CRE Faltering
By Barry Ritholtz - May 21st, 2009, 1:00PM
With Rosie now gone from Merrill Lynch/BofA (new research here), let’s see what his replacement, Neil Dutta, is up to:
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Leading measure of commercial real estate market heads south
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Neil notes that Commercial construction contracting, as demand for architectural services (a leading indicator for nonresidential construction) is still contract as of March 09, as the Institute of Architects’ Architectural Billings Index dropped to 42.8 in April from 43.7 in March.
May 21st, 2009 at 1:02 pm
SRS BABY!
Who’s coming with me.
May 21st, 2009 at 1:05 pm
I’m in. Just with a third though. In at 24.
May 21st, 2009 at 1:06 pm
Three cheers for Rep. Alan Grayson:
http://zerohedge.blogspot.com/2009/05/time-to-make-federal-reserve.html
And so it begins. Rep. Alan Grayson has distributed the letter below to all Democrats in the House and will use it to generate Democratic co-sponsorship for the HR1207 Bill, aka The Federal Reserve Transparency Act, allowing the GAO to audit the Federal Reserve, and also require a Fed report to Congress by the end of 2010.
~~~
BR: He is speaking at our conference
May 21st, 2009 at 1:08 pm
I’m riding the FAS train instead. RIFIN is stubborn this morning.
May 21st, 2009 at 1:27 pm
Yeah, I posted that link to my facebook Cursive, good stuff.
May 21st, 2009 at 1:31 pm
@ Cursive Three cheers for Rep. Alan Grayson:
Bingo !
I saw his video of his testimony last week ( no time to find link ) but he had this to say…
Apparently nobody at the Federal Reserve has any clue where the trillions of dollars that have come from the Fed’s expanded balance sheet have gone. Additionally, nobody there seems to have any idea what the losses on the Fed’s $2 trillion portfolio really are.
As for the pittance of $9 trillion in Fed off-balance sheet transactions over the past 8 months, well, yeah, that’s also somewhere out there… Just don’t ask the Federal Reserve where.
Rep. Alan Grayson summarizes it best “I am shocked to find out that nobody at the Federal Reserve is keeping track of anything.”
Alan Grayson should team up with Ron Paul to also get his bill passed because the $9 trilllion are the guarantees that the Fed has given to underwrite various markets … There is no accounting for this as most was done through the New York Fed which is a PRIVATE CORPORATION… and is NOT subject to Congressional inquiry or Agency oversight …
This quote is more true today than depression years
“We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it”. — Congressman Louis T. McFadden
May 21st, 2009 at 1:36 pm
So why is my SRS down so much ove r the past few weeks and barely changed today?
Thinking of some long dated puts.
May 21st, 2009 at 1:50 pm
Mike in Nola @ 1:36
Why not just short IYR…?
May 21st, 2009 at 1:55 pm
@ben22
(SRS)
Go for it Ben…
Ya Gotta get your hands on some of those “rounded bottom” formations…
May 21st, 2009 at 1:56 pm
Interesting that IYR is showing relative strength today. Weird stuff.
Once again I wouldn’t hold SRS. IYR has been hard to borrow. (go figure, eh?) I’m paying a small fee most days to be short.
May 21st, 2009 at 2:00 pm
SRS will have its day, but it is probably best used as a small core with relatively large trades around the position.
Here at Schadenfreude we are also big fans of Rounded Bottom™ formations.
May 21st, 2009 at 2:05 pm
@ Left:
Think I’m gonna bail on SCO… should’ve done so earlier when you did probably. Although volume is weak on USO’s bounce off this mornings low… I dont like it. The USD is throwing a wrench in this trade at the moment. Gotta split for the hills.
May 21st, 2009 at 2:09 pm
@ben22: I’ve been too early on this one (as many here know) but my time will come. This shit storm will be the next one to hit eventually. I just hope SRS isn’t at zero by then.
May 21st, 2009 at 2:11 pm
@ben22
I know the “math” works out in it’s own way…But if you think about it in a SIMPLISTIC way, SRS started its lastes incarnation in FEB ‘07 at $60…
Essentially it did a TRIPLE (going to $180 – I know it spiked “beyond” that, but let’s call that NOISE of 3 trading days)…
So now you’ve have a TRIPLE retracement of $60 (down to $20)…Sinewave amplitude…
I’d be willing to bet you’ll see $60 easy again if the markets do a re-test of the March lows
May 21st, 2009 at 2:11 pm
@I-Man: AT thinks crude may see $64 before a pullback – he may be correct. I felt like I would enjoy the weekend more with minimal risk. Market is still going to be here next week.
May 21st, 2009 at 2:11 pm
Onlooker from Troy @ 1:56
“IYR has been hard to borrow. (go figure, eh?)”
You’re right. I just tried to enter an order to short it (just to see what the response would be). The icon came up: “can’t borrow the shares”.
It’s just plain weird. Short interest in IYR is very low. And, since it’s not leveraged, I can see no risk to the brokerage firm whatsoever.
I think that someone out there is making a killing by shorting SRS and FAZ
May 21st, 2009 at 2:12 pm
@DL: Might that “someone” be Goldman (and maybe Morgan Stanley & JPM Chase), perhaps?
May 21st, 2009 at 2:13 pm
Glad I didnt pull the sell trigger on that one!
May 21st, 2009 at 2:14 pm
Mannwich @ 2:09
“I just hope SRS isn’t at zero by then”
That just about sums up my sentiments about SRS, FAZ, SKF, and a few others.
May 21st, 2009 at 2:16 pm
Dude, TLT is getting shelacked…
May 21st, 2009 at 2:16 pm
“I think that someone out there is making a killing by shorting SRS and FAZ”
That’s why they are best used for day trades/swing trades now, and when the odds are in your favor.
May 21st, 2009 at 2:16 pm
Mannwich @ 2:12
Not only are they making money at everyone else’s expense, but they’ve got it set up so that their short positions don’t show up in the short interest figures.
It’s somewhat analogous to “naked” short selling, which is only available to a few people.
May 21st, 2009 at 2:17 pm
True… but they have to cover sometime… and a couple more days like today should get em ruffled.
May 21st, 2009 at 2:18 pm
DL:
Re: shorting IYR. Been lookin at it. Not exactly a huge volume though, esp. farther out. I suppose the writers are scared of IYR too.
May 21st, 2009 at 2:21 pm
I-Man: I have a large and illiquid position shorting the 10-year, against which I hedge occasionally by buying govies when the sell-off seems extreme. Today, you’d have to say, would probably be a good time to buy TLT.
But for a trade, with the view – expressed by DL – that the long term trend in the 10-year is toward higher rates. I do think govies will be OK over the summer, once the $ finds support.
May 21st, 2009 at 2:21 pm
I’ll see if I can find the post, but I believe that Zero Hedge recently had a post about the REIT’s raising more capital that surmised the games in that sector (thus affecting IYR and SRS) could go on until early June once all of this capital raising concludes. Let me see if I can find it but I believe this is probably correct. SRS seems to be settling around the 19′/low 20’s area…for NOW anyway.
May 21st, 2009 at 2:22 pm
Yeah, I dont own any TLT… just very surprised by the action today… still scratching my head. There werent any govie auctions this week were there?
May 21st, 2009 at 2:27 pm
More supply of Treasuries next week. I am guessing there will be buyers (BB), so will get in ahead of the trade.
May 21st, 2009 at 2:32 pm
I’m only short IYR against my O position. Conservative little REIT with no mortgaged properties, little debt and none due ’til 2013. Very conservative management who saw the crap storm coming and sold off some properties, raised some cash last summer, lots of liquidity, etc.
I’m confident in the div, but hedged against cap losses with the IYR short. And it should outperform the IYR so I should get some net gain from that. But if not I’m happy with my 9.45% yield.
May 21st, 2009 at 2:41 pm
Can’t believe people are still messing around with the likes of FAZ and SRS.
One more time, those leveraged etfs have a very strong volatility decay. They pay off great when they move in your direction but ONLY when they are moving in that direction in close to a straight line. If they are moving in bits and spurts with real corrections in the mix then their value is going to decay away something nasty even if the sum of the movement is great. Toxic to hold on two, use them for very specific short durations only.
May 21st, 2009 at 2:51 pm
@ Mannwich 2:21
Read that, too, but too lazy to look it up. Also, in case anyone missed this little nugget from Denniger two days ago:
http://market-ticker.org/archives/1051-WHERE-ARE-THE-DAMN-COPS-BAC.html
“What I do know, because I have a real-time squawk feed with commentary, is that Goldman was very quietly selling S&P futures in the back of the pit this afternoon.”
May 21st, 2009 at 2:52 pm
[...] there is the CRE market. As both Zero Hedge and Barry Ritholz write today, it is the commercial real estate market that now seems to be in trouble. This will [...]
May 21st, 2009 at 2:53 pm
Uh oh. Somebody pick up the red phone and get the PPT on the line asap! 875 on the S&P is going to get tested today.
Also isn’t this redemption month for mutual funds. The 30 day notice has to be in before May is over.
May 21st, 2009 at 2:55 pm
Like I said earlier, looks like it’s not “sell in May and go away”, but “sell when Mannwich goes away.”
May 21st, 2009 at 2:56 pm
Quite the sell off. Just like old times.
Don’t get too greedy guys, as Andy T says: “don’t be a dick for the tick”. Classic.
May 21st, 2009 at 2:57 pm
“The SEC needs to start issuing subpoenas NOW. This has gone on now for more than two years, dating back to the 2007 “surprise” discount rate cut, the “short ban” on financials and more. It is abundantly clear from a simple examination of the price and volume immediately in front of these announcements that someone is being given the information before the rest of the market gets it and they are trading on it, and that is against the law.
Period.”
Too bad it will never happen, because they are on the take too…
May 21st, 2009 at 2:58 pm
@km4
Ron Paul + Alan Grayson = Dream Ticket, circa 2009
May 21st, 2009 at 3:02 pm
@ Mannwich 2:55
I need for you to book about a 3 month engagement in corporate living. Stat.
May 21st, 2009 at 3:03 pm
@ Left, Karen:
Bailed out of SCO just now. Tidy loss. Not worth carrying it over. Might take a peek at DTO next week Karen, that one seems to track USO a little better.
May 21st, 2009 at 3:04 pm
Outlier,
How would you compare decay on SRS (or QID?) with margin account interest?
serious question.
Ben
I’m with you (and manwich) to the tune of 100 shares of srs until I get conviction.
I almost had it yesterday at 10am, but ….not quite enough.
To further the word play, I’ll have conviction about the market when I see a conviction (and jail time) for anything mentioned above. (I-Man)
May 21st, 2009 at 3:06 pm
@cjcpa: From what I can tell, the decay is FAR more pronounced with SRS, FAZ and SKF, so be careful with those. Not as much with QID and SDS.
May 21st, 2009 at 3:10 pm
Calling the PPT: “The number you have dialed has been disconnected. There is no other information at this time”.
May 21st, 2009 at 3:14 pm
Don’t complain, guys. TRADE. We have to OUT-THINK these cunning bastards.
Nice pile of cash over here today. I feel more handsome than ever .
May 21st, 2009 at 3:15 pm
The REITs and banks are more volatile day to day than the overall market therefore the “decay” is more pronounced. And of course the 3X are even more volatile. The volatility is the important factor here.
May 21st, 2009 at 3:17 pm
Feelings can be SO misplaced, Lefty..
May 21st, 2009 at 3:17 pm
Leftback is right. There’s always a way to do an end-run around those “cunning bastards”.
However, it is worth spending some time to figure out what “they” are going to do.
May 21st, 2009 at 3:17 pm
Who’s complaining?
I’m up and quite happy.
Do we have more follow through tomorrow? Will there be discomfort holding long through the long weekend with today’s action? Do we test/break the 875 resistance tomorrow? Key questions here for the very short term trade.
May 21st, 2009 at 3:22 pm
Onlooker has fingered the culprit correctly. Don’t sit in those things, use them like hand grenades. I keep a small amount of SRS as a marker. I probably will not go in that direction until after the inevitable post-holiday rally.
Here is a thought for I-Man and ben: Johnny Retail will be buyin’ em again on Tuesday, after those Tall Stories from Brian the Broker at the Memorial Day barbecue. Shorting into Memorial Day is un-American, eh??*
* This is a joke.
May 21st, 2009 at 3:27 pm
I think they might even rally this thing a bit tomorrow on the light volume… looks like the big shorts are still a little gun shy. Cant say I blame them really… but it sure would be nice to see them.
I was expecting to see alot more fireworks at 880… maybe AT’s right and we’ll see them at 875.
Summary: tomorrow will be a yawner.
May 21st, 2009 at 3:41 pm
I’m looking for a low volume pump job tomorrow. But I have been wrong a lot….
cjc
May 21st, 2009 at 3:42 pm
I-Man: Here is the Schadenfreude game plan. We plan to do diddly squat until about 3.45 on Tuesday.
Tomorrow, a yawner. Low volume up day.
Tuesday, Brian the Broker placing new orders for Johnny and Jane Retail. Everything will be up. Green shoots!!
Wednesday, “Sell em, Lloyd”.
Now, Bruce, get back to the grill, please. You know how LB likes his burgers.
May 21st, 2009 at 3:44 pm
@ Karen:
Damn… looking at the day you had with DUG compared to my day with SCO I’m thinking SCO sucks.
May 21st, 2009 at 3:45 pm
@cjcpa the margin interest is pretty close to the management fees built into a ETF. Any decay effect is going to be on top of that.
best illustration of the problem is to imagine a 3x Bull ETF stuck in a holding pattern. For math simplicity imagine both the index and etf start at 100, and the index is oscillating between 100 and 125 (25% up one day, 20% down the next, repeat.) The ETF is going to go up 75% and then down 60%. What how it plays out in numbers. 100, 175, 70, 122.5, 49, 85.75, 34.3, 60, 24.01… Catch that first bump to 175 and you are golden, but otherwise it’s just sucking money out of you. Buy that on margin and you’d be down a few pennies in interest, buy it as an ETF and miss your exit and you are bleeding despite the fact that the index is even and your ETF is popping up 75% every other day. And that’s a bull, the bear ETFs add an extra degree of decay.
Obviously that’s an extreme case, but the bottom line is these ETFs lose value every time the market changes directions (in 1 day increments). Presumably some ETF house is going to start issuing long term bear funds at some point, but who knows.
May 21st, 2009 at 3:48 pm
I-man, my real winner was dto… but you are right, dug held up the best.. dto was a good sell in the 120s, not a hold. i imagine sco was similar altho it’s not on my screen.
i have a small post on faz on the previous thread.. did you see it?
May 21st, 2009 at 3:49 pm
I haven’t been able to keep track of the score. How many burgers have exchanged hands at this point? And who’s ahead — who’d better check their cholersterol? Maybe add a statin as a condiment.
May 21st, 2009 at 3:51 pm
Lefty:
It is a pleasure to fire up the old grill for you….we will have to find something of interest for the room that we can resume our wagers upon after the holiday.
Perhaps odds that Franky will find a job?
May 21st, 2009 at 3:54 pm
@wunsacon:
As long as lefty is eating burgers it is ok with me…but if he reverts to those British Isles favorites like haggis or spotted dick….we may have to put the old grill back in storage…
May 21st, 2009 at 3:55 pm
Anyone think DRI is (still) a good short here (if not at least as a hedge)?
If indexes were to head down from here, I don’t know why money would want to stay in DRI.
May 21st, 2009 at 3:57 pm
Bruce, send him over to GBK but only agree to pay for the Junior!
May 21st, 2009 at 4:00 pm
@ Karen:
I did see it… and yes, I see it too… the Cup and Handle part anyways…
My system at work wont do 60 min charts… it bugs the crap out of me because those are my favorite, but I substitute with the 15 min 5 day.
Not sure I want to see the H&S pattern… I only see what I want to see anyways.
And honestly, although I’m holding 2/3’s of a position on FAZ, I rarely look at it. I do my homework on that trade with XLF, and shorting that is really my trade with FAZ. On XLF, we got the breach of the third trend of the Fan Principle today, as expected. Might recycle back up to test that, but unlikely. I say it throws up a doji tomorrow, if not a weak advance on weak volume. Either way, I’m long FAZ until XLF makes a higher high. I have my line in the sand at 13.25, and then I wont take any more pain.
Its all down from here on XLF… stubborn it may be, but the thing is coming down.
Today’s close oh so predictable.
May 21st, 2009 at 4:08 pm
all that burger talk! i had to go make myself a giant arugula, basil, avocado, feta, and raisin salad.. drizzled with chipotle olive oil and balsamic..
that xlf chart looks pretty strong to me… maybe you better try turning it upside down…
May 21st, 2009 at 4:13 pm
@wunsacon: Bruce inserts 81mg aspirin and a Caduet into each burger.
May 21st, 2009 at 4:14 pm
Thanks for the laugh Mistress… I needed that.
Lunchtime for I-Man. Catch yall later.
May 21st, 2009 at 4:15 pm
Karen,
If you had to pick one investment to stabilize your finances assuming the day of inflation returns…what would it be?
May 21st, 2009 at 4:16 pm
@karen
Try making yourself a pizza with stracchino & rucola (arugula)…
May 21st, 2009 at 4:16 pm
In your case Lefty, the Swedish twins have asked for a little Viagra in each burger…
…sorry…
May 21st, 2009 at 4:18 pm
In your case Lefty, the Swedish twins have asked that a certain “performance enhancing drug” be inserted into each burger…
…sorry, hadn’t really meant to tell you. At least it wasn’t aspirin..
May 21st, 2009 at 4:19 pm
Let me see, from today’s Bloomie:
Krugman calling for a $ collapse, Swonk talking about an oil spike, Gross saying US to lose AAA but not yet.
Given the market acumen of this lot, I’d say we see a $ and Treasury rally quite soon, and oil is going to sell off.
More importantly, Bloomberg had a story this morning that lingerie sales were down. Karen, say it ain’t so…?
May 21st, 2009 at 4:19 pm
Bruce, you have been too fun and funny today! But, I almost choked on my arugula, LOL.
May 21st, 2009 at 4:19 pm
The NAR will spin the news.
May 21st, 2009 at 4:20 pm
I-Man @ 4:00
I’m hoping for one last gasp from XLF.
May 21st, 2009 at 4:22 pm
Lingerie sales….
… the new hemline indicator?
May 21st, 2009 at 4:26 pm
wunsa-
please know: how stupid this: ” Maybe add a statin as a condiment.” is..
see: http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=statin+risks
~~
BnT,
pick one investment to stabilize your finances assuming the day of inflation returns..
what are you planning to use over the next 1 year? 3 years? 5 years?
Plan ahead and stock deep, not deeply in Stox, or debentures (”Return-Free Risk”– from J. Grant from the source he named from the ’30s, Freeman)..
Grant on WBBR, this afternoon, needs to heard..
May 21st, 2009 at 4:30 pm
Bruce: Couldn’t post b/c I was laughing so hard. No wonder Inga and Britta were impressed.
May 21st, 2009 at 4:33 pm
lb,
this: “I felt like I would enjoy the weekend more with minimal risk. Market is still going to be here next week.”
will keep you Alive & Well..very Sage–speaking of condiments/compliments ~
May 21st, 2009 at 4:34 pm
@Bruce in Tn (4:15)
Stabilize your finances in case of inflation?
-Buy some land
-Buy a tractor
-Install solar & wind power
-Get a nat gas generator and a large propane storage container
-Refit your vehicles to nat gas
-Make sure the basement in your home is climate controlled to between 55-70 degrees
-Drill a well (or stock up on bottled water)
-Buy 4oo lbs of dry food (rice, beans, flour, pasta) and SEAL them
-Buy seed packets of whatever you like to eat or think you can grow
-Read up on gardening
As for investments…ask the other guys
May 21st, 2009 at 4:37 pm
cvienne,
you know which way the Sky is, no Compass, or Quotron, needed..
May 21st, 2009 at 4:38 pm
Faltering?? Barry has been taking nice pills again. CRE is dead, muerto, kaput. There are buildings withing walking distance of TBP HQ that are trading at 40% of last valuation. And the party is not even hot yet. This is why I am so negative on the banks. When 2/3 of the financing for the US economy DISAPPEARS and all that is left are the banks and the Fed, the only place prices can go is down. This goes for non-conforming RES in NY/CT/NJ/CA etc. Stick a fork in it. NEXT!
May 21st, 2009 at 4:42 pm
@MEH
A compass wouldn’t help anyway if and when the magnetic field of the Earth changes…
I’d rather stick to the old fashioned way…
May 21st, 2009 at 4:43 pm
Thanks, Mark. (I followed your statin-related search link a few weeks ago, since I take a very low dosage.)
May 21st, 2009 at 4:43 pm
Think I may adopt the Taleb strategy: small bets on way out of the money long term options. Schwab now allows you to see option charts. Not very detailed, but you can see even those way out of the money skyrocketed around the bottoms.
Put a toe in on a couple of puts way under the market on IYR: Dec o9 and Jan 2011. Also one in Dec. on SLX. It’s had a runup of 50% in the last couple of months ont he non -existent Chinese recovery.
lefty: regarding treasuries, Mish suggested the same thing here:
http://globaleconomicanalysis.blogspot.com/2009/05/nonexistent-pre-recovery-in.html
I think he was a little premature, but correct. The power of green shoots cannot be underestimated. Whenever the market starts crashing, there should be a flight back to treasuries.
Agree with you on oil, but got dug way too early and it ain’t doin to well. May look into puts of IYE. USO sucks.
May 21st, 2009 at 4:47 pm
Chris, agree completely re: the death of CRE.
See it everywhere in NYC, feel it, hear it, anxiously waiting to trade it. The Inevitable Fall™.
May 21st, 2009 at 4:53 pm
wunsa-
good, just be sure to replace what it’s taking from you..
~~
cvienne,
you know what’s Up, that’s why those ‘tools’ weren’t needed..
May 21st, 2009 at 4:57 pm
Chris,
btw, shorter days are soon to be here, y’all @ IRA need to get w/ the T-Shirts..
and, yes, CRE, and ‘banks’, thereby, are truly Toxic, soon to look like T+1 Neutron Bomb detonation for Debtor Nation..
May 21st, 2009 at 5:01 pm
@MEH
If they could somehow find a way to convert all that empty CRE space into Costco & WalMart grocery aisles they could solve the problem!
May 21st, 2009 at 5:09 pm
just a note about the Costco joke.
Costco should be busy as they sell food in bulk at discount. So if you don’t grow your own, you’d be buying 50 pound bags of rice and sugar at the Costco.
They sell emergency-food-buckets online too. for the truly bear-cave among us.
May 21st, 2009 at 5:15 pm
@cjcpa
That wasn’t a joke about COSTCO…It’s absolutely true…
Anyone who is driving around simply looking at how full “parking lots” are at retailers these days aren’t doing their complete homework…
Costco is more packed because people are stocking up on bulk food (or, SAVING otherwise)…Costco members also get cheaper gasoline (so many who need to fill up their tanks with gas at $2.40 again are stopping in to do their shopping)…
If you mull around WalMart or Costco…75% of the traffic is in the grocery sections…NOT the other retail areas…
May 21st, 2009 at 5:32 pm
Another interesting tidbit on costco…
They dont take credit cards.
~~~
BR: The one by my house always takes Master Card or Visa . . .
May 21st, 2009 at 5:34 pm
I am long the dollar….so gutted we did not see a flight to safety today. Is the DOW down | Dollar up correlation over? Or will we see Dollar strength if the wheels really come off this rally?
May 21st, 2009 at 5:39 pm
@I-man
That IS relevant…It signifies that everyone is maxed out on their credit cards and has to pay cash…
@Bill
Andy T has some good chart scenarios on that…Either the dollar holds here, OR, it crumbles down to 72 in a flash…
May 21st, 2009 at 5:41 pm
I-Man, they take the Costco-AMEX with 2% back. 3% on restaurants, and 5% on gasoline.
They take any amex, I think, but that’s the one I have.
Or, more importantly, the one I share with my wife who frequents the Costco.
cvienne — thought your reference to Costco was a play on F411’s comment about the Costco being packed.
snark upon snark gets lost.
in any case, we agree, green light on bulk food discount.
May 21st, 2009 at 5:44 pm
Bruce, just noted your question @ 4:15… “stabilize your finances” can mean different things to different people. For me, first and foremost it means zero debt, and at my age, no mortgage. So, that alone, is stability. But as far as managing my money, it means, where do I park dollars that I don’t want to trade and get the highest return possible? Since I don’t have the personality or desire to become a landlord, that basically forces me into equities. I keep my eye open for opportunities, and trade across the short, medium, and long term. For comfort, I have some physical gold and cash (dollars, candos and euros), not a lot % wise, though. Eventually, i believe we will return to the commodities bull… and i bot my shippers for the long term.. i consider that parked money. Hope I answered your question at least partially. No bonds, no CDs..
May 21st, 2009 at 5:44 pm
Today was an amuzing day to watch SRS. More horrible news about CRE, the S&P down nicely, but somehow the financials didn’t get detroyed (must be all of the gubmint money) and SRS finishes down.
I see there are several more states considering additional foreclosure moratoriums. Every month of moratorium is a month that the recovery is delayed, as those people living for free (or partial payments) are squatting in a house beyond their ability to service and preventing someone who wants to buy the house at a depressed price from buying it. Someone will buy these houses for the right prices. Let the prices go there and the recovery starts from there.
May 21st, 2009 at 5:44 pm
chuckling to myself. ….
I don’t hold myself out as an expert on much, but the payment format at Costco is something I think I’m qualified as top-tier. I pay the Amex bill. *Extensive* personal knowledge.
May 21st, 2009 at 5:45 pm
@cjcpa
The folks in WDC will have to figure out how to incorporate “discount bulk food” into their LEI indices…
“Oh look…discount bulk food sales are UP…more green shoots!”…Quick everybody…issue more common stock!
May 21st, 2009 at 5:49 pm
@cjcpa
Yeah I think I’ve got about $10k on an savings account balance that was CASH BACK from AMEX purchases…It’s earning, like 2%…In about 5 years that will probably be enough to buy a box of POP TARTS or something…
May 21st, 2009 at 6:34 pm
@I-man,
I thought COST took Amex. Don’t they have some sort of corporate contract with them? I could be wrong. Maybe Franklin knows, then again, he probably can’t stand all the long lines at costco when he’s trying to check out so he just pays cash to make it quick.
May 21st, 2009 at 6:36 pm
karen,
you don’t seem like a CD kind of girl. That seems way too boring for you.
May 21st, 2009 at 6:44 pm
she said no cd’s
May 21st, 2009 at 6:45 pm
since I posted it first, I should just say, I DO NOT have a current position in SRS. I already got stopped out of that twice this year. Just waiting, right now I have no advantage there. There will come a time for it.
May 21st, 2009 at 6:46 pm
JD,
got that, just saying she probably didn’t need to say it. +, she’s an inflationista so why would she hold CD’s : )
May 21st, 2009 at 7:11 pm
deflation first, inflation second
May 21st, 2009 at 7:59 pm
Several things… first I completely misinterpreted Bruce’s question and answered too broadly. Bruce wanted me to name “one investment to stabilize to my finances assuming the day of inflation returns.” Of course, I already picked that investment years ago and it was gold… i bet on rising gold and rising oil (until it went parabolic.) Today, in an IRA that was 100% precious metals, I moved 10% to emerging markets… this will either be exactly right or exactly wrong in the short term… Intuitively, and perhaps wrongly, I think we can see a 20-50 -100 dollar down day/move in gold again.. I do believe in gold as a store of value.. and, gold bugs will be all over the three white soldiers (candlesticks) in $gold.. but gold trades nearly 24 hours and we don’t have that visibility on our charts. So, looking at the $hui (almost an antique now that we have the gdx!), i see a correction coming.. Further, I always sell a bit on fat moves up, or regret it later : )
As an aside, I use a cash rebate Amex for costco as well. Did have an odd experience with amex lately that made me question their exposure to credit problems in the pipeline.
Ben, I never did that well with SRS.. it’s been frustrating.. if it gets in the teens, I will be a buyer.. just like FAZ in the 2-3 range…
May 21st, 2009 at 8:03 pm
ben22, not only boring, but low return.. i can sit in a zero return MM and make it up on a market opportunity. That said, this is my day job.. if I were a brain surgeon, a cd for some of my cash might be my game.. especially in one of those Everbank foreign currency CDs…
fun and interesting day, all in all.
May 21st, 2009 at 8:23 pm
Not as fun and interesting as that quadruple top day
I’m still laughing about that one.
May 21st, 2009 at 8:29 pm
karen,
are you ready to go with that 680 gold call I was blabbing about a few weeks ago? I was way too early on that. You should write out a little more often, but you are probably busy or having a salad. It’s good analysis. I’m looking for the same in SRS before I try again. Third times a charm. Never did FAZ, don’t plan on it. Don’t really feel like I’m missing the party though. CD’s have a place, no doubt. I like as much liquidity as possible myself so I never use em.
May 21st, 2009 at 8:31 pm
Chris Whalen’s comment is hilarious.
May 21st, 2009 at 8:38 pm
Karen, you are the Queen of this lair.
May 21st, 2009 at 8:41 pm
ben22 @8:31 where is the link?
May 21st, 2009 at 8:42 pm
ben! 680! no way! ha ha ha… that is a bit of main stream money manager baloney… can’t believe you’d buy into it : ) may be gone for a bit.. big happenings here in southern california.. the sun sets in 2 hours.. i need to get ready…
May 21st, 2009 at 8:43 pm
Elliott Wave guys are talkin’ about that level
May 21st, 2009 at 8:47 pm
chris whalen left a comment- pretty sure that’s what b22 is talking about
http://www.ritholtz.com/blog/2009/05/cre-faltering/#comment-174499
May 21st, 2009 at 8:50 pm
Chris Whalen Says:
May 21st, 2009 at 4:38 pm
Faltering?? Barry has been taking nice pills again. CRE is dead, muerto, kaput. There are buildings withing walking distance of TBP HQ that are trading at 40% of last valuation. And the party is not even hot yet. This is why I am so negative on the banks. When 2/3 of the financing for the US economy DISAPPEARS and all that is left are the banks and the Fed, the only place prices can go is down. This goes for non-conforming RES in NY/CT/NJ/CA etc. Stick a fork in it. NEXT!
May 21st, 2009 at 8:52 pm
I thought mark to market was resended?
May 21st, 2009 at 8:57 pm
rescinded?
May 21st, 2009 at 8:58 pm
thank you ahab
May 21st, 2009 at 9:02 pm
karen,
the only person I saw call that number was Steve Hochberg who writes for Elliot Wave International. Anything but a main stream money manager.
May 21st, 2009 at 9:04 pm
EW guys = deflationist….”but a buy at that level”….deflation first, inflation second
May 21st, 2009 at 9:08 pm
ben, well, i know a money manager or two.. what’s the McClellan report calling for these days, do you know? I have someone I can ask, but it’s not important to me.. just trying to come up with names that may be very negative gold…
May 21st, 2009 at 9:13 pm
Ben Bernanke
Timmy
Lord Brown(e, or not)
shall we go on with the list?
May 21st, 2009 at 9:17 pm
karen,
don’t know, I’m not subscribed, don’t know anybody that is. I do know that oscillator was recently at a recored high though for the S&P.
prechter is bearish on gold as well and his description of why is interesting.
I can’t think of anyone else that really is, oh I suppose WB but he’s never made any calls like that.
May 21st, 2009 at 9:22 pm
“McClelland” Oscillator – be sweet Ben.
May 21st, 2009 at 9:32 pm
Prechter has been WRONG ever since I learned his name. The ONLY elliot wave person I’ve ever liked is Andy. Prechter was bearish on gold at $300.. $400, $500. $600, $700, $800, $900. $1000.
May 21st, 2009 at 9:35 pm
@ben22
I’ve talked with you about gold b4…You know my stance…I’ve owned the bullion (investment quantities) since 2004 so you know I’m bullish…But I’m in the camp for a pullback here (no breakout yet)…
Gold peaks or troughs the week before or after a HOLIDAY (either when US or Europe has a closed market)…Look at the length of the bars on weekly charts…
3/17/08 week going in to Easter
4/28/08 trough (May 1 is Labor Day holiday in Europe, US is open)
7/14/08 Week past July 4 (no holiday in Europe – except July 14 bastille day)
9/8/08 Labor day US (no holiday in Europe)
10/20/08 that was no holiday, just cash raising during bank crisis
2/16/09 Presidents Day (no holiday in Europe)
you could even call “minor” reversals (like MLK day in January)
Gold does REVERSALS on holiday weekends when ONE of the markets is closed (either Europe or USA)
So I expect either a massive breakout (doubtful), or a REVERSAL (probable) to initiate by Tuesday…
My target on the downside would be $750, where it would find support around August 15th (holiday in Europe – not in US)…Right at that time, you’re going to get a big S&P selloff so people won’t be paying any attention to gold…
May 21st, 2009 at 9:37 pm
By the way…Easter is always interesting cause they close the markets HERE on Friday & in Europe on Monday…
May 21st, 2009 at 9:41 pm
cv @9:35…..and then the price of gold goes….?.
May 21st, 2009 at 9:43 pm
cvienne, did you see my post @ 7:59? perhaps we are in agreement with gold here… I only see 850-60 as a low.. depends on the timing.. that was a very good post, btw.
May 21st, 2009 at 9:46 pm
UP…
I’m in the camp for GOLD trading 6x the value of the S&P before all is said and done…
It may take a couple of years and I can’t say where the cross will be…
S&P 400/gold $2,400
S&P 600/gold $3,600
I can’t say…
There is only ONE THING that worries me even in the slightest about gold in the long run…That would be if Obama does an FDR and confiscates everybody’s gold before it reaches full fruition…
Anyway (BTW2)…The “holiday” sequence was something I picked up from Hugh Hendry when I was in Europe and used to watch hime there…
May 21st, 2009 at 9:49 pm
@karen
I’m fully with you on $850 as well (maybe that would be a “4th of july” target)…I basically keep 680-750 in my head only because the WHOLE thesis would be broken UNDER those levels (not that I think gold will necessarily trade there)…
And you can’t credit me fully for these ideas…I picked up the idea from Hugh Hendry…It’s worked a good % of the time…
May 21st, 2009 at 9:53 pm
did you guys see the paper that was published here maybe 6-8 months back “The Shadow Price of Gold”
May 21st, 2009 at 9:54 pm
…deflation first, inflation second….
May 21st, 2009 at 9:56 pm
@ben22
No, I’m kinda new to this blog, but I just googled it and will be interested to read it…
Other interesting facts:
Did you know the US has more than 8x the gold reserves vs. China
&
that the GLD has 25% more reserves than China?
May 21st, 2009 at 9:58 pm
@Wes
I think we all agree with that…I’m just not TRADING gold because I own the bullion…
May 21st, 2009 at 9:58 pm
cvienne,
that was here you can probably find it by using the search at the top.
May 21st, 2009 at 9:59 pm
So if it breaks out over the weekend…I’m happy…
But if it CORRECTS, I’m happier because I want to accumulate more…
May 21st, 2009 at 9:59 pm
GLD may be a bit of a fraud…ownership of the physical could be by more than one….trading vehicle only
May 21st, 2009 at 10:07 pm
Most likely some “Degaulle-Nixon” moment will arrive in the future (without warning)…
The Chinese, wanting to bring their reserves up to US levels, will demand transfer payment from the US using its gold reserves…
Either the US will have to comply, or the Chinese will float their currency…At that point, the YUAN would immediately replace the USD as the worlds reserve currency and the dollar would collapse…
But that day is aways in the future…
May 21st, 2009 at 10:10 pm
Not possible. USD not tied to gold. FX is all relative.
May 21st, 2009 at 10:13 pm
cvienne-
good analysis and true- possible outcome- assuming they can find another way to sell their goods without an artificial value for their currency-
obviously their goods would become much more expensive around the world
May 21st, 2009 at 10:14 pm
@Wes
Who really knows? All I know is one thing: Paper currencies don’t have a brilliant history
May 21st, 2009 at 10:15 pm
cv@10:14, totally agree. it is only a matter of time.
May 21st, 2009 at 10:17 pm
@ahab
What China needs is a good World War (that they can stay out of) but be the manufacturing base for the countries fighting…
May 21st, 2009 at 10:19 pm
Prechter wrong? At times sure, like all of us.
Show me someone else out there who has been able to spot turns in major markets like he has in the last 30 years.
Prechter did “pretty well” with his call to short the S&P in Oct 2007, and to lever up if inclined to be more aggressive (e-minis). That trade was covered earlier this year if you followed his forecast to the letter.
He had a Pretty good call in 1982 (bullish) as well as a couple weeks before the ‘87 drop. None of us are infallible, Prechter included (he would be the first to admit that). That said, he has called some truly enormous market turns over his career.
May 21st, 2009 at 10:22 pm
and a follow up-
that would not necessarily be a bad thing- Chinese goods become more expensive- American goods become less expensive-
it all works out- with some adjustments to our standard of living of course- and-
it would finally stop the other economies around the world from depending on the USA as their lifeline- all dependent on USA consumption for their livelihoods
May 21st, 2009 at 10:25 pm
OK, between Mexicali’s exhaultation of Prechter, and cv’s war to support China’s manufacturing industry (man, I hate to get political, but this sounds like the Establishmentarian Party TM), what do you think the value of gold will do – up or down, what say ye?
May 21st, 2009 at 10:25 pm
Wes,
you’re on the right track, GLD is Not Gold.
ben22,
hear karen on this, as lb has said: AT, how to do EW better than Bob Prechter..
AT is, really, the best I’ve ever seen–his, again from lb, is Top Witchcraft.
Though, if you, really, want to dive into the arcana, dial up Arch Crawford .. http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Arch+Crawford
also, more down to Earth, see: http://www.amazon.com/Martin-Zweig-Winning-Wall-Street/dp/0446672815 and, note the books by Schwager + Lefevre
feel free to order any of those books, if you don’t like them, I’ll 2x your Cash back, in exchange for them..
May 21st, 2009 at 10:26 pm
MexicaliBlues,
Take it easy on Karen, I think she was just referring to Prechter’s more recent stance on Gold not any market calls.
You are right though in what you say. Prechter, imho, is brilliant.
May 21st, 2009 at 10:28 pm
okay, okay, we are all on the same page… just don’t believe the CB reports of gold sales.. the gold has already been leased out and cannot be bot back.. it’s a paper play.. just as PE is : ) In other words. It’s Old Mother Hubbard looking in the cupboard… lol.. i grew up on english nursery rhymes.. (otherwise, i would abhor LB, lol.)
http://en.wikipedia.org/wiki/Old_Mother_Hubbard
Quote of the day, week, year, ten year…: Paper currencies don’t have a brilliant history. (Cvienne @ 10:14.)
May 21st, 2009 at 10:32 pm
ben22,
to be clear, this: “Prechter is brilliant.” is, to me, True, too.
Wes,
Long-run, the Paperback, as we know it, yon’ FedRes ‘Note’= Null.
http://www.thefreedictionary.com/null
yes, def.s # 1, 2, 3, & 4
May 21st, 2009 at 10:36 pm
@MEH
yeah, I wonder what will go to zero first…
The greenback? or FAZ?
May 21st, 2009 at 10:39 pm
Did any of you read Prechter on Bloomberg a few days ago?
http://www.bloomberg.com/apps/news?pid=20601103&sid=aKYrBQ3gr6Q4&refer=news
May 21st, 2009 at 10:41 pm
Oh, LOL, we have a lurker… Mex. LOL.. short late 2007! anyone with a brain was; and we were EARLY and WRONG! Talking about turns…. laughable. Richard Russell, was right 50% of his turn calls! Prechter, less. You wanna follow somebody? Listen to Jim Sinclair… on the BIG calls. He guaranteed my 20 oz gold purchase… when he makes that call again, i’ll be a buyer.
May 21st, 2009 at 10:42 pm
YOU guys are nuts… Prechter is no genius… I’m gonna be ill now.
May 21st, 2009 at 10:47 pm
James Dines? You guys got there yet?
May 21st, 2009 at 10:56 pm
karen,
you’re 2x correct re: Jim Sinclair.
and, in the Behaviorial Econ.-Frame, yes, Prechter is brilliant.
cvienne,
good Q: , that FAZ has butchered many a peep. I was fading FAZ Puts b4 Apr opex, would up Short a lot of FAZ in the mid-/low- teens..still had my Fuzz, so I blew it out.. O, Hindsight~ Better to see a Tomorrow..
May 21st, 2009 at 11:13 pm
Karen-
don’t let your own preferences cloud your judgment- here is Prechert telling folks to close their short positions 2/25/2009
http://www.youtube.com/watch?v=4SG7XGcL7JE&feature=channel_page
May 21st, 2009 at 11:50 pm
MEH @10:32 oui. -95% since 1913
May 22nd, 2009 at 8:33 am
karen,
make yourself a nice salad and watch these in order, he is right in pretty much every single one.
notice that he says cash is actually ideal all along the way, though as mentioned above, he recommended some trades in the last 18 that would have made you lots of money. For lots of fun, map these videos over a chart of the DOW during the same period. It’s a very pretty picture.
10/19/07
http://www.youtube.com/watch?v=SjS60TaD_J8&feature=channel_page
11/2007
http://www.youtube.com/watch?v=WJnMia2rARI&feature=channel_page
2/27/2008
http://www.youtube.com/watch?v=KQUcKHRb2ME
03/2008
http://www.youtube.com/watch?v=9KbMFlSDGmw&feature=channel_page
05/2008
http://www.youtube.com/watch?v=2Yzb4ilsrzg&feature=channel_page
06/25/2008
http://www.youtube.com/watch?v=n-I1Mv4DCYY&feature=channel_page
08/20/2008
http://www.youtube.com/watch?v=76P-6P9dVcQ&feature=channel_page
10/28/2008 (still pushing cash or cash equivalents here)
http://www.youtube.com/watch?v=NIko3758xCM
02/25/2009
“not a bull market, but cover your shorts”
http://www.youtube.com/watch?v=4SG7XGcL7JE&feature=channel_page
I don’t know, that’s about as accurate as anyone I’ve seen during this bear market.
May 22nd, 2009 at 9:06 am
I enjoy reading Prechter, but you have to admit he was dead wrong throughout the entire 1990s bull run. Indeed, his call for crash in 2008 is the same call he has been making for decades.
I can say that, and also point out that Prechters Perspective is a fascinating and readable book.
May 22nd, 2009 at 9:20 am
Barry,
No doubt. I find his comments on Socionomics most interesting.
I would have hated to miss the 90’s.
May 22nd, 2009 at 9:20 am
Ben, all those videos are from late 2007… please… a blind squirrel could find those acorns.. Barry is absolutely right in his post above… But, I will certainly refrain from future commentary on Prechter…
May 22nd, 2009 at 9:24 am
karen,
you really don’t like him do you. Only two of the videos are from 07. Anyway, you know I respect your opinion. I think we’ve beat this into the ground enough.
the main problem with wave is that if you are on the wrong count, you will just be wrong.
May 22nd, 2009 at 9:35 am
sorry, ben I meant the videos begin from late 2007… seriously i haven’t followed him in many years except for his gold calls.. he turned me off hard a long time ago. and, of course, as you know i struggle mightily with the wave thing..
May 22nd, 2009 at 9:39 am
yeah, I’m just getting into it now (wave). I see what you are saying though. Have fun trading today. Should be interesting watching the bonds again today.
you are right about late 07 though, it seems especially easy to say it now, but if you were paying attention it was easy to see the, uh,… problems.
May 22nd, 2009 at 9:43 am
Ben, what i should have been saying… Prechter is no market genius… but he may be a marketing genius : )
May 22nd, 2009 at 9:59 am
Clarification… My bad folks, I did not mean to impart false information on Costco’s payment practices. I always thought they didnt take credit cards, but here is the real deal from their website FAQ:
What types of payment does Costco accept?
You may pay by cash, Amex card or Costco Orico co-branded card. We do not accept other credit cards because their fees would increase the costs to us and our members.
I-Man is cash money anyways.
May 22nd, 2009 at 10:15 am
karen,
you may be right. I just went to the Elliot Wave international site and it looks like they have over 100k subscribers. At $40 per month + if you buy extra’s and the ad’s on there that’s a decent amount of revenue each year.
Perhaps his background in psychology did make him a marketing genius
May 29th, 2009 at 7:30 am
[...] there is the CRE market. As both Zero Hedge and Barry Ritholz write today, it is the commercial real estate market that now seems to be in trouble. This will [...]