Confidence Game
I find that most of the day-to-day market action is simply noise. The moves up and down are for myriad reasons, but hardly what is ascribed to them.
Take for instance the recent bounce on “better than expected” confidence numbers. Markets took off on the number earlier this week, rallying 200 points. Why?
History teaches us that Confidence does not forecast future economic activity; rather, it is closely correlated to recent stock market gains or losses. Markets go up, and people feel better; markets go down and people feel worse.
One of the ironic things about the data is how conclusive it is that sentiment is a contrarian indicator. Mark Hulbert looked at consumer confidence data (via the Conference Board’s index) to its beginning — 1977. He then looked at how markets did over the ensuing periods. His conclusion?
“The biggest monthly jumps in the consumer confidence index were, on average, followed by sub-par returns. Conversely, big drops in the index were typically followed by above-average returns.
The starkest patterns in the data, however, were between monthly changes in the consumer confidence index and how the stock market had performed in prior months. When the stock market is going up, their confidence rises too — and vice versa. So, given the stock market’s impressive rally over the last couple of months, it was entirely to be expected that consumer confidence would rise smartly.
In other words, focusing on consumer confidence tells us more about how the stock market has performed in recent weeks than it does about the future.”
That makes perfect sense to me.
Howard Simons of Bianco Research pointed out sentiment tracks past — and not future — activity. He notes the absurdity of believing future activity follows sentiment changes:
“For this to be otherwise, we would need to believe consumer sentiment and expectations were truly leading indicators and completely independent variables, with the reductio ad absurdum being the U.S. economy was based in large measure on mood swings.“
>
Consumer Confidence and S&P500
Chart via Bianco Research, May 2006
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Even more amusing: Consider the big Homebuilder‘s bounce on Tuesday — they were one of the strongest performers that day. But if you looked at the part of the sentiment survey about houses, it was the most negative aspect of the survey: The outlook for home purchases over the next 6 months fell — not surprising, given the recent activity in the housing market — falling sales and prices.
Since that’s the case, why did the Homebuilders rally?
>
Sources:
Consumer confidence is a contrarian indicator
Mark Hulbert
MarketWatch, May 27, 2009
http://www.marketwatch.com/story/a-contrarian-take-on-the-consumer-confidence-data
Sentiment Is Not An Independent Variable
Howard L. Simons
Bianco Research, May 27, 2009
http://www.arborresearch.com/biancoresearch-files/SubscriberArea/commentaryarchive/pdffiles/com20v35.pdf
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May 29th, 2009 at 2:38 pm
Hence, O’s stock market’s “good buy” recommendation a couple of days before the March 9th lows. His administration isn’t stupid. They know the stock market is one of the biggest confidence boosters in the whole confidence game and that any significant rally would buy them time.
May 29th, 2009 at 2:38 pm
Barry,
This is the best post of the day. Right up my alley.
May 29th, 2009 at 2:55 pm
That’s EXACTLY right. I caught a few moments of CNBC that morning, on accident, and heard one of those numbnuts say ‘you need confident consumers to spend so this is a good number.’ I immediately turned the TV off, remembering exactly why I’ve tuned out CNBC for good.
What people say in a Survey and what people do in real life are two completely different things. Consumer confidence is just another contra-type indicator…it really doesn’t tell you much until it swings too fast one way or another….
Great post BR.!
May 29th, 2009 at 2:57 pm
What’s interesting is the bulls all the way down last year said that “consumer sentiment” numbers are meaningless in the grand scheme of things. Now, of course, they’re very meaningful. Strange disconnect there.
May 29th, 2009 at 3:06 pm
@Barry
How about a chart showing what correlation exists between consumer confidence and the macro picture, if any. I could not care less about the stock market’s daily gyrations.
May 29th, 2009 at 3:10 pm
As to which parameter is leading and which trailing, I am not convinced by the above plot. On the left half of the plot the S&P definitely trails Confidence while on the right half the two appear to be more tightly correlated.
A correlation function of the two variables would help nail which is trailing and which is leading down. Causation is another issue, as we know.
May 29th, 2009 at 3:13 pm
BR asked: “Since that’s the case, why did the Homebuilders rally?”
Short covering. There is no other reason for banks, REITs and homebuilders to rally in this bear market.
Not that you are likely to hear that on CNBC.
May 29th, 2009 at 3:14 pm
Here’s a good post on short covering:
http://zerohedge.blogspot.com/2009/05/300-million-shorts-covered-in-russell.html
May 29th, 2009 at 3:16 pm
This is interesting, because I remember looking at political polling and noticing that people’s concern about the “economy” began to jump quite significantly in December, 2007–exactly as the recession started. I’ll try and dig up numbers, but there’s a news story dating Dec 20 2007 that said a majority of voters felt the economy was going badly, and70% thought it was going to get worse.
Interesting, especially considering that in December 2007, it’s not like there were a lot of pundits arguing the economy wasn’t going well and it was in danger of getting worse. Quite the contrary.
This suggests to me the problem lies in however this “consumer confidence” measure is derived. Because it does seem like there’s meaning in an indicator that asks the American people “how’s the economy?” Which probably shouldn’t be surprising (after all, people do notice when they lose their jobs), but still is surprising.
May 29th, 2009 at 3:17 pm
three points. first: if the stock market has a six month crystal ball, as grandpa told me it do, and consumer sentiment surveys record the consumer expectations for the next six months, as the survey questions indicate they do, then the claim that one leads the other is a straw man … or rather, a coin toss. it might be worthwhile to look at, e.g. the conference board actual spending and anticipated spending numbers and compare those to both the stock market and economic growth (or jobless claims, whatever).
second: consistent with that, the graphic shows any story you prefer: sentiment leading market in the early 1990′s, sentiment tracking market around the turn of the century, and sentiment lagging the market in the mid 2000′s.
so third: there is clearly a dynamic story here. in the ’90′s the wealth effect was very broad; when i bought my porsche in 1997, the dealer thanked me because my employer had made him rich in the stock market. in the 00′s the wealth effect had a very different footprint, concentrated in the financial industry and in mortgages; there was also a drumbeat of war from the bush administration. the linkage between confidence and the economy is mediated by culture, politics, sectors and demographics.
a collateral point: a lot of the discussion about the current market seems to me seriously confused. there are at least three factors in play. the first is the collapse of the financial system, the meltdown of adult supervision and probity; call it trust. the second is the collapse in the economy, lack of credit and layoffs; call it hardship. the third is the huge anxiety about the future, whether your paranoia is global warming, inflation, profit growth or political comity; call it uncertainty.
we should be a little more cautious about separating out the effects of trust, hardship and uncertainty (and maybe other things) when talking about consumer confidence, “why the market does what it does”, and where we forecast where the economy will be in the next six months.
May 29th, 2009 at 3:17 pm
As far as I can tell the formula for consumer confidence is pretty simple:
Cc = Stock Prices – Gas Prices
May 29th, 2009 at 3:20 pm
I think the most revealing period for the consumer confidence numbers was in 1998. IIRC there weren’t really any economic problems at the time in the US at the time, just lots of scary talk about stuff going on in Asia.
In late 1998 I recall the company I was working for was still desperately trying to hire people.
May 29th, 2009 at 3:30 pm
Of course, the most hysterical thing about all this is that the market is, indeed, ruled by mood swings–although you could say herd mentality if it makes you feel better.
Kevin Depew over at Minyanville has been making that case for a long time now. He’s not alone, but he’s the one I tend to read most because the guy is not only insightful, he’s pretty funny.
May 29th, 2009 at 3:36 pm
A big nothingburger of a day. Should have spent the day on the golf course.
May 29th, 2009 at 3:40 pm
This is a great piece. Thanks for doing this.
May 29th, 2009 at 3:43 pm
I am confident that Andy T is punishing himself by watching CNBC-
also- I am confident that people will continue to rein in spending- putting away what they can- as far as high end discretionary- the tale of the tape can be seen here-
http://finance.yahoo.com/news/Tiffanys-1Q-profit-tumbles-apf-15382513.html
that something can plummet 62% but meet expectation- well- you can always set the bar so low that a company would almost have to have zero sales to miss the mark
May 29th, 2009 at 3:45 pm
Late day, last 10-15 minute pump in action. On cue.
May 29th, 2009 at 3:57 pm
franklin411 Says:
May 29th, 2009 at 3:06 pm
@Barry
How about a chart showing what correlation exists between consumer confidence and the macro picture, if any. I could not care less about the stock market’s daily gyrations.
reply:
———-
F411, this would be a good exercise for you to do. It would be easy and informative at many levels. If you choose to ignore headlines and look at actual statistics, you will see that many historical numbers are still quite bad and getting worse. What makes things look better is the rising stock market and the happy talk newscasters who ignore much and skim over much.
If someone is terrified, they’re not very confident. If they are not terrified any longer but their personal situation hasn’t changed, the confidence numbers will go up, but nothing else has changed. Thus, the confidence numbers are meaningless unless, perhaps, there is a lot of disposable income available and it might potentially make people feel good about spending some.
Rising confidence numbers compared to a couple of month ago were intuitively predictable.
You know, there’s nothing wrong with not knowing something or even being wrong if you make an effort to learn something. I was horribly wrong when this thing started. I assumed 2008 would be a recovery year because I had no concept of the criminality and stupidity in the world of finance or the stupidity of the government. I expected a bad recession, but not a balance sheet recession. This is unique and will take many many years to come back from.
Fortunately, I had read Richard Koo’s book about Japan and have no problem recognizing crooks in action, so this compensated and gave me a base to learn from. The oil thieves and their apologists were my big eye opener, as were the naked shorts and their belief in their right to steal at will. The slavishness of CNBC was also an eye opener. I didn’t grasp the bubblevision label until recently.
Pushing the envelope and taking a different side of a topic is great. The apologists for the oil thieves were, basically, dittoheads. Some of TA is good and some is horrible, but people still believe both because it looks official and important people speak up it its behalf. Right now, there is still a naive belief in honesty in the markets because it is believed they are too big to manipulate. I disagree, but am not smart enough to explain things technically. Too many details look contrived as opposed to random.
Taking the other path is OK. Just try to be a little more conscientious.
May 29th, 2009 at 4:01 pm
DOW up over 100 points in less than 20 minutes on nothing.
May 29th, 2009 at 4:02 pm
Such low volume friday afternoon action is irritating but of little consequence. I can tell you without looking that this isn’t the PPT, it is people covering their short positions in XLF and IYR to end the week. Again.
hobo: In some cases the oil thieves and the naked shorts were the same people.
May 29th, 2009 at 4:08 pm
The Dow up 100 on nothing, try the 10 yr. Ben, talk about saying one thing and doing another!
May 29th, 2009 at 4:13 pm
I said:
Too many details look contrived as opposed to random.
addendum:
Such as the close today. This little jump must have cost a couple hundred million $$ by one or a small number of players. No professional would do something this insane unless they were using someone else’s money and pumping the market. It’s all a scam by a limited number of people with huge resources to pump the market and suck in the gullible. The SEC apparently doesn’t care.
May 29th, 2009 at 4:13 pm
why would the market care about consumer confidence going up when it doesn’t care about it going down? seems more like a ‘reason’ for some thing that happened as opposed to why it really happend
May 29th, 2009 at 4:18 pm
Longest monthly market streak since, ahem, October 2007……
The Dow Jones Industrial Average jumped 100 points in the last half hour of trading on Friday, capping a third straight month of gains for the stock market. Market benchmarks saw their biggest three-month percentage gains in more than 10 years. It is the longest winning streak for stocks since the three months ended in October 2007 — when the Dow industrials and S&P 500 hit record highs.
May 29th, 2009 at 4:21 pm
Oh yeah, end of month, someone had to make their numbers. Monday is a new month.
May 29th, 2009 at 4:21 pm
This chart says it all on today’s close. This can’t be “natural”, can it?
http://3.bp.blogspot.com/_FM71j6-VkNE/SiBBUA4c-uI/AAAAAAAAC7o/95yqvJZE3GQ/s1600-h/SPY+Vol+5.29.09.jpg
May 29th, 2009 at 4:22 pm
I guess no “Sell in May & Go Away” this year. Another conventional “wisdom” debunked?
May 29th, 2009 at 4:22 pm
Mannwich Says:
May 29th, 2009 at 4:21 pm
This chart says it all on today’s close. This can’t be “natural”, can it?
comment:
—————–
Chart porn???
May 29th, 2009 at 4:22 pm
Wow. Major Phat Phinger trading, that is interesting.
May 29th, 2009 at 4:23 pm
It’s the pump for the hedge fund redemptions starting next week. Added to my shorts going into the close.
May 29th, 2009 at 4:23 pm
can’t link up to the chart here at my office-
volume spike last few minutes?
May 29th, 2009 at 4:25 pm
@ahab: Huge spike in SPY buying in final minute. Literally parabolic. Not natural. I’m sorry. Little Mannwich might take his ball and go home. I’m sick of this shit. Getting close to liquidating everything (including equity longs) and going 100% cash.
May 29th, 2009 at 4:27 pm
XII moved at the same time as DJIA, SPX, SPY, etc. All were pumped at 15:35
May 29th, 2009 at 4:28 pm
Question. If credit is tightening how will businesses get new credit cards after Advanta shuts down?
May 29th, 2009 at 4:30 pm
@AmenRa: Answer: Many won’t. I’m involved in a business that we’re trying to get off the ground and we have no plans to replace our Advanta card at the moment. Just going to pay down the balance and use our other WFC card if we need it.
May 29th, 2009 at 4:32 pm
I guess I am trying to understand why? Why all the interest at the last minute- to what end?
May 29th, 2009 at 4:34 pm
You know, I think it might take a crook to beat a crook.
Let’s bring back naked shorts. I’m serious.
May 29th, 2009 at 4:35 pm
@ahab: Computer-driven program trading? I have no idea. Trying to shake out remaining shorts? I’m not the most experienced person at this game compared to others on this board but is what just happened “normal” in a well functioning market?
May 29th, 2009 at 4:35 pm
Someone had to make their monthly number? Could have been a small buy program and then shorts covering.
We’ll never know…
May 29th, 2009 at 4:36 pm
@hobo: Someone made an interesting comment on Zero Hedge that if this happened to the short side, we’d have a full Congressional inquiry on Monday. He’s so right.
May 29th, 2009 at 4:40 pm
Mannwich Says:
May 29th, 2009 at 4:36 pm
@hobo: Someone made an interesting comment on Zero Hedge that if this happened to the short side, we’d have a full Congressional inquiry on Monday. He’s so right.
comment:
————-
Except this is probably official policy meant as a confidence builder. Only the stock market has officially become a no man’s land. It’s not safe for normal people anymore.
May 29th, 2009 at 4:47 pm
Well….let’s see…the US$ tanked and the Ten Year bond suddenly found support into a nice technical target….I’m guessing we get some sort of “surprise” announcement from the Fed that they intend to piss into the wind some more and buy even more government debt…borrowing from ourselves…..genius!
And maybe, just maybe, that information has been leaked somehow……
May 29th, 2009 at 4:49 pm
dead hobo-
I have to agree with you- this rally has lasted well beyond what I could have imagined- I wonder if all the TARP money given to the TBTF banks came with a mandate to drive up share prices
May 29th, 2009 at 4:50 pm
Andy, who the f*** knows what they are doing? This is why we have charts, I guess. Takes away the emotion.
May 29th, 2009 at 4:51 pm
Andy-
I just don’t see that as good news
May 29th, 2009 at 4:51 pm
“I wonder if all the TARP money given to the TBTF banks came with a mandate to drive up share prices?”
Ha ha ha, ya think???
May 29th, 2009 at 4:55 pm
GM terminating even more dealerships.
May 29th, 2009 at 5:03 pm
lftbk-
its all a reflationary play- putting a floor under all asset classes- as we can see- home prices keep falling anyway- regardless of low rates and tax credits- in the end the markets will have to reflect reality- but I am still amazed that large short positions have not entered the market
May 29th, 2009 at 5:09 pm
Mannwich Says:
May 29th, 2009 at 4:22 pm
I guess no “Sell in May & Go Away” this year. Another conventional “wisdom” debunked?
====================================================
That will only be known in the fullness of time my friend….This October, look back to the prices you witnessed in May and then you’ll know if the adage was crap advice this year.
May 29th, 2009 at 5:11 pm
call me ahab Says:
May 29th, 2009 at 5:03 pm
but I am still amazed that large short positions have not entered the market
reply:
———
I think the shorts are a designated profit center now.
May 29th, 2009 at 5:15 pm
I said:
I think the shorts are a designated profit center now.
addendum:
————–
I mean it is official policy to shut down unpatriotic shorts. This is a liberal twist on GWB policy. God, I never thought I would say anything even remotely similar to that.
May 29th, 2009 at 5:17 pm
I see that I am not the only reader who finds F411′s unique blend of economic and investing cluelessness, combined with his snarkiness and overweening sense of intellectual superiority, to be insufferable. Memo to Franklin: there are plenty of intelligent, degreed, accomplished folk here with a lot of experience. If you want to be taken seriously, show some respect. If you want to be a fringe d-bag type amusing only to yourself, just keep on keeping on.
Alternaltely, Barry could start charging admission. You disappeared like a flash from RealMoney when your gratis edu-sub ran out.
May 29th, 2009 at 5:24 pm
Geithner to reassure China that its massive US bond holdings are safe despite concerns.
HA !!!….US economy carries about $20 trillion of excess debt.
Until that debt is eliminated, the idea of a healthy boom is a mirage.
Tsing Tao early today!
May 29th, 2009 at 5:25 pm
km4 Says:
May 29th, 2009 at 5:24 pm
Tsing Tao early today!
reply:
—————-
No, just bourbon. See you tomorrow later.
May 29th, 2009 at 5:37 pm
@StockSeekr
The rigging today is so overt but the elites just don’t give a shit because most Americans just take it with complacency.
America has had 50+ yrs of mostly upwards economic growth cycles with better standard of living but this time the damage and greed is so systemic and massive that most Americans should prepare for a declining standard of living.
What’s good for GM is good for the country right … oh wait that was in 1960′s when America was a creditor nation and the economic and manufacturing superpower !
Now we’re swimming in debt http://www.usdebtclock.org/ and much of the world is laughing at BB and his printing press operation that will bring the USA to hyperinflation.
Now we just mainly produce bullshit financial ponzi schemes and pass the bill to the American taxpayers….
Most Americans had better get a new dream and fast !
May 29th, 2009 at 5:51 pm
km4 Says:
“Now we just mainly produce bullshit financial ponzi schemes and pass the bill to the American taxpayers”
pretty much it
May 29th, 2009 at 7:03 pm
Andy T said: http://www.ritholtz.com/blog/2009/05/confidence-game/#comment-177661
Indeed Andy. The high was set on May 8 and hasn’t been topped yet. Maybe it will hold and the adage will be apropos to this year as well. We’ll see how long this black box, hedge fund, short squeeze circus continues.
May 29th, 2009 at 7:13 pm
How can any of this surprise anyone on this board?
Speculation, bubble blowing, manipulation are all still the underlying fundamentals of the stock market and other financial assets. All the pros have to do something to make up for the miserable performance they put in over the last 18 months. We still have way too many of them, the shadow banking system has collapsed and no one is issuing much new ABS so they are all in equities. Most of the pundits and newsletters are all pumping the inflation ‘trade’. Maybe the Chinese are all in as well.
May 29th, 2009 at 7:18 pm
Does anyone know why the US government would be in the market to buy physical gold?
May 29th, 2009 at 7:49 pm
Moss Says:
Does anyone know why the US government would be in the market to buy physical gold?
The U.S. Mint makes and sells numismatic and bullion gold and silver coins with a nice mark up. They are having trouble keeping up with demand and are required by law to meet this demand. Why not exchange paper for gold and then make a profit on the fabrication as well. It’s the only thing the Government makes money on.
May 29th, 2009 at 8:02 pm
@olephart
Thanks.
I know a Gold dealer who told me the gov. is buying 50Billion. Does that seem realistic at all?
Needless to say he will be making some serious coin to broker the deal.
May 29th, 2009 at 8:17 pm
Well, in the mother of all suckers rallies, within the mother of all debt crises, we got today, the mother of all end of month window dressing. The utter brazenness of it is to be marveled at…they waited intil the last half hour and did it with ease. The stupidity of the market can be easily seen in GM still trading at .80, when it will be about 3 cents by COB Monday.
May 29th, 2009 at 8:25 pm
Tiffany’s reported sales were down q-o-q by 62% and the stock tacked on .40. There is no rhyme or reason to any of the markets save one. The CRB posted its largest monthly gain since 1974. Do we all remember what followed?
May 29th, 2009 at 8:31 pm
now I m starting to think that maybe the players who took TARP have been told “in so many words” that they cannot short the markets-
hmm- would explain the bizarre market action- additionally-
maybe they have been instructed to drive shares up- to protect the baby boomers 401k’s- since that is the age demographic that will be retiring for the next 20 years- and is the age of the average person setting policy today-
regardless of market news- which has been dreadful- the market does not have any selling pressure- add to that- the market has rallied for 3 months with nary a hesitation-
seems unfucking believable
May 29th, 2009 at 8:38 pm
I am more convinced with each passing day that this is a monetary phenomena.
May 29th, 2009 at 8:43 pm
So much skepticism here. Saw my pal Mr Leuthold on Bloomberg last week talking about a June melt up due to underinvested mutual fund types. The market looks tired, extended, but week in and out it goes higher. A higher friday like today means somebody is willing to be long the weekend. It aint over til its over. Yogi Berra said that.
May 29th, 2009 at 9:05 pm
@ call me ahab Says:
May 29th, 2009 at 8:31 pm
now I m starting to think that maybe the players who took TARP have been told “in so many words” that they cannot short the markets-
hmm- would explain the bizarre market action- additionally-
********************
excexllent observation and I agree
Timmy to going to China in early June to reassure China that its massive US bond holdings are safe despite concerns.
HA !!!….US economy carries about $20 trillion of excess debt.
Until that debt is eliminated, the idea of a healthy boom is a mirage.
A Treasury official acknowledged last Thursday that the budget deficit was “going to increase sharply” as a result of aggressive measures to jolt the economy from recession but added that once recovery was firmly established, “we are going to walk back these measures and the deficit will decrease.
“In general, Treasury believes that by maintaining the most liquid debt markets in the world, by maintaining strong economic fundamentals, we will continue to attracts both domestic and international investment.”
Liquid debt markets = More Tsing Tao please ;)
May 29th, 2009 at 9:09 pm
In other words the market is rigged like we’ve never seen before i.e. collusion between the 19 too big to fail banks that got TARP and Obama bought and paid for economic team.
You wash my hand and I’ll wash your and maybe even have Maria B jerk you off !
May 29th, 2009 at 9:09 pm
Don’t know where to post this for you with SRS like me :( keep the faith:
http://www.calculatedriskblog.com/2009/05/rite-aid-and-cre.html
May 29th, 2009 at 9:21 pm
As for the readings of consumer confidence.
I have only one word to summarize it – “hope”. I hope the market will pick up. I hope a don´t see red “for sale” signs on my street. I hope my company stop firing, cutting people’s wages and hours, and gets some orders.
I am hopeful for a recovery soon, because I am barely hanging on now. This is what I think the consumer confidence is based on today. As they say in russian “hope always dies last”.
The whole thing reminds me of an old story, that I believe is similar across the all countries. It´s about a boy, who called out to the villagers, about the big bad wolf that was coming.
This is just the same, but opposite. The spin from the market and the government – The recovery is coming, the recovery is coming, now go BUY something!
While the consumer answers, great, recovery is coming, and when it comes, and my home price stabilizes, and THEN I go buy something!
May 29th, 2009 at 9:22 pm
In the perfection situation set up, what would we want?
1. Confidence in US banking system.
2. Low rates for everyone to refinance.
3. House prices to stop their fall.
4. Consumer starts to spend.
5. Moderate inflation down the road, to pull overleveraged consumer out of the debt trap.
Now what have we have?
1. Stress test was kind of a joke, the worst case scenario for unemployment is within reach, and probably would be reached even if we have the third quarter- late year recovery like many believe. BUT, many banks could refinance on the market rally, so all in all, the banks look on the outside better. Personally I would only take a long position in them under a gun point, bu that is me.
2. We had low rates, but how many had time to refinance? Like commented earlier on this blog, the window was to short, and now the long T notes and bonds are behaving not as FED wants them to behave. So much for overhyping “recovery soon “while blowing the deficit out of proportion.
3. House prices will not stop, if the mortgage rates rise, and they just rose, they need to get down. And for that to do, the best would be a flight to safety scenario, when things would look much worse economically in the rest of the world that in US. The US equity has to fall as well of course. If the flight to safety would largely be triggered by internal US market weakness, that would have also a negative effect, part because bond investors would anticipate further stimulus packages from the government down the road.
4. Consumer will not spend, while their house prices fall, and while the business not expands their production. The Chicago PMI showed clearly that the key indicator, new orders, fell.
http://anasdaq.econoday.com/byshoweventfull.asp?fid=438276&cust=nasdaq&year=2009#top
Now why does one need employees if there is no one to sell your product to?
5. And while all this is going on, the commodities, and most of all, oil is marching up. Moderate inflation, when the economy starts to pick itself up, that would be good. But oil at the level of 65 $ per barrel? Shame we hardly knew this lifeblood of the economy at the price below 40 $.
May 29th, 2009 at 9:23 pm
Crazy day.
I am new to actually risking my money, in the markets. Reading courses in corporate valuation and knowing the CAPM, alpha, ATM and perfect market hypothesis is one thing. Master in finance, year, hmm, It´s some joke what we learn in schools today.
I think I have all the flaws of a human behavior in the markets: overtrading, ignoring stop losses, overleveraging and bad confidence in my positions. I am net down.
Special thanks to you, Barry, and all the blog commentators. My favorite place to learn from.
May 29th, 2009 at 9:26 pm
One final thought, looking at the way the market trade, supported, almost synthetic, and the oil price running up, I draw the conclusion that it is still too much money running around, speculating.
Those owners and this paper need to be separated. Otherwise, each time we will try to pick our self up, they will be quick to re inflate the commodity/oil/ real estate bubble. Who will separate? Market – hopefully. The dark scenario is if the speculators are the big banks, and the creditor is US government, than this game will go on for quite some time. Not month, but years.
But in the end, the wolf, sorry, I ment “the recovery” will come. And as always, the villages will not believe in it.
May 29th, 2009 at 9:34 pm
This is some of the most bizarre action since the Nov weirdness. SPY toggles in a tiny range for hours, then suddenly shoots up 15-20 pts and then the bid just vanishes. This has been happening with increasing frequency lately. It will be interesting to see what happens Monday. Fascinating really, as my positions get ripped back and forth.
May 29th, 2009 at 9:40 pm
On SRS: you simply cannot speculate with this baby other than momentum, and there are better vehicles for that. Not until the cash flows turn south. That’s not going to happen until the first quarter of 2010. Until then, Gov money will sustain the refinancing requirements.
May 29th, 2009 at 9:43 pm
…quite a bit OT,
cv and F411 hve gone off on this. hey, what the heck. check it out.
love him or hate him….
http://www.financialsense.com/fsu/editorials/schiff/2009/0529.html
May 29th, 2009 at 9:44 pm
For those bears who are doubting themselves…a nice article.
http://www.financialsense.com/Market/wrapup.htm
The best line :
•“Greed is Purged from the System”
I can absolutely assure you that this has not happened yet.
May 29th, 2009 at 9:47 pm
SB,
clearly, you are correct sit.
May 29th, 2009 at 9:47 pm
sir
May 29th, 2009 at 9:55 pm
SB@ 9:44
OK, make that dark sit, errrr sir
May 29th, 2009 at 10:27 pm
The comments here indicate a crescendo of frustration with a market that refuse to turn. Don’t forget that this rally was very late in its arrival. A delayed departure is to be expected. I subscribe to the patient hunter school of investing which basically means ignore the daily swings wait for the trend line to break wait another day then wait a bit more then pounce.
May 29th, 2009 at 10:52 pm
I love the smell of capitulation in the evening …
May 29th, 2009 at 11:00 pm
Through some quick Jethro like ciphering: about $2.7B flowed into SPY in the last 10 minutes today. The volume was about 3x the recent normal. Now if you’re big money and wanted in, why would you wait until the close and run up the price on yourself? Unless you wanted to run up the price.
The portion of my brain that wants to believe in conspiracies (the paranoidamus) thinks the PPT plan was to snug up the SPY and QQQQ at the May 8 highs. Then Monday morning, throw a few more $billion at the open to blow through that resistance point, send the shorts scrambling, and we’re off to 1000.
May 29th, 2009 at 11:09 pm
Simon,
You are correct sir! Attempting to argue with the market is a waste of time and energy. We are so omniscient that how dare it do something other than what we have ordained! Assume a detached fascination: like you are watching ants carry a grasshopper to a grisly death. Or maybe a fern frond unfold a little more everyday. Or that chicken breast in your refrigerator get a little more green fuzz on it every time you go to get a double shot. You know you can’t throw it away: you helped created it! It is your own chartreuse Frankenstein. Only know most will be caught flatfooted, broke, frustrated and exhausted. Just let it do what it will-the money is in the big trends anyway, not little ripples in your orange jello.
May 29th, 2009 at 11:23 pm
stillaway-
that was my question earlier- I didn’t understand it- the other reason could be leaked info as opined by AT-
bizarro
May 29th, 2009 at 11:25 pm
@”Stillaway”: Have had pretty close to the same thoughts. This was clearly a calculated move to jam things higher next week. The markets had started to stall. This now probably helps goose the Asian markets before the U.S. opens, and it could be off to the races on Monday morning in the U.S. after Asian markets end higher.
@thetanman & Simon: With your thoughts are you assuming that we’re trading in what is a totally transparent, unmanipulated, fair “market”? If so, then you may be right. If not, then I don’t think so.
May 29th, 2009 at 11:31 pm
Does anyone else also find it strange that almost the EXACT same thing happened today with the NIKKEI as well?
May 29th, 2009 at 11:44 pm
I still find it hard to believe that- on the day GM files BK- we can expect the market to rally- that would fly in the face of common sense
May 29th, 2009 at 11:48 pm
@ahab: “Common sense?” LOL. Don’t you think we’re well past that point now? Anything’s clearly possible now.
May 29th, 2009 at 11:50 pm
Since the same thing happened to the NIKKEI today, could it be a major hedge fund liquidation that caused this, meaning that one fund that’s closing due to insider trading allegations? Can’t remember the name…….
May 29th, 2009 at 11:51 pm
from yahoo finance-
“Analysts said the surge was the work of short-sellers who had bet that stocks would fall and then had to rush to buy when those bets turned out to be wrong.”
May 29th, 2009 at 11:52 pm
If I’m long stocks, I don’t care if the whole thing is just a rigged conspiracy, as long as it keeps going up. But if “they” can make it go up, then they can take it down also.
The question is WHEN.
May 29th, 2009 at 11:54 pm
manny,
Don’t get too caught up. I am reminded of Allen Ginzburg, a man so far ahead of his time that he had no time of his own. Let’s tune in on his classic Howl:
I saw the best minds of my generation destroyed by
madness, starving hysterical naked,
dragging themselves through the negro streets at dawn
looking for an angry fix,
angelheaded hipsters burning for the ancient heavenly
connection to the starry dynamo in the machin-
ery of night,
who chained themselves to subways for the endless
ride from Battery to holy Bronx on benzedrine
until the noise of wheels and children brought
them down shuddering mouth-wracked and
battered bleak of brain all drained of brilliance
in the drear light of Zoo
who burned cigarette holes in their arms protesting
the narcotic tobacco haze of Capitalism,
who cut their wrists three times successively unsuccess-
fully, gave up and were forced to open antique
stores where they thought they were growing
old and cried,
And finally
who sank all night in submarine light of Bickford’s
floated out and sat through the stale beer after
noon in desolate Fugazzi’s, listening to the crack
of doom on the hydrogen jukebox,
You don’t know the machinery, you can’t know. You’ll go mad trying to figure it all out. They know you can’t, but they know you think you can. Then you are theirs.
May 29th, 2009 at 11:58 pm
DL-
you don’t seem to be a very confident bull
May 30th, 2009 at 12:18 am
manny,
They have the money. You are a stand up guy from what I can tell. They are corrupt, slimy, unscrupulous and evil. You don’t have a chance to come out whole. So you guess right. Good! Now you are playing their disgusting game. You will be called to account for this. Just to get richer in little pieces of paper that will turn to ash in your hands. Do what my father does. Read books, garden, leer salaciously at your wife, read about halogen bulbs. Maybe you already know them. Marvel at Charles Curtis and imagine what the World would be like if President Hoover had died. Write a book. One day the outside World will penetrate your inner sanctum. Then it will be time to pounce. And you’ll have all the peices of paper you could possibly want. And you just might know how to make a better halogen bulb.
May 30th, 2009 at 12:19 am
if anyone is still up- read this article from Pravda titled-
‘American capitalism gone with a whimper”
http://english.pravda.ru/opinion/columnists/107459-0/
scathing- the comments on Barney Frank are brutal
May 30th, 2009 at 12:47 am
call me ahab @ 11:58
Ready to run for the exits on a moments notice.
May 30th, 2009 at 12:51 am
ahab @ 12:19
Interesting article, given the source.
May 30th, 2009 at 1:03 am
They will do every thing to avoid a deflationary spiral. Everything! If there is one thing we’ve learned about BO is that he doesn’t fuck around. He rewards his friends by any means possible. And you know what the flip side is. Like many great men, he will be the greatest man of all time, or will die trying. And take everyone with him. They can just mail people cash. The dollar depreciates, inflation soars, and they are suddenly right side up on their house. They will ignore what ever they have to. The media is in the bag, anything that can be spun, will. Will we rise up? Maybe if they shut the tattoo parlor down. If what you say will happen takes place, we are totally screwed. Any kind of depression will rip the micro thin veneer from our zoned out populous. You know how most people are trying to get through this recession? By ripping someone off. In stead of pulling together we are warily eying one another with our hand clamped on our wallet. New national pastime: endless scams and free money. Visions of free riches. We are the least prepared people to ever face a depression. It would mean not only the end of our World, but our very lives. We’ve gone way too far: we ride this tiger to the end.
May 30th, 2009 at 1:10 am
Likewise with announcement yesterday that COV will be going out of the S&P 500 due to Covidien being in the process of redomesticating to Ireland, rendering it ineligible for continued inclusion in the S&P 500 indices… well what does it do today instead of selling off? Up 4.66%. What does its replacement, MET do? Up only 1.22%. Go figure!
May 30th, 2009 at 7:57 am
@Tanman:
It’s clever to joke about printing money and mailing it out…I have done so myself in the past…but will out creditors (read China) around the world accept being paid back in worthless currency? Interesting thought, but if we were an island to ourselves, their idea might work.
May 30th, 2009 at 8:04 am
Speaking of our creditors, Geithner is going to China to advise them to be more like us…that’s funny. Since the average Chinese makes $2000 a year, will this really help the global economy?
http://news.yahoo.com/s/ap/20090530/ap_on_go_ca_st_pe/us_geithner_china_2
May 30th, 2009 at 9:04 am
DL-
It appears Zero Hedge got whiff of the same article-
http://zerohedge.blogspot.com/
I thought it was refreshing to read- all the PC slant is thrown out the window
May 30th, 2009 at 9:15 am
Mannwich Says:
May 29th, 2009 at 11:31 pm
Does anyone else also find it strange that almost the EXACT same thing happened today with the NIKKEI as well?
reply:
—————–
I just looked at it. At least Japan admits to manipulations in the equities markets. This looks like a good example of it.
May 30th, 2009 at 10:13 am
http://3.bp.blogspot.com/_FM71j6-VkNE/SiBBUA4c-uI/AAAAAAAAC7o/95yqvJZE3GQ/s1600-h/SPY+Vol+5.29.09.jpg
My mistake above, late yesterday afternoon. 12 million shares at $93 cost over$13 billion traded in the last 1/2 hour just for SPY, most of it apparently in one simultaneous transaction. Nothing to see here.
May 30th, 2009 at 10:16 am
oops. I must have not cleared the calculator first. It only cost $1.1 billion. Still, nothing to see here.
May 30th, 2009 at 10:20 am
Judging from these comments its obvious that beating your head against the wall isnt torture its just an enhanced investment technique. So much angst in Mpls.
May 30th, 2009 at 5:58 pm
“I find that most of the day-to-day market action is simply noise. The moves up and down are for myriad reasons, but hardly what is ascribed to them.”
Truer words were never spoken. You’ll finally know that you’ve received an accurate news report on the stock market when the media report that markets moved up/down because the market makers decided that the day’s level of demand for stocks dictated higher/lower prices. Please note the crucial role of the black box that are the market makers.
June 2nd, 2009 at 12:48 am
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