My friend and Top 10 Financial Blogger Barry Ritholtz also believes we are in a secular bear market but sees the current rallying continuing until as high as 11,500.  In a must read post, he discusses the key factors that have been contributing to, and may continue adding to, the ongoing rally.  More than just lip service, I’ve provided 2 of his great data pieces to look atbelow .

At the same point, it should also be pointed out that both are bullish on gold.  Peter’s position is no secret – but Barry’s confirmation lends significant further support to gold bulls.  Specifically, Barry stated:

As I mentioned in an article this summer, you can look for a close of GLD over $100
and spot Gold over 1032 highs to get long or add to your position (Ideally,a close over 1050).

As we know, Gold smashed through both $1,032 and $1,050.

1]  Composite Of 29 Secular Bear Markets

I love this data because it is a compilation of 29 secular bear markets, as opposed to those that try and simply compare today’s markets to the Crash of 1929 – 1932.  Barry’s notes in the graph make his point very clear. “X” marks the spot that we are currently at:  (click on it to see a larger version if necessary):

2]  11,500 As The Typical Recessionary Sell Off Point

Barry demonstrates that 11,500 was the level we should have reached for a typical recessionary sell off – and that the next 5,000 points was the “end of the world” panic sell-off.  As such, we should get back to 11, 500 before real resistance starts to settle in.  Again, click on the chart for a larger image:

OK, then.  See you all at 11,500.

Regards,
George

Tags: Barry Ritholtz, Peter Grandich, AGORACOM, secular bear market, Dow, 11,500, Gold, $1,000, gold stocks, gold prices

Wall Street Journal, September 21, 2009

The Fed has accounted for half of all Treasury purchases in Q2 ($164 billion of total of $339 billion).  Below we present data for what could be construed as a Treasury funding crisis borne out of lack of demand for longer maturities, once the QE portion of UST purchases expires. This crisis could hit as soon as October.

ZeroHedge.com, September 25, 2009

Regards,
George

(The following quote via TraderMark)

Julian Robertson is a legend; when he speaks – I listen.

Robertson had the best hedge fund record throughout the 1980s and 1990s. It is reported that the compound rate of return to his investors was 32%. During his active years, he was considered to be the “Wizard of Wall Street.” His hedge fund, Tiger Management, became the world’s largest fund, which peaked at over $23 billion invested.

He seems to appear on CNBC once a year, this is our opportunity to learn via osmosis.

(a) Nailed it —> [Oct 30, 2007: Julian Robertson Calling for "Doozy of a Recession"] <— market, as a “forward looking indicator” was at all time highs
(b) Nailed it —> [Oct 13, 2008: Julian Robertson Buying Some of Our Names - But Bearish on Economy]

——

A few days ago, Mr. Robertson appeared on CNBC TV a couple of days ago and his comments have really caught the attention of online investors.  (Peter Grandich, AGORACOM Chief Commentator, would love him).  I’ve provided you with an 8-minute clip of the interview, which is worth its’ weight in gold given his track record.  Some of his comments include:

• We’re in for some rough waters. The recession is temporarily over but the US has not addressed its problems
• The US can’t possibly pay back its debt
• Tragic that US leadership has put the country in this position
• Correct course is to scale back, stop spending and start saving
• It’s almost Armageddon if China and/or Japan stop buying US debt
• Inflation risk is much higher than deflation
• 6-7%  interest rate is conservative … we could easily see 15-20%
• Chinese don’t want to stop buying our bonds – but there could be circumstances where they have to
• His solution would cause temporary pain in America. People will have to ask for it because government won’t.
• Japan could be forced to sell some long-term US bonds, which is much worse than not buying
• China is buying short-term debt because US can’t sell long-term debt.  History has shown that short-term borrowing is fatal.
• US has yet to attack their problems.  ”Stimulating” is just spend and borrow in disguise.  US needs to stop.

Drawing my own conclusions, gold would absolutely benefit from both high inflation and a loss of confidence in US debt, which would have to mean a loss of confidence in the $USD.  What were once fringe scenarios are now very plausible scenarios.

Regards,
George

Do you agree?  Are you cautiously optimistic, bullish, or are we in the middle of a bear market rally?

Would love to hear your thoughts.

Regards,
George

• The US economy
• The US dollar
• Base Metals
• Gold and Precious Metals
• Junior Resource Stocks

In particular, Grandich is calling for gold to break through $1,000 within a month.  Given his uncanny track record, investors should take note.  Click on the screen shot below to watch Peter’s episode.  Pretty powerful information, so viewing is highly recommended.

Regards,
George

“if the government relaxes mark-to-market for 12 to 18 months you could
see financials move 100% in a matter of hours.”  And he went on to say, “In
fact, I hope you’ll replay the soundbite because if the government relaxes
mark-to-market accounting a number of banks stocks will be unbelievable
values at these levels.”

Here is the CNBC Fast Money clip on the subject, including a call on which financial stock would most benefit.  For his money, Najarian suggests a higher risk play – long the Financial Bull 3x ETF FAS (take a look at the 6-month chart).

Hat-tip to Howard Lindzon of Stock Twits

UPDATE:  Citigroup Up 30% Since Blog Alert, Bank Of America Up 50%

Regards,
George

AGORACOM Chief Commentator, Peter Grandich, has offcially shed his permabear skin according to his latest blog post.  This is a pretty important declaration because Grandich has an uncanny ability to call market tops and bottoms in commodities and equity indexes.  In fact, it’s the primary reason I brought him on to AGORACOM and I would easily state that he ranks up there with Peter Schiff.

GRANDICH HAS BEEN JUST AS RIGHT AS PETER SCHIFF

I’m going to work on compiling a chronology over the past couple of years but go ahead and google “Grandich + robbing Peter to pay Paul and Peter is tapped out” (OK, I did it for you).   It’s the phrase he’s been using for 3-4 years now to help illustrate the state of the US economy to his audience and a quick scan of the Google results finds at least one quote in Kitco from the summer of 2005.

At the beginning of 2008, Grandich banged the table on going short the US market once the Dow crossed 13,000.  In short, he’s just been dead on.

GRANDICH NOW BULLISH?

To be clear, he is not advocating running out and filling your boots today.  Grandich believes Dow 5,000 vs. 8,000 is an even money bet right now.  Given the fact his readers have been able to avoid the fall from 14,500 to 6,600, he’s willing to take small losses in order to be a year early, rather than a day late.

Like a freight train that takes miles to come to a full stop once the brakes have been applied, Grandich believes the markets are now in the same process and investors need to start reserving some choice seats for the turn around.

In the short-term however, he does state the following:

“At the minimum, we’re overdue for a sharp bear market rally. Never have my technical indicators suggested so in almost 25 years. Several market indexes are dramatically below key moving averages. Several have never seen this far of a spread between price and moving average while others only once or twice. Knowing in technical analysis you must look only at the charts, I do believe anyone experienced in this type of analogy would suspect as I do that a significant correction of an almost straight-down decline is overdue.”

He’s even put his money where his mouth is and provided specific equities and ETF’s that he would be buying, with a lot of emphasis on oil companies.  Sound choices if you expect the global economy to begin turning around in the next 12-15 months and the stock market to anticipate it sooner.

He also believes gold and precious metals continue to be attractive investments that will run as inflation – due to extreme US deficits – hits the US economy over the next couple of years.

Read his full post.  It is worth the read.

Regards,
George

• Cheerleading the markets vs. reporting on them
• Cheerleading their Wall Street pals vs. holding their feet to the fire

Well, their beating just went mainstream after cancelling an appearance by Rick Santelli on Wednesday.  John Stewart of the Daily Show used the vacant time to rip CNBC to shreads with their bullish clips over the last 2 years. Comedy Central (US) and Comedy Network (Canada) can block you from watching online video depending on where you are located, so I’ve provided the Canadian and US links below.

Watch and enjoy:

CANADIAN VERSION:

US VERSION

• Banks (Most stable banks in the world)
• Mortgages (Banks hold mortgages rather than sell them, so they have to be careful)
• Budget Surplus (Canada has been in surplus for years – going into short-term deficit with stimulus)
• Energy (US will be importing more and more oil from Canada in the future)

The interview caused Peter Grandich, our US residing Chief Commentator to blog Oh Canada! and call for a $CDN at par with the Greenback.

Regards,
George

Tags: small-cap stocks, small-cap, small cap, micro-cap stocks, micro-cap, micro cap, penny stocks, TSX Venture, CNQ, AMEX, OTCBB, Pink Sheets, AGORACOM, investor relations, American Stock Exchange, CNBC, Stephen Harper, Larry Kudlow,

The Wall Street credit-crisis “CYA” playbook continues to be run by those who do not want to accept their portion of the blame.  Specifically, Portfolio.com ran this story titled Mcgraw Hill Drops Book Critical of S&P. What makes the story even more interesting is the fact that it was written by my friend Barry Ritholtz – who is frequently listed as one of the world’s top financial bloggers and often quoted right here on AGORACOM.

The book was so highly anticipated by Wall Street that a month away from publication, 22,000 copies had already been pre-sold.  Wow.

So why did McGraw Hill drop it? According to Portfolio, MH provided the following explanation:

McGraw Hill spokesman Steven Weiss this afternoon said the publisher dropped
the book because of a conflict with Ritholtz over editing, not because of his
criticism of S&P. “The material needed extensive corroboration across a range of
topics. We could not agree on unified approach with the author for resolving
the issues,” Weiss said. He denied that the publisher dropped the book because of what Ritholtz had written about S&P.

OK, anything is possible.  However, given the fact that Barry Ritholtz has both the smarts and the street cred that comes with the PYMWYMI (Put Your Money Where Your Mouth Is) nature of bloggers, I side with him when he provides the following retort from his blog:

Really? You cannot verify these footnotes?

As you can see, the overwhelming majority of the footnotes come with URL
included. So I guess if you lack an internet connection or are unfamiliar with Google,
you might have trouble corroborating the contents of the book. But for everyone else
over the age of 6 years old who is possession of any IQ score better than 75, it really
should not be a problem to accomplish.

But to prove it even further, I challenge any of the McGraw Hill editors or
publishers (or any of the editorial staff) to take a polygraph/lie detector test
- at my expense.

If the poly proves anything I said was false or anything Mr Weiss said was true, I will
let them edit the book however they want, or kill it altogether and not publish anywhere
else.

I’m sold because whenever I’ve had righteousness on my side in the past, I too have challenged people to polygraph tests at my expense. I severely doubt a blogger of Barry’s stature is going to put his reputation on the line at his expense.

CONCLUSION

McGraw Hill blew it.  Sure, they were in a tough position but they put themselves there when they approached Barry to write about the bailout / crisis in the first place.

Clearly, MH publisher Herb Schaffner didn’t see the connection from the outset.  By the time the lightbulb went on and they needed Barry to tone it down, Barry advised “Sorry, Herb, but I don’t do diplomacy.” Barry has 34,000 subscribers (not a typo) for a reason  – he tells it like it is.

At the end of the day, MH made a massive tactical error when it dropped the book.  In this Obama / Geithner / Stimulus package environment, Barry’s criticism of the S&P probably wouldn’t have got much media play.  As such, MH would have been better off simply publishing it as is and letting the S&P stuff blend in with other issues raised by Barry in the book.

Now, S&P has become the book and MH has become the story….. and Barry has an even bigger stage to speak from.  God help those guys.

Regards,
George

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