First 5% Plus Month in 5 Years
By Barry Ritholtz - March 23rd, 2009, 2:00PM
My friend Josh points out:
We have not had a 5%+ up month on the S&P since December 2003 — a streak of abut 62 months. With a week left in March, and the SPX up +9%, we could end that cold streak.
The last such month was December ’03. (Peter Boockvar notes we got close in April ’08 when SPX was up 4.75%).
The key question is, does this have any correlation to market bottoms?
March 23rd, 2009 at 2:05 pm
I think its related to good marketing:
Govt spots on 60 minutes and Leno certainly helped.
And the Daily Show (not Jon Stewart, but President Obama) has certainly helped.
I cannot help but comparing this all to a shell game.
March 23rd, 2009 at 2:05 pm
Perhaps it’s the cause of the market bottom!
As in ‘The Cause’ by NOFX.
“…it’s a plan, a scam, a diagram for the benefit of everyone…”
March 23rd, 2009 at 2:12 pm
What is the engine of growth? If anyone can answer me that (and the answer is of substance – not based on accounting tricks or voodoo), I’ll tell you we’ve seen the bottom. If not, we still haven’t figured a way out, and we’ll head back down. The rally might extend for some time, but it’ll be built of toothpicks, not timbers.
March 23rd, 2009 at 2:13 pm
@Marcus: Overpriced real estate, mortgages/re-fi’s, securitizations = engine of growth. Oh wait, we tried that already. Nevermind. Next.
March 23rd, 2009 at 2:19 pm
US economy just one BIG Ponzi scheme where ‘bailed out’ elite monied interests still make the rules even for shitty bets like CDS and where US taxpayers play the fool and foot the bill !
March 23rd, 2009 at 2:19 pm
Mannwich:
Nothing to see here. Move along.
March 23rd, 2009 at 2:29 pm
This guy gets it
Sigh… the biggest problem is not (toxic) bank assets Hotlist
by Jerome a Paris
Mon Mar 23, 2009 at 10:18:22 AM PDT
The Geithner plan is yet another attempt to relieve banks of their toxic assets – all the irresponsible loans they made, willfully or not, to clients that will not be paying them back. Bad mortgages, bad mortgage-backed securities, bad loans to Lehmans or Icelandic banks, bad loans to vehicles that invested in the same, etc…
There’s $2 or 3 trillion of these bad assets in the world’s banking system right now. And Geithner’s plan is to help the banks by inflating somewhat the value of these assets and funding their purchase with (mostly) taxpayer money.
But he’s missing the real problem, and in the process, he’s blowing another trillion of taxpayer money (just another friendly gift to the finance world) to actually not solve the financial crisis.
http://www.dailykos.com/story/2009/3/23/712012/-Sigh…-the-biggest-problem-is-not-(toxic)-bank-assets
March 23rd, 2009 at 2:39 pm
It’s conceivable that SPX 650 will be the bottom. But even if it is, we’ll see that level at least one more time.
I find it hard to believe that the current rally could have much steam left in it.
March 23rd, 2009 at 2:45 pm
The Big Casino stays open only when it can afford to avoid welshing on its gambling debts.
So now we are being entertained by the Three Stooges of Wall Street: Larry, Timmeh, and Ben.
Who plays the role of the fourth Stooge, Shemp the Chump?
Perhaps Obama?
Or maybe we, the taxpayers, who are paying off the gambling debts of the high rollers and who are left standing amidst the rubble of that Big Casino, surrounded by the collapsing real economy of goods and personal services.
by FMArouet @ DKos
March 23rd, 2009 at 2:52 pm
Barry,
What has a corrolation to a market bottom is the fact the world’s oil supply is now DIMINISHING. It is in PERMANENT DECLINE. The Nouriel Roubinis of the peak oil world are predicting less than 65 mbpd liquid oil production by the end of 2015. This is reality. That is $300 bbl +. That is certain doom for Obama’s plan to fix the financial market. That is an energy armegeddon in progress. For realsies.
http://kuwaittimes.net/read_news.php?newsid=NDA5NjY2NTU4
“Saudi warns of ‘catastrophic’ energy crunch
Published Date: March 19, 2009
VIENNA: Saudi Arabia’s oil minister warned of a possible “catastrophic” energy supply crunch without prompt investment. “In years to come, if traditional energy supplies should prove inadequate because capital expenditure was curtailed due to unsustainable prices, unreliable indication of future demand or hopes for a substitute that oil cannot deliver, such a supply crunch would be catastrophic,” Ali Al-Naimi said yesterday.
The painful result would be felt sooner rather than later. It would effectively take the wheels off an already derailed economy”
Why this is studiously ignored far and wide, especially on the economics blogs, is a mystery to me. What on god’s green earth could possibly be more important and germane to this countryies and the worlds financial and economic future than the fact the worlds oil supply is now in permanent decline?
Really, name one.
March 23rd, 2009 at 2:53 pm
“It’s conceivable that SPX 650 will be the bottom”
We really have to refer to this here as the Leftback Bottom – at 666.79
“I find it hard to believe that the current rally could have much steam left in it.”
Don’t bet on it, fund managers are “Seeking Alpha”. At least until April.
March 23rd, 2009 at 3:00 pm
Here’s one way to look at it:
http://sentimentrader.blogspot.com/2009/03/is-5-month-bottom-signal.html
March 23rd, 2009 at 3:03 pm
Major bear market rallies occur even when the fundamentals have not improved. The facts that the market continues to show strength into overbought readings and has now conquered the very important SPX 805 pivot tells me that a major counter-trend rally has, indeed, arrived.
This major counter-trend rally will correct the 18-month decline off the October 2007 top. An 18-month move does not get correct in a few days or weeks. I am looking for the market to rally into late summer (very choppily, of course) before we roll over and work our way into the ultimate low in 2010 or 2011.
March 23rd, 2009 at 3:05 pm
What has a corrolation to a market bottom is the fact the world’s oil supply is now DIMINISHING. It is in PERMANENT DECLINE.
Run the sky is falling.
We don’t even know where ‘oil’ comes from, much less how much is left.
Do your own research or fall for the BS about dinosaur bones.
There are deep sea vents pouring out Superhot oil at a rate that dwarfs the Exxon Valdez spill daily.
There are even species of critters that have adapted to living in this superhot, sulferous mess.
Our problem seems to be we have stopped trying to learn and assume we know it all.
You did notice this was the Saudi’s making this claim, no?
Gee, i wonder what their motive could be?
March 23rd, 2009 at 3:07 pm
Marcus Aurelius: The change in the future expected growth rate of dividends per share is the engine of growth, at least where the stock market is concerned. Here’s a quick look at the move from bottom to where the market is as of midday today.
Hope this clarifies things!
March 23rd, 2009 at 3:09 pm
There’s no way that was *THE* bottom, but this rally definitely has legs. Climb on board. Sell out in early June and take the summer off.
March 23rd, 2009 at 3:12 pm
@spigzone: Ain’t you never heard of ‘talking one’s book’?
March 23rd, 2009 at 3:13 pm
Barry asked:
Yes. Quoting, well, me:
March 23rd, 2009 at 3:18 pm
Barry,
Heres another interesting little angle to consider.
http://www.arabianbusiness.com/545723-oil-output-could-fall-by-30m-bpd-by-2015—merrill
“Oil output could fall by 30m bpd by 2015 – Merrill Lynch
by Tom Arnold Wednesday, 04 February 2009
Steep falls in oil production means the world now needed to replace an amount of oil output equivalent to Saudi Arabia’s production every two years, Merrill Lynch said in a research report.
Non-OPEC crude oil production may have already peaked and international oil companies faced the prospect of both younger and older oil fields declining steeply, the firm said in the report released on Wednesday.
It said the cumulative decline of global oil production from today could amount to 30 million barrels per day by 2015.”
——————
1 + 1 = 2
The Wall Street robber barons KNOW what’s coming. They KNOW those toxic assets are permanently radioactive. THEY KNOW. They know the financial system and the markets are headed to perdition.
They are draining as much FUTURE wealth from the country as possible before the rubes FULLY wake to what’s happening and America be DAMNED. That FULLY awake moment will arrive when the price of oil again starts spiking, only this time AS the world is in a depression.
This article by the way was NOT the Roubini’s of Peak Oil I referred to in m earlier post . This article is to show definitively the Wall Street robber barons are fully aware of peak oil and were it’s headed and they are willfully and knowingly detroying this coutries future to fill their pockets.
March 23rd, 2009 at 3:18 pm
Thanks to this post, I now cannot get the Spinal Tap song “Big Bottoms” out of my mind.
March 23rd, 2009 at 3:25 pm
DL Said:
March 23rd, 2009 at 2:39 pm
It’s conceivable that SPX 650 will be the bottom. But even if it is, we’ll see that level at least one more time.
I find it hard to believe that the current rally could have much steam left in it.
reply:
————————
I beg to differ. Had the asset plan not been announced today, I would have agreed with you.
1) As of this moment, there is no aggressive selling into the rally. In fact, it has gone up since I started writing this.
2) In spite of the BR analysis about housing, the fact that houses are moving in a better than expected volume is a positive. Housing doesn’t have to come around completely for things to be regarded well in that sector. They just have to look a little better in excess of the bad news.
3) The asset plan was probably pre-approved by likely participants confidentially behind the scenes before being announced. Thus, there will be public acceptance in the coming days. The participants are probably buying low at this time to hog all the low priced equities for themselves. Markets will continue to rise when they join the team. This is legal insider trading.
4) The mark to market fix will be announced shortly. This should be worth a couple of percents in the major indexes.
5) End of quarter window dressing will both join and aid in the momentum.
6) The S&P just went up more. Let’s see if there is a sell off in the last 1/2 hour.
———————————————————————
Unless the mood changes dramatically, I’m expecting 850 – 875 as the top at this time, and it might spike past that if enough euphoria jumps on the bandwagon. I fully expect another mini-crash in a few weeks.
March 23rd, 2009 at 3:29 pm
Foghorn Leghorn – “Run the sky is falling.
We don’t even know where ‘oil’ comes from, much less how much is left.
Do your own research or fall for the BS about dinosaur bones.
There are deep sea vents pouring out Superhot oil at a rate that dwarfs the Exxon Valdez spill daily.”
Good choice of a posting moniker. Fits like a glove.
March 23rd, 2009 at 3:31 pm
This is going to last into spring….then a fade but not back to the bottom……which was the bottom….then tread water for summer…then a strong rally in the last quarter…..That’s been my expectation for this year and so far my expectations are turning into reality……that’s all I can say
March 23rd, 2009 at 3:31 pm
spigzone
Good choice of a posting moniker. Fits like a glove.
As does yours.
Is that all ya got?
March 23rd, 2009 at 3:35 pm
this is the market bottom….if the government is willing to throw trillions to fill the gap left by decreasing consumer and business spending.
my only concern would be speculation in commodity leading to inflation since economic recoveryin near future seems possible.
how will the government fight speculation in commodities which will put a brake to their economic expansion plan by inflating wages??
what if the world still supports USD even if USA continues to print trillions to fill the gap left by evaporating assets??
consumers may be maxed out, but what if government is able to create jobs by spending trillions, which is turn may lead to higher wages??
i am wary of only two things:
1. inflation in commodities
2. bad earning reports in first and second quarter
if these dont shock too much in the negative….market seems to like the idea of inflating our way out of Debt.
March 23rd, 2009 at 3:36 pm
Otto,
I completely agree with you. We bottomed around 7k, scalloped under it briefly, and now we’re going to do a nice sine wave between 7000 and 8000. Unemployment will peak in 6 months, and then get ready to really rip when the Economic Recovery and Reinvestment Act really starts juicing the mother of all recoveries!
March 23rd, 2009 at 3:39 pm
dead hobo Says:
March 23rd, 2009 at 3:25 pm
“I fully expect another mini-crash in a few weeks.”
…..I’d agree with this but a mini crash is the key description……I don’t think it will plumb the depths again…… And I agree the fix was in on the asset plan…….This is going to be heavily subscribed so much so that they may have to go back to congress and ask for a few more bucks but it will from a position of strength…..Purely anecdotal….. I’ve been thinking about buying an I phone so hit the Apple store today…..Packed….people buying
March 23rd, 2009 at 3:45 pm
franklin411 Says:
March 23rd, 2009 at 3:36 pm
……I’m a bit less bullish but I’ve been saying for months there’s been a big underestimate of the impact of the liquidity that’s being poured into the economy…..the stimulus bill was huge whatever the naysayers said…and it was the tip of the iceberg….the Fed has been pumping in liquidity below the radar for months…of course the Austrians think this all ends in hyperinflation but it doesn’t follow at all
March 23rd, 2009 at 3:46 pm
ottovbvs,
About retail, I haven’t been out to the stores recently, but I believe the people are still spending. The reporters don’t like to talk about it because it doesn’t fit into a “brother can you spare a dime” theme. Every time I go out I have seen masses spending and retail numbers support it. They are ignored as anomalies, though. They aren’t. The press and doom lovers like to concentrate on autos or some other sure loser instead of points of recovery and support.
March 23rd, 2009 at 3:46 pm
My weekly 3 line break has a target of 873.29 for the trend to reverse upwards. The daily 3 line break was broken on the 13th (indicating the trend has reversed) with the close of 750.74. So there should be pretty good resistance once the S&P gets close to 873.29. If it fails to close above that then the current trend (down) is still intact. IMHO. Play the tape and don’t let the tape play you.
This was another weekend shell game played by the Treasury. This so called auction is just to juice the prices of the toxic assets. It doesn’t change a thing. The banks are still insolvent.
March 23rd, 2009 at 3:48 pm
Ugh. Who let in the stinker from the Oil Drum/LATOC. You’d think that the latest batch of Peak Oilers would have moved on considering that the last year demonstrated in spades that the price of oil is driven more by speculation than supply.
Just so you know all the big “heros” of Peak Oil community have been 100% wrong, wrong and wrong again. A recent favorite is Matt Simons’ call on July 14, 2008, “It’s going to go higher, way higher. It’s not a bubble, not a temporary spike.” Right at the top before prices dropped $150 to $35/barrel. LOL. Deffeyes, Hirsch, Kunstler all have been proven wrong over and over but the Peak Doomers carry on with their cult.
Another favorite Peak Loser canard is that when oil runs out we won’t be able to make fertilizer and we will all starve to death. Except that natural gas, not oil, is used to make fertilizer and can be used to power trucks to deliver it as well. There is no shortage of natural gas.
March 23rd, 2009 at 3:49 pm
Of course this the start of new bull market. Just look at the plethora of headlines today, asking, “Is this the start of a new bull” and answering with a qualified, but hopeful “Yes!”
All new bull markets require leadership, and what better leadership than dead-cat bouncing, insolvent, opaque transnational banks.
Hope springs eternal, but the markets don’t give a rat’s ass about hope.
See you at SPX 150.
March 23rd, 2009 at 3:51 pm
well . . . I was definitely wrong . . . I thought the market would do well early and fade if only because Geithner is not a confidence inducing persona. Looks like it’s for real though. Should have listened to Kass I guess when he said the bottom was in- but it always makes sense looking backwards.
March 23rd, 2009 at 3:53 pm
NiNM Said:
March 23rd, 2009 at 3:48 pm
Just so you know all the big “heros” of Peak Oil community have been 100% wrong, wrong and wrong again. A recent favorite is Matt Simons …
reply:
—————-
No disagreement there. I gave my copy of his book to The Friends Of The Library a long time ago. They probably got a buck for it.
March 23rd, 2009 at 3:57 pm
NiNM
There is no shortage of natural gas.
In fact, there is a glut of it at this very moment, and 7 or 8 big plants due to come on-line in the next year.
And they are drilling right now for more. Shell is just south of Shreveport drilling away.
March 23rd, 2009 at 4:01 pm
Dead hobo @ 3:25
Duly noted.
March 23rd, 2009 at 4:04 pm
What ever happened to dont fight the tape and dont fight the fed?
March 23rd, 2009 at 4:07 pm
@ DL: Glad you didn’t get short at lunchtime?
This puppy will run out of steam at some point but I, for one, do not intend to be trampled underfoot by hordes of panic buyers. We blew through 805 so now we are looking at consolidation between 805 and the 845-850 zone. There will be a time to get short but it sure as hell wasn’t today…
March 23rd, 2009 at 4:07 pm
@techy
the government can’t have it both ways, they can’t prop up the economy and stimulate spending without stimulating inflation, eventually. we are seeing the earliest effects of inflation in the dollar and precious metals. the base metals and general commodities will follow.
@catman
i agree, we may now also have the proverbial wall of worry.
March 23rd, 2009 at 4:09 pm
@catman:
The answer is simple: Because it’s different this time. =P
March 23rd, 2009 at 4:10 pm
call me ahab Says:
March 23rd, 2009 at 3:51 pm
well . . . I was definitely wrong . . . I thought the market would do well early and fade if only because Geithner is not a confidence inducing persona.
…..ahab I love you but you have a tendency to judge a book by it’s cover…Geithner is an ultra smart technocrat who does just fine when asked intelligent questions…..He got dumped on over the non announcement announcement but it stuck out as clear as dogs balls that they were just not ready….I’f anything the fault was the O mans for giving it a build up….. I’m a dedicated Kass follower btw
March 23rd, 2009 at 4:15 pm
This rally is total bullshit, I’m not buying it.
It has no leadership.
SPX finds itself at the close resting right up against the down gap created on 2/13, identified here on 3/12 as the next major milestone for the bulls following that day’s closing of the gap at 729 from 3/1. Let’s see them take it up another 23.5 % in the next 12 trading days.
Right.
March 23rd, 2009 at 4:16 pm
Otto,
Agreed. We had our “inspiring,” 6 foot tall ex-quarterback Goldman Sachs alum Treasury Secretary, Hank Paulson. I know it’s so counter-intuitive, but is it possible that “uninspiring,” short, clumsy geeks could actually know what they’re doing?
Perish the thought!
March 23rd, 2009 at 4:16 pm
ottovbvs Says:
March 23rd, 2009 at 4:10 pm
… but it stuck out as clear as dogs balls
comment:
—————–
Great metaphor. I’m a little embarrassed for not having thought of it already. You own that one and all derivative works.
March 23rd, 2009 at 4:17 pm
AmenRa Says:
March 23rd, 2009 at 3:46 pm
“The banks are still insolvent.”
And if Vikram gets 250 billion of liabilities off his books in the next six months….and there’s some appreciation in the better asset classes…..does this remain true?
March 23rd, 2009 at 4:17 pm
BTW the above is meant to be sarcastic against Geithner-bashers…I guess sarcasm doesn’t post well on a blog!
March 23rd, 2009 at 4:21 pm
Yes indeed the Big Casino stays open only when it can afford to avoid welshing on its gambling debts ( CDO’s, CDS’s ) by having the American taxpayers ( the suckers ) on the hook for the bill !
March 23rd, 2009 at 4:23 pm
In England when something is good they say “it’s the dog’s bollocks”…
Classic bear market rally day. Just another routine 7% rip.
Nice. If you were long.
March 23rd, 2009 at 4:24 pm
some_guy_in_a_cube Says:
March 23rd, 2009 at 4:15 pm
Right.
Probably right against the high bar you set….but for a more modest one probably wrong….we’ll have to see
March 23rd, 2009 at 4:26 pm
OK…the question was: what does a 5% monthly gain mean for the markets?
Using data from Shiller going back to the 1870’s — there have been 137 months where the return on the SP500 was 5% or above (about 8.25% of the time). So what happens…. A year later the market is higher 71% of the time with an average gain of 21% – and the average loss for the remaining time was 14%. Two years later…The gain was nearly 30% (rising two-thirds of the time) vs. a loss of just under 20% the remaining periods.
If we ASSUME (I know) that the market is actually toward the statistically cheap area – might consider that the chances of a positive return over the next year or two are not too shabby.
March 23rd, 2009 at 4:26 pm
leftback Says:
March 23rd, 2009 at 4:23 pm
…..I was saving the dog’s bollocks for another day…..and yes it was nice….give us more O Great Obama
March 23rd, 2009 at 4:27 pm
@ franklin- got the sarcasm- still don’t like him though- but hey I can’t let that blind me to possible opportunities in the market.
March 23rd, 2009 at 4:28 pm
It’s different this time. You gotta love it. The govt probably will bankrupt us in time, but it’ll more likely be our our paranoia and the DOD as opposed to treasury. Im buying the world ex-USA. Not that multinationals care.
March 23rd, 2009 at 4:29 pm
Someguyincube, it has the media as its leader! And a shit load of day, and swing traders…
March 23rd, 2009 at 4:35 pm
Had to sell 1/2 my position in WFC today – after making a 100% gain by the way!
Mannwich, still don’t want to touch financials with a 10 foot pole? I think WFC may pull back, but I see a price of $25 – $30 within a month or two. I will probably buy back the shares next week when it is in the 12’s.
Lefty, Otto, others, thanks for the more balanced view these days. These perma-bears (a.k.a. Steve Barry) can only make money one way, while guys like us play with the hand that’s dealt.
March 23rd, 2009 at 4:36 pm
“And a shit load of day, and swing traders…”
Yup. Leftback plans to sell to Johnny Retail early tomorrow morning and take the rest of the day off….
March 23rd, 2009 at 4:41 pm
I agree the rise from $100 to $140/barrel was a speculative run from dollar-phobic money. But, here are a few of questions for peak-oil critics:
1. Peak oil means peak production. Actual price levels will vary by the strength of whatever currency you’re using to measure it in. Most of the world realized (at about the same time) that half the US-denominated debt in the world was unservicable, causing a dramatic increase in the value of the USD. So, everything has been repriced. How does oil look in comparison to homes or other assets?
2. We reached a peak in oil production in 2005 and touched it again in 2008. The price was so high that it was eating into the profits of all firms but energy firms, who were driving the S&P earnings. If the credit markets hadn’t caved in simultaneously, how much longer could economic growth have been sustained?
3. If the Saudi’s convince people that oil is going to run out without tremendous investment, don’t they risk — especially with Obama in the White House — persuading Americans not to grow complacent over the big recent decline in the price of oil but instead to invest more heavily in alternative energy?
4. If I recall a chart correctly, when whales started disappearing, whale oil went thru a dramatic boom/bust double-top. Are you unconcerned that oil won’t rise again out of proportion to everything else?
I’m not looking for actual answers to these. I can accept that you’ll answer these questions differently. But, one point about your relative optimism: When the welfare of the world depends on cheap energy, your lack of alarm alarms me more than the problem itself. In other words, I’d rather people (a) consider PO, AGW, second-hand smoke, bisphenol-A, asbestos, agent orange, etc. to be threats until convincingly proved otherwise than (b) consider them okay until convincingly (for you) to be proved threats. I believe we can tackle the threats as long as we consider them a problem. When many people don’t consider them a problem (e.g., housing appraisal fraud), then that’s when the problem — a problem so visible that it’s basically an “open secret” — can “sneak up” on us and turn our world upside down.
March 23rd, 2009 at 4:44 pm
Dow 3000 for Pete’s sake !!
March 23rd, 2009 at 4:45 pm
“Lefty, Otto, others, thanks for the more balanced view these days”
Just play what you see, bro’.. and be careful out there. The Bear eats whatever he catches.
March 23rd, 2009 at 4:48 pm
@jdamon33: You got a little help from your friends at the feds. Good for you. Enjoy it while it lasts. I still won’t touch them, especially now. Can’t win ‘em all. Congratulations to you. Hope you’re still doing your little TD dance in a few months though.
March 23rd, 2009 at 4:49 pm
wunsacon Says:
March 23rd, 2009 at 4:41 pm
….What would you say is the “natural” level of oil in a healthy but not overheated world economy…I think it’s not far short of a $100…..take a look at a lot of these oil service companies that have been beaten to death…..any upward move in the next year and they fly
March 23rd, 2009 at 4:50 pm
Summers was on Bloomberg still talking the myth that we’re in a liquidity crunch. It’s not a liquidity crunch. It’s a solvency issue. Nothing has really changed fundamentally with the economy with this program. We saw this run in December (still well below those levels, by the way) based on bailout plans from the feds and still broke those previous lows. This is merely a repeat.
March 23rd, 2009 at 4:51 pm
leftback Says:
March 23rd, 2009 at 4:45 pm
….he’s just making a plea for less mental rigidity
March 23rd, 2009 at 4:53 pm
Mannwich Says:
March 23rd, 2009 at 4:50 pm
…..Summers…just another no nothing wanker…
March 23rd, 2009 at 5:03 pm
Wunsacon — well said. Thank you. Funny that we are both connecting recent events to whale oil.
My State of Maine is going whole hog now into wind generation. We have so many projects ready to go that the bottleneck is a lack of grid capacity in northern and western Maine to handle to electricity that will be generated. The technology as finally arrived and the KWH price point has arrived. Maine is also aggressively committing state and federal (stimulus) $$$ to energy efficiency in buildings. This is the type of momentum that has been absent during Bush’s term because of Cheney infamously saying that energy efficiency doesn’t matter. Now that attitude is changing 180 degrees at precisely the same time that the technology is maturing. Lots of people don’t understand that making wind power economically feasible on a large scale has required an enormous number of discrete and arcane technological and materials advances to be achieved.
So there is some hope.
March 23rd, 2009 at 5:03 pm
@otto: To put it simply, you’re a fucking prick. Fuck off. That’s not what I said. He knows plenty but he’s lying through his teeth with that terminology. One can still be smart but lie. After all, we’ve seen quite a bit of that over the past 10-20 years by our corporate and political leaders, no?
March 23rd, 2009 at 5:03 pm
@otto: To put it simply, you’re a fucking prick. Fuck off. That’s not what I said. He knows plenty but he’s lying through his teeth with that terminology. One can still be smart but lie. After all, we’ve seen quite a bit of that over the past 10-20 years by our corporate and political leaders, no?
March 23rd, 2009 at 5:03 pm
@otto: That’s not what I said and you know it. It must be in your DNA to be a know-it-all prick who nit-picks and misrepresents other comments on blogs. He knows plenty but he’s lying through his teeth with that terminology. One can still be smart but lie. After all, we’ve seen quite a bit of that over the past 10-20 years by our corporate and political leaders, no?
March 23rd, 2009 at 5:03 pm
@otto: To put it simply, you’re a fucking prick. Fuck off. That’s not what I said. He knows plenty but he’s lying through his teeth with that terminology. One can still be smart but lie. After all, we’ve seen quite a bit of that over the past 10-20 years by our corporate and political leaders, no?
March 23rd, 2009 at 5:12 pm
Don’t we have Q1 2009 earnings season staring us right in the face?? Earnings should be dreadful….
March 23rd, 2009 at 5:22 pm
Peak oil does not mean peak production.
Do not pervert the language any worse, please.
If you reach a peak, you fall off the other side, never to rebound.
If you reach peak Production at any one time, you can always exceed that by doing more of what you’re doing. Or by doing it more efficiently.
Peak Oil.
How do we know we have reached a peak, when we haven’t explored every square inch of the planet?
So like the banksters, the oilsters get some smart young computer whiz kid to plug some numbers in a black box and voila,
We are running out of oil, we must charge more.
In life, remember it is about extracting as much loot out of your pocket as possible before you die.
We could have reached peak oil ten years ago, if could be ten years in the future, it might not occur in 100 years, we just don’t know because we won’t do the work.
Anyway, ya’ll worry warts can have some of my share, we have cut back quite drastically. Have fun.
March 23rd, 2009 at 5:24 pm
How will we know all is now well? The money, whose value as a medium of exchange is only just a bit more important than its value as a means of accounting, has been impossibly queered up, with the Fed doubling its own balance sheet, and planning to double it again, all in the span of about six months. Add to that, the banking industry’s successful lobbying of the FASB whores such that there’ll be no more marking and no more crying queering up the actual accounting even more, how will we know?
I suppose when Lawrence Yun delivers a speech about how its a great time to buy and sell real estate at artificially-manipulated prices. When 2006’s half-million dollar McMansion goes again for a half-million, never mind the reason is monetary hijinks, then I suppose all is well again.
And Mannwich is right.
March 23rd, 2009 at 5:25 pm
I apologize for the multiple posts. My computer froze up. I don’t apologize for the content.
March 23rd, 2009 at 5:29 pm
Hey boys and girls I am all for renewable energies.
I just can’t stand fear mongering.
What cha gonna do about it anyway.
i’ll tell ya what you’ll do,
walk or ride a bicycle or horse or ox or donkey, or mule, you get the idea.
March 23rd, 2009 at 5:33 pm
Have a 95% gain on my BAC position, 30% on JPM and 40% on BNS- today helped nicely. I should have sold but now I am getting greedy. Still only gained 2.5% today because my short position is 75% of my long. I swore I was going to cover my shorts once we broke S&P 700- just didn’t have the balls to pull the trigger.
March 23rd, 2009 at 5:39 pm
And they say; “money can’t buy you happiness”. Oh, that’s right, it’s not theirs.
March 23rd, 2009 at 5:41 pm
Mannwich-
Deep breath, now go to St. Paul and head over to Grand Ave, go to the Tavern on Grand and have a wonderful walleye for dinner. Have a beer or two and tell em Rudy Perpich sent ya or the curent gov and put it all on his bill.
http://www.twinix.com/Lunch/tavern_on_grand.htm
Don’t forget to ‘persignarte’ yourself when you pass the Cathedral. And no, it’s not a rude recommendation.
March 23rd, 2009 at 5:43 pm
@ Broken-
I give you credit- that took a lot of manhood to buy the banks- couldn’t do it myself because it looked like sheer speculation- gut wrenching stuff.
March 23rd, 2009 at 5:48 pm
@MRegan: Thanks for the tip. It’s been a rough couple of weeks. Lost a really big deal at last minute that cost me $40-$50K and the biz ain’t getting any easier. Good news is I’m getting a nice tax refund this year largely because my business is so shitty. Couple that with the bizarro world we’ve all entered with all of this bailout crap that doesn’t seem to be helping the little guy/gal at all, and I’m a little on edge (and I’ve actually already worked out today, might need another one).
March 23rd, 2009 at 5:50 pm
Peter Schift not having a great few weeks. SP500 spiking wildly since 3/6 and gold is UNCH. Last month I caught him on Kudlow a few times and there was just too much smugness, rattling on about how much stock it would take to buy 1oz. of gold yada yada yada….
Gold very well may go to 1500 or 2000 or whatever, but it sure isn’t acting right in a world where the Fed is actually monetizing our debt.
Very impressive day for the SP500. With today’s action, the next objective is 867 – 881, the A=C and the 23.6% retrace of the entire decline. I wouldn’t be chasing this thing at this point, but with the break of 805, the 870’s flashing bright as a target zone. That crazy 990’s possibility we talked about a few weeks ago may not end up being so crazy, especially with the pace of this move.
March 23rd, 2009 at 5:57 pm
Tough to be short on days like this…just remember the reason to be short…370% Total Credit to GDP, even worse than when I put on these shorts. Rallies like this only happen in bear markets and volume was of course barely above average. On a bright note for fellow shorts, put/call moving averages remain at much lower levels than previous 3 year lows and probably are at near decade lows.
March 23rd, 2009 at 5:58 pm
Mannwich-
Sorry to hear it. My uncles and cosuins tell me the same about the Twin Cities. I can offer only one thing- take a look at NVEC- not a buy recommendation- just a heads up for alittle DD. When the earnings reality is clearer perhaps companies like NVEC will be rewarded with a richer valuation for growing revenues.
March 23rd, 2009 at 6:00 pm
@wunsacon
If I had 1/10 certainty that you do that oil prices will rise I’d sell everything I own and would be maximally leveraged to cash in on it rising. Why futz around? Particularly with wasting time on questions based on silly premises such as whale oil production = crude production.
March 23rd, 2009 at 6:03 pm
Mannwich – While youre out this eve have a Summit for me, its my birthday and a +500 Dow was a nice present. And no NVEC, please.
March 23rd, 2009 at 6:10 pm
Peak Oil is “is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline.” I am agnostic as to whether we’re near Global Peak Oil or whether humanity will ever reach Global Peak Oil. But please use the right terminology when discussing the issue. Peak Oil has nothing to do with price. If you think Peak Oil has something to do with price, you should stop thinking you’re smart enough or informed enough to post your opinions on the subject.
N.B. It is believed (not proven) that the US reached US Peak Oil in 1970 (and yes, as you can tell by the wild variance in price in the four decades that followed, US Peak Oil had nothing to do with price).
March 23rd, 2009 at 6:10 pm
SB-
I dabbled lightly in QID back in the fall of 2007 @35.18 and did ok but jumped out too quick at 51. I keep an eye on it. Confess I don’t get all the action in it for the last 3 months.
I wonder what the change I saw in its action back in Feb was. Is a toe in @ 46+ begging for a lifelong limp or a solid position for a near certain ride to MoneyLandia?
March 23rd, 2009 at 6:10 pm
Mannwich Says:
March 23rd, 2009 at 5:03 pm
@otto: To put it simply, you’re a fucking prick. Fuck off.
I don’t apologize for the content.
….sleep on it young man
March 23rd, 2009 at 6:25 pm
Steve Barry, what if the central bankers are in the process of accumulating all bad private debts so that they one day sit down and mutually forgive? I wonder if that’s where we’ll end up. (I can dream. Can’t I?)
MRegan, NVEC looks interesting. Thanks for the tip. Why Catman no likee?
NiNM, acknowledged. The price of oil depends not just on supply/demand but also on inflation/deflation (Mish’s definition). So, I’m not sure it will rise and am not betting my retirement on it. But, I do believe the supply is constrained, that peak oil production was probably 2008, and that the price of oil will rise in real terms, meaning that people will have to find ways to do with less. (And hopefully we *do* — in grand style.)
March 23rd, 2009 at 6:27 pm
:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::;;
Marcus Aurelius Says:
March 23rd, 2009 at 2:12 pm
What is the engine of growth? If anyone can answer me that (and the answer is of substance – not based on accounting tricks or voodoo), I’ll tell you we’ve seen the bottom. If not, we still haven’t figured a way out, and we’ll head back down. The rally might extend for some time, but it’ll be built of toothpicks, not timbers.::::::::::::::::::::
The engine of growth, is Bernanke printing money, plain and simple.
The world cannot get enough of USD, everybody wants USD.
March 23rd, 2009 at 6:36 pm
quarter end looms for the braindead, nothing more. the rally certainly is not associated with geitners time bomb. this monstrosity is the same as the paulson flub disaster.
March 23rd, 2009 at 6:40 pm
Hey Mannwich, sorry to hear of your troubles.
Don’t let Otto get to you. I use him as BR uses Mag covers,…a contrarian indicator.
March 23rd, 2009 at 6:48 pm
Holy freaking cow! More accurately, holy freaking sheeple. Just when the public outcries for justice were actually getting loud enough to be heard……
Look guys, a rally!!! (let’s go chase it)
I mean, with action like that, who needs justice? Bonuses all around!!!!
Pavlov would be proud of you guys, me, not so much.
March 23rd, 2009 at 6:48 pm
The pessimists have been predicting the end of the world since about last spring…..It hasn’t happened yet and it’s not going to…….apparently Paulson didn’t know what he was doing……Now Geithner/Summers/Bernanke don’t know what they are doing…..Amazing how these folks from different parties and different governing philosophies have no idea what they are doing……I’d say Geithner’s plan is actually a no brainer which is why the market was so enthusiastic…..the rally with a few ups and downs will probably last into April/May then fade and then we’ll see a late year rally…..Doug Kass actually predicts the rally in late Summer….since his prognostications have been markedly closer to reality than the pessimists I’m sticking with him
March 23rd, 2009 at 6:50 pm
Ken H. Says:
March 23rd, 2009 at 6:40 pm
Don’t let Otto get to you. I use him as BR uses Mag covers,…a contrarian indicator.
……Problem is the contrarian has been right
March 23rd, 2009 at 6:51 pm
ottovbvs @ 4:49pm, what you say makes sense. $80/barrel seems plausible. I did nibble on some energy (e.g., NE, OGZPY) on Friday. But, there’s so much political risk these days. With market prices being so heavily dependent on politics, I’m reluctant to bet heavily. The one thing I like about drill ships is that some country’s SWF can always trade in their Treasuries for some drill ships. Buying drill ships is a “safer” investment for them than buying many other US assets that are physically attached somewhere and can’t be “moved”. They can “take possession of the assets” either by simply leaving them in place for now or by repositioning them over their own fields.
Douglas Watts, good to hear people in Maine are preparing. I didn’t know about that Cheney comment. Too funny.
Foghorn,
>> Peak oil does not mean peak production.
You got — I say — you got to listen. That’s exactly what it refers to, as Anonymous Jones points out. If you think it refers to anything else, no wonder you “disagree” with the theory.
>> I just can’t stand fear mongering.
I used to say that years ago about some things until I realized/decided there’s truth in the phrase “Americans only know ‘complacency’ and ‘panic’”.
March 23rd, 2009 at 6:56 pm
Mannwich-
NVEC
catman is right in a way. It is a very funky stock, with all sorts of issues with MRAM, IP, transfer from Motorola to Freescale, and who owns what and Honeywell and Minnesotans trying to ‘fistfight’ with Bronx Bruisers and it’s frickin’ freeforall. But that’s the fun of it. I am not intentionally giving you bad advice cuz you live in Minneapolis and my peeps are from St. Paul. Hell I recommended XL and ACAS to jdamon33 and he was mean to me, called me godless communist or some such, alls I know is it cut to the quick, so in short, alls I’m saying is take a look- probably not a buy at 34+.
I have Minneapolis roots too, my great great grandfather used to play golf with Hiawatha over at Interlochen in Edina. And Bishop Ireland winked at my great great aunt Catherine, the cad. Oh, and they never made last payment on the land the Diocesis bought to put up the Pro Cathedral. Asked me grandpappy if he’d like a winda’ instead, a great dirty winda’ none can see thru.
March 23rd, 2009 at 6:59 pm
wunsacon,
You seem to be respected around here but, you need to reread my post and AJ’s.
You seem to be a bit confused, I say son.
I am an oldster and panic nor complacency is is in my vocabulary.
I guess if you can’t dazzle ‘em with brilliance, you just baffle ‘em with bullshit.
March 23rd, 2009 at 7:02 pm
@jdamon33
Yes, congrats on the WFC gain, that’s nice but I’ll say it since Mannwich didn’t, he’s said on here many many times that he isn’t a trader and since that is the case why would he buy a bank? Are you a trader, I thought you had a broker at Merrill? If you aren’t, what exactly were you “investing” in when you bought WFC? I’d like to understand what claim you think you have on WFC’s long term cash flow when you buy them right now and I’d like to better know what the business model is exactly that leads you to believe the stock is mispriced.
I’ve been long since 11/20, well documented on this site and I clearly discussed what I was buying.
That said, I would never run around on here talking about how good I did and then taking a jab at a guy like Steve Barry. Steve’s analysis is often simple and direct and in case you forgot he has been very correct for a long time, I highly doubt a guy like Steve only knows how to make money one way. He was up 77% last year!
Methinks most people talking up their bank profits are just using them to work back towards breakeven after losses in 2008.
As for the question posed above about what the engine is for growth. My reply would be, Is that ever clear at a market bottom? Please correct me if this has been clearly definable more than once or twice during major market bottoms.
@Lefty,
This has been fun hasn’t it?
March 23rd, 2009 at 7:03 pm
wunsacon Says:
March 23rd, 2009 at 6:51 pm
….My natural level is in a 80-100 range given the shape of the world economy in 2010…..I know a little about the business…..these oil service co’s are cheap and if things do turn this is not a resource that can just be turned on and off like a light switch….so they’ll fly I suspect
March 23rd, 2009 at 7:13 pm
@AT,
You haven’t posted much lately man!
Just curious if you think 1000 has a snowballs chance on this one. BR put a chart up about three weeks ago with the SPX and then the 200 SMA on the top of it, we hit a level a few weeks ago that was only seen twice before. I tried to eyeball the chart based on the last two times it happened and it looked like S&P around 1000.
At the time I thought, no way in hell, we would never get that close, BUT, as many of us have discussed here there is a lot of “money on the sidelines” and pension and hedge funds have the lowest net long positions they have had in years so we do have a marginal buyer. As Leftback stated above retail will enter soon enough they think the market is going up now, not realizing we are just back where we were a few weeks ago.
March 23rd, 2009 at 7:14 pm
Otto
You get gas much above $2.50 you will shut it down again.
I was raised in the Permian Basin and the general consensus is $60-80.
You get much above that, you kill the golden goose again. And this little goose is already bleeding out of it’s eyes.
So. be careful what you wish for.
March 23rd, 2009 at 7:17 pm
Do bull markets start and/or market bottoms form by government intervention? I think not.
March 23rd, 2009 at 7:18 pm
Removing trash from banks’ balance sheets is a short-term solution that delays the problem’s ultimate solution, bank takeovers. The government won’t be able to inflate the prices banks receive for selling bad assets indefinitely. Ask yourself, how do actual bank profits look going forward?
sell the sell.
March 23rd, 2009 at 7:19 pm
ben22 Says:
“for the question posed above about what the engine is for growth. My reply would be, Is that ever clear at a market bottom? Please correct me if this has been clearly definable more than once or twice during major market bottoms.”
So . . . you just fake it? Take a stab and hope for the best? I think what is being alluded to is- why are we getting excited? For someone to want to invest they have to believe that there is something worth investing in? Correct? So . . . what would that be? On a macro level- I have no clue. Of course there are individual stocks that may do well- but I don’t think that was the point of the post.
March 23rd, 2009 at 7:21 pm
JohnnyVee,
That could be a real hard question to answer, after all, government intervention, that could include going to war couldn’t it? Last I checked those were pretty good for profits at a few outfits, if not for the market in general.
March 23rd, 2009 at 7:22 pm
Wunsacon:
Vice President Dick Cheney, July 2001:
“Conservation may be a sign of personal virtue but it is not a sufficient basis for a sound, comprehensive energy policy.”
Cheney later walked back from this statement when he was challenged on it by Jim Lehrer:
http://www.pbs.org/newshour/bb/white_house/july-dec01/cheney_7-18.html
Suffice to say that during the period 2000-20008 the Bush/Cheney administration dismissed the value of energy efficiency, energy conservation, and the development of non-oil and non- coal-based energy strategies in both short and long term scenarios.
Opportunity lost.
March 23rd, 2009 at 7:23 pm
Foghorn Longhorn Says:
March 23rd, 2009 at 7:14 pm
……Don’t agree with you…..the country can live with$3.50 gal particularly with a gradual switch out of Explorers…It was only when the price went to over 4 bucks a gallon that consumption was seriously impacted and even then it didn’t go over a cliff
March 23rd, 2009 at 7:24 pm
Roy Rogers – “What is the engine of growth? If anyone can answer me that (and the answer is of substance – not based on accounting tricks or voodoo), I’ll tell you we’ve seen the bottom”
Thats simple. Useable energy is the engine of growth. No useable energy = no growth. That’s true from a virus to himan civilizations to the current world economy. Declining useable energy = declining growth. Currently the premiere source of useable energy in the world is petroleum. Civilization in it’s present form is utterly dependent on it. The decline of availability of that useable energy source spells the end of civlization as it now exists.
That bottom is not within our lifetimes.
March 23rd, 2009 at 7:25 pm
The guys on Kudlow are calling this the Paulson Rally. And Kudlow’s not even there to talk over them. At least they’re consistent.
March 23rd, 2009 at 7:29 pm
Douglas Watts
Suffice to say that during the period 2000-20008 the Bush/Cheney administration dismissed the value of energy efficiency, energy conservation, and the development of non-oil and non- coal-based energy strategies in both short and long term scenarios.
Opportunity lost.
Plus the two doofusses invaded a sovereign oil rich country, oil was only $30 a bbl back in those good old days.
March 23rd, 2009 at 7:30 pm
vaughn Says:
March 23rd, 2009 at 7:18 pm
……What you guys don’t appear to get is it isn’t all trash….and even the trash has value which is set by prevailing market conditions…….And yep believe it or not large parts of banks traditional ops are actually doing ok and will do much better if the economy opens up……why do you think so many of these small regional banks who never got into this are actually doing quite nicely…..people who work in the banking business tell me that if they can get some of this stuff off their balance sheets some of worst cases like Citi are not going to look too bad…..You’re addicted to over generalizations here.
March 23rd, 2009 at 7:31 pm
@call me ahab,
That’s not really what I was saying, and I see your point, as I saw Marcus’.
What I’m getting at is that after a massive decline in the market, and declines in so many stocks far greater than the market I find spots to be invested in right now appealing. I’m not saying to run out and buy the index but there are plenty of stocks here that should be far higher 10 years from today and I don’t need a clear engine of growth for me to want to buy them.
On a macro level wouldn’t you agree that global needs based spending (food, energy for example) have growth potential from even these levels and certainly from levels a few weeks ago and in October and November of 2008?
March 23rd, 2009 at 7:34 pm
Someone please enlighten me. Can anyone tell me what’s to prevent the holders of the toxic assets from joining the program and bidding the assets up? I mean if you can get a bit over 3300% (97% gov’t vs 3% private) return on selling your worthless shit isn’t the sky the limit? I assume there must be a feature that prevents this but exactly what is it?
March 23rd, 2009 at 7:36 pm
ben22 Says:
March 23rd, 2009 at 7:31 pm
……Absolutely right there were some incredible bargains a couple of weeks ago in just the areas you mention like construction and ag equipemt, oil services etc
March 23rd, 2009 at 7:37 pm
the country can live with$3.50 gal particularly with a gradual switch out of Explorers
Well don’t forget credit was still flowing freely in those halcyon years.
On the news tonight, saw where they cut one dude’s credit card limit from $19,000 to don’t laugh $300.
So you need to adjust your bar a little downward.
Official Disclaimer.
I don’t give a shit about Wall Street or stocks and don’t have one penny at risk in ‘the market’
March 23rd, 2009 at 7:39 pm
ottovbvs Says:
March 23rd, 2009 at 3:31 pm
This is going to last into spring….then a fade but not back to the bottom……which was the bottom….then tread water for summer…then a strong rally in the last quarter…..That’s been my expectation for this year and so far my expectations are turning into reality……that’s all I can say.
Famous last words! just ask Wuns about peak oil at $140 or cinefoz about stocks bottoming at 10,000. How did that all work out?? Fundamentals boys and girls.
At first I figured you as a Banker, and why not be for the bailouts,…right?? But with comments like that I think your just a BO spinster.
Either way, this plan sucks because there is no transparency or ability to keep banks from gaming the system and lay it ALL on the taxpayer. Realize at the end of the day this will end badly as I fear the taxpayer will have the last word. Along the lines of the “consumer” is always right.
Good luck with that position. Hope you are right but I do not see the fundamentals in your corner.
March 23rd, 2009 at 7:40 pm
@ottovbvs says
“if they can get some of this stuff off their balance sheets some of worst cases like Citi are not going to look too bad”
You must be smoking crack. I guess if we ignore the hundreds of billions(including guarantees) that have been thrown Citi’s way, and ignore the $800b in SIVs that should be on Citi’s books, and ignore the growing writedowns from credit card loans, and change the accounting rules so Citi doesn’t have to mark it’s dud assets to market, and then have the government overpay for those dud assets…then I guess everything looks hunky dory. Jeez.
March 23rd, 2009 at 7:41 pm
paulyarbles
I mean if you can get a bit over 3300% (97% gov’t vs 3% private) return on selling your worthless shit isn’t the sky the limit? I assume there must be a feature that prevents this but exactly what is it?
HONESTY
March 23rd, 2009 at 7:48 pm
On a macro level wouldn’t you agree that global needs based spending (food, energy for example) have growth potential from even these levels and certainly from levels a few weeks ago and in October and November of 2008?
I do agree- as an investor- however, I think what the post was trying to drive home- where is the basis for the USA’s recovery as an economy? What does the future growth of the USA lie?
March 23rd, 2009 at 7:51 pm
sorry- the following from my post above is from Ben22:
“On a macro level wouldn’t you agree that global needs based spending (food, energy for example) have growth potential from even these levels and certainly from levels a few weeks ago and in October and November of 2008?”
I do agree- as an investor- however, I think what the post was trying to drive home- where is the basis for the USA’s recovery as an economy? What does the future growth of the USA lie?
March 23rd, 2009 at 7:58 pm
Foghorn Longhorn writes: HONESTY
Uh, anything else? Anything that is not in such short supply on Wall Street?
I do think there must be something but I just don’t know enough about the program details.
March 23rd, 2009 at 7:59 pm
@MRegan: LOL. I hadn’t thought you might lead me astray due to the Minneapolis-St. Paul “rivalry”. As an outsider with east coast roots (mostly Boston but 6 years in NYC), the whole Twin Cities rivarly is quite amusing to me, as I’ve heard there are many here who won’t even venture into the other city for any reason. I, for one, love venturing into St. Paul. It’s so different from Minneapolis, so it’s a nice change for me. More old school than Minneapolis. In fact, I was just there on Friday for the WHCA Final Five Hockey tourney. UMD (U of Minn-Duluth) took it to UND (North Dakota) 3-0. My buddy was the sports physician covering the tourney, so he got us sweet seats 3 rows behind the goalie. Forget just how fast and how much hitting hockey games have when you’re there in person and up close. Thanks for the tip, by the way.
March 23rd, 2009 at 8:04 pm
Leftback: SRS starting to look like a bargain again.
So is SMN. Chinese are driving that at the moment, but they will wind up with more than they need as their economy is about as bad as ours. I believe the low for the past couple of years is around 26.
Dug also. Back down to 22.7, but market manipulation only works so far. Can’t hide the fundamentals. Schlumberger just announced another round of layoffs.
http://www.chron.com/disp/story.mpl/front/6333029.html
March 23rd, 2009 at 8:07 pm
Mannwich: Hockey sounds like fun. We really like Duluth in October. Skeeters are gone and weather is crisp. Been there twice and are talking about doing it again this fall.
March 23rd, 2009 at 8:08 pm
Plus the two doofusses invaded a sovereign oil rich country, oil was only $30 a bbl back in those good old days. — Foghorn Leghorn.
Cheap oil/gasoline in the 1990s and since 2008 has screwed up the U.S. badly because it has shunted investment capital towards retrograde technology (Hummers, coal plants) and diverted capital away from emergent technology (hybrids, modern rail, wind power, solar, distributed energy, remaking the power grid).
The worst thing you can do to “help” an alcoholic is give them a gift certificate to the package store.
Or as we say in Mass., “the packie.”
March 23rd, 2009 at 8:09 pm
pauly
From here:
http://www.ritholtz.com/blog/2009/03/public-private-investment-program/#comments
By him:
http://www.ritholtz.com/blog/2009/03/public-private-investment-program/#comment-156305
Hoisted from comments:
I am SAC Capital. I get to be one of the bidders on bank assets covered by the program
Citi holds $100mm of face-value securities, carried at $80mm.
The market bid on these securities is $30mm. Say with perfect foresight the value of all cash flows is $50mm.
I bid Citi $75mm. I put up $2.25mm or 3%, Treasury funds the rest.
I then buy $10mm in CDS directly from Citi [or another participant (BOA, GS, etc)] on the bonds for a premium of $1mm.
In the fullness of time, we get the final outcome, the bonds are worth $50mm
SAC loses $2.25mm of principal, but gets $9mm net in CDS proceeds, so recovers $6.75mm on a $2.25mm investment. Profit is $4.5mm
Citi writes down $5mm from the initial sale of the securities, and a $9mm CDS loss. Total loss, $14mm (against a potential $30mm loss without the program)
U.S. Treasury loses $22.75mm
Great program.
It’s just a scheme to transfer losses from the bank to the taxpayer with an egregious payout to a middleman (SAC) to effectively money launder the transaction.
You’ve also transmuted a $30mm economic loss into a $36.75mm economic loss because of the laundering. So its incredibly inefficient.
How did fraud and money laundering become the national economic policy of the US?
One would have to be a criminal to participate in this.
Folks, this IS even worse than I thought, and you know I have a constitutional predisposition to take a dim view of things (although it was clear from the get-go that the introduction of private parties to give air cover to the Treasury would make the exercise more costly without adding any value).
You were saying…
March 23rd, 2009 at 8:09 pm
this:
NiNM Says:
March 23rd, 2009 at 3:48 pm
Ugh. Who let in the stinker from the Oil Drum/LATOC. You’d think that the latest batch of Peak Oilers would have moved on considering that the last year demonstrated in spades that the price of oil is driven more by speculation than supply.
Just so you know all the big “heros” of Peak Oil community have been 100% wrong, wrong and wrong again. A recent favorite is Matt Simons’ call on July 14, 2008, “It’s going to go higher, way higher. It’s not a bubble, not a temporary spike.” Right at the top before prices dropped $150 to $35/barrel. LOL. Deffeyes, Hirsch, Kunstler all have been proven wrong over and over but the Peak Doomers carry on with their cult.
Another favorite Peak Loser canard is that when oil runs out we won’t be able to make fertilizer and we will all starve to death. Except that natural gas, not oil, is used to make fertilizer and can be used to power trucks to deliver it as well. There is no shortage of natural gas.”
esp. “Another favorite Peak Loser canard is that when oil runs out we won’t be able to make fertilizer and we will all starve to death. Except that natural gas, not oil, is used to make fertilizer and can be used to power trucks to deliver it as well. There is no shortage of natural gas.”
more esp. “can be used to power trucks to deliver it as well. There is no shortage of natural gas.” v. the Hackable “SmartGrid” & PEH-auto Ruses..
is on the Right Track..
Foghorn makes a # good points, as well..
“Peak Oil” & GHG-induced AGW are Hoaxes that would do Bernays proud..
if we were Really worried about thos thing we’d have a fleet-wide retrofit to CNG and, you know, Buy American, but that’s not the Gambit..
Like TT Timmy’s Tarp II, it’s, another, misdirection..
Though, as lb points out, “trade the market you see~”
March 23rd, 2009 at 8:12 pm
Foghorn Longhorn Says:
March 23rd, 2009 at 8:09 pm, above
that’s All one needs to know..U. Sucker’s wallet is wide-open
March 23rd, 2009 at 8:13 pm
@Mike in Nola: Duluth in the early fall is great. Great color up there that time of year and weather’s usually pretty nice. Reminds me a little of New England in the fall. My sister-in-law’s family used to live up there, so we were regular visitors in recent years, but they’ve since moved, so we don’t go up as much anymore. It’s great in the summer too, but you gotta deal with the state bird (skeeters).
March 23rd, 2009 at 8:19 pm
The worst thing you can do to “help” an alcoholic is give them a gift certificate to the package store.
Oil=Alcoholic
whatever, enough bizzarro world for me today.
March 23rd, 2009 at 8:20 pm
Thanks Foghorn. Now what’s to prevent SAC from bidding $150mm and buying $20mm in CDS? I mean Citi will sell to the highest bidder, no? Isn’t everyone better off? Everyone but the U.S. Treasury.
There at least has to be something to prevent an arbitrarily high bid up, right?
March 23rd, 2009 at 8:28 pm
paulyarbles @ 7:34
Yeah, I see this as a potential issue when investors are only putting up 7% of the money, and the taxpayers the other 93%.
From the investor’s point of view, it’s like buying a call option, except that there’s no expiration. And there’s potential for all sorts of “under the table” deals between the investors and the bankers.
March 23rd, 2009 at 8:41 pm
NOTHING can stop housing prices falling another 20%. Until then, nothing at issue can be values with certainty. And the uncertainty is causing much of the problem.
NOTHING can stop real S&P earnings in 2009 falling to around $32. So we are now at P/E 25+ already. In the present global economy, that doesn’t make much sense to me.
Isn’t this just the boys on the Street again?
March 23rd, 2009 at 8:49 pm
Otto-
I don’t always agree with your ideas and assertions but I guess I don’t understand them, because they haven’t triggered much antipathy. How do you manage to make so many friends?
March 23rd, 2009 at 9:03 pm
My favorite part of this new investment plan is that hedge funds are the new white knights. People are throwing tea in the river over some schmuck in CT getting a million $ bonus at AIG? The lowly tech guy or controller for some of these hedge funds blows that much in Vegas on weekend.
Enjoy the rally, I’ll report back when I hear about any uptick in demand in corporate america (actually demand for everything seems to be finding a new cliff to fall off every week – but let’s not get bogged down with fundamentals when the charts and my horoscope say buy, buy, buy!!!)
March 23rd, 2009 at 9:26 pm
“The key question is, does this have any correlation to market bottoms?”
August 2000 +6.07%
April 2001 +7.68%
November 2001 +7.52%
Um, yeah, you usually run into a few of these before you find a market bottom.
March 24th, 2009 at 3:09 am
>> Famous last words! just ask Wuns about peak oil at $140 or cinefoz about stocks bottoming at 10,000. How did that all work out?? Fundamentals boys and girls.
Not that I’d want to spend 30 minutes to find supporting links on TBP for my past statements. So, you’ll have to take my word on it that I was *not* bullish on the price of oil past $110/barrel. I’m not the sharpest knife in the drawer by any means. But, I did conclude that the price of oil had become less and less based on fundamentals and more and more based on a surge of money looking for a home safe from dollar devaluation. (At around the same time, I also noticed a TV reality show about roughnecks.) Now, that being said, I did try catching falling knives once the prices came down below $90/barrel. So, I’ve got a lot to learn.