October 7th Edition

Good Morning All,

It looks pretty much as if we had our wishes fulfilled with yesterday's round the world market performance. It is worth noting that this positive action came on the heels of an early 4th quarter correction (window undressing?) which had followed an abnormally strong September. Alcoa, one of our early recovery favourites, will kick off earnings reporting season after the close. Since it has had a recent analyst upgrade, one must think the prospects are good for a bullish announcement. Intel reports next Tuesday, but the serious influx will occur during the week of the 19th.

So I guess the question now, is not about a 10,000 Dow Jones, which is less than a couple of good trading days away, but one of how far, how soon? For this prognostication I will refer to my summer long held view that once past 1060 on the S&P 500, market momentum would accelerate buying through to 1200. This is rarely a straight line occurence, but dip buying continues to be the pattern in force.

Gold and the U.S. dollar are now more firmly linked than ever, a truth also seen of oil and other commodities. The trends, until broken are all up; excepting the greenback.

I have been accumulating stock in the company described in the link below since the spring. It is a microcap, sure enough, and may seem to be a silly investment to some; that is until you think of those who recommended AIG at 60$ or....Nortel over 100$. This is a nanotech, a theme that will dominate the years to come. Enjoy the sites, buy the paint or the stock, symbol INTK pink sheets.



Bill Copp
Montreal, Canada
October 7 2009
laurelcommentblogspot

http://www.nansulate.com/nanoblog/

October 6, 2009

Good Morning All,

Due to inclement market conditions the rocket launch to higher market highs that was predicted in this letter a few weeks ago has been delayed, not aborted. Although yesterday's 100 point plus rally was a good start toward stabilization from the recent mild correction, I am always wary of "Tuesday turnarounds", so let's see if we can put in a solid all day performance before I give the green light to the 1200 S&P 500 target that I believe is in sight for this often devestating month.

No one need be surprised by the constant berating of all things Obama by the lunatic right, nor should they be particularly distressed by the no idea nasty opposition that has been emanating from the rest of the Republicans. What is difficult to stomach is the nit picking criticisms that have become the new mantra for many moderates. It is indeed strange how quickly people seem to have forgotten how we got here, both economically and militarily. These crises did not appear on inauguration day, in the case of deregulation, it began with the Reagan administration; and as for the wars in the Middle East, we may thank the Bush regime's ignorance and hubris for creating this ongoing waste of lives and of treasure. In short they will not be fixed overnight, a statement that should require little repetition.

Meanwhile the dogs of war appear to be gearing up the media for an escalation of the insane war in Afghanistan. This is where I part company with many of Obama's concessions to the war's advocates. There will be no victory here, history has taught us so. With a massive infusion of men and arms, it may be possible to obtain the appearance of stability for a short while, but in the end few of the "on the ground dynamics" will have changed.

There have been many intelligent columns written on this and other issues; one such observation by E J Dionne follows.

Yes Alice, newspapers still exist. " and the seasons go round and round
and the painted ponies go up and down"
The Circle Game by Joni Mitchell

Bill Copp
Montreal, Canada
October 6 2009
laurelcommentblogspot

No Rush to Escalate
By E.J. Dionne Jr.
Monday, October 5, 2009
At a White House dinner with a group of historians at the beginning of the summer, Robert Dallek, a shrewd student of both the Kennedy and Johnson administrations, offered a chilling comment to President Obama. "In my judgment," he recalls saying, "war kills off great reform movements." The American record is pretty clear: World War I brought the Progressive Era to a close. When Franklin D. Roosevelt was waging World War II, he was candid in saying that "Dr. New Deal" had given way to "Dr. Win the War." Korea ended Harry Truman's Fair Deal, and Vietnam brought Lyndon Johnson's Great Society to an abrupt halt. Dallek is not a pacifist, and he does not pretend that his observation settles the question against war in every case. Of the four he mentioned, I think World War II and Korea were certainly necessary fights. But Dallek's point helps explain why Obama is right to have grave qualms about an extended commitment of many more American troops to Afghanistan. Obama was elected not to escalate a war but to end one. The change and hope he promised did not involve a vast new campaign to transform Afghanistan. It's easy to get enraged over the mess in Afghanistan and with the voices insisting that Obama has no choice but to remedy it by going big and going long. Too many of those who say that Obama is obligated to step up the pace in Afghanistan spent the Bush presidency neglecting that war because their main interest was in waging a new one in Iraq. In his recent report to the president, Gen. Stanley A. McChrystal, the top U.S. commander in Afghanistan, noted repeatedly that the effort there had been "under-resourced." It sure would have been nice if we had settled Afghanistan before beating the drums of war in Iraq. It's also enraging that those who insist on offsetting every penny spent to expand health coverage would never ask the Congressional Budget Office to score the costs of McChrystal's strategy. For the uninsured, they propose fiscal prudence. For war, they offer profligacy. Yet rage is a poor guide to policy. The truth is that Obama has only bad choices in Afghanistan. Obama has said over and over that the war in Afghanistan, unlike the war in Iraq, is necessary. "We are in Afghanistan to confront a common enemy that threatens the United States, our friends and our allies," he declared in March. He cannot walk away from that. But while his March speech was sweeping in certain ways, he defined a limited core objective. "I want the American people to understand that we have a clear and focused goal," he said, "to disrupt, dismantle and defeat al-Qaeda in Pakistan and Afghanistan, and to prevent their return to either country in the future." These are the words that will give Obama room to reconsider his policy. McChrystal argued that the full counterinsurgency strategy he proposes demands that we "elevate the importance of governance" in Afghanistan, and, to his credit, he is brutally frank about its current dismal state. He writes of "the crisis of popular confidence that springs from the weakness of [Afghan government] institutions, the unpunished abuse of power by corrupt officials and power brokers, a widespread sense of political disenfranchisement, and a long-standing lack of economic opportunity." That doesn't even take into account the fraud involved in President Hamid Karzai's reelection. Is this a situation in which Obama should commit tens of thousands more troops for a lengthy war? Should it surprise us that some administration officials are asking why it is that al-Qaeda has weakened even as the Taliban has grown stronger? These skeptics now question whether routing the Taliban is actually essential to Obama's core goal of defeating al-Qaeda. There's a jelling conventional wisdom that if Obama doesn't go all in with McChrystal's strategy, he is admitting defeat and backing away from his earlier pledges. Those who want him to commit now are impatient for a decision. Obama should resist both their impatience and their criticism of his search for an alternative strategy. The last thing he should do is rush into a new set of obligations in Afghanistan that would come to define his presidency more than any victory he wins on health care. Those most eager for a bigger war have little interest in Obama's quest for domestic reform. As he ponders his options, theirs are not the voices he should worry about.

September 16th Edition

Good Morning All,

The S&P 500 closed above 1050 last night. This powerful advance has led Asian and European markets higher in what North Americans refer to as "overnight trading". Our often-expressed initial target of 1060 will likely be exceeded at the opening bell, and after allowing for some momentary profit taking, markets should begin their march toward 1200. This will not be a long trek; it will more closely resemble a rocket launch. It is my belief that the little duckies have successfully aligned themselves in conjunction with interstellar activity, sunspots, phases of the moon and any number of Nostradamus' predictions to set the stage for a sharp, strong advance into early October.

Actually folks, I don't really believe that markets act in either an orderly or a random manner; and I certainly don't believe that forces unknown to us have any influence on market behavior (unless of course we are talking about rogue bankers). What I do give credence to is my oft-stated view that bears hold cash they must invest, and that bulls hold stocks they must one day sell. The only question to be asked is; how many are in each group? The answer, as posited in my previous treatise, is thus: the bears who have missed the 50% market gains that were triggered in March must now spend their cash, and they will do so in a hurry. So enjoy the ride and be ready to depart the scene as we approach either 1200 or the second week of October.

Although traders must remain nimble, longer-term investors may rest assured that the five year up cycle has begun in earnest. The signal may have been given by the recent renewed interest in stalwarts such as GE and Alcoa. The tech rally is still game one but own some commodity based stocks including gold. Many have been mentioned in previous letters at much lower prices.

September 1st Edition

Good Morning All,

Although markets closed out August with somewhat less than an august robustness, it should be noted that the final numbers still added a sixth month to the recovery rally. Bulls appear to be somewhat worried by the recent volatility in China, while bears, particularly those of an ideological bent, rant on about deficits and bailouts, something they seemed less concerned with when the Bush-Cheney regime was creating both the trillion-dollar war for oil and the deregulatory grounds for the bank debacle.

This letter has been bullish since late October of last year, which for many, though not all, sectors, was a tad too early. But then again we were calling for the end of the world in mid 2006, months before the May 07 peak in bank stocks and the October crash that followed. Time, however, passes rather quickly and the worst things in the world are never permanent. Depressions, recessions and wars each end in time, at least for most "civilized" partners. It has been my view that we were offered a multi-generational opportunity at the end of last year, one which became even greater by March 2009. Some of you might remember the stock lists I first published in late November and added to as the months went on. Should you wish to see them again...ask.

Markets will either correct soon from 1060 S&P 500, or in early October from 1200 plus. Be confident in the future, but remain nimble.

Commentary

The nutbars in America have been out in full force these last months as the demagogic right continues to rally their intellectually-challenged minions in opposition to all things Obama. Health care has been the main focus of much of this insanity as many of the uninsured, the barely insured and the already government insured have marched to the tune of the INSURANCE companies and other assorted lobby groups. Reminds one of the P.T. Barnum dictum "there's a sucker born every minute"...or a customer.

I am also reminded, anecdotally, of a story told to me by a friend, who while visiting Florida last winter was confronted by another resident of his complex with a statement on Canadian medicare. "So you are a Canadian", he stated, "yes", Paul proudly replied. "So you have that medicare, where you have to wait for treatment" he continued. "Well", Paul quietly observed, "I guess we do have to wait for some things, but I have never met anyone who lost their house over it".

To this story may I add my humble suggestions to the American health care debate. Why not just expand the existing Medicare and Medicaid programs, by dropping the age eligibility on the former first to 60 from 65, and then gradually make it inclusive of 55 and 50 year olds. For the latter, which presently covers 40 million of America 's poor, why not just double the maximum income requirement. This could be expensive, but cost savings would accrue from the limits paid on drugs and treatments which are now part of the existing programs. The government could, at the same time, pass "tort reform" wherein caps could be placed on lawsuit settlements, much as they presently are by insurance companies. So much for a life, a lung, a leg, a liver or a linguini. This would stop the unreasonable settlement scam wherein some chain-smoking, wife-beating, child abuser who has spent a life chasing down an unending series of six-packs with shots of bad bourbon, from receiving gazillion-dollar awards for having the wrong diabetic leg amputated...at the expense to entire system.

August 26th

Good Morning All,

Positive market activity this week has continued to validate our view that stocks are headed higher over the coming weeks with our initial target of 1060 S&P 500 likely to act only as a resting point along the way to 1200. Although there is much bearish talk about the danger inherent in the low volumes that have accompanied this summer rise, the contrarian in me is assured that large volume days and big market moves are yet to come. When this happens, we will enjoy the "blow off" rally that will set up the fall, but that fall will take place from a much higher plateau.

Ted Kennedy's death should remind us all of the history behind the drive for Medicare. It should also be a time to further debunk the myth of Reaganism by remembering that the late idol of the right cut his political teeth opposing its enactment. It is ironic now to watch elderly Reaganites expressing personal terror of having it "messed with". August 26Bill Copp As usual...Paul Krugman, not the CNBC libertarians...is spot on.

August 24, 2009
Op-Ed Columnist
All the President’s Zombies
By PAUL KRUGMAN


The debate over the “public option” in health care has been dismaying in many ways. Perhaps the most depressing aspect for progressives, however, has been the extent to which opponents of greater choice in health care have gained traction — in Congress, if not with the broader public — simply by repeating, over and over again, that the public option would be, horrors, a government program.Washington , it seems, is still ruled by Reaganism — by an ideology that says government intervention is always bad, and leaving the private sector to its own devices is always good.Call me naïve, but I actually hoped that the failure of Reaganism in practice would kill it. It turns out, however, to be a zombie doctrine: even though it should be dead, it keeps on coming.Let’s talk for a moment about why the age of Reagan should be over.First of all, even before the current crisis Reaganomics had failed to deliver what it promised. Remember how lower taxes on high incomes and deregulation that unleashed the “magic of the marketplace” were supposed to lead to dramatically better outcomes for everyone? Well, it didn’t happen.To be sure, the wealthy benefited enormously: the real incomes of the top .01 percent of Americans rose sevenfold between 1980 and 2007. But the real income of the median family rose only 22 percent, less than a third its growth over the previous 27 years. Moreover, most of whatever gains ordinary Americans achieved came during the Clinton years. President George W. Bush, who had the distinction of being the first Reaganite president to also have a fully Republican Congress, also had the distinction of presiding over the first administration since Herbert Hoover in which the typical family failed to see any significant income gains.And then there’s the small matter of the worst recession since the 1930s. There’s a lot to be said about the financial disaster of the last two years, but the short version is simple: politicians in the thrall of Reaganite ideology dismantled the New Deal regulations that had prevented banking crises for half a century, believing that financial markets could take care of themselves. The effect was to make the financial system vulnerable to a 1930s-style crisis — and the crisis came. “We have always known that heedless self-interest was bad morals,” said Franklin Delano Roosevelt in 1937. “We know now that it is bad economics.” And last year we learned that lesson all over again.Or did we? The astonishing thing about the current political scene is the extent to which nothing has changed.The debate over the public option has, as I said, been depressing in its inanity. Opponents of the option — not just Republicans, but Democrats like Senator Kent Conrad and Senator Ben Nelson — have offered no coherent arguments against it. Mr. Nelson has warned ominously that if the option were available, Americans would choose it over private insurance — which he treats as a self-evidently bad thing, rather than as what should happen if the government plan was, in fact, better than what private insurers offer.But it’s much the same on other fronts. Efforts to strengthen bank regulation appear to be losing steam, as opponents of reform declare that more regulation would lead to less financial innovation — this just months after the wonders of innovation brought our financial system to the edge of collapse, a collapse that was averted only with huge infusions of taxpayer funds.So why won’t these zombie ideas die?Part of the answer is that there’s a lot of money behind them. “It is difficult to get a man to understand something,” said Upton Sinclair, “when his salary” — or, I would add, his campaign contributions — “depend upon his not understanding it.” In particular, vast amounts of insurance industry money have been flowing to obstructionist Democrats like Mr. Nelson and Senator Max Baucus, whose Gang of Six negotiations have been a crucial roadblock to legislation.But some of the blame also must rest with President Obama, who famously praised Reagan during the Democratic primary, and hasn’t used the bully pulpit to confront government-is-bad fundamentalism. That’s ironic, in a way, since a large part of what made Reagan so effective, for better or for worse, was the fact that he sought to change America ’s thinking as well as its tax code.How will this all work out? I don’t know. But it’s hard to avoid the sense that a crucial opportunity is being missed, that we’re at what should be a turning point but are failing to make the turn.•

August 24 2009

Good Morning All,

After passing the 1000 mark on the S&P 500 early in the month, markets spent the middle part of August in a push me-pull me mode, one that ended last week when the bull side of the investment argument emerged victorious. As this letter has iterated in more than one printing, we believe that this important "benchmark" index will close above 1060 by early September or maybe, early Tuesday. The question of where to next now becomes even more important to those who have come late to this once in a multi-generation banquet. Many of these aforementioned folk, nonbelievers if you will, are still awaiting the arrival of Armageddon or worse, and are thereby holding cash. They may well be right...someday. Meanwhile it may be of greater significance to try to map out a market future rather than an economic one.

If Dave Nichols of the Fractal Report is correct, markets could rise beyond the September cutoff of 1060-1100 to reach a 1250 crescendo early in October. This would nicely coincide with my penchant for a blow off, throw-in-the-towel rally that would culminate in an October currency crisis. The stategy at hand would entail dating some of your favourite stocks as opposed to marrying them. Even though I remain positive about the next five years, markets are shaping up for a somewhat normal year with the potential for a mid to late October crash/correction. Should such a cleansing occur, it would offer both solace and opportunity to permabears on the one hand and alert bulls on the other. The third hand belongs to those who have it firmly emplaced, along with their heads, somewhere in their personal anatomy.

Commentary

The "New Colossus" is a poem by Emma Lazarus whose famous words are etched into the Statue of Liberty - you know the ones..."give us your poor, your tired, your huddled masses...". What it failed to say was give us your mean-spirited and your incredibly stupid, in order that a future America will be able to populate its airwaves with demagogues, its evangelical churches with morons and one of its political parties with the greedy and the disingenuous.

The late Bobby Kennedy was fond of saying that "20% of the people are against everything, all of the time". This homily has since taken on even greater meaning during the health care debate, or should I say rants, wherein a bunch of crazy white people are running around in support of the insurance companies that either just creamed them with unconscionable premiums or took away their coverage. One often repeated anecdote tells of the elder genius who told one town hall meeting to keep the government's hands off his MEDICARE. Crazier still was the Arizona meeting during which one bright light had an assault rifle strapped to his back, shocking the civilized world when we learned that his act was perfectly legal in that state. The first thing I listen for each morning is no news... on an attempt on the President's life.

August 11th Edition

Good Morning All,

The S&P 500 held above its newly acquired recovery high of 1000 plus yesterday, despite a bout of early week profit-taking. The question now before us is no longer about 1075 by early September, but rather, how much sooner and how much higher? The Fed will meet over the next two days and will not likely change anything or affect markets one way or another. This market is about momentum and unused cash, and until the latter has been somewhat exhausted, the momentum will continue to drive prices upward. Favourite groups are still those I noted last November/December although many other sectors have since joined the fray. Stem cell stocks and other small biotechs have enjoyed a strong summer and I suggest you refer to my list. Opaxa, another stock I own and follow, rose over 400% on Friday after announcing a deal with Novartis. There are many similar buyouts in the offing, as this multi generational opportunity plays out.

I reiterate the opinion that this is shaping up to be a normal autumn prefaced by the current summer rally. Serious profit-taking may make the latter weeks of September fearsome...so be nimble of mind and remember the real lesson of these past two years. Market direction is the only thing you need to know, and for most of us the long term is in sight.

Commentary

The town hall meetings on health care now taking place in the United States have brought much of the Republican leadership to the depths of depravity. Mob rule is a very scary social condition at any time, but when it is encouraged, not just by the Rush Limbaugh assholes of America but by many in elected positions, it can be doubly dangerous. Much of what is going on may even border on sedition. As a Canadian who is well versed through experience in the plusses and shortfalls of our Medicare system, I find the constant misrepresentation of the plan both repulsive and insulting. I am also fearful for America and for the safety of its first adult President in many, many years. This is all beginning to look like an old western movie, you know, the one where the bad rich guy stirs up the lynch mob. Essentially this debate is about the non-inclusive insurance company bureaucrats versus the government bureaucrats. Weirdly, many of those opposing the health care initiative have no insurance themselves. Let's hope that there is a Hollywood ending to the script.

On a more practical front, it would seem that the combination of anti-Sotomayor votes and this continued assault on sanity and conservative principles will further isolate the GOP. Just Google Sarah Palin's comments on health care and as you do, wonder what might have been...I shudder still.

And finally, for all you conservatives out there who disagree with the foregoing...reread Edmund Burke.

Bill Copp
Montreal , Canada
August 11, 2009