How Long Is a Fed Light Year?

A light year is the distance light travels in one year. Light moves so fast that we perceive its motion to be instantaneous. Light travels at 186,000 miles per second. It seems to many of us that we receive information at the speed of light, while the fed receives it at a snails pace. The fed statement today was merely a review of what everyone all ready knew. Housing is a problem and inflation is out of control.

Here are some excerpts from the statement:

"However, the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction."

"but recent increases in energy and commodity prices, among other factors, may put renewed upward pressure on inflation. In this context, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully."

The fed is going to solve this problem the only way it knows how. It is going to print money.

The Boardwalks and Park Places of the Market

You need to put your money into high growth stocks to beat inflation. Stocks like AAPL, GOOG, BIDU, ISRG, UA and FSLR are the place to be.

If you want a steady climber that will profit the most from this inflationary environment. Get into gold stocks. These stocks have the potential to double or triple over the next few years. Stocks like GG, NEM, GOLD, and AEM are the place to be (all of those stocks are all ready multi-billion dollar companies).

The pain is not over for stocks like PMI, MTG, ABK, RDN, TGIC, MER, CFC, KBH, LEN, and MBI.

I'm not arguing that these companies will all go bankrupt, I just do not see the point of risking so much for a relatively small return. I have found that sometimes, when you go bottom fishing the fish bites back.

Gold Briefly Crossed 800 (It will be up there to stay soon)

Oil is Currently Touching 96/Barrel ($100 Doesn't Look So Far Off Now)

Mainstream Media VS. Bloggers

What do these two have in common??
(Hint, it's not the tan)



Angelo "Angie" Mozilo
(CEO Countrwide Financial)

Robert "The Grenader" Genader
(CEO Ambac Financial Group )

There are some bloggers out there who are good at blogging. Then there are others out there who are so amazing that they deserve their own TV channel. Michael "Mish" Shedlock is one of those bloggers who deserves his own cable TV channel, maybe even his own network. He broke a story today on insider selling at ABK (he was also early on the case of CFC). It always seems like Mish is first on the case.

Stories like these me scratch my head and wonder why places like the WSJ do not pick this stuff up. These are clearly violations of Sarbanes-Oxley insider trading laws. Those laws were put into place to avoid what happened at Enron. It seems like dozens of Enron's are popping up everywhere.

This blog author is credited with the addendum.

Link to article:

http://tinyurl.com/3ahzeb
Ambak Financial

A Spooky Halloween Video

Gold is currently at $791.40/oz in evening trading. Things could get crazy if it crosses $800/oz in the overnight market. I am expecting gold to come into strong resistance at 800/oz. It could also encounter fresh short covering at that level as well. A rate cut of 25bp seems guaranteed at this point, and the futures markets have priced it in all ready. Oil is up $0.50/bbl to $92.34/bbl.

Here Are Some Things I Find Scary This Halloween

A Bank Without Checking Accounts For Customers

On the Countrywide bank FAQ site. They say that they are no longer accepting new customers for checking accounts. That is pretty spooky, and just in time for halloween. However, during the conference call officers of the company said that loans were now being funded through the countrywide bank as the company no longer has access to outside sources of credit.

Does anybody still use savings accounts anymore? How do the countrywide executives expect people to hold money in a savings account where you earn 3% interest (if you are lucky), inflation is running at 2% (according to the fudged CPI data), and the dollar has fallen 10.4% against other major currencies this year. Dollars kept in savings accounts lost 9.4% of their value this year subtracting for interest.



CFC Faq Site

"Quality Rated Paper With A High Yield!!!"

This is what currently qualifies as A rated paper:

Last Price (35.86)

If you do not know much about bonds. They always start out at 100. This bond has lost 65% of its value. The rating agencies should issue downgrades on these bonds soon, but they can only downgrade them to BBB- (one notch above junk status). That is because many large institutions are not allowed to hold bonds with ratings lower than a BBB-. If the rating was below a BBB- the institutions would be forced to sell all of their holdings of the bonds. That would cause further price declines and even more selling.

The question also has to be raised: Who has the capital to buy them from the large institutions???

Here is the worst preforming sub prime bond. The BBB- rated bond. You should keep a garbage can close by for puking into if you dare to click on the thumbnail for a larger image.

Last Price (18.57)

The Sultan Of Slime Is At It Again

"Freak of Nature"
"Alien Predator in Subprime Slime"

Anyone who can sell 500 million in stock and have people believe that the company is ok must be a freak of nature. No one person is directly responsible for creating more personal tragedy in in the housing market debacle than the Freak of Nature pictured above. At the same time there is probably no one that profited more. (Sent in by reader Steve)

Just take a look at:
RDN
MTG
TGIC

You can thank Mozilo for the gap up in those stocks today. In three months you can also thank him for those companies filing for bankruptcy.

CFC Conference Call:

"Loans are now being funded through banking deposits because CFC can not obtain funding in the capital markets"

They are giving out loans from their bank assets and deposits. These funds are not unlimited and will eventually run into negative territory, when there is a run on their bank. I am sure that bank customers are happy that their money is being handed over to save home-owners who are close to bankruptcy. This is a recipe for disaster. I would take my money out of CFC as soon as I could if I banked there.

If You Had a Bad Trading Day

Just take a look at the chart below and you will feel better. The company is WCG, and they had the pleasure of being raided by the FBI on Wednesday. The stock was subsequently halted and as you see below there was a small gap down at the open on Thursday.

"The nature of the investigation is unknown at this time. A release from the U.S. Department of Justice was generally vague. It said the ongoing investigation does not directly concern, nor should it have an impact on, the delivery of any health care service to any person."

My guess is that they were actively participating in Medicare fraud. I know someone who used to work for the office of the inspector general and he would tell me that it was rampant.

P.S. Take a look at the RSI reading (overbought/oversold indicator) it went from above 70 (overbought) to below 30 (oversold) in ONE day!