With analysis like this, it's not surprising US financials are so bad

For Investor's Business Daily (a publication that makes Pinochet look like a commie bedwetter) the reason for the decline in stocks is clear. It has nothing to do with the multiple years of "self governing" banks given free reign by the most irresponsible administration of modern times. It has nothing to do with the credit crunch, with sinking house prices, with retail inflation, with pinkslips being handed round like confetti. It has nothing to do with the negative savings ratio of spoiled brat I-want-it-all-and-I-want-it-now citizens who'd rather put a plasma TV on an overburdened credit card than be in the least bit responsible and do quaint things like "save money".

None of that. According to IBD, the reason for the stock slump is simple. It's Barack Obama. This photo is of today's print version of IBD.

I now understand why the USA is in so much trouble. Its business leaders read total crap and believe it. (Thank you to reader RR for the headsup).

PS: This is the article that accompanied the chart. Enjoy it, because it will be the only time I ever link IBD via this blog.

Trading Post (base metals relief rally edition)

It's not exactly throwing hats in the air, of course, but copper rallying 5% to $1.81/lb is at least in the right direction. Notable amongst the the base metals complex (all green) is Nickel, up 12.5% to $4.88.

As a result, FCX and PCU have both turned green on the day, with Freeport up a handy 4%. Other spots of BM green to have caught my eye include Amerigo (ARG.to) up 5.7% at $0.56 and Gold Hawk (CGK.v) up 20%, both of those on low volumes.

One that hasn't rallied is Vale (RIO), still slightly in the red despite being exposed to Nickel. Perhaps the general Brazil malaise (bovespa is off 3%) weighs heavier than company fundamentals right now.

Metanor (MTO.v) is down 10% this morning despite getting another dose of pumperooney treatment from Jay Taylor this weekend. Volumes at nothing, too. Losing your touch, Jay?

A sad one for me to see is Los Andes Copper (LA.v) down at just six cents a share. Multibillion pound copper deposits are worth precisely nothing these days it seems, even with evidence of further Chinese interest in the industrial metals sector showing up today. Go figure.

Petrobras (PBR) now at $20 a share. When I was whacking into this stock as being overpriced earlier in the year I had a hate mailer who'd send multiple crap per week to me, and every single mail included the name Ken Heebner. Strange how the mails stopped at the same time Heebner lost his auto-invite to CNBC, isn't it?

Crystallex (KRY) at $0.34. Thirty-four bottles of beer on the wall, 34 bottles of beer. Take one down and pass it around, 33 bottles of beer on the wall.......

By the way, I'm in cash and I'm staying that way today. Not even a little splash'n'dash to tempt me. Not even SLV. Preservation of capital is boring, I know. But it does have this nice side-effect of....well...of preserving one's capital.


UPDATE: Just minutes after publishing this note, RIO sprang to life and is now 1% up. Sheer coincidence, or does the investment community hang on every word said at IncakolaNews? YOU BE THE JUDGE!

The Antonini Wilson Suitcase trial thingy in Miami gets its verdict today

Another Telpuk photo rescues another boring post: amazing what
they can do with photoshop these days, isn't it?

Borev ran this note on the "valijagate" trial in Miami over the weekend and a reader passed the link on to me and said, "So? Waddya think, Otto? Exciting stuff no? Coming to a climax, no?".

No.

I've tried, I've really tried to get all hot'n'bothered about the suitcase trial thingy but it's just not working. Even the nekkid photos of the Telpuk girl were disappointing in that plasticky way, but the main problem I have with all this is that on the one hand you have a prosecution revealing shock truths about corruption in South America (which shocks nobody who lives down here) and on the other you have a shocked defence accusing the USA of meddling in South American affairs and generally stirring up shit for its own good (which also shocks nobody down here).

It's a zero-sum game, y'see. Add that to the fact that I don't like soap-operas, and half the cast of this one are straight out of the worst Mexican telenovela possible. You have the fat dickhead millionaire, the wannabe playboy model who has opportunity knock on her door, high level gov't shenanigans, thrusting truth-seekers with their own ambitions, guilty-person-declared-innocent / innocent-person-declared-guilty (whichever way it goes for Franklin Duran today), then the fast cars, fast women, intrigue, private jets etc etc etc ad infinitum. It's very fitting that the whole thing is going down in Miami, all things told.

So the verdict is supposed to hit the wires this afternoon and Franklin Duran gets anything from set free to 15 years in the can. Whatever way it goes, a squillion words will get written on the affair on both sides of the fight. But count me out as from the end of this post. Sorry, not interested, go get your fix somewhere else.


UPDATE: Against my better judgement, a quick update. The jury hasn't been able to reach a unanimous verdict today and so the deliberations will continue tomorrow.

For balanced, objective reporting, don't bother reading Bloomberg Venezuela

Another piece of biased crap from Bloomberg Venezuela hit the wires today, penned by Steve Bodzin and Matthew Walter (what? Him again? Sheer coincidence, y'know.........). Entitled "Chávez Ambitions in Venezuela, Abroad May Sink With Oil Price" its premise is that Venezuela is in the schtuck if oil prices remain low.

I don't really have a major problem with the concept of the note; after all, I said much the same thing with this post on Peru yesterday and even mentioned Venezuela will be in the same kind of position as Peru if long-term prices for commodities stay where they are (for the record, I say U$70/bbl is a baseline level for Venezuela in 2009 and U$90/bbl is comfortable). No, the problem I have with the crud from Bloomberg is the way the business world just gets spoonfed what it wants to hear from people who should be reporting the news, not trying to invent their own version of it.

1) Let's note the language used by Walter and Bodzin:

"tumbling oil prices", "slash output" "tailspin", "socialist revolution", "plummeting oil revenue", "arms purchases from Russia", "oil subsidies for Cuba".

And all that, ladies and gentlemen, is in the first two paragraphs of the report! Errrr....trying to suggest something here, bloomiedudes? I can hear the chat at Bloomie Vzla editorial meetings right now; "Hey, I have a great idea! Let's treat our readership like stupid, braindead sheep...that'll be good for ratings!"

2) So what about the people quoted in the report? Well Walter and Bodzin have managed to collate eight different people to quote from which is all very industrious and that, but strangely seven of those are anti-Chávez, his gov't and his plans. The other person quoted? Hugo Chávez. This is just the kind of populist crap the world wants to read, of course. But don't you think that Bloomie could have dug out just one voice to pit against the seven they quickly cobbled together for this ridiculously biased attack note? Just one? For the sake of appearance of trying to be slightly fair and balanced? Nah, not Bloomberg Venezuela. We have to put up with moronic reporting written by morons for morons and edited by morons.

So go and read the note if you want. As it happens I'm doing Walter and Bodzin a favour here, as they actually get paid year-end bonuses depending on the popularity of their reports (hey, working for Bloomie is like working for Gawker! I'd never thought of it that way before...). But please don't confuse what you read with serious reporting. If these so-called reporters want a job as analysts then they should go out and get one, then they'd have all the right in the world to opine on their chosen subject. But they're reporters, not analysts. They're paid to write balanced reports, not one-sided crap like this. Serious businesspeople read Reuters for LatAm.

Cardero (CDY): You could have knocked me down with a feather....

....they actually sold something.

OK, it's not "sold" as yet (and I'd sure like to see the full terms of agreement) but according to the PR just released CDY has sold its Pampa de Pongo iron ore deposit for a cool $200m. They get $10m within the first three months and then the other $190m is supposedly due within nine months. During this time the buyers, Nanjinzhao Group of China, have to get the necessary paperwork from their government.

Nanjinzhao is a bit of a surprise name to play with here; Pampa de Pongo has an approximate U$3.3Bn (with a "B") construction cost attached to it, so the numbers quoted in the CDY press release this morning suggest that this is a big project for Nanjinzhao to take on relative to its present size. On the other hand, most of the Chinese metals buyouts in the last two years are headed up by this-or-that company but really it's China the Nation buying into and developing the mines.

Back to Cardero; with 57m shares out, this $200m deal would add a large, large chunk of cash to company assets. Shares are trading up 35%+ at C$1.97 this morning (Canandian stock CDU.to), and if the company receives the full $200m on schedule it's worth $3.50 a share in cash.....one to think about. I have to say here that I've never been comfortable with the arch-promo techniques used at CDY and the other companies in the "Cardero Group" (just check out the "anatomy of a canadian stock promotion" series to see where I'm coming from and remember DRI.v is the same stable).

But a signed deal is a signed deal, no arguing with that one. I'll certainly feel more convinced that CDY is going to close the deal when the first U$10m is handed over and if/when Nanjinzhao makes noises about getting its hands on the necessary Chinese paperwork. So for the moment you can slate me for being leery but I'm remaining sceptical on this deal, bird-in-the-hand and boy-who-cried-wolf and all that. However I'll be very happy to be eventually proved wrong on this; those who have read the story of the boy who cried wolf will recall that at the end of the story, the wolf actually turned up.

Chart of the Day: The Gold Silver ratio (an update)

It's my favourite ratio chart in the whole wide world (because it's useful) and it makes and appearance here every two weeks or so. Here we go again.....

(click to enlarge)

....and this time the moral of the story is "let's not worry too much about the idiocies of the short-term. Eyes on the prize, people. Eyes on the prize". FWIW, I had a couple of separate conversations with market professionals over the weekend (a couple by e-mail, one by phone). The one thing they had in common was the phrase "I'm buying silver right now", and the only difference was the method.

For the record I think SLV is the way to go. It gives me the flexibility I want (being close to full liquidity at the push of a button is a big advantage). I also think there's a lot of paper trades to cover as we get close to COMEX delivery day, and the bigger players will be buying up open interest contracts at any price to close the arbitrage gap between silver/gold's paper price and the physical price out there at your local coin shop. And sorry, tinfoilhatters...as much as it might please you guys, I'm not expecting the total demise of the US dollar in the next couple of months.

By the way, I nearly put up the six month version of the GSR chart instead of the longer timeframe above because even though I know that most TA is mumbojumbo, it sure looks like a near-term head and shoulders is forming. You grasp at your own straws, I'll grasp at mine :-)

The Don Coxe conference call tapescript, October 24th 2008

Don Coxe definitely wears glasses

For all you Don Coxe addicts out there, here's the tapescript to last Friday's conference call entitled "Denominating Debt Driven Deflation." Eleven pages of Coxe, with the normal Q&A session as part of the fun. Two very interesting charts, too. Click here to get your copy.

Thank you to regular reader "M" for passing this on.