Look Out Below ?
By Barry Ritholtz - April 28th, 2009, 6:30AM
Note the question mark in the title — is this the same gig as yesterday? Yesterday morn also had Dow Futures off triple digits, but it was less of a sell off than implied.
>
>
But it didn’t seem to matter much– markets rallied after the open, and closed much better than the futures would have suggested.
Is today more of the same, or is the overdue correction imminent.
I suspect the latter.
April 28th, 2009 at 6:55 am
I hear that AF1 flew over Manhattan yesterday to see if lines were forming outside CITIbank branches
April 28th, 2009 at 7:01 am
Ahhh, thats what that commotion was . . .
April 28th, 2009 at 7:19 am
http://www.marketwatch.com/news/story/Japan-sees-economy-shrinking-33/story.aspx?guid=%7BD018A959%2D005A%2D4AA1%2D9ED1%2DA4E23DF8E351%7D
Japan expects economy to shrink a record 3.3% in fiscal ‘09
“Previously, the largest economic contraction on record was the 1.5% decline seen in fiscal 1998.
“The fiscal 2009 economy will have to get started at a low in negative territory which has never been seen before,” the Cabinet Office said, according to a Kyodo News report. ”
…Now, this we all know is the state of the deteriorating Japanese economy….but what I thought was spot on as Lefty might say was one of the comments about the article…and it sounds so Wall Street:
Comments: 22
Nah, Jim’s right. It’s always a good time to buy — especially if you estimate that Japan is utterly and completely bankrupt and then suddenly they’re only 99.2% bankrupt which means they “beat estimates,” so, y’know, buy!
- LanceBoyle
Lance , my man, you must be a stockbroker….whatever you are, you have a lovely way with sarcasm…
April 28th, 2009 at 7:42 am
BR asked:
Is today more of the same, or is the overdue correction imminent.
reply:
——————-
No, this is another buying opportunity for money managers who have a lot of cash on the sidelines and are afraid of being made fun of when the stock market continues to rise and they’re not a part of it.
Also, you’re still confusing the stock market with the economy. The economy can do whatever it wants. The stock market does what happy talk reporters say it should do. Thr smart money should just listen to them. On Fox Business and CNBC, pundits and personalities were saying as recently as yesterday this market rise is the real thing. They wouldn’t be on TV if they weren’t smarter than the rest of us. Ditto for the friendly people on Wall Street who want to help me with my free cash.
The economy and the stock market have little to do with each other, they only look a little alike. The stock market has been on a hard run to the stars. The economy looks like it is knee deep in rock hard cow turds. How could anyone say they have anything to do with each other? The stock market is a rock star with a billion dollar contract. The economy is a bag lady with wet Depends. The smart money will continue to fly high with the stock market. The low numbers are just another bear trap. Stupid bears.
April 28th, 2009 at 7:43 am
Glitch notice. I still can’t log out. What’s for breakfast?
April 28th, 2009 at 7:46 am
Many people may not get it til the Stress Test flim flam is over and we get more bad news in spite of it.
There seems to be a sustained PR campaign to convince everyone that it’s all over, much as described in Michael Pettis’ recent article on China “This is getting tiresome, so please let’s declare the crisis over” at
http://mpettis.com/2009/04/this-is-getting-tiresome-so-please-let%e2%80%99s-declare-the-crisis-over/
All this is in keeping with Geithner’s statements that it’s only a crisis of confidence and everything will be fine if people think positively and go out and borrow while he provides liquidity. The man on the street here in Houston seems to be buying the idea that the financial crisis is over to a large extent and we are just in cleanup mode. No idea of the huge, unsustainable measures propping up the financial world at the moment. Probably driven by the zero attention span of modern humans. They can’t conceive that effects take awhile to propagate through the system. Won’t change til reality hits ‘em in the face.
April 28th, 2009 at 7:50 am
News items:
Unions to own big part of Chrysler and GM if reorganizations go as proposed.
Cosmic Justice.
April 28th, 2009 at 8:31 am
as long as there are asset, mutual fund and hedge fund managers that aren’t “long enough”, we will not get the correction that so obviously needs to come. there are too many institutions that are chasing the indices, deperately trying to keep up so they can fend off further redemptions.
and they’re out there now buying he secondary and tertiary names, going lower and lower in quality, just to show investors that they caught the rally
the correction will come, but not before these guys get “longer”
April 28th, 2009 at 8:48 am
News items:
Unions to own big part of Chrysler and GM if reorganizations go as proposed.
————–
That’s Communism, right?
At least we don’t have the dreaded socialism.
/sarc.
April 28th, 2009 at 9:02 am
Bloomberg announcer just crowed that the Case Shiller index declined .1% less than expected, only 18% y/y.
You see, the crisis is over.
April 28th, 2009 at 9:16 am
I think eventually Chrysler and GM will be completely owned by the governments (US & Canadian)and unions with the union shares guaranteed by the government to support pensions and benefits, this way it won’t be necessary for the companies to actually be profitable , they can cover their losses with annual capital assessments of shareholders.
April 28th, 2009 at 9:42 am
News Item, excerpted. It concerns the CS index. Even though I think the index is flawed, I’m just captivated by AP happy spin:
————————————————————–
US home prices post 18.6 pct annual drop in Feb.
Index shows US housing prices falling by 18.6 percent in February, but no annual record
* On Tuesday April 28, 2009, 9:29 am EDT
NEW YORK (AP) — Home prices dropped sharply in February, but for the first time in 25 months the decline was not a record, another sign the housing crisis could be bottoming.
The Standard & Poor’s/Case-Shiller index released Tuesday showed home prices in 20 major cities tumbled by 18.6 percent from February 2008. That was slightly better than January’s 19 percent and the first time since January 2007 the index didn’t set a record.
The 10-city index slid 18.8 percent, the first time in 16 months its decline was not a record.
But the good news was mixed. All 20 cities in the report showed monthly and annual price declines, but half recorded annual records. Prices fell by more than 10 percent in 15 cities, including Las Vegas, San Francisco and Phoenix. In fact, Phoenix home prices have lost more than half their value since peaking in July 2006.
Yet, nine of the metros — including Dallas, Denver and Boston — showed improvement in their yearly losses compared to the month before.
—————————————————————–
Yea!
April 28th, 2009 at 10:04 am
Same as yesterday. I think AT’s (and karen) onto something – the market just wants to ignore bad news and grab onto the silver linings (e.g. today’s consumer confidence number) move higher right now. This could go on for quite a while, I’m guessing.
April 28th, 2009 at 10:35 am
This has gone on long enough! I watch them manage overnight futures (to keep them from getting out of hand) and then find a way to push the market higher during the day. I’m absolutely amazed that more people have not caught on to this.
GLD made a bullish move yesterday by having a turnaround bar in the 3LB. Now the question is: “Can it follow through”? Faith in the $USD is starting to wane. Other countries have been reducing their purchases of treasuries. Eventually the only bidder at the auction will be the Fed.
I loathe waiting for trends to develop but it seems to be much safer during these volatile times.
April 28th, 2009 at 10:54 am
Same as yesterday. Overnight, futures get ramped down quite hard and miraculously pull up in early trading as that invisible hand shows up. Hmmm….
April 28th, 2009 at 11:34 am
it is still too early to say but I’m thinking we are still going higher. It wouldn’t be a surprise to correct on the SP to 780-791 but it’s hard to say, we would have moved higher through yesterday if not for the Swine Flu news imo.
Barron’s article over the weekend showed 59% bulls but judging from the comments on this board and others as of late people are still generally skeptical and therefore the direction should be up from here and I still think the S&P could go over 900 before this rally is over. I don’t think the optimism is over the top and lots of people are still skeptical and for all of you that are bears using the GD as a guide, I’d think if we got a rally like there was during the GD you’ll get similiar optimism to what we had Oct 2007 before the next monster leg down.
The huge leg down would probably come when even more people (more than 59%) are bullish and the govt tells us they don’t need to do anything else b/c the economy is o.k. on its own. it would also help if during that time gold went down to 680 or so, it would be more reasons for the pundits to say things are fine and if China continued along saying that GDP would be 8%.
Then.
Boom.
April 28th, 2009 at 11:51 am
This seems to be the pattern lately. Futures down overnight, but then the market closes up the next day (or just slightly down). Maybe part of the “topping out” process(?).
April 28th, 2009 at 12:09 pm
@ Mannwich 10:04 –
“This could go on for quite a while, I’m guessing.”
Please to define “quite a while” — days, weeks, months or years?
April 28th, 2009 at 12:21 pm
@Dead Hobo: “The economy is a bag lady with wet Depends. ”
Very good one.
April 28th, 2009 at 1:30 pm
Mannwich wrote:
Not necessarily. Perhaps the stock market is right where it ought to be.
April 28th, 2009 at 1:40 pm
@constant: I have no clue but my best guess would be weeks.
April 28th, 2009 at 2:17 pm
mannwich,
Copper is still in free fall. So much for the miracle economy of China and it’s impending super expansion.
I suspect the market will dilly dally around daily and close a little lower on most days for the next several days. Too many people have bought into the fantasy to accept that they might have been a wee bit early, especially if they bought last week. Imagine a crack in a dam, with a little spurt and a couple of dribbles now, but a big assed mountain of water on the other side yearning to be free. Plus, whoever is managing the futures and indexes won’t let the last available dollars get away too easily.