Federal Reserve Cannot Account For $9 Trillion

Highlighted the other day: Does The US Federal Reserve Knows Where The Trillions Went??

Moneynews.com had an article on the video. Federal Reserve Cannot Account for $9 Trillion

• Video: Federal Reserve Cannot Account for $9 Trillion
  
  Tuesday, May 12, 2009 12:30 PM
  
  By: Julie Crawshaw Article Font Size
  
  The Federal Reserve apparently can't account for $9 trillion in off-balance sheet transactions.
  
  When Rep. Alan Grayson (D-Orlando) asked Inspector General Elizabeth Coleman of the Federal Reserve some very basic questions about where the trillions of dollars that have come from the Fed's expanded balance sheet, the IG didn't know.
  
  Worse, nobody at the Fed seems to have any idea what the losses on its $2 trillion portfolio really are.
  
  "I am shocked to find out that nobody at the Federal Reserve is keeping track of anything," Grayson says.
  
  Grayson asked Coleman if her agency had done any research into the decision not to save Lehman Brothers, which “sent shockwaves through the entire financial system,” Coleman said it had not.
  
  “What about the $1 trillion plus expansion of the Federal reserve’s balance sheet since last September?” Grayson asked.
  
  “We have different connotations,” Coleman replied. “We’re actually conducting a fairly high-level review of the various lending facilities collectively.”
  
  Translation: Nobody at the Fed knows where the money went.
  
  Do you know what who got the $1 trillion or more in the Fed's expansion of its balance, Grayson pressed.
  
  "I do not know. We have not looked at this specific area at the particular point on that specific review," Coleman answer.
  
  What about the trillions of off-balance transactions since last September, Grayson asked.
  
  Coleman demurred again, saying the IG does not have jurisdiction to audit the Federal Reserve.
  
  Grayson pointed out that it was the inspector general's job to audit such spending and asked again if the office had done any investigation at all.
  
  Coleman's answer: Not enough yet to even respond. "We are in not a position to say if there losses."
  
  Grayson concluded, "I am shocked to find out that nobody at the Federal Reserve, including the inspector general, is keeping track of this."
  
  Meanwhile, Federal Reserve Chairman Ben Bernanke says the bank is working on ways to rein in the massive balance sheet commitments.
  
  "A majority of the members who made these projections just recently took 2 percent as being an appropriate number" for inflation, Bernanke said Monday.
  
  "Somewhere between 1-1/2 to 2 percent is basically the number that our committee has individually stated is the appropriate medium-term inflation rate.
  
  "To achieve that we need to demonstrate that we will be able to exit from the balance sheet position that we currently have, and have been working on this intensively," Bernanke said in response to questions after a speech to a conference organized by the Federal Reserve Bank of Atlanta, reported by Reuters.

Truly embarrassing and shocking. Just where is the money?

And here is the video clip again.

Wigan 1 Man United 2

Teves equaliser.

Carrick's winner

• Speaking on Sky Sports, Ferguson paid tribute to Wigan, as well as his own men, after the final whistle.
  
  ''We were up against a very determined Wigan side,'' he said.
  
  ''We were fantastic in the second half. We kept going, got a little break and we were the better team.
  
  ''A really gutsy performance.''
  
  And Ferguson insists he will prepare for Saturday's match in the same way.
  
  ''We'll approach the game the way we always approach a game," he added.
  
  ''It is against a very good Arsenal side - I don't take any notice of what is written, they are a very good side.''
  
  Goalscorer Carrick admitted United were made to battle for the three points.
  
  ''It (my goal) was worth the wait,'' he said. ''To score goals as important as that is a great feeling - I had to make up for the miss in the first half, it's a great feeling.
  
  ''Wigan came at us and caused a few problems.
  
  ''It's not the first time we have come from behind - we did it the hard way.''
  

PT Pertamina Goes Shopping For More.... Oil!

Interesting.

• SINGAPORE (Dow Jones)--Indonesia's state-owned PT Pertamina bought 4.65 million barrels of sweet crude oil for July delivery and tendered for more cargoes, a company official said Wednesday.
  
  This marks the fifth straight month the company is tendering twice in a month to import crude. The outcome of the tender also showed that the arbitrage window for the supply of long-haul Atlantic Basin crude to Asia remains wide open.
  
  Pertamina bought 600,000 barrels each of Malaysian Kikeh, Vietnamese Bach Ho and Algerian Saharan Blend, the official said, declining to provide price details or identify the sellers.
  
  It bought a further 950,000 barrels of Saharan Blend, as well as Azerbaijan's Azeri Light and Nigerian Bonny Light, confirming a Dow Jones Newswires report earlier Wednesday.
  
  Last month, Pertamina imported 5 million barrels via two tenders.
  
  The second tender for July, specifying only medium-gravity grades, will close May 18, with offers to stay valid for one day, the official said.
  

Abby Cohen Targets S&P At 1050 In A Year1!

On CNBC: Stocks Likely to Climb Slowly, S&P at 1,050 In a Year: Cohen

• "The S&P and the Dow will be moving like a staircase," she said. "We've seen a 35 percent lift from the bottom and we may be stuck here for a while in a higher trading range as we await more fundamental news."
• "We think the fundamental information will get better gradually, and so a staircase pattern moving higher six to 12 months from now (with the ) S&P between 1,000 and 1,050 even with very modest profit expectations," Cohen added.
  The economic recovery is likely to be uneven, she said. Inventories will increase as businesses see demand improve gradually, while areas of the housing market that suffered the most probably will be the first to recover, she said.
  "I don't want to say that that it is looking good but clearly it's not falling off the cliff as it had been previously, and that is making investors feel more comfortable," Cohen said.
• Our real concern is a year or two down the road when the US economy and the global economy are in better shape--particularly all that demand coming from China," she said. "When that happens, we may in fact see that demand is outstripping supply."
  In the near term, nobody should be expecting anything drastic.
  "The reality is that different sectors of the economy went into recession at different points," Cohen said. "They will come out at different times, and with different levels of vigor."

Does The US Federal Reserve Knows Where The Trillions Went??

3:19: If you are not responsible for investigating that then who is?

oO

Jim Rogers Warns On Stocks And Calls End To USD Rally

On Bloomberg: Dollar Rally Will End, Rogers Says; May Short Stocks

• By Chen Shiyin and Haslinda Amin
  
  May 12 (Bloomberg) -- The dollar’s rally is set to end in a “currency crisis,” investor Jim Rogers said, adding that he may bet on a slide in equities after they jumped 34 percent in the U.S. in nine weeks.
  
  The rally in the dollar has been driven by investors covering their short sales, Rogers, 66, said in an interview with Bloomberg Television in Singapore. He may consider adding to his holdings of the yen and prefers the euro to the dollar or the pound, the investor added.
  
  “We’re going to have a currency crisis, probably this fall or the fall of 2010,” Rogers. “It’s been building up for a long time. We’ve had a huge rally in the dollar, an artificial rally in the dollar, so it’s time for a currency crisis.”
  
  The dollar has rallied against all of the so-called Group of 10 currencies except the yen over the past 12 months, according to data compiled by Bloomberg. The U.S. currency was at $1.3576 per euro today from $1.3582.
  
  So-called short sellers borrow securities and sell them on hopes of capturing a profit by replacing them after prices fall.
  
  The rally in U.S. stocks also signals a “correction,” Rogers said. He’s avoiding equities for the next two to three years because prospects haven’t changed, he added.
  
  The Standard & Poor’s 500 Index has jumped 34 percent from its March 9 low, erasing its losses for the year. The gauge plunged 38 percent in 2008, its worst year since the Great Depression.
  
  ‘Time for a Correction’
  
  “The market in the U.S. went up very powerfully for nine weeks in a row so of course it’s time for a correction,” Rogers said. “Fundamentals haven’t changed if you ask me. I don’t see the stock market as a great place to be in the next two to three years.”
  
  Equity markets may dip below recent lows as more troubles lay ahead in the financial market, Rogers said in an April 13 interview with Bloomberg TV. Rogers is the author of “A Bull in China: Investing Profitably in the World’s Greatest Market.”
  
  Rogers owns some Chinese and Japanese stocks, and also continues to hold some shares of airlines, he said without naming any companies. Stocks in emerging nations that supply natural resources may also perform better than U.S. shares, Rogers added.
  
  Commodities are still among the best bets for investors because of constrained capacity, the investor said. He has been buying agriculture-related commodities and prefers silver to gold, palladium and platinum, Rogers added
  

Would You Buy This Stock Pullback?

Posted Tuesday, May 05, 2009: Is Sell In May And Go Away An Unwise Option This Year?

On CNBC:

• With stocks jumping 35 percent in less than two months, you can't help but ask the question: Is history repeating itself?
  
  Investors who want the stock market to go up had better hope not.
  
  The market's moves after the 1929 market crash serve as a scary template that investors hope the current market won't follow.
  
  At that time, stocks plunged about 48 percent in just two months following the Oct. 29 crash, only to surge 48 percent in the next six months.
  
  But the next two years saw a crushing drop in the Dow Jones industrial average—which at that time was trading off a Sept. 3, 1929 high of 381.17—that saw the index lose 86 percent from the high of the rally.
  
  So could the same thing happen again?

Yes, would history repeat itself again? Here is the rest of the CNBC article: Stock Pullbacks Then and Now: Is History About to Repeat Itself?

Some comments posted on that article.

• "I would say at this point it seems unlikely," says Richard Sparks, senior analyst at Schaeffer's Investment Research in Cincinnati. "It doesn't look like any of the really bad things out there that exist as potential worries could blow up in our face and cause us to have a very sharp downturn."
• "I don't expect that to happen because of the stimulus, which is totally different than what happened during the Depression," says Michael Kresh, president of M.D. Kresh Financial Services in Islandia, N.Y. "But right now most of this market gain is on anticipation of things getting better. The only underlying fundamentals we have is things are less worse. That does not a bull market make."
• "That would give a good entry point to see where the buyers live. Straight up is never good. Everybody's chasing performance," says Dave Rovelli, managing director of US equity trading for Canaccord Adams. "I'd like to see a correction of maybe 10 percent of the rally we've had then hopefully some stabilization, maybe get some good economic news
• "I do think we could see another selloff like (the Depression drop) but when it comes I don't know," Kathy Boyle says. "We need to get more exuberant, because there's still enough bears out there. Not everybody's bought in--for the market to sell off that viciously you have to get everybody in. There' still more room on the upside here before you see another fall."
• "One good thing I would say about the rally is it's been very methodical, very measured, slow and steady. That's important because it kind of gives it a more sustainable feel," says Sparks. "As short-term traders we can play this rally and look to expose ourselves to the upside with relatively tight stop-loss even if we still believe it's a bear market."
• "The government's inflating the market right now. They're doing everything in their power to make the banks stronger. It's giving the impression that it's working," Rovelli says. "By the end of the summer if you don't see things turning around in housing and the unemployment rates keeps going higher, you're going to have a snapback to the downside."

The US Government is inflating the market? LOL! Need we say out loud? :p

On another article: Beware the Bear Market Rally

• Market peak -- the Dow hit 381.17 on 9/3/1929
• Market crash -- 10/28-29/1929, the Dow fell 23.6% over the two days going from 301 to 230
• Presumed low -- 11/13/1929, the Dow closed at 198.69, a fall of 47.9% from the September high
• Rally -- the Dow rallies to 294.07 or up 48% by April 17, 1930
• BEAR TRAP -- the Dow proceeds to plummet to 41.22 (yes, you read it correctly) by 7/8/1932, down 86% from the rally high of 1930 and down 89% from its 1929 high
• Recovery -- it took until November 1954 for the Dow to get back to its 1929 highs

Some other articles.

• Dow at 10,300 by End of 2009: Strategist
• Pros Say: A Pullback Won't Kill Rally (Updated)
• Art Cashin: 'We're Severely Overbought' in This Market
• Not a Bull Market — But There's Upside: Citi's Levkovich
• When The News Drops Off
• Whitney's "Rotten Assets" Call

Yes, Meredith had strong words on the financial sector. I Would Not Own Bank Stocks: Meredith Whitney

• "At a core basis, I would not own these stocks," Whitney said in a live interview. "Their business models are not going to come back."
  
  Whitney, a former analyst at Oppenheimer who has her own firm, is renowned for calling out the problems with banks' toxic assets before the issue became widespread.
  
  "This is the great government momentum trade," Whitney said on why bank stocks had seen some improvement lately. "But the underlying core, earnings power of these banks is negligible."
  
  Whitney also said that consumer spending is still going to remain slow. "There's a massive retraction in consumer liquidity," said Whitney. "Credit contraction is happening at an accelerated pace. Consumer spending is going to be less than people expect going forward."

LOL! The great government momentum trade.

Some simply had called it as fake! :p

And some have stated they are simply desireless.

And do note the comments from dear old Kathy on the Japanese Yen. Japanese Yen: Trading At Critical Levels

• The U.S. dollar has sold off significantly against the Japanese Yen over the past 2 trading days. It is nearing a very important support level. If it breaks that level, we could see a test and potential break of 95. Given that equities are pressuring USD/JPY lower, a “break” of the 95 level would be contingent upon a top in equities. In my special report on FX360, I talk about the fundamental reasons behind the sell-off in USD/JPY.

However, George Soros is saying that "The US Dollar Is Already Weak"

• "The economic freefall has been stopped, the collapse of the financial system averted. National economic stimulus programmes are starting to take effect. The downward dynamic is easing," Soros told the newspaper.
  
  "I expect the recovery to make up for around half of the downturn we have had and then to move into stagnation," Soros said. "Asia will be first to find out of the crisis, but America is also currently doing that."
  
  Soros said the U.S. dollar was already weak, adding: "I don't expect the dollar to lose much value against the euro, on the contrary."
  

CSC Steel Soars Despite Profit Warning!

I highlighted on the profit warning from CSC Steel this morning. Profit Warning From CSC Steel

CSC Steel is up some 5.8% or 6 sen!

When a company issues a profit warning saying that "net profit and revenue will be lower than in the same period last year due to lower selling prices and demand" and the stock shoots for the moon, you know something has gone out of whack!

So how brown cow?

On one hand, you know the trend is your bestest friend in the market.

However, when the trend goes totally out of whack and against common sense, do know what is best for your money.

:D