West Coast Open Thread
By Barry Ritholtz - April 1st, 2009, 9:56PM
Long day !
Virgin America was interesting — nice plane, but no internet access, no TV, and my power plug didn’t work. (Kinda surprising for a new airline).
This is my 6th or so visit to L.A. — its an interesting city, one that the economy has definitely taken its toll on the town.
I always have fun out here, but I feel like I missed out what was going on in the markets, NY, economy.
Whats going on ? Its time for an open thread.
What say ye?
April 1st, 2009 at 10:04 pm
> Whats going on ?
Stock markets closed at 4pm. Lots of people had comments upon what happened during the day.
What’s new in L.A.?
April 1st, 2009 at 10:05 pm
I say I hope ye used the 30% off any r/t flight that Virgin America sent out via email last week!
April 1st, 2009 at 10:08 pm
Barry,
I’m sorry to hear about your less-than-stellar Virgin America flight, but I assure you that is not typical.
I have flown them several times now and every time has been light-years better than any other airline.
In my opinion they are the best domestic airline out there.
April 1st, 2009 at 10:23 pm
Same old, same old…low volume market pump…auto sales down 40% y/y or so, seen as good news! Seems they were up from February and the government bought a lot of cars (maybe they got a stockholder’s discount). The ISM factory index rose to 36.3 in March from 35.8 in February…such an improvement was a call for rejoicing. The ADP report was much worse than expected, but why let that spoil the party?
April 1st, 2009 at 10:29 pm
Futures up tomorrow pretty big for the time being. Must be anticipating mark-to-market changes tomorrow. Maybe this run could go longer than many of us think? We shall see.
April 1st, 2009 at 10:31 pm
LA is always a disappointment to me, sprawling, filthy, hardly the picture painted in the media (I much prefer SF)… but there are spectacular pockets of homes, of course… Orange County is a picture of opulence, even now. South Coast Plaza was bustling with shoppers last weekend… I’m down in the sleepy, southern end, however. Across from the Western White House for those that watched Frost/Nixon.
You didn’t miss much in the market today… just look at the charts and you’ll be caught up.
Oh, and franklin411, that 30% off deal on Virgin America didn’t apply to first class tickets… so : ( or i’d be buying my ticket to NYC.
April 1st, 2009 at 10:36 pm
Maybe this out of left field, but I wonder if tax return $$ this year might give a temporary stimulus to the economy? I know that unlike in recent years, my wife and I are getting money back (a pretty nice chunk too due largely to my business being off last year by over 50%, some capital losses, and a hefty medical-related write off) and my tax accountant (my brother’s firm) tells me that many of his clients are also getting money back as well, with many getting pretty sizable amounts. Just a thought. Has anyone analyzed this at all? We’re using some of that money to replace some old windows on the house. Are others doing the same or will most pocket the dough and/or pay down debts?
April 1st, 2009 at 10:48 pm
The left-coast separation helps one see the forest through the trees. I like to execute trades at the end of the day, so it can interfere with lunch – but there are worse things in life. You should visit Newport, it’s nicer than LA.
April 1st, 2009 at 10:48 pm
Karen,
No worries…I can’t use my Virgin America coupon either…they only fly out of LAX and it’s not worth the trip down from Santa Barbara to save a few bucks.
Soo….
I guess when it rains, it pours:
Dow Chemical to Sell Morton Salt to K+S for $1.675 Billion
Bloomberg – 9 minutes ago
By Jack Kaskey April 1 (Bloomberg) — Dow Chemical Co., the biggest US chemical maker, will sell its Morton Salt unit to K+S Aktienesellschaft, Europe’s largest salt producer, for $1.675 billion in cash to help finance the acquisition of Rohm & Haas.
April 1st, 2009 at 10:49 pm
Nothing much happened Barry. Vikrim Pandit showed up for work around nine ish, met with his decorator, dashed off an email to Keith Olbermann asking why Keith was so mean to him on his show the other day, met with the board to discuss his reservations about being able to take all this heat, for only 36 million, sorry typo, $1 per year, then went for lunch with Susan Krakower. Pretty average day, all in all.
April 1st, 2009 at 10:50 pm
I say go to Pink’s and get ye a hot dog.
~~~~
BR: Dinner at Mr. Chows. Very good . . .
April 1st, 2009 at 10:54 pm
Earnings are on their way and I am eager to learn what their release will do to current prices and what insight we will gain on likely outcomes for 2Q earnings. The job cuts seem a desperate measure to present an earnings picture that can’t possibly represent the real deal.
Also, someone linked a CNBC video with almost 10 minutes of uninterrupted Nassim Taleb:
http://www.huffingtonpost.com/huff-tv/emblack-swanem-author-nas_b_181551.html
Cash, baby, cash. Very good stuff, except Arianna reveals herself to be an excellent echoer of others’ thoughts…
Last item, I have a friend who does financial reporting for a English language outlet in BsAs Argentina – not reuters, not DowJones, sounds like the Mayor of New York, so we email a little about RE in BsAs and he tells me prices are at peak there right now and say huh? and that rents are really high and I think huh? and email him about ‘la inflación’ and he says we’ve come down to about 18%. So, if you want to buy a mansion with polo grounds, gettting the financing up here, Barry. Or pay cash- it’s only 2.5mil o sea una gota de agua en el océano para ti
http://www.argentinapolofarm.com/
http://buenosaires.en.craigslist.org/reo/1093450436.html
April 1st, 2009 at 10:56 pm
@Mannwich,
My biz partner and I owe again this year, but far less than we normally do, so it’s like a mini stimulus for us. Sadly, we aren’t hiring anyone new as a result.
I’m still sort of laughing about how bad I got had by the April fools joke last night.
April 1st, 2009 at 10:58 pm
Am I on probation? I don’t remember doing anything objectionable.
April 1st, 2009 at 10:59 pm
You and me both, ben22. I swear that I never get sucked into hoaxes like that (well, my wife gets me from time to time but that’s different). Too cynical. Don’t trust anyone or anything at face value (why I was initially attracted to this blog). Jumped the gun on that one. Sorry to lead you astray. That one’s on me.
April 1st, 2009 at 11:01 pm
haha, nah, I blame myself. I had a reflexivity type reaction to it.
Oh well, we can both laugh about it now.
April 1st, 2009 at 11:04 pm
Barry,
How are your meetings going out there? Picking up some new clients?
I was sort of surprised you still had 2 slots open not long before you left. I would have thought those were booked solid.
Anyway, I hope you do well.
April 1st, 2009 at 11:06 pm
Jeff,
slim odds on peeps par-tay’ing like it was ‘005 w/ those ‘tax refundz’
also, w/this: “Has anyone analyzed this at all? ”
whaddya think? no? ?
and, to puzzle:
this: Tax Refunds
Seventy percent of consumers who have received their 2007 income tax refund are using it to pay off credit cards and bills, the first time in 20 years that figure has topped 50 percent, according to Beemer. People who may have never seen the inside of a Wal-Mart are now buying groceries there, he said.
“In my 29 years of research, consumers are doing exactly what they said they are going to do: they’re not spending,” Beemer said in a telephone interview. He said his firm interviews 8,000 to 15,000 consumers a week.
This is a stunning announcement: “Seventy percent of consumers who have received their 2007 income tax refund are using it to pay off credit cards and bills, the first time in 20 years that figure has topped 50 percent.”
Anyone who thinks Bush’s economic stimulus package will work is sadly mistaken.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
from last year~
they’ll be more/less likely to spend this year?
April 1st, 2009 at 11:07 pm
http://globaleconomicanalysis.blogspot.com/2008/04/march-auto-roundup-and-retail-sales.html
April 1st, 2009 at 11:09 pm
franklin411, i attempted to fit into my previous post that my two favorite places in california are SB and Catalina… you have the spectacular town and vistas; i have the better beaches, warmer water, and surf : )
every time I visit SB, I think, and why aren’t i living here?
April 1st, 2009 at 11:10 pm
franklin,
are you at the home of the gauchos, or the banana slugs?
April 1st, 2009 at 11:12 pm
Santa Cruz is the slugs…we’re the Gauchos! =P
April 1st, 2009 at 11:16 pm
@Hoffer: I hear you and pretty much agree. Just throwing it out there. I guess I’m underestimating just how much debt people have to pay down, but I’m also partially of the mindset that it’s human nature for people to want to cling to their standard of living for as long as they can, so maybe, just maybe we’ll see one last gasp of sheer irresponsibility out there that will have a stimulative effect, however temporary it may be. Old habits and delusions die a hard, slow, painful death in this country, especially when the crack dealer, I mean, feds are offering the “quick fix” again at every turn. Once again, I’m getting multiple calls daily from telemarketers trying to offer me re-financing, credit cards, consolidation of debt, etc. etc. They’re trying hard to get the game going again or to at least get one last gasp of life from it. There may also be the prevailing mindset out there that people KNOW damn well they’re not going to pay any of it back. After all, they can just walk on those debts like they did on their homes, right? In our culture, sadly nobody is really held accountable or faces repercussions for one’s actions anymore, so why not just live it up? I’m not advocating this kind of behavior, but I get the feeling that others may see it this way. Saving, playing by the rules, and investing wisely is for chumps. That’s the message that comes across today and I believe that message has dire ramifications for any culture. Sorry for the soap box.
April 1st, 2009 at 11:20 pm
Just another day, another emergency bail-out.
April 1 (Bloomberg) — The U.S. Treasury injected $46 billion in emergency funds into government-controlled mortgage-finance companies Fannie Mae and Freddie Mac.
The Treasury payout yesterday included a $15.2 billion investment in Fannie’s preferred stock and a $30.8 billion purchase of Freddie’s preferred shares, the companies said in separate filings to the Securities and Exchange Commission today. The companies must pay a minimum dividend of 10 percent.
The Obama administration and Congress have been leaning on the government-sponsored enterprises to help lower mortgage rates and loosen lending requirements even as the two suffer record losses on their existing mortgage investments. Regulators put the two into conservatorship in September, and the Treasury has agreed to invest as much as $200 billion into each company as needed when their assets fall below the value of liabilities.
Freddie’s net worth was negative in both the third and fourth quarters. The McLean, Virginia-based company took $13.8 billion in aid from the Treasury in November. Washington- based Fannie’s draw from the fund yesterday was its first and goes toward erasing a net-worth deficit for the fourth quarter.
Both companies said in recent securities filings that they will need more aid and that the $400 billion Treasury lifeline may not be enough to stay afloat this year.
Freddie’s total of $44.6 billion in draws from the Treasury’s preferred stock program carries an annual dividend of at least $4.5 billion, according to a March regulatory filing. Fannie’s draws would require an annual dividend payout of at least $1.6 billion, according to a February regulatory filing.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1Va5SmQCD1o
April 1st, 2009 at 11:31 pm
franklin,
UCSB, UCSC, from ~15 000 000 feet away, close enough to start arguments (;
Jeff,
w/this: “I’m getting multiple calls daily from telemarketers trying to offer me re-financing, credit cards, consolidation of debt, etc. etc. They’re trying hard to get the game going again or to at least get one last gasp of life from it.”
a lot of that activity is from ‘bucket-shops’ trying to put an additional squeeze on the ’squeezed’..many, many scams in ‘debt re-fi’ land..
and, this: “There may also be the prevailing mindset out there that people KNOW damn well they’re not going to pay any of it back. After all, they can just walk on those debts like they did on their homes, right?”
are you catching any first-person tells of that? I hear peeps mention it off-hand, but w/o intent..
I think the recent 1/2 off sale on Wall St. has sobered up quite a few folks, ones that are able to de-tox, anyway..
April 1st, 2009 at 11:33 pm
CNBC pumping it for all they’re worth. And this was only the website. Bottom is in in housing. Cramer is making fun of Roubini and Krugman and asking if it’s too late to buy into the NEW BULL MARKET.
Asian markets up big. Euro futures up.
I guess I need to pick some entry points for ultrashort ETF’s.
Mish had an interesting comment on how the PPIP is going to be limited to the usual suspects.
http://globaleconomicanalysis.blogspot.com/2009/04/more-ugly-details-emerge-on-geithners.html
And on how lenders are ignoring defaults on CRE
http://globaleconomicanalysis.blogspot.com/2009/04/commercial-real-estate-limbo-lenders.html
And the Chinese have the solution to our real estate problem: have officials hawk real estate and if they can’t sell t, make them buy it.
http://chinesepolitics.blogspot.com/2009/03/government-forces-officials-to-sell.html
April 1st, 2009 at 11:34 pm
Here in Boston, the John Hancock Tower was auctioned yesterday for $.0006 Trillion (trillion is the new million), half of the $1.2 billion it sold for 3 years ago, after the bankruptcy of its former owners.
http://online.wsj.com/article/SB123851237251273961.html
My fantasy baseball league draft is tomorrow night and I am woefully unprepared this year. Won’t be taking A-Rod in an early round, anyway.
April 1st, 2009 at 11:36 pm
Transor,
you might take a peek at the Braves new Catcher..
April 1st, 2009 at 11:39 pm
Am I nuts for holding FAZ here?
April 1st, 2009 at 11:44 pm
Nothing happened BR. Absolutely nothing. Nothing that made any sense, anyway.
April 1st, 2009 at 11:48 pm
@Hoffer: Case in point, Mish reporting that GMAC now looking to resume making car and truck loans to subprime borrowers. I kid you not. Check it out. Deja vu all over again.
I’m just trying to play devil’s advocate to myself here. I think the market’s headed for another dump at some point soon but I want to be sure that I’m being truly objective about it so I don’t lose my shirt.
April 1st, 2009 at 11:51 pm
What news is causing the Asian markets to open up 4%? Has anyone heard anything?
April 1st, 2009 at 11:52 pm
News? Who needs actual “news” for a 4% pop in our so-called “markets” anymore? We don’t need no stinkin’ news.
April 2nd, 2009 at 12:00 am
Question: can you all see a comment I made at 10.54?
April 2nd, 2009 at 12:02 am
No, you probably used an objectionable word that gets swallowed up by WordPress?
April 2nd, 2009 at 12:02 am
No.
April 2nd, 2009 at 12:05 am
Earnings are on their way and I am eager to learn what their release will do to current prices and what insight we will gain on likely outcomes for 2Q earnings. The job cuts seem a desperate measure to present an earnings picture that can’t possibly represent the real deal.
Also, someone linked a CNBC video with almost 10 minutes of uninterrupted Nassim Taleb:
http://www.huffingtonpost.com/huff-tv/emblack-swanem-author-nas_b_181551.html
Cash, baby, cash. Very good stuff, except Arianna reveals herself to be an excellent echoer of others’ thoughts…
Last item, I have a friend who does financial reporting for a English language outlet in BsAs Argentina – not reuters, not DowJones, sounds like the Mayor of New York, so we email a little about RE in BsAs and he tells me prices are at peak there right now and I say huh? and that rents are really high and I think huh? and email him about ‘la inflación’ and he says we’ve come down to about 18%. So, if you want to buy a mansion with polo grounds, get the financing up here, Barry. Or pay cash- it’s only 2.5mil o sea una gota de agua en el océano para ti
http://buenosaires.en.craigslist.org/reo/1093450436.html
April 2nd, 2009 at 12:22 am
In a repeat of Y2K, Conficker worm fizzled.
April 2nd, 2009 at 12:25 am
http://www.space.com/scienceastronomy/090401-sunspot-activity-low.html
we’ll have to guess why “Global Warming” morphed into “Climate Change”
~~
“But like the stock market, the sunspot cycle is unpredictable. And just when astronomers thought it had hit bottom, it went lower. It has been a bear market for sunspots for many months now. That also means there have been no major space storms, which can zap satellites and threaten power grids on Earth.
There were no sunspots observed on 266 of 2008, or 73 percent of the time. The last time things were quieter was 1913, which had 311 spotless days. Some observers figured the solar cycle had hit bottom in 2008.
But the sunspot recession may not be over. Sunspot counts for 2009 have dropped even lower, the space agency announced today. As of March 31, there were no sunspots on 78 of the year’s 90 days (87 percent).
“This is the quietest sun we’ve seen in almost a century,” said sunspot expert David Hathaway of the Marshall Space Flight Center.”
~~
and, if you like ’shots in the dark’, don’t expect any sustainable rallies until the Sun ’storms’ come back into line..
April 2nd, 2009 at 12:26 am
For those who did not devote 10 mins. to watching Taleb’s video, he basically said the same thing as Stiglitz did in his forceful op-ed piece in today’s NY Times:
http://www.nytimes.com/2009/04/01/opinion/01stiglitz.html
i.e. TALF is a goner. Geithner, although valiant in his efforts, should be shown the door. The sooner Obama does it, and names someone with cred (my pick is Volcker) to the position, the sooner the markets recover.
April 2nd, 2009 at 12:28 am
When asked if he would consider firing Bank CEO’s Timothy geithner said “Of Course” two times in a row.
I’m not a shrink but I think that means he has no intention of firing any CEO’s, but he would if he could…
April 2nd, 2009 at 1:19 am
When asked if he would consider firing Bank CEO’s Timothy geithner said “Of Course” two times in a row.
Has Geithner been watching too much Goodfellas lately?
April 2nd, 2009 at 1:44 am
Okay: who needs a good laugh?
http://www.youtube.com/watch?v=_SXNAtwYMBw&feature=player_embedded
One minute video clip… and if you’re easily offended, don’t watch the end!
April 2nd, 2009 at 3:40 am
I’d add this to the market buzz – oil storage in the US WTI at Cushing, OK is at all time highs and is around 35 million bbls of their 40-odd m bbl capacity, we got yet another build in yesterday’s EIA report all across the board – gas, oil, diesel, OPEC excess capacity is estimated at ~5 mbpd right now, and we are waaay above the 5-year average in days supply, which is currently a bit above 55 days. All this and gasoline consumption YoY is down ~3.5%.
Last time OPEC had 5 mbpd sitting idle was 2003 and oil was ~$35 bbl. Not a single bullish item in the mix.
Despite all this oil is hovering around $48 a barrel.
Seems the market is either about to correct, is being strongly manipulated, or is anticipating a particularly heavy 2009 Summer driving season.
What’s your guess? Oil to $30/bbl or a sudden surge in demand that sops up the slack in the system?
April 2nd, 2009 at 4:17 am
Barry, you didn’t use the Company jet? Worried about being questioned how you got there, very topical!
April 2nd, 2009 at 7:10 am
Enjoy the time change.
Market starts trading at 6:30am and closes at 1pm. Then you have the rest of the day to entertain yourself.
April 2nd, 2009 at 7:45 am
@ MarkH
Mark, a couple weeks ago I posted on here that J. simons was asked in Bloomberg markets mag about a year and half ago about a study he conducted regarding sun spots and the impact they had on markets. He refused to comment on it, which I thought was interesting.
Why do so many seem to ask what the news was to cause markets, or futures to be up. All bear markets have rallies like this. I thought everyone was aware by now of the 50% rally during the GD, there has been countless mention of this and other rallies during bear markets on this site for the last year.
April 2nd, 2009 at 7:56 am
aitrader: I’m sure they’re anticipating all the deman gengerated from the coming boom
Marc Faber has repeatedly said that the amount of money being thrown at the economy has to have some effect on the markets. Since no one is actually going to use it for business purposes because they are too scared, it will probably just cause some bubblets as the banks use their tarp to speculate.
April 2nd, 2009 at 7:56 am
Maybe I’m being overly critical here, or maybe it’s because I can’t get the “is it fun being a billionaire” question out of my head but carl (karl?) on CNBC asks the most worthless questions out of any of them. Does he prepare for these interviews?
April 2nd, 2009 at 7:58 am
Mike in Nola,
Did you read Faber’s latest? I did last night. I’m trying to be careful reading him because I’m in the reflation camp and clearly so is he. That said, he made some compelling points in the most recent letter.
April 2nd, 2009 at 9:17 am
ben22,
this: “Why do so many seem to ask what the news was to cause markets, or futures to be up.”
is a good Q,
I’d just say that peep are a curious folk. and, seeming answers, soothe.
and, this: “All bear markets have rallies like this. I thought everyone was aware by now of the 50% rally during the GD, there has been countless mention of this and other rallies during bear markets on this site for the last year.” – is certainly true, much fat has been chewed over the topic of “Bear Market rallies”..
and, re: simons, just shows he’s smart enough not to get into it in .mixed company. the ridicule he would face by broaching the topic, isn’t worth it..
going fwd: one really needs to pay attention to the G-20..Wall Street, as we knew it, is totally Dead, and it ain’t ever coming back..Braces and Czech Strippers, notwithstanding..
April 2nd, 2009 at 9:20 am
airtrader, you left out the $usd in your considerations…
ben22, thank goodness you are in the reflation camp.
April 2nd, 2009 at 9:31 am
reflation is just nice way of saying :theft of purchasing power, but, yes, ya got to bet on it occuring, there are ‘Politicians’ about, afterall..
April 2nd, 2009 at 10:12 am
An extraordinarily profitable morning for Schadenfreude Asset Management.
Factory orders and crude seem to have gotten the recovery/reflation memo.
Watch out for the NFP/earnings banana skin. I am already looking at entry points on the Dark Side.
April 2nd, 2009 at 10:16 am
@ MRegan at 12:00 am
Question: can you all see a comment I made at 10.54?
I see it @ 10:54 and the re-post @ 12:05
April 2nd, 2009 at 10:52 am
Too good not to post:
What’s the Difference between Maddoff and U.S. Social Security?
by Paul Kasriel March 31, 2009
Coercion. Both depend, or in the case of Maddoff, depended, on being able to get new contributors into the scheme in order to pay off the previous contributors. The Social Security Administration has the power of the law to force new contributors into its scheme. Maddoff did not have the power of the law to force new contributors into his scheme, therefore, he has been accused of breaking the law. Just another example of it’s good to be the king.
http://www.safehaven.com/article-12973.htm