDAQ advance/decline lines (that is, the ratio of advancing to declining stocks). There are many symbols shown above, but the ones that count are the braces:
NEXT ISSUE - should appear in May 2008.