Flashback – Highway Robbery or Tricks at the Trough?

TDC Note – Rob Kirby is one of the smartest guys in the room. His work, spanning the past two decades, is based in statistics, thereby, it will stand the test of time. Below is one of his last public works that demonstrated how the banksters were planning on stealing everything. They are currently stealing everything that isn’t nailed down. They are going to steal your 401k and/or IRA. The banksters have already planned the theft, it is merely a question of when it will happen. Let’s take a look to 2006 when the work below was born from Mr. Kirby’s pen. by Rob Kirby, Kirby Analytics

Way back on Sept. 25 – in this very space – we were "early to the party" with a piece titled Running On Empty where we examined the effect of Goldman Sachs recalibrating their vaunted Commodity Index [GSCI] to have a lower weighting.

We pointed out how this thinly veiled attempt at partisan financial engineering was well timed with the run-up to the mid-term elections. In the month since the election, here’s a quick summary of what’s occurred in the energy complex:

  • since falling from a high of 78.00 and subsequently bottoming at approximately 55.00 per barrel, crude oil has rebounded quite sharply in the weeks following the election to 63.00 per barrel at the time of writing.
  • the wholesale price of gasoline which found a "bottom" at 1.46 per gallon just before the election has now recovered to 1.69.
  • even natural gas, which saw its price plunge to the 4 dollar range [in the process bankrupting hedge-fund behemoth, Amaranth] before recovering to this morning’s 8.26.

If any lesson is to be gained from any of this, one of the most pertinent and poignant is that it magnifies the short comings of Central Planning. On that note, we should all be aware that history reminds us that one of the most distinguishing hallmarks of a Central Planned Economy is "bottlenecks" and chronic shortages of base commodities; much like the developing and ongoing shortages that are manifesting themselves in the base metals copper, aluminum, nickel, zinc and lead.

We can only hope that lawmakers and regulators have taken note.

With Black Friday and Thanksgiving festivities now in the rear-view-mirror, Wall Street’s and the main steam financial press’s attention has expressly turned toward holiday [retail] sales. This data is closely monitored by analysts because it accurately measures the willingness of the average Jane and Joe to spend money [or go further into debt, perhaps].

Strong start – for some. Wal-Mart sees sluggish sales for November, including Black Friday results. But others see healthy business.
November 26 2006: 11:06 AM EST

NEW YORK (CNNMoney.com) — Wal-Mart Stores Inc. predicted surprisingly weak November sales on Saturday, but a survey of thousands of retail locations pointed to a relatively healthy start to the holiday shopping season.

Wal-Mart estimated that November sales fell 0.1 percent at its U.S. stores open at least a year – the forecast includes sales on Black Friday. At the same time, a survey by ShopperTrak estimated a 6 percent sales increase overall for the day, to $8.9 billion.

Wall Street Wallows in Wild Windfalls

While visions of sugar plums [or Bentleys, perhaps?] dance in their heads, it’s been widely reported over the past week that the Big 5 – Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. are now – no doubt – faced with the most daunting task of their pressure packed year; namely, how to divvy up $36 billion in bonuses amongst their 173,000 employees.

Wall Street’s Wild Windfall

The average windfall for each individual at the five largest U.S. securities firms will be enough to buy a $165,000 Bentley Continental GT, the two-door coupe favored by Paris Hilton and Cher. They’ll have plenty of change for a box of Romeo y Julieta cigars and a case of Pol Roger champagne – the stuff enjoyed by Winston Churchill, Britain’s prime minister in the 1940s and 1950s.

Wall Street’s wild windfall

Earnings help NYC cut estimated deficit as brokerages’ $36B in bonuses prime pump for luxury-goods sales

BLOOMBERG NEWS
November 7, 2006

Never in the history of Wall Street have so many earned so much in so little time.

Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. are about to reward their 173,000 employees with $36 billion in bonuses. That’s a 30 percent increase from last year’s record, and it doesn’t include the billions more that will be paid by Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co., the three largest U.S. banks, as well as the hundreds of hedge funds and private-equity firms that constitute the financial industry…

Speaking Of Wealth Transfers

For us mere mortals, let’s not forget that December is time for tax loss selling! For those of us who have the "odd loser" to augment our basket of winners for the year – this strategy can be an effective way to shelter some of our gains as well as provide an opportunity to upgrade / rebalance our personal investment portfolios.

"If you have sold some assets and realized capital gains in the year, and you are holding other assets with unrealized losses, consider selling them as well. This will allow you to realize losses to offset the capital gains."

You might want to include this topic, and its potential application in your own personal situation, in your year-end discussion / portfolio review with your financial advisor.

Today’s Market

Overseas equity markets began the week on a quiet note with Japan’s Nikkei Index giving up 18 points to close at 16,303. Meanwhile, North American markets soared with the DOW ahead by 89.72 to 12,283.85, the NASDAQ up 35.20 to 2,448.40 and the S & P gaining 12.40 to 1,409.10. NYMEX crude oil futures fell .99 to 62.50 per barrel.

On foreign exchange markets, the U.S. Dollar Index was unchanged at 82.42.

Interest rates were unchanged from Friday’s close with the benchmark 2-year bond ending the day at 4.52%, the 5-year at 5.38% and the 10-year at 4.43%.

The precious metals day spent much of the day mixed, with COMEX gold futures finally ending the day with a .10 gain to 646.20 per ounce while COMEX silver futures added .08 to end the day at 14.12 per ounce. The XAU managed a gain of 1.68 to 148.82 while the HUI Index added 6.34 to 360.22.

On tap for tomorrow, at 8:20 a.m. revised Q3 Productivity data is due – expected +.6% vs. prior 0.0%. At 10:00 a.m. Oct. Factory Orders data is due – expected – 4.2% vs. prior + 2.1%. Also at 10:00 a.m. November ISM [Institute for Supply Management] Services Index data is due – expected 55.0 vs. prior 57.1.

Wishing you all a pleasant evening and happy holiday shopping!

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