Trading With Common Sense

posted by Trader No 1 on Feb 2

Well folks, have we got ourselves in a pickle or what? In the old days (don’t you just hate it when writers come out with phrases like that?), in the old days there were several so called “Pillars of the Community”.

First there was the local Vicar, (Parish Priest, Rector, the names vary but the post was by and large the same) next there was the local Doctor, the family Solicitor (if you were lucky enough to be able to afford one) and then there was the local Bank Manager. Never mind about “The Four Horsemen of the Apocalypse” these were the boys you didn’t get on the wrong side of if you wanted to make a success of your life and yes, looking back on it, “yours truly” has probably at one time or another annoyed at least one member of all four professions.

However I digress. The point I am making is that society as we know it has changed and no longer are the old rules still in force. This means of course that the new generation of our above mentioned professionals have now assumed their position in society but society it seems no longer has the respect for these professions it once had.

Is there any wonder? Nowadays you have married clergy running off with other peoples husbands / wives, Doctors up in front of the General Medical Council on charges of disrepute, Solicitors serving jail sentences for embezzlement of client funds and then lastly you have the Bank Manager. Now what can we say about our esteemed financial friends that possibly hasn’t been put into print already?

Well as a profession they have almost single handily brought about the worst economic downturn in the last 100 years and the most serious financially challenged times almost since records began and the best part of it all is that having “right royally screwed up” (if you forgive my lapse into colloquialisms) they have the temerity to come “cap in hand” to the rest of us to ask us to bail them out of the mess they have caused and…….to ask that we still pay them their bonuses!

Now perhaps I am getting too “long in the tooth” and have missed something but in my day you got bonuses for a job well done and not the mess these idiots have landed us all in. The trouble is that they know we cannot stand by and let them disappear up their own backsides, despite how tempting the notion would be. They have screwed up so badly that the risk is let them pay for their misdemeanours and watch their business fold and then stand by and watch the rest of society collapse as well.

So as far as Governments are concerned, they cannot stand idly by and watch the financial carnage, they have to be seen to do something…..but still the rest of us will end up paying for it. The sad thing is that (allegedly) we have only just finished paying for World War II so heaven knows how long this is going to take to pay off.

We have not only let down our children by this stupidity but we have mortgaged the future of our children’s children’s children too.

Bookmark It

Hide Sites

posted by Trader No 1 on Jan 13

US SMALL BUSINESS CONFIDENCE fell in December, according to the National Federation of Business optimism index. The index fell -3% to 85.2 from a prior 87.8. That is a 28-year low. A majority of respondents to the survey reported having cut prices in the latest survey, the first time that has happened in nearly 6 years. The selling price index fell -6% after a zero reading in November. The plan to hire index also fell -6% after a -4% decline in November. Plan to increase inventory -4% vs -6%. Capital spending plans remain positive, though reduced, with that index up 17% in December vs 19% in November. Expect higher sales index -18% vs -14%. Expect better economy -13% vs -2%. This is about what one would expect, given deterioration in most business indicators.

Bookmark It

Hide Sites

posted by Trader No 1 on Dec 21

The Troubled Assets Relief Program (TARP) was set up by the United States Government as part of its response to the (almost) Wall Street crash of autumn 2008.

OK perhaps the word crash is perhaps over stated but lets be honest the DJIA did still plunge some 6000 points at its worst and enjoyed some fairly spectacular one day plunges during this period and if the truth be known (and I don’t want to sound too alarmist) but there is a lot to be said for the argument that we might not have seen the worst of this crisis. Let’s see how we get through January and February 2009 before we start to say whether we are out of the woods on this one yet.

Anyhow back to TARP and the current proposed bailout for the US Auto Industry. Now as we said, TARP was set up primarily to provide a vehicle for the US Government via the Treasury and /or Federal Reserve to purchase illiquid or difficult to value assets from Banks and other troubled Financial Institutions. Now this is where it gets awkward as far as the current US Govt strategy for the Auto Industry is concerned. As we have mentioned TARP was set up to help solve problems within the Finance Industry and not any other.

Quite why then the House of Representatives and the US Senate last week debated whether to use TARP funds to help the troubled “Detroit Three” heaven alone knows? Now as we all know the legislation passed through the Democrat controlled lower House, the House of Representatives before coming unstuck in the Senate. Now this in fact may be a blessing in disguise as far as the US Government was concerned primarily due to the fact that the big three Auto Manufacturers are just that, Auto Manufacturers and not Banks and therefore would have opened a relative Pandora’s Box if they had been provided with financial relief from TARP.

Why? Well the bottom line would have been, if TARP was set up to assist the world of Finance and now they were using it to assist the Auto Manufacturers then where in effect would the Treasury Dept be able to draw the line as far as other potential sector rescue packages were concerned?

Now again as it turned out the proposal was thrown out by the Senate amidst a fair deal of acrimony but this in the long term may have been to both the Industry and Governments benefit. Now it could also so be argued that the Republicans in the Senate could be fairly hawkish on this proposal as the White House had said at the time that failure for the Auto Industry was not an option that it was prepared to see happen at this point in time so they always knew there was plan B waiting in the wings.

How long it is going to take for Plan B to materialise is anyone’s guess but they do not have long to put it into place. General Motors have said that they need to see the funding in place by January 2nd 2009 which is a crucial date as this is the date by which the next round of supplier payments fall due and a failure on the part of GM to meets its supplier bills could in the end turn out to be catastrophic.

Watch this space.

Bookmark It

Hide Sites

posted by Trader No 1 on Oct 13

OK, the activities of our beloved Indices have been nothing short of spectacular over the past few days but is this down to the sort of activity that most pundits reckon it is? That is to say, are all our problems sorted and are we all about to set sail happily forever forward into a new Bull Run?

Nah, we didn’t think so either. All of us here at the TWCS Office reckon in the first instance that you should seriously expect and beware the so called “Dead Cat Bounce” and expect a fair amount of Profit taking over the next 24 hours as Traders try and gauge in their own minds exactly what they think has happened and in these instances the first thing they do is protect and lock in profits first. So please, please, paleeeeeese no open long positions left unattended. Quite beyond the fact that we feel this is seriously against TWCS Rule No 1, in the present climate this would be extremely unwise as the markets have shown themselves to be extremely unpredictable and to be honest this current situation has, we think, more to do with the “last stage thrashes” of the current Bear market rather than a straight forward start of a new Bull Run.

The only thing that baffled us here in TWCS Land was the complete lack of any form of last minute sell off in New York last night with the DJIA steaming upwards right through the close. Not even a last minute little 10 minute “twitch” and slippage of a 100 points or so which I must confess caught a few of us off guard but hey nobodies perfect.

Either way we don’t care what sort of direction the Indices take over the next few days or so do we TWCS’s, do we, as long as it is moving in one direction or another and there are opportunities for profitable trades up or down?

Usual drill, keep your powder dry, stay safe and your back covered at all times.

Bookmark It

Hide Sites