Comments on: ZIRP Rally Open Thread http://www.ritholtz.com/blog/2008/12/zirp-rally-open-thread/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Mon, 22 Mar 2010 13:08:16 -0400 http://wordpress.org/?v=2.9.2 hourly 1 By: Simon http://www.ritholtz.com/blog/2008/12/zirp-rally-open-thread/comment-page-2/#comment-134262 Simon Wed, 17 Dec 2008 21:39:41 +0000 http://www.ritholtz.com/blog/?p=13076#comment-134262 This rally looks horrible. It looks exactly like the one that ended in May and the one that ended in August. The out look for future earnings is awful. Who are going to be the buyers this time round? The Government? The Government debt is horrible too and promised to get much worse. The smart money people are the people who still have money. The people who have it are getting fewer and fewer and smarter and smarter. They long since gave up listening to the FED or any other marketing agency. As for currency there is so much uncertainty about how that is going to pan out. I propose a very large wide range trade as opinion ebbs and flows in the gigantic international Bath with liberal quantities splashing out at each end. THose left with money when the spashing stops will be the lucky ones. Hey I like that analogy. Think of Trichet and Bernanki as two infants in a Bath playing with the resonant frequency of sloshing water and seeing how much they can empty out each end. This rally looks horrible. It looks exactly like the one that ended in May and the one that ended in August.
The out look for future earnings is awful. Who are going to be the buyers this time round? The Government?

The Government debt is horrible too and promised to get much worse. The smart money people are the people who still have money. The people who have it are getting fewer and fewer and smarter and smarter. They long since gave up listening to the FED or any other marketing agency.

As for currency there is so much uncertainty about how that is going to pan out. I propose a very large wide range trade as opinion ebbs and flows in the gigantic international Bath with liberal quantities splashing out at each end. THose left with money when the spashing stops will be the lucky ones.

Hey I like that analogy. Think of Trichet and Bernanki as two infants in a Bath playing with the resonant frequency of sloshing water and seeing how much they can empty out each end.

]]> By: kingtone http://www.ritholtz.com/blog/2008/12/zirp-rally-open-thread/comment-page-2/#comment-134150 kingtone Wed, 17 Dec 2008 16:43:45 +0000 http://www.ritholtz.com/blog/?p=13076#comment-134150 @ Hoffer Thanks for pointing out Janszen's blog posting. I wonder if he still feels that this is FIRE's first near death experience (ie another bubble gets things righted before the big one) vs its only. ps - Janszen's Harpers piece in March rocked my world - unfortunately i thought a %25 decline WAS a near death experience... @ Hoffer

Thanks for pointing out Janszen’s blog posting. I wonder if he still feels that this is FIRE’s first near death experience (ie another bubble gets things righted before the big one) vs its only.

ps – Janszen’s Harpers piece in March rocked my world – unfortunately i thought a %25 decline WAS a near death experience…

]]> By: bernandoo http://www.ritholtz.com/blog/2008/12/zirp-rally-open-thread/comment-page-2/#comment-134142 bernandoo Wed, 17 Dec 2008 15:19:28 +0000 http://www.ritholtz.com/blog/?p=13076#comment-134142 All the major indexes moved above the 50 dma yesterday and are holding above even with today's move down. Don't count this rally out. All the major indexes moved above the 50 dma yesterday and are holding above even with today’s move down. Don’t count this rally out.

]]> By: Lugnut http://www.ritholtz.com/blog/2008/12/zirp-rally-open-thread/comment-page-2/#comment-134140 Lugnut Wed, 17 Dec 2008 15:15:33 +0000 http://www.ritholtz.com/blog/?p=13076#comment-134140 Bernanke is pumping the bicycle tire pump for all its worth, but that tire with the huge blowout still refuses to be reinflated. The rally is WS' way of throwing confetti in the air for a couple of hours. Bernanke is pumping the bicycle tire pump for all its worth, but that tire with the huge blowout still refuses to be reinflated.

The rally is WS’ way of throwing confetti in the air for a couple of hours.

]]> By: karen http://www.ritholtz.com/blog/2008/12/zirp-rally-open-thread/comment-page-2/#comment-134133 karen Wed, 17 Dec 2008 15:04:53 +0000 http://www.ritholtz.com/blog/?p=13076#comment-134133 jojo, thanks for those! jojo, thanks for those!

]]> By: DeDude http://www.ritholtz.com/blog/2008/12/zirp-rally-open-thread/comment-page-2/#comment-134123 DeDude Wed, 17 Dec 2008 14:31:18 +0000 http://www.ritholtz.com/blog/?p=13076#comment-134123 If the year does not end with SP > 950 we will have another “October dive” in January. People get their quarterly 401K statements in the first week of January (just as they got them in the first week of October). If they see another big drop in their balance and hear all that "end of the year Armageddon talk" on the TV, those who didn’t panik in the first two weeks of October will panik in January. If we end with SP > 1050 they will all believe that the worst is behind us and we may even get a solid rally in January. If the year does not end with SP > 950 we will have another “October dive” in January. People get their quarterly 401K statements in the first week of January (just as they got them in the first week of October). If they see another big drop in their balance and hear all that “end of the year Armageddon talk” on the TV, those who didn’t panik in the first two weeks of October will panik in January. If we end with SP > 1050 they will all believe that the worst is behind us and we may even get a solid rally in January.

]]> By: vaughn http://www.ritholtz.com/blog/2008/12/zirp-rally-open-thread/comment-page-2/#comment-134080 vaughn Wed, 17 Dec 2008 08:36:56 +0000 http://www.ritholtz.com/blog/?p=13076#comment-134080 December 16, 2008, 2:47 PM ZIRP! That’s zero interest rate policy. And it has arrived. America has turned Japanese. This is the thing I’ve been afraid of ever since I realized that Japan really was in the dreaded, possibly mythical liquidity trap. You can read my 1998 Brookings Paper on the issue here. Incidentally, there were a bunch of us at Princeton worrying about the Japan problem in the early years of this decade. I was one; Lars Svensson, currently at Sweden’s Riksbank, was another; a third was a guy named Ben Bernanke. I wonder whatever happened to him? Seriously, we are in very deep trouble. Getting out of this will require a lot of creativity, and maybe some luck too. http://krugman.blogs.nytimes.com/ Hello. One guy got the Nobel Prize-the other got to destroy the united states..... Krugman won, i believe, for his seminal work "The Mechanism Of Luck, In a Post Keynesian Economy" pfffft December 16, 2008, 2:47 PM
ZIRP!
That’s zero interest rate policy. And it has arrived. America has turned Japanese.

This is the thing I’ve been afraid of ever since I realized that Japan really was in the dreaded, possibly mythical liquidity trap. You can read my 1998 Brookings Paper on the issue here.

Incidentally, there were a bunch of us at Princeton worrying about the Japan problem in the early years of this decade. I was one; Lars Svensson, currently at Sweden’s Riksbank, was another; a third was a guy named Ben Bernanke. I wonder whatever happened to him?

Seriously, we are in very deep trouble. Getting out of this will require a lot of creativity, and maybe some luck too.

http://krugman.blogs.nytimes.com/

Hello. One guy got the Nobel Prize-the other got to destroy the united states…..
Krugman won, i believe, for his seminal work “The Mechanism Of Luck, In a Post Keynesian Economy” pfffft

]]> By: dawase http://www.ritholtz.com/blog/2008/12/zirp-rally-open-thread/comment-page-2/#comment-134079 dawase Wed, 17 Dec 2008 08:21:56 +0000 http://www.ritholtz.com/blog/?p=13076#comment-134079 I posted on SeekingAlpha earlier that I think we're actually witnessing the bankrupting of the United States. Plain and simple. From the Federal government all the way down to the little guy who's underwater on his refi. Two years ago (when the campaigning started) I said that it didn't really matter who won the Presidential election because we'd be broke by then and that with the reckless fiscal policies of the Bush WH/Republican Congress, the next President would be hamstrung by the debt load and future obligations. I had no idea we'd be so far down the rabbit hole this soon. The market is in denial. The GS move this morning was my confirming indicator. Is it the Santa Claus rally? I don't know, but consider this: It's the holiday season next week. Everyone on Wall St has had a front-row seat for the carnage. At this point everyone just wants to be able to buy their kids the GI Joe with the Kung Fu grip. Denial gets them there until '09. To wit, I'm more convinced than ever that 99.99% of the people out there still don't understand what's going on. Sure, they can parrot what they read in the newspaper or hear on the news, but they're not capable of the level of comprehension that leads to the creation of derivative ideas that further the discussion. Even 50% of the people that have studied finance and economics don't get it. They're all just hoping that sometime after January 20th, they're going to wake up and see it was all a bad dream. Talk about a rude awakening. On the other hand Paulson just yesterday said on CNBC: BARTIROMO: WE HAVE SEEN AT LEAST 20 BANKS CERTAINLY IN THE UNITED STATES FAIL IN 2008. HOW MANY MORE BANKS DO YOU EXPECT TO FAIL? PAULSON: I'M EXPECTING NO OTHER MAJOR FINANCIAL INSTITUTIONS TO FAIL. Interesting declarative... although I guess Mr. "Sub-prime appears to be contained" has no qualms about saying one thing one week and something else a month later. As an aside - I'm sure Neel is a smart guy, but I'm not sure that his past really qualifies him to be running the TARP. Guys like this are a dime a dozen. I'd be more inclined to propose someone with a little more experience where the rubber hits the road... even for the temporary appointment. This guy is the best Paulson could find? Really?? Paulson picking someone from GS... kind of like using your daughter as your compliance officer... we know where that leads. Engineer ... went to Wharton for an MBA... then to Goldman Sachs and finally Treasury. Pretty standard stuff really. http://en.wikipedia.org/wiki/Neel_Kashkari I posted on SeekingAlpha earlier that I think we’re actually witnessing the bankrupting of the United States. Plain and simple. From the Federal government all the way down to the little guy who’s underwater on his refi. Two years ago (when the campaigning started) I said that it didn’t really matter who won the Presidential election because we’d be broke by then and that with the reckless fiscal policies of the Bush WH/Republican Congress, the next President would be hamstrung by the debt load and future obligations. I had no idea we’d be so far down the rabbit hole this soon.

The market is in denial. The GS move this morning was my confirming indicator. Is it the Santa Claus rally? I don’t know, but consider this: It’s the holiday season next week. Everyone on Wall St has had a front-row seat for the carnage. At this point everyone just wants to be able to buy their kids the GI Joe with the Kung Fu grip. Denial gets them there until ‘09.

To wit, I’m more convinced than ever that 99.99% of the people out there still don’t understand what’s going on. Sure, they can parrot what they read in the newspaper or hear on the news, but they’re not capable of the level of comprehension that leads to the creation of derivative ideas that further the discussion. Even 50% of the people that have studied finance and economics don’t get it. They’re all just hoping that sometime after January 20th, they’re going to wake up and see it was all a bad dream. Talk about a rude awakening.

On the other hand Paulson just yesterday said on CNBC:

BARTIROMO: WE HAVE SEEN AT LEAST 20 BANKS CERTAINLY IN THE UNITED STATES FAIL IN 2008. HOW MANY MORE BANKS DO YOU EXPECT TO FAIL?

PAULSON: I’M EXPECTING NO OTHER MAJOR FINANCIAL INSTITUTIONS TO FAIL.

Interesting declarative… although I guess Mr. “Sub-prime appears to be contained” has no qualms about saying one thing one week and something else a month later.

As an aside -

I’m sure Neel is a smart guy, but I’m not sure that his past really qualifies him to be running the TARP. Guys like this are a dime a dozen. I’d be more inclined to propose someone with a little more experience where the rubber hits the road… even for the temporary appointment. This guy is the best Paulson could find? Really?? Paulson picking someone from GS… kind of like using your daughter as your compliance officer… we know where that leads.

Engineer … went to Wharton for an MBA… then to Goldman Sachs and finally Treasury. Pretty standard stuff really.

http://en.wikipedia.org/wiki/Neel_Kashkari

]]> By: aerodynamichaircut http://www.ritholtz.com/blog/2008/12/zirp-rally-open-thread/comment-page-2/#comment-134078 aerodynamichaircut Wed, 17 Dec 2008 08:00:18 +0000 http://www.ritholtz.com/blog/?p=13076#comment-134078 and the most disconcerting irony of it all - the REAL MINDS around here (sincere compliment) sense some inevitable disaster as a consequence of the Feds fly-by-night policymaking, yet these Fed chums... through some pounding of a square peg into a round hole, are conceived as the best and the brightest by the enablers of this entire fiasco... the interplay between politico/Fed/power wallstreet is so reminiscent of the vicious circle one observes after a toilet is flushed... so the next question is: How can a plethora of "bright" guys act so foolishly and recklessly in concert (past and present tense); and finally, where will the path of least resistance-policymaking eventually lead us? (back to the flushed toilet metaphor) and the most disconcerting irony of it all – the REAL MINDS around here (sincere compliment) sense some inevitable disaster as a consequence of the Feds fly-by-night policymaking, yet these Fed chums… through some pounding of a square peg into a round hole, are conceived as the best and the brightest by the enablers of this entire fiasco… the interplay between politico/Fed/power wallstreet is so reminiscent of the vicious circle one observes after a toilet is flushed… so the next question is: How can a plethora of “bright” guys act so foolishly and recklessly in concert (past and present tense); and finally, where will the path of least resistance-policymaking eventually lead us? (back to the flushed toilet metaphor)

]]> By: vaughn http://www.ritholtz.com/blog/2008/12/zirp-rally-open-thread/comment-page-2/#comment-134075 vaughn Wed, 17 Dec 2008 06:35:02 +0000 http://www.ritholtz.com/blog/?p=13076#comment-134075 " but there will be risk takers willing to step into the water and in times like these where nobody else wants to risk those that do will be heavily rewarded." ...Brody, who fears the ocean, heads out to close the beaches, but is intercepted and overruled by the town mayor Larry Vaughn (Murray Hamilton), who fears that reports of a shark attack will ruin the summer tourist season which is the town's major source of income. The medical examiner says he was wrong about a shark attack and tells Brody that it was a boating accident. Brody reluctantly goes along with this. Everything i learned about Human psychology i learned from "Jaws" ;) "Rules have been rewritten and this is why most academics failed to have seen this coming, failed to figure out the remedy and failed to enact appropriate measures. Their is a reason why there is a 35yr old rocket scientist running the TARP, because the old academics need bifocals." Jesus keerist MAgne13 did they pull you out of Treasury to post here? ” but there will be risk takers willing to step into the water and in times like these where nobody else wants to risk those that do will be heavily rewarded.”

…Brody, who fears the ocean, heads out to close the beaches, but is intercepted and overruled by the town mayor Larry Vaughn (Murray Hamilton), who fears that reports of a shark attack will ruin the summer tourist season which is the town’s major source of income. The medical examiner says he was wrong about a shark attack and tells Brody that it was a boating accident. Brody reluctantly goes along with this.

Everything i learned about Human psychology i learned from “Jaws” ;)

“Rules have been rewritten and this is why most academics failed to have seen this coming, failed to figure out the remedy and failed to enact appropriate measures. Their is a reason why there is a 35yr old rocket scientist running the TARP, because the old academics need bifocals.”

Jesus keerist MAgne13 did they pull you out of Treasury to post here?

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