In the course of its average 20 months in circulation, U.S. currency gets whisked into ATMs, clutched, touched and traded perhaps thousands of times at coffee shops, convenience stores and newsstands. And every touch to every bill brings specks of dirt, food, germs or even drug residue.
Research presented this weekend reinforced previous findings that 90 percent of paper money circulating in U.S. cities contains traces of cocaine.
Money can be contaminated with cocaine during drug deals or if a user snorts with a bill. But not all bills are involved in drug use; they can get contaminated inside currency-counting machines at the bank.
In his study, the rate of drug-contaminated money varied geographically from urban to less populated areas. A hundred percent of the sample bills collected from major cities such as Miami, Florida; Boston, Massachusetts; and Detroit, Michigan, tested positive for cocaine, but samples collected from smaller cities such as Salt Lake City, Utah; Niagara Falls, New York;and Dearborn, Michigan, had 87 to 67 percent.
Michael Porfirio Mason
AKA The Peoples Champ
AKA GFK, Jr.
AKA The Sly, Slick and the Wicked
AKA The Voodoo Child
The Guide to Getting More out of Life
http://www.thegmanifesto.com
Six months ago, I received an odd phone call from a man named Jake DeSantis at A.I.G. Financial Products—the infamous unit of the doomed insurance company, staffed by expensively educated, highly paid traders, whose financial ineptitude is widely suspected of costing the U.S. taxpayer $182.5 billion and counting. At the time A.I.G. F.P.’s losses were reported, it became known that a handful of traders in this curious unit had sold trillions of dollars of credit-default swaps (essentially unregulated insurance policies) on piles of U.S. subprime mortgages, but its employees hadn’t yet become the leading examples of Wall Street greed. And so this was before Jake DeSantis and his colleagues found themselves suburban-Connecticut outcasts, before their first death threats, before the House of Representatives passed a bill because of them (taxing 90 percent of their large bonuses), before New York attorney general Andrew Cuomo announced he was going after their paychecks, and before Iowa senator Charles Grassley said that A.I.G.’s leaders should follow the Japanese example and “either do one of two things, resign or go commit suicide.”
DeSantis turned out to be a friend of a friend. He’d called because he didn’t know anyone else “in the media.” As a type he was instantly recognizable: a “quant,” a numbers guy who was allowed to take financial risks because of his superior math skills, but who had no taste for company politics or public exposure. He’d grown up in the Midwest, the son of schoolteachers, and discovered Wall Street as a scholarship student at M.I.T. The previous seven years he’d spent running A.I.G. F.P.’s profitable stock-market-related trades. He wasn’t looking for me to write about him or about A.I.G. F.P. He just wanted to know why the public perception of what had happened inside his unit, and the larger company, was so different from the private perception of the people inside it, who actually knew what had happened. The idea that the employees of A.I.G. F.P. had conspired to maximize their short-term gains at the company’s longer-term expense, for instance. He and the other traders had been required to defer about half of their pay for years, and intertwine their long-term interests with their firm’s. The people who lost the most when A.I.G. F.P. went down were the employees of A.I.G. F.P.: DeSantis himself had just watched more than half of what he’d made over the previous nine years vanish. The incentive system at A.I.G. F.P., created in the mid-1990s, wasn’t the short-term-oriented racket that helped doom the Wall Street investment bank as we knew it. It was the very system that U.S. Treasury secretary Timothy Geithner, among others, had proposed as a solution to the problem of Wall Street pay.
Even more oddly, the public explanation of A.I.G.’s failure focused on the credit-default swaps sold by traders at A.I.G. F.P., when A.I.G.’s problems were clearly broader. There was the mortgage-insurance unit in North Carolina, United Guaranty, that had taken on all sorts of silly risks in the past two years, lost several billion dollars, and replaced their C.E.O. There were the fund managers at A.I.G., the parent company, who had blown nearly $50 billion on trades in subprime mortgages—that is, they had lost more than A.I.G. F.P., whose losses stood around $45 billion. And there was a pattern: all of this stuff had happened since 2005, after an accounting scandal forced C.E.O. Maurice “Hank” Greenberg to resign. Greenberg, who had headed A.I.G. since 1968, was a bullying, omnipotent ruler—one of those bosses who did not so much build a company as tailor it to his character and render it incapable of being run by anyone else. After he was forced out, Greenberg said, “The new management wanted to prove that they could continue to grow without former management” and so turned a blind eye to all sorts of risks. So how come most of the senior management at A.I.G. was left in place by the U.S. Treasury after the bailout? Why were officials, both public and private, so intent on leading others to believe all the losses at A.I.G. had been caused by a few dozen traders in this fringe unit in London and Connecticut?
Michael Porfirio Mason
AKA The Peoples Champ
AKA GFK, Jr.
AKA The Sly, Slick and the Wicked
AKA The Voodoo Child
The Guide to Getting More out of Life
http://www.thegmanifesto.com
It always amazes me how short-term investors’ memories are. There is chatter of improving U.S. and world economies, which we feel is way too premature. Corporations are reporting optimistic numbers but could that be because expectations were so low? We’ve lost 2 million jobs in the last 6 months and because unemployment dropped 0.1%, which I still doubt is the case, it is supposed to be viewed as positive? Commodities are moving higher and this signals a recovery…I don’t think so. Treasuries and equities are trading in tandem as opposed to inversely, this will not last. The dollar is not being sought out as the fear trade and it actually rallied on positive economic news? As my basketball coach used to say, sometimes the best offense is a good defense.
To find out exactly how we are positioning our clients in commodity futures and options, Contact us today at 1-888-920-9997. Don’t forget to mention The G Manifesto.
Energies
The DOE reported crude oil supplies were up 1.7 million barrels, supplies of gasoline were down 200,000 barrels while heating oil supplies were down 300,000 barrels. September crude oil closed up $1.63 trading to its highest level since 6/30. Expect $73/74 to act as resistance with support coming in at the 9 day moving average at $69.40. The chart looks overbought; a trade down to $66/67 is not out of the question. At this time we’re not advising getting short, but we would suggest being out of longs. September heating oil was higher by just over 8 cents last week but it too is showing signs of a top with prices ending last week 6 cents off their highs. Resistance is seen at 1.95/1.96 with support at 1.8850/1.89 followed by 1.83. September RBOB closed lower by 45 ticks as prices failed to make their way to higher ground after 3 positive weeks. Resistance is seen between 2.05 and 2.07 with support at 1.94 followed by the 20 day moving average at 1.87.
The DOE reported underground supplies of natural gas were up 66 billion cubic feet last week to 3.089 trillion cubic feet. Supplies are now up 23% from a year ago. September natural gas closed up 4 cents which would not have been possible without the 11% move higher on Monday. Resistance comes in between 3.85 and 3.90 with support at 3.55 followed by 3.40. We continue to buy clients November $1 call spreads. The settlement on the $5/6 call on Friday was $2700.
To view our full commentary which includes the sectors of energies, livestock, currencies, financials, grains, softs, and metals, subscribe by visiting this link: http://mbwealth.com/subscribe.html.
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Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results. There are no guarantees of market outcome stated, everything stated above are our opinions.
Even after the recent market turmoil it appears investors still have an appetite for risk. Whether the risk taking is misguided is debatable, but the reality is if investors are more informed about the inherent risk they may be more comfortable taking risk. Though there still seems to be more questions than answers for investors to earn above average returns, they may need to be willing to take above average risks. That is not to say the stock market alone, real estate, bonds, or even commodities should be your sole focus it just means that investors need to educate themselves on the unique risks for each asset class and really ask themselves what type of beta they can handle in their portfolio. My suggestion would be to consult a professional in the chosen asset class that interests you and align yourself with someone that has a comparable take on the markets.
To find out exactly how we are positioning our clients in commodity futures and options, Contact us today at 1-888-920-9997.
Financials
Stocks: The million dollar question was asked in Barron’s over the weekend” How much of the recession’s passing is already priced into stocks?” The S&P was higher by 7.50 points last week to trade to a fresh high for 09’. We are still not ruling out a test of 1000 before prices back off but we will remain consistent and reiterate that we do expect a sell off very soon. That being said we were light buyers for clients in the ES September 925 puts for $800 last week as we expect in the next 2/4 weeks a trade down to 945/950. The Dow was higher by 75 points last week, gaining over 1000 points or 13% just in the last 3 weeks. With July now behind us the Dow put in its best monthly performance in more than 7 years, do things feel that good? Resistance is seen at 9200/9225 with support at 8990 followed by 8825. A trade back down to the 50 day moving average would only be a correction of 6%. We have suggested for clients to lighten up on those stocks in their portfolio that have gained over 50% since the March lows.
Bonds: September 30-yr bonds were higher by 2’25.5 points last week to trade to their highest level in 2 ½ weeks. Resistance comes in at 120’00 with support at 118’00 followed by the 40 day moving average at 117’00. September 10-yr notes were bid higher as well gaining 27.5 ticks last week. Support is seen between 116’11 and 116’17 and resistance between 117’28 and 118’00. We advised clients last week to exit their NOB spreads at a profit of roughly $1500 per spread as we reached our target. We also advised clients to lighten up on their Euro-dollar puts as we expect a trade higher in the near term. However we would sell into this rally and look to re-establish these positions in the coming weeks buying more June & September 10’ puts. The NFP # guess comes in at a loss of 375,000 jobs for the month of July and an unemployment rate of 9.6%.
To view our full commentary which includes the sectors of energies, livestock, currencies, financials, grains, softs, and metals, subscribe by visiting this link: http://mbwealth.com/subscribe.html.
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Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results. There are no guarantees of market outcome stated, everything stated above are our opinions.
As Boom Times Sour in Vegas, Upward Mobility Goes Bust
During the boom years, Las Vegas wasn’t just a place where gamblers could hit the jackpot, but where hard-working hotel maids and cocktail waitresses could, too. The city offered something almost no other place in America did: upward mobility for the working class.
Now, that is evaporating.
The recession has jolted Las Vegas in a fundamental way. Like other job-creating cities in the Sunbelt, Las Vegas saw its population, income levels and housing prices surge over the past decade. And like those cities — including Phoenix, Orlando and San Diego — it’s been battered in the bust.
But by many measures, Las Vegas’s rise and fall has been more dramatic than most. Last year, Clark County’s population declined for the first time in more than two decades. More than 10,000 people left Las Vegas between July 2007 and July 2008, according to Keith Schwer, director for the Center for Business and Economic Research at the University of Nevada Las Vegas. The unemployment rate in the metropolitan area tripled from 4% in May 2007 to just over 12.3% in June 2009, higher than the national rate of 9.5%. And after the median price of existing homes rose by 122% in sales between 2000 and 2006 — more than double the national rise of 49% — sale prices fell by 30% between last year and this year.
IN the late, lamented boom, waiters at luxury restaurants here could make $150,000 a year and more thanks to the electrifying arrival of high rollers renowned as “the whales.”
Robert Martinez, a 33-year-old waiter at Rao’s in Caesars Palace, said these heavyweights “had wads of $100 bills and gave them to everyone on the staff, and tipped generously on $12,000 to $15,000 checks.”
Last year, a fourth of the country’s highest-grossing restaurants were in Las Vegas. But the feast has transitioned to famine. Fewer revelers are arriving, and they are spending less. With the economy reeling, more than 5,000 food and restaurant workers are unemployed here.
“We look out and we see every jet coming and going,” said Michael N. Baker, 50, a waiter for eight years at the Top of the World restaurant in the Stratosphere Casino Hotel tower. “They used to be stacked up all day long,” he added. “Then there was nothing out there. That was scary.”
Many of the town’s 2,900 restaurants are beset by fabulousness fatigue.
“It was gold, and suddenly it became fool’s gold,” said Malcolm M. Knapp, who heads a restaurant consulting firm that bears his name.
With Americans cutting back on luxuries, and the price of transport rocketing, the so-called “Vegas vacation” is facing the axe. This week, as the nation celebrated Independence Day, major hotels were taking stock of a fall in all-important room occupancy rates from their usually impressive 95 per cent levels to nearer 80 per cent.
More worryingly, new figures showed gambling revenue has also dropped – a further 3 per cent this month – starting a price war between worried firms anxious to lure punters back. Hotel rooms, which last year averaged $130 each, now go for less than $100 (£50).
At the vast Planet Hollywood resort, the clatter of fruit machines and poker chips was this week replaced by an uneasy – and, for Vegas, very unusual – calm. A large if slightly tatty double room could be found for less than $80.
No tourist resort can afford to lose its buzz. Yet the slump now runs so deep it’s starting to hurt even the town’s Elvis impersonators, wedding chapels, and sex industry. When money’s tight, the prospect of stuffing another $20 bill into a lap-dancer’s gyrating stocking-top somehow doesn’t seem quite so enticing.
“This year already we’ve seen the Minx closing, the Mensa club closing, and the Crazy Horse closing,” says Dolores Eliades, owner of the OG, the second biggest “adult cabaret” venue in the world. “By another 12 months from now, I expect another two or three major venues will have gone.
Continue
Less Vegas: The Casino Town Bets on a Comeback
I have come for revenge. For years, I’ve hyperventilated at restaurant “tasting menu” checks, forfeited 1,000% markups for bottle service at clubs, neared my credit-card limit for hotel suites, paid usury to strip-club ATMs and pushed far too many chips to the dealer. On this trip, I will get a hotel room for less than the upkeep on the room, eat a meal for near what it costs to serve it and — at least according to a sign in the Cheetahs dressing room berating the strippers for undercharging — get some kind of deal in the VIP room. For the first time ever, it is possible to complete a monetary exchange in Las Vegas and feel bad for the other person.
I, however, feel guiltless about taking advantage when someone is down, and Vegas is way down. This has been the first major recession Vegas has experienced since it became a real city. After two decades as one of the fastest-growing metropolises in the U.S., Las Vegas has seen its population growth flatten. It’s got the highest foreclosure rate of any major metro area, and the unemployment rate jumped from 3.8% to 12.3% in just three years. Even if you have a job, it’s not a good time to have your wage be dependent on lavish tips. The No. 1 convention city has also had a wave of cancellations from the AIG effect — companies don’t want the bad publicity of being seen in Sin City. Just as Las Vegas was the epicenter of the extravagant consumption of the past 20 years, now it’s the deepest crater of the recession over the last year. And while I do want to get my money back, I’m a little worried about seeing the dream sucked out of our most American city, the one with the optimism and possibility of New York City in 1900. The one I’ve, embarrassingly, come to love.
Michael Porfirio Mason
AKA The Peoples Champ
AKA GFK, Jr.
AKA The Sly, Slick and the Wicked
AKA The Voodoo Child
The Guide to Getting More out of Life
http://www.thegmanifesto.com
