How not to run a country

Vanity Fair has an exhaustive and well-done redux of the Bush administration in all its ineptitude.  In case you have been asleep the past eight years and need a primer, or if you just want a refresher on the beginning chapter of  western civilization's self-destruction, read on.  Here's an excerpt (the entire piece is lenghty, but quite worth it):

January 23, 2004 David Kay, the chief U.S. weapons inspector, resigns his position, affirming his belief that no W.M.D. stockpiles will be found in Iraq; the following week he discusses his conclusions at the White House. Nine months later his successor, Charles Duelfer, will conclude officially that Iraq not only did not possess W.M.D. but did not have an active program in place to develop them. The structural supports of Powell’s U.N. presentation begin to crumble.

Lawrence Wilkerson, top aide and later chief of staff to Secretary of State Colin Powell: Well, [Powell] got a telephone call each time a pillar fell. It was either John [McLaughlin, deputy C.I.A. director], calling Rich [Armitage], and Rich telling him, or it was George [Tenet] or John calling the secretary. And I remember this vividly because he would walk through my door, and his face would grow more morose each time, and he’d say, Another pillar just fell. I said, Which one this time? And, of course, the last one was the mobile biological labs.

Finally, when that call came, the secretary came through the door and said, The last pillar has just collapsed. The mobile biological labs don’t exist. Turned around and went back into his office.

David Kay, chief U.S. weapons inspector in Iraq: As we turned to the trailers, it was probably—I guess the single biggest shock I had during the entire inspection process, because I’d been powerfully moved by Powell’s statement to the Council. Well, when we started tearing it apart, we discovered it was not based on several sources. It was based on one source, and it was an individual [code-named Curveball] held by German intelligence. They had denied the U.S. the right to directly interview him. And they only passed summaries—and really not very good ones—of their interrogations with him. The Germans had refused to pass us his name even.

As you delved into his character and his claims, none of them bore any truth. The case just fell apart.

Joschka Fischer, German foreign minister and vice-chancellor: I was astonished that the Americans used Curveball, really astonished. This was our stuff. But they presented it not in the way we knew it. They presented it as a fact, and not as the way an intelligence assessment is—could be, but could also be a big lie. We don’t know.

April 13, 2004 At a press conference Bush is asked by John Dickerson ofTime to name the biggest mistake he has made since 9/11. Bush is unable to come up with an answer. He replies, “I wish you would have given me this written question ahead of time, so I could plan for it.”

Friday Morning Rant

TARP: 

Wall Street paid out $18 billion in bonuses to executives and valued employees last year, with most of that coming after the companies recieved TARP funds.  I don't know too many industries, but OB/Gyns in the USA recieved in the ball park of $7.5 billion in compensation in 2008-- that's all Ob/Gyns put together, total compensation and not just "bonuses", and Medicare and Medicaid have decreased reimbursement for services in each of the last five years.  Outrageous.

The TARP was initially set up to purchase "troubled assets" and we remember that it morphed into this idea by Paulson and Bush to inject funds directly into banks by buying preferred stock; those funds primarily went to pay out bonuses to follks who make too much money anyway.  Although I try to be positive about the motivations of the govt and their buddies on Wall Street, this smacks of cynicism.

Obama:

WTF was the point of Obama going to the Republicans and asking for their support and giving in to their demands about the stimulus package?  Not only did they all vote against it-- every single Republican representive-- but then their leadership got in front of the cameras and gloated that they voted against it and they're proud.  Assholes.  The only "hope" I have for Obama is that he grows a pair some time soon.

I would have liked to see our president say, "Fuck you.  Not only only can you all go to hell, but I propose that we increase the budget outlay for contraception for poor people and double the sod on the Washington mall."  I can't help but think that's what Hillary would have done.

I hold the Republicans responsibile for the need for this stimulus bill due to their lack of regulation of the financial markets... and don't even give me that bullshit castigation of Fannie and Freddie.  Most mortgages in this country are not originated by Fannie and Freddie.  The executive branch decided to pull all the regulation of the markets, full stop.

My New Site

OK, the new year has brought some changes and one is the NEW SITE called Trader's Log devoted to stock and ETF trading, finance and economics.  This should clean up the KaPo which will continue as my repository of opinion on culture, politics and sports.

Have a look around, but remember it's a work in progress so patience is a prerequisite.  And keep tuning into the KaPo for all my quirky opinions on the real world. 

Banks-- don't bank on 'em for the long haul

XLF on the ten-minute graph (above) we see that the price action is showing an ascending triangle and the RSI gives it an oversold reading.  Resistance and support are marked on the BMP image.

WFC looks very similar to XLF and may be good for a trade here out of the oversold condition, but I would put a tight stop on this one.  The risk reward does not look that good to me for anything but a day trade.

WFC, like XLF, in the daily graph (below) is showing declining 50 and 200-dMA's and the 50 has crossed below the 200-dMA which is a negative sign.  Regionals look even worse, which is evidence by the thrashing that HCBK took despite pretty good numbers.  I prefer not to fight the tape even though I realize that a big bump up can occur at any time.

Most sectors are showing the 50-200 dMA "death cross", with the notable exception of biotechs.  GERN is a representive stock here.  Also,  STEM could be considered on any pullbacks. 

Another sector worth a gander is gold miners.  It's a little quirky, but the technicals are showing great price movement.  I stay away from individual gold mining stocks because of the vagaries of valuation.  Also, GLD and SLV look relatively strong on the long side.

Sectors that will lead the recovery: UPDATED

First of all, I have no idea when the recovery will take place, but if the recovery were to occur with a bounce off the current low, the sectors that would lead are likely to be healthcare and staples.

According to Justin Mamis' Nature of Risk, the sectors that lead the recovery out of a bear market are those that a) underperformed relative to the market during the last bull cycle, and 2) outperformed relative to the market with the current bear cycle.  

Those sectors are healthcare and consumer staples which underperformed during the bull market from 2003 to 2008, with energy obviously far outpacing all other sectors.  

The second part of the Mamis thesis is that those sectors that have been relatively spared from the bear market will be the first to recover.  Again, those sectors that outperformed in the bear market are healthcare and staples as shown in the last two graphics below, with financials obviously leading the way downward.

Is this really The Bottom?

Yesterday, at the advice of Eric and direction of Teresa Lo,  I have re-read the seminal tome  Nature of Risk by Justin Mamis and his discussion about recognizing market bottoms by looking at the number of new lows.  Mamis' thesis is that the market sends messages before any trader or investor can notice, and we only know why the market recovered after the fact.

His graph depicts the "typical bottom" with the psychological stages that market participants experience.

Now let's look at today's market:

I have drawn in the representative stages as if we have already hit the bottom and are now poised for a recovery.  Of course, my opinion is next to worthless but I have great trepidation about calling the recent blip downward Stage E since it did not feel like "aversion" with everything being sold off en masse as is typical of a true bottom.

Teresa Lo gives daily barometers of market internals on her proprietary site and she is showing that the new lows have not dropped sufficiently and have actually shown a little increase which is inconsistent with Mamis' observations of a market low.  He states on p.143: "A diminishing number of new lows as [the index] chalks up a lower low is a divergence telling us about an impending market bottom."  This has not happened yet.

Mamis' review of how to spot a market bottom:

Next up: what Mamis would say to buy when the market turns...

Oprahfication of Obama

If you read one article today about Obama, read this one by Kathryn Lofton... read the whole thing.   An excerpt:

First, you need a name.  Not just any name.  A weird name: a Biblical misspelling, maybe, or an invocation of some distant land.  No matter what: the name needs an O.  The O will come in handy when you need to summon a common sphere, encourage chanting, or design a gentle logo.  Never deny the utility of its replication, never avoid its allusion, and never miss a moment for its branding.  An O is a space anyone can fill with anything.

[...]

You will possess a preternatural ability to give people what they want, to know what they need, to sell what they will buy.  Prepare yourself for this.  You have to get over any anxieties about your own assimilation, incorporation, and amalgamation.  Be the commodity.  Put your O everywhere.  Your iconography is how you brace against the disappointments of your humanity.

[...]

You are, as everyone knows, a Protestant.  But you dabble in everything, shying not away from the Koran or kabbalah, Jewish professors or Eastern spiritual advisers.  You will entertain anything that might embolden your O.  You are the ambiguity of your epoch, the middle that makes the mass, the crossroads of a country that excited your youth, raped your ancestral continent, and claps now for your children.  You are a global distribution suffused with spiritual truth.  You are motivated with missionary zeal to convert everyone, unrelentingly, to change.  You make them believe their best lives are yet to come.  You make it impossible to look away, to hate, to dissent, or to change the channel.  You make us feel good, finally.  You are our redemption.  You are our favorite smile. And you are our satisfaction at the possibility of a secular that made it all so.

My take:  Any person who attains such high office must have an element of celebrity which smacks of gimick; they've all had it and previously the gimick has been divisive while Obama's has been inclusive.  This marketing of sorts has been Obama's advantage so far, but can also become his undoing if he is unable to fulfill the persona that has been created.  While I give President Obama high marks for his successful candidacy and the positive atmosphere that has imbued his campaign, at the end of the day the presidency is-- pardon the cliche-- a highly demanding job that will entail certain failures and sometimes success, even with the most well-meaning and capable people in the position.

Granted, the last eight years have been disastrous largely because of the incompetence of the chief executive who inherited every advantage yet squandered them all, but Obama's intelligence and charisma and competence hardly guarantee success.  Hope is but a word, and the work ahead looks daunting.  If this mess can indeed be fixed, it will take all of us... in addition to great leadership.

And by all appearances, this leadership, nascent as it is, seems the greatest of my lifetime.

(h/t WW)

"Let it Ring"

Aretha Franklin at the Inauguration

Mr. Potter attends Obama's Inauguration

Despite his advanced age, the star of It's a Wonderful Life made a grand appearance today at the Inauguration of President Barack Obama.  Mr. Potter, shown today at right is escorted to the event by the grandaughter of Peter Bailey.

"I think it's great having such an iconic curmudgeon here to celebrate," said First Lady Michelle Obama upon their introduction.

"Good riddance to you, young missy," the aged Mr. Potter was heard mumbling.  "Now, go and get the people who are here to take office.  Go on, now."

Shown at left, Mr. Potter in his salad days as a banker in Bedford Falls.  "You know, I've always wanted to serve in public office, but my strengths have always been exploiting people to my own selfish ends, and that just doesn't comport well with community service," he had once famously said.

From MLK to BHO: "Now is the time"

My father Vince was the same age as Martin Luther King and by all appearances that was the end of their similarities yet one of my earliest memories of my father was his tears that April 1968 that King was assassinated. Vince grew up in a middle class household on the south side of Chicago and left the Catholic church in his 30's. He left the mainline Protetestant church in 1968 when the minister refused to officially acknowledge the loss of King as a great leader.

Every MLK Day I think of my dad. As a kid in the 1970's I remember the rallies and picnics we attended for civil rights; the outings at the Unitarian Church to bring awareness. I wish I could say that we rallied every weekend, or that we spent time in jail due to protests, which we certainly did not. I remember the violence inflicted on black marchers at the hands of white racists in Marquette Park, the red-lining by realtors, the protests against bussing black kids into our schools. As a family we had little to gain or lose by the immediate cause of civil rights and my personal existence was sheltered from the repercussions of civil rights and its opponents.

But on a grander scale the movement has enriched our nation, and thus our own lives, in immeasureable ways. And my dad knew that. The sin is that it has taken so long and so much pain to achieve this moment.

Both King and Vince are gone. Tomorrow we will be inaugurating Barck Obama, a black man, as the 44th president of the United States of America. Obama is almost exactly the same age as myself and I wish my father were alive to see the continuation of the civil rights movement which he so solemnly supported just as so many of us also wish that Martin Luther King would be alive to celebrate his 80th birthday during this eventful week.

Barack Obama has not become president because he is a black man; he has become the president because he is the best person for the job. Like Jackie Robinson, the barrier has to be broken by an individual who is so starky qualified, so much better than the others, that he is launched into the role by an overwhelming sentiment. That is Barack Obama. Like Robinson, who entered Major League Baseball in 1947 as the first black player, Obama stands above the others who have vied for this position, and he possesses the demeanor to withstand the negativity.

Tomorrow we will go to the local theatre for the "Obama Inauguration Celebration" to watch my next president take the oath of office. An American celebration. And I will think of my dad. And I will think of MLK whose speech from four decades ago rings louder today than ever. Every word is pertinent to this moment.

"Another down leg coming..."

“There’s another down leg coming. Normally the market comes down in five legs. We’ve come down in two. I think we’re going to test those lows at the very least, and eventually probably take them out.”

--John Murphy, chief technical analyst at StockCharts.com and the author of three books on market analysis. 

Is your pension about to flop?

I had a discussion yesterday with a colleague about investments, pensions, Social Security and the possibility (probability) that our retierment years may be very different than what we have expected.

One strategy that we had discussed previously was that of changing jobs after qualifying for the company's ten-year pension in order to work for another entity to get a second pension, thus retiring with two pensions, plus Social Security.

This article discusses the risk in current pension funds that are not fully funded and rely on stock market returns for payouts.  Sure, we always figured Social Security benefits would be "revised", but now our pension, too?

Yikes.

"Du-u-u-d-e, that's sick!"

Adrenaline junkies in wing suits:

Let's go to the video.

(hat tip, JL)

Stunning disclosure by Bush official

Tell me how this advances the US' position in the world.  From the Washington Post:

The top Bush administration official in charge of deciding whether to bring Guantanamo Bay detainees to trial has concluded that the U.S. military tortured a Saudi national who allegedly planned to participate in the Sept. 11, 2001, attacks, interrogating him with techniques that included sustained isolation, sleep deprivation, nudity and prolonged exposure to cold, leaving him in a "life-threatening condition."

"We tortured [Mohammed al-]Qahtani," said Susan J. Crawford (at right), in her first interview since being named convening authority of military commissions byDefense Secretary Robert M. Gates in February 2007. "His treatment met the legal definition of torture. And that's why I did not refer the case" for prosecution.

[snip]

"For 160 days his only contact was with the interrogators," said Crawford, who personally reviewed Qahtani's interrogation records and other military documents. "Forty-eight of 54 consecutive days of 18-to-20-hour interrogations. Standing naked in front of a female agent. Subject to strip searches. And insults to his mother and sister."

At one point he was threatened with a military working dog named Zeus, according to a military report. Qahtani "was forced to wear a woman's bra and had a thong placed on his head during the course of his interrogation" and "was told that his mother and sister were whores." With a leash tied to his chains, he was led around the room "and forced to perform a series of dog tricks," the report shows.

This detainee, who is an alleged conspirator to murder, will likely go free after years of imprisonment without due process.  The Bush administration has condoned activity that achieves no purpose but to undermine our status as the purveyor of any moral authority.  We have emboldened the enemy, allowed bin Laden a safe haven, and have helped him to recruit extremists in a holy war.  Not only is this illegal, but it is in direct conflict with our national interests.  

Where are the indictments?

46 million people cannot be wrong. Right?

File this under "beating a dead horse" if you like, but this video is the most surreal thing I have ever seen. Remember that it is put out by an organization that is sympathetic to Sarah Palin and is attempting to portray her in a positive light.

And remember that 46 million people voted for her... for Vice-President of the United States... to serve with a 72 year-old cancer survivor as President. I know idiots like Sarah Palin exist, heck I see them every day, but my question is how-- why-- can she garner so much support. Can someone PLEASE explain her appeal to me?? Seriously.

Let's go to the video [not embeddable for some reason].

1. "Anonymous bloggers" also known as "they" spread rumors that Trig was not her baby. The horrors. My advice: get over it. "They" will always spread rumors about all kinds of things, such as someone being a Muslim who is not, or someone "palling around with terrorists"; if you're the prez, you ignore 'em babe. If you want a job where you're hermetically sealed from moronic criticism from "anonymous bloggers", then clean hotels rooms at the local Knight's Inn.

2. The "campaign", ie, her handlers and assistants, who are the "upper eschalon of powerbrokerin' and media", or the "they", forced her to do the Katie Couric interview against her better judgement. I can imagine going out to the family of a patient and saying, "Ya know, I didn't want to make that incision into your wife's and mother's aorta, and I knew it was the wrong thing to do also, but ya know how those silly scrub techs and nurses in the OR are, and gosh it just happened. The funeral home will be picking her up at 2 pm." Idiot.

3. It's really too painful to continue a critique of this video. While I'm heartened that Obama is president, it's very disheartening to think that 46 million people have such utter disregard for the job of president, or have such profound trust in someone merely because they believe Jesus rose from the dead, or want to overturn Roe v Wade, or want lower taxes or any other other convoluted rationale for voting for a moron. It's scary... but then again that is how George W. Bush got elected-- twice.

When someone asks why Sarah Palin just won't go away, the answer is that 46 million people voted for her. Unfortunately, she's here to stay.   I think that all 46 million should be forced to watch this interview on an endless loop for the next four years.  Also.

Here's Olbermann's priceless take:

Visit msnbc.com for Breaking News, World News, and News about the Economy

"Textbook January Effect"

Small caps began a nice run the last week of the year which continued until today.  Is this pullback just the normal profit taking and short selling that comes with any double digit run?  Or is it the beginning of the return to November lows.  Let's look at the hourly graph:

The IWM is coming back from a six day run and is at the 38% Fibonacci retracement and close to the 50-hour MA.  This looks healthy to me.  We await the the nonfarm payrolls Friday after the lousy ADP employment report today and that seems like a reasonable bogeyman to blame for this pullback.  But I would argue that if we had no bad ADP number, the pull back would have happened anyway and we would ahve blamed the Israeli's incursion or Russia cutting off the gas on Europe or Obama's haircut or something else.  The news is secondary.

Disclosure:  I have several small caps long  and opened up a hedge with TWM (short IWM) Monday looking for this pulllback.  I'm still think that Textbook January Effect with a positive month is in the offing, but be careful, if this breaks down past the 62% retrace-- $48 on IWM-- I'd be more concerned.

Predictions 2009

1. Geopolitics

a. A world financial center is rendered uninhabitable after a "dirty" nuclear bomb is detonated by a terrorist group.

b. Labor unrest in Eastern Europe and Asia leads to mass rioting, looting and martial law in several countries.

c.  President Obama successfully negotiates a Middle East accord that entails making the entire Levant a demilitarized zone which is patrolled by UN peacekeepers indefinitely.  The Israeli stock market doubles over the ensuing 6 months.

2. Domestic Politics

a. The Detroit city council asks President Obama to place the city under federal conservatorship in order to provide basic services and health care as social crises mount.

b. Several prominent Republican leaders form a new party which emphasizes moderate social values and fiscal responsibility.

3. Medical

a. A basic science breakthrough is announced in cancer therapy giving great hope to the treament of various types of malignancies.

b. Primary care physicians thoughout the USA protest decreasing reimbursement and many walk off the job leaving patients without care.

c.  Later in the year, Congress passes a universal health insurance plan devised by Zeke Emanuel.

4. Financial markets

a.  Municipal bonds rise in value as President Obama announces his desire to provide massive funding for urban renewal.

b.  Gold rises parabolically to $1400 per ounce due to worldwide monetary loosening and geopolitical crises.

c.  The FTC balks but finally allows the announced merger of Apple and Google which creates an innovation behemoth.

5. Popular Culture

a. Tony Shaloub takes over the Tonight Show Prime Time when Jay Leno abruptly quits.  

b. The surly comic Kathy Griffin marries a prominent diplomatic leader which raises concerns about her demeanor at official functions.

6. Sports

a.  The Chicago White Sox win 110 games on their way to their second World Series win in 4 years as they sweep the Cy Young, Rookie of the Year, League MVP and Manager of the Year awards.

b.  As a number 7 seed in the NCAA March Madness Tournament, University of Illinois Men's Basketball shocks everyone by beating UNC in the final to become National Champion.