Open Thread
By Barry Ritholtz - November 16th, 2008, 10:25PM
Ok, we have a brand new week acomin’:
The cost of living in the U.S. likely tumbled in October, Goldman senior management ain’t takin’ no bonuses, GM is anglin’ for a bailout, the G20 meeting was a big fat nothing done, Japan’s economy slipped into recession (again) and Oil fell to $55.
So, whats on your collective minds? What will this week bring — in the markets, in the economy and in the wonderful world of bailouts?
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What say ye?
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November 16th, 2008 at 10:32 pm
HIG buying a bank for to million to access 1.1 billion tarp. yay! 100 to 1 leverage, going in the wrong direction. Obama good interview on 60 minutes
November 16th, 2008 at 11:04 pm
The cost of living increased. My health insurance Blue Cross Standard (not basic) plan premium rose 13.3%. Health insurance is an integral part of the cost of modern living. Food also went up, not down. Even the flaky government “core” data which excludes food and enrgy (that’s because corporations don’t eat or consume energy- only dumb humans do) showed an increase.
Yes, cars and clothes probably got cheaper. So what? Used cars are what people buy when they’re hurting. Used cars didn’t drop in price and car insurance didn’t drop either. Truth is out the window. Hype continues to rule.
With fewer available jobs each month, it could be argued that for those who have jobs, the cost of living might go down because of all the bargains which come about from desperate people selling their thinga and even themselves. Is this a good thing? I don’t think so. But then I don’t have any reptilian relstives or friends so what do I know?
November 16th, 2008 at 11:14 pm
I work with grants at a Univ. of Calif. campus.
We got word that the benefit rate (as a % of salary) will be rising at a very fast pace over the next 4 years – 400 basis points per year during that period (starting rate is 22%).
Part of that is a resumption and ramp-up of employee contributions to the retirement plan (UC still has a defined-benefits plan). For quite a few years, neither UC nor employees contributed to the plan, because it had a substantial surplus. No longer.
UC has no budget for salary increases this year. I’m not very optimistic about increases the following year, either. Combine that with the resumption of retirement contributions and there will be a lot of California employees seeing a decline in real take home pay.
November 16th, 2008 at 11:15 pm
Goldman execs are deferring bonuses, but they’ll just make up for it later.
GM definitely gets its bailout, but not this week. And I’m going to go out on a limb and predict that the government will go the entire week (until Friday) without a new bailout for anyone.
Oil will hit bottom within the next seven months, and after that, will handily outperform the S&P500.
The S&P will make it to 950 by Friday (11/21).
(The foregoing predictions come with a money-back guarantee if not satisfied).
November 16th, 2008 at 11:25 pm
Well, I have money in the bank, A few gold stocks which are at about break even right now, my house is paid off but it sucks because it is too small and shabby. I want a bigger nicer one but my strategy is to wait for prices to fall and in the mean time save save save. I think this is a good strategy because deflation is improving the value of my dollar. What sucks is that it is going to take a long time before house prices finally level out. In the mean time I’m living in a shabby shack. My gold stocks are a hedge against financial uncertainty and unexpected inflation.
I’d like to buy a nicer house now but prices aren’t coming down fast enough just yet. PS I live in New Zealand
November 16th, 2008 at 11:27 pm
15 reasons the US economy will get worse: Link Here
November 16th, 2008 at 11:37 pm
Just got back from Bond Movie. Theater was packed. Best Bond opening ever. Consumer obviously isn’t feeling the pain just yet.
Anyway, we’ve got a lot more pain to go in the real economy. This baby is consumer driven. Lumps of coal for everyone.
My wife and I are now including in our financial planning the very strong reality that one of us gets laid off and stays out of work for 10 months. That’s harsh stuff, but we’d be silly not to plan for it.
November 16th, 2008 at 11:39 pm
I’m one to say we’re very very very close to the NBER admitting we started a recession in November/December/January. I’m fully guessing this will cause the stock market to skyrocket for absolutely no reason beyond stocks being oversold. GM gets bailed out soon, yes, most definitely. And oil…going back up to $95 by early spring 2009 before it plummets back to $40 by late 2010.
November 16th, 2008 at 11:40 pm
I have no idea. Still trying to decide whether to trade or watch. I’m almost completely in cash, and moved to that stance far later than I should have.
Everything I see tells me that we have farther to drop, and will follow earnings lower, with municipalities and states trying like hell to avoid default in the coming year. Perhaps the TARP will cover them too. Plenty of national turmoil across the Atlantic, what happens to globalization if the EU comes apart and trade barriers start being erected?
OTOH, the lesson from last week (when I incredibly did not lose any money) is that we are prolly NOT in any kind of near-term trend, but are instead in a turbulent, chaotic period that will be very difficult for me to surf. I’m no day-trader.
November 16th, 2008 at 11:41 pm
My folks are asking me the diff tween 1080i and 1080p – and they’re asking if laptops will get cheaper in the next 6 months, so they’re starting to bargain hunt on big things. At the same time I’m pretty much putting off any new job-hunting and staying put for while.
I predict continued side-ways chop with plenty of 2% overnite gaps. We’re all afraid to miss the boat or catch the falling knife while staring at bottom-signs and reasonable p/e’s within an overall downtrend the morn after sleeping on our cash-stuffed pillows (which start to harden knowing the inflation we’ll see in a few yrs).
November 16th, 2008 at 11:43 pm
I’m planning to buy a shotgun to protect my home. And some gold metal so I can eat.
Selling stocks.
Looking for books on being a carpetbagger… that’s sorta like the reading books about Lincoln thing.
Let’s see….. hmm what else.
Oh yeah Google has put 1/3 of their new building up the street up for lease instead of filling it with new employees.
I heard someone say Seattle is now “Miami North” in the coffee shop this morning
I should probably stop … sweet dreams all
November 16th, 2008 at 11:49 pm
Opened the newspaper this cool Sunday morning and it was filled with sales, sales and more sales. Everyone from cars to homes to electronics is lowering prices. This will continue I predict – along with the fall in oil; a very deflationary environment.
Since sales will not pick up, more retail stores will go under and announce lay-offs. Unemployment will continue up. More companies and city & state governments will seek an Uncle Sugar hand-out – but nothing for GM this year. Stocks will go up then down, but generally down. The activity now is in the downward pressure of commodities and the increase in interest rate spreads. The U.S. is broke, as are its consumers – which is slowly sinking into the American mind. Much like a waking nightmare…
November 16th, 2008 at 11:58 pm
The good news is that heating oil is close to what it was last year at this time.
The bad news is that my mother, who is 70, just told me she has lost $16K on her pension fund.
November 17th, 2008 at 12:03 am
“The cost of living in the U.S. likely tumbled in October”
Not really. Citibank charged me with a $10 fee to “wire in”. I think that’s a new one. To charge a fee on wiring out, I think they’ve had that for a while. But what work are they doing or have to do when someone brings money INTO their bank??? As a U.S. Taxpayer and them getting bailout dough from my pocket, what right do they have to bleed me for an extra $10? Maybe it’s time to move the accounts over to B of A; at leats their stock price is further from zero and therefore, hopefully, less likely to test the FDIC claim process.
November 17th, 2008 at 12:06 am
By the way, fyi the upper end mall nearby, Old Orchard in Skokie, IL. (think Nordstrom’s and Macy’s, etc.) was a zoo this past Saturday. No sign of an economic slowdown there.
November 17th, 2008 at 12:07 am
Well given that our Presidente-Elect went on “60 Minutes” and declared that he’s going to ignore out Mt. Vesuvius-sized deficit in favor of continuing the disastrous policies whereby we randomly throw money at whomever the dart lands on, I have no faith that we will get out of this quickly. So much for sacrifice, huh Barack. Unless, of course, by “sacrifice” he meant that we are all going to get completely screwed when the Barney Fife of Fed Chairman finally succeeds in crashing the bond markets because he has absolutely no idea how markets and economics function in what is known as the “real world” and instead prints and borrows money until nobody will lend it to us anymore. Which means that when he does crash the bond markets, our cheap financing of the Mother of All Bailouts will cease to be cheap, cease to be a bailout and we will all be crying for out Mothers. Which then means that all of these empty shell companies who should right now be bankrupt will be bankrupt anyway, but it’ll take longer and trillions of dollars of our money which won’t be going to things like, you know, social security, building roads, paying cops and fireman and other apparently unimportant stuff. And so the Nasty Recession of 2008 will turn into the Fugly Depression of 2009 and Beyond. And because we’ll be completely broke, a recovery will take that much longer and will leave even more people, broke, unemployed, without retirement funds, healthcare and hope and our economy without a firm base from which to grow. Thanks, fellas. Christ, why don’t you just set off a nuke on the White House lawn and get it over with.
OK, so that was a bit tongue-in-cheek – but not much. It is apparent that Obama has as little a clue about the economy as anyone else in Washington right now. Big surprise, since these clowns have collectively caused this mess. Unfortunately, I believe the best hope we have is for things to actually get so bad that Americans will finally wake up and realize how rotten our political and economic structure is in this country. Things are just plain broken and terribly so. Washington is completely morally bankrupt, as is Wall Street. Congress has absolutely no interest in solving any problems. If they did, they would have taken action to do so, rather than throw money in a panic, refuse oversight, refuse to actually enforce the law and actually ask some freakin’ questions.
Instead, in what is a very serious moment in our history, nobody’s asking any damn questions. Nobody’s skeptical. Nobody wants to take time to think things through. They’re all still under the delusion that somehow we can continue “growth”. Jesus Christ, are you freaking kidding me? And they’re listening to the same clowns (Bernanke, Paulson, themselves) who have been dead wrong for over a year, who missed the entire bubble and are now making it worse. God forbid, they actually consult with some folks in private business who actually saw this thing coming and might actually have some good ideas as to what to do about it.
Our government is under the delusion that we can continue to get something for nothing. That we can continue to borrow up to our asses and it will no effect because the U.S. is the Big Swinging Richard of modern times. Obama called on Americans to “sacrifice” in his acceptance speech, but so far, all he wants is more free lunches and failed policies. You’d think one of these ding dongs would actually pick up a history book. Maybe then they’d understand that what they’re doing has never worked. Not once.
Unfortunately, Americans are still anesthetized. I have many friends who still, after an almost 50% crash in the markets, the failure of the global banking system and the collapse of every economic number conceivable, think that maybe we’ll have a recession or something. I’d say about 98% of Americans still have no clue as to how serious this is. And what’s more, they don’t care. They still seem to think that all they have to do is hold onto their 401K’s and it will even out in the end. But in the end, as was famously said, we’re all dead.
November 17th, 2008 at 12:30 am
Any more anecdotal evidence of serious shopping activity at upscale malls? An ounce of that sort of data is worth a pound of emotional fears.
November 17th, 2008 at 12:30 am
Well, a family friend mentioned that he pulled $500,000 out of his “investment” properties in the past 4 years before he lost (or will lose) them all, and he “had a blast.” Nothing left of course. Just one guy who hasn’t had a job in years, and lived in a small apartment until the genius brigade decided he was a good risk to buy a couple million in property. He said it was “the banks fault.” True story, couldnt’ believe it.
Beyond that, there was this remote control train at TOYSRUS (sorry couldn’t figure out how to reverse the R) that was $29.00 two weeks ago when I put it back on the shelf, dropped to $22.00 this week and coupled with the $10.00 cuopon that came in the mail cost only $12.00. So what you ask? Well, there is a certain 20 month old little boy who thinks this whole deflation thing is working out great for him.
Then there is the father in law that just got a new Crysler 33% below list today. So, on the bright side-we Americans are still buying our plastic toys and muscle cars, we just pay less.
November 17th, 2008 at 12:34 am
Predictions for this week:
- Oil stays stable… at least I’d expect it can’t go much lower with winter heating demand and worldwide supply decline. (Even with supply cuts being framed as “we want to boost prices” as opposed to “we can’t produce more”.)
- DOW touches 8000 again. And perhaps falls below 8000 for real this time?
Really, I don’t know. My prediction record (in general poor) has been especially crap this year. I really have no idea what’s going on economically.
November 17th, 2008 at 12:40 am
Upscale retail malls are taking a hit. Simon Properties, which owns a lot of these upscale malls has taken a hit. A client of mine who made most of his money building shopping centers and still keeps up with the industry has told me that all mall developers – but upscale and lower end – are all having serious problems right now.
November 17th, 2008 at 12:44 am
Does anyone have any historical accounts of how past deflations came to an end? The only one I know of was the Great Depression, and it took the complete self-investment of the American public in WWII to break the deflationary mindset. I know that other deflations have occurred, but have no clue as to how they eventually ended. Presumably they did not require national commitments to global wars.
Deflation, like inflation, has both a monetary component and a psychological component. Neither can be altered by addressing only the monetary component — just ask the Japanese.
I think that Ben Bernanke is coming around to that realization.
November 17th, 2008 at 12:52 am
I said it on another thread but I’ll repeat it here. I’m predicting the mainstream news media will have a lot softer tone now that the election is over. I expect fewer stories about crisis and more stories about new found economic recovery. We may even see the Roubini’s of the world get less screen time(but still some) now that their function has passed.
To put it in perspective I wouldn’t ‘trade’ that call but I might paper trade it. Since it would be very hard to track I suppose you can only check your own perception of the news cycle going forward
November 17th, 2008 at 12:59 am
Start printing.
I opposed the Fannie/Freddie mother-of-all-bailouts. But, like McCain once tragically said: “we are where we are”. Once our government took that step, we must continue with the plan. (As has been said as well: “when you find yourself in hell, keep going.”) So, at this point, I’d like to say: let’s print already!
Look, everyone was betting against the dollar. Some overextended. The tide went out and some people have been spotted naked. Some of the excesses have been written off. Some people have gotten hurt. (Not enough of the bad apples. Yes, I know.) But, markets are tanking everywhere because of the dollar’s resurgence. It’s killing trade. It’s time to take the dollar back down.
Printing isn’t going to give us “something for nothing”. I’m not that stupid. But, won’t it convince a FEW people — at least those with fixed interest rates — to not walk away from their mortgages (because the houses will start increasing again in nominal terms)? Won’t that prevent some more of these CDO’s from becoming “non-performing”? NO OTHER POLICY will stop the slide of housing prices.
And as the dollar depreciates, it reduces the cost of American labor. *Some* jobs will stay in the US as a result. NO OTHER POLICY will stop the hemorrhaging of jobs other than by making our labor cost-competitive with the rest of the world. (Yes, it’s sad. But, you don’t think our labor will stay ahead because we’re smarter or somehow gifted, do you?)
Start printing.
I know imported goods will rise in price. Oil will start rising again. But, that will hasten our move to clean tech, which is where we want to head anyway.
Start printing.
In his Op/Ed, Buffett told Americans he’s buying stocks because government policies will make it inevitable that “cash is trash”. The only way to stop this continued liquidation of all debt is for the government to make it so. The alternative is: everyone takes continued declines in their 401k’s as every company with any debt finds itself unable to service its debt. As ugly as inflation will be, it’s probably “less ugly”.
We all knew our government’s fiscal policies were reckless. Either we literally default on all our debt OR we guarantee it but technically default on it by printing. But, there is no “in between”. Once we backstopped Fannie/Freddie, for better or worse — and we’ll eventually find out! — we must continue with Bernanke’s experiment.
Start. Printing.
November 17th, 2008 at 1:09 am
Any more anecdotal evidence of serious shopping activity at upscale malls? An ounce of that sort of data is worth a pound of emotional fears.
~~~~~~~~~~~~~~~~~~~~~~~~~
Went to the Mall of America with the wife this Saturday and last — drove around forever to find parking (I think they have something like 20,000 parking spaces). A lot of folks I saw in the mall were doing more than window shopping, kept thinking to myself, wtf? did I blinked and missed the recession?
November 17th, 2008 at 1:20 am
Fear rules the day. The dumb money (you know, the herd – institutions and mutual and hedge funds) is always afraid to be left behind. Both on the way down and on the way up. It has been the race of who can sell more stuff faster up until now, but it appears the point where the market decides to torture the herd on the way up is close by. Of cource, tripple bottom (low, test, and retest) and all that, it may be that this is just a half way stop on the way to 5000 or so on the Dow, but that would mean that the markets assume that capitalism is dead, but judging from G-20, we are not there yet.
November 17th, 2008 at 1:31 am
By the way, what I’m doing above is: trying to convince myself of the “merits” of the policy trajectory we seem to be taking. I’m certainly not married to the position. (Actually, we only “just started seeing each other”.)
November 17th, 2008 at 1:38 am
One quote for GM:
“Insanity: doing the same thing over and over again and expecting different results.”
- Albert Einstein
So are those who are ignorant of history not only ignorant but actually insane as well?
November 17th, 2008 at 1:44 am
Start Printing?
Got news for ya. We’re printing up a storm. The dollar is rising because other countries are printing even more! Guess what, a race to the bottom to see who can outprint thy neighbor is a suckers game and exactly one of the problems that exacerbated conditions during the Great Depression – beggar thy neighbor trade tactics including tariffs, trade barriers and currency devaluations (FDR seized our gold @ $20 per ounce and then devalued the dollar @ $35 an ounce).
Another economic point. Rising and falling prices are laymans understanding of what is Inflation and Deflation. In the real world inflation is an increase in money supply over and above what is demanded in the normal course and Deflation is the contraction of the money supply under said conditions. In normal situations inflation eventually manifests itself in higher CPI prices. But not always. This is especially true when gold is not an anchor and a bubble is popping. What can happen is asset prices can fall while paper money is being printed. It looks like prices are falling, but people’s ability to buy things falls because their income and borrowing capacity is falling. For example, house prices in general have fallen 20% this year. Is the avg house to the avg Joe more affordable now or was it more “affordable” 2 years ago. Now you need twice as much resources to qualify for and fund a house purchase (higher down payment, higher interest rate, higher credit score based on things like income and existing borrowing o/s). So house prices in fact have gone up on a relative basis. Voila! Inflation while prices are falling. Believe me, in the next year people are going to find more and more things completely unaffordable, whether they have a job or not, even though prices in general may fall. Of course, there will always be anecdotal stories of people making a killing buying “cheap assets” but only because they husbanded their purchasing power both during and after the bubble burst. Don’t let the politicians fool you into believing this is because these people were “hoarding” and are now taking advantage of “other people’s misery” to stop them from buying these assets (therefore destroying the purchasing ability of people who will be the only buy side – ie see banning short selling). Also don’t let them fool you into thinking that “inflation” will be needed to counter “deflation”. These are the same people who are already using inflation to rob you blind and convincing you to beg “please sir, may I have another [inflation]” so they may continue robbing you.
November 17th, 2008 at 1:47 am
Oh, anecdotal data point: Costco was packed on saturday afternoon, plenty of flatscreen sets in carts and on pallets, as well as electronic equipment etc. I was queued for 15mins or so, 12/15 registers open. Tedious, but they charge more than $1/gal less for milk than the local stupormarket, and a good set of their stainless steel pans was less than replacing my one good nonstick at Williams-Sonoma (and at this point I cook enough to start worrying about teflon toxicity, and frankly I wanted something I could stick in the dishwasher!)
November 17th, 2008 at 1:53 am
@KC:
Of all the posts, yours stuck with me for a bit. I’ve been asking myself if there’s any reason to see a strong bear rally as we head into Dec. I end up saying no. The only thing I want to hear from the NBER is that they think housing finally hit a bottom. Since problems in housing are only getting worse (job loss means bleeding into prime and near prime mortgages), I don’t see acknowledgment as having much impact amidst a hurricane of bad news. As for GM getting bailed out – of course it will – and it should. The consequences would be dire. So long as the loan has some enlightened conditions attached, I’m good with it. Regardless, I don’t see that driving anything but a 200 point intraday rally, if that.
November 17th, 2008 at 2:16 am
Since the only things that could have come out of the G20 farce were bad, I’m going to call ‘nothing done’ at least a small miracle and maybe a big one. Maybe I won’t have to hear a bunch of insufferable self-important know-nothings until World Economic Forum season rolls around, but that is probably too much to hope for. Oh, and I think NBC has yet another vomit inducing Green Week scheduled for Boobus. Another reason for me to be thankful that I’ve accidentally ended up watching less than two hours of TV per week over the last few months.
Other than that, my buys and sells for my weekly system are all placed, as are my dailies for today, so I’m ready to get out there and lose some money! But now it’s time to go back to bed for awhile. Maybe one day I’ll move closer to the London open.
November 17th, 2008 at 2:48 am
If the bank index closes under its recent lows, and its pretty close right now. I would say ‘it’s all over Red Rover’
November 17th, 2008 at 2:52 am
Heard AT LEAST 10 times in the past week:
I’m not a trader and I don’t want to be as I don’t have the time/interest/expertise. But I recognise that buy/hold is a mugs game. I just want to invest money for my future security at a reasonable rate of return. I’m not looking to make a fortune, just a safe and reasonable return.
Looks like cash or…? And I suggest that the answers to the “or” will be very important to the successors of Wall Street in the next 5 years. People are sick of the volatility and don’t want to participate any longer
November 17th, 2008 at 3:27 am
Low and behold the malls of Allentown and the Best Buy of Allentown are alive. Considering a majority of the population of Allentown area is hispanic lower middle class that’s a good sign. People calling for doomsday scenarios are likely to get one heck of a wake up call; especially those short the market.
Now, I don’t know if all areas have the same people out and spending and of course the postiveness can fall apart in a second if the media keeps feeding negativty. Bond having a big box office showing I think show’s the general population’s attitude.
November 17th, 2008 at 4:46 am
C CEO bought 750k shares last week so if this town hall meeting is about job cuts how could that insider purchase be legal considering he likely knew they were going to do job cuts ahead of time? Seems the media might have this one wrong.
November 17th, 2008 at 5:58 am
Well, clearly the ‘financial crisis’ is in the air everyone is breathing now.
The G-20 came out with little more than ideas to ‘prevent’ another happening.
We’ve passed the point when people are suggesting that we have any way to stop the avalanche into Main Street.
Anyone who buys food knows prices continue to rise despite cuts in clothing prices, gasoline, toys and gadgets.
Job losses are becoming fearfully familiar occurances as the holidays approach.
It’s that awful feeling you get when the Flu is about to hit you and you know all you can do is ride it out.
Government is really doing the same thing. It can’t solve the problem, but can’t be seen not to be trying.
So they’re strategy is tried and true….
Muddle thru behind the razzle dazzle of a one or two trillion dollar ‘effort’, plenty of hearings to entertain and distract. We are dealing with a crisis forty years in the making.
The good ship Titanic on which we have sailed has hit the iceberg and there are just not enough lifeboats.
If you need to keep busy, start rearranging the deck chairs.
“plan”.
November 17th, 2008 at 7:17 am
I think what interests me this week is the Auto mess…I see that the unions don’t want any further cuts and that management doesn’t want to lose their jobs…imagine that….
This looks like the same ole same ole to me…I think it will end badly…
If the Japanese are paying US citizens half what Detroit is paying at each other’s respective factories…even if Detroit gets bailed out, they are doomed. Their cost basis must come down, or you are merely prolonging the inevitable…
November 17th, 2008 at 7:54 am
The economy was all consumption; consumption was all credit; credit was all housing; and all of it is never coming back. What’s left is a hollow shell of a country and sooner rather than later that reality will be priced in to the market. We have seen the “credit crisis” lows — maybe — but not the recession/depression lows.
November 17th, 2008 at 8:29 am
Watching the banks. As goes the piggies…. BKX could break down this week. Also, GS, JPM, BAC and C trades very week last week.
Emerging market and their currencies: We have not seen the endgame yet on Russia, Eastern Europe, China and India.
The British Pound getting pounded. Trades worse than the Ruble. This is what, the fourth biggest currency out there and it’s sinking like a stone. Down 35% vs the yen and 25% vs the dollar in just four months.
Energy stocks. At some point investors will all run for the door if oil keeps collapsing and credit stays tight. This is one of the most capital intensive industries out there, democrats hate it, alternatives are emerging and OPEC + Russia could collapse if we go much below 50.
Stocks that trade below cash minus liabilities. Some farming and food stocks trade at these levels and I’m warming up to them. HQS is my favorite play, but FEED and some of the little known farming stocks out there could work at some point when the hedgefunds are done selling.
Option expiration week. If I recall correctly the last two months “they” held up the market until the end of Q3, then dropped it like a stone. Then a bit of mixed trading and dropped hard again during option expiration week. Then took it up for month end and kept it up in early November when the shorts feared the Fed meeting and the election. Then bank to dropping hard again. And now we have another expiration week and if I’m right that the trend is down and if expiration week gets brutal again, then this could be a very ugly week for the bulls. I see everybody is a chart watcher these days and the bulls are not “can I feed my kids”-scared but just trading smaller and discussing if we get a year end or a January rally. It’s hard to see what Ben and Hank can pull from their hat at this point. I expect an ugly week.
November 17th, 2008 at 8:30 am
re: the full malls. This has me confused and worried most because of the ex’s behavior. I’ve been out of a job for nearly a year. That’s with a J.D. and a gov. clearance. We’re plowing through the retirement. And she can’t (not won’t) can’t seem to moderate her lifestyle beyond not buying dessert at Panera. When things are worst, she has this irresistible urge to go shopping (thank god it’s at food stores, not department stores, but hey. . .).
I am scared that this will not unwind, but rather it will snap. One day, one discreet, sunup to sundown day, tens of millions of people will go from thinking life is fair, good, and worth living to life is solitary, nasty, brutish, and short. Before that day, we will blog, shop, commute, and after that day we will hide, starve, and fight.
November 17th, 2008 at 8:34 am
Chicago suburbs: The wife went out to eat at nice Italian joint with her friend on Wednesday. They had reservations still had to wait. The wife went shopping to Oak Br0ok mall on Sat. said place was very croweded. Lots of discounting though. Friend went out to eat on Saturday could not get a reservation anywhere. Realetor friend needed to clear her balance sheet sold a starter home she owned for 8 years. Was dissapointed that she made 100,000 instead of 200,000 that she could have made 3 years ago.
Phizer looks like a buy.
November 17th, 2008 at 8:34 am
My instincts were telling me that too many people, including our own BR, were in the “trading range play” of SPY 840-1000 [or DOW 7800-9500 if you prefer], yet it seemed to have merit, and I put the trade on last week. Unless we have a massive reversal off the futs in 1 hour, we break it. I use all sorts of tools–including technicals [which i don't pretend to be an expert in], but I’m pretty sure there is no such thing as a “triple bottom”…
Barry–[and BTW i am very much in the camp you can do what you want when you want and it's too bad for anyone else]– by all means gloat if you called this one [you were "meaningfully buying" as per a few posts ago], but step up and be the goat if wrong! [I'm hoping for the former BTW]… but the failure of the follow through Friday makes me dubious.
The only positive is everyone is so negative–
November 17th, 2008 at 8:55 am
The salt mine opens in 18 minutes, but I do find the posts here interesting. The foot traffic at the malls…I am not sure how that reflects the reality of money spent…I would have to see the numbers…certainly Best Buy and Lowe’s think we are going to have a bad Christmas…..
http://dailybriefing.blogs.fortune.cnn.com/2008/11/17/lowes-sees-deep-sales-drop/
I have also as H.T. states accepted the abundance of negatives as a positive all my investing life, because I was told that was a contrarian indicator…smart people who do this for a living think when sentiment is overwhelmingly negative, then things should get better…I understand it, and in most cases believe it…
I am wondering if this premise has a dislocation this time…if the fact that the developed world and the developing world are all in recession simultaneously, and that because the consumer stated in a much different financial basis (over-leveraged, etc.) that the consumer will pull back just when we need him or her to spend…they may think differently this time…
Is it different this time? I didn’t think so with Volcker, or the tech bubble…here I am not so sure…
November 17th, 2008 at 8:58 am
@H.T.
I agree with you. But didn’t we set a new low in SP500 last week (intra day). Is that the new low to be tested. Hence no triple bottom but a test of a new bottom?
November 17th, 2008 at 8:58 am
I am still in the “trading range play” until it breaks. Why? Because nothing else makes much sense right now. I will tell you another thing: the world is not ending and everyone is printing. Wunsacon said that they have to stop the $ rising and I think they know this and it was a major talking point at G20.
November 17th, 2008 at 9:09 am
Negativity again seems to be at extreme levels with almost everyone thinking the market is heading much lower. Are we closer to a substantial rally than most think? I believe yes and plan to use this morning’s weekness to cover my bank shorts which I think are even more oversold than the general market (at least in the short term).
MP
November 17th, 2008 at 9:20 am
@ MP: I could be completely wrong about today but I agree with your perspective. I also think that some of what we saw late Friday was people getting out of positions b/c they had no idea what the G20 clown show might produce and didn’t want to wake up Monday on the wrong side of the trade. Logic suggests that we are going to see a reversal in the $ very soon if the EM markets are not going to be destroyed. So I am sticking with my thesis of a resurgence in commodities and I am going to trade this range until I get rich or it kills me. At some point we are going to see some news that is less bad than what we have been seeing recently, and that may be all it takes to spark a rally. Will I sell when we see SPX 1000 coming overhead? You bet.
November 17th, 2008 at 9:21 am
“Bond having a big box office showing I think show’s the general population’s attitude.”
Movies are escapism, which should do well in a downturn. Like alcohol and gambling, which are also booming.
I don’t think of shopping as entertainment, but I get the sense that others do. Perhaps people are escaping to the mall. Ours was quite joyously decorated, I’ll admit, so perhaps that helps make it a draw. Like xon pointed out, some people shop because they are stressed, even if they are already in debt. So a mixed sign.
November 17th, 2008 at 9:40 am
Here’s a little guess…All those perma-bulls who have been telling us to focus on the Core CPI number are going to tell us to do just the opposite when the number is down due to drops in commod prices.
November 17th, 2008 at 9:49 am
A lot of buying (and selling, of course) in UYG… big chunks changing hands.
just sayin’, hmm…. watch out shorties. i am going to take a little bite of that action.
November 17th, 2008 at 9:54 am
short and sweet. Goldman senior dudes(duds) not taking bonuses. What a crock LOL. this is unearned money anyway. what a ridiculous spin the media puts on this rubbish. NO bonuses should be paid to anyone. retain talent. what a laugh. where are these propellor heads going to go. as a matter of fact bonuses should be paid back from 2007 when every wall street firm marked up their toxic assets for the big payday before the collapse. completely pathetic and disgusting. burn them to the ground
November 17th, 2008 at 9:57 am
“The only positive is everyone is so negative–” H.T.
or, conversely, it’s negative that too many aren’t negative enough..
xon: “..that this will not unwind, but rather it will snap. One day, one discreet, sunup to sundown day, tens of millions of people will go from thinking life is fair, good, and worth living to life is solitary, nasty, brutish, and short. Before that day, we will blog, shop, commute, and after that day we will hide, starve, and fight.”
two things, one, the ’snap’–the dislocation from here to a ‘different’ level…it’s the greatest risk that too few seem able/willing to discuss.. (kennycan, above, was the only one beginning to draw it out)
and, two, the escapism/self-delusion factor attendant with ‘Movie Going’/ ‘Shopping’–we know that the Nickelodeons made Millionaires in the ’30’s, the ‘retail-therapy’-thing will have to find a new outlet (no pun intended)..
as I’ve asked previously, Who’s got bets that the U$D sees 2011? now, I’ll ask: Who’s betting the U$D sees 2010? (note: how are we going to rollover this burgeoning debt-mountain?)
November 17th, 2008 at 10:28 am
@ Mark: Get short the 10-year, HT outline this on the weekend and I think it is a great trade. Have a great day everyone, see you at the close.
November 17th, 2008 at 10:30 am
MEH — I’m not so sure about the dollar. The election generated global confidence in the ability of the US to mend itself. It wouldn’t be surprising if, on the next panic, the rush back to the dollar accelerates.
November 17th, 2008 at 10:32 am
Y0u do realize, don’t you, that the bailout package is more than the entire cost of the Vietnam War, even in inflation adjusted dollars……you do realize that, don’t you?
http://www.cnbc.com/id/27717424?slide=12
November 17th, 2008 at 10:36 am
Yes, but do we borrow or monetize?
November 17th, 2008 at 12:24 pm
rww @ 10:36
Borrow now, monetize and tax later
November 17th, 2008 at 12:34 pm
Nouriel Roubini is the next bubble to burst.
November 17th, 2008 at 1:56 pm
Have you noticed that since Dr. Hussman took off most of his hedges and started buying long positions, he’s gotten kicked in the teeth?
http://finance.yahoo.com/echarts?s=HSGFX#chart1:symbol=hsgfx;range=3m;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
Falling knife cuts even the smartest bubbas….
November 17th, 2008 at 2:25 pm
Shorting long-term treasuries is what Jim Rodgers is doing. The yield curve is begging for it.
November 17th, 2008 at 3:09 pm
When traveling in a leaky boat, it is best not to ask the people at the helm or economists about how to plug the holes. It is also infinately better to be in a state room than a lower berth.
November 17th, 2008 at 3:20 pm
I’m taking long walks in the Texas Hill Country while waiting for better trading opportunities. Today, Monday 11/17, was clearly a snoozer from the get-go.
While I’m biding my time, I’m also wondering why the U.S. gov’t hasn’t yet figured out how to solve this mess, because frankly it’s not that hard.
The two-step process (think they’ll name a dance after this?): (1) Nationalize the banks that are giving everyone heartburn and/or stomach ulcers, and (2) Sell the clearly excessive amount of land holdings that the U.S. owns in the West to re-capitalize the banks.
Any other world problems need solving today? Beautiful day outside in Austin…think I’ll go for a second walk.
November 17th, 2008 at 3:42 pm
I predict that we will have a large number of insurance companies turning themselves into banks. With congress talking against spreading the bailouts to other industries, that is the only way they can get money to deal with the fact that all their AAA rated bonds (backed by BBB rated assets) are worth next to nothing.
I am with wunsacon when he says “start printing”. I would be even more specific and say start printing stimulus checks and send them out to everybody every 2 months until we have killed the deflation beast with some consumer-driven inflation (and stick Benancke in a sack and tie it up, while we do so). The only way out of all that debt is to inflate it away. If the dollar dies in the process so be it – at least we will get our jobs back from India and China.
November 17th, 2008 at 4:18 pm
Conspiracy Theories just make reasonably simple things too complex. “They” do not exist. Existing is the status quo, the powerful, and the vested interests. They may be a wee bit better informed but they are no smarter than the rest of us. They are not out to rip the rest of us off, they merely perpetuate a system they believe in. They believe in the system because it works for them. They will never see it as other than a good system. Why would they. Change will only ocure when the keys are taken away.
Having said “They” do not exist I’ve found no other good term for them. I guess you could call them the modern Zars or Aristocracy.
November 17th, 2008 at 4:37 pm
Down another 200…yawn…..
same ole same ole….
November 17th, 2008 at 4:38 pm
“Shorting long-term treasuries is what Jim Rodgers is doing. The yield curve is begging for it.”
-TrickStyle
like lb was mentioning, on the ten-year..
has to be the next, actually starting, big trade..
tho, lb, why not (shorting) long dated zero-coupon Treasuries, or the Futures contract on 30-yr UST-Bonds?
November 17th, 2008 at 6:00 pm
The one time I wanted to be on-topic, and all you have left for me is an open thread.
Oh well, did anyone else catch the pimple under Margaret Brennan’s nose today? What the hell? Wash your face regularly, Maggie B.
November 17th, 2008 at 8:05 pm
shorting long term treasuries and treasuries will be the trade that carries out the geniuses who remain oblivious to the issues that the globe faces. there is ZER Oinflation and i expect near zwero or negative CPI by sometime next year. Dopes have been shorting the JGB 190 year treaury for years on end and have gotten run over by an incoming freight train and i expect the same to happen globally particularly in the good ole USA. good luck with your treasury shorts and i hope you are well capitalized
November 17th, 2008 at 10:13 pm
Barry, love the open thread. Perhaps there could be a daily open thread for all the OT stuff people want to talk about? What’s on your mind? What are you trading today? Etc.
November 18th, 2008 at 2:09 am
Shorting treasuries hasn’t really worked but at some point (soon) they’re going to implode. I believe a plunge to new lows is right upon us in the SP500. My reasoning is here: http://www.economicdecryption.com/. Technically, it won’t be surprising if oil and natural gas climb during December.
November 18th, 2008 at 7:35 am
The insurance companies are already “bankers”. They are ‘invisible’ but do many of the same things as bankers already. A complete transition would be a non-event, merely reconciling fiction with reality.
The way insuracne companies get the funds to invest like bankers is thru the use of the Reserve for Future possible liabilities, a fictitious number based on some pretty lame math. It lowers their net income to avoid higher taxes.
November 18th, 2008 at 2:57 pm
GM should go find a cheap bank to buy, change their name to General Motors Slaving and Loan, then apply at the Fed and Treasury windows!