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Financial news I consider important, with my opinion, which is worth as much as you paid for it.
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Monday, December 31, 2012

Predictions 2012 recap

1 year ago I posted predictions for 2012, lets see how I did.  Text in Italic is original article, quoted.


Roundup:
2012 - 2 miss, 1 partial, 7 hit
2011 - 2 miss, 2 partial, 6 hit
2010 - 1 miss, 3 partial, 4 hit
2009 - 7 miss, 8 partial, 5 hit  (my first year, some crazy predictions!)


2012 predictions
1) The market will end LOWER on Dec 31st 2012 than Jan 1st 2012.  Last year I waffled and said couldn't tell, and the market did end about flat.  This year I am not going to hazard how low the market goes.  It could move higher before lower.  But with the election over by November, pretty much the hype of the next president will be over, and the market can take a nice dive, like it did in 2008.
Complete and utter miss, did not end lower.

2) Commodity prices will bottom in 2012 - there will be a pattern of a low hit in 2012, with the CRB index moving up from that low set in 2012 at the end of 2012.  This will be the setup for a hell of a 2013 that no one will forget.  This index represents commodity prices in USD terms.  (This includes Gold, Oil, and food.) This will be key setup for the inflation issues ahead.
A hit for 2012, we had a distinct CRB bottom mid 2012.  The only question is follow through in 2013 or not. This could be a fake hit, if CRB breaks into new lows in the years ahead.  See chart at bottom on CRB.

3) The worst of China's financial crisis will come to pass in 2012.  A new regime will take over, and plans for creating the worlds largest consumer nation will be center stage.  China's stock markets will bottom in 2012.  In effect, China will throw down the gauntlet at replacing the USA as world economic driver.  The transition will take years.  This setup by China will move from the corners of blogs to mainstream media.  Expect China to take shots at USA like trade tariffs etc.  It will be all positioning for them to take the upper hand in the world arena.  The issue won't be why the tariff is justified or not.  The issue will be China can do it and the USA can't respond in kind.  It will in effect be a test.

A hit.  China regime change happened in November. I am sure everyone is aware of the details, since the largest country on the planet changed government once every decade....    Chinese stock market hit a low first week in December not seen since 2008, and has been on a tear upward since.  Up 10% in less than a month.  There have been multiple contention points with China in 2012 on trade and military.  China is positioning to take over Japanese controlled islands, as it continues to breach Japanese territories on water and air. A tariff war has not started between China and USA, although some tariffs around solar and wind power are in progress.  The New Leadership is trying to reform the corruption, which is required to take over the US as world leader.   Only miss is mainstream media ignores china in USA.

4) The Euro will NOT be the same as it entered 2012.  The nations bankrupt will be either kicked out of the euro, or a new two-tier model created, or a new Euro model that allows printing to finance debt emerges.  The facade of all nations must adhere to fiscal responsibility will in effect be gone.  The nations that need to print, can, either through the euro or on their own.
Utter Miss.  Euro is kicking the can, and nothing has changed, except appeasement and perpetual financial turmoil.

5) US, and Europe will be declared in a recession.  The media has hinted, but this hasn't come to pass.  Although this may be a "gimme" on my part, it is still an important event for the 2013 lineup.
Partial hit.  The recession isn't declared, but its there.  US is in a recession since July, and Europe same.

6) US 30 year bond rates will NOT break out of the channel in effect since 1986.  This is critical, for if we do break out of this, chances are most of my other predictions will be wrong.
A hit!  Another year of 30 year bond rate decline since 1986. What won't go up, must go down...until zero is hit.

7) US dollar will NOT break below the low in 2011 until after August of 2012 (or may not at all in 2012).  With the election, there will be enough political spin to keep the dollar from crashing until close to the election.  This is related to, but not tied to the previous item, Euro, China, and the market movements.
Hit! US dollar has spent entire 2012 above the low in 2011.

8) State and Town bonds will continue to deterioration as high quality choices for investments.  I am pulling back from my 2011 prediction of a significant shift.  Instead for 2012, predict more issues, more bankruptcies, and some interesting court rulings.
Hit, if I stick to the bold line above. Towns are winning right to go bankrupt, but no avalanche yet.  Also all States operate solvent, even if not truly solvent.  However, no state bankruptcies.

9) Since this is an election year, there will be a few TOKEN prosecutions around financial wrongdoing, but overall, we won't see the law enforced like we did back in the Savings and Loan crisis.  Lack of law enforcement continuing is crucial for the 2013 crisis setup.
Hit, really no major push to prosecute for trillions in fraud.

10) The end of the world will not happen, China will not declare WW3, and mass riots in USA will not happen.  In a nut shell, 2012 won't be chaos erupting, but 2012 will be the layup for 2013+ for issues heating up.  My 2013 predictions will make all previous years look tame. :)
Hit, Chaos is at bay, an easy one :)




Saturday, December 22, 2012

End of year Market Wrapup

The Year is drawing to a close. I wanted to take step back and look at where things stand since 2008.

Generally speaking, relative to 2008, things are still good.  Relative to 2008 this is what we are trending now.
USD neutral, looking weak
Gold Miners mixed, leaning weak
Gold looking mixed, leaning weak
S&P 500 - Trending middle of up range since 2008
TYX - US 30 year interest rates on verge of trend change up.

If we are to believe these indicators, 2013 is not going to be fun.
I need to think on this, and possible lessen positions....again.

To the charts!






Thursday, December 13, 2012

Economic posts for thought

I regard Mish of Global Economic Analysis as the best economic bloggers out there, and well worth a daily read over any other blog, including mine!

Next up is Karl Denninger of Market Ticker.org, who is better than Mish in his activism stance against corruption and other market distortions.  Mish tends to cover a wider, more even view of topics at hand.  Karl is next blogger I place in high regaurd.

Then comes Gary of Smart Money tracker.  For the most part, Gary focuses on making money, and positioned at the precious metal sector.

A few great rants recently I highly recommend reading.

Smart Money Tracker
EUPHORIA STAGE

Global Economic Tracker
Crazy Incentives in Welfare System; The Welfare Cliff; Welfare Spending Per Hour $30.60 - Median Income Per Hour $25.03

Exit Strategy? What Exit Strategy?

Apple to Relaunch Manufacturing in US, Net Result +200 Jobs; Lights Out

Incredibly Easy to Balance Budget Without Repealing Obamacare and Without Fiscal Cliff Tax Hikes



Market Ticker
The Real Problem With America: Morality
"Unions Destroying America"

Tuesday, December 11, 2012

Market Musings, What next?

Looking at all things objectively, its hard to get optimistic on the markets.
However, we have had weeks of market movements that has been sideways action.
The US Dollar rose quite a bit, but now shows signs of weakening.

Once again, it isn't a bad time to buy a LITTLE more gold miners.  (GDX and GDXJ) The last two times I said this, we are lower than when purchased.

What is at stake here is global currency pressures, global economic pressures, and gold pricing.
To the charts!




Wednesday, December 5, 2012

Public Posting Opinion, is it worth it

Earlier this year I posted Giving Opinion, is it worth it .
In that post, I stated I need to roll back my posting on potentially harmful posts on my future self, or my family.  Specifically reducing or eliminating posts on Corruption, among other things.

Today I get a link the solidifies what I already knew.  The patriot act opened pandoras box to marry technology with government desire to control with unprecedented invasion of privacy.
Back when the Patriot Act was created, I discussed this with some coworkers.  Their view was we need to be kept safe, so its ok to erode civil rights in the name of saftey.

The logic being, its a large herd of people, and in the crowd it won't affect me.  The net should make it safer for me, with occasional unwarranted casualty.  The problem with this logic is what is 'reasonably' ok today can quickly turn on a dime to be not ok.  But once the tools are in place, curbing mis-use of tools will take a force GREATER than those using the tools.

So while all is well, and I do not believe I, or anyone is under immense threat to free speech, the groundwork is in fact, operational.

William Binney is 2012 Callaway award winner for civic courage.  An award given to a US citizen for take a public stance at some personal risk to advance truth and justice.

You can read his interview by clicking here, or watch video below.
With the view I have, the question is, is any public posting opinion post with any political implications worth it? In light 99% of Americans (including myself) will not be mobilized at all with this news available to change it.







Sunday, December 2, 2012

Market Levitation

I am quite impressed how the market has held up.  Europe is in near daily crisis.  Recession is basically recognized by most to be in the cards, but not yet official.

Manufacturing down, profit crappy.

Through all this the market levitates.  It's hard to imagine, but the correction may be over?
I remain cautious into February.  I think by then we will have our answer for 2013.  By then, the US fiscal cliff buzz will be resolved, and the markets levitation resuming.

Chart for perspective, with the long term weekly below.

I am removing my bear on my blog, and refer back to my October 1st post 'Getting out of the Market'.




Friday, November 23, 2012

Free Speech

Free Speech takes many forms, not always written and oral speaking.
The ability to wear what you want, do what you want, use money the way you want, and yes, say what you want.  As long as those activities do not directly invade someone else's rights to pursue happiness. (murder, theft, bullying, etc)

The internet is the biggest leveler of the playing field in the history of mankind from the top percent to the masses. Anyone can speak, participate, contribute to the social order.

To keep the internet vibrant and growing is GOOD for investing.  It enables new opportunities as I posted in my Manufacturing Revolution posts.
Allow the tiny few to control the construct, the internet, is doomed to limit everyone's freedom.

I urge to to simply sign this petition and pay attention.  Support free speech and don't allow it to be taken in the dark.

Googles' Free and Open Speech campaign

Keep the power with the people.





Manufacturing Revolution, early examples

I posted about the American Manufacturing Revolution that is underway, and gets very little press.  I am not sure what it will take for the press to take hold of this story.     Probably will require a significant success story, a company going public on the stock market, or if enough commerce starts flowing through this area to be material.

To track this on my blog, I'll  label as Manufacturing 2.0

Below is one of many examples on Kickstarter of new tech being created, by the people.  Collaborating not with just US citizens, but world wide.
America is on the bleeding edge, but not alone.  With the web the rest of the world is joining America.

Watch this video, and ask without the internet and web sites like Kickstarter, how much harder, longer, or even impossible it would be for YOU to get this product TODAY? One of the first in the world ever made?

Amazing stuff.









All of the projects above may not succeed, but that isnt the point.  The possibility is there, when it wasnt before.

Thursday, November 22, 2012

Shopping, Getting the Best Price Possible

If your looking for deals, I always recommend checking out Dealnews.com (click).  Its a news feed of best deals on the net.
The site also lists all black friday deals.  However, many of these deals are impossible to get.  I sometimes try for online sites, since there are no lines, just good timing.

Amazon has Lightning deals, the good stuff usually sells out in 60 seconds, so you have to be at your PC when it goes on sale. Good news is they tell you what goes on sale when, just not how much ahead if time.

For electronics, I alway check out Newegg.com, be sure to always look at reviews of the product before purchase.

If you go shopping, be sure to check out Wow-Coupons, and PRINT your coupon before you shop. Save!
For online coupons (Codes), I  use DealNews Coupons.

Even with all the tricks above to save, use a credit card with cash back, and save even more.
Well thats it, happy hunting for the best deals for stuff you need!  Save more by not buying it ;)

Sunday, November 18, 2012

Already time to buy miners?

The market and news continues to look weak, if not near future, but the year ahead.
It is perfectly sane to stay in cash at this point.

However, looking at the Gold miners, from a historical perspective, we are hitting levels where the risk is now reduced compared to the reward.
I believe GDX will hit easily above twice the current price by 2016.  Of course, I have been wrong before.

But looking historically, entry into GDX has significantly less down risk than two weeks ago.
GDX is now at 46.47, GDXJ at 21.51.

I am adding shares here.  good luck.

Saturday, November 17, 2012

Hostess Bankrupt, who to blame?

I have not done my typical 2 hour scan and seek 'the truth' on the Hostess bankruptcy.
What does amaze me is how the public unions is publicly persecuted and we, the people buy it completely.
It should go to show how amazingly powerful the media is, and how it is not a LEFTIE establishment as popular myth says it is.

Reporting should provide full analysis on topics, so I the reader can get the short summary.

Take a look at fox news coverage here titled "Hostess to close, lay off 18,500 after 'crippling' union fight".
Notice how the final straw gets all the blame.  Its like blaming the doctor when a 500 lb fat man dies of a heart attack on the operating table.

Now, back to how i started this post.  I did NOT seek the truth on this topic, to spin to what I believe reality is.   But I do notice the news is not impartial, it is framed in a very specific way, to place 100% blame on the strike at the very end.  The news reads to blame greed of unions for the company failure.

Now, lets look at an alternative view.... What Killed Hostess?
For a more radical view.... Blaming it on Venture Capitalists.

What we are seeing frequently as baby boomers retire is massive improper funding of a pension.
Pensions, should have never been allowed to exist.  They are a future promise, to be paid by magic in the future.    Yes some pensions are well funded and self-sustaining, but many many more are not.

Under funding a pension, lack of re-investment, innovation, food attitude changes, greed resulting in debt piled upon debt, and bad management. If you are a manager, and a victim, then you should not be a manager.  Own up and take responsibility, or join the blue collar workforce.

Blame the union? I am sure they are not innocent.  But lets be more objective than blame the final act, that 500lb man dead on the hospital table, it's not the doctors fault, its the shape the man/company was in at the time after years of abuse.

Don't take public spin, its almost always wrong.

Power Back and Internet Restored!

I got power back a week ago.
As of about 3pm today, my internet has been restored.
That was 19 days of NO INTERNET!  I haven't gone that long without the net since it was first made public available in early 90s.
I may go a little overboard posting :)

Friday, November 9, 2012

Market Musings, Part 2

So the SPX is broken below 1395.   I am very bearish on the overall market. (reconsider SPX 1316)  Gary of Smart Money Tracker expects gold and gold miners to buck the rest of the market.  Having some of this sector to build on is always a good idea in my book.

We are ENTERING another recessions, globally.  Such a recession I doubt will resolve quickly.  A good turn around would be spring or summer of next year.  Turn around right now seems hard to imagine.

The republicans lost the presidential race, and the fiscal cliff in January 2013 approaches.
If the republicans can maneuver to force the fiscal cliff to occur, thereby injuring US economy significantly, they will have setup Obama to have another hard four years to try to stabilize the economy.

The more the Republicans can injure the US economy, the more they can make Obama look like the problem, with the solution being a Republican president in 2016 elected.

I am no fan of Obama. If the republicans played nice and worked with Obama, I do not believe his medicine will fix it.   The most likely outcome is if both sides fight, and fail to unite to compromise, we all lose.  That is the likely path I see.  Republicans do not believe in compromise, and Democrats seemingly cannot grasp fiscal and government discipline.  This is not a political blog, but politics do affect your investments, so it must be kept in the spotlight.


With a backdrop of Christmas upon us, election over, North East impaired and deficit spending to restore normalcy, Europe in perpetual crisis, and the fiscal cliff ahead, I see no reason to run to stocks.

If you have a burning desire to buy stocks and not fixed income, as always for the loooong haul I like Oil, gold, food, and alternate energy.   Some of these sectors have been BRUTALIZED in the last year.   Stocks  that have been gaining in this market decline recently are:
NAK - 4.19 , HTM - 0.33 , AUQ - 8.46 , AUY - 20.36, UNG - 21.19
EFT's for miners holding their own
GDX - 51.41, GDXJ - 23.92,
And metals
GLD 168, & SLV 31.38
Alternate Energy and Oil are getting punished with the dowturn.
TAN -14.55 (solar) is at a low, and OIH 37.19 (oil companies) is getting punished.
DBA - 28.78 (food) also getting mildly punished

Wednesday, October 31, 2012

Market Musings

I am without internet access for foreseeable future at home.  This will severely impact my postings.
I'll try to post, but likely not in earnest until my access is restored.

Gary of the Smart Money tracker likes gold right here.  And GDX & GDXJ are holding up since my post "Decent Spot for Market Entry".  If the market can't make significant decline a week after the presidential election, my market optimism for gold miners will increase.

For now, if you wish to buy on the low, now is good, with eye on SPX 1395 as a mark to reconsider investments.
The S &P 500 has has a floor above 1400 since a week ago, October 23rd.

In a nutshell, nothing decisive yet.  Some minor technical breaks to indicate gold higher, but not impressive yet.  For actual real analysis, click on Gary's link, 10 buck special to try his service.

Friday, October 26, 2012

Rare Earths

I posted before about my enthusiasm for Rare earth metals.  Since then, much has changed in market prices, collapsing with the economic downturn.

That is a huge issue with natural resources, when economy is picking up, even moderately, resource stocks are fan-tastic.  The moment stocks lose momentum, stock prices can easily be cut by 50% in months.

I am still bullish on Rare earth metals long term for a few reasons.
1) The materials cannot be fabricated by alternate methods.  Companies may say they can, but at what cost of R&D?  Too much compared to just using whats available.
2) China produces 90% of rare earth supply to the world, but has 30% of the rare earth resources
    That gives too much power to China over such a key resources, I expect China to abuse this position.
    The net result of abuse will be at some point, higher prices and competitors entering market.
    It is the competitors I have interest in.
3) New tech, new materials will likely come from exotic materials.   These materials have not been used in earnest until recently.  

As for item 2, ran across article of China tightening rare earth production, and a desire to make production tightly government controlled.  Production has been cut this week to force prices higher.  While I don't expect a price jump immediately, this bolsters for item 2.

Thursday, October 25, 2012

Decent spot for market entry

While I remain very concerned of a longer term market decline, I'll be first to admit that anything could happen.

On the PLUS side for market advance, the market knows corporate profits are missing and getting pinched. But yet, the stock prices had not moved down severely.
There is the thought that all financial institutions, governments, and corporations all want stocks to go up.   Financial institutions are employing sophisticated trading platforms to 'manage' the market, such as High Frequency Trading.  The government changes laws to make corporations look better, such as changing accounting rules in place since the great depression.  Corporations continue to innovate to move liabilities to off-book accounting mechanisms.


So while I am skeptical of the market making new highs, doesn't mean it wont.  Today is a good entry point if your mildly optimistic, with a stop-loss if the market closes below SPX 1395.
Futures are pointing up.  US presidential election home stretch is upon us.  The USD may resume it's decline, bolstering stocks until the effects take another bite out of companies.

Image below.  I will buy some GDX, GDXJ today on advice of Gary of the Smart money tracker, but not to the same degree as he may.  Also lighten on HDGE. Good luck.

Paul Volcker Interview

The last Federal Reserve Chairman I have great respect for is Paul Volcker, from back in 1980.  I have posted post from him before.  Recently, did an internet search, put recent interviews of him.

In the third video, Volcker quotes as his hero is John Bogle, I mentioned him post Worst Market in 60 years.



Wednesday, October 24, 2012

USD time for a break, revisited

On September 24th, posted blog entry USD fell quickly, time for a break?.  In that post I called for USD to trade in a range, and stop the freefall the USD was experiencing at that time.

Four weeks later, this view has proven to be correct, the USD has traded sideways.  However, I believe that this will soon break, probably as the presidential election approaches.

The only question is, which way does it break.   Gary of the Smart money tracker is calling for USD decline.  While I agree the USD will decline, and make spectacular new lows, we may get some surprises in the near term.  But I do agree that it is more likely that it will follow Gary's prediction.

The reason for my restraint on calling for USD decline resuming in earnest is Europe and other countries are struggling.  USD currency valuation is a relative measuring to other fiat currencies.  In a relative world, I call into question the USD will move significantly lower in the next 6 months.  As an example, Japan which has lead the west in debt to GDP ratio, has recently called on printing more, to keep up with other countries in fiat currency creation.  In such a world that countries race to the bottom, its hard to call out USD as leader to the bottom.

I fully expect USD to take the lead after markets depreciate enough to justify the Fed to up the ante beyond QE3 and break the USD as a currency. I expect the USD to begin a lifetime of decline decline.

Right now its watch and see.  USD recovers and rises in the months ahead, expect stock prices to continue to decline.  If USD declines, expect a more choppy market.  Natural Resource costs are already eating away corporate profits.  A lower USD will accelerate that trend, and hardly can stimulate significant market valuation gains.


Tuesday, October 23, 2012

Monday, October 22, 2012

Stephen Diggle a billionaire trader speaks

Stephen Diggle made over 2.5 Billion dollars in collapse of 2008.  As a hedge fund manager, he was calling for an enconomic collapse years before others, and was ridiculed.

He has given a speech of his view then, now, and the future

Sunday, October 21, 2012

The Next Apple Stock

Smartphones are now mainstream, and so are tablets.  The competition for consumers are now from many manufacturers.   I expect this market to continue to be fractional-ized, akin to the car manufacturing market.  In the phone & Tablet markets it will settle into bands like the car market, BMW (Apple?) and Toyota (Samsung?), etc.

So while investing in this market can still be very profitable, the form factor is defined. Sure Android has the cool feature to touch phones shoot over data to another phone, unlike iphone, but all of this is incremental.  A new design like Google Glass will eventually take those form factors on.

Quite amazing when you think about it, the iphone was introduced in June 2007, and here we are in 2012 and the form factor is reasonably defined with tons of competitors.   

I can't but help compare this to the Ford Model T, released in 1908, and mass produced in force by 1914.   Competitors took years to take on Ford en mass.  The model T was so successful, the first model car to surpass Model T production run was the Volkswagen beetle in 1972!  Samsung has already outsold the iphone in recent quarters, although not nearly as profitable as Apple.

We have witnessed the smart phone market to be born in it's full glory and in 5 short years highly competitive sales.
For investing, the future holds the greatest gains.  Biotech, nanotech, alternative energy, and the maker community all offer opportunities for companies to be born to mirror Apple's success.   I think the nature of cell phones, tablets, and PC's cannot easily duplicate the same level of success of Apple in other fields.  But even 1/10th the success of Apple is huge for any company.

I continue to be fascinated by the Maker community, and one of the forces 3d printing.  I am watching carefully which company first makes a break to advertise end consumer 3d printer, which I fully expect in the next 5 years to be announced.   Once Pandora's box is open expect innovation in 3d printers to accelerate and consumer pricing to improve dramatically.

Already companies like Airbus and Boeing are embracing 3d printing as part of their design process.

On kickstarter today, I ran across a 3d printer that you can buy, today, for 580 bucks.  It requires your own assembly and paint.   I am amazed that for the price of a hotel stay in NYC, you can print almost any plastic object you desire.  Granted, the resolution isn't what I'd like to see, for that you need MakerBot for 2K dollars.  I can't wait to see the mass production for general public entrant to this market.

Consider selling stock in any company that makes it's living on cheap plastic parts. ;)
First two videos are summary of advantages of 3d printers, and below that, 3d metal printing, below that 3d printing of human organs! (maybe someday food?)



Saturday, October 20, 2012

ETF Proxy Shorting the Market

I can safely say that shorting at the right time, right place, can yield huge gains.  However, math isn't on your side.  In post "this time its different", when the market falls, valuations drop around 50%, but gains are over 100%.   To properly short and gain valuations requires a commitment of time and careful positioning.

I do not have the time, nor the desire to embrace shorting the market as I did in 2006-November 2008. (I couldn't short Dec 2008 to march 2009, I didn't have the guts)

Aside from simply buying fixed income, which by the is the safest play normally, there is an alternative.
There is an ETF called HDGE that manages active shorting.  Meaning, they change their composition and try to remain nimble.  The fund was made public in 2011, and has wiggled around since then.  It's valuation isn't impressive.  Then again, the SPX has moved from 1300 to 1450 in the same time period, (up 11%).

So purchasing HDGE is pretty risky.  But I wanted to share with readers as I am buying some shares the last two weeks, and I'll follow up with some posts as the market develops.

HDGE is available recently around $20.50, I can reference this post in the future.

To find out more about HDGE, here are some handy links.

HDGE fact sheet, video, and current shorting macro allocation.

Friday, October 19, 2012

This time, it's different

I am growing in concern once again about market valuations to the extreme, my position changed on October 1st of this month in post titled "Getting out of the Market".

I wanted to take a step back and look at the market long term from two different angles.  First from 1995 to present, the more recent history of market valuations.  Using this history as an example, looks pretty compelling that we are in for a market correction.

The market hasn't seen below SPX 700 (except briefly in 2009) since 1996.  Assuming SPX 700 is the new bottom, then the rise in 1996-2000 was about 115%, in line with the last two bull markets.

However, if we look back to 1995-6, the market moved from a norm range of 400 to 700 and has never looked back.  That rise was in fact "this time its different".
The market moved from a whole new level.  So using the logic back in 1997 as market went from 400 to 800, you would have been sorely mistaken.

Wanted to give some perspective of market view, from the last 18 years, and from before.   I for one think 1996 was the realization of technology, and the last two bubbles have been  ponzi-scheme-like driven. However, Nano-tech, makers, biotech, alternate energy could be poised to bring us to the new level.

The market may recover and hit a new all time high, but I can't get on board with SPX 1400 moving to 2000 or 2800 in the next 3 years.  A MAJOR random element of course is USD currency valuations.  I simply cannot see a major USD decline until 2016-17.

Pictures for thought.  Fixed income, some core precious metals (small) and possibly short fund. (I'll do post on ETF short fund HDGE).  To the charts!



Monday, October 15, 2012

Deflation everywhere, except monetary policy

The typical view many armchair economists take is viewing the capital markets and central bank policies, calling foul when central planners bend or break the law in the spirit of saving the economy.

I agree in spirit that central planning is bad vs free markets.  If a regulated, transparent capital market was set free to evolve on it's own, there is no question in my mind that the world will adapt to change much faster, and efficiently.

But what most miss is part of the problem IS efficiency.  Technology RUTHLESSLY tears down inefficient and helps evolved business and social fabric to a more efficient model.   What efficiency effects are basically less people can do more.  Meaning, you don't need as much middlemen from the Makers to the Consumers.
As this happens, the net result is if your not a maker, or wealthy enough to be a eager consumer, you fall into the cracks.  This group of people is ever widening, as technology moves forward.

What compounds this effect is global trade efficiency, in effect allowing others around the world compete for work.  Net this is a good thing, for people who most desperately needs work can get work.  But the effect when looked at closer can be more personal and disturbing.  Plus global trade raises questions of what is efficiency....and what is fair.

Easier examples of technology efficiency effect is music industry, software makers, open hardware, financial trading, retail distribution, farming, and hosts of other industries.  When you look at each one to see how they have changed and are changing over the last decade, it is easy to see the displacement of workers.

The makers and consumers benefit from a more direct relationship, yielding cheaper prices and more competition.  But the channel distribution now yields less workers.  Consider WalMart vs mom and pop stores across the country, music stores vs iTunes, local book store vs Amazon.
Farming is moving towards 100% robots ...except for on-call mechanics...as cheap labor is driven out by cheaper labor, robots.

When you see the changing landscape, if left up to a more efficient market, we may see honest assessment of unemployment in USA of 25% or more.  Possibly in some areas of Europe of 50%.  By artificially keeping inefficient human processes afloat with Government spending, Central Bank intervention, what is being done is avoiding the reality today in hope a better answer appears tomorrow.
Extrapolating into the future, (with DOUBLING of technology every 18 months!) this problem will accelerate.  Picture a world where renewable energy accounts for 75% of energy use, self driving cars, planes, google glass, and robotic factories.  A world where a flexible robot can be easily adapted to a wide variety of custom tasks.  This is NOT a world of full employment, for those less skilled simply cannot compete vs automation.

So when people pound the ground that we need to return to an efficient capital marketplace, you best be a maker, a skilled specialist, or a well positioned consumer, for the rest may not like the world that leaves them out.

Sunday, October 14, 2012

Nigel Farage and the Fall of Europe

I have posted on Nigel Farage before, a shrewd politician who speaks directly on the weakness of European Financial positions.

This interview is a good one on Nigel.  My only hesitation with Mr. Farage is I am unsure of what his long term objectives are.  The stereo typical politician panders to the fundraisers, explaining why Nigel stands out so much.  A good watch none the less.  at 25 minutes in, a good commentary from Jamie Diamond and purchase of Bear Sterns with Government encouragement.

In Europe news, Greece unemployment 25% and climbing, French Economy taking a hard turn down, Spanish bonds being dumped abroad, and European union secession support gains in Belgium.

Wednesday, October 10, 2012

Market Musings

A week ago I posted "Getting out of the Market", over the next couple of days the market went higher after I sold, SPX was about 1450 at the open, and  the market closed on Thursday and Friday at about 1460, with intra-day high at about 1470.  Today Market closed at about 1432.

My goal is to stay out of the market until SPX hits above 1557, or pulls back to 1250 and I re-evaluate.
Of course, any major news can change my opinion.

Gary of Smart Money Tracker is calling for new highs, passing SPX 1557, click here to read.
Anything is possible.

Good luck.

Tuesday, October 9, 2012

Makers

I am going to deviate from the theme of this blog, and start covering Makers and financial news.
Why? Because I believe Making is a key role of America for the next 100 years.

America is a story of making, since its founding.  America Maked and the world taked.
Since Reagan with trade agreements favoring China and the world, America has reduced making substantially.

The new Making revolution I am witnessing is the start of the rebirth, not just of America, but of western society.   As it grows it will change society view of the order of things.  It will also bring investment opportunities the likes of Microsoft and Apple to us.  The fun will be spotting the biggest winners and investing.   For more on making click label Maker on bottom of any article or here.

My friend Bob sent me a link on a nifty video of a Heli-copter-thingie that someone made.
I highly recommend full screen, in a quiet room, watch and enjoy.

Heli showreel late summer 2012 from Esben Nielsen on Vimeo.

Monday, October 8, 2012

Jim Chanos and China Economics

This video is a few weeks old, but great to watch.
Jim Chanos talks frankly about China and how their miracle growth isn't there.

I recommend a watch, click here.

Jim Crammer spars with Chanos on china

Sunday, October 7, 2012

Credit Card Cash Back

This is a follow up to post "Saving Money With Credit Cards".  See also "Paying off Credit Cards"

Since that post, I acquired the primary three cards mentioned in the post, and since then flushed out details.
To help you calculate your annual savings, I have put together an Google Spreadsheet, accessible below.

Short version is by getting these three credit cards, you can maximize your cash back from all household spending.   Your spending habits may reflect different categories selected by the USBank card, which offers 12 different 5% categories for cash back.  Fidelity Investments card does require an account to recieve 2% back on all purchases, which may be worth while depending on your spending habits.   A typical American Express or other point systems work out to 1/2% to 1% cash back, excluding travel rewards.

For most families, the 6% Grocery and 3% gas cash back is well worth getting American Express Blue Preferred card. (Max $6000 per year for grocery)
NOTE: if you get two cards, one for him different account for her, can get back on 12,000 per year for groceries!

To access the sheet, click on the image below or the link here.
*WARNING* If someone else is modifying the sheet at same time as you, you will see each other making changes.  To get a private copy select "File" then "Download as" and pick EXCEL. Or come back later when the sheet is not in use.  Look in upper right corner to see if others are viewing the sheet.


I used stickers to mark the cards to make it easier to follow.  You can access the template I used for Avery Template 5162 by clicking here.  It will look messed up, you need to download the file. Click "File" then choose Download.

I researched American Express points, various Citibank cards, and other rewards.  Excluding travel rewards, the cards above are the best rewards I could find.  If you find better, please click the word comments below to add to this post.

After searching the web, it seems cash back is considered a discount, not income.  Only tax implication is if you spend 100 bucks, you can write off 98 bucks (2% Cash Back) as an expense.

Alternately, you can SELL your points for cash, at a 'grey' market vendor I had no issues with, www.rewards2cash.com.  If you sell your points, buy airfare on sale and get points it usually works out better.

UPDATE: I booked flights with Amex points.  The airfare was 841 bucks.  The points to pay for it was 84100 points.  Since each 1 dollar gives 1 point, that works out exactly 1% payback.  Therefore best ROI is to get cards above and simply pay for airfare from cash back, and as bonus get additional 2% off the airfare itself.   It is possible to get special trips for better ROI if shopping offerings.

Friday, October 5, 2012

Manufacturing Revolution Revisited

This past weekend I went to MakerFaire in NYC.  This is related to the post I did titled American Manufacturing Revolution.  The phrase Maker in this context refers to people who...make things.  As an engineer, I focus on 3d printers, Arduino, Rasberry Pi, Robotics, and manufacturing machines like laser cutters.   However Maker can refer to anyone who makes including artists, musicians, foodies, etc.

I linked to various terms above if unfamiliar with terms.   Seeing the capabilities of the 3d printers, the influence of Arduinos, and robot progress, I am very convinced we are back in the IBM PC days of 1981 for this new technological revolution.  I believe 3d printers and other related tech are moving towards Moores law, where we will start seeing great progress in capability every 18 months.

It is not out of the question that in 16 years, we will have a sort of Star-Trek machine that can create anything we want made of metal and plastic, even simple electronics.  30 years, print your own cell phone.

Like any new trend, the gains are greatest earlier relative to the previous tech level.

So I bring you below videos from Makerfaire.  As for investing, well...I messed up on that one.  When I posted the American Manufacturing Revolution post in Dec 2011, if I immediately bought 3d printer stocks, I would have done fan-tastic.  Not to say its too late, but I don't want to buy in earnest unless I see a fire sale after such a quick rise.  I may buy a little of each for now. (100 shares)
Stocks to look at: ssys , ddd, ARCM (Swedish)
More interesting is 3d printing organs...yes, you read that right.  ONVO , (TOO SPECULATIVE!)
Makerbot is NOT yet public, but I believe they are moving in that direction.  They closed sourced their latest printer.

Videos!


Thursday, October 4, 2012

Presidential Debate #1

I enjoyed watching the presidential debate tonight.  Romney left with a much better impression than I started with.

However both candidates lied heavily tonight.  I am amazed that Romney didn't asked on anything Obama said he would do....why didn't he try last week, last year?

Why do I say both lie?  Balance budgets but cut nothing that drives 90% of the costs....the magical 10% left will reduce 33% of the government spending.....right.

For the first time in my life, I like no candidates.  None.   Maybe thats a sign I have matured to an adult finally.   Anyway, worth a watch.  Romney got his ass handed to him in past weeks, now the media will hype the comeback, yawn, same thing each election.

Wednesday, October 3, 2012

Economic Outlook from CEOs, Bernanke, and Beyond

Thanks for Mish for his post US CEOs Sharply Reduce Expectations for Economic Outlook, Hiring; Third Largest Plunge in 6-Month Expectations in History; Reflections On "Uncertainty".

The survey hasn't seen this outlook level since 2009, inferring a slowdown is upon us.

Ben Bernanke must have read my post on Monday.  Mish reports Bernanke Begs Congress to Address "Fiscal Cliff", Pledges to Hold Interest Rates Near Zero Through Mid-2015 Even If Economy Picks Up
Which is exactly what I posted on Monday, that the fiscal cliff is going to be a political showdown at the expense of US citizens and the world.  Mr. Bernanke not only promised to purchase 40 Billion per month indefinitely  but keep low interest rates through 2015.  Once again, I ask you, what else can the fed do to prop up inflated asset prices?  There is always more, but only if there is a situation that justifies taking more extreme measures.

Looks like Austerity is the fad in Europe, and France has joined Greece, Spain, Italy, Portugal and others in cutting back spending.  As governments around the world grow more conservative in spending, is that a economic boom or would deflation likely follow.....
Mish reports Austerity Programs Hit France; Marchers Demand Vote on Treaty; Hollande Reneges on Campaign Promise

To add fuel to the Europe fire, Mish reports Concerns Mount that ECB Bond-Buying Program Is Illegal; Concerns? What Concerns?.   If the ECB was forced to stop bond buying, even for a few months, it would be devastating to prices.

The US Federal Debt is now at over 16 Trillion dollars.   The US GDP is about 16 Trillion dollars.  Congratulations USA, we now owe as much as the entire US Generates in 1 year!.  At this point the debt should never be paid back, not that anyone believes it will.  The real issue is not actually paying back, but the interest alone today every citizen owes the US is 12K and counting.  The interest will strangle the US budget and economy in the years ahead.

What we may be facing in the years ahead is not an Arab Spring, but a World Spring, as the central banks perversion of risk pricing, asset inflation, and capitalism distortions create more acute pain.  2013 is looking to be a real fun year, and at some point I'll do gold and gold miners again.


Monday, October 1, 2012

Getting out of the Market

Update: see post Market Musings
Monday AM update: Gold spiking up VERY fast, same with Oil, I am sticking with my plan below
I have given quote some thought about the market as of recent.
I have decided to "get out of dodge" for now, the reasons.

  1. I waffled quite a bit the last week or so.  Such waffling usually means I am fighting fear and greed, and greed is winning.  Usually a bad thing.
  2. Gary of Smart money tracker is also waffling.  
  3. The Federal Reserve bank did blow its big announcement, buying 40 billion EVERY month indefinitely of US troubled mortgages from banks.  Not sure how they can top that one in the near future.  And to top it, I assume something bad will happen first.
  4. If Obama wins, the republicans may make Obama's life difficult when tax increases occur in January.  I do not like the current democrats OR republicans.  All they have to do is NOT play nice with dems and allow taxes to increase in January, as it is set now.  That should really put the nail on any optimism.
  5. Miners etf went from 40 bucks to 54 bucks in couple of months or so.  30% gain when 30 year bonds pay 3%...lets not get too greedy.
  6. I will eat my hat, and turn around when the market hits a mere 100 points higher on the S&P 500 from recent high of 1447 to 1557, topping the old high back in 2007.  I can miss those 100 points if I am wrong, but rather miss losses of 100's of points if we decline.  Re-valuate at 1250 or so.
  7. I said to sell on any strength last week, and frankly, if I had done that it would have been perfect timing.  Best to get out of dodge before more damage is done.

So there ya have it.  I am dumping almost across the board.  irony is I'll probably keep Facebook, Groupon, and Zenga from the post a while back, they got soooo beat up, eh, they may buck.


I will keep Tiny core positions.  I'll sit on my hands until above 1557 or radical news comes out.
Look at the chart below, really, why hold for 100 more up? I'll rebuy then when proven wrong.
Influences are across the board, including John, Slope of Hope (click, nice vid), Gary, and reality (click).

Friday, September 28, 2012

All Clear?

Friday AM update: decided to sit on my hands, dont sell what I got, dont buy more. I want to read and look at charts indepth before buying.
This is a crazy world, I posted much fear in last few posts, and here I am bullish again.
Obviously, I could post in couple of days running for the hills.

One thing I think is that this administration will NOT allow another market crash like Bush had.
So on that one gut alone, it pushes me towards Gary and not my friend John.

Gary posted here about oil bottoming, and stocks maybe in a 'runaway move'.  I highly recommend you click there and pay the trial 10 bucks for his newsletter.

Another aspect is my lack of faith I have in the USD valuation.  It ran up for a year, and now I believe we are on the downswing in the year ahead.
This should help increase valuations of gold, oil, etc.  So between Gary, the USD, and my faith in corruption, I am going back into miners. ETF GDX & GDXJ  So much for me selling on strength.

I will check the futures in the AM to confirm this intent.


Wednesday, September 26, 2012

Market Cycles

My friend John, a professional securities trader, has recently become bearish enough to put a toe into shorting the market, for near term.  He views the market movements after QE1, QE2, different than current after QE3.  The market movement difference now has encouraged him to take a bearish stance on the market.

If you read the news, there is plenty of bearish news to back up this view.  Fedex shipping is down, which can be compared to GDP forecasting, California sales tax revenue declined 20% YOY in August,  IMF chief warns of US financial issues in short, medium, and long term, Eurozone is seeing steepest contraction since 2009, Japan exports contract 3rd month in a row and China PMI contracts, Toronto home sales decline 64 percent (due to law change).
Pile on the Euro news with Greece, France, and Spain seeing Neo-Nazi fractions rising threatening those countries status quo.

Now lets look at the opposite view, there is plenty to find, but I am quoting the top two from my perspective. The Federal Reserve bank believes QE3 will help the US economy, as QE1 and QE2 did in the marketplace.

My favorite market watcher Gary of Smart Money tracker is calling for a "near term" bottom with market reversal.  Gary isn't the sort to make super long term predictions like the year ahead, he watches cycles to see next move.

So what is next?  A market fall of significance is always in the cards, especially if you look at history now or in the Great Depression.  (currency wars occurred back then too)  I am mixed, while I don't think in the year ahead we will see 30% market gains, it is possible the market finds a dead range of +10% and -10%.  My inner voice tells me the market is very weak and going to implode, but then again, I have heard that voice a few times in the last few years.

A conservative stance is probably in order, and on any strength, I may continue to lighten to be nimble.

Tuesday, September 25, 2012

Ronald Reagan Director of OM and Budget

David Stockman was Ronald Reagan's Director of Office Management and Budget, and was recently interviewed on effect of the Federal Reserve bank.  I completely agree centralized force trying to alter capitalistic cycles.  The Fed can distort the capital markets, but it cannot fix by meddling with loose monetary standards.

If the fed exists at all, it should intervene ONLY in a 2008 type event.  But the irony is 2008 event wouldn't have happened if the Fed didn't blow that credit bubble in the first place.  Sorta like a pyro who's dayjob is fireman.   Justifying one's job by putting out your own fires.

I don't dislike the fed because of bankers, or top 1%.  I dislike the fed because a small group of people in power cannot contain capitalistic forces.  It's like trying to control evolution, something bigger than human kind.   The central authorities will be broken by technology, as I discussed before in post "Technology, the Ultimate destructor of inefficiencies"


Monday, September 24, 2012

USD fell quickly, time for a break?

The USD broke DOWN from the uptrend started back in August 2011.  After a year of USD gains, time for some down pressure.  Recently USD fell quite a bit in a reasonably short period.  I expect a couple of weeks of sideways before resuming down.
If this happens, gold, oil, etc may lose some gains before resuming the uptrend.
Heck its possible USD gains strength and resume up, but it seem unlikely.

So hang tight, some in, take some profits, and wait.
Gary of smart money tracker posts cycles, etc, but I simply like the chart below to tell a story.



Thursday, September 20, 2012

Bill HR 2827 Weakens Taxpayer Protection

HR 2827 in effect routes protection against mass taxpayer fraud and bribery enacted under Dodd-Frank.
I was made aware by blogger Karl Denninger, referring to Rolling Stone article Wall Street Rolling Back Another Key Piece of Financial Reform . What is amazing to me as of 7:48 pm eastern, USA time I did a Google news search for  HR 2827.  Rolling Stone is only news periodical I recognized (rest where blogs, specialty financial news,  etc).
I am not a lawyer, I welcome any lawyers out there to read and clarify how my perception may be wrong on this topic.

From the Rolling Stone article, Quote:
...passage of a new House bill (HR 2827), which rolls back a portion of Dodd-Frank designed to protect cities and towns from the next Jefferson County disaster.      ....
Jefferson County, Alabama was the most famous case – the city of Birmingham went bankrupt after being bribed and goaded into taking on billions of dollars of toxic swap deals – but in fact it was just one of hundreds of similar examples of localities being duped into suicidal financial deals by rapacious banks and financial companies.

For those that don't know, Jefferson County is a bankrupt municipality, thanks to public bribery and unsound loans made to the county.  Public official was convicted of bribery, but the private counter party has not.  Tax payers left with a bankrupt county paying much higher utility bills than neighboring counties. 

Returning to article....  
Here’s how SIFMA describes burden would have been under Dodd-Frank’s original reform:
The consequences of being deemed to be a municipal advisor are very serious.  Providing municipal advice without having registered is “unlawful”—i.e. potentially criminal.  The highest standard of conduct--a fiduciary duty--is imposed.
....
Sound good right? Well HR2827 has clarified  definition of Municipal Advisor"  Full text of HR 2827 here.
SEC. 5. DEFINITION OF MUNICIPAL ADVISOR.
Section 15B(e)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(e)(4)) is amended to read as follows:
`(4) the term `municipal advisor'--
`(A) means a person (who is not a municipal entity or obligated person, or an employee of a municipal entity or obligated person) that--
`(i) is engaged, for compensation, by a municipal entity or obligated person to provide advice to a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, including advice with respect to the structure, timing, terms, and other similar matters concerning such financial products or issues; or
`(ii) undertakes a solicitation of a municipal entity;
`(B) includes financial advisors, guaranteed investment contract brokers, third-party marketers, placement agents, solicitors, finders, and swap advisors, if such persons are described in either of clauses (i) or (ii) of subparagraph (A) and are not excluded under subparagraph (C); and
`(C) does not include, solely as a result of their performing the following activities--
`(i) any broker, dealer, or municipal securities dealer (or person associated with such broker, dealer or municipal securities dealer);
`(ii) any investment adviser registered under the Investment Advisers Act of 1940 or with a State or territory of the United States (or person associated with such an investment adviser);
`(iii) any commodity trading advisor, swap dealer, major swap participant, futures commission merchant or introducing broker registered under the Commodity Exchange Act (or person associated with a commodity trading advisor, swap dealer, major swap participant, futures commission merchant or introducing broker) who is providing advice related to, engaging in, or arranging any swap;
`(iv) any security-based swap dealer or major security-based swap participant registered under the Securities Exchange Act of 1934 (or any person associated with a security-based swap dealer or major security-based swap participant) who is providing advice related to, engaging in, or arranging any security-based swap;
`(v) any attorney offering legal advice or providing services that are of a traditional legal nature;
`(vi) any engineer providing engineering advice;
`(vii) any financial institution or person associated with a financial institution; or
`(viii) any elected or appointed member of a governing body of a municipal entity, with respect to such member's role on the governing body;'.

Securities Exchange Act of 1934, created after the last Great Depression to prevent future financial issues.  It has been amended quite a bit since then.  Current version  here, and buffered version as of 9-20-12 here.

To ensure the effect of HR2827 is as important as it looks, I took a snippet from SEC 1934 law, to provide context use of MUNICIPAL ADVISOR.

It shall be unlawful for a municipal advisor to  provide advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products 253 SECURITIES EXCHANGE ACT OF 1934 Sec. 15B or the issuance of municipal securities, or to undertake a solicitation of a municipal entity or obligated person, unless the municipal advisor is registered in accordance with  this subsection. 

The law was bi-partisan passed the house with vocal role call only, with no record of who voted.  I don't think Senate has passed it YET.
This type of behavior has entered into my Financial Ground Zero series, documenting the  likely crisis ahead.

Wednesday, September 19, 2012

Marc Faber on US Economics

Mark Faber is one of the best people to listen to on economics.  He is direct and a very serious investor.  He has some not so kind words for the US economic outlook, and it is well worth a watch.
In-depth interview.

Tuesday, September 18, 2012

Karl Denninger speaks at Republican Liberty Caucus

Karl is one of the few verbose and articulate outspoken bloggers on various finance, political, and social issues. His blog the Market Ticker is a must read. Watch and decide for yourself on Karl.
>

Sunday, September 16, 2012

Gold, Silver, and Oil, is the sky the limit?

There are huge forces in the global economy at work increasingly intense since 2008.

First we have the demographics of the baby boomers.  The Baby Boomers have basically dictated my entire job outlook and financial health.  As they go quietly into retirement, the shift will put strains breaking so many ponzi-like financial models such as Social Security, Pension funds, Medicare, etc.  And its not just USA, its Europe too.

Couple that with internet and computer efficiency ripping the face off of everything.  Anything that can be outsourced, is.  Anything that can be automated is being automated.  Never in history of mankind can so few people accomplish so much with robots, computer networks, and technological innovation.  Net effect is less  people employed to do same work. (Think checkout lines, toll booths, phone operators, etc, list is endless).

There is no question the USA lead a credit bubble of epic levels that popped in 2008.  But the US has not reformed anything, and instead is re-inflating the same old bubbles.   This may have been tempered by Europe and China, but recently, it seems they are changing too.

Europe had a model that required fiscal discipline, which by now should be well recognized to have been a little misguided.  The ECB is on track for monetizing debt USA style.  As this becomes reality, a MAJOR deflationary force will cease, or at minimum slow down.  For if countries don't implode like dominoes in Europe, then deflationary forces are reduced.

China was on track for reforming from export nation to consumer nation.  And they may still be.  However, the shift is proving painful, so painful that their next leader to lead the next revolution is MIA.  Mish has great summary of the situation.  If it turns out China is going to go back to export nation full steam ahead and not see through reform to consumer nation, yet another global force is shifting back.

Ben Bernanke of the US Federal Reserve will be on track for owning large part of the US Mortgage market, upwards of half in a few years with latest announcement.

Couple the above forces to reduce deflation, couple that with political tension escalating.
China fighting over Japan for territorial issues, US embassy attacked in Egypt, I see this possibly escalating as tensions rise economically.

I see this all good for precious metals and oil.  Political tension, deflationary reduction on a "monetary" level, counter to employment deflationary forces which still persist.  Jeffrey Lacker of the Federal Reserve sees inflation as a likely outcome.

The world is entering into a global recession, but with intense efforts from US, Europe, China, and elsewhere this next recession may be short, followed by intense commodity price upsurge.

A global economic cascade like 2008 could derail this view, but barring a deflationary event, I see resources are at a good entry point.  STAY AWAY from industrial metals, as china has been primary driver, and has huge over-stocks on supplies.

GLD, SLV, GDX, GDXJ, OIH, GCC, and DBA are decent ETF's to look at, however this week we should hopefully see a pullback.

With the USD having plenty of room to fall further, all of this makes for interesting observation.