UrbanSurvival

Now that Robin Landry’s target zone has been filled, the odds are increasing daily that the run-up we have seen since March may be toast.  The gold price is down $7.50 when I looked this morning (early) and that would seem to portend a drop of 75-points or so in the Dow.

 

When I look at a 1-year chart of the Dow, what I see is the fast & slow stochastics have just completed a nice double peak, there’s a divergence in the MacD, and the RSI (relative strength indicator) has turned down. 

 

IF this is the case (and this is NOT financial advise…you’re on your own there), then I would expect to see the Dow come down a fair bit today, maybe rally next week with the usual pre-Holiday bias and either set a nominal new high or just miss it, and then get into serious down mode in coming weeks.

 

To just throw a dart, I’d expect to be back at March lows in either February or March, before a last gasp upside run which ought to be quite playable; at least that’s how I’m planning to bet the markets.  Not touching equities, but big dollar rally and subsequent commodity decline would certainly make sense but I’ve been wrong more times than I can count.  Death of the Dollar taking off for the holidays could happen from where I sit.

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Although markets move on their own - trader noise being equivalent to meandering herds of bulls, bears, and sheep - there usually ends up being some news event that gets blamed for directional changes.  My personal theory is that the market is going to be very disappointed that Oprah Winfrey is planning to leave her talk show in 2011 - and before having me on as a guest, too - or more likely, the semi-retirement of the Mogambo Guru (see today’s coping section) will leave the market without as much of a wall of worry to climb.

 

Oh, sure, a vote this weekend on the Health Care Bill might be mentioned, or the way the bill sends $100 million to Louisiana in return for support by Senator Landrieu, changes in dollar values, and the wave of troubles in the Afghanistan War (15 killed by a motorcycle bomber today), but the prospect of the Mogambo on a golf course scares me as much as all other factors combined.

 

Falling Gold

Big move today and Monday in gold?  That’d be December commodity options coming off the table, just so’s you know.  Tungsten-filled or otherwise.

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On the other hand, there could be a huge pop in gold prices coming shortly, since my eagle-eyed broker JB called this morning to say “You know, the roll-overs to future contracts has been unusually slow…and you know what that means?” 

 

I didn’t get an argument when I said “Oh, probably something like institutions are going to be taking some extra-large deliveries…which means either I should not sell either one of my gold coins, or I should buy tungsten futures?
 

Going Dutch

A Treasury Press release caught out consulting national bank veep this morning:

“November 19, 2009 TG-415

Treasury Announces Intent to Sell Warrant Positions in Public Dutch Auctions

The US Department of the Treasury today announced its intention to dispose of several warrant positions received in consideration for investments made under the Capital Purchase Program (CPP). Over the next month, Treasury intends to conduct auctions to sell its warrant positions in JP Morgan Chase & Co., Capital One Financial Corporation, and TCF Financial Corporation.

Each of these banks has fully repurchased Treasury’s preferred stock investment. The warrant sales anticipated over the next month, if consummated in full, would represent Treasury’s disposition of its remaining holdings in these companies. The proceeds of these sales will provide an additional return to the American taxpayer from Treasury’s investments in these banks beyond the dividend payments it received on the related preferred stock.

Treasury intends to sell the warrants through registered public offerings. These offerings will be executed using a modified Dutch auction methodology that establishes a market price by allowing investors to submit bids at specified increments above a minimum price specified for each auction. More detailed guidance for the auctions will be available in prospectuses that will be filed by the warrant issuers prior to the opening of each auction. Treasury expects to conduct similar auctions in the future for other warrant positions it holds in banks that have repaid CPP investments.

Deutsche Bank Securities Inc. (Deutsche Bank) has been retained as the auction agent and sole bookrunning manager for these offerings. In this role, Deutsche Bank will accept bids and identify a clearing price for each auction. If investors do not have an account with Deutsche Bank, they may be able to participate in the auction through their own brokers, as a network of several dozen brokerage firms will be invited to aggregate suitable client orders and submit them to Deutsche Bank. The warrants are complex securities that are not suitable for all investors.

Prospective investors will be able to obtain copies of the prospectuses relating to these securities, when available, from Deutsche Bank Securities Inc., Prospectus Department, Harborside Financial Center, 100 Plaza One, Jersey City, New Jersey 07311-3988, telephone: 1-800-503-4611.

Terms like “bookrunning manager sound a lot like a numbers-racket is that your point?”

 

No, just an interesting way to get warrant positions in JPM, Capital One and TCF…

 

Dead Banker List

Unemployed private eye?  Fired financial researcher?  You may be interested in a list of ‘Dead Bankers” that has shown up at Scribd….find the common elements and report back.  Expect there will be two lists - one which is tied up to this side or that, and then the others in response/reaction from another group.

 

I’d do this myself, but remodeling frenzy is in full swing.

 

For Whom the Dell Falls…

Not a happy quarter for the Round Rockers, but bound to improve…yada yada…global recovery…yada, yada….good times are just ahead?

 

Inflation to the Streets

Dozens of students have been arrested at UC Davis for protesting 32 percent tuition hikes.

 

While one of the signs read “Save the humanities” (I’m sure they meant Save the Manatees, and they just screwed up the spelling) what UC Davis really ought to focus on is saving the math department which needs to be beefed up in order to excusify 32 percent increases in a 5% (or less) inflation environment.  Why, anything other than capitulation to a 5% increase would mean either the University or the Federal Government has completely lost track of inflation realities.

 

I leave it to you who you’d believe: UC Davis claims of soaring costs or BLS claims to the contrary…hard call, I know.  But one of ‘em ain’t shooting straight, near as I can figure….or both.

 

¿Por Que?

“Work site arrests of illegals fall dramatically” says a report in the Washington Times.  Why this would happen seems clear to me - no it’s not a tolerance policy - just the Border Patrol has more important stuff to do - like stop people 99 miles inside the US Border in the Northeast and put them in a national database…got it?  You really need more fluoride.  Sheesh!

 

Climate Change to Increase Prostitution?

Yep - so goes the logic of a UN official:  climate change wrecks farming and fishing and drives people to any other sources of income like dangerous work and prostitution.

 

While this comment was directed at the Philippines, might also explain California and….and….most people have this habit called eating.

 

Ark Notes

About now, people in Britain are maybe wondering (Britain hit by floods after record rainfall) whether the promise by God not to destroy the world by flood again is somehow being breached. 

 

Common sense (or nearly such):  If you check the fine print, that warranty wasn’t first written in English and applied only to a small marketing area the Middle East.  Your results may vary, see insert for details, offer void where prohibited… Don’t ask Noah, ask NOAA.  Besides, Britain is not part of ‘the world’ - it’s a Crown entity.  Sorry. 

Over the past couple of days, several people have written in saying the Ure Ratio may not be working.  If you’ve been paying attention, the ration says that the move in the price of gold times 10 is about where the Dow should go.

 

We ought to see a fine test of the ratio at the open this morning since the price of gold is down about $5 bucks as I write this, but check the gold price at the top of the page just before the open to see how it works out.  The ratio is not a hard & fast thing; just an indicator of how I shade my expectations for the day.  It’s not flawless, but it’s a start.

 

A bit of a comeback in the outlook after the unemployment number for the week came in unchanged:

“In the week ending Nov. 14, the advance figure for seasonally adjusted initial claims was 505,000, unchanged from the previous week’s revised figure of 505,000. The 4-week moving average was 514,000, a decrease of 6,500 from the previous week’s revised average of 520,500.

The advance seasonally adjusted insured unemployment rate was 4.3 percent for the week ending Nov. 7, unchanged from the prior week’s unrevised rate of 4.3 percent.

The advance number for seasonally adjusted insured unemployment during the week ending Nov. 7 was 5,611,000, a decrease of 39,000 from the preceding week’s revised level of 5,650,000. The 4-week moving average was 5,711,500, a decrease of 83,500 from the preceding week’s revised average of 5,795,000. “

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One reason the Dow may falter a bit today is president Obama is suggesting that the nation faces a growing chance of a double-dip recession if government doesn’t rein in mounting public debt.  My guess is someone sent him the Meredith Whitney interview on CNBC and he’s shading expectations. 

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The problem with government debt is that there’s really no way to rein it in since a good chunk of it is likely our own government, intervening through proxies, to buy our own paper - thus sustaining the illusion that there’s demand for dollar-denominated debt.

 

A visit to the TreasuryDirect website reveals the present Public Debt to the Penny is running a little more than $12-trillion dollars.  While once-upon-a-time the US Gross Domestic Product was running $13-trillion, that was before the National Foreclosure and Layoff Festival kicked into high gear from 2007 onward - featuring for your dining and dancing pleasure the jobless recovery we’re in now.  Nowadays, I expect real GDP is down around $11.5 trillion, but that’s just a dart because I’m too lazy to really pencil it out.

 

My point is that GDP = Public Debt is not a good thing.  It would be like you (and your spouse if you have one) having to work an entire year to pay off all your debts; made especially comical because of all the federal level talk about ‘balanced budgets’ which sorry to report ain’t never been real in the first place.

 

The only reason the Capitol reprobates can get away with such nonsense is the off budget accounting tricks, something the Heritage Foundation has been harping on since 1985… but of course, they don’t need to raise campaign dough, so there you have it.

 

Swell Healthcare

I don’t mean swell like ‘good’…I mean swell as in twisted knee…or in this case a twisted healthcare bill that’s up to 2,074 pages.  But as a Politico report notes, 14 pages of that is index...

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You know, it occurred to me that someone could try to read everything put together in Washington - and they would never catch up, even with a speed reading course…

 

Simple Answers Department

Word that “California requires TVs to be more energy efficient” got me to putting on my inventor’s cap this morning.

 

Then it came to me - in a flash - we just unplug them and presto!  100% energy efficient!

 

Yeah, yeah, won’t work in California because people would have to learn to read (dangerous step toward critical think, that).

 

Drips of News

Some mornings I think I should be writing for SNL or a good standup comic.  There are so many stories that scream “this could be funny!”  Take, for example Time’s story that “Obama Would Fire Afpak Leaker.”   

 

The comic stands up to announce:  “President won’t take a leak…”  (rim shot)

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Please: This is serious stuff (or nearly so) what with president Karzai pledging strides in security and corruption fighting.  It’s oh such a …you know…set-up to surging kinda thing.  Sit on your wallet.

 

Doing Blow

So what is coverage like in the MSM when Washington and Oregon have 100+ MPH winds and hurricane force winds and the largest waves ever recorded on the coast?  Nada…zilch.  Did anyone notice more wind and rain is coming?  Not outside federal region X.  Hurricane force winds again on the Oregon coast is in store.

 

But people on the East Coast are still gah-gah over Tropical Storm Ida…which brings me to considering how the Northwest could change its profile a bit: Start naming Pacific storms.

 

Maybe even come up with a snazzy new name for them:  I kinda like the word “Hurphoon” although I could live with “Tycane”.  And then name them after political leaders so the idea of wind comes across really clearly… 

 

Dueling Santa’s Department

See this morning’s article in the NY Post about how Wal-Mart and Amazon are playing discounter roulette. 

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Reminds me:  My legal counsel suggested that I retract my suggestion about leaking a couple of Vicodin and a glass of water in lieu or cookies and milk this year. 

 

“Branding issues plus offering medical advice on a scheduled drug is a no-no.” 

 

OK, I countered, how about a couple of aspirin?  “Nope, may cause stomach problems if not taken with food.” 

 

Back to cookies?  “Yeah, probably the best idea but be sure and leave the box out in plain sight in case Santa has any allergy sensitivities and see if you can get cookies that aren’t made in a facility that processes peanuts and tree nuts, just to be on the safe side.”

 

I’ll put a bottle of Benadryl out, but unopened.  What if the fat guy is diabetic?  “If you’ve left the cookie box out, we should be safe - if Elaine bakes them, have her leave the recipe out and circled but not too big a concern since there’s protein in the milk.  Might leave a piece of cheese, just to be safe there…and no more than three cookies, or we open up to exposure for OCD food suits…”   

 

This is how my days go lately.

If you were waiting for a world-ender deflation to strike, forget it:  CPI is still going up so that’s one sign that deflation is being held at bay:

“On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.3 percent in October, the U.S. Bureau of Labor Statistics reported today. The index has decreased 0.2 percent over the last 12 months on a not seasonally adjusted basis.

The seasonally adjusted all items increase largely reflected advances in the indexes for energy and for new and used motor vehicles. The energy index rose for the fifth time in the last six months, advancing 1.5 percent as the indexes for gasoline, fuel oil, natural gas, and electricity all increased. The index for all items less food and energy rose 0.2 percent in October, the same increase as in September. The indexes for used cars and trucks and for new vehicles both rose sharply and together they accounted for over 90 percent of the increase in the index for all items less food and energy. The indexes for airline fares and medical care also increased, while the shelter index was unchanged and the indexes for apparel and recreation declined.

The food index also increased in October, rising 0.1 percent after declining in two of the previous three months. The index for food away from home increased slightly, while the food at home index was unchanged. Within the food at home group, the index for dairy and related products rose significantly, while the fruits and vegetables index declined for the fourth straight month.”

I spent a little time in the BLS data archives this morning (hence a somewhat shorter report) and threw together some numbers that are pretty interesting.

 

The revealing part of the following table is that the ONLY reason that the year-on-year CPI numbers look anything like restrained price inflation is that the CPI dropped by almost 3% over the November-December period last year.  If you turn around and look at the cumulative inflation since the last December when those declines were replaced with small advances, then one can build a case for a big jump in the numbers over the next few months as those minus signs get backed out.  (Yellow highlight is a dart throw at the increases I’d expect, gas prices going up, yada, yada, yada…)

 

CPI Data Archrived from BLS
10/1/2008 Basis	Change	100	Since Dec
Nov	0.981	98.1
Dec	0.99	97.119	100
Jan	1.004	97.50748	100.4
Feb	1.005	97.99501	100.902
Mar	1.002	98.191	101.1038
Apr	1.002	98.38739	101.306
May	1.003	98.68255	101.6099
Jun	1.009	99.57069	102.5244
Jly	1.002	99.76983	102.7295
Aug	1.004	100.1689	103.1404
Sep	1.002	100.3692	103.3467
Oct	1.003	100.6704	103.6567
Projected Nov	1.003	100.9724	103.9677
Projected Dec	1.003	101.2753	104.2796

 

Those projections are conservative as the Dickens. Of course, who heaven only knows what will happen with “corrections” — as usual, the devil is in the details.  It’s well know fact in this part of Texas that the devil’s a statistician when he’s not stoking fires elsewhere, sending out junkmail & spam, or doing his work inside the Beltway.

 

Pay Attention to Whitney

That the market has been on a fine tear since the March lows is beyond a doubt.  That I moved to the short outlook prematurely is also correct.  But, what’s the old saying?  “Even a broken watch is right two times a day…”  As we’re now seeing the averages in Robin Landry’s target range, we should be ready to plunge back down and test the March lows but the specific trigger is not yet in sight.

 

Setting off a bonfire of the equities is something I’ve always thought of sort of like fire starting.  When the market has just done a major correction and is bouncing, another major down move takes a fair bit of doing.  Like trying to start a fire on a rainy day in the woods when there is no tinder about.   But at the market reaches certain points, the fire task becomes easier.  Some days it’s like lighting a normal campfire.  But then there are days - like now - when it seems the least little spark could set off a major collapse of prices.

 

All this is shared since one of the few people I track closely outside my own circle of friends is Meredith Whitney who was on CNBC Monday saying she hasn’t been this bearish in a year.

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Another realist the herd seems not to hear is Nouriel Roubini who’s also been saying lately that Americans should be ready for more downside to come.

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As I’ve said before, about the only reason I can come up with for the market moving up is that the market may be changing pricing regimen from some (wonky) relationship with earnings to ‘fixed assets as inflation hedges’ which may have been Warren Buffett’s BN acquisition motivation and which is about the only thing that makes sense to me on pricing:  The replacement cost of plant, equipment and market share has to be rung up somehow in all this.

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The dollar dropped this morning to the area around .666 Euro - dangerous stuff that - and I’ll leave you to ponder whether I mean the .666 part or the Euro…up to you.

 

Percentage wise, silver has been lagging since it was once above $20 an ounce when gold was around $10,40 a good while back.  Still under $19 when I looked this morning, so short term silver will either want to play ‘catch up’ with gold, or gold will come down, or the gold/silver ration will become even more extreme.  Choose one - or several.

 

Led by Geniuses

“Obama: Too much debt could fuel double-dip recession.”  Gee, yah think?

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Obviously, California is still looking for the mythical free lunch as the once Golden State has becoming something else…with a $21-billion+ budget shortfall.

 

Taxing Marijuana Questions

Interesting decision out of Colorado that “Medical marijuana dispensaries subject to sales tax, retail license laws.“  Even leaving aside that the AG’s office would potentially benefit from the additional revenue into the state’s coffers as a conflict, there’s a more pertinent question here:  How are people popping Big Pharma backed pills treated:  Do they pay sales taxes on meds in Colorado?

 

The answer is the AG is trying to treat medical marijuana differently that other prescriptions which are tax exempt in Colorado.  Wonder if the pharmaceutical outfits made campaign contributions?

 

Speaking of Drugs

“Failed anti-depressant drug could be ‘women’s Viagra’ ” says a report out Tuesday.  No, it’s not ecstasy - that names already been taken…

Along about the middle of each month we begin one of our breakfast of champions with a short discussion of how things are going down on the docks.  I hit the press release circuit which the MainStreamMedia reports and insist (patiently) that there other-than-government sources which will tell you how the wind’s blowing through the economy.

 

Take, for example, the October figures from the Port of Long Beach:  Inbound container traffic is down 22.4% compared with year ago levels when you look at TEU’s (twenty foot [container] equivalents.  The good news - such as it is - has to be the export (outbound loaded) for October was down only 10.1%.  And the shuffling of empties has slowed, too: Down 37.6%.

 

Across the viaduct, the competition at the Port of Los Angeles is celebrating with headlines like “Port of Los Angeles reports strongest monthly cargo volumes for 2009 calendar year to date.”

“Containers shipped through the Port of Los Angeles last month increased 10.9 percent compared to September, making October the strongest month yet for the Port this calendar year. Both containerized imports and exports reached their highest levels for 2009, with loaded outbound containers seeing an 11.8 percent rise over October 2008 volumes. Still, loaded inbound containers were 8.3 percent below October 2008 levels.

Despite a reporting period that included a weeklong observance of a Chinese holiday, the total number of Twenty-Foot Equivalent (20-foot containers or “TEUs”) imported and exported through the Port of Los Angeles in October was 647,423.70. Total container volumes were 10.9 percent above September 2009 levels; loaded imports were up 9.6 percent and loaded exports were up 7.4 percent over the previous month.

Year to date in 2009, total TEU volume is at 5,606,798.65, 15.4 percent lower than the same 10-month period in 2008. Tracking by the Port’s fiscal year beginning July 2009, container volumes are 15.2 percent lower than 2008.

Before you pop the champagne, loaded inbound containers were down 8.7% compared with 2008 and what they don’t mention is that October 2008 was down about 4% from 2007…and October 2007 in turn was down more than 8%  from October of 2006…and 2006 seems like it was the last ‘good’ year on the LA docks, although the Port of LA press release doesn’t mention that.  Calendar year 2007 was down only a tad from 2006, but from there, things headed down hill.  But don’t let me rain on the statistical blip just because it’s getting to the time of year when I wear a Grinch suit and scare the cats.

 

Heading north up the ILWU’s west side, we find Oakland was down 6.7% in October and down 11.1% year-to-date.  They’d been down YTD 6.4% last year.

 

I’ve always gotten on well with longshoremen, BTW.  Interviewed Harry Bridges back during the early 70’s West Coast shutdown.  Great guy and he had some fine insights into the changing relationship of workers to the ownership class like this one:

“”Why should we take it upon ourselves to pick up the pieces after industry discards people for machines? Isn’t it about time unions got in there before the fact to insist that there must be some obligation to people in all this?”

Between guys like Bridges (not to mention Eric Hoffer) and the gangs that used to have a boilermaker after work now and then at the old Nifty’s Diner down on Harbor Island in Seattle the even trade between a day’s work and a day’s wages seemed in good hands.  Here lately, when I read reports about mythical productivity I wonder what legendary union leaders would have thought of imputing a productivity jump from processor speeds. 

 

And no, I’m not saying kind things about labor just because I’ve met some outstanding labor leaders.  It’s because the folks who did (and still do) work in this country often have a clearer vision of the relationship between work and money than the gangs of lawyers that inhabit capitols. Which could have something to do with why the corporate types want to outsource whatever real work they can…lest their scamming be ratted out.

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Continuing up the coast, Portland hasn’t figured out how to turn on the calculator yet this month.  If they figure it out today they’ll maybe post October numbers here.

 

Tacoma is reporting foreign container traffic down 19.3% for the month with domestic down 9.3%

 

The Port of Seattle was up actually up 6% for the month of October, but remains down 11.9% year to date.

 

Take as a whole, no sign of a big recovery - some small shifts in traffic patterns, but I expect not too much overtime on the docks.  Which is worrisome when you think about it:  I’ve warned you before about Grim Reaper Does Christmas this year.  I can see the headlines already: “Slaying of the Sleigh!”

 

Instead of cookies and milk being left out for Santa this year, a glass of water and a couple of Vicodin will be more in order.

 

PeePeeAye

Which then moves us along to the day’s next headache:  The Producer Price Numbers.  May I have the clickvelope, please?

“The Producer Price Index for Finished Goods advanced 0.3 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed a 0.6-percent decline in September and a 1.7-percent rise in August. In October, at the earlier stages of processing, prices received by manufacturers of intermediate goods moved up 0.3 percent and the crude goods index increased 5.4 percent. On an unadjusted basis, from October 2008 to October 2009, prices for finished goods fell 1.9 percent, the eleventh consecutive month of year- over-year declines.

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Finished goods

The October increase in the index for finished goods can be attributed to higher prices for energy and food, both of which moved up 1.6 percent. By contrast, prices for finished goods other than foods and energy declined 0.6 percent.

Finished energy: The index for finished energy goods advanced 1.6 percent in October compared with a 2.4-percent drop in the previous month. Almost half of the increase can be traced to the gasoline index, which climbed 1.9 percent. Rising prices for residential electric power and liquefied petroleum gas also contributed to the advance in the finished energy goods index. (See table 2.)

Finished foods: Finished consumer food prices rose 1.6 percent in October after edging down 0.1 percent a month earlier. Accounting for about half of the increase, the index for fresh and dry vegetables jumped 24.2 percent. Higher prices for fresh fruits and melons also contributed to the advance in the finished consumer foods index.

Finished core: In October, the index for finished goods less foods and energy moved down 0.6 percent, its second consecutive decrease. Lower prices for light motor trucks and passenger cars led the October decline, falling 5.2 percent and 0.5 percent, respectively. In accordance with usual practice, most new-model-year passenger cars and light motor trucks were introduced into the PPI in October. (See Report on Quality Changes for 2010 Model Vehicles, USDL 09-1400.)

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components moved up 0.3 percent in October, its third straight monthly advance. The October rise can be traced to higher prices for intermediate energy goods, which climbed 2.3 percent. By contrast, the indexes for both intermediate goods less foods and energy and for intermediate foods and feeds decreased 0.2 percent. On a 12-month basis, prices for intermediate goods fell 7.5 percent in October. This is the third consecutive month of slowing year-over-year declines following a record 15.1- percent drop for the 12 months ended July 2009. (See table B.)

Intermediate energy: The index for intermediate energy goods advanced 2.3 percent in October after falling 2.1 percent in September. About one-fifth of this increase can be traced to a 5.5-percent rise in diesel fuel prices. Higher prices for natural gas to electric utilities and commercial electric power also contributed to the advance in the intermediate energy goods index. (See table 2.)

Crude goods

The Producer Price Index for Crude Materials for Further Processing increased 5.4 percent in October after falling 2.1 percent in September. For the 3-month period ending in October, crude material prices rose 7.1 percent after advancing 4.1 percent in the 3 months ending in July. The monthly October rise was broad based, with prices for crude energy materials jumping 8.3 percent, the index for crude foodstuffs and feedstuffs moving up 5.2 percent, and prices for crude nonfood materials less energy increasing 0.5 percent. (See table B.)

Crude energy: The index for crude energy materials increased 8.3 percent in October. From July to October, this index rose 9.5 percent, compared with an 11.8-percent rise in the 3 months ending in July. Accounting for about sixty percent of the monthly October increase, the natural gas index moved up 16.3 percent. Higher prices for both crude petroleum and coal also contributed to the advance in the crude energy materials index. (See table 2.)

Crude foods: The index for crude foodstuffs and feedstuffs increased 5.2 percent in October. This index moved up 2.4 percent in the most recent 3-month period compared with a 6.0-percent decline in the previous 3-month period. In October, a 9.0-percent rise in the grains index led the advance in the crude foodstuffs and feedstuffs index. Higher prices for slaughter poultry were also a factor in this increase.

Crude core: The index for crude nonfood materials less energy rose 0.5 percent in October, and 10.4 percent for the 3 months ending in October. Similarly, for the 3 months ending in July, prices climbed 10.8 percent. A major contributor to the monthly October increase was the gold ores index, which rose 5.4 percent.

What does it all mean?  Remember (not to harp on this, but…) global synchronized inflation seems to be game on now…so that finished goods are only down 1.9% annualized YoY means what?  Printing money is again offsetting incipient deflation and we may be able to paper our way through this mess yet.  At least until the commercial paper bundles start taking down big institutions, but no point getting ahead of the play by looking at the libretto.  We just sit back and enjoy the show.

 

If you thought this was fun, be sure and drop by tomorrow as the Prince of Mirth unveils the CPI numbers.  Another knee-slapper, for sure…only question is whether it’ll be a LOL or ROFLOL.

 

Market Ahead

The Dow yesterday hit an intraday high of 10,434 - which means any old time in here, things could turn down in an ugly way.  The good news is that if it’s the high for this bounce off the March 2009 lows, our crash dates (37 days, 55 days, 37 trading days and 55 trading days) are all out there in January or early February, although I don’t feel like playing the short side of thing.  This is NOT investment advice…

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Gold down about 8 means by the Ure Ratio the Dow oughta drop ten times that or about 80 near the open plus or minus noise traders.

 

With Friends Like This, 1

An NFL owner has been fined for flipping off fans. 

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Sports in general, and football & hockey in particular, have always struck me as a huge waste of time & energy.  It’s thinly veiled ritualized warfare where the goal is to slam people down who get in the way (fine training for corporate life, I suppose) or beat people with sticks, which may track hockey fans into law enforcement careers.  Next time you want to get even with a crass sports owner the best payback I can think of is heading for The History Channel or Discovery and put information - not ritualized warfare into your head.

 

Except the last inning of the World Serious or the final 2-minutes which turns to 20 (or more) of the Super Bored.  But seriously (or mostly so) next time you’re watching sports ask yourself “What’s my motivation here and what am I getting out of this?”  We know you’re being separated from your individuality and cash; I mean beyond that stuff…

 

With Friends Like This, 2

See where the governor of NY is not happy with the Obama administration for trying the 9/11 suspects in the Big Apple.

 

The way I’ve got this figured, “If you can’t say something nice…don’t say anything at all.”  Unless, of course you’ve got aspirations to higher office….

 

Saving the Auto Industry

Politico has been counting cars - in the presidential motorcade off in China.  71-they figure it to be.  Is that excessive?  Yes…and no.  Yes if you’re trying to cut greenhouse gases; no if you’re secretly still bailing out the auto industry.  See how yin and yang work?

 

Hungry for News

Word that 17,000 children per day die for lack of food shouldn’t come as a surprise.  Nor should the international conference on point in Rome. 

 

From the standpoint of aliens watching Ant Farm Earth I can almost hear the dialog:  “How long before they figure out this is the Feed & Breed question on the evolution test, do you think?”

 

I think I’ll skip lunch.

 

Police State Notes

Our reader in the far, far northeast has a question:

“what do you think of border patrol setting up checkpoints 99 miles inside us border?

they’re doing it in vt & nh on interstates 91 and 89, at White River, Vt and Lebanon, NH

so they catch a few sad illegals…

any bad guys with half a brain can scoot around the checkpoints on state roads and be on their merry way..

whats the point? sheep conditioning?

well, I got my wood split, back to stacking…

Well, as everyone knows, especially at this time of year, there’s a horrible problem with immigrant hockey players sneaking into the US to work illegally.  In fact, some reports have it that as much as 10% of Canada’s population has come across the border at some point to support these migrants who send money home to Canada.

 

Seriously (or nearly so) It points out how seriously the Obama administration is proactively preventing Main and New Hampshire from being overrun with illegals from New Brunswick.  Be careful how you answer, eh hoser?  It’s not a police state.  It’s a joke.

Gold popped up to nearly $1,135 overnight.  But then again, since I told you last week that the G-20 was engaging in something tantamount to ‘global synchronized inflation’ that would be the logical outcome, wouldn’t it?

 

So if this is really in play now, what could we anticipate?  Home prices falling slower or even rising  (why, lookie here…act surprised!) , the G-20 bumbling and stumbling about, and APEC making more ‘pronouncements’ about working together, firming oil prices, and since the season to be jolly is almost here, perhaps a premature partridge in a pear tree.

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The World is beset by a cast of bozos who don’t seem to understand Occam’s Razor, very well. Occam’s says  in so many better constructed words than I can parse together at this ungodly hour, that given a multitude of possible answers that are increasingly complicated, the right answer will likely be among the most (if not the) most simple.

 

Take for example the idea of climate change.  APEC leaders agreed this weekend that the Copenhagen climate treaty was probably out of reach.  Fine, and so it is.  The question someone ought to be asking is “Why?”

 

Some of the reasons cited sounded absurd:  We’ll not to this one because we want to get something more comprehensive down the road.  That’s govspeak for “We can’t drive the automatic transmission version, but we’re gonna buy the 6-speed version later.”  Like I said: Led by bozos.

 

So, what did the changeling say about this in 2008?  “Delay is no longer an options...”  Right….Guess some things have changed, huh?  Like political winds, maybe?

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What’s really going on under all the environmental ink is that too many people (globally) are waking to the real agenda which is being pushed by the UN, G-20 and all the rest:  Global Government. 

 

This is a topic the John Birchers were warning about what?  40-years ago…and here we are with arguably the most socialist government ever to haunt Washington and the John Birch Society was right after all.  Far right sometimes, but right is right…. 

 

But THE biggest stumbling block to a global coup  by the bankster and ruler class has been a lack of money to do their dastardly deed with.  But wait!  There’s movement on your (left) flank as the “UK joins G20 push for Bank Levy“.

 

Main point of this story is the concept of a global bank tax in order to fund future bailouts owned by The Chosen Few.  Pass….

 

The clear and present danger is that some super-organization that’s NOT DIRECTLY ELECTED begins to tax everyone in the world.  Don’t know about you, but I don’t remember voting on G20 membership, do you?  But that’s how the plan’s gonna roll, and the great (socializing) of world government needs a funding source and control of the global currency picture.

 

I’m not trying to sound alarmist at all this, but that’s how it’s all rolling out:  A global synchronized inflation to beggar the working people’s of the world.

 

As a free man, I don’t recall anything under the Constitution that provided for the US to contribute to - let alone join - some global government…but it’s early yet.  Was G20 membership voted on anywhere? I can’t recall…

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A trip over to Alexa.com reveals the www.jbs.org web site is ranked 31,824 in the US, while the

www.socialistworker.org sports a ranking of 58,479, so one would think that there are still more right-thinking (yes, meant both ways) people left (yes, another meant both ways, bad Monday puns are my thing today…) in America.

 

But the real battle lines are a lot different through issues hijacking.  The way this works is that the globalists throw money silently into the coffers of this group, or that, and then use the organization as an issues manipulator.  There are lots of so-called ‘green’ groups that have higher ratings that either the JBS or the SW web sites and it’s here that social influencers can operate behind the scenes on issues like climate, carbon, or whatever.

 

Related Data Point: Al Gore speech in Florida draw 800 pro and 200 supporter this weekend.

 

What Gore et al are pushing for (among other items)  is carbon credit trading because without monetizing climate control, it’s not going to happen.  However, given money, or taking it,  then anything is possible in the scramble to control the planet.  Which, in case you’re asleep, is the uber macro picture of what’s going on here on Ant Farm Earth.

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Remember, from a “power to control” standpoint, the objective is to get a system of global taxation in place which is ‘above direct control of the people’.  Accomplish that and you smash down the barriers of nationhood and you can install World Government.

 

Related Data point: Interpol now has its own passport:

“SINGAPORE – INTERPOL today issued its first ever passports which will enable Heads of National Central Bureaus (NCBs) and staff to travel internationally without requiring a visa when assisting in transnational investigations or urgent deployments to incidents.

Two countries, Pakistan and Ukraine, have already agreed to waive visa entry requirements for INTERPOL passport bearers, recognizing that those individuals will be travelling on behalf of the organization in the furtherance of international police co-operation.

Without the delay of visa processing procedures, any INTERPOL team can be immediately deployed to scenes of terrorist events, major crimes or natural disasters and officials from NCBs can easily cross borders to assist in fugitive extraditions. “

But wait!  Did I miss something?  I don’t remember voting on allowing anything other than US law enforcement to operate within the US…and maybe they don’t, but the operant  three letter word of the day is YET.

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What seems to be emergent from the fog of Monday morning’s headlines is the “Aha!”:  There are  two meta-factions now competing for control of the world.  One could be labeled the UN, but since there are so many Third Worlders there which the globalist crowd which likes to exploit, they’re now moving up the G20 and outfits like APEC to the front of the line and is grabbing as much media attention there are possible.  Look for the first global tax to emerge from one of these.  Remember that earlier story about the UK being stampeded into a bank levy which is a global tax no matter how much presstick is smeared on it by the MSM.

 

Here’s the playbook:  Have a global synchronized inflation save (or at least hide)  the so-far jobless economic recovery and watch for the G20 to take all kinds of bows, thus reinforcing the need for that global bank taxes to fund such interventions in the future.  Simple stuff, hell, not even elegant. 

 

No clue why the MSM doesn’t report it this way, but then I don’t have a board of directors, or touchy advertisers to pander to…nor am I likely to get there at this rate….

 

What you’re not supposed to notice now that the Dow is beginning to approach where it was back in the week of  April 12, 1999, is that one dollar in 1999 bought more than a dollar does in 2009.

 

If you use the Minneapolis Fed calculator for inflation, a buck’s worth is up to $1.28, but that’s before adding another 4 or 5 cents for this year’s inflation since the year is almost a goner.  Maybe $1.32, shall we say?

 

But, if you go to the Shadow government Statistics web site and plug in April 1999 through August of 2009, you find the government’s own numbers show a buck’s worth then is now $1.52 worth - not to mention what’s happened to real prices since August.

 

If you were expecting the skies to part and humans come to their senses, it didn’t happen this weekend…nor, if I’m guessing right, will it happen this week.  But one investment decision endures - getting out of paper.

 

The price of gold in April of 1999 was $284 when the Dow was this high back then.  I’d say gold’s done OK, huh? 

 

Any more, the only paper that I put my full faith in (since it hasn’t been diluted over time)  is Charmin.

 

Retail Sales

Hmmm…kinda early for numbers, but new retail data is out:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for October, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $347.5 billion, an increase of 1.4 percent (±0.5%) from the previous month, but 1.7 percent (±0.5%) below October 2008. Total sales for the August through October 2009 period were up 1.5 percent (±0.3%) from the same period a year ago. The August to September 2009 percent change was revised from -1.5 percent (±0.5%) to -2.3 percent (±0.3%).

 

Retail trade sales were up 1.4 percent (±0.7%) from September 2009, but 2.1 percent (±0.5%) below last year. Gasoline stations sales were down 15.0 percent (±1.3%) from October 2008 and building material and garden equipment and supplies dealers were down 15.0 percent (±1.8%) from last year.

 

You got the weasel wording here?  Not adjusted for price changes… So let’s guess prices were up 5% for the year, which would mean the unit volumes 6.7% year-on-year….which explains why they don’t adjust for price in this number, doesn’t it?

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GM meantime only lost $1.2 billion in Q3 - calls it progress.  Let me lose just a few million a year and I’ll show you what real progress is…

 

All of which has the market headed for a higher opening - using the Ure Ration (Dow moves about 10X gold price change) seems to mean up around 80 early on.  Your results may vary, void where prohibited, yada yada yada.

 

Ukraine’s Flu Mess

Media there is reporting 299 people dead so far and nearly 80,000 hospitalized.

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Around here, Elaine noticed something when she happened to visit a local Doc’s office last week (lube, oil & filter time) - prominent signs that “Persons with flu-like symptoms” (including x, y, and z) should NOT come in. 

 

So let me see if I have this right:  If you’re sick, don’t go to the doc’s office?  Boggles the mind…doesn’t it?  Guess it explains why we’re a pill-popping nation of self-medicators.  So I’ve herd.

 

Out to Launch

STS-129 - Shuttle Atlantis is going up this afternoon, unless you’re in Hawaii or the West Coast, in which case right before launchtime.  Ahem….

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No, the shuttle launches don’t produce as much pollution as cars. The good news is that if you’re awake enough to form a question that complicated, you can skip looking yourself up in the obituary column today.

 

His Head in the Clouds

I refer, of course, to Hugo “Chavez asking Cubans to “bomb clouds” amid drought“.  Here all this time I thought Chavez had his head somewhere else.

 

Texas Madness

Ken Clark, Galveston County (Houston) Commissioner (District 4) is hopping mad and if you hear a loud exchange of words on Wednesday, here’s what’s going on:

 

Clark’s absolutely livid because Galveston County has apparently brought some IT people into the US from foreign countries to work on the county computer systems.  Clark told me last night that some of these jobs are paying north of $75,000 a year! 

 

With all the people unemployed people in America, Clark is asking what the hell is going on?  Fine question, that….fireworks due Wednesday.

Happy F-13/triskaidekaphobia etc. As you munch over the trade figures, down toward the end of this morning’s report, remember that sometimes when a new consensus starts to appear, it will come from the ‘fringe’ which is where most of the action comes from.  OK, so the Mogambo Guru has been yelling “Buy gold!” for a couple of years - more then - and I made the inflation-is-coming buy assets call back in 2001 (I don’t like to make too many investment decisions…find them tiring). 

 

Thoughtful piece today in the WSJ “Tight maneuvering for Bernanke” gets to the idea that the Fed doesn’t really have much elbow-room in decision-making these days.

 

But now go read the Tyler Durden piece at ZeroHedge on how this all adds up to “Goldman on why a second stimulus is merely months away...”

 

About the ONLY question on the table is timing and whether the next stage of money-printing will happen before - during - or after the next round of panic, probably over quickly depreciating bundled commercial real estate debt which is about to sneak up on us in January when the Grim Reaper Does Christmas gets reported.

 

You  really ought to start a pool at the office for both remaining coworkers…  Form might look something like this:

 

Commercial RE Panic in Market week of	Bought by
Nov 15
Nov 22
Nov 29
Dec 6
Dec 13
Dec 20
Dec 27 — etc…—

 

And you sell tickets all over town - until you’re busted for breaking gambling laws.  When you go to court be sure to ask embarrassing questions like “Why is betting on when a market panic will occur any different than buying a stock option?  Or, how about different than taxpayers betting that there’s really all the gold in warehouses and Fort Knox without a complete audit of the Fed & bar analysis or betting that this will all end pleasantly?

 

Does ‘deep storage’ mean the gold has yet to be mined?  Which I suppose gets us around to this in our…

 

So We’d Noticed Department

Can’t count the number of emails that I’ve gotten about the Rob Kirby story about gold bars being partly filled with tungsten.  Here’s a typical example:

“The story is hitting some messageboards I frequent. People are getting worried about all that “real money” they bought over the last year or two in the form of precious metals.

I’m not sure I believe it, and actually it might be good for gold longer-term, but for now I wouldn’t be surprised to see all PM’s take a dive soon once this hits mainstream.

Was this .Gov trying to quell the run on gold as a mechanism to drive the dollar up?

YOU TELL ME!

Yes, this was one of those darn predictive linguistics hits I mention (way too often for some). 

 

Starting to look like the swine flu really was the predicted ‘building tensions’ part of the language globally, what with the situation in Ukraine, etc.  What’s interesting in the amount of hate mail both Cliff and I got for that particular prediction.

 

As I’ve mentioned many times before, the linguistics often get ’scale’ wrong…but for sure there was a shift of language on the expected date and if you read the October 25th Obama declaration of a national emergency related to swine flu, here, please note that the situation is placed in the same category as Hurricane Katrina, Hurricane’s Ike & Gustav, and the North Dakota Flooding of this year.

 

Interesting to note the latest figures out from the CDC show that some 22-million Americans have had swine flu now and the death toll is running about three times higher than previously estimated with 4-thousand deaths attributed to swine flu.  41.6 million doses of vaccine are available presently… CDC video here.  3-million doses of ‘regular’ seasonal flu vaccine have been distributed in the  latest reporting week.

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One of the things bugging me about the ‘flu’ being ‘it’ in the linguistics is how this relates to the economy…but now what we’re finding out is that flu spending has turned into a major discussion within Ukraine and concurrently, Ukraine’s debt rating has been downgraded by Fitch to B-minus status according to a MarketWatch report.

 

Oh, and local press coverage in Ukraine continues to paint an ugly picture, although maybe not from pneumonia.

 

And it looks like WHO is taking a more aggressive stance on antiviral use early on in the flu.

 

Trippin’

President Obama is in Japan before continuing on to meet with the Chinese.  Hope he remembered knee pads for that meeting with the Chinese who could flush our economy on a whim…

 

Apparently their power position/cat bird seat is clear:  “China’s Hu prods West on trade, investment barriers”.  I figure it’s just a warm-up for the strong arming ahead - especially since Commerce Secretary Gary Locke was just recently giving China missile technology.  Don’t mean to keep HAARPing on this, but the MainStreamMedia must be DDNB - deaf, dumb ‘n blind - on the importance if giving China access to our hard won technology.  You & I paid for it…remember?

 

Trade Gulf Wider

The latest figures out from the Census & BEA types today shows that after declining a bit in late 2008 and into the first part of this year, the trade deficit is up again…

“The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total September exports of $132.0 billion and imports of $168.4 billion resulted in a goods and services deficit of $36.5 billion, up from $30.8 billion in August, revised. September exports were $3.7 billion more than August exports of $128.3 billion. September imports were $9.3 billion more than August imports of $159.1 billion.

 

In September, the goods deficit increased $5.6 billion from August to $47.6 billion, and the services surplus was virtually unchanged at $11.1 billion. Exports of goods increased $3.5 billion to $90.3 billion, and imports of goods increased $9.1 billion to $138.0 billion. Exports of services increased $0.2 billion to $41.6 billion, and imports of services increased $0.2 billion to $30.5 billion.

 

In September, the goods and services deficit decreased $23.7 billion from September 2008. Exports were down $20.0 billion, or 13.2 percent, and imports were down $43.7 billion, or 20.6 percent.

 

Not to Worry

OK, so the economy has a cloud over it (which is what you’d expect in a Second Depression, right?) and yeah, so Obama is going hat-in-hand to China.  What’s really encouraging is the report that a number of students aged 15 and younger have been arrested for a school food fight.

 

See how this will solve our nations ills?  Why if we can start putting enough of these pre-adults into jails, we could be off on another huge phase of economic expansion.  Better yet - jail both the parents and students involved in this.

 

Imagine the gloriousness of it all:  A perfect command economy:  Everyone goes to jail, everyone gets do-overs, and no one is held accountable, but it all costs a bundle, so everyone has a job - even if just trading places every so often with their jailer.  This, my friend, is the essence of economic recovery going on right now.

 

The only problem I’ve ever had with socialism is I can’t figure out how to get rich following it.

There’s a fine article to start things off today over at the Kitco web site by Alf Field.  It tells the tale of what happens when a currency dies as it did earlier this year in Zimbabwe.

 

I mention this as a reminder that the USA is on a similar track - toward death of the dollar - although Zimbabwe got there first.  Our own progress has been a little slow, but not for a lack of effort on the part of the left-right-money alliance in Washington.  The ruling Troika (and the Russian word is becoming more and more apropos) has been moving us right along the nonlinear path toward hyperinflation ever since the bankers seized the nation’s monetary controls in 1913.

 

By 1929, the not-really-federal reserve had stolen away 42.1% of the dollar’s purchasing power.  By 1950, that amount had swelled to where 58.9% of the dollars purchasing power had been stolen.  Even more importantly, thanks to Keynesian doubletalk, the American public had the “Big Lie” about inflation deeply seated in both textbooks and popular media.

 

The Big Lie is that prices go up.  They don’t.  The purchasing power of your dollars goes DOWN.

 

By 1975, the dilution of purchasing power had sucked 81.6% of the dollar’s purchasing power away - meaning that something which cost $1 in 1913 when the banksters took over (along with their free lunch/deficit spending pals in congress) was up to $5.43.

 

Then things got worse.

 

By 2000 the dollar’s purchasing power was diluted 94.25% from where it started in 1913.  What had cost a single dollar then was up to $17.39.

 

This morning, if we assume 5% inflation for 2009 year-to-date, what cost a single dollar in 1913 is up to $22.61.  The dollar is buying 4.42% of what it did in 1913, or more clearly its purchasing power has dropped 95.57%

 

It doesn’t take a financial genius to figure out that what’s happening to the US dollar’s purchasing power is along the same lines as Zimbabwe’s only slower - at least for a little while.  But over time there’s no way of getting around it:  We’re going down the same road led by compounding interest the whole way.

 

The major task of governments is to keep as many people buying into the idea that paper money is a ’solid’ thing.  It is…and it isn’t.

 

John Williams of Shadow Government Statistics wrote a most excellent piece back in 2008 - a “Hyperinflation Special Report” in which he forecast a “Hyperinflationary Depression remains likely as early as 2010.”

 

Williams calculations of the dollar depreciation, by the way is even more grim than mine.  The way he figures it, the decline in purchasing power has been such that since December 1913 through August of this year, fully 96% of the dollar’s purchasing power has gone toes up and what cost a single dollar in 1913 is up to $25.18.

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Obviously, this can’t go on forever.  The only reason that China has played nicey-nicey is that the U.S. has been bribing China with things like missile technology.  You probably missed a couple of weeks back when I reported that Commerce Secretary Gary Locke was in China with quietly issued Obama permission to hand over more missile technology?  Not that Obama’s the first mind you; the Bushies were in the same boat.  Such is the power of blackmail.

 

That gets us to an old saying:  “You can never pay off a blackmailer.”  THE most important story of this week was carried Wednesday when bond traders were sleeping in:  “China central changes wording on Yuan policy“.    We must be running out of trading stock, huh?

 

Next week, president Obama heads to China for his first visit there.  I’m expecting that China will essentially hand him a shopping list of demands and Obama like Clint6on and Bush before him, will put on his best repartee.

 

But the bottom line, behind all the hoopla is that the US dollar seems heading in the same direction as Zimbabwe’s old 100-trillion Z dollar notes. 

 

It might take a while longer, but as you watch the price of gold making new highs, remember that gold’s not going up.  What you’re seeing is the dollar coming down.

 

Can the dollar rally for a while?  Sure - but the rally I was expecting to start around October 26th was a lot weaker than I expected - although maybe the little rally going on this morning will turn into something.  But regardless of the short term, longer term compound interest wins and inflation is the systemic bias.

—

Word that Barrick has shut its gold hedge book ‘as world gold supply runs out‘ should be a hint.  But  here’s the thing:  It’s not entirely run out yet.

 

I was talking to one of Elaine’s boys yesterday (electrician up in the Telluride/Delta area of Colorado) and he mentioned in passing that the big gold mine up that way is still closed.  When that reopens, then I’ll start to take the “gold runs out’ stories more seriously.  Expect it will reopen when economics of production improve.

 

Jobs Numbers

From the Labor folks:

“In the week ending Nov. 7, the advance figure for seasonally adjusted initial claims was 502,000, a decrease of 12,000 from the previous week’s revised figure of 514,000. The 4-week moving average was 519,750, a decrease of 4,500 from the previous week’s revised average of 524,250. “

A green shoot or no one left to fire?  We report, you something or other…

 

Keep an Eye on Ukraine

Although there have been a lot of reports that the outbreak of ‘whatever’ in Ukraine is something other than swine flu and a lot of panic, the stories from the mainstream have - at least until this morning - pretty much closed off that possibility.  But, a careful read this morning is starting to open a few doors to new possibilities.

 

Take for example this Reuter’s story under the headline “Ukraine PM accuses Yushchenko over H1N1 swine flu“.  All of which sounds just swine until you get to looking at the cited numbers. 

• “A total of 189 people have died in the outbreak, the health ministry said…”

• Then in the next paragraph “The toll included 17 deaths from the H1N1 flu, First Deputy Health Minister Vasily Lazorishinets told journalists.”

 

Now, I’m not saying for sure that something else/big is going on here, but by my arithmetic, that would leave 171 dead people to be explained.

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In a strange way, this whole flu thing is filling out the linguistics for this period - the ‘ill winds’ aspect of things, the economic impacts, and the fact that it’s not US-centric - it’s really out in GlobalPop.  The declaration by the Obama administration (October 25th)  was bang on time-wise, and since then we’ve seen building tensions globally although not so much noticed by the MSM.

 

Wouldn’t be the first time the linguistics have painted a more dire picture of events in advance that actually come to pass, nor will is likely be the last since another report is in the offing for mid-Decembers tentatively.

 

Whether pandemic ‘flu’/hemorrhagic whatever is “IT”, or whether we’ll finally get around to seeing an attack on Iran’s nuclear facilities should become clear over the next week, or so.  Since Ukraine is already under martial law, a generalized spread of hemorrhagic whatever popping up in other countries, which could bring serious restriction on air travel, particularly of the intercontinental sort, is something worth at least keeping an eye on in terms of future developments.

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Iran, meantime, was the ONLY item on the agenda as the prime minister and president of Israel met in Washington with president Obama Monday.

 

O Poll

A reader sends this:

“A web bot hit from The shape of things report volume 0 issue 1. The first sign of revolt will be the President’s declining poll numbers.”

Yeah, the Rasmussen Reports daily tracking poll show only 30% strongly agree that president Obama’s doing a good job.  Guess the rest of us are waiting for change.

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The notion that Obama’s presidency would somehow improve race relations may be illusion as a bar fight in New York seems to underscore.

 

Dobbs Moves On

I’ve watched Lou Dobbs history ever since his stint at KING-TV in Seattle where I was newsing at the same time (Seattle, not KING).  Part of me is sorry to see him leave CNN - where he was usually on the same side of issues (e.g. the reasonable/rational side) as I tend toward. 

 

The other part of me is hopeful that Dobbs will get serious about making some real change happen in this country; the change we were promised by the democorps has been long on wind and short on delivery.  Could Dobbs be the one that takes a run at high office and actually makes it?  We should be so lucky.

 

Workers Paradise

Well, not prexactly:  Cuba is going through huge energy cuts due to a failing economy.  You’d think the country’s leadership would have learned a thing or two, but in case they need a reminder here it is: Communism Failed in the Soviet Union…so why would Cuba be any different?

If you’re just waking up this morning - and it’s the usual time, too bad for you that you don’t have one of those GS-whatever levels jobs in the federal government since this is Veterans Day and a holiday for many government types besides federal.

 

The good news about the mail is bills won’t be coming.  The bad news about the mail is that if yoiu leave it in your box to be picked up - after scraping together a house or car payment, that won’t be picked up today.  Oh - and I guess that “You may have won!” notice from Publisher’s Clearinghouse won’t be arriving today, either, come to study on it.

 

In most states - we’ll pick Missouri for our example of the day since I haven’t picked on the square staters for a while - things like state offices are closed, too.  Schools, on the other hand, will be open - or not - depending on district.

 

The stock market will be open today, but my bond-trading friends will be running up flags at home presumably because the bond market is closed.

 

Doesn’t hardly seem fair to me that the bond traders will get the day off, but the logic is that if the feds are getting a day off - which includes Treasury - then why go to work?  And then - because there’s no one to pass troubled assets off to, the banks (for the most part) will be closed.

 

Probably the highlight of the day is that we’ll see banks closed by something other than the FDIC today…trying to put a positive spin on things.

 

Gold traders have distinctly not taken the day off with gold up more than $10 earlier - which applying the ‘Ure ratio’ suggests that that a Dow rally of a hundred points, or so, may be in the works.  Why, with the feds off (in a manner of speaking ;-)) ) who’s going to throw cold water on euphoria?

 

A couple of major insights usually come from Veteran’s Day.  First is that I’ve always held that if you give someone a day off to ‘observe’ something, then they ought to be honor (if not legally) bound to do some observing.  I don’t mind the bond traders and bankers that get the day off, but it they aren’t laying flowers on graves, showing up at a parade, or in some other way honoring those who have paid freedom’s highest price, the WTF are they getting the day off for?

 

By the same token, I reckon that if folks get Martin Luther King day off, of President’s Day, or Labor Day, they should actually observe and honor.  Not that I’m against taking time off, but just pick one, how much honoring of the labor movement actually gets done on Labor Day?  Labor Day has always been more than a little suspect since it originated in Canada, a country known for shameless torpedoing of a single national language.  Other than the NHL players, timber, and time off, well….we shouldn’t go there.  My older sister lives in Canada and she’s managed to retire while I haven’t so maybe Canada isn’t so bad.

 

Two other notes on this “half day”:  If you like to gamble (and if you have a 401(k) you’re gambling, whether you’ll own up to it, or not) this is a fine day to play parking meter roulette.  You drive to a city with parking meters, don’t feed the meter, and see if you get a ticket.  If you’re a winner - no ticket.  If you’re a loser, you ought to learn to read meter labels.

 

The final point to be made about this ‘half day’ is to notice how smoothly everything runs.  Most of government shuts down and the working people that are really where the ‘rubber meets the road’ (fire, police, air traffic, paramedics, etc.) still get their jobs done.  But there’s less - you know - overhead.  All of which gets me to thinking we could cut the cost of government in half my reducing its hours to three days a week, so the rest of us could get stuff done.

 

Maybe when backs of envelopes were used for bond figuring bond trading took time.  But with point & shoot spreadsheets?  And federal offices?  How about we make a little side bet they can overspend as much in three days as five?

 

Not So Free Speech?

There’s a very interesting story developing about a federal grand jury which is apparently trying to compel a web site (www.indymedia.us) to produce all kinds of records about people that visit its web site on one particular day in 2008.  Apparently the request was withdrawn, but that leaves a very interesting question about what was the DOJ looking for?

 

The Electronic Frontier Foundation has been watching the development of something called ACTA - the anti-counterfeiting trade agreement, which its web site suggests is a “Secret Global Deal Targets Internet“.

 

One has to wonder if the web site was being targeted over some copyright issue, or whether the DOJ (this was during the Bush era, BTW) was simply trying to do ‘intelligence’ gathering on what the unbrainwashed folks were up to.  We may never know. 

 

But if you get some time, read “From EFF’s Secret Files: Anatomy of a Bogus Subpoena.“

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There’ s a simple answer to this kind of government intrusion - I think:  Seems like the ‘fishing’ is based on the existence of ‘log files’ which are generated by operating systems.

 

You didn’t hear this from me, but I am not aware of any legal requirement to maintain server logs.  Could be ignorance on my part, I’ll let you know what I hear back.

 

The problem with not keeping server logs is this:  A lot of the internet traffic ranking system is built around server logs.  Ranking services routinely send out spiders that sample logs and come up with traffic reports.  Without those logs, how would traffic be counted?  And no telling how much of what goes on over the internet is sniffed out by phone company tie-ups with big phone companies, but that’s another discussion for a different day. 

 

This whole area continues to hold my attention, however, since it was in the middle of the first Depression that government seized control for itself over the airwaves via the Communications Act - and no reason to expect any other channels of communication that happen along wouldn’t be seized in this one.  America’s a ‘free country’ but only just so free, don’tcha know.

 

If you think America is really free - try speeding sometime.  The yoke is there, whether folks care to see it or not.

 

Speaking of Yokes

A lot of talk has been surfacing around this whole ‘jail time for failure to have health insurance’ boondoggle that’s up for a bloody fight in the senate shortly.  What’s bothering me is that president Obama is widely quoted as saying “penalties are appropriate for people who try to free ride the system and force others to pay for their health insurance.”

 

I have to respectfully disagree here:  If someone is not able to afford healthcare, rather than throw them in jail, the administration ought to work on positive reinforcement rather than the jackboots approach:  Get folks jobs that come with health insurance. 

 

Or, is that a little too simple?  Criminees sakes: Next we’ll have healthcare police.

 

Power Problems

The “Light return following Brazilian blackout” is an interesting story to read because it serves as a kind of grim reminder that life without electricity can get pretty dicey pretty quickly.  Making coffee, just for instance…  I trust you’ve got a camp stove an a percolator, yeah? 

 

Wide Ranging Pirates

Something about the report that “Pirates seize Greek vessel off Seychelles” didn’t sound right, so I hauled out the maps this morning.

 

The report says the vessel was seize 607 miles (513 nautical) north of the island group.  That would imply  that the pirates if based in Somalia or Ethiopia were ranging almost 800 miles out.  A half-circle on that kind of range is 800,000 square miles of ocean to patrol and that’s some kind of ocean space.

 

Signature Litter

Have to love the headline on CNN:  “Golf balls: ‘Humanity’s signature litter.” 

 

Maybe.  But I’d offer that paper money is the signature litter:  It don’t seem to last more than 80-years, or so, at a stretch without being retooled would be my candidate.  The whole notion of usury and depreciating value is at the core of planned obsolescence and in turn low quality goods that swell landfills to overflowing.  And through inflation, people are robbed of their savings which in turn fills to pockets of the owners of the means of production.

 

If you want to be rich: Make junk and sells lots of it. Over and over again.

 

Humans have been really slow - to verging on dumb - figuring out that if we were focused on quality as a species, we’d all more time to pursue self-improvement and self-discovery.

 

Or, maybe that’s really the plan: To prevent just that?

A Tyler Durden piece over at Zerohedge.com tipped by a reader Monday is a fine place to begin a Tuesday morning conversation about “How frigging crazy are we?”

 

The answer (looked surprised, OK?) is very crazy, manic, irrational, and insane - but thanks for asking.  The behavior of markets is nothing more than numerical evidence of something we all know deep down inside anyway; we just don’t like to talk about it.

 

The Durden article makes the case that we’re in a market now which sees the “S&P Price Oscillator is three Standard Deviations from Mean: 99% outlier Market.” Or, if the coffee hasn’t sunk in yet, the market’s in a 1-in-a-hundred kind of rally.

 

With a modest pullback in gold in the early going indicating perhaps a soft start to the Dow today, we have to start looking for my (still expected) decline back to a test of the March 2009 lows around Dow 6,627 before the one final run up till August/September of 2010 which now seems like the time when widespread recognition of the Second Depression ought to be sinking in.

—

Here’s one of the drivers to be watching:  I was talking to one of my sources who’s pretty well ‘plugged-in’ to the commercial real estate market.  “You know George, I’ve got one client who is a national retailer who has just negotiated a zero rent deal because the landlords are becoming so desperate to keep big-name tenants in operation…because when anchor tenants go, the traffic count drops and the remaining stores in a strip get upside down and the owners then find their properties in a downward spiral.  So what we’re seeing is a lot of the anchor tenants are renegotiating great deals…”

 

Great, that is, if you don’t own commercial real estate.  And I’m not talking the BIG malls - I’m talking the smaller strip kinds of malls.

 

As these huge rewrites of rents start rolling in to cash flows happens in early 2010, that will probably add to the woes of commercial real estate which tends to be a lagging sector.

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The Big Picture to keep in mind here is that when you see deals like Warren Buffett buying things like railroads, there’s a better-than-even-chance that he is buying because it’s a ‘fixed asset play’ that’s much more resilient than owning malls, strips, and so forth.

 

We kicked around “Why would he buy 100% of Burlington?”  Especially since he is apparently planning to sell off his Union Pacific and Norfolk Southern rail pieces in order to own 100% of BN.

 

My source and came to appreciate that by taking BN 100% under the Berkshire umbrella, Buffett’s outfit would not have to report its rail operations separately.  Thus, because the Interstate Commerce Commission is hardly regulating much of anything (except safety issues, driver hours and such) that would give Berkshire an opportunity to play poker essentially with other players while never having to show their hand.

 

So once again - it’s a sheer genius move by Buffett:  He’s buying this huge inflation hedge since the replacement cost of all the rail stock and real estate under BN tracks has to be worth probably somewhere in the trillions. 

 

In yesterday’s column I talked about my ‘poor man’s fixed assets’ project:  Machine tools for the shop here at the ranch, a tractor that’s only 3-years old with only 220 hours on it, a collectable old air cooled sports car, and having no credit card debt plus enough real estate that’s paid for such that as global synchronized inflation comes along, our fixed assets replacement costs ought to zoom such that my next year (summertime) we can unload a few things having gotten desired use out of them, recoup probably our purchase price and maybe then some.  No, it’s not a railroad, but it’s a start.

 

Looks like Buffett’s plan is in a sense the same thing, except he gets to play engineer on a big railroad and I have to be satisfied with a smooth-shifting five speed.  He gets to move more zeroes around, for sure.

 

Probably the reason Buffett has so much more money than me is that I’ve wasted a lot of personal resources on projects like learning to fly airplanes, whereas Buffett had the good sense & focus to just make oodles of money and hire the plane and pilot.  To each his own; Life seems like a tradeoff between focus and fun all too often.

—

I suppose we could go through lots of technical discussion about why this market is overbought, but the simple part is that the turn down can come any time, or we could rally north of 10,500.  Arguing against going too much higher are indicators like the report that German investor confidence is falling, and the HR department at Lloyds bank rolling grenades on 5,000 more workers. 

 

Also making the case for ’synchronized global inflation’ is the drop in the pound today as Fitch said - in some many words, that the British credit rating is more at risk than ours. 

 

If you’ve played the rally since March, “Get thee to the sidelines” seems like a fair approach.  Especially since we’re now in 1% country as Durden’s work points out.  As usual, this is NOT FINANCIAL ADVICE.  Think of it like…oh… financial suicide prevention comes to mind…

 

Got What We Came For Department

Does the headline “Iraqi Cabinet approves Exxon-Shell oil deal” mean we can send fewer troops to the sandbox?

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Don’t you wish?  Nope:  Word is Obama is sending another 40,000 troops to Afghanistan.

 

PM’manship

The BBC News Magazine has a rather interesting article seeing as I’m such a $275 gold Gordo fan:  “How does Brown’s handwriting compare with other PMs” they ask.

 

Well, at least he can write…that’s…er…reassuring.

 

Speaking of the BBC

Journalism at its finest here:  BBC has also been covering the adventures of a female college student who was kicked out of school for wearing a mini skirt.  She’s been readmitted to school, they report - but that’s just a good starting point to a finely honed investigative journalist like…ahem…..

 

“You’re going for a bad pun…like ‘Built like a BRIC________‘?” you worry.

 

Never anything so gauche! This is a serious (or nearly so)  financial news & comment site, after all.

 

No, the BBC story launches us into a discussion on the application of hemline theory.  You know - the one that says as go hemlines, so go markets.  Hemlines going up should mean strong rally and upward movement while ankle-length attire would indicator declines or Depression.

 

So if you click here you can see a comparison of how the Sao Paulo Bovespa stock has done over the past year compared with the Dow. 

 

The Dow is up something like 7% while the Bovespa is up around 75-80%.  Conclusion:  If our government is so damn smart…why aren’t they promoting miniskirts to get the economy rolling again, huh?   Look what it’s doing in Brazil!

 

Rainy Night in Georgia

No, not Brook Benton - just knowing that likely makes you a Boomer, though.  Tropical storm Ida is what we’re talking about..  Looking at the weather radar for Atlanta today the drought seems so long ago and far away….

…you wake up, it’s Monday, and the US dollar is worth 0.666 of a Euro. Of course, it was only there for a few minutes, but still, it makes a thinking person wonder “What’s up?”  I mean besides the price of gold which was handily through the $1,100 barrier earlier this morning.

 

Usually, when gold is up, so is the Dow.  Thus a continuation of last week’s rally seems in the cards for this week to the 10,300 to 10,500 range, but beyond that is anyone’s guess.  The problem is that once a dollar exodus is underway the potential increases for the markets to become ‘disorderly’ and that’s when the fireworks go off.

 

The headline that “World markets get a G-20 boost” because the money-meisters decided this weekend to continue their economic stimulus plans may sound like a non-event, but to my way of thinking it’s an admission that 1) they haven’t printed enough money to jump-start the economy yet so 2) they are continuing to orchestrate what is best described as ’synchronized global inflation’.

 

You’ll have to work out the meaning of this to your own financial statement, but imagine, if you will, that global inflation is heading up at 10-15% over the next six months or so.  That’s the kind of possibility to consider.

 

If you were in a house and its value had fallen 10-15%, it might come back up a bit and therefore tempt you into not walking away from a loan.  If you’ve been holding back on buying a big ticket item, global synchronized inflation will tempt you to ‘buy now  since prices are going up.

 

In any event, synchronized global inflation will keep the US dollar from complete and utter collapse while at the same time dropping our standard of living since magically wages won’t keep up with born again inflation.  At the same time, it will moderate the amount of goods that can be bought in countries like China and India.

—

Around here the long-term strategy has been to buy as many long term/big ticket goods as possible while interest rates were (and are) at lows.  Hence, a car loan from a Big Bank  can buy a decent car for say $20,000 at something less than 5%.  A couple of years from now, the inflation rates that are coming as a consequence of global synchronized inflation might mean the car will depreciate less rapidly on the one hand, while there should be more dollars sloshing about if, and when, we get into serious recovery mode — which pardon my conspiratorial bent here - ought to happen in time for the next presidential election cycle.

 

Thus people who voluntarily lowered their stand of living over the past half dozen years may now be able to reap some benefits by locking in low rates and seeing their paid-for goods actually appreciate in some cases.

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I mentioned almost a year ago I was thinking about buying an old (mid-80’s) air-cooled Porsche because it might be a ‘good inflation hedge’.  I had done this before in the very early 1980’s when inflation was zooming along.  There was so much global inflation going on back then that the car I bought for $6,500 fetched $7,500 at trade in time 4½ years later.  Ignoring maintenance, the underlying car actually appreciated in period I owned it.

 

Can you do the same kind of thing today?  This isn’t financial advice, but it’s an interesting bet.  If you think about what 20% global inflation would do to imported car prices, one has to imagine that as imported car prices go up 20% that the price of used cars will be buoyed up.

 

Same thing is true in other hard goods as well. 

 

The Jet 9X20 metal lathe out in the shop was in the $800-900 range when it arrived here about 3-years back.  This morning I checked prices and the new units have gone up to the $1,200-$1,350 range.

 

I can’t tell you that machine tools are as good an inflation hedge as gold because gold in the period went up 70% and at best, the machine tooling went up only 50%, but you can kinda get the idea:  Physical commodities are the hedge when money-printers are afoot.  Hence long term investments in commodities look interesting and if the economy doesn’t completely implode housing may be cheap.

 

But it’s still a bet with long odds.  If the market hits 10,400-500 and then drops down to test the March lows either late this year or early next, there may be one more good run-up in the market.  That’s when I’d be unloading any physical good hedge positions and roll back into bonds for what could be a humungous ride down.

 

But that’s probably the biggest financial story of the day - global synchronized inflation to continue to kick-start the economy - it’s what gold, machine tools, and even collectible car prices seem to be telling us.

 

Wall Street ought to be moderately higher for the week if my guess is right - and about the only ‘biggie’ due out should be the Balance of Trade figures on Friday the 13th.  CPI and whether synchronized global inflation is apparent there yet is a crap shoot.

 

Related: An article by strategic planner Bill Sharon under the heading “What Needs to Go Right” that discusses how we have gone from goods-trading people to money traders and a swing back to goods could be something to think about…

 

Ida

Hurricane Ida is likely to make landfall tomorrow morning along the Mississippi, Alabama, and Florida coasts. The southeast weather radar looks like pretty good rainfall ought to be hitting the Florida pan handle later on this morning.

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You saw where there was a tornado in Lincoln City, Oregon this weekend?  Talk about terra changes…

 

Big Quakes Department

 A 7.2 in Fiji this morning.  If you look at the plate map sure looks like something big is in play all along the southern edge of the Pacific plate…

 

Hungry China

Interesting to see that China’s prime minister is pledging $10-billion in loans to Africa.  Making sure the Chinese food supply chain is intact long term, perhaps.

 

Free Press?

The headline “India limits media on contentious Dalai Lama trip” to a disputed border area.  When I sit back and think about China’s interest in Tibet and other high mountainous areas in that part of the world I sit back and ask “Why?”  Rumors have been around seems like forever that there’s some kind of “hall of records” lost in the Himalayas, that there may be hidden hints as to what’s ahead in 2012…all that kind of stuff.  Maybe it’s because there are some minerals up there, but China’s interest is enough to give one pause to wonder “Why?”

 

Iran’s Bad ‘Tude

Iran’s latest attitude shift has gotten some seriously negative press in Israel.  “Iran ignoring USA bid to salvage deal” points out the Jerusalem Post this morning.  There’s a report the US has not lost hope yet, although clearly there’s a sense in Israel of ‘time running out’.  Iran’s reportedly given its president authority to end fuel and other subsidies to shift money into nuclear development in event of Western sanctions. 

 

Detached Government Department

I’ve argued many times that people should come back from service in Washington with no more than they had going back there…plus some adjustment for inflation - using the CPI figures like the rest of us put up with for cost of living adjustments.

 

So let’s roll this morning with a press release from the Center for Responsive Government which reveals that 237 members of congress are millionaires:

“WASHINGTON -- Even members of Congress – many among the country’s richest people — aren’t impervious to the nation’s economic recession.

Current congressional members’ median wealth uncharacteristically dropped nearly 5 percent in 2008 when compared to the prior year, a Center for Responsive Politics analysis of federal personal financial disclosure reports indicates.

But with 237 millionaires still serving in Congress, most of the nation’s leaders are doing fine compared to many of their constituents living paycheck by paycheck, if they’re earning a paycheck at all.

About 1 percent of all Americans are considered millionaires, while more than 44 percent of congressional members claim that distinction. And 50 members of Congress boast estimated wealth of at least $10 million.

“Generally speaking, members of Congress are wealthy by comparison with the vast majority of Americans. That doesn’t mean they’re immune to the effects of this ailing economy — they’re not,” said Sheila Krumholz, the Center for Responsive Politics’ executive director. “But they are much better positioned to withstand financial pressures than the people they represent.”

U.S. senators currently serving have a median reportable worth of $1.79 million for 2008, down from $2.27 million in 2007, CRP’s analysis indicates. Meanwhile, currently serving House members’ median income was $622,254 in 2008, down from $724,258 in 2007.

This ends a notable run of congressional wealth expansion.

In 2007, for example, members of Congress then serving experienced a 13 percent increase in wealth when compared to 2006. Congressional members experienced similar year-over-year increases back to the early part of this decade.

Among Congress’ biggest financial losers: Sens. John McCain (R-Ariz.), John Kerry (D-Mass.), Dianne Feinstein (D-Calif.) and Mark Warner (D-Va.), according to CRP’s research. All experienced double-digit percentage declines in their average, estimated wealth between 2007 and 2008.

On the opposite end, however, stand Sens. Daniel Inouye (D-Hawaii), Mitch McConnell (R-Ky.), James Inhofe (R-Okla.) and Richard Shelby (R-Ala.), who each experienced sharp spikes in their reported wealth.

Many members of Congress reported holding assets in companies that have come before them for financial bailout money, such as Bank of America and Goldman Sachs. Real estate holdings are the most popular investments among congressional members. This is followed by recreational and live entertainment entities – powered almost entirely by Kohl’s ownership of the Milwaukee Bucks basketball team — securities and farming.

But because members of Congress are only required to report their wealth and liabilities in broad ranges, it’s impossible to precisely determine how much value their assets are worth, or have gained or lost. CRP determines the minimum and maximum possible asset values for each member of Congress to calculate a member’s average estimated wealth.

Based on this criteria, Democrats occupy the top five spots in terms of average wealth among senators: Herb Kohl (D-Wis.), Warner, Kerry, Jay Rockefeller (D-W. Va.) and Frank Lautenberg (D-N.J.). Kohl, in placing first, boasts an average wealth figure of more than $214.5 million. In contrast, Max Baucus (D-Mont.) and Debbie Stabenow (D-Mich.) recorded average wealth below $0.

In the House, Rep. Darrell Issa (R-Calif.) placed first, with an average wealth of $251 million – top among all members of Congress. Following Issa are Reps. Jane Harman (D-Calif.) and Jared Polis (D-Colo.). Twenty-three House members recorded average wealth in negative territory, with Alcee Hastings (D-Fla.) and Harry Teague (D-N.M.) scraping the bottom.

This may – or may not – mean that these members are financially destitute. In addition to only requiring congressional members to report their assets in ranges, federal financial disclosures don’t require members of Congress to report certain assets such as personal residences, which may represent significant stores of wealth.

“Federal disclosure requirements don’t make it easy to determine the true extent of federal politicians’ personal holdings,” said Dan Auble, who manages CRP’s database of lawmakers’ personal financial information. “More transparency regarding congressional members’ personal assets helps lawmakers make decisions in the interests of their constituents and discourages them from attempting to benefit from legislative actions.”

CRP advocates electronic submission of personal financial disclosure reports to provide greater transparency and more meaningful access to this valuable public data.

All interesting stuff except that the real report I’d like to see as a taxpayer is what was their net worth BEFORE they went to Washington and what does that pencil out to?

 

The way politics (of the kind I covered in my reporting days) works is simple -yet legal.  Say a congressman is on an important committee - like the XYZ committee.  A lobbyist with XYZ horse trades some information with the lobbyist for the ABC industry.  The lobbyist for XYZ meets with the congressman and explains the position of the XYZ industry and informally drops the hint that ABC is a good thing to invest in.  No conflict of interest, because the congressman doesn’t actually regulate XYZ - so this is all nice & ethical.  Or it’s an investment hint plus a promise of turning out XYZ industry workers to support the congressman…that kind of stuff.

 

Which is why disclosure of net worth before - and after - government service seems like a good idea to me.