Nice cover image from the Economist on the brown shoots.

Excerpt:

“But, welcome as it is, optimism contains two traps, one obvious, the other more subtle. The obvious trap is that confidence proves misplaced—that the glimmers of hope are misinterpreted as the beginnings of a strong recovery when all they really show is that the rate of decline is slowing. The subtler trap, particularly for politicians, is that confidence and better news create ruinous complacency. Optimism is one thing, but hubris that the world economy is returning to normal could hinder recovery and block policies to protect against a further plunge into the depths.”

Here’s the cover image:

perils-of-optimism

Hat tip Gary

>

Source:
A glimmer of hope?
The worst thing for the world economy would be to assume the worst is over
Economist, April 23rd 2009

http://www.economist.com/opinion/displayStory.cfm?story_id=13527685&

Category: Contrary Indicators, Economy, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

141 Responses to “The (False) Glimmer of Hope”

  1. DL says:

    In the words of that economic philosopher, “dead hobo” (4/22/09 @ 5:05 p.m.),

    “screw the second derivative”.

  2. Marcus Aurelius says:

    The light at the end of the tunnel is an oncoming train.

    Oy.

  3. DL says:

    “Optimism is one thing, but hubris that the world economy is returning to normal could … block policies to protect against a further plunge into the depths.”

    Not clear what “policies” the author is advocating.

  4. Transor Z says:

    First, my toddler will confirm that they stole the cover idea from “Finding Nemo.”

    Second, the quote is thought-provoking but there’s another angle to the part about the “subtler trap” — and that’s the smokescreen of government paternalism.

    Like an old-fashioned doctor, Treasury and Fed officials have argued that the patient is better off not knowing the real diagnosis so he’ll keep his spirits up and not get bogged down in worry or panic. IOW, consumers will not be afraid to spend if they think things are better than they really are.

    Suffice to say, if the US government is paternalistic, it’s safe to say it’s a world-class deadbeat dad. It’s also extremely bad at keeping things under wraps.

    So try to tell the truth already.

  5. Paul Jones says:

    Beautiful cover.

  6. Tranzor,
    My biggest worry is that they somehow calm the waters, get the rubes back in the game and then yank the rug again.
    The rubes will be pizzed

  7. leftback says:

    Chrysler BK imminent, GM shutting plants? Wait until the bondholder haircuts and cramdowns start. Holders of relatively large and illiquid debt positions (pension funds, hedgies) will be looking for things to sell. Guess what?

    That’s right. I knew this was a smart group. Where’s Franklin? He only shows up for short squeezes….

  8. Mannwich says:

    @leftback: Those things are all priced in. All are bullish, right? I mean, who needs to actual jobs and income when one can just put your money into the market and watch it go, up, up, up and away?

  9. Mannwich says:

    The predator on the cover is Goldman. The little fishies are the rest of us waiting to be eaten by them.

  10. Bruce in Tn says:

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aTXb4zX3x59A

    BOJ’s Shirakawa Says U.S. Faces ‘Painful’ Adjustment

    April 23 (Bloomberg) — Japan’s struggle to rebuild growth during the 1990s suggests American consumers and companies face a “painful” period of retrenchment as the economy works out excesses created by a bubble, Bank of Japan Governor Masaaki Shirakawa said.

    Japan didn’t resume sustainable recovery until it brought down excessive levels of debt and productive capacity, and the same will be true in the U.S., Shirakawa told the Japan Society in New York today.

    “This will be painful, but inescapable,” he said in the text of his remarks. “In view of Japan’s decade-long experience, there are no palatable alternatives.”

    …apparently there are some grown-ups in Japan…

  11. Mannwich says:

    Wow, nice final 15 minute pump. Impressive…….the beat goes on.

  12. franklin411 says:

    Sometimes that light at the end of the tunnel is really a freight train headed straight for you.

    The other 99.99% of the time, it’s just the end of the tunnel.

    I just wrote that.

  13. ben22 says:

    Nice chart about half way through this article that illustrates the lack of volume during this rally. Also a pretty good article.

    http://www.hussmanfunds.com/rsi/rallyvolume.htm

  14. leftback says:

    Lots of really dire economic data coming up next week. Weak rallies on low volume. Friday tomorrow.
    I’d say this is as good a time as any to be massively short. Added to shorts into the close. Again.

    We’ve seen your pump. Now show us the dump.

  15. DL says:

    leftback @ 3:47

    I have a hard time believing that Obama is going to let the UAW twist in the wind.

  16. Mannwich says:

    Picked up more SRS at the close. Might snag some QID tomorrow. Tempted to grab the FAZ but I just can’t right now. I’m short enough at this point.

  17. DL says:

    leftback @ 4:04

    I actually wouldn’t mind seeing a big rally in the last hour tomorrow. THAT would be a good time to get short.

  18. HCF says:

    I keep asking myself, “What has fundamentally changed, structurally speaking, about our economy?” The answer is NOTHING. It’s the ultimate pump job, hoping that optimism alone will get us out of this mess. Once we see real change in how business is conducted, then maybe, there would be something truly to be optimistic about…

    HCF

  19. call me ahab says:

    I could see a Chrysler BK for sure- I think the decision has been made that there is too much capacity and Chrysler has to go- Jeep can be sold to another automaker- remember AMC/Jeep?

  20. DL,

    see: http://www.seiu.org/splash/

    there’s a new sheriff in town.

    you’ll have to remember that the UAW was useful in building ‘a productive AMC’, and ‘fighting the Russkies’..

    both, of which, are anathema to the SEIU..

  21. Mannwich says:

    @HCF: Things have gotten worse at a slower rate. That’s the good news we’re hanging on. That’s all that’s changed. That’s it, really.

  22. leftback says:

    @ben22: Great post by Hussman, thanks. That’s a very cerebral discussion of bear market rallies.
    (Although where was the Leftback Bottom™ citation?).

    @DL: Someone is going to get hosed in the Chrysler and GM reorganizations. The bondholders have escaped to this point, but for how much longer? At the moment there is serious bailout fatigue – it’s Haircut Time.

    @Bruce: The Japanese must be laughing all the way to the sake bar after the lectures they received in the 90s.

  23. Mannwich says:

    Terrible numbers by Microsoft just now. S&P will probably hit 900 tomorrow.

  24. Bruce in Tn says:

    @call me ahab:

    I remember AMC…my mother bought a Gremlin, thought it was the neatest car she’d ever seen…

    100 miles later, we had our first rattle….

  25. call me ahab says:

    how about Hyundai/Jeep- that might work

  26. DL says:

    ben22 @ 4:04

    Nothing earth-shattering in the article, but well worth reading anyway.

  27. call me ahab says:

    the Gremlin- LMAO- what about the Pacer?- I liked the Javelin though

  28. as opposed to: http://www.uaw.org/

    the UAW, for all their other faults, understood what built America–and it wasn’t the National Service Corps.

    By ANN SANNER, Associated Press Writer Ann Sanner, Associated Press Writer – Wed Apr 22, 12:13 am ET
    WASHINGTON – Calling on Americans to volunteer, President Barack Obama signed a $5.7 billion national service bill Tuesday that triples the size of the AmeriCorps service program over the next eight years and expands ways for students to earn money for college. “What this legislation does, then, is to help harness this patriotism and connect deeds to needs,” said Obama, a former community organizer in Chicago.

    “It creates opportunities to serve for students, seniors and everyone in between,” he said. “And it is just the beginning of a sustained, collaborative and focused effort to involve our greatest resource — our citizens — in the work of remaking this nation.”
    http://news.yahoo.com/s/ap/20090422/ap_on_go_pr_wh/us_obama_national_service

  29. DL says:

    Mark E Hoffer @ 4:10

    O.K., “Change that works”.

    But I’m not clear on what your prediction is for UAW employees of GM.

  30. ben22 says:

    DL,

    That’s why I liked it, simple. I like visuals as well thus my mention of the chart.

    HCF,

    You haven’t been watching enough CNBC. The market always goes up 6 months before the recovery so since we are going to have a second half recovery that’s what’s going on.

    LOL.

  31. willid3 says:

    i suspect the reason the bond holders and debt holders actually haven’t cared much is they have CDS on their holdings. so they in the end don’t care if the companies crash or not (actually they might make more money if they do. odd how that works out). course the judges could take that into account when working their payouts. they could actually end up with nothing but what their CDS contract is suppose to pay. and maybe they end up with nothing at all if the company who sold it goes under also>?

  32. franklin411 says:

    @Mark
    Uh…America wouldn’t exist were it not for the National Service Corps of the US Army.

  33. Bruce in Tn says:

    Lefty:

    This was my birthday week, been great…wore a French cuff to the salt mine today…(wife’s idea)…very interesting response throughout the mine…

    Had one guy come by the mine asking me to play in a golf tournament…told him I don’t play golf…he said, “Yes, you do.”…..Very odd…must have been the way I was dressed…

  34. Mannwich says:

    @ben22: How many times has CNBC made that claim in the past year? How many more times will they make it before this is truly over?

  35. ben22 says:

    I put this on another thread for Mark but I thought others would also enjoy.

    “Did Goldman, Sachs and Company organize the Goldman, Sachs Trading Corporation?” Senator Couzens asked.
    “Yes, sir,” Mr. Sachs replied.
    “And it sold its stock to the public?”
    “A portion of it. The firm invested originally in 10 percent of the entire issue for the sum of $10 million.”
    “And the other 90 percent was sold to the public?”
    “Yes, sir.”
    “At what price?”
    “At 104. That is the old stock … the stock was split two for one.”
    “And what is the price of the stock now?”
    “Approximately 1 ¾.”

    GS is selling stock again. Beware!!!

  36. leftback says:

    Truly horrible earnings after hours, especially technology.
    All the way through this earnings season revenue has been below expectations.

    Everyone missed by miles – Mr Softy, Juniper, Amgen, retailers – all except Netflix.
    The writing is on the wall now. Let the bears out of the cage again.

  37. peep love to laugh at AMC, they forget that the Eagle pioneered the ‘Crossover’-craze, 30 years ago
    http://amceagle0.tripod.com/page2.html

    link, w/pop-ups

  38. Mannwich says:

    AMEX beat big-time. Hhhhm, didn’t they get TARP funds as well?

  39. ben22 says:

    @Mannwich,

    Way too many to count. I guess you weren’t watching this morning. Around 8:30 EST some guy gave loud mouth Joe Kernen a lecture on it. He was so arrogant about it using phrases like

    “don’t be confused about what is going on here”

    and of course for him

    it was a great time to be buying. Clark Capital management I think it was. I can’t remember, after hearing this guy I immediately tried to erase his memory from my mind.

  40. call me ahab says:

    Hoffer @ 4:15

    National Service Corp- what a joke- next thing we’ll have is a “cultural revolution” – best start looking for a “Moa suit”

  41. ben22 says:

    oh man, I can’t wait to pull apart this AXP report, that has to be total BS.

    After the Capital ONe news the other day you are telling me AXP is o.k.

    Sorry, not buying that.

  42. call me ahab says:

    that’s Mao- Duh!

  43. Mannwich says:

    @ben22: I don’t watch CNBC anymore. I swore them off a couple of months ago and haven’t gone back once since. I watch Bloomberg now. They’re not perfect (for example: placing much emphasis on the companies beating the numbers but not much on the ones who didn’t…..shocking) but far better than the CNBC cast of thousands clown show.

  44. Mannwich says:

    @ben22: Capital One was somehow up around 20% today, I believe. Strange days indeed.

  45. ben22 says:

    @Mannwich,

    That’s probably really smart. I’m sure CNBC doesn’t add any value to my life other than I laugh at them a lot. Each 30 minute session of CNBC watching is like a mini ab work-out.

    I think M will soon crash and burn!

  46. DL says:

    Mannwich @ 4:25

    I think CNBC Europe (in the evening) is O.K. They’re willing to admit that stocks can go down, and that the economy can get worse. Big contrast with CNBC/NY

  47. ben22,

    compare that dialog to the blizzards of bull**** we are entreated to, today.

    you’d have visit Mr. Serling to imagine TTTim answering in such a straigh-fwd: way..
    ~~

    franklin,

    which time-frame are you referencing?

  48. call me ahab says:

    @ Hoffer-

    I remember the AMC Eagle- had to be one of their last cars- 4X right?

  49. ben22 says:

    So far during earnings season, the thing I found most interesting, which I heard basically no mention of, was that graph JPM used during the call that showed the rising of PRIME defaults.

    Speaking of charts, not sure if anyone here reads John Mauldin but in a recent Outside the Box he had a chart with what GDP would have been if it weren’t for home equity withdrawals. It was pretty wild.

    The data point I recall was something like:

    Q2 2006 home equity withdrawals totaled $232 billion
    Q2 2008 home equity withdrawals totaled $9.5 billion

  50. HCF says:

    @ben22 / Mannwich:

    Gotta love the whole idea of “market bottoms leading economic recovery by 6 months.” Apparently all the bad news is priced in, the market is efficient, and always ahead of the curve. Well, except when it isn’t…

    I think equity markets in 2007 basically predicted no recession and Dow 30,000 right around the corner! Optimism is dead, long live optimism!

    The only green shoots worth talking about are one that can be dried and smoked =)

    HCF

  51. leftback says:

    @Mannwich: and they have Betty! So cool, sitting at the Bloomberg terminal, and yet….

    Durables tomorrow? GDP, Case-Shiller and factory orders next week?
    An orgy of Bearishness, one hopes.

  52. DL says:

    HCF @ 4:33

    I remember the logic of the “Kudlowites” during 2007:

    a ) if there were going to be a recession, the stock market would be declining

    b ) the stock market isn’t declining, therefore there’s not going to be a recession.

    c ) since there’s not going to be a recession, stocks should do well.

    d ) buy, buy, buy !!

  53. Whammer says:

    MSFT up over 3% A/H. Go figure.

  54. ben22,

    see: http://finance.yahoo.com/q/op?s=M
    look at the OI in the Puts

    lots of incentive to keep M right where it is..

  55. Whammer says:

    @ben22, I did read that John Mauldin piece, and it was wild. Didn’t he say something along the lines of “Bush wouldn’t have been re-elected in 2004 without MEW”?

  56. DL says:

    Whammer,

    Yeah, MEW and “sub-slime”.

  57. HCF says:

    @ DL:

    I love watching Kudlow, mainly because he often has good guests and he has a comically optimistic outlook. It’s a great sentiment indicator….

    I believe one key indicator that we are NOT at a real bottom is that two types of stocks have done well in this recent rally have been

    1) low quality shit (financials, real estate, and other beat up names)
    2) same old shit (AAPL, RIMM, emerging markets, and everything that led the previous bull market of 2003-2007)

    In other words, no NEW leadership… Until new ideas and new companies drag us out, we’re just doing the same thing and hoping it’ll get us to the promised land… So much for change I can believe in!

    HCF

  58. ben22 says:

    Whammer,

    Yes I remember him saying that. It’s probably true. I look at those figures above and take away that spending and the ever rising unemployment add that together with our 70-75% consumer economy and you’ve got to wonder about all the optimism.

    Oh wait nevermind, people are getting that tax cut b/c gas ins’t $4 anymore.

    Mark,

    M reports on May 13 I think. We’ll see what happens.

  59. ahab,

    see: 2004: Last year for the last AMC engine – the 4.0 liter six – still used as the Grand Cherokee’s base engine and the Wrangler’s optional powerplant.

    http://www.allpar.com/amc/index.html

    Renault Premier was introduced in late ’87. It too, fit a hungry market niche of larger, well-appointed FWD cars. They, and ’88 Medallions were rebadged “Eagle,” as Chrysler agreed to build the new Premiers in AMC’s new high-tech Bramalea, Ont. plant for five years. AMC Eagle was trimmed to the wagon bodystyle only. Less than 2500 were built. Jeep J-series pickup production was halted; and the Kenosha, Wisconsin assembly plant, which had been manufacturing cars since the first Rambler in 1897, was torn down. The spirit of AMC lives on, though, as many AMC employees were absorbed by Chrysler. Former-AMC engineers, stylists, and other personnel are helping to create the incredible MoPar machines of today. Indeed, some would say that the AMC engineers and managers rescued Chrysler from an egocentric, bureaucratic culture.

  60. Bruce in Tn says:

    http://www.marketwatch.com/news/story/Looking-green-shoots-desert/story.aspx?guid=%7B6D3E8F8C%2DE879%2D43A0%2DA4D2%2D327FE39544FD%7D

    Looking for green shoots in the desert

    “Given that by our estimate the economy needs to create more than 100,000 jobs per month on a sustained basis to move the unemployment rate lower, we expect the unemployment rate will remain at a very deflationary double-digit level through to the end of 2010,” Bank of America-Merrill Lynch economist Sheryl King said in a note to clients.

    Franklin, this is why you should be glad you have the blonde and my extra 40 bucks a month…

    The size of the American economy will contract over the next at least 18 months…hopefully we can keep Franklin employed..did some nitwit say deflation again??

  61. leftback says:

    Chrysler BK, as early as next week. I’d like to commend the dudes at Zero Hedge.
    Their stories are timely and much more insightful than the MSM.

    http://zerohedge.blogspot.com/2009/04/tim-geithner-to-put-chrysler-in.html
    I am sure this will be a “surgical” bankruptcy. But maybe without anesthesia?
    Swaps or no swaps, someone will be hurting before long.

    The credit markets are continuing to show signs of stress.
    http://zerohedge.blogspot.com/2009/04/collapse-of-high-yield-market-and-why.html
    Yields are high but they will have to go higher for lower quality credit to re-emerge from the deep freeze.
    High yield interest rates were about 25% in the Great Depression.

  62. GREEN SHOOTS ARE FOR PANDAS…wake me up when things ACTUALLY improve…

  63. call me ahab says:

    Mark-

    I had a 1992 Cherokee w/ a 4.0 litre straight six- that thing lasted forever- one of the best cars I ever owned. Was never a fan of the Grand Cherokee- like my cars as simple as stripped and as simple as possible- roll up windows/ lock out hubs/ manual transmission- just can’t find a car like that anymore.

  64. DL says:

    Leftback @ 4:49

    From the “zero hedge” article:

    “Treasury has an agreement in principle with the United Automobile Workers union, whose members’ pensions and retiree health care benefits would be protected as a condition of the bankruptcy filing…”

    Yeah, this is more along the lines that I would expect from Obama. Take money from the taxpayers, and give it to the UAW so that the UAW members can get a better retirement package than the average taxpayer gets (relative to his average income).

    Only minimal pain for the UAW.

  65. ahab,

    only in the classifieds! ol’ H. Ford taught us that Simple=Reliable=Wealth Creation..

    can’t have that when your ‘economic’ Game Plan is based on Debt-fueled Consumption Velocity..

    what happens when Citizens get turned into ‘Conned-Moo-ers’

  66. Transor Z says:

    So I’m wondering what happens at the dealer level if Chrysler and/or GM file for BK? Must be some issues with manufacturers honoring cash-back incentives, obtaining financing, warranties — no?

  67. DL says:

    Tranzor Z

    Obama said that the USG would back the warranties.

    But the dealers themselves may get screwed… they don’t have the political power of the UAW.

  68. call me ahab says:

    aren’t pensions insured to some degree so that if the company fails the pension is then administered by the Pension Benefit Guarantee Corporation?

  69. Onlooker from Troy says:

    The old “market leads the recovery” bit is so easy to dismiss it’s not funny. It has predicted 5 (or 6, depending on how you look at it) of the last zero recoveries in the last 18 months or so. And how many times did it predict a recovery in ’29-’32?

    People are funny. We run through periods of elation and depression. That’s what the market reflects. Right now it’s downright delusional and deeply in denial.

  70. Bruce in Tn says:

    Lefty:

    You are right. Earnings after hours stink.

  71. cjcpa says:

    Leftback, if I may query:
    what exactly would you be considering getting short with?
    been watching faz dwindle…. I think the fix is in on the financials. suspect the hand of gov’t will interfere.

    It was bring your daughter to work day. 1/2 a day anyway.
    after that, no time left for blogs….

  72. “Given that by our estimate the economy needs to create more than 100,000 jobs per month on a sustained basis to move the unemployment rate lower, we expect the unemployment rate will remain at a very deflationary double-digit level through to the end of 2010,” Bank of America-Merrill Lynch economist Sheryl King said in a note to clients.

    Is there anyone in the universe that gets the reality that high unemployment does not cause deflation or vice versa? That the one COULDN’T cause the other, because they’re not even correlated? Correlation is not causation, but a lack of correlation surely means there can’t be causation.

    Have we all forgotten 1979/82?

    Double-digit unemployment; double-digit inflation.

    Or 1993-1998?

    single-digit unemployment; single-digit inflation.

    Ms. King is just where (Bank of America) she ought be: A firm clinging to a life-raft of delusion for its continued existence.

    Inflation is everywhere and always a monetary phenomenon.

  73. Transor Z says:

    @ DL: Dealers screwed in what way? By the manufacturers getting out from under non-warranty incentives/obligations in Chapter 11? Or did you mean something else?

  74. DL says:

    cjcpa @ 5:11

    I find it hard to believe that XLF isn’t going to drop at least 30% from here. Maybe not in a straight line, but sooner or later.

    (That information is free, and worth every penny).

  75. DL says:

    Transor,

    I just mean that we’re likely to have a lot fewer of them when all is said and done.

    Right now, they’re protected by various state laws, which I don’t fully understand. If Obama won’t protect them, no one will.

  76. Bruce in Tn says:

    Curmudgeon:

    I imagine you and I have much the same experiences in our respective businesses. I very much agree with nearly all your posts. However, if you are saying that inflation will occur by 2010…I think this time I will take the other side…I think the massive size of the global deleveraging will delay things longer than most think…but I agree, eventually there will be an economic distortion, and maybe even a bigger mess because of the global printing of money..

  77. DL says:

    5:19

    Yes, CPI will be tame in 2010.

  78. leftback says:

    “What happens to the dealers?”

    F***ing BK baby !! More McMansions and vacation homes are going to be flooding the market.
    Donny Dealership always has a McMansion, right?
    Debbie Dealership is not going to get that diamond bracelet this year.

    cjcpa: “what exactly would you be considering getting short with?”

    More or less anything, I am in with both arms and legs and the rest of my anatomy.
    This feels like the best shorting opportunity since last September.
    A mini-crash is so close I can almost smell it.

    Steve Barry did great with QID in the fall, more than doubled at one point.
    If you don’t enjoy the thrill of FAZ/SRS, then QID or SDS are much less volatile.
    Just calibrate your risk tolerance before you get in. I usually use a 20% stop for FAZ.

    Hint: those little end of day rallies are people dumping shorts. That’s a good time to buy.
    I bought FAZ and SRS about 3.58pm, just like I added longs at 3.58 in early March.

  79. call me ahab says:

    cjc-

    if you are looking to short with an ETF- here is a list of all the ETF’s- short and long offered by Proshares and Direxion- includes most of the obvious ones and some others you may be interested in.

    http://www.proshares.com/funds
    http://www.direxionshares.com/etfs

  80. MRegan says:

    Does anyone know what has happened to asset prices in Japan over the past 18 or so years? What about the monetary base?

  81. @Bruce in Tn:

    I don’t know when or if inflation will take hold. I suspect, unless by some miracle all those $1 trillion pixels being planted in the bank accounts of the GSE’s disappear, that we’re apt to get a massive inflation, my guess, by 2012. And of course, the whole point behind the exercise is to do just that–artificially inflate the housing prices to save the economy. It will be hard to inflate housing without inflating a few other things along with it. I own some gold and oil as an insurance policy against it.

    But my point is that the premise underlying the statement “we expect the unemployment rate will remain at a very deflationary double-digit level” is wrong. High unemployment rates are not necessarily deflationary, (nor inflationary, for that matter), as the fabulous seventies in the US, the 20′s in Weimar Germany, and present-day Zimbabwe attest. All three were/are periods of high unemployment rates and high inflation rates. Of course, in the US Great Depression, you had deflation and high unemployment, but correlation is not causation.

  82. cjcpa says:

    I’m about 3% 3x short with faz and 3% 2x short with srs.
    All underwater. my wet shorts comment from last friday.

    Not a trader, not real confident about things. Pretty sure the economy is in dire straights. Also pretty certain that the market does not follow EPS, but some fantasy land. Karen keeps reminding that the market can remain irrational longer than you can remain solvent. Making sure that doesn’t happen to me.

    Been reading The Black Swan when I can.. about 2 weeks per chapter. I know I live in mundanistan, or something like that. market is extremistan, and I’m not real comfortable with it.

    If I can get this to work out, maybe I’d take a bigger stake.

    …. built into the calculus is explaining it to my wife. keeping a small stake until I can get comfortable.

    Not arms legs and appendages. that’s for sure.
    waiting for that cascade — I can’t smell it yet.

  83. Andy Tabbo says:

    Irritating day. Bulls negated yday’s potentially ugly doji star looking candlestick. I was expecting a little overnight bounce and then a strong dump. The end of day rally was surprising….

    Most bearish short term case I have is that we finished another wave 2 today or will finish early tomorrow morning…this sets up a ‘third of Third” wave tomorrow, which means we should see a collapse shortly. For this uber-bearish case to be valid we need to reverse very hard tomorrow morning and should not be able to get above 857. If we do break above 858 tomorrow then it will negate the most immediate horrific bearish case. However, the market would then face another area resistance just overhead between 865 and 871 which represent the 78.6% retracement (865) and the a=c (871) for a B wave conclusion.

    Market confused me a bit today, so losing some confidence in these most bearish short term models. It seems like the dollar weakness was the big factor that saved the day for stock market bulls. However, as I look around at some of the currencies like Loonie and Pound they’re only retracing 50-61.8% of the drubbing they took earlier this week. Also, on the daily chart of the Dollar Index, it looked like it was merely filling a gap that was left over from the 4/17 jump. Also, on Bloomberg TV, there were more than a few mentions about how great the loonie was…thus, I want to sell it.

    So, these are interesting moments in time. I still favor the bear case shorter term, but feeling a little less confident after today.

  84. Bruce in Tn says:

    Good, because you are WAY smarter than the attorneys I know..

    :)

  85. DL says:

    cjcpa @ 5:35

    You might sleep better at night just being short XLF… or just short SPY.

  86. DL says:

    MRegan @ 5:27

    “Does anyone know what has happened to asset prices in Japan over the past 18 or so years?”

    Real estate has declined steadily (although the rate of decline is probably pretty minimal at this point).

  87. cjcpa says:

    DL,
    thanks. I view it as a gamble. which is not right. But I’m okay with losing half and being wrong.
    Point I posted earlier is that CPFXX is returning .01%.
    Just trying to goose the return to a few percent.

    I cannot do my job and be a full time student of the market. I cannot be me and be Barry. In a 5k, I cannot compete with a full time athlete, b/c I am not. I can guarantee that a day spent working on what I do will create a positive return. The market, not so much. I love the concept of passive income, but the tragedy for me of the last 1.5 years is that it is not available. “A trader’s market” they say. Great. I’m not a trader.

    Kiyosaki had a parable about amateur golfers and pro golfers and the difference between amateurs playing golf, and doing it well enough to earn a living. and the kicker was that most of Americans are going to turn pro — as in professional investor– the day they retire whether they are ready or not.
    I have decades to go, but it is clear to me that I will need to know how to make money off of investments if I aim to retire.

    Many Americans are not ready to go pro.
    many will need to, or suffer……
    I could go on, but he already wrote the whole book.

  88. karen says:

    IMO, all of you are too anxious to be short. Just look at 2007 if you think the market can’t do the seemingly impossible. That whole year was irritating… take a look at $tran, very positive action; i wouldn’t fight that chart. $copper is at an interesting juncture, as well. The only thing i’d want to be short right now is the USD, and i guess i am with my gold position. Earlier today I pointed out the potential reverse h & s in that… April 08-Oct 08-April 08. My thinking is it’s now or never on gold… Okay, I’m done ranting.

  89. leftback says:

    Cj: With 3% FAZ and 3% SRS, you are not putting much on the line. :-)

    You could also buy May or June SPY or XLF puts. One of the things in your favor with options is that you have a defined risk and the short-term volatility is then irrelevant. You have to wonder how many times the banks and Treasury are going to be able to con the retail investor into buying C. At some point this con game is over.

    In the meantime, keep on reading AT. He is rarely wrong, and never wrong for long. I am encouraged by the relative up-down volume trends more than anything else. Last Monday was high volume, the rallies were weak. As the Hussman piece ben22 posted shows, that’s bearish.

  90. [...] market economic recovery Jump to Comments Despite whatever Cramer claims: The obvious trap is that confidence proves misplaced—that the glimmers of hope are [...]

  91. DL says:

    cjcpa @ 5:51

    I work at a full time job (unrelated to finance or economics). But I also spend a substantial portion of my free time (and not an insignificant amount of work time) following the economy and markets.
    One of these days I just might quit and become a day trader, however.

  92. cjcpa says:

    DL
    Will you call it retirement?

  93. call me ahab says:

    Karen is on the money with her 2007 comment- that was ridiculous- but the market continued up, up, up when all indications showed it should have gone down, down, down

  94. DL says:

    karen @ 5:55

    I’m sure that there are many who yearn to “hear” your rants.

    At least we know where everyone stands.

  95. karen says:

    As far as the $spx candles go, you might consider yesterday’s and today’s to be high wave* candlesticks… if we get another one of those tomorrow, a short body with a long upper or lower shadow, then a definite turn of the market could be in… meaning monday could be ugly.

    *the last spx doji star was friday, march 6th… leftback’s bottom… dare i bring that up.

  96. DL says:

    cjcpa @ 6:06

    It’s a possibility that I think about from time to time.

  97. DL says:

    karen @ 6:09

    Won’t you at least allow the bears a 10% pullback?

  98. karen says:

    Thank you, DL, because obviously I wasn’t finished ranting, whatever you meant : )

  99. Andy Tabbo says:

    karen. agreed that markets can stay weird for awhile. That’s why I like to have fairly tight stops on what I do. I’ve been dragged out of plenty of markets and held plenty of losers before learning my lessons.

    in re: gold and US dollar. Last several months those market have not behaved the way one might thing. I don’t see any rhyme or reason between $ and gold….they went up together…they went down together…it’s a crap shoot. If you’re bearish the US dollar, I would short the dollar directly. However, as I pointed out above some of the currencies like loonie and sterling have some things to prove imo. I’m actually a little bullish the dollar v. those currencies….fwiw.

    gold (june futures)….i think 920 is going to be your hurdle there. There’s still a downtrend channel in place from the 1000′s on 2/20. 920 would break that down trend channel and would clear the 38.2% retrace of the entire decline….would be doubling down if i were you above 920. I don’t really have much opinion about gold otherwise….just pointing out that level to you…

  100. leftback says:

    “I also spend a substantial portion of my free time following the economy and markets”

    I refer to this as making use of a small amount of excess mental capacity. A lot of TBP people appear to have technical or engineering backgrounds, and I think Barry was a Physics major. This presumably helps with the limited math required and the Newtonian concept that what goes up, must come down. Mustard seeds, indeed.

    Win or lose, for my money it sure beats “trusting your broker”. I am sure almost everyone here escaped the Crash simply by virtue of having their own hands on the controls in October.

    @Karen: I don’t think it will be a reflationary summer, but I like gold too. How’s the weather?