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Jim Sinclair’s Commentary
As long as the uptick rule is absent from the market a 1930s type rally in equities cannot be sustained. That is fact.
January 25, 2009, 6:01 AM EST
Relevant excerpts:
The latest attack on short selling could come in the form of a reinstatement of the so-called uptick rule, which requires that a stock moves upward in price before it can be sold short.
Many critics attribute the market’s recent downward spiral, in part, to the absence of the uptick rule, which was in place for nearly 70 years before the Securities and Exchange Commission repealed it in July 2007. They claim that without the rule, short sellers fuel volatility while driving stock prices down to unrealistic levels. . . . .
Mary Schapiro, the new chairwoman of the SEC, has stated that she favors reinstating the uptick rule, according to published reports.
Ackerman Urges New SEC Chief to Restore Uptick Rule to Regulate Short Sales of Stocks
Congressman also receives letter supporting reinstatement of the regulation from Christopher Cox, the former SEC Chair who rescinded the rule
January 27, 2009
(Washington, DC) – U.S. Rep. Gary Ackerman (D-NY), a Senior Member of the House Financial Services Committee, today sent a letter to the new Securities and Exchange Commission (SEC) Chairwoman Mary Schapiro – on her first day in office – that urges her to reinstate the uptick rule, the depression-era regulation that required a stock to increase in price before a short sale could be executed.
“One of the simplest but most important and effective initiatives that the SEC could undertake immediately to combat market volatility is the reinstatement of a so-called uptick rule” Ackerman wrote. “For more than 70 years, the uptick rule curbed short-selling runs until, short-sightedly, the Commission revoked it in 2007. The lack of a price test in our exchanges created an environment that provided short sellers with the ability to both exploit and accelerate the failures of a number of companies, including Bear Stearns and Lehman Brothers, the collapse of which had a devastating effect on confidence in the U.S. financial markets.”
Ackerman also received a letter from former SEC Chairman Christopher Cox dated January 20, 2009 – the day he left the agency – in which Cox said he supports the reinstatement of an uptick rule. Cox sent the correspondence despite the fact that the SEC rescinded and refused restore the regulation during his tenure as Chairman.
Dear CIGAs,
The following is compliments of CIGA Kahama.
Acts2:38
A woman had just returned to her home from an evening of church
services , when she was startled by an intruder. She caught the man in the
act of robbing her home of its valuables and yelled: ‘Stop! Acts2:38!’
(Repent and be Baptized, in the name of Jesus Christ , so that your sins
may be forgiven.)
The burglar stopped in his tracks. The woman calmly called the police and
explained what she had done.
As the officer cuffed the man to take him in, he asked the burglar: ‘Why
did you just stand there? All the old lady did was yell a scripture to
you.’
‘Scripture?’ replied the burglar. ‘She said she had an Ax and Two 38s!’
Send this to someone who needs a laugh today and remember: Knowing
scripture can save your life – in more ways than one!
Good morning Jim,
It’s been a while since I’ve been in touch, so I hope all is well!
I was shocked to see this article on Bloomberg this morning.
Gold Rally Fills Vaults With Bullion as Bank Stimulus Increases
By Pham-Duy Nguyen and Nicholas Larkin
Jan. 30 (Bloomberg) — The same unprecedented steps that central bankers are taking to rescue the banking system are driving investors to gold, the commodity investors buy when they lose confidence in financial assets.
David Einhorn, manager of the $5.1 billion Greenlight Capital Inc. hedge fund, bought gold for the first time. Steven Lehman, the Federated Investors Inc. fund manager who beat 99 percent of his peers last year, is betting on bullion with Toronto-based Yamana Gold Inc. and Goldcorp Inc.
The combination of central banks spending trillions of dollars to prop up the banking system in the worst financial crisis since the Great Depression will cause gold to appreciate at least 17 percent this year from $882.05 an ounce on Dec. 31, surpassing the record of $1,032.70 in London, according to 16 of 24 analysts surveyed by the London Bullion Market Association. The metal traded at $909.10 yesterday.
“The government can print endless money, but they cannot increase the supply of gold,” said Michael Pento, chief economist at Delta Global Advisors Inc. in Huntington Beach, California, who is doubling holdings of the precious metal to 8 percent of his $1.5 billion in assets. “Anything the government cannot replicate by decree, I want to own.”
Investors typically buy gold during times of financial turmoil as a store of value. The commodity has gained in five of the past six U.S. recessions.
Jim,
You were the first to warn!
I believe you think the risk of a planetary Weimar is more than 10%?
All the best,
CIGA Jeroen
Attali Warns of ‘Worldwide Weimar’ as Governments Print Money
Interview by Farah Nayeri
Jan. 30 (Bloomberg) — Imagine a country so ravaged by inflation that $1 will buy you 630 billion in the local currency, where a loaf of bread costs tens of billions, and where wheelbarrows are the new wallets.
That was the Weimar Republic in November 1923. A similar prospect may now await the world economy, says French economist Jacques Attali in “La Crise, et Apres?” (“The Crisis, and Then?”), a stinging new critique of the financial meltdown.
Attali, 65, served as a special adviser to French President Francois Mitterrand in the 1980s and later became the first head of the European Bank for Reconstruction and Development. He went on to found microfinance agency PlaNet Finance. In 2007, he steered a panel on economic growth that made recommendations to Nicolas Sarkozy, the current president.
Dear Jeroen,
It gives me no pleasure to know this is occurring without any practical manner to oppose it.
All we care about is that those who read here protect themselves.
Respectfully,
Jim
Dear Jim,
As the following two pieces (one article and one press release) suggest, the uptick rule is in play with both new SEC Chairman Mary Schapiro and Congressional Democrats calling for its reinstatement. Even former SEC Chairman Cox – on his last day in office – pulled a 180 and called for the rule’s reinstatement.
I respectfully suggest that the readers of this site take this opportunity to contact both their representatives and the SEC to express their support for reinstatement. We know the hedge funds will be fighting back with all they’ve got. The direct email address for the SEC Chairman’s Office is:
chairmanoffice@sec.gov
Respectfully yours,
CIGA Richard B.
Market participants split on reinstatement of the uptick rule
While many question its effectiveness, some feel it’s better than an outright ban on short selling
By Jeff Benjamin
January 25, 2009, 6:01 AM EST
Relevant excerpts:
The latest attack on short selling could come in the form of a reinstatement of the so-called uptick rule, which requires that a stock moves upward in price before it can be sold short.
Many critics attribute the market’s recent downward spiral, in part, to the absence of the uptick rule, which was in place for nearly 70 years before the Securities and Exchange Commission repealed it in July 2007. They claim that without the rule, short sellers fuel volatility while driving stock prices down to unrealistic levels. . . . .
Mary Schapiro, the new chairwoman of the SEC, has stated that she favors reinstating the uptick rule, according to published reports.
Ackerman Urges New SEC Chief to Restore Uptick Rule to Regulate Short Sales of Stocks
Congressman also receives letter supporting reinstatement of the regulation from Christopher Cox, the former SEC Chair who rescinded the rule
January 27, 2009
(Washington, DC) – U.S. Rep. Gary Ackerman (D-NY), a Senior Member of the House Financial Services Committee, today sent a letter to the new Securities and Exchange Commission (SEC) Chairwoman Mary Schapiro – on her first day in office – that urges her to reinstate the uptick rule, the depression-era regulation that required a stock to increase in price before a short sale could be executed.
“One of the simplest but most important and effective initiatives that the SEC could undertake immediately to combat market volatility is the reinstatement of a so-called uptick rule” Ackerman wrote. “For more than 70 years, the uptick rule curbed short-selling runs until, short-sightedly, the Commission revoked it in 2007. The lack of a price test in our exchanges created an environment that provided short sellers with the ability to both exploit and accelerate the failures of a number of companies, including Bear Stearns and Lehman Brothers, the collapse of which had a devastating effect on confidence in the U.S. financial markets.”
Ackerman also received a letter from former SEC Chairman Christopher Cox dated January 20, 2009 – the day he left the agency – in which Cox said he supports the reinstatement of an uptick rule. Cox sent the correspondence despite the fact that the SEC rescinded and refused restore the regulation during his tenure as Chairman.
