I love the ’90s
In what could be straight out of a VH1 episode of ‘I love the ’90s,’ Japan’s govt is proposing another stimulus plan of $150b which is $50b above what was discussed earlier in the week and that combined with an unexpected gain in machinery orders is helping to lift Japanese stocks to a 2 month high.
Taiwan and South Korea are rallying to 5 month highs and other Asian markets are also higher. Copper is also at a 5 month high.
While decoupling was a failed thesis in 2008 as no one was immune to the economic crisis in the US and parts of Europe, lower debt levels in other parts of the world and stabilization in commodity prices will create decoupling on the upside with the US economy unfortunately likely to lag as deleveraging here takes years to unwind.
As expected, the BoE made no change in policy. Canada’s jobs data was weaker than expected. The results of the bank ‘Stress Test’ isn’t so secret anymore after today’s NY Times article.
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April 9th, 2009 at 9:44 am
The stock market crossing over into bubble-licious land today and a buyer frenzy is here.
Apparently, layoffs don’t matter because the prevailing fantasy is that the stock market is looking in the distance where, magically, employment improves for unexplained reasons. (Buy Buy Buy) The availability of new government money is today’s substitute for improving EPS. (Gotta Buy Stock) One bank doing well is pretty good, but the stress tests make others look suspicious and probably in need of more bailout money. (Yea … BUY BUY BUY Now!) Insurance companies might need bailout money (Who needs EPS anymore) . Retail vendors of subsistence living merchandise are prospering while the top shelf sellers are troubled (Buy Everything NOW Earnings Exceed Analyst Expectations!!!!!)
Who’s buying anyway? I can’t imagine many several-times burnt regular people are diving in. Idiot hedgies who were crashing the exits last month?
April 9th, 2009 at 9:51 am
Oh yeah, and GM is likely to declare bankruptcy in 60 days (Get out of my way so I can buy stocks!!) and Chrysler has a tenuous future at this time (I mean it, out of my way). Auto sales are dismal, creating a ripple effect throughout the economy (I’m going to hit you if you don’t step aside). How ’bout those aircraft manufacturers and their canceled orders (I’ll buy them too! Beat it loser.)
April 9th, 2009 at 9:52 am
Who’s going to decouple? Taiwan and S. Korea? Think that’s a bit of a reach. Even exports to China see a large portion processed and reshipped to the US. Who’s going to buy all those semiconductors and panels?
April 9th, 2009 at 9:52 am
@dh: I tell you who’s buying: I read in the WSJ yesterday that more retail buy & hold investors are day trading their accounts because they got burned and don’t trust it anymore. The online brokerages are seeing a big uptick in business from this, as a declining few seem to trust buy & hold these days. Maybe I’m wrong, but this will likely produce more wild swings on announcements like today’s WFC. Hang on. Going to be a wild ride in the coming months.
April 9th, 2009 at 9:54 am
Who’s buying? The Fed is buying, with its infinite supply of funny money.
April 9th, 2009 at 9:56 am
Dead hobo… you might want to try decaf. :) But seriously, I’m with you… it’s a great time to buy at the bottom… months (well maybe weeks… could be days… hell most likely hours) people will look back and say “Wow… Damn!” depending on their perspective. For now, I think I’ll just soak in the upcoming short opportunity.
April 9th, 2009 at 10:02 am
Mannwich,
So it’s day traders playing hot potato with stocks? The greater fool theory is alive and well. Flip that stock!
April 9th, 2009 at 10:04 am
hobo – why so cranky this am? did the WFC report get your down…your earlier comment about only wanting “free” stuff online says it all…the markets look forward…you’re stuck in the past pal
April 9th, 2009 at 10:04 am
@dh: I believe so. Just like the old securitization market. Pass the potato! We could see more upside. Amazingly, the banks are making money! Hurray! Maybe they can pay back the TARP money now?
April 9th, 2009 at 10:06 am
@cttfinder: I won’t speak for hobo, but I’m cranky because it’s not real. Markets “look forward” huh? We’ll see about that. Be sure to come back in a few months. We may see a run up for a while but this sucker’s coming back down again at some point. Where are the new jobs going to come from? Anyone have an answer? Sure, the banks may ultimately be “saved” but at what cost to the greater economy?
April 9th, 2009 at 10:11 am
WFC cashing in on the Fed’s free money and unemployment came in better than expected…and the stimulus hasn’t even hit the economy yet!
April 9th, 2009 at 10:14 am
This is a generational buy in QID…hey, gotta keep a sense of humor. 21 day put /call still near decades lows and II Bulls up to 47%, where it has only been that high 3 spikes in the whole duration of the crisis. Fundamentally, credit to GDP is even worse than when we started “deleveraging.”
April 9th, 2009 at 10:17 am
Gotta love QQQQ…hasn’t had what I would call a strong volume day since the Nov 20 bottom…100 trading days of a light volume pump job.
April 9th, 2009 at 10:23 am
Mannwich,
You still think WFC is a bad play? Remember when it was $8 and change I said to buy it? Guys, it’s really a simple logic to use. Not ALL of the banks are going to go out of business. Just was never an option for the US Government to shutter all of them. However, the market (thank you naked shorts by the way) were pricing in ALL major banks to go to zero. With all the smart folks on this board, most got way to caught up ONLY focusing on the bad news. I think even Ben22 who I think has a lot of good ideas made fun of my WFC pick as well.
What people didn’t look at was the massive reserves WFC had taken in the 4th quarter on the Wachovia crap (and yes, I know there was a lot of crap in there). However, there is also surely good stuff that is paying and worth something (probably more than 10 – 20 cents on the dollar as the naked shorts had contended).
Plus, with only a couple large players around, look at all the refi activity that is going on now. Doesn’t anyone see this is a very profitable business. Look, my father is a loan officer at a small bank in Illinois and even he can’t talk on the phone with all the refi business that he is seeing.
Like Leftback and I, you have to think with both parts of your brain. The pessimistic side (worked for me last year), but the optimist side is working for me this year. That is why when guys like Doug Kass, Fleck, and others start to get bullish, you know something is up.
Now, if Barry ever gets bullish, I know it will be time to sell because he is always directionally correct, but his timing is so-so :-)…… JK BR, I love you man!!!!
April 9th, 2009 at 10:24 am
I am with Steve Barry today.
QID, FAZ, SRS, load up.
Classic pump and dump in action right here.
Happy Clappy all day on CNBC into the holiday – then back to reality.
April 9th, 2009 at 10:25 am
BTW, Mannwich, I’m just messing with you. I love reading your comments!
April 9th, 2009 at 10:28 am
That’s cool, jdamon33. Congrats to you. I’m glad you’re doing well. It’s good to have big Daddy on your side, something we should all heed. I would take profits though if I were you.
April 9th, 2009 at 10:29 am
Agreed re: the daytraders – you can’t fathom the volume of daytraders out there swinging for the fences in the hot name of the day. Look up the twitter comments in the past week on stocks like FAZ, FAS, AA, GGP, RIMM, SGP, FSLR, etc…
If the smart money took $$ off the table last week (like BR) I’d imagine we’ll hear over the weekend that they might have shifted to short.
April 9th, 2009 at 10:30 am
I guess we have to buy at this level. Doesn’t seem like there will be a pull back before the next leg up (to 10k on dow, 1000 spy).
April 9th, 2009 at 10:31 am
Shorts keep driving the market higher. It’s not Johnny retail.
April 9th, 2009 at 10:31 am
@jdamon33: WFC may do very well with re-fi activities NOW but be careful about holding this long term. They’re going to get hit again as Alt-A’s and Option-ARM’s reset and when those re-fi’s they’re writing now start failing again when more of those folks lose their jobs. I am only pessimistic when I see reasons on the ground for being so. I will turn optimistic when I see evidence that things are really turning. This is more window-dressing nonsense.
April 9th, 2009 at 10:34 am
Mannwich, anecdotal confirmation….
I was buy and hold in my 20s. got cured of that thesis with the tech bubble.
Convinced I wasn’t going to hold it all the way down again. Somewhat succeeded. Sold some in 07, rest in 08 over the course of the year. Actually, fall 07 was the big quandary for me. CR and BR say the end is near. briefing.com says … no problem. who to believe? well, I figured it out.
now…. with my money parked and earing 0.3% I am wondering what I can do to get some appreciation.
Day trade? I can’t afford the time. Is there a way to ‘night trade’? (:
Leftback, your use of words in an unconventional manner is funny.
Wanted to jokingly take you to task for saying you wouldn’t sleep with the FAZ last week, and then later changing your mind. Would be more morally questionable if you had reversed your decision after midnight. Yeah, that comment has been pinging around my head for a week. finally got it out of there.
cjc
April 9th, 2009 at 10:39 am
re: banks making money on refis.
I was a loan officer in 2003 2004. After everybody had refinanced, and rates went up, it was amazing how your available client pool went from nearly every homeowner you could find, to just about nobody.
(I went back to IP in 04. )
Point is, agreeing with Mannwich again, refi, and housing sales, will suffer greatly when rates rise.
When is that going to happen? Not any time soon if the Fed gets their way.
But, if they lose control, as some suggest they might. Then we have disaster in every direction.
If they don’t, we have continued manipulation, mirage, kick the can, etc. as everyone has noted.
April 9th, 2009 at 10:41 am
Going short with this action is not recommended (except for a scalp). The market won’t go down for a swing trade (4-6 week+) until the shorts give up (including Johnny retail who is trying to get back to even with FAZ). Won’t happen until we get another 20-25% up. Shorts are just to stubborn after the last 8 months (minus March) of joy.
April 9th, 2009 at 10:42 am
Barry’s 2nd favorite ratings agency downgrades Berkshire to establish credibility…
http://thereformedbroker.com/2009/04/09/mooooooodys-tries-to-prove-its-not-a-joke/
little late in the game to start getting real, fellas
April 9th, 2009 at 10:49 am
Where’s the NYT article on the stress test?
April 9th, 2009 at 10:51 am
Read this and tell me this isn’t bullshit window-dressing……..
Regulators say all 19 banks undergoing the exams will pass them (the stress tests). Indeed, they say this is a test that a bank simply will not fail: if the examiners determine that a bank needs “exceptional assistance,” the government, that is, taxpayers, will provide it…
Regulators recognize that for the tests to be credible, not all of the banks can be winners. And it is becoming increasingly clear, industry insiders say, that the government will use its findings to press certain banks to sell troubled assets. The hope is that by cleansing their balance sheets, banks will be able to lure private capital, stabilizing the entire industry.
They also will likely need more money. So they’re going to pass the stress tests but need more taxpayer money? OK, I see how this works.
April 9th, 2009 at 11:00 am
If the S&P is to get to 450, just let it happen all at once…that would be .5 times sales roughly, a good, solid bottom. I would even become a long term buyer.
April 9th, 2009 at 11:05 am
I am seriously wound up today on this B.S. action… Have to avoid watching cnbc.com or else I’ll punch out my screen, so I’m listening to music today. It’s scary that I’m finding subtle market messages in some songs:
Suck it in suck it in suck it in
If you’re Rin Tin Tin or Anne Boleyn
Make a desperate move or else you’ll win
And then begin to see
What you’re doing to me this MTV is not for free
It’s so PC it’s killing me
So desperately I sing to thee of love
Sure but also rage and hate and pain and fear of self
And I can’t keep these feelings on the shelf
I’ve tried well no in fact I lied
Could be financial suicide but I’ve got too much pride inside
To hide or slide
I’ll do as I’ll decide and let it ride until I’ve died
And only then shall I abide this tide
Of catchy little tunes
Of hip three minute ditties
I wanna bust all your balloons
I wanna burn all of your cities
To the ground I’ve found
I will not mess around
Unless I play then hey
I will go on all day hear what I say
I have a prayer to pray
That’s really all this was
And when I’m feeling stuck and need a buck
I don’t rely on luck because…
The hook brings you back
I ain’t tellin’ you no lie
The hook…
On that you can rely
“Hook” by Blues Traveler
-HCF
April 9th, 2009 at 11:08 am
california foreclosures are skyrocketing but even worse it is hitting alta and prime mortgages. credit card rates are squeezing the braindead and credit remains tight. does anyone point to the fact that wfc is now simply a larger bank and that this is the first quarter that wachovia has been incorporated into the fraud? MAYO states also that loan loss provisions were not increased to adequate levels an this contributed to a large part of the scam. i guess the casino will frustrate everyone and the pain trade is higher before the eventual bottom of 450 and below
April 9th, 2009 at 11:09 am
hopeImwrong Says: Won’t happen until we get another 20-25% up.
Another 20% before a significant pullback?
Ultimately that is up to the mkt of course. That said, I think there is plenty of opportunity to short 875-880 S&P. Sure I will buy the idea of folks getting giddy and eventually breaking that level. I also do subscribe to the oft quoted rally target 1k/10k levels S&P/DIA.
Assuming we hit those lofty levels, I plan to take all long exposure off, and go with SB’s “generational buy” on the short side. Believing in upside beyond that suggests one has a lot of faith in the govt intervention.
The treasury and Fed teaming up with private capital with the intent of levering up (to solve an original leverage induced dilema?) should all but guarantee this blows up in everyone’s face at some point.
April 9th, 2009 at 11:11 am
You know those stress tests they give you in the cardiologist’s office? Where they inject radioactive dye and put you on a treadmill while doing an EKG and taking nuclear images of the blood flow through your heart? You know — a test with a scientific methodology and stuff?
Or where they subject test pilots to multiple Gs in an accelerator to see if they can handle it?
These tests aren’t like that. They’re more like the tests to draw a cartoon kitty cat to see if you might have the talent to be a professional artist.
@ HCF: Careful, man. Don’t get all John Nash on us. :)
April 9th, 2009 at 11:15 am
Have we raised a whole generation of “investors” that simply won’t demand a good value for their money? I mean really, if this massive deleveraging, financial/economic crisis doesn’t get us to market bottom type valuations (and no, I don’t think bouncing off of 666 to these levels in 4 weeks qualifies), then what will? I remain convinced, the more I learn about history, that we’ll get there eventually. It’s just mind boggling to see people chase this market up like this.
You’d think we’d be more informed and sophisticated than those in the ’29-’33 market, but alas, I guess human nature doesn’t change now does it? We never learn.
The higher and faster we climb, the lower and faster we’ll go, I suppose.
April 9th, 2009 at 11:18 am
Funny how this news is being ignored today. All is well in banker-land. Main Street? Not so much.
Retail Chains Report Further Drop in Sales in March
http://www.nytimes.com/2009/04/10/business/economy/10shop.html?_r=1&hp
April 9th, 2009 at 11:24 am
“Funny how this news is being ignored today. All is well in banker-land. Main Street? Not so much.”
That’s old news, don’t ya know? You’ve got to “look over the valley” and see the value beyond. Of course the valley continues to get deeper and wider, (and who knows what quagmires lurk there), but don’t let that bother you.
April 9th, 2009 at 11:24 am
@MexicaliBlues – I agree 1k/10k will be a good area to short. Maybe that’s why it won’t happen, BUT…. everyone seems to still be in disbelief (and even anger) about this rally. The rally is just a rally. Believe it. Until people really believe it, or the shorts stop trying to catch the top, we will float higher. I say float, because it is lack of sellers (true sellers) rather than actual rushing in of buyers. The only rush of buyers is daily short covering.
Maybe 875-880 will cause a rollover to the downside, but the sentiment here say no. Too many are looking for the pullback. Too many are looking for the resumption of the bear. Too many are trying to make money shorting (including inverse ETFs). Until this changes, bias is up. Likely we get a false break above the 200 day moving average, a pullback, and a retest of the top. It could take many months before the next real down leg starts.
April 9th, 2009 at 11:28 am
@TransorZ:
Which John Nash? The one who did the original reggae version of “I Can See Clearly” or the paranoid schizophrenic math genius?
=)
HCF
April 9th, 2009 at 11:29 am
@Onlooker: Every day I hear about more and people that I know who are getting laid (many who have never been laid off before) and others who are hanging onto their jobs by a thread. Until that reverses somewhat, I’m not getting bullish here. If we get back close to the prior lows, I will probably change my tune. Too late to jump in now. Going to wait and watch the fools rush in.
April 9th, 2009 at 11:29 am
Whoops, that’s laid OFF. I hope they’re getting laid too though!
April 9th, 2009 at 11:34 am
VIX is down to 37.50. People are apparently getting more comfortable at these heights. Hard to believe. I’m sure it could draw many more in before reality hits. Efficient, all-knowing market, ya know.
April 9th, 2009 at 11:34 am
@hopeImwrong Says: (few posts above)
Good post, cannot argue with your logic. Right now there seems to be ample liquidity to mop up the sellers who are getting out at break even.
Hope we are right @1k/10k
April 9th, 2009 at 11:35 am
I think I’m with HopeI’mWrong here. There is a lot of juice to this rally. It will take something exogenous to derail it, not just more of the same bad news.
April 9th, 2009 at 11:37 am
Mannwich,
What are you talking about???? This is what the WaPo says…..
March Retail Sales Show Possible Signs of Stabilization
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/09/AR2009040901273.html?hpid=topnews
Bull Market ON!
It’s weird because almost everything I own benefits from the lies (2 houses, 401K etc.) yet every day I root against the lies and theft because…… well because they’re lies and theft. Talk about cognitive dissonance. I imagine many others hear would benefit from any housing and stock rebounds, yet consciously root against it because they have integrity. How do you do it, Franklin????? How do you just turn it off?
April 9th, 2009 at 11:40 am
I hear you, Thatguy. My wife works in retail, so it benefits me to see it coming back, but she doesn’t see it, and neither do I. Reality sucks but I’d rather deal with it now than be surprised by it later on.
April 9th, 2009 at 11:48 am
Hey, retail sales will be saved by Easter in April, don’t you know? Everybody loads up on Easter bunnies and chocolate (while not buying a car or anything else substantial, because they spent the last 6 yrs gorging) and the world will be fine. Good grief.
April 9th, 2009 at 11:56 am
In support of SB’s Generational Buy: Buy ‘Cyclical’ Stocks as Worst Is Past, Goldman Says. Yes, that Goldman, the one that told everyone mortgage backed securities were the greatest investment vehicle on earth as they unloaded all of the crap while at the same time putting shorts in place.
Now the question is, how long can they snow the world over until reality hits? Sell in May and go away, bottom of S&P 474 beginning in October.
April 9th, 2009 at 11:57 am
@Onlooker from Troy:
Hey, retail sales will be saved by Easter in April, don’t you know?
Wal-Mart blames late Easter for slow sales
April 9th, 2009 at 12:04 pm
They can always trot out the bad weather meme for bad April sales. That one hasn’t been used in a while. April weather has been pretty cold here in Minny, even by our low standards. Wait for that one next month. Alcohol (low-end) sales will probably be good though.
April 9th, 2009 at 12:31 pm
I am happy to stick this out with some long-term positions in commodities and some dividend-paying energy, gold and materials stocks, while also holding TIPS and shorting the 10-year note.
If we do go lower from here, I would accumulate more stocks. In between times I plan to get short when I see obvious signs of irrational exuberance. XLF 10 was a signal for me to get net short for the first time in months. Today’s rally reminds me so much of the Thanksgiving rally, which sold off hard as you remember.
cjcpa: On the few occasions I have slept with FAZ it hasn’t hurt me too badly. But she is a very fast girl who blows hot and cold – although she is always promising me an exciting ride. We’ll see if she comes through this time. She certainly has been going down a lot of late. One does worry whether it is safe to take her home for the weekend, though. Not the sort of investment that Mummy would approve of.
April 9th, 2009 at 12:51 pm
Full disclosure: I’m 1% gold miners, 3% metal miners, 2% RAI, 4% MO, 90% cash. waiting.
April 9th, 2009 at 1:09 pm
Lefty, I’m still with ya on some of those longs. Looks like you just took a dose of Noassitol today though. Can’t be right always.
In respect to the 10-year position, what effect will the recent and continued expansion of quantitative easing programs have on the treasury markets?
April 9th, 2009 at 1:14 pm
I thought this to be an interesting Market related article:
http://www.financialsense.com/Market/wrapup.htm
a fickle mistress, no doubt:
http://finance.yahoo.com/q?s=FAZ
April 9th, 2009 at 1:16 pm
@Diggidy: Didn’t have FAZ this morning, luckily I had dumped her yesterday when she was 17. :-)
But I grabbed her first thing this morning after the opening surge. I did have QID and got mildly toasted.
Shorting the 10-year is a long term inflation play. I also own some 2-year notes so it is a Bear Steepener.
Lots of cash, lots of TIPS, lots of oil. There is all kinds of nastiness still ahead of us.
April 9th, 2009 at 1:53 pm
leftback:
by cash do you mean short term treasury money market type things, or FDIC insured deposits, or mattress?
April 9th, 2009 at 1:54 pm
@Mark: Interesting you should post the article about the VIX by Chris Puplava.
I was just thinking what a load of old bollocks about the low VIX this week. Who wants large open option positions going into a (double) holiday weekend? The VIX got pretty low into Thanksgiving and then, wham-o…!!
April 9th, 2009 at 1:58 pm
cj: Exactly. All of the above. Multiple forms of Mattrii. We are not ready for Dollar Collapse. Yet.
Leftback believes in Multiple Mattresses for now – but not Multiple Mistresses, of course. ;-0
April 9th, 2009 at 2:09 pm
tis human nature to be over-optimistic gamblers. 80% of Americans probably don’t own more than 5k worth of stock, but for those that do, a big sentiment question is how many would rather lose more on the way down than miss out on the upturn. The higher it goes, the more that question burns…..
April 9th, 2009 at 2:10 pm
“I thought this to be an interesting Market related article:
http://www.financialsense.com/Market/wrapup.htm”
Interesting indeed. Hard to argue with those stats, but it’s very aggravating to know that it’s going up because it’s gone down too fast, even when the fundamentals point to those lower levels being justified.
Also: It’s going up because it’s going up just seems ridiculous. But I’m starting to accept the reasoning – I guess.
April 9th, 2009 at 2:10 pm
lb,
good point re: VIX, the lower VIX has been a crowing-point of the HappyClappy’s–
there is some Industrial-strength delusion being poured into yon’ ‘Punchbowl’..
this, on the flip-side, should be understood, it is trend, under-/non-reported on v. MSM:
**Selling off America’s manufacturing might, a factory at a time
Ypsilanti — You can now watch the liquidation of the American Dream in real time.
Any given week, the guts of a whole factory are auctioned off. Its contents are sold piece by piece and taken away for scrap or antiques or resale to foreign companies. Men with blowtorches and trucks haul off tool-and-die machines, aluminum siding, hoists, drinking fountains, salt and pepper shakers, anything that might be of some value. It is the removal of the country’s mechanical heart right before your eyes. It is breathtaking.
“Everyone in our generation from the Midwest ought to see this,” said Cooper Suter, a 44-year-old unemployed carpenter from Toledo who has turned to scrapping factories to make ends meet. “It kind of sums up life in the Rust Belt.”
More than a dozen factory auctions have been held over the past six months in Michigan alone. On a recent morning, Suter and his sidekick, Rick Phillips, a 25-year-old former steelyard worker, were mining the last remnants of the Automotive Components Holdings plant, which made alternators and windshield wiper motors for Visteon and Ford. Men like Suter call themselves the cockroaches, the crumb snatchers, the last people in the factory before the metal scrappers come…
http://www.detnews.com/article/20090409/OPINION03/904090411/Selling+off+America+s+manufacturing+might++a+factory+at+a+time
April 9th, 2009 at 2:23 pm
MH-
http://www.americaeconomia.com/250242-Brasile%C3%B1os-pagan-hasta-10-veces-m%C3%A1s-inter%C3%A9ses.note.aspx
Interesting-a translation will be pinged.
April 9th, 2009 at 2:23 pm
“**Selling off America’s manufacturing might, a factory at a time”
Depressing stuff, indeed. We’ve got to find a way to start making new and innovative things in this country again. The global competition is tough, no doubt, but we can’t find prosperity in offering each other non-essential services. And we have to swallow the fact that our living standards will suffer while the developing world’s rises. Until we can create real value on a wide basis.
April 9th, 2009 at 2:28 pm
@Jdamon, et al.
The refi trade will be over in six months. How do I know? Because BofA and WFC, etc., were told by the Fed to “expect a big summer” and hired temp workers for the spring/summer, well before the announcement that the Fed would be buying $1.25 trillion in MBS to juice the housing markets by pushing down rates. In the past, bBanks never never never hired in anticipation of increased demand, because normally they haven’t a clue what the Fed is going to do. Welcome to the new paradigm. The Fed’s already planning to remove the “stimulus” by then, and everyone in the industry knows it, like they knew about the MBS purchases–except the taxpayers that are funding it and the bank stockholders that are getting taken for a ride.
Going short (or, buying puts–substantively the same thing as we discussed yesterday) on the banks towards the end of the year might be a good trade. Their earnings are gonna get mongo juiced this quarter and next, but it will all be a mirage, a plateau to which they’ve fallen, before the earth continues to crumble beneath them.
April 9th, 2009 at 2:34 pm
MR–
those ‘foreign’ links are, indeed, useful. if you come across others you think are worthwhile, let ‘em happen..
the Translation is appreciated though, today, yon’ languages are sticking in the cogs..
~~
Onlooker,
that’s the only way of this: ” The global competition is tough, no doubt, but we can’t find prosperity in offering each other non-essential services.”–as Bangledesh knows–all too well.
April 9th, 2009 at 2:38 pm
Thatguy says:
It’s weird because almost everything I own benefits from the lies (2 houses, 401K etc.) yet every day I root against the lies and theft because…… well because they’re lies and theft.
—I’ve got a lot of cognitive dissonance going myself because I root against the Federal Reserve lies ($1.25 trillion in the MBS markets alone), yet I’m making a butt load of money off of them (I do real estate closings when I’m not posting onery diatribes on BR’s site). I imagine each tainted dollar I make earns me a few more years in purgatory.
The real non-dissonance problem is that I and the rest of the industry is allocating all this time and energy to this fraud when it has no future and will be over, and for good, by the end of the year. Then what?
April 9th, 2009 at 2:42 pm
@ Curmudgeon:
I think your due diligence and ethical obligations consist of reminding the migrant strawberrry picker and his Costa Rican au pere co-signer at the conference table that misrepresenting their income or other information on mortgage documents is fraud.
“Please read over these documents and make sure that all of the information is true and correct.”
April 9th, 2009 at 2:49 pm
speaking of Fraud:
“…Here’s the deal guys:
Spreads have widened over the last year on broker (and direct bank) mortgage pricing .vs. Fannie and Freddie bond pricing.
How much?
About 200 basis points worth.
Why is this important?
Because you, the consumer, are getting cornholed in the “pricing” these guys are “offering” you!
That is, the banks are exploiting the dislocation in pricing and the credit markets to screw you and post what Wells now says are record profits.
Are you being told about this? Of course not.
Are regulators stomping on this? Of course not.
Are you being looted to pay for this? Of course you are.
You are seeing near-zero (or actual zero) interest earned on money you loan to the bank (when you make a deposit or buy a CD you are loaning money to the bank) and yet when you go to borrow money you’re being screwed with record-high spreads that the bank is pocketing – in mortgage and credit card interest rates charged.
How much does this add up to?
About $4,000 in extra profits per mortgage on top of the “usual” $1,000 profit.
That’s right – the banks are making five times the “usual and customary” profit per loan, and it is coming right out of your hide.
I’ve been hollering about this for months (as has Mish Shedlock) but it appears that both our intrepid lawmakers and the mainstream media simply refuses to talk about it.
When does this stop?…”
http://market-ticker.denninger.net/archives/949-Tired-Of-Getting-ROBBED-America.html
April 9th, 2009 at 2:55 pm
@MEH: I’ll take a 4.5% fixed 30-year on a house that’s been on the market 300 days and lost 40% of its bubble value.
The rate’s not going to be 0-.25% forever…
April 9th, 2009 at 2:59 pm
Here is the translation of that article for those who may be interested:
Brasilia. Brazilian banking entities have moved contrary to the expansion of the national financial system, states a study disseminated this Tuesday by the IPEA (Instituto de Investigación Económica Aplicada), a public entity linked to the presidency. In 17 years, from 1990 to 2007, the total number of banks fell 8.4%, shrinking from 19,996 to 18,308, which represents 1,688 fewer agencies. According to the study, since 2006, there were 505 cities without bank headquarters.
The researchers used as a base for the analysis information from the Banco Central. From 1996 to 2007 the number of financial institutions diminished from 230 to 156. Also, there was a reduction in he number of public institutions, moving from 32 to 13, and of private ones, going from 198 to 143. The only segment which gained participants was that of foreign banking enterprises, which increased from 41 to 56.
The study shows that, despite representing a minority among the banks which operate in Brazil (8.3%), the public institutions are responsible for 43.1% of the agencies. The private sector, which represents 91.7% of the banks, owns 56.9% of the agencies.
Distribution. Sampling a quantity of banking outlets elevated the relation of inhabitants per establishment, provoking regional inequalities. According to data from 2006, while there is 1 outlet per each 6,812 inhabitants São Paulo, in Maranhão, the proportion is 1 per each 26,917 inhabitants.
There also exists an imbalance in the distribution of the bank outlets throughout the country. Despite the fact that the average national distance between agencies is 473 km², in the Federal District there is 1 every 18 km² and, in Roraima, there is 1 every 11,8 mil km².
In 1985 there was 1 bank outlet for every 7,432 Brazilians. In 2007 the number of inhabitants per agency rose to 10,145. A comparison of IPEA with information from the World Bank about other countries shows that the proportion is of 1 agency for every 3,372 citizens in the United States and it reaches 1 for every 1,089 in Spain.
Credit. According to the IPEA analysis, there was a reduction in the participation of the poorest regions in credit operations and in bank deposits between 1997 and 2006. The Southeast Region was during that period responsible for 72% of the deposits, while the North diminished its participation from 1.2% to 1.1% and the Northeast from 7.6% to 5.3%.
In the region Southeast also more loans were given out, going from 59.5% in 1997 to 70.6% in 2006. In the North, the numbers from 1.9% to 1.7%, and finally, in the Northeast there was a reduction from 13.6% to 6.1%.
The entity compared the average annual interest rate paid by Brazilians, Americans and Europeans. In 2008, an individual (persona física) paid in Brazil 60.4% a year, while in the US the number only reached 13.96% and in Euro zone it came to 6.38%. For a juridical person (persona juridical), the average rate was 38.1% in Brazil, 4% in the US. and 5.45% in Europe.
The same difference appears when the real interest rate applied by international banks is compared in its base of operations and in Brazil. The British HSBC charge is, on average, 6.6% a year in the UK and 63.42% in Brazil. The interest from Spanish Santander in Spain is 10.81%, while in Brazil is 55.74%. American Citibank charges its clients in the US 7.28% a year, but the Brazilians, pay 60.84%.
April 9th, 2009 at 3:02 pm
It’s all about the price you pay for the house in the end. Peeps are being sucked in by low interest rates AGAIN.
The CA housing crash may be nearing its end but there is still tremendous bubblement in NYC and CT.
Once rates are forced higher it will choke off some of the lending and prices will continue their descent.
There hasn’t been nearly enough misery and despondency for this deleveraging to end any time soon.
April 9th, 2009 at 3:03 pm
Transor,
I hear you, 4.5% fixed, preferably w/ a 10-yr IO, can be a Great deal.
All a matter of what one is looking to accomplish..
though, the point was undergirding Curmudgeon’s, not fixin’ to last, ‘banks’ getting ‘xtra’-play..
sort of, like this, from the geo-physical realm:
“Still no sign of the national media on the extraordinary growth of sea ice at the antarctic. They sure haven’t missed a chance to point out the relatively small loss of ice at the arctic. Did did it ever occur to them that perhaps there is a natural process at work that has shifted ice growth from one pole to the other? Do they not want to admit that there are things man doesn’t yet understand about how this planet works?”
http://www.globalwarminghoax.com/comment.php?comment.news.109.3
April 9th, 2009 at 3:06 pm
@leftback: agreed – which I why I qualified with 40% price drop.
Also: peeps should check with the towns/municipalities they are thinking about buying into to see when tax abatement requests are accepted. Some places have a narrow window for abatement requests, often at the beginning of the year.
April 9th, 2009 at 3:08 pm
@Transor Z…as you say, I don’t make the souffle, I just dish it out. “Make sure this is what you ordered sir” is about the extent of my duty.
And wait ’til about June/July for the lowest rates. The Fed’s just getting cranking on these puppies. By then, if the world hasn’t sniffed around and discovered how much funny money they’re printing to buy these things down, they should succeed in getting them to about 4.00-4.25, w/ no points.
April 9th, 2009 at 3:09 pm
Transor,
as you allude to P+I+T+I+E needs to be well accounted for..
E for Energy/Electricity..
April 9th, 2009 at 3:15 pm
It’s too late.
Read this: http://www.boingboing.net/2009/04/08/gentleman-in-new-orl.html
And then watch the Omega Man with Chuckie Heston. It’s yer only hope. Start getting skinny, stop looking delicious, and start your long distance running training.
April 9th, 2009 at 3:23 pm
@MRegan: Awesome.
But you know, the folks who Googled the address in the comments said it was a church.
Doesn’t seem to have occurred to anyone that he might have lived…
IN THE GRAVEYARD!
April 9th, 2009 at 3:27 pm
TransorZ-
Given you are a robot and unlikely to eat my flesh (and that of others for that matter) I feel as though I can confide in you my imminent cannibalism hecatombe survival strategy. Do not eat the fat people- empty calories, chase down and devour the lean- that is some good eatin’.
April 9th, 2009 at 3:46 pm
Fatty cuts usually have better flavor and are more forgiving if you over-cook.
Don’t forget about the prisons. You’ve got millions of head o’ humans there, on the hoof. Nowhere to go. Probably a good place to start.
April 9th, 2009 at 3:51 pm
Speaking of zombies any theories on SRS’ continued weakness?
I can see a potential bullish case for the economy as a whole outside of the FIRE zone, people bucking down and getting down to work and the like.
I can even see potentially extending that to the F and I in FIRE, government funds plus a rebounding economy pushes them out of their over-leveraged pit.
But Real Estate? There are still monstrous looming issues there, waves of mortgages about to be reset, large inventories, banks sitting on foreclosures, underwater owners who will need to move for work, commercial real estate falling apart. Developers in mass loads of debt and sitting on inventory. So why is SRS bricking so hard?
April 9th, 2009 at 4:02 pm
“So why is SRS bricking so hard?”
Good frickin’ question. REITs are going absolutely parabolic today! Is a speculative blow off finally coming??
Hard to understand why people would be piling into some of these names, like KIM, VNO, BXP, etc. I think it clearly doesn’t hardly matter what the name is anymore. Fundamentals are out the window for now.
April 9th, 2009 at 4:05 pm
Outlier -
“So why is SRS bricking so hard?”
When previously asked here, the response has been, the trepidation is that the Fed might well step in tobackstop all the sh*t paper along with all the other backstopped sh*t. The very magnitude of the sh*t pile though gives me pause, surely not. Given their track record, however, the trepidation is not all that unwarranted.
April 9th, 2009 at 4:05 pm
So why is SRS bricking so hard?
See US Treasury balance sheet. The Fed is buying, buying and then buying some more, mortgage-backed securities–about $500 billion thus far, w/another $750 billion on the way–with the implicit intent of creating the illusion of demand in housing such that the good ol’ 05′s and 06′s return.
Your shorts will come back ’round about the time the world figures out what the Fed is up to (depreciating the currency to artificially juice the demand) and/or the program ends in about six months, when things will all fall apart, again. The last time we tried this it ended with situation of late, with insolvent financiers everywhere. The next time, the printing presses won’t be able to even create the illusion of saving us.
April 9th, 2009 at 4:11 pm
Aaaaaah, Curmudgeon, so it’s not the existing sh*t the Fed buys, but new mortgages packaged in new MBS. There’s that much new paper being generated?
April 9th, 2009 at 4:11 pm
@Jdamon33
Said:
I think even Ben22 who I think has a lot of good ideas made fun of my WFC pick as well.
You know what man, you got me on this one so props to you and congrats on making some money on that. I certainly didn’t have the stones for it. I was dead wrong about WFC, but like Mannwhich said above, I’d take profits on that now if you haven’t already.
I’ve had a really nice year so far but I haven’t had to take the risk of owning a bank to do so. Buy hey, to each his own. I’ve got a strategy much more like lefty does and I also recently bought the TBT again. While I’m not so long oil, and instead own a bigger basket of hard assets, it’s a strategy I’m going to stick with…at least for now.
Little ground floor observation: I got 5 calls in the last two days from Johnny Retail about buying some C. They didn’t want to “miss it” They all new someone that bought at (insert whatever the 52 week low is, don’t know b/c I don’t even bother looking at that shit hole) This tells me that it’s about time to get short, or it will be soon. Retail always comes in at the wrong time, the time for buying was in late Feb. in early March, last November, it’s not right now. This won’t go up in a straight line and I’d guess that what rallied most during this nice move up, could crash hardest when it moves down again. The whole move up, if you look at what did best, says that all is well is consumer land, as BR posted the other day. I don’t think anyone here really believes that and I can tell you that if you talked to anyone on Main Street, they’d tell you that all is not well.
@ Steve Barry,
Dude, I have mad respect for you, but if you don’t stop looking at the put/call ratio it might force you to give back that huge gain you had last year. Then again, I’m a reflationist so that’s where it’s coming from. I just don’t believe that has much validity right now.
Finally, re SRS: I don’t know what the hell is up with that thing. I had a limit set up in Feb. to buy it at $46.50, which I didn’t know if I’d ever get, then it went through and not 30 minutes later I got stopped out of it for a 12.5% loss.
April 9th, 2009 at 4:18 pm
“Little ground floor observation: I got 5 calls in the last two days from Johnny Retail about buying some C. They didn’t want to “miss it”
Yep, it’s got the feel of the tech bubble days, writ small (on an accelerated time frame). Everybody’s making money, I can’t stand it anymore, get me in!
April 9th, 2009 at 4:19 pm
@Batmando
Yes, indeed, a huge wave of mortgage refinancings is now underway, all of it the result of the Fed’s purchases of MBS (the wholesale stuff) that pushes down the retail prices (mortgage interest rates).
Of course, they’re doing other stuff, too, like buying $100 billion of agency (Fannie Mae/Freddie) debt, which seems senseless when you consider they’re on the hook for the stuff anyways.
April 9th, 2009 at 4:21 pm
RE: Mortgage Rates
Leftback,
You make the best point of all regarding this. If you buy a home that goes down by 20% in value after you buy it, then your real rate isn’t 4% or 5%, or even 6%. It’s higher than that.
I’m not sure how low rates are going to go at this point but get it if you can because they will only go higher, and probably a lot higher, once that bottom is put in.
April 9th, 2009 at 4:26 pm
@onlooker,
No doubt about that. It’s actually really bothered me, those phone calls. I kept thinking, of all the shitty banks, why C???? Then I would remember that lowest price equals cheapest in the mind of the herd. I would have thought after the second worst drop ever, certainly the worst in decades, that those “animal spirits” would be hard to come buy, but rest assured, in Johnny Retail land they are alive and well and therefore, the path of pain for the majority should return sometime soon.
This wasn’t really hard to predict. If you just stuck to the MACD timing tool through the Trader’s Almanac 2008 was a lot of fun for you and 09er is lining up to be about the same.
April 9th, 2009 at 4:28 pm
@ben22: But here’s the thing about that – - once rates skyrocket again, home prices are going to plummet even worse, so if you can wait on buying a home, why not just wait it out? There’s really no rush. The thing is going to crash again even lower once rates go through the roof. Many here could probably just bide their time and pay mostly cash once this happens.
April 9th, 2009 at 4:33 pm
@Mannwich:
My answer is that I would buy sooner (assuming a great fixed rate and 40% drop off peak in most areas) rather than later because I am afraid of inflation.
April 9th, 2009 at 4:36 pm
@Transor Z: Good point. I own already so I’m covered there. Got my inflation-protection, which is good because I’ve been getting murdered lately in the markets.
April 9th, 2009 at 4:37 pm
@Mannwich,
I totally agree with that. My wife and I are waiting for exactly that to happen to move to our next home. I should have clarified my comment was more directed at a person who has say a 6.5% fixed rate now with plenty of equity and they aren’t leaving that home… maybe ever. They can refi now and, IMO, there isn’t a lot of risk in doing that given where rates are right now. Even after paying a point, a person in that situation might break-even on that in 18 months or so after you factor in the closing costs.
April 9th, 2009 at 4:38 pm
Transor, that is a good point, as an inflation hedge.
Speaking along those lines. What’s everyone who is holding doing with Gold right now?
Karen?
April 9th, 2009 at 4:41 pm
@ Hoffer,
I dumped my RTN at the close today. I just caught a major run on that and I wanted to keep the gain. I’ll go back at a later date. Thanks again for that video link. Not sure I would have ever gotten into it, or looked at it even, if that video hadn’t prompted me to do so.
April 9th, 2009 at 4:42 pm
oh and to clarify one more time, my area hasn’t seen anything close to a 40% drop from the peak on home prices, which is why I’m still waiting. They will eventually come down though, BAC is the largest employer in the state I live in, followed by DD and AZN outside of state employees.
April 9th, 2009 at 4:47 pm
@ben22: I don’t have Gold but I do have GDX. Gonna hang onto it for a bit here.
April 9th, 2009 at 4:51 pm
Have GLD, DGP (2 x gold), and SLV (silver) to varying degrees in my portfolio. I figure they are all near the 200MA for now and one of two things happen:
1) People get spooked again and go to precious metals, or
2) Reflation occurs and this will lead to inflation hell eventually
Of course, if they start going and stay below the 200 day for an extended time, I gotta remind myself to get the hell out…
HCF
April 9th, 2009 at 4:58 pm
@ben22:
I live in the Boston area. Sorry — I forget that there are a lot of less volatile housing markets out there. 40% down is still short sale/bank-owned territory here for residential. The Z’s have multiplied and need new digs so we’re looking. :)
April 9th, 2009 at 5:08 pm
ben22,
re: RTN, it’s cool that you put it to good use~
as an aside, this may be of interest:
“In fact, the so-called “Prevention Awareness Bulletin” is a weekly product of the North Central Texas Fusion System, a terrorism and crime-prevention intelligence center run by the Collin County Department of Homeland Security. The system gathers and shares information for a 16-county area that includes Dallas and Forth Worth. The bulletin is written by the architect and operator of the fusion system, Bob Johnson, a former chief scientist for defense contractor Raytheon Co. Johnson has a background in data mining, the controversial, computer-aided practice of trolling massive quantities of data in pursuit of patterns and links.
At Raytheon, Johnson oversaw a short-lived project in Garland for the U.S. Special Forces Command that mined public information as well as classified files to sniff out Al-Qaida. The program, identified in congressional testimony as Able Danger, generated attention in 2005 and 2006 when former Rep. Curt Weldon, a Pennsylvania Republican, claimed that Able Danger had identified Mohammed Atta, one of the 9/11 hijackers, before the terror attacks. Weldon asserted that Johnson had told him that he personally had identified Atta…”
LSS: DataMining/DataWarehousing has been a boom biz in the 21 st C., it’ll continue, con mucho gusto.
April 9th, 2009 at 5:10 pm
link: http://www.texasobserver.org/article.php?aid=3003
April 9th, 2009 at 5:34 pm
@ Mark,
Wow, that’s some powerful stuff right there. There is a lot appealing about that stock right now. I have some personal rules I stick by about when I will always take a profit based on a certain % gain over a one to three week period so on this one I just followed my rule. I think this stock has a wonderful long term growth story attached to it but I can’t be greedy, this market will destroy people doing that. Lately of course that’s been anything ultra-short.
I haven’t sold a dime of MON yet.
April 9th, 2009 at 5:35 pm
re gold:
yeah, that’s about the same as what I’m doing with mine, basically just watching, not taking any action though.
April 9th, 2009 at 6:23 pm
ben22,
re: MON
here’s something to chew on:
http://www.onechicago.com/?page_id=1289
one for RTN, as well..
w/this: “I have some personal rules I stick by..” it’s really key, one has to play Their game, or they’ll get Gamed..as always, review, revise, reiterate.. http://www.thefreedictionary.com/iteration
stay Nimble, the East will tell us: “Flexibility is the Key to strength.”
April 9th, 2009 at 11:09 pm
“But here’s the thing about that – - once rates skyrocket again, home prices are going to plummet even worse, so if you can wait on buying a home, why not just wait it out? There’s really no rush. The thing is going to crash again even lower once rates go through the roof. Many here could probably just bide their time and pay mostly cash once this happens.”
Because they’re looking at the “discounts” from the peak prices and perceive that there’s an unbeatable bargain that they just can’t pass up, lest it pass them by (i.e. shoot back up). It’s similar to what’s been going on in the stock market, even among “professionals.”
It’s a big mistake as they just don’t realize/understand how overinflated these prices were and therefore how bad they are as a benchmark for value.
In the market the prices were based on a highly leveraged economy that yielded extremely high and unsustainable profit margins, among other valuation problems.
April 10th, 2009 at 12:48 am
Japan’s market hit the 1982 low a few months ago. Asia isn’t going anywhere fast. Commodity prices: who cares, nobody makes anything.
April 10th, 2009 at 12:50 am
God, decoupling.