Ignore ‘em this week.
Christmas day throws the data gathering off. Same with next week.
>
(I cannot believe what I hear about these in some places).
"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%...
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December 31st, 2008 at 9:11 am
Due to the massive QID distribution hiting my account today, I have some money to put to work…what would you guys do this morning? (I already know what I’m doing)
December 31st, 2008 at 9:23 am
It might be early but starting a position in TBT.
December 31st, 2008 at 9:29 am
@rww: Interesting…I think that is intriguing. ..it will be a good play after the deflation ends, as will gold miners.
December 31st, 2008 at 9:30 am
Kernan is cheering at CNBS as it shows jobless claims are slowing so therefore IT’S PARTY TIME…..
December 31st, 2008 at 9:39 am
Who is applying for jobless claims Christmas week? The office is closed one day anyway. The holiday is over, now the retail layoffs really start.
December 31st, 2008 at 9:58 am
Sitting on my hands, waiting until after Congress returns and O’s stimulus plan dominates the news 24/7. Looking for a rally top somewhere around the 7th. Just think the Dems and government intervention are all Wall Street has to look forward to / rally on now. Friedman must be spinning!
December 31st, 2008 at 9:59 am
Microsoft getting ready to lay off 17% of staff
The rumor that Microsoft was set to lay off people on January 15th, 2009 is no longer a rumor but a fact. Staff at Microsoft have been informed that the company is readying major layoffs to its worldwide operations and it’s not a small cut, either.
Currently Microsoft employs about 90,000 people across the world and from what we’re hearing, some 15,000 of those are expected to be giving marching orders come January 15th. That’s almost 17 percent of Microsoft’s total work force, not exactly a small number.
http://www.fudzilla.com/index.php?option=com_content&task=view&id=11142&Itemid=38
December 31st, 2008 at 10:17 am
Steve,
Like a lot of others I plan to invest in PST next year when the T Bill starts to lose its luster…As you know, I have been buying short term cd’s and will continue that until the PST makes itself attractive..
December 31st, 2008 at 10:22 am
BR: “Ignore ‘em this week.”
First, you are also ignoring that the estimates had factored in the shorter week variable (it was not a known fact).
Second, using the same logic one would also have to “ignore” the week before spike (586K) when people rushed to file before the holidays.
Instead of ignoring this week and not ignoring the last week spike (selectively massaging the data), I would suggest to take an average between the two (if one is really interested in a big picture instead of media headlines).
(586K+492K)/2=539K
Big picture (pun intended) since November 29
515K => 575K => 556K => 539K* => 539K*
*Seasonal holiday adjustment
P.S. Thanks for posting a link to Washington Post article about AIG. It is a great article.
Happy New Year!
December 31st, 2008 at 10:30 am
Can somebody explain how a CEO, Ezra Merkin of GMAC, which just got a massive gov’t cash infusion, was also running massive hedge funds of funds?
December 31st, 2008 at 10:33 am
BR: I agree entirely. Lots of companies wait until the new year to hand out the pink slips. The 2nd claims number in January could well be a shocker.
SB: Because Ezra Merkin is a member of the criminal financial elite, that’s why.
We all know where you are putting your QID cash…!!
December 31st, 2008 at 10:34 am
@SB: He was obviously not doing either job very well. Nice work if you can get it.
December 31st, 2008 at 10:36 am
@leftback:
My cash was just invested shorting the likes of Merkin, Madoff and the whole rotten financial system.
December 31st, 2008 at 10:38 am
Addendum:
Alternatively, one can use a 4-wk moving average, instead of just ignoring the better than expected data — ignoring the unexpected.
Remember AIG’s biggest mistake, they did not factor into their models the unexpected – AIG credit rating downgrade.
December 31st, 2008 at 10:40 am
@mannwich:
Good point…run GMAC into the ground AND lose your investors billions…this guy is an all-timer.
December 31st, 2008 at 10:43 am
@SB: Employment in financial services for the elite has become akin to VERY highly paid government work. There’s no penalty for incompetence (or criminality). They actually get rewarded for it in many cases, as we’ve seen.
December 31st, 2008 at 10:45 am
@Jurgen: Let’s wait until January/Feb/March before determining that jobless claims are declining. One report does not say much.
December 31st, 2008 at 10:58 am
I am about to close down for the year.
For Q1 I am going to try to trade around a core position in specific commodity stocks (Gold, Silver, Moly, Uranium) and dividend-paying stocks (COP, VLO). I am agnostic about oil at present. I am putting a toe into corporates and high yield bonds, and since this is based on the Fed’s desire to narrow spreads, I am also shorting the 10-year. At some point I will buy more TIPS. From time to time I will trade QID. I expect much higher unemployment, earnings surprises (duh!) and hedge fund liquidations will create a lot of volatility in Q1 and we will see some sharp corrections, and perhaps retest or break the November lows, if only fleetingly.
I think that Q2 and Q3 will be better for stocks and much less volatile in general. Q4 (maybe earlier) will see inflation return (indeed, it may never have been away) and commodities will start to outperform stocks. By this time I would be out of all other bonds and into TIPS. So this is a “double-dip” forecast for stocks, much like the one on Paul Kedrosky’s site.
Barry, my gratitude knows no bounds for bringing us all the real time truth during this amazing period.
Thanks to everyone here for their valuable insights and good humour – the best of luck to all in 2009.
December 31st, 2008 at 11:01 am
Mannwich Says:
“Employment in financial services for the elite has become akin to VERY highly paid government work.”
Good point, and yet they have the nerve to decry government workers as incompetent!
The USG is incompetent, Ben is, Wall Street is, the auto industry is, Buffet is almost 80, Jobs may be ill, and Gates has retired. Where have you gone Joe DiMaggio; a nation turns it’s lonely eye to you…
How did we get here, and who is going to save us now?
It’s time to stop looking at TPTB and those on the tube for answers, and to start looking at ourselves. The best answers, as always, come from the bottom, not the top.
December 31st, 2008 at 11:14 am
KJ:
Here’s to the end of the Tyranny of the Incompetent. I am willing to wager that President Obama has a few surprises up his sleeve for members of the financial elite. All is not lost.
It’s always darkest before the dawn. Opportunities will beckon for those who have acted wisely.
December 31st, 2008 at 11:22 am
I am wondering if companies will cut cash outlays much like FDX has done in lieu of some layoffs anticipating a pickup later in the year. This approach (wage freeze, 401k contribution halt) is probably cheaper in the shot run than paying severance. I expect to see more of this along with div. cuts, more plant furloughs, even forced unpaid days off (municipalities) and even retiree benefit cuts on health care for those companies with defined benefit plans.
December 31st, 2008 at 11:29 am
@ Moss:
This is the John Mauldin “muddle through” approach. We all get through this thing somehow, without the whole system falling apart. The price will be inflation in things we need (food, oil, gasoline), and continued deflation in things that had formed enormous bubbles (houses, I-Banks, nail salons, luxury car dealerships).
December 31st, 2008 at 11:34 am
Absolutlely the most “out there” call I have ever heard…guy on CNBC calling for a hedge fund boom in 2009.
December 31st, 2008 at 11:44 am
A call for a hedge fund boom is almost as stupid as calling for a credit derivative boom.
December 31st, 2008 at 11:51 am
leftback Says:
“Here’s to the end of the Tyranny of the Incompetent. I am willing to wager that President Obama has a few surprises up his sleeve for members of the financial elite. All is not lost.”
I too have not lost faith in O. People can scoff, but IMO he is the closest thing to a real outsider / “man of the people” as president we have had in my lifetime. But I am worried: for one thing he always leaves me looking for more from him. In reading his two books and often when I hear him speak, it sounds very good, but he seems to fall short on the really big ideas. He throws great long passes, and his ground game is superb, but he seems to not be able to get it across the goal line for me.
Plus he is emulating Lincoln, whom I think he sees him as a consensus builder like himself, and to me the only way to govern with consensus is to end up in the middle, like Clinton. That makes him more susceptible to being coopted by TPTB. Also, real change is not going to happen in the middle. Further, the prez is only one person, and what he can realistically accomplish against TPTB is much less than we like to think.
All is not lost, but we do need a serious course correction throughout our culture and society, and that is not going to come from the top. O may set the right tone, but it will be up to us to make it happen, and that is what I am worried most about, that the American people have lost the ability to think and act for themselves and by themselves.
Thanks to all, including Barry, for enlightening comments and engaging debates. I look forward to more of the same in ’09. Much happiness and good health to us all in the new year.
December 31st, 2008 at 12:39 pm
KJ,
from Reuters (via the FT)…
“The chairwoman of the Chinese company at the heart of a tainted milk scandal that has killed at least six children and made thousands ill went on trial in China on Wednesday, facing a maximum penalty of death. ”
Bush would have appointed her to head the FDA.
Talk about your cultural differences.
From the same article…
“Zheng Xiaoyu, former head of the food and drug watchdog, the State Food and Drug Administration, was executed last year for taking bribes and dereliction of duty in the wake of a series of drug safety scandals.”
While I voted for Obama, I suspect that when it comes to dealing with our own financial criminals, we will all be left “looking for more”.
If I’m wrong, I’ll gladly buy leftback a burger for every indictment.
December 31st, 2008 at 12:47 pm
VIX is below 40 for the first time since 10-2. Meaningful change or just holiday low volume trading?
December 31st, 2008 at 12:58 pm
10 cc Says:
““Zheng Xiaoyu, former head of the food and drug watchdog, the State Food and Drug Administration, was executed last year for taking bribes and dereliction of duty in the wake of a series of drug safety scandals.”
While I voted for Obama, I suspect that when it comes to dealing with our own financial criminals, we will all be left “looking for more”.”
Yes, and in Japan they used to commit suicide when they were caught in dishonorable acts. Here “the buck stops here” has become just a quaint idea adhered to only by those naive enough to still accept responsibility for their own actions. After all, taking responsibility can be painful; it is much more agreeable to hire a good attorney and get off easy.
December 31st, 2008 at 8:29 pm
One should look at the Non-Seasonally adjusted numbers. There is a problem with the seasonal adjustment being used.
Advance Prior1
WEEK ENDING Dec. 27 Dec. 20 Change Dec. 13 Year
Initial Claims (SA) “492,000″ “586,000″ “-94,000″ “556,000″ “339,000″
Initial Claims (NSA) “718,468″ “716,576″ “1,892″ “629,867″ “507,908″
4-Wk Moving Average (SA)”552,250″ “558,000″ “-5,750″ “544,250″ “344,500″
Taken from the DOL press release: http://www.dol.gov/opa/media/press/eta/ui/eta20081873.htm