Little is known about the terrorist group that calls itself Deccan Mujahideen and claimed responsibility for the series of attacks Wednesday, in Mumbai, India, that left more than 150 dead, including as many as six Americans.

Nations need to be more vigilant than ever.

I quote from Dr Brett Steenbarger at Traderfeed dated November 29 2008:

The attacks in Mumbai are a stark reminder that rogue groups possess the will to disrupt modern society. The threat assessments from the recent reports cited above suggest that it is only a matter of time before they also possess the means. Research is under way to protect vulnerable systems and the cost of hardening new components and systems is not prohibitive. The cost of retrofitting and hardening existing systems is significant, and that leaves much of our infrastructure vulnerable–and almost all of us unprepared.

What is applicable to the US is equally applicable to any sovereign state.

Research studies on

electromagnetic pulse

in the US include:

As in successful trading, there is a parallel schema which needs to be in place before one takes a trade.

TARP, now it is TALF!

–Patrick J. O’Hare

If you’re keeping track at home, the acronyms in use by the Federal Reserve just went up by one.  The latest one to keep tabs on is TALF, which stands for Term Asset-Backed Securities Loan Facility.

It is a shorthand way of describing a loan facility whereby the Federal Reserve will lend up to $200 billion to facilitate the issuance of asset-backed securities (”ABS”) that help accommodate the credit needs of consumers and small businesses.

When thinking of this facility, think of it as an aim to get credit flowing smoothly again for things like auto loans, student loans, credit card loans and small business loans.  In turn, think of it as an effort to help the consumer economy by improving liquidity in this important market so that credit is not only more readily available, but also cheaper to get.

Don’t think of it, however, as an instant fix for all that is broken in the consumer lending market. 

The TALF program is a starting point, which is evident in the fact that the Federal Reserve is only going to accept as eligible collateral asset-backed securities that have a long-term credit rating in the highest investment-grade rating category (i.e., AAA) from two or more nationally recognized rating organizations.

Also, all or substantially all of the credit exposures underlying eligible ABS must be newly or recently originated exposures to U.S.-domiciled obligors.  This is a tacit way of saying, “Don’t send us your lowly and tempest tossed ABS yearning to be free.  We only want the good stuff.” 

That stance helps protect the U.S. taxpayer, who is the ultimate lender here, yet it is a limiting factor of the new program.  Still, it does put the onus on banks to start lending again, even if only to high-quality borrowers, since they need to have more recently originated loans to qualify for the program.

The Treasury has indicated it will allocate $20 billion of TARP funds to the Federal Reserve as credit protection for the TALF program.

In a separate announcement, the Federal Reserve said it will allocate as much as $600 billion to purchase the direct obligations of housing-related government sponsored enterprises and mortgage-backed securities backed by Fannie Mae, Freddie Mac and Ginnie Mae.

Purchases of up to $100 billion in GSE direct obligations will be conducted with the Fed’s primary dealers through a series of competitive auctions that begin next week.  The Fed’s statement said purchases up to $500 billion in MBS will be conducted by asset managers selected via competitive process with a goal of beginning the purchases before year-end.

This action is being taken to reduce the cost and increase the availability of credit for the purchases of houses, which the Fed has indicated should support housing markets and foster improved conditions in financial markets more generally.

One can only hope so considering the housing market has been at the center of this financial crisis.  In hearing the Fed’s plan today, there was a measure of relief that the administration is stepping up efforts to attack the heart of the problem.

Nonetheless, this represents another shift in direction that contributes to that pervasive sense of uncertainty about the timing of a recovery.   There won’t be a lot of backlash here, though, because any effort to bring relief to the housing market is going to be considered constructive in nature.

Separately, the Fed is essentially going to print money to fund these programs.  That’s notable for a variety of reasons, not the least of which is the thinking that it has the look of quantitative easing whereby the Fed adds reserves to the banking system without cutting interest rates.

Such an approach can be used to help thwart deflation when there isn’t a lot of room to cut rates further.  Although no one at the Fed said that was the residual aim of these programs, it’s likely that thought won’t be lost on the market given the historic monthly declines seen recently in the producer price and consumer price indices.

–Patrick J. O’Hare

Turkeys Spending Trillions and Yet There’s Still Room For Thanks

From  Adam Hewison

Have you ever built or remodeled a house? If you have, then you know that it always takes longer and cost twice as much as you first estimated. This is exactly the position that the US government has put itself in, only this time the house is the whole country. Now we have to gut the country and totally redo everything. It’s likely to take twice as much time and cost US taxpayers twice as much money to get out of this recession.

Do you know how many zeros there are in a trillion dollars? I really didn’t know myself, as that is way above my pay scale. So, I looked it up on Google and there are 12 zeros behind the 1. When this mess is all over, we will be lucky if the government doesn’t spend 5 trillion dollars (5,000,000,000,000) to get everything back to some form of normalcy in the US markets.

We are continually seeing new people being trotted out in front of the cameras and microphone saying that this bailout is going to cost $700 billion and something else is going to cost $350 billion. I have a deep suspicion that they have no clue and no belief in what they are saying or doing. It’s also amazing to me that the people that got us into this mess in the first place on now in charge of getting us out of this mess. This does not seem like a very smart idea to me.

One of the most interesting things about the markets is that they never tell you when a bottom is in place until much later. I think that the many economic problems that are currently sitting on the back burner, will warrant this market to continue its slide to the downside. If you haven’t seen my video, “How Low Can The Dow Go,” I recommend that you check it out by tapping this link:

Enjoy the video
http://www.ino.com/info/263/CD3131/&dp=0&l=0&campaignid=3

The technical outlook for the stock market remains negative in my opinion. There’s a great deal of overhead resistance in this market which leads me to believe we will still see further downside erosion. Unlike a bull market that constantly needs to have positive inputs like earnings and positive outlooks, a bear market simply can fall on its own weight.

One thing we rely on to tell us when the market switches gears from a negative to a positive trend is our “Trade Triangle” technology. Presently all of our “Trade Triangles” are in a negative mode for all the indices, and show little or no signs of turning up.

So what’s an investor to do?

Do you buy and hold because it looks cheap? That is not the way I believe you want to trade this market. The closest parallel we have to this market is the crash of 1929 and the bear market that lasted into the early ’30s. We’ve only been in this crisis mode for a little over a year and I believe we have a way to go before the recovery begins.

We still have a downside projection for the DOW at 6,600 and we see little or no reason to change that technical target at this time.

Make no mistake about it, these are difficult times for many people, and many people will lose their jobs before business and the markets pick up. There’s still the mess with General Motors (NYSE_GM), Ford (NYSE_F) and Chrysler to take care of. How much is that going to cost? In my opinion, the auto industry has been in decline and denial since the ’70s, and any money that is given to them is like throwing money down a rat hole unless there is a major new business plan and a severe downsizing of those industries.

No matter what rough times lay ahead, keep the faith, keep your head down and the computer on, because there are some great trading opportunities that I know will be coming up soon in the marketplace.

From all of our staff both at INO.com and MarketClub, we wish you success in the future. To all of our American friends and clients, we hope you had a very Happy Thanksgiving. We still have a lot to be thankful for in this world.

Adam Hewison
President, INO.com
Co-creator, MarketClub

Key economic data for the week starting December 1st, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.

Monday:
	10:00 Construction Spending Oct -0.9% -0.3% 10:00 ISM Index Nov 38.0 38.9

Wednesday:
	08:15 ADP Employment Nov -173K 08:30 Productivity-Rev. Q3 0.9% 1.1% 10:00 ISM Services Nov 42.6 44.4

Thursday:
	08:30 Initial Claims 11/29 NA NA 10:00 Factory Orders Oct -2.7% -2.5%

Friday:
	08:30 Nonfarm Payrolls Nov -300K -240K 08:30 Unemployment Rate Nov 6.8% 6.5%

Today with Bloomberg, Ray ’s prediction to Bernie :

Video

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aErEKzPl13TY

Happy Thanksgiving again

Prestige -Thanksgiving revisted

http://awanginvest.com/wp-content/uploads/2008/04/thanksgiving-celebration.pdf

A thanksgiving fire-drill – John Mauldin:

https://mail.google.com/mail/?zx=1oxlrbe03yf9w&shva=1#inbox/11ddc92f2661a955

Sharing this video with you on this controversy:

http://www.ino.com/info/264/CD3131/&dp=0&l=0&campaignid=3

It has been a difficult time for gold bugs for the past two months as gold has been trapped in a broad trading range which made it seem insulated and immune to all of the financial chaos around it. The action on Friday the 21st, put all of that in action to rest as gold soared to trade over the 800 in a matter of hours. This may be the move we’ve been looking for and coming from a two-month base, it seems large enough to propel this market higher.

I have just finished watching a new video on gold that goes into some depth and shows you potential upside targets for this market. The video can be played on any computer and does not need any special plug-in. It is available free of charge from MarketClub as part of their on going educational outreach program. Their goal is to help traders improved the timing and trade selection in a scientific way using tools that are real world tested and have stood the test of time.

Here is the URL link again:

http://www.ino.com/info/264/CD3131/&dp=0&l=0&campaignid=3

Why You Win And Why You Lose: Trading Traps And How To Get Out Of Them Part 2

by Janice Dorn, M.D., Ph.D.

TRADING TRAP # 2.
FAILURE TO TAKE PERSONAL RESPONSIBILITY FOR YOUR TRADES AND INVESTMENTS

One can have no smaller or greater mastery than mastery of oneself…Leonardo da Vinci

We buy stocks, options, futures, currencies, commodities, etc, because we want them to go up and make profits. We short them because we want them to go down and make profits.  Bottom line:

(1) We trade to make profits

(2) So does everyone else

(3) Someone has to win and someone has to lose.  You need look no further than the futures markets to understand that this is a zero-sum game.

So, why do so many of you lose money consistently? Why is it that you put on a position and it seems like it goes against you immediately?

For most people the answer is clear: “It’s “THEM. THEY are doing this to my position. THEY are taking it down. The newsletter writer is an idiot, the guy who told me to buy the stock has no clue what he is talking about. What is wrong with all of these people? Don’t they know that this stock has a really low P/E, great earnings history, is innovating and is a fantastic company? After all, I heard it mentioned on some TV show, and the almost all the analysts have a buy on it. Why is it not going my way?

This has nothing to do with me. It’s all of THEM that are out of touch. I am just a victim sitting here watching it go against me and I have no control whatsoever. I’m a helpless pawn in this game, victimized by all of “da boyz” constantly doing things to me and out to get me. How dare they? Don’t they know that I am right and THEY are wrong?”

In life outside the markets, we have a society focused highly on litigation. Everyone one of you is either suing someone, being sued by someone or knows someone that is suing someone or being sued by someone. In the markets, there are lawsuits almost daily, and some come to your mailbox in the form of class actions (where the attorneys always win the most anyway). Others are much more high profile, involving billions of dollars against firms, funds or individuals. This is part of the great game of being in the market. Lawsuits happen. Perp walks happen. Investigations happen. There are consequences.

However, where you are concerned, it is more insidious. There is absolutely no scarcity of people, places, or things to blame. Think about it for a minute, and ponder many times you personally have blamed some unknown or unseen person, place or thing for the fact that your positions are not doing what you want them to do. Who have you blamed? The hedge funds, market makers, floor traders, Bernanke’s Fed, arbitrageurs, quants, cabals, Working Committee on the Financial Markets, economic reports, climate changes, war, threats of war, your ISP provider, your brokerage, presidents and rulers of countries, newsletter writers, radio and TV market commentators, momentum traders, value investors, CEO’s, CFO’s , people in your own trading room, people in other trading rooms, short sellers, program trading architects, grain farmers, China, Japan, and every other country if necessary, your trading platform, your scans, your dog, wife or your screaming child…( the list is incomplete, so please feel free to add your own contribution, as space does not permit the ad infinitum naming of every person, place or thing that could be responsible for your losing position)

The reality is that, to one degree or another, every one of these forces may be in play every minute of every trading day, so go ahead and blame away. If you do not comprehend the simple fact that somewhere, somehow, someone is manipulating some part of the markets every day, then you have absolutely no business playing the great game of trading and investing. So–hurl invectives, bang on your computer, yell at someone or have another drink. There is nothing you can do about it…right?

Wrong!

There is one thing you can do about it and that is to take personal responsibility. None of these people, places or things forced you to put your hand on the mouse and click it. None of these people, places and things picked up the phone and called your brokerage. You did it, and you are responsible.

If you find yourself making excuses constantly, you are not taking personal responsibility. You are lying to everyone around you. Worse than that, you are lying to yourself. If you do not get out of your ego and off your pity potty, and realize that you are totally responsible for every thought, word and action ( both in and out of the markets), then you are covering yourself with a shroud of secrets, excuses and lies. The outcome is that you are putting yourself in the position of a victim and taking away both your self esteem and personal power. In your secrets lies your sickness. Excuses and lies come always in moments of weakness and are symptoms of low self-regard and the inability accept the truth of what you have done.

The benefit of taking complete personal responsibility for your thoughts and actions is that you attain true freedom and power. You cannot control all of those visible or invisible hands, so don’t even try. However, you can control yourself– how you think, feel and act. This is called moving forward from an internal locus of control.  The majority of our frustrations in life and in the markets stem from the fact that we blame others or look to others for approval (external locus of control.) This sets up a spiraling series of negatives that tends to feed on itself.

Once you give up blaming others and look to yourself (internal locus of control) as the source of whatever is or is not right with your trading or your life, you find a new freedom and a new happiness that is born of radical honesty and authenticity. You will become more calm and centered. Nagging doubts and worries about what others are thinking or doing or saying will fade away. Everything in your life, including your trading, will improve enormously.

How can you begin this journey to become personally responsible and a more evolved human being, trader or investor?

WHAT DO YOU SEE WHEN YOU LOOK IN THE MIRROR?

First, take a very hard and close look at yourself. Go inward with radical honesty and do not be afraid of what you see or feel. These traits are part of you and make you both unique and extraordinary. Use your strengths to deal with what you perceive to be your weaknesses. Grow your strengths and let the weaknesses fade further and further into the background.

Second, take total responsibility for everything you do, say and think. Thoughts are the precursor to actions. Accept what you cannot change. Instead, ask yourself what you can change, what steps you can take to effect that change, and then just do it.

Lastly, see yourself as powerful and in control of yourself. Relinquiash any tendencies to control others.  Accept others without condition, as you would like them to accept you. Take action to evolve yourself to a place of radical personal responsibility by knowing that all changes on the outside start from commitment within.

When a man points a finger at someone else, he should remember that three of his fingers are pointing back at him…Louis Nizer

With the conclusion of this meeting of world leaders at Lima, I wish to pay tribute to a good friend and diplomat Ambassador Juan Carlos Capunay who will leave us in Singapore after serving his term of office as Executive Director of APEC Secretariat.

ABOUT APEC

The APEC Secretariat is based in Singapore and operates as the core support mechanism for the APEC process. It provides coordination, technical and advisory support as well as information management, communications and public outreach services.
Staffing
The APEC Secretariat is headed by an Executive Director and a Deputy Executive Director. These positions are filled by officers of Ambassadorial rank from the current and incoming host economies respectively. The positions rotate annually. For 2008, the Executive Director is Ambassador Juan Carlos Capuñay from Peru.
ISO Certification
In 2002, the APEC Secretariat obtained ISO 9001:2000 Quality Management Certification. This recognises the continuous efforts made by the APEC Secretariat to provide improved administrative and support activities. The APEC Secretariat is the first multilateral trade-related secretariat to attain ISO certification. program directors, seconded from APEC Member Economies. In addition, professional staff fulfill specialist and support functions at the APEC Secretariat.

More on APEC

http://www.apec.org/apec/about_apec/apec_secretariat.html

http://www.apec.org/apec/about_apec/apec_secretariat.html

Farewell, Amb Juan Carlos Capunay

You have made a great difference between Singapore and Peru thoughout your presence in Singapore.

You gave me courage to launch L’Enfant Sauvage in 2004 @ Esplanade

http://www.anatrader.com/booklet_ls.pdf

Hope you will visit us again with your lovely wife Linda.

Bonne chance

LOOKING FORWARD TO YOUR FAREWELL AND WELCOME FUNCTION TO YOUR SUCCESSOR ON DECEMBER 18 2008

The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.

“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”