Anecdotal Sentiment Discussion
By Barry Ritholtz - April 2nd, 2009, 5:30PM
Yesterday during lunch, we were going over various sentiment indicators. We track a variety of different psychology metrics, but the anecdotal ones are the most fun.
Kevin Lane noted all of the TV shows that had reflected the bad economy as major plot lines — from Desperate Housewives, 30 Rock (and a 3rd I forgot).
My example was the post earlier this week showing “100 Days from Major Troughs.”
The pushback in the comments was amazingly one-sided . . .
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April 2nd, 2009 at 5:40 pm
Barry, I think you may have mistaken negative sentiment about the silly chart for negative sentiment for the market. You are a bright guy, but your weakness for that sort of thing is really over-the-top.
I think the sentiment indicator has swung wildly the other way now. Half of humanity seems to have called the bottom in the last two weeks. And now on Bloomberg: Obama Says G-20 Summit Will Be `Turning Point’ for Global Economic Rebound
I wonder if they found a “Mission Accomplished” banner for him to stand in front of?
April 2nd, 2009 at 5:43 pm
Its cool to be a doomer now. I’ve since given up being doom and gloomer…
April 2nd, 2009 at 5:43 pm
Sentimental anecdote…
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April 2nd, 2009 at 5:45 pm
I’d be bullish right now, but, I looked at the 25 year chart of the Nikkei vs the S&P.
Nikkei down 10% over that time frame, S&P up more than 500%.
Japan is the closest analog to what we have right now, so……..
April 2nd, 2009 at 5:53 pm
Well, I think it is interesting…the big economic news…layoffs, actual jobs, housing prices, commercial real estate,credit cards, car sales, GM, etc.. all these things are about the same…but some of the “niche” news like RIMM is positive. You can understand how these things could be that way.
The mark to market FASB ruling…well, if the emperor had no clothes or did have clothes before the rule change, the emperor still has or has not the same clothes..
The changes in the stock market have been remarkably fast. both to the downside, and now to the upside…reminds me what the old saying is about the life of an obstetrician…nine months of boredom and 30 minutes of sheer anxiety…
…certainly interesting..
April 2nd, 2009 at 6:02 pm
may I add that the slow stochastice shows a woefully oversold SPX- has to come down soemtime.
April 2nd, 2009 at 6:14 pm
Weekly 3 line break give me overall market sentiment and the current trend. The 5 minute midpoint ((open+close)/2)) gives me daily sentiment. This numbers are using the SPX. It’s weird but the 5min becomes pretty good support/resistance for the day. I watch the pivot, R1 & S1 also.
Currently headlines seem to drive the market not fundamentals.
April 2nd, 2009 at 6:40 pm
@AmenRa: Agree. My sense is the traders are doing what they can to create plays. As others have noted, volume remains low which should be a clue.
But this G20 Obama “feel good” campaign just might work for those that still have jobs and need to find a home for their $$$$ that doesn’t lose ground to inflation.
Someone’s got to feed the trader fires.
April 2nd, 2009 at 6:41 pm
The economy is collapsing at a slower pace; isn’t that reason enough for a 25%+ rally?
April 2nd, 2009 at 6:48 pm
Any rally this fast, and this furious, must be doubted, especially given long term concerns about the ponziconomy.
April 2nd, 2009 at 6:49 pm
@Rajesh
Homes prices are still falling. They are the underlying security in many securitizations. How can the banks value the assets higher when the prices haven’t stopped falling?
April 2nd, 2009 at 6:55 pm
I found a video about the current market rally:
http://www.youtube.com/watch?v=sotyIECe_hw
April 2nd, 2009 at 7:10 pm
Just on CNBC (I accidently stopped on the channel). The Senate is now considering a review of the Federal Reserve Banks. If you ever wanted to know who runs a country you’re about to find out.
April 2nd, 2009 at 7:10 pm
I love the way CNBC trots out Roubini and Taleb the morning before a big rally. I think they’re done that 3 times now. This morning they brought out Cramer- could that be a signal to sell?
April 2nd, 2009 at 7:33 pm
How’s all that cash feeling now folks?
Critical thought – Japan 1990 had P/E’s north of 70 so your comparison doesn’t stick.
April 2nd, 2009 at 7:36 pm
Well, I heard Howard Davidowitz interviewed last Friday on WBBM’s “Noon Business Hour” show. Howard really went off about the Obama budget assuming unemployment stops at 8.1%. Further, how do the markets react when the IRS tax receipts are announced and come in FAR below what had been estimated? The unemployment number out tomorrow is sure to be above 8.1%…
April 2nd, 2009 at 7:37 pm
Barry, what’s the story with hedge fund redemptions? If you can have forced selling, you can also have forced buying. With all the talk of remdeptions, I have to wonder if this rally is at least partly driven by redemptions from the short side.
April 2nd, 2009 at 7:41 pm
This rally has been good. At first I did not trust it, but have been able to grab a little here and there. All of Feb. it was down, down, down. In early March, it started, and it has been up in fits and starts. Too manic
for me to think this is anything more than a good bear market rally. Have things really changed that much?
April 2nd, 2009 at 7:47 pm
People seem to forget some history about bear market rallies:
The first leg down in 1929 lasted about 2.5 months and brought a 47.9% drop in the DJIA. This was followed by a 47.7% rally from the bottom lasting about 5 months. After those mustard seeds were planted, an 85.8% drop lasting 27 months happened… It wasn’t the initial drop that killed everyone, it was the second leg down that was the real bear.
Not saying that we’re in the GD part deux, only that anyone who is sure everything is over may be in for an unpleasant surprise…
HCF
April 2nd, 2009 at 8:17 pm
Well, if you didn’t have people that figured everything would work out sooner rather than later, then everything would be ZERO and that’s no fun.
Yet I feel that now is the time to return one’s faith to your pundit of choice.
April 2nd, 2009 at 8:18 pm
South Park
April 2nd, 2009 at 8:20 pm
1) Is the USA better off today economically than 8 yrs ago ?
I say a Resounding NO…. its trying to mask or paper over ( literally ) the systemic financial ponzi scheme
2) Now are you better off today than you were 8 years ago mainly in terms of real estate and stock portfolio wealth ?
I think few people would be a strong YES
3) Now where USA and you be economically speaking in 2 – 4 yrs.
a) much better off
b) about the same
c) on food stamps like 1 out of 10 Americans today ( and probably 2 of 10 soon ! )
April 2nd, 2009 at 8:33 pm
km4,
re: 3) c) :http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=number+of+Americans+on+Food+Stamps+2009
What I find amazing, is that peep are taxed to subsidize higher Ag prices, taxed to subsidize Ag Exports, and taxed, at least, again to fund Food Stamps..
Aretha belted it best: Who’s Zoomin who?
April 2nd, 2009 at 8:34 pm
link: http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=number+of+Americans+on+Food+Stamps+2009
April 2nd, 2009 at 8:37 pm
Whatever you have Faith in, the real solution is to have some of those eight million people who live in New york learn to do something other then suck wealth off the rest of the nation. If New York were to go cancerous rust in it’s core like most of Americas other major cities, it might be a relief to the rest of us. Detroit is ready for a rebirth in the next couple decades as a model of green urban landscape, with chickens and goats grazing at the feet of sky-scrapers. The only question is: Will those sky-scrapers be inhabited by people?
Let New York die, so America can live.
April 2nd, 2009 at 8:51 pm
Sentiment is in the eye of the beholder.
You can’t turn on a cable news channel without seeing the little corner box with a blow-by-blow account of how the Dow is doing. Everyone is fixated on stocks and on calling a bottom and on getting “in” and on not holding cash, doomed as it is to be destroyed by hyperinflation or debasement or mattress mites or whatever. The afternoon DJ on WQXR cheerily announced during a break that spring is in the air and the Dow is up.
I’m looking (still) for a trend reversal and leadership, any leadership. I’ll leave the heartbreak to the market, if it’s so disposed.
April 2nd, 2009 at 9:00 pm
I read an article in the WSJ print paper today while feverishly peddling on the stationary bike (I’ll post it if I can find it online) that revealed just how many retail investors are now day trading Citi’s stock, many of whom are doing so just to “get back to even” (their words, not mine). This is basically what it’s come to in our “markets”. Once the this thing turns the other way and the herd start running for the exits again, this will get ugly fast. Many have gotten killed on C and the market overall and are basically gambling it will go higher. I have a sneaking suspicion many of those folks are going to get burned again on C when all is said and done.
April 2nd, 2009 at 9:06 pm
bman:
NY is a net payer of taxes – and you can bet that money is coming primarily from NYC.
http://www.taxfoundation.org/research/show/22685.html
http://www.taxfoundation.org/research/show/266.html
For New York city, check p. 29 of this report:
http://www.taxfoundation.org/files/wp2.pdf
April 2nd, 2009 at 9:15 pm
bman:
NY is a net payer of federal taxes – and you can bet that most of that money is coming from NYC. Far from sucking the wealth from the rest of the US
As of 2005, the largest recipients, per dollar of taxes paid are New Mexico, Mississippi, Alaska, Louisiana, and West Virginia. New York ranks 42nd.
For city rankings, check the following PDF (NY is on p. 29).
http://www.taxfoundation.org/files/wp2.pdf
BTW: New York city is a great place – 8 million people or not.
April 2nd, 2009 at 9:16 pm
Sorry for the double post – first didn’t show up.
April 2nd, 2009 at 9:17 pm
This big problem still hasn’t been anywhere near resolved in various parts of the country….
http://www.reuters.com/article/newsOne/idUSTRE53200O20090403
On another note, drove by yet another monstrosity CRE development in suburban Minneapolis that looks close to being finished and another one just getting started next door. Who exactly is going to fill these places? Ridiculous.
April 2nd, 2009 at 9:18 pm
Wonder how many Americans read The Quiet Coup….perhaps .001 % ?
http://www.theatlantic.com/doc/print/200905/imf-advice
US Banking oligarchy f*cked up and all the key players are still running the ponzi scheme show !
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.
by Simon Johnson
The USA in addition to having most advanced economy and military also has the most advanced oligarchy so if the Obama admin doesn’t clamp down on Wall St crooks now ( it won’t ) and swing the banking regulation pendulum back we’ll also be the world’s largest Banana Republic.
April 2nd, 2009 at 9:34 pm
MA,
re: other thread, on Playpers, de nada..
though, to your point, “Taxes paid” are one thing, “Total Income” is another..
I think bman was referring to the latter, + the total cost, see: Bailouts, of the actions epi-centered in NYC..
just guessing..
Mannie,
re: empty CRE, see: Rahm Emanuel: “If you are on that no fly list, your access to the right to bear arms is cancelled”
http://cryptogon.com/?p=6611
H. R. 645
To direct the Secretary of Homeland Security to establish national emergency centers on military installations.
SEC. 2. ESTABLISHMENT OF NATIONAL EMERGENCY CENTERS.
(a) In General- In accordance with the requirements of this Act, the Secretary of Homeland Security shall establish not fewer than 6 national emergency centers on military installations.
(b) Purpose of National Emergency Centers- The purpose of a national emergency center shall be to use existing infrastructure–
http://cryptogon.com/?p=6492
there’s a whole list of other Bills pending in Congress, along the same lines..
should be a good time..
April 2nd, 2009 at 10:09 pm
HCF @ 7:47
The Fed is acting very differently now versus then. Then, the money supply contracted by 25% (I think). Now, fiscal and monetary stimulus are unlike anything the world has ever seen. I do think the market is going down again (soon). But the economic backdrop is vastly different.
April 2nd, 2009 at 10:22 pm
@Mannwich — re the retail investors who are day trading C — I think that is an example of why the bottom isn’t in yet. Even the venerated Leftback bottom is in trouble.
As a Johnny retail type myself, I don’t see enough despair among my crowd. People are not looking at their 401(k)s and hoping it will get better. I’m not hearing people say that they have moved all their 401(k) contributions into cash going forward, for example. I think people have not really let go of the buy and hold mentality that let them (including me) ride everything into the toilet.
Now that we’ve had this big, sudden rally and people are starting to say “well, that was bad, but things are looking up”, folks feel like they did the right thing by not panicking.
I think retail investors need to panic before this is over.
April 2nd, 2009 at 10:25 pm
@ DL:
I absolutely agree that the fiscal and monetary environment is completely different. The Great Depression will never happen again in the same form, but the lesson I draw from it is that calamities can happen both because of or in spite of government intervention. Every action has both intended and unintended consequences and often, people only focus on the intended positives. I am waiting for the bad stuff to come up. I find that too many people have turned too positive very quickly, so that side of the boat is getting pretty crowded right now.
HCF
April 2nd, 2009 at 10:39 pm
HCF @ 10:25
I think the risk is that there’s too much stimulus (fiscal and monetary), and that the Fed will be unwilling to tighten policy enough to head off inflation.
If that’s the scenario, however, it will be possible to have a “rip snorting” bull market for a while (although not just yet), before the sh*t hits the fan.
April 2nd, 2009 at 10:40 pm
MHoffer:
I got his point, and nobody likes the banks, but he’s talkin’ 8 million people on the dole. It just ain’t so.
April 2nd, 2009 at 10:53 pm
It’s hard to have any sentiment right now. We are in a no mans land. It’s like calling down to the engine room to fire up the second boiler. The fire as been started, but we are still waiting for that steam power to kick in. Fed has started the fire, but we are still waiting for the steam to build.
This is like nothing before, the govt will not let the general populace suffer until it can no longer prevent it from happening. Right now that will be later rather than sooner.
My belief is that every effort made to prevent the downside move caps the upside future potential. This will just lock us into a sideways movement for years. The total up and down range has yet to be determined.
April 2nd, 2009 at 10:59 pm
Why do I keep hearing that the volume behind this rally has been weak? Are we looking at the same stats? We traded 1.8b shares today with nice gains in the market (off the highs though…). The average volume of this rally is significantly higher than the 27% off the 11/21 low.
I think a lot of people are waiting for a bottom where you do not have tons of analysts and pundits saying it is the bottom. People seem to be waiting for all the “experts” to give up at the exact wrong time. I think that is highly unlikely. There will always be a strong chorus of people calling every single bottom over and over again and eventually they will be right.
I agree with the earlier comments that it is now cool to be doom and gloom, it is becoming the crowd…
http://moneyneversleepsblog.blogspot.com/
April 2nd, 2009 at 11:10 pm
@km4
Thanks for this link friend:
http://www.theatlantic.com/doc/print/200905/imf-advice
outfuckingstanding article. A real, non-partisan, no BS assessment of where we are and how we got there.
April 2nd, 2009 at 11:52 pm
well Barry, you were 2-3 years early on Dow 6000… it’s only fitting that you’d be 2-3 years early on the recovery. LOL ;P
April 2nd, 2009 at 11:54 pm
I get the same feeling as Whammer: ok, we’ve had the recession; time for stocks to start their inevitable recovery.
As to the short term, it looked like people were trying to bail out this afternoon so they wouldn’t be caught long if the numbers are bad Friday. If the employment numbers are halfway decent, or are made to sound that way, the rally keeps goin’, or at least I hope so. Set some orders to buy ultrashorts at various points based a bit above past lows and only one has gotten triggered, that for a little bit of DUG.
There could well be some panic buying from those who don’t want to be left out, so this could go further than most expect, much as the 1930 rally did.
I just went to the Fox Business site to see what it was saying. God. Will be my last visit. The feature video was some guy whining about the creation of the nanny state, how we are all spoiled by all the good things we’ve had, and how all those good things were due to free enterprise. The brainwashing never stops.
April 2nd, 2009 at 11:59 pm
Here’s my sentiment take…first is quantitative – 21 day total put/call at 3 year lows, possibly at decade lows (don’t have data back past 3 years).
Second…Bob Doll on CNBC this morning…”My clients are 0% cash (starts a hearty laugh)”
April 3rd, 2009 at 12:23 am
My take is that while recovery in the stock market tends to precede recovery in the economy, it NEVER HAPPENS while the economy is still headed lower. (I say this without a shred of hard data to back me up)
So we have housing prices still heading steeply lower, unemployment rising ever-higher, and I feel confident that over the next few weeks we will see some of the sickliest earnings in living memory — which will be topped (on the worser scale) by the next quarter, and then the quarter after that.
Ergo, I submit that this is “only” a bear market rally, although I readily admit that it could go one for several months, depending on how much effort is put into pumping the happytalk express (which seems to have more backing than the banksters, which is saying something these days). I’m not about to chase a rally upward and run smack into the bear coming down the slope.
April 3rd, 2009 at 12:58 am
Seems like folks are happy drunk and ready to party. If the market is usually forward looking, then this one is also part psychic. I can’t see any good news on the horizon. This rally isn’t climbing a wall of worry, it’s climbing a wall that isn’t even there. Almost like it’s all just market memory: “we were at 14,000 and we’ve got to get back there…”
No one can deny the direction is up, up, up. The trend is your friend. Fight (and ride) it at your peril.
April 3rd, 2009 at 1:42 am
MA-
what the Poli-Sci-Fi Crowd hates to acknowledge is that they are ‘metaphysically’, at the very minimum, ‘on the dole’ of the Goods Producing Economy.
IOW, the FIRE ‘economy’, and its ‘politico-Keepers’, burns on the Timber grown on ‘der Welt’, the Timber of its tenders’ Souls, and is carried by the timbre of the voices of deception that carry its Tune.
April 3rd, 2009 at 7:17 am
LOL
This can’t end until you all stop picking the top!!, It’s killed me this cycle that all the people who couldn’t pick a Bottom, are trying to pick a top. WHAT IS WRONG WITH YOU THAT YOU THINK YOU CAN PICK A TOP,WHEN YOU COULDN’T PICK A BOTTOM!
Even Barry, who I love was all “There may be a bottom here somewhere, I’m not sure where.”
My favorite indicator from a few weeks ago was the schwab commercial that said ” I just want to stop losing my money, *head cocked* and start saving it….. you know?”
The new one is that Magic Johnson is Pimping Rent-A-Center!
Just let us know when you all are ready to go Long… so I can get short!
I also love that everyone is waiting for the Roubini bottom at 600, and that everyone was going to catch it at the same time.
April 3rd, 2009 at 7:45 am
Re: Roubini
If the market keeps rallying, Roubinin, Taleb, et al will be relegated to the broken clock category. They predicted the crash for a long time before it happened and got lucky.
Then they will be trotted out for interviews after halftime.
April 3rd, 2009 at 10:32 am
@Marcus Aurelius So they pay taxes on their ill gotten gains big deal, the money didn’t come from NYC.
Money flows into that city, and in this last year it has flowed into it and just disappeared. You show me any sector where NYC adds value to something other then financial (which is of course illusory) and I’ll be surprised.