Its now at a 4 and 1/2 year low. (That’s enough of a reason to rally by itself)
chart via barcharts
Oil continues to freefall as the deflationary cycle plays out.
"My formula for success is rise early, work late and strike oil." —John Paul Getty
Consumer Credit outstanding fell $14.8b in Sept seasonally adjusted, almost $5b more than expected and marks the 11th month in the past 12 of declines. At $2.456T outstanding, it is 4.9% below the record high in July '08. After a flat reading in Aug, (didn't fall b/c of the CARS program), non revolving debt outstanding fell by $4.9B. Revolving (mostly credit cards) balances outstanding fell by $9.9B. To fully put into perspective today's data, look at the current level of consumer credit (doesn't include mortgages, the biggest chunk of consumer credit) relative to GDP. As of Q3, it totaled 17.2%...
read more »
December 5th, 2008 at 3:15 pm
The $25 Merrill call may end up looking as stupid as the $250 call from Goldman.
All these guys know dick so why don’t they shut up?
Watch out for oil when the $ turns downwards after the latest edition of Bailout Nation..
Look for the oil/gas stocks to bottom before crude, even before the $ starts to move down.
All the tools who bought the 10-yr at 2.50 this morning must be crapping their pants.
Well done, mate!! Absolute bloody genius. Exactly what reward was there in that trade???
Sold my SRS at 11, went long and have had a very nice day indeed.
December 5th, 2008 at 3:21 pm
Natural gas, however, may be on the verge of hitting at least a temporary plateau.
December 5th, 2008 at 3:23 pm
Can anyone exlplain to me why the market is up almost 200 after the jobs report this morning? What am I missing? If I wanted to be sarcastic I’d ask why the Dow isn’t up 500 on the jobs numbers.
December 5th, 2008 at 3:26 pm
@ Calvin: Here is what I wrote yesterday:
“tomorrow could be one of those days that the average joe just doesn’t understand. they might print a -450,000 NFP and the market may actually rally b/c we already had the sell off this afternoon.
technically i feel better off being long than short here. plenty of room up to the 890 area.”
Andy Tabbo was all over this as well and so was Borchers.
December 5th, 2008 at 3:36 pm
Low volume, stupid rally going on that has taken 10 day put/calls to yearly lows. Sell all long positions in equities immediately.
December 5th, 2008 at 3:37 pm
Isn’t this around the price where some Canadian oil shale becomes unprofitable?
December 5th, 2008 at 3:39 pm
Anyone else scarred by Oil at $40? If not ponder this. The march contracts on corn where set at near record levels. Who will pay? If no one pays is the farmer screwed? If ethanol is unviable and it is at $40 a barrel. Who needs that much corn? What will russia do? It wasted a third of its total reserve trying to help the ruble and it needs oil at $50 just to breakeven? What about Venaz, What if they default on there debt cause they need oil at $50? What about Mexico who’s govenment is fund almost exclusive on Oil? What about Iran,Iraq and the rest of the mideast? What if all the govenments become destabilized?
Scared yet?
December 5th, 2008 at 3:39 pm
I’m with Steve B. Wouldn’t touch this market with a ten-foot pole.
December 5th, 2008 at 3:41 pm
Barry, excuse me if this was already posted. This story about China raising gasoline tax may have had something to do with the fall in crude. There is also the probability of some unbelievably clueless hedge fund still in the process of unwinding some idiocy from June…
http://www.marketwatch.com/news/story/China-raise-gasoline-tax-five/story.aspx?guid=%7B417A50BB%2D2E4E%2D4BB8%2D8C17%2DAA8431743446%7D
@ Steve, AT thinks there is actually significant UPSIDE risk just now. Any automaker deal gets done and we are off to the races. The Treasury market is starting to look a bit nervous….
December 5th, 2008 at 3:42 pm
I’m more in S.B.’s camp than A.T.’s, at the moment.
I still think we can see SPX 800 before 12/31/08.
December 5th, 2008 at 3:42 pm
Not suprised that we’re rallying here. Said before we could rally into year-end a bit but early ‘09 (probably sometime after O’s inauguration) is going to bring us the other leg down, which will be in more brutal than the few.
Kudos to jmborchers (although he did predict 220K jobs lost, which was way off) and AT on this one though.
December 5th, 2008 at 3:42 pm
It is oil sands, big diff.
All the mid east oil has higher breakeven than Can synthetic crude.
It is all cash flow now baby.
December 5th, 2008 at 3:43 pm
Leftback:
Are you sure you feel better being long here?
There is no way the economy does anything except get weaker over the next 6 months…you didn’t ride the short bus when you were going to school, so now you are telling me you are playing the market and trying to guess the 24-48 hour trend?
Say it ain’t so…
December 5th, 2008 at 3:45 pm
I think this rally could continue for a while, irrationally overshooting to the upside, which is why I’m not selling my longs just yet. Going to take a wait and see approach. As usual, none of this is due to any type of fundamentals whatsoever. Things are going to get far worse before they get better no matter what the Feds do.
Waiting for more strength before I sell most of my non-retirement accounts logns and put most of it into SRS and QID (and smaller chunk into EEV). Still have a small GDX holding as well.
December 5th, 2008 at 3:50 pm
@ Bruce: I am never long the overall market. Trading around a core position in commodity stocks.
December 5th, 2008 at 3:53 pm
@ leftback: Good post yesterday afternoon. I’m one of those average joes who’s scratching my head ’til it bleeds right now. Took a bath today, don’t have the balls to take losses here. I’m with Steve Barry for a little longer here – today was ridiculous. You can’t tell me this is optimism – I’m not adept enough at tracking outflows from Treasuries, but is this a case of people moving money out of t-bills and just needing somewhere to put the money? What drove this today?
December 5th, 2008 at 3:57 pm
garthdbrown Says:
December 5th, 2008 at 3:42 pm
It is oil sands, big diff.
All the mid east oil has higher breakeven than Can synthetic crude.
It is all cash flow now baby.
Is that really true? Not what I’ve read previously. There is no way costs are greater Kuwait, etc.
I’ve been nibbling at SRS. Just was below 100.
December 5th, 2008 at 3:57 pm
Mannwich,
if you want some Homework for the weekend, think about why you even Have a “Retirement” account..
take a peek at Robertm73 Says: above, for some thought starters..
see the ‘New’ Cabinet shaping up, for some add’l dome-scratchers..
and riddle this one: how many currency devaluations/new currencies do you think you’ll see, here, in the North American Union, over the 20 years?
and, lastly, I’ll ask this one: Who’s got bets that the U$D sees 2010? ..again.
December 5th, 2008 at 3:59 pm
OK….Don Luskin’s posts aside…the NFP showed 370k losses in the SERVICE sector today…I know you looked into the numbers as I did…these payroll numbers today tell me that even Roubini may be looking at the light in the tunnel and not realizing it is a train…
Earnings next year, assuming companies try and try to cut costs but can’t cut enough to avoid this, should be dismal.
I will tell you a little story from here in East Tennessee…we have 17 partners and do well into the 8 figures yearly…we have salespeople who, because of the volume of things we use, buy lunch for the staff here in the salt mine, and have been doing it for 15 years. Well, Judy sent us all an e-mail today that said through the end of the year sales people won’t be coming by or buying lunch so they can talk with the partners. “Many say they are just out of money” Judy said…unprecedented………
December 5th, 2008 at 4:00 pm
Grabbed some more SRS myself at around $97. It’s insanely underpriced now.
December 5th, 2008 at 4:04 pm
@CPJ13: T-bills are not looking too clever here. When those guys go home this weekend and think about it, we might see a migration of fear and panic from the equity side to fixed income. All investments carry risk.
I have been short JNK and reduced that today. I closed some day trades and picked up some DUG for the weekend as a hedge. I am long VLO and COP – refining should do well in a moderate oil price environment unless we return to the Stone Age. I am about 80:20 long:short. Carrying a moderate short position overnight and selling it in the morning has worked very well lately.
Just to clarify – I will not hold banks, REITs or four-letter stocks with fancy multiples or anything with a lot of debt. I will trade the ultras, in each direction. This market has not bottomed, but certain sectors may have done so. Anyone think that high yield debt has bottomed? If not, can yields go higher? 25% 30% Any opinions?
December 5th, 2008 at 4:14 pm
guys, sorry to be the one to tell you, the market isn’t about fundamentals. the market is about the “money” sloshing around the globe and where is settles. fundamentals never supported the dow at 14000. or oil at $148, for that matter. 12oo sf homes selling for 1.2 million? another joke.
no news on monday, but tuesday gives us pending home sales for oct… the numbers for california are already out and they are stunning:
http://www.dqnews.com/News/California/RRCA081120.aspx
i anticipate more price reductions from greedy sellers and a better spring than people are expecting… especially with mortgage rates in the 4.5 range.
calculated risk posted that 31% of homeowner’s in the united states have no mortgage. something to keep in mind.
December 5th, 2008 at 4:19 pm
@karen: Perhaps so but eventually reality bites and reality will bite the market again, which is why I’m begging for it to hit DOW 10,000 and S&P 1,000 so that I can sell my longs and go mostly short again. We’re deluding ourselves if we think we’ve seen the worst of this debacle.
Bet you a fictitious bottle of wine we will see DOW <700 and S&P <750 before we see DOW 10,000 and S&P 1,000?
December 5th, 2008 at 4:20 pm
Shoot no preview feature! Obviously meant DOW <7,000………
December 5th, 2008 at 4:21 pm
upside bias until proven otherwise, don’t try to figure out a market that is operating in unchartered economic times. I think we all have an educated idea where the market is eventually headed, we just don’t know how it is going to get there. I think most will be surprised.
December 5th, 2008 at 4:25 pm
Karen – “calculated risk posted that 31% of homeowner’s in the united states have no mortgage. something to keep in mind”
That may be true, but the federal government is busily taking out mortgages on their behalf.
December 5th, 2008 at 4:28 pm
Bob,
think of it like this; Saudi Aramco is a wholly owned sub of SAudi Arabia Co. Look at the cost to run SAudi Arabia and their cost per barrel is way higher than Can oil sands. And they cannot lay off the “staff” ie citizens.
They will not cut back production they will increase it, it is all about cash flow now, til things settle down.
December 5th, 2008 at 4:33 pm
Estragon beat me to it. I don’t have a mortgage on my home either, but I’m going to spend the next 20 years paying everyone elses.
Here’s another little “tax” not being discussed much yet – homeowner association “special assessments” to make up for all those empty houses and others who can’t / won’t pay.
December 5th, 2008 at 4:34 pm
@ Karen said: “i anticipate more price reductions from greedy sellers”
greedy or desperate ??
@ Mannwich said: “Bet you a fictitious bottle of wine we will see DOW <700 and S&P <750 before we see DOW 10,000 and S&P 1,000?”
i tell you what, mate. Quit thinking about the DOW and start thinking sectors and stocks and you will make more money. if you look around there are some amazing bargains and i am not talking financials. i did a 100% gain last week, bought F at 1.32 and sold it at 2.68. you just have to see what is being heavily shorted. did you see GGP today, for example, or the homebuilders? Of course the stocks ARE total dogs – so they are all short term short squeeze trades, but they have a great risk:reward ratio.
the time for shorting the indices is over for the time being and that’s why there is less volatility. in fact i bet you a REAL bottle of 1982 claret that we have a substantial year end rally that will be a lot bigger than people think. As for January/February, the earnings will lead to a slaughter in many sectors (not the refiners, though).
We will not see a market bottom until that’s done or until housing has crumbled in the last bubble markets (manhattan, nyc suburbs). Now that’s some fun we can all enjoy.
December 5th, 2008 at 4:37 pm
from article posted by KAren
“They are 36.5 percent below the spring 1989 peak of the prior real estate cycle. They are 48.7 percent below the current cycle’s peak in June 2006. ” 36.5% below spring of ‘89? WOW
December 5th, 2008 at 4:40 pm
leftback,
That’s a very good question. But first consider this (from DealBook yesterday)…
“Junk bond peddlers should have taken a vacation in November. That’s because there were no — count ‘em, zero — high-yield corporate bond deals done last month on the entire planet, according to data from Thomson Reuters.”
So I guess it’s hard to say what the going rate for new issues might be until someone can actually get one done (lol).
Meanwhile, if the price of existing issues continues to drop, then obviously their yields (and those of the ETFs I suppose) can go higher. On the other hand, if new supply is constrained, might that be enough to offset any continuing risk aversion?
It’s a tough call (at least for me). As tasty as junk looks here, I’m still trying to be patient and wait for default rates to spike up.
December 5th, 2008 at 4:43 pm
Our tax code simply no longer reflects the realities of the stock market.
It should be considered long term capital gains if you hold overnight.
December 5th, 2008 at 4:43 pm
In honor of the season and for stocking stuffers, I bought coal (MEE) again this morning – at some valuations you just say to yourself “hey, what the hell, there’s not much downside risk left”.
December 5th, 2008 at 4:44 pm
@leftback: I agree, which is why since the last market bottom I have been nibbling at various long energy and commodities positions like ACI, GDX, VLO, COP (triggered in part by your tip, thanks), etc., as well as MCD. I’m not totally long or short but am bearish overall near and mid-term for ‘09. We’ll have many bumps along the way and I’m willing to sell anything into significant strength. Nothing is truly an “investment” in this environment.
Have traded in and out of SRS, QID, and EEV as well (maybe a bit “early” with my most recent purchases). Also grabbed DUG at ~29 but sold it recently.
December 5th, 2008 at 4:45 pm
jeff, if you make it a case, you’re on!
bkm, the only thing i have figured out about this market is that i haven’t figured it out. hopefully, i stay one step ahead of the steam roller, an asteroid doesn’t hit the earth, and i continue to put my sons through college.
leftback, is it greedy to be asking $2-3 million more than you have into the house? maybe it’s not greed, they just don’t realize that home prices aren’t what they used to be, and are not going to be what they used to anytime soon.
well, we’ll all be on guard. if it looks like nassim, nouriel, and hugh are right, you’ll find me farming in kaui soon…
December 5th, 2008 at 4:51 pm
Enjoy it while it lasts. The name of the game is “Inflate or Die” and the Monetarist Monkey twins, Paulson and Bernanke, are clearly showing their hand.
December 5th, 2008 at 4:51 pm
@ Mark Hoffer. I’ve said it before and I’ll say it again…I’ll take the other side of that bet. The USD isn’t going anywhere. Except down relative to other currencies. But I get your point. Alas.
December 5th, 2008 at 4:52 pm
@karen: I’ll see you in Kauai. That was my honeymoon spot in ‘03. My brother and his wife own property (for now) and are building a home there, one of which has been designated a “farm” (ocean views are incredible). But that would likely mean you would be paying up on that case of wine.
A case of wine it is then! I will say, these last four to five days have been humbling for me but to quote the unquoatable Dennis Kneale, “it’s not a loss if you didn’t sell”!!!
December 5th, 2008 at 4:55 pm
Mrs Watanabe just called.
She was short the yen and long the Aussie and Kiwi – with leverage.
Now she wants a bailout before her husband gets home from the sake bar.
@ Winston… you bought a stock ??? LOL.
F***ing brilliant. When Steve Barry covers, I am all-in.
We are all permabulls now….
@ Karen: “asking $2-3 million more than you have into the house”
that’s not greed, that’s delusion. F*** em.
i hope they enjoy the 40-yr workout on their super jumbo.
no mercy, no quarter for the over-leveraged high end homeowner.
NONE – Well, they can move into the garage and mow my lawn for quarters.
December 5th, 2008 at 5:06 pm
I still think SP 1100 is possible before new lows are put in.
Here is one scenerio that I think is possible: We trade into the 900’s and things seem less stressful, we trade over 1000 and the bulls declare the bottom has been put in for certain, the shorts from the low 900’s are giving back their 08 gains. There is an optimism in the air in 1st Q09 from Obama and his stimulus package and we trade into the 1100’s . The market then leaks back to the low 800’s as employment continues to worsen and CEO’s are offering zero visibility. Dispair overtakes optimism and we set a new low. From there we hit an air pocket and rapidly trade to the mid 500’s. There is still no visibility, volume is low as many traders and investors have thrown in the towel. At this time large value investors are accumulating huge long positions as they have been since 750.
Don’t think for a second that an 1100 and 550 SP can’t happen.
December 5th, 2008 at 5:07 pm
DP
That is damn funny!!!!! made my day
December 5th, 2008 at 5:09 pm
@BKM: I can see that happening (although my guess is that it won’t), but, then again, I can see just about anything happening at this point.
December 5th, 2008 at 5:16 pm
karen,
you make the point too many here seem to be missing with questions about why were up today in light of the jobs number, have you all forgotten the market and economy are not the same. I’m bullish right now, also in the camp of many that we rally for a while here, or at least the general direction is up into next year, then the low in 2009, that said, this view is almost too common right now so it is almost certainly wrong. Don’t be surprised if people start spending earlier than most think. I keep hearing that “the consumer is tapped out” I wonder how many people on this site have no equity in the home they live in, have no more room on credit cards, no more credit at all, my guess, it’s almost none of us, if even one of us. I believe the consumer is weak but the weakness is overstated especially when considering the stimulus that is coming. This is all only a band aid but if it goes up those ultra shorts and long bonds are dead.
I’m doing close to what leftback is doing, tactical allocation of capital, who gives a shit about the indexes, I do believe some energy has bottomed here and I’m long in that space and a few other sectors, not financials and wont’ be going there maybe ever. I’m going to look at F over the weekend for a trade. With the jobs numbers today they are going to get money before year end. I bought a little more TBT earlier today.
leftback, IMO HY has not bottomed, there will be more defaults and you might be better off buying next spring. I think the same with muni’s.
Steve Barry,
I have to say you are certainly more patient than me. When is QID going to hit that $120 target, and why are you so confident you can call that given the fact that these ultra’s don’t always mirror the index daily like they are supposed to and thus the prices over the longer term don’t always go as they should. I don’t see how you can hold the ultra’s, I do see how you can trade them. I”m just trying to understand how you do it, not saying you are wrong.
Mark Hoffer,
I agree about the dollar but you are way too early on that call. It won’t go down by 2010 but soon enough. What changes do you think will be made to that Homeland Security Act after 1/20/09
December 5th, 2008 at 5:18 pm
“I can see just about anything happening at this point.”
Mannwich, that is my point. expect the unexpected. I’m net long now and it is very uncomfortable as my stops are down there a ways. Been a while since I have been net long.
December 5th, 2008 at 5:23 pm
@BKM: Point taken. I’m trying to remain flexible and open-minded on the fly but the facts still tell me we’re headed further down and that the worst of it lies ahead in ‘09. I just have no idea how/when.
The facts tell me that the feds are going to do everything they can to prop up this sucker. If they’re successful, the market may run up for a while against all logic (like it did in ‘07) but common sense (and that uneasy feeling in my gut) tells me a rocky road like ahead and to beware the law of unintended consequences.
December 5th, 2008 at 5:41 pm
@ leftback,
Shocked me, too. Certainly not calling it an investment yet.
Longer term, I have real concerns that this is going to be really, really, really ugly. I do not think many are yet factoring in the true risk significance that is implied by the proposals being bandied about – quantitative easing, for example. Quantitative easing has a track record to follow – it was done by the Bank of Japan in the 1990s. It stabalized their banks but did nothing for their real economy. 10 years of ugly followed.
Couple cases that Mish Shedlock brought up: California has an $11.2B budget shortfall, while Minnesota is facing a $5.2B deficit. I would estimate at a conservative number among the 50 states the budget shortfalls this year alone will be close to $100B, and that equates to lost jobs and lost services.
We are still wandering aimlessly in the forest and have a long ways to go to get out of the woods. The market may not care for awhile, but eventually it will again.
December 5th, 2008 at 5:52 pm
@Winston Munn: Thanks for the reminder about MN. I’m sure this means that our beautiful city lakes will remain somewhat clean? I’m guessing not…..
In fact, this year I’d already begun to notice more litter in/around the lakes and parks here but then again I tend to notice those little things when others don’t.
December 5th, 2008 at 5:56 pm
Mannwhich, Indeed!
December 5th, 2008 at 7:33 pm
BKM like your 1100/500 sp scenario thank you. Now I must correct you on an earlier post about “unchartered waters”. Exactly where are these waters you speak of that have no charters? Perhaps it is uncharted waters, waters that have not been drawn and appear on charts? Sorry for the petiness, however it drives me nuts to see “we are now in unchartered waters” all over the web everyday!
It is “uncharted” everybody. We are now in “uncharted” waters. Screwed any way you want to spell it I guess!
December 5th, 2008 at 7:40 pm
Anyone want to take a stab at why 9 outta ten calls I make are right? Am I just lucky or do I actually know what I’m doing?
December 5th, 2008 at 7:42 pm
I have not traded in years, but I do know a thing or two about technicals. The 10 day MA on put call is now about where it was in mid-May and early August. Both times, the market literally fell off a cliff. (Past returns do not guarantee future results)
http://stockcharts.com/h-sc/ui?s=$CPC&p=D&yr=1&mn=0&dy=0&id=p11854858723
December 5th, 2008 at 7:44 pm
To get that chat, select symbol $cpc, do a one year and look at 10 day MA
December 5th, 2008 at 7:49 pm
Somebody’s getting cocky off of one accurate (I won’t name any names but 9 out of every 10 seems like a stretch to me). We all know what happens next to those people. This is not a market in which to get cocky. Humility is the best course.
December 5th, 2008 at 8:01 pm
If you doubt 9 out of 10 go back and look at my statements made way in advance of the action that occured. The only day I didn’t know what to do was yesterday and I said I have no idea what’s next.
The market has never been so mispriced due to a banking panic, consumer panic, hedge fund panic, money manager panic. By the time they figure out what went wrong you want to collect big off their mistake. They are already starting to figure it out.
How is everyone going to make money in cash/bonds when everyone is in them? We have the exact opposite of the market peak.
Could we take another crash and burn in the market. If they let the automakers go under absolutely. But it will be short term.
I believe I made 2 bad calls the last month. 1) I indicated oil was a good buy yesterday morning. 2) On the last rally to 1000 I thought more money would come back from the bond market and it didn’t when the bond market was closed for the holiday.
December 5th, 2008 at 9:09 pm
boys will be boys, lol and shaking my head.
December 5th, 2008 at 9:11 pm
Jmborchers @ 7:40
If it’s really true that you’re right 9 times out of 10, or even 7 out of ten, you should quit your job and trade S&P futures. You’ll make a hell of a lot more money that way.
December 5th, 2008 at 9:38 pm
@jmborchers: You also said that the jobs number today would be ~$220K but who’s counting?
Seriously though, nobody gets “9 out of 10″ at this game. Like DL says, if that’s true, you really SHOULD quit your day job.
I give you credit for making some nice calls lately but please be sure to stick around for the carnage next year when you will be dead wrong about the recovery.
December 5th, 2008 at 10:46 pm
Leftback
“All the tools who bought the 10-yr at 2.50 this morning must be crapping their pants.
Well done, mate!! Absolute bloody genius. Exactly what reward was there in that trade???”
I enjoy reading your comments, especially concerning the bond market. Of all the thing that have happened in the last year, to me the most unbelievalble is a 30 year bond yielding almost 3% .
Mish Shedlock says it is not a bubble.
Randall W. Forsyth http://online.barrons.com/article/SB122828019013275379.html?mod=9_0002_b_online_exclusives_weekday_r1
“A rare exception is Albert Edwards, the strategist at Societe Generale, who for years has been predicting a coming economic and financial Ice Age. “Commentators are always reluctant to forecast big moves,” he writes. But the bull market in government bonds is intact with the U.S. 10-year yield headed still headed below 2%, which has been Edwards’ long-held forecast.”
I have no idea how this thing turns out but I think you have to look at all possibilities. Again I would like to thank you for your posts.
December 5th, 2008 at 11:51 pm
I made the above comment before I looked and the one day charts of TYX and TNX. A mojor correction for the bond bulls will probalbly coincide with the year end stock rally. But the question remains to be answered if the lows in yields have been seen.
December 6th, 2008 at 5:27 am
The chart that looks scary to me is the $Libor:$UST1M, which appears close to a high for the year. Also, $TED is still above its levels hit during the March 17 and July 14 bottoms.
Obviously people are totally divided about what the market will do next; however, I do think it is interesting that most people who are forecasting a year-end rally acknowledge in advance that it will be a bear market rally as opposed to a longer term rally off of the true bottom. Such a consensus among so many commentators in the financial news media regarding an inevitable “mother of all rallies” seems like a possible head fake. That being said, it is incredible that here hasn’t been a sustained bear rally to date, given the magnitude of the decline.
December 6th, 2008 at 5:47 am
Also, four days later and we are still trading inside of Monday’s range. Doesn’t exactly speak to strength, despite an up day on a bad jobs number.
December 6th, 2008 at 6:33 am
$ 40 for crude is great!!! I can now much better afford paying the bill for heating oil!
I hope it will trade at $ 20 end of 2009 and $ 10 end of 2010! Deflation is great! Inflation is only good for the rich!!! – I hope the rich get this time a lesson they never forget!
But I think we will get a rally in crude + 50 to 100 % from the low into spring 2009.
December 6th, 2008 at 11:35 am
BKM
your scenario is EXACTLY what i am looking for. unfortunately it seems this rally trade is once again getting overtelegraphed and crowded. i hear of very few reputable hedgies and traders who have any shorts on at all and are hiding in t-bills like myself. the market action yesterday must have sent the media in a tizzy. bulls seem to be crawling out like army ants. obviously this makes me second guess the scenario. the conomic data is not bad it is god awful it seems longs are playing with fire here. what happpens if mr. market decides to give them the old 1 2 and TKO’s the herd. i will not be upset to miss a rally but if it does somehow transpire and trade to 1070-1090 area good lord what an opportunity for new shorts and liquidating one’s remaining equities.
December 6th, 2008 at 11:56 am
@harold becuba: And do you know just how many other people (ahem, ME) are thinking the very SAME thing and just chomping at the bit to liquidate any remaining longs (and I mean ALL of ‘em, including “retirement accounts”) into some serious irrational market strength? This thing ain’t over yet. Not even close. Gonna be a wild ride in ‘09.
December 6th, 2008 at 1:53 pm
manwich
ya hit the nail on the head. here is another word that is misplaced and used in the wrong context “panic” panic? i would call what is happening being pragmatic, realistic. i don’t listen to the media or read newspapers but are the buffoons calling for the end of a recession yet? i believe we just had the warm up and recession starts in dec8 not dec 07
December 6th, 2008 at 4:43 pm
The other disconnect this week, other than stocks rallying on the jobs number was the CDS spreads widening while the stock market was going up.
http://ftalphaville.ft.com/blog/2008/12/05/50119/cds-update-an-extreme-week/
The graph shows that cds for single A credit on the financials is near its high for the year, above the levels seen at Bear and Lehman’s collapses.
December 6th, 2008 at 5:26 pm
@harold becuba: There have to be millions (especially retail investors) of investors who never sold all the way down and are just waiting for a solid, lengthy rally to get the heck out. Who in their right minds really trusts the “market” anymore? We may get a few nice rallies like we did from ‘29 – ‘32, but there will be big-time selling into those rallies over the next couple of years. This thing may be in the 7th inning but we are going into extra innings and there is no curfew to halt the game.
December 7th, 2008 at 1:28 am
I read that China will be in a recession by mid of next year. China has extremely high unemployment figures and its once booming construction industry is slowing down tremendously. Once China goes down… the world economy will need at least three years to recover to its former glory. This recession is very serious.
December 7th, 2008 at 8:35 am
One thing I find frustrating in the financial media is the plethora of serial bottom callers. Whether it is the long only managers or permabulls, they should only get one shot to call the market bottom, and then refrain from making additional calls as the market goes lower. Hey, you called it on March 17 Bob Doll, so shut the fcuk up!! That would disqualify about 90% of the people on TV these days.
December 8th, 2008 at 1:06 pm
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