Took forever to get home from Indianapolis yesterday — 90 minute flight, with weather and congestion delays. took far too many hours. I am still recovering, but it was a great conference and the trip was well worth it. I love speaking to sophisticated farmers and ranchers who run a cooperative power association — surprisingly savvy folks, smarter than the geniuses who caused the meltdown.

Anyhow, I have a a few posts today after the open today, but here’s what I am looking at this morning:

Why the Bulls Just Won’t Die (Barron’s)

Profit Rebound Still Has Long Climb Back (WSJ)

Profits Squeezed at the Margin (Barron’s)

Banks Balk at U.S. Push to Rein In Derivatives (WSJ)More Homeowners Facing Foreclosure (NYT)

Bernanke Bid to Lift Housing Scuttled by Rising Rates, Defaults (Bloomberg)

Borrowers with good credit fuel foreclosures in 1Q (AP)

Did the CRA cause the mortgage market meltdown? (Minnesota Fed)

The Big Banks’ Best Friend in Washington (Washington Post)

Credit Relief May Not Last Long (NYT)

Roubini Finds Economy Even He Can Be Bullish On (Bloomberg)

Banks’ Appraisal Conflicts Could Continue Under New HVCC Rules Cuomo’s office: “GSE’s knew they were buying loans with appraisal fraud…” : “Outside industry experts on Bank of America’s advisory council, speaking on the condition of anonymity, said they had hoped Countrywide’s shady past would be cleaned up within a year of the new ownership. But nearly a year later, we’ve learned that the Charlotte-based BofA has simply assumed the same practices that branded Countrywide a financial predator.”

Category: Financial Press, Weblogs

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

225 Responses to “New Posts . . .”

  1. My travel tip of the day: Always travel with baby wipes — they can be a lifesaver!

  2. cvienne says:

    @BR

    I love speaking to sophisticated farmers and ranchers who run a cooperative power association — surprisingly savvy folks, smarter than the geniuses who caused the meltdown…

    Thanks Barry…I “resemble” that remark [cooperative farmer]…

    I don’t know how savvy any of us are, but the fresh air, and food on the plate sure gives one a sense that to enjoy prosperity in this country, one need not go looking for too many gimmicks…

    It seems we spend more time “cleaning up messes” in this country than we do enjoying simple things…

  3. VennData says:

    PPIP simply isn’t needed…

    http://online.wsj.com/article/SB124346787723260427.html

    …the next bold statement is: Fed should raise rates in late summer, just a little. Would be a huge show of confidence, tighten the yield curve spread a bit, etc.

  4. cvienne says:

    @BTW

    The book just arrived…congrats!

  5. ben22 says:

    hmmm, I wonder what her discretionary spending looks like, i would also guess she has 0 savings:

    Nadine Harris in Bakersfield, Calif., is hoping to modify her 30-year fixed-rate mortgage under President Barack Obama’s loan modification and refinancing program introduced earlier this year.

    The 55-year-old was laid off two years ago by Sears after working there 34 years. Harris found another job, but she makes $20,000 less a year. The $925 she takes home every two weeks doesn’t cover her $1,522 mortgage and other living expenses. She’s used all her savings to stay current on her payments, but next month the reserves will run dry.

    “I’ll have to scrimp to make up the payment in June,” she said

  6. krice2001 says:

    Anyone have any thougths on this?
    http://online.barrons.com/article/SB124275522397735517.html
    Robert Pritcher, Elliot Wave Theory “Guru” has some harsh views on where we’re heading. Harsher even perhaps than some I frequently read here. For example he says in the interview:

    “It’s a developing global depression. Economies and societies are so closely entwined in the modern world that social mood is much more pervasively shared than it was centuries ago. So the world had a boom together, and it’s having a bust together. The canary in the coal mine was Japan, which reached impossible-to-maintain extremes of debt and investment values a decade earlier than other countries did.”
    No chance for green shoots in his dire perspective. I have not been in the green shoots camp – because I just can’t make a good case for it, but here is a pretty bright guy with some rather dark predictions.

  7. ben22 says:

    when are we going to put this CRA thing to rest. Anyone still trying to blame the crisis on CRA is a damn fool.

  8. ben22 says:

    krice,

    we have been talking about prechter here at length for almost a month now. If you want to see more go to the video’s section or troll the comments sections of almost any market post over the last 4 weeks.

    Here is another very interesting prediction from Prechter based on Socionomics:

    Pioneering Studies in Socionomics, Chapter 17 (excerpt): “In 1985, The Elliott Wave Theorist’s original study on ‘Pop Culture and the Stock Market’ asserted, ‘Trends in sports reflect the prevailing mood.’ The emergence of a bull market produces an escalating energy level that is physically embodied in the organization of athletic competitions. As the rise in social mood progresses, people share the optimism of the time by heading out to the ball park in larger numbers and constructing elaborate events.” Ch. 10 (excerpt): “Our ‘Popular Culture’ Special Report of 1985 concluded that baseball is a bull market sport (good guys are the good guys) and football a bear market sport (bad guys are the good guys).”

    Hockey is also on the “bear market sports” list — see Pioneering Studies in Socionomics, Ch. 12. Also, the January 2003 Elliott Wave Financial Forecast said: “To suit a bear market of high degree, entire new forms of athletic competition will emerge. In our 1996 report, we noted that after 200 years of rising stock prices, it is ‘hard to imagine what a bear market sport would be like. We envision something along the lines of boxing, where it’s man against man. There is no ball to displace man’s natural aggression and no hoop to make us focus on any loftier ambition than survival.’ The rising game on the scene is just such a sport: Ultimate fighting…”

  9. cvienne says:

    @ben22

    I agree…enough already with CRA & the “blame game”…

    I mean for goodness sakes…If we’re so smart in hindsight and have correctly identified all the things that that caused the problem, and heaped out all the blame…

    THEN WHY IN THE WORLD ARE POLICIES THAT ARE BEING ENACTED A COMBINATION OF THE SAME THING (WITH AN EVEN HIGHER PRICETAG)?

    It’s like ‘curing’ your addiction to gambling (which you lost your home on), by going to the mob and getting one more pile of cash to get you back to even…

  10. cvienne says:

    @ben22

    I like that story [Precchter]…

    Perhaps yet another “team sport” will emerge as well in the near future…

    It will be called “Storm the Castle” (White House, Capitol, Wall St….you nominate the “castle”)

    or how about ressurrecting old childhood games like “Smear the Queer”

  11. krice2001 says:

    Ben22,
    Appreciate the further mood references from Pretcher, and I can’t gauge whether we’re cheering baseball (bull) or football (bear) more at this time. My hometown Philles won the World Series and that was bullish for me, though I’m in Red Sox territory these days and it did nothing for them here.

    I guess my greater concern is how low we can go…? And if the happy (happier?) talk currently being spread by the media, from mainstream on-line news to TV and print MSM, to business networks like CNBC are just setting us up for the kind of optimism (still muted perhaps) that will set us up for the next big fall. And most self-centeredly, I worry as cynical as I am that I will eventually get caught up in the updraft at some point only to get caught in this next fall.

  12. Marcus Aurelius says:

    I sympathize with your travel difficulties. For the past couple of years, I had the privilege of flying around in a small corporate jet (alas, it belonged to a home builder who can no longer afford it). It ruined me forever. I dread airports, security checks, shuttles, satellite parking, and the associated glamour of modern air travel. What a pain in the ass.

  13. ben22 says:

    Cvienne,

    you said:

    THEN WHY IN THE WORLD ARE POLICIES THAT ARE BEING ENACTED A COMBINATION OF THE SAME THING (WITH AN EVEN HIGHER PRICETAG)?

    The Fed’s plan will not work because it only tinkers with symptoms of the decline, it doesn’t fix the problems. There is just too much debt. I’m sorry, but in general, people just are not interested in expansion right now, especially of the personal balance sheet type. Frugality is in, not Escalades and McMansions. Remember when were were all supposed to turn the lights out in March? Or, an even better example, look how popular Craigslist has become. It’s a form of barter after all.

  14. call me ahab says:

    krice-

    thanks for the Pretcher post- who I am inclined to agree with- the problem is that Pretcher is a long term Bear for the most part with some calls here and there to take some money off the table if you were in short position-

    so- he may see the big picture- and he may be correct- but the market can run up contrary to reality- and seems to be able to hang on by sheer optimism far longer than it should

  15. call me ahab says:

    on the “why the bulls just won’t die” link above-

    interesting observation was made- that on very light volume days the market rallies and on higher volume days the market goes down-

    that would appear to be bearish

  16. call me ahab says:

    and- I still think the oil rally is bogus- unless I am the dumbest mofo walking on the planet- I just don’t buy it-

    we may get inflation- but I don’t see it on the horizon anytime soon- I see it as a play against the $- but mostly a bullshit story-

    that oil went to +$140/barrel last year only to deflate faster than a popped balloon- should send chills up anyone’s spine

  17. Bruce in Tn says:

    Barry,

    What did you think of the preliminary GDP released this morning?

  18. hopeImwrong says:

    BR – That’s for the awesome blog site. It is my “go to” site for financial information. I check other sites, but this is my first click in my favorites list. It’s great that you allow posters to link to other articles and blogs (which could be considered competition). It make this site a very complete source.

  19. hopeImwrong says:

    Does anyone else think the FED is swooping in every time the credit markets become dysfunctional? I’m not talking about the big bailouts, I’m talking about holding back the spike in the 10 year when it starts to “break” the mortgage market (and things like that). I think they realize they can’t control the market except at the margins (short term, slight impact), but maybe they think that’s enough if they time it right.

    If this is happening, how long can the facade of green shoots be held up be this behavior? It always seems to go on much longer than I would ever imagine is possible.

  20. cvienne says:

    @call me ahab

    “the market can run up contrary to reality- and seems to be able to hang on by sheer optimism far longer than it should”

    You’re correct in stating that, but everything has its limits…

    At the moment, it appears that its setting up that VECTOR of optimism is KEY…I’ll explain…

    Looking at the charts, the S&P has been in “consolidation” mode for the past 3 weeks or so…It’s RANGE is getting squeezed tighter and tighter and will eventually get resolved one way or another 9I’d say that break will occur within 2 weeks time (or June 12)…

    A lot of BEARS are going to think that the market will stall at the 200 day MA (but they may be mistaken)…There is A LOT of room to the upside “technically” on the energy & commodity charts and that seems to be where the ‘speculative’ money is flowing right now…So the SPECS might call energy up some more, and since it is the largest component of the S&P, the S&P may actually do a break above the 200 day MA…If THAT happens, then there will be YET ANOTHER short squeeze which rallies the S&P all the way to ben’s famous 965 – 1k levels (Andy T has 962 & 979 as targets, I think)…

    My point is…That kind of PRESSURE seems very likely on the charts right now and can happen so fast, there is nothing POLICY wise that could stop it, or throw a wrench into it…

    Now enter the BOND VIGILANTES…

    We saw this past week that they have just about had ENOUGH of the spending in Washington…They rang a “shot across the bow” on Wednesday, but then eased back on Thursday…If, during the first two weeks of June, you see oil rally to $70, and the S&P up at 962+, EXPECT THE BOND VIGILANTES TO TAKE DEAD AIM AT THE SHIP…

    When they pull the plug, the Fed is going to have to go back into crisis mode (only this time, they’ll be talking about how to DRAIN $$ from the system NOT pump it full of cash…That will involve a few visits to the WH & Capitol Hill…

    This will occur just about the same time Obama is trying to get spending approved for health care reform and CAP & TRADE…

    I expect A LOT of the HOPE for the big utopian society will end up getting torpedoed this summer…

    Buckle your seat belts & put your life preserver on…

  21. hopeImwrong says:

    Precious metals are behaving well lately. Treasuries spiking too. Commodities trend is up. If this doesn’t reverse soon (at least two out of three)… look out below. The expectation that the rally will take us higher is quite common now, therefore it may be proved to be wrong.

  22. leftback says:

    This is a complete nonsense market now, it has lost all direction. When nothing makes sense, it’s because the market is being dominated by quant fund momentum trades du jour, most of which are leveraged $ hedges. Those chasing these trades should be aware that a rally in the greenback will change the momentum very abruptly.

    Anyone else think gold is a good short here? No fear, no immediate inflation, and no deflation. Hmm….

  23. cvienne says:

    @LB

    read my 9:07 post and you’ll see that YES, I do agree with you that gold is a short here (as well as oil)…

    But here’s the kicker…

    You may see ONE LAST BLOWOUT to the upside on both…

    - Taking oil to around $70
    - Taking S&P to 962
    - Inching gold up just a little higher

    Probably ALL of the three moves will look like a “technical breakout” and suck in a lot more short covering…

    When you see that happen…I think the BOND VIGILANTES step in and lower the boom…That’s when you get your dollar rally…and equities say GOODBYE to LA-LA LAND…

    What’s interesting is that HEALTH CARE REFORM & CAP-EX will probably get torpedoed in the process…

    It might be a “cruel summer” for Big O…

  24. AmenRa says:

    I read somewhere that the rise in yield on the 10yr note was a challenge to the Fed to live up to its promise of buying treasuries.

    Does anyone have info or links to sites that have stats of the credit cards (business)? I know Advanta is not the only company in trouble. I’m curious as to who else is in trouble.

  25. leftback says:

    @cv: Agreed, your last blowout is possible and that is my PAIN TRADE. But I see so many signs of exhaustion in this rally that my money is heavily skewed to the short side. I am early, as usual.

  26. call me ahab says:

    @ AmenRa-

    please see cvienne’s post (bond vigilantes) which appears to contradict what you are asking

  27. hopeImwrong says:

    I like cvienne’s thoughts on the upside false breakout-blowout. Not sure what the odds are on that. I’m a little worried that a breakout would just driver everything higher (make it easier for the bulls), before reality hits.

    The real wildcard is an event which the gov’t-FED can’t control. Could be further downside in treasuries. Could be the dollar moving big. It’s like reality is waiting for a catalyst.

    As LB says, the dollar is key here.

  28. cvienne says:

    @LB

    The PAIN TRADE…:-)

    It’s time to embrace the horror!

  29. cvienne says:

    @hopeI’mwrong

    Don’t worry my friend (about a breakout making it EASIER for the bulls)…IT WON’T

    It’ll be like that scene in Wall St. where the 3 union leaders from Blue Star Airlines charge into Gordon Gecko’s office and tell him to SHOVE his contract…

    Union Leaders (from movie) = Bond Vigilantes

    The whole trade unravels…

  30. dead hobo says:

    leftback Says:
    May 29th, 2009 at 9:17 am

    This is a complete nonsense market now, it has lost all direction. When nothing makes sense, it’s because the market is being dominated by quant fund momentum trades du jour, most of which are leveraged $ hedges.

    reply:
    —————
    Agreed it’s all traders and big money controlling this market. Underlying value is not the controlling influence. The old saying “If you don’t know who the sucker is, it’s you” applies. The leveraged speculators will suck in the mutual funds and others with excess free cash who can’t afford to sit on the sidelines just in case it’s a real rally and not a leveraged, manufactured one.

    I suspect the sharp rallies that happen in a few minutes every day are designed to trigger computer buying programs elsewhere. These sucker programs drive the prices higher and the stocks that were purchased to trigger the run up are off loaded to the sucker programs who want a part of the action. Thus, the players who started the rally are substantially out of it before it tops out. Enough free cash on the sidelines can keep this scam going for a longer time than we might expect. At least, that’s my speculation on the frequent mystery market spikes.

    About inflation … it needs to be redefined. Traditionally, wage and price increases were considered inflation. These were caused by too much cash in circulation and the ability to raise prices. Today, hte unfettered ability to raise prices only exists in the commodity markets, And the regulators ignore this.

  31. danm says:

    It’s one thing to be right and another to make money. Someone stated this here and I could not agree more.

    The the trick should be to understand what is going on (being right) and making money off of everybody’s stupidity (those not seeing the light).

    The problem is that if I am right and the Western world is going to hell in a hand basket, then as a moral person, it is very difficult to make money off people who are wrong yet making the market go up.

    Furthermore, in my experience, I have met very few people who could change strategies on a dime. There is something about the human psyche that makes it very difficult to detatch oneself emotionally.

  32. ben22 says:

    Lefty,

    I don’t know about the gold short, we might see another move higher here in the short term. I thought about doing it a few weeks ago. I would have lost money on that trade so I’m glad I didn’t.

    This market is a mess right now, I’m really going to have to think hard about holding my remaining longs over the weekend. I may take them off and sit it out for a while. Sometimes it’s just good to watch. Thus far, it’s been a great year.

    Down .21 on my UUP trade.

  33. cvienne says:

    @dead hobo

    You don’t need REGULATORS IGNORING THINGS to cause commodity spikes…What’s happening isn’t even nefarious…

    It’s BB & BHO in Washington handing out gobs of free cash to everyone (under the guise of “saving the economy”)…

    Are the banks taking that free cash and using the steepening yield curve to make loans?

    NNNNNNNNNNNNOOOOOOOOOOOOOO!

    They’re trading with it…They were the first to the party, and when joe dumb mutual fund manager arrives to the party, they hit the sell button, plow their profits into the dollar, buy some puts, pay back the TARP, and go on bonusing themselves for a job well done…

  34. dead hobo says:

    cvienne Says:
    May 29th, 2009 at 9:40 am

    @dead hobo

    You don’t need REGULATORS IGNORING THINGS to cause commodity spikes…What’s happening isn’t even nefarious…

    reply:
    ————
    Sorry. My mistake. I thought something fishy was going on.

  35. thetanman says:

    The market’s acting weird.

  36. dead hobo says:

    thetanman Says:
    May 29th, 2009 at 9:45 am

    The market’s acting weird.

    reply:
    ———-
    It’s way too soon to say, but a look at the S&P for today makes it look like the sucker programs didn’t bite this time.

  37. ben22 says:

    Can anyone explain the GDP deflator and what impact that had on the revision this morning?

    Also, it might be worth noting when looking at the TIF report this morning it’s been the common trend in this reporting period:

    If we’ve had any surprises it’s been in earnings, but it has not been in revenues.

  38. AmenRa says:

    Chicago PMI 34.9 (40.1 previous). These green shoots are looking more like dandelions. Where’s my weed & feed.

  39. Stuart says:

    RE: why the bulls won’t die. When you have state capitalism and a spin machine in full overdrive, little wonder. This recent GDP print of -5.7% was lower than last quarter partially because of a greater decrease in imports. This boosted GDP yet imports, a sign of consumer demand, if falling harder are in fact a measure of further consumer tightening and economic strain in a consumer lead economy. Even though it boosted GDP it is in fact a very negative sign of worsening economic conditions… yet spun out as a positive. I have yet to see anyone in the MSM talk through this point and similar instances where a disconnect exists between the measured target and the actual statistic, each yielding a different conclusion.

  40. Transor Z says:

    Re: the Bloomberg piece on Roubini and South Korea

    IMO a key element a lot of people are missing about the export-driven economies of Asia is relatively weak domestic demand. Take away US consumption from China and South Korea and you are confronted with the paradox of thrift. Remember that the per capita GDP in China is only about 2000 USD. Yes, the aggregate savings of 1.4 billion people on deposit in Chinese banks is something to behold, but the savings rate does include public savings as well.

    The reality for the rest of the world is that the US is TBTF. Not saying that’s a good or honorable thing, but it is what it is.

  41. ben22 says:

    Transor,

    Nice post at 9:50. This is why the credit deflation will be global. And another reason why the worry about the US$, at least in the short term, imho, is misplaced.

  42. cvienne says:

    I’m reading everyone’s posts here and I can sense the noose is getting tighter (on both BULLS & BEARS)…

    The range is tightening…Furthermore, it’s FRIDAY…

    I like what LB said…(and Mr. ‘T” for that matter also)……PAIN…

    I’m thinking the MAX PAIN scenario is that the S&P continues to consolidate within 10 points of 900 for another two weeks…

    THAT ought to cause a lot of sleepless nights! :-)

  43. dead hobo says:

    Stuart Says:
    May 29th, 2009 at 9:49 am

    I have yet to see anyone in the MSM talk through this point and similar instances where a disconnect exists between the measured target and the actual statistic, each yielding a different conclusion.

    reply:
    ————
    Why should they talk about this when they are successful in their work by ignoring everything else of substance. If someone can figure out how to turn your observation into a sales pitch, they’ll be right on it.

    In fairness, a few business newsies have gotten better. Rick Santelli is making an effort. I caught a couple minutes of Fast Money last night. They noted that high oil prices might crush the economy again if they don’t abate. Then they talked about making money from the commodity scams in progress. Some headlines actually reflect reality, although they are scant few still.

  44. leftback says:

    ben22: I started small in DZZ. If this isn’t the dollar turn I will be slaughtered and then try it again later.. :-)

  45. Mannwich says:

    Jump on the next bubble – commodities and emerging markets. I know the commodities theme has been hammered by many here, but t’s either one or both. All aboard.

    GDX going bananas lately. Sold some of my holdings too soon but still have some.

  46. ben22 says:

    Left,

    I think Karen took a tiny short position in gold but I could be wrong.

  47. Mike in Nola says:

    Hyperinflation: Regardless of the politics, I think Krugman has it right about the lack of danger of immediate hyperinflation. Money that is printed and sits in vaults has no effect.
    http://www.nytimes.com/2009/05/29/opinion/29krugman.html?_r=3

    Mish has been talking about this for the last six months:
    http://globaleconomicanalysis.blogspot.com/2009/04/money-multipliers-velocity-and-excess.html

    green shootsEven Bloomberg has joined the cheerleading. Has Timmy been around to see them with a bazooka in his pocket? This article was rightly dubbed “the Orwellian post of the day” on some blog:
    http://www.bloomberg.com/apps/news?pid=20601087&sid=aZhCpkVnhzo4

    Similar here:

    http://www.nakedcapitalism.com/2009/05/pangloss-watch-japans-industrial.html

    commoditiesA repeat of last year, showing that most money managers have really short memories. Or are confident they can always find greater fools. Starting to hear stories to justify the speculation, e.g. “Saudi’s want $70 oil,” as if the Saudi’s had any control over price. If they had, it wouldn’t have dropped to $40 a barrel last year.

    It’s being driven by big speculators, like hedge funds and SWF’s.
    http://ftalphaville.ft.com/blog/2009/05/29/56403/funds-piling-back-into-the-commodities-trade/?source=rss

    Hard to predict where the top is but expect lower than last year, as many hedge funds have gone under and the SWF’s are severely shrunken after brilliant investments in banks last spring. Expect the same result in a few months.

  48. cvienne says:

    The Goldman Boys are probably out there WRITING SPY 88 puts and SPY 91 calls for the June contract and laughing their asses off…Then they unwind it all on June 12, take off the harness and get ready to fade the next largest move in either direction…

  49. Mannwich says:

    This ought to be good for CRE. Who else is getting in this line with Starbucks? Someday that shoe WILL drop. Who the fvck is buying REITS right now? Are they insane?

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aPQv7BPDql9s&refer=home

  50. franklin411 says:

    Consumer sentiment hits 68.7, which is the highest reading since September. Also,

    Some executives have expressed optimism. Global capital markets have improved “dramatically,” General Electric Co. Chief Executive Officer Jeffrey Immelt said this week.

    “The worst is over” for the economic downturn, Immelt said in a speech in Tokyo. Improved liquidity and the ability to raise equity in capital markets have stabilized the economy, producing “green shoots.” As a result, he’s more confident now than any time in the last nine months, he said.

    Green shoots, patriots! Green shoots!

  51. leftback says:

    ben: Karen knows that market. I have shorted gold on Fridays many times and usually made money.

    Little by little it seems that fundamentals and technicals are starting to align here for a summer sell-off. We know that earnings are weak and that recovery in earnings will be slow at best, meaning that P/E is elevated. Yields in Treasuries have become more attractive, providing a safe haven in the short term. As far as technicals are concerned we have a top at SPX 930, the 200DMA above as resistance, and we have made a lower high in the 910-915 range. So although we can’t be sure until there is a decisive break below 875, it does seem as though this is a bearish set-up. Add to that picture that energy and commodities seem to be overbought.

    f411: If you weren’t so green, we’d have to shoot you.

  52. cvienne says:

    We love you Franklin…we really do!

    It’s like having a little puppy around…

  53. cvienne says:

    @LB

    It would seem that way now wouldn’t it…

    Don’t be hasty there partner…Wait until you see the whites of their eyes before you shoot…

  54. dead hobo says:

    leftback,

    About TA, I think this might be a time where it is relevant because the computers making the trades are probably using TA based statistics as trigger points. The tail might be wagging the dog, but the motion is real.

    Give this assumption as possibly true, what factors in the charts now might make a computer program balk?

  55. hopeImwrong says:

    The market is being rational (valuations and prices) for deep value stocks. They are being ignored by most. When I say deep value, I’m talking about stocks with more predictable revenue and profits going forward, and good dividends. I would put MO in this group. Kind of a boring stock, but rational price moves, and good value.

    LB, I’m long gold, silver, and PM miners, and holding, watching closely. Just a little nervous on the precious metals.

  56. Bruce in Tn says:

    Leisman said this morning that US revenues were down 34% this year compared with this time last year…that got me to thinking…when we mull over the debt to gdp ratio…we really aren’t talking about the GDP…we are talking about the amount of tax revenue that that level of GDP brings into the government…so when Leisman says revenues are down by 1/3, one could posit that the effective level of GDP (tax revenues) is down by effectively 1/3 and should make the debt/gdp thingy much worse than the surface would show…

    my 2 cents..

  57. Mannwich says:

    Geez franklin. Imelt wouldn’t lie, would he? Just like old Harold Hill from “The Music Man”. My wife with her musical theater background would be proud that I worked that reference in on this blog.

  58. Mr Objective says:

    I went short the July silver futures at 15.49 this morning. I totally agree, there is something about shorting precious metals on a Friday morning.

    Silver futures are like a hand grenade. Very effective if used properly, but …

    I won’t hold the futures past the low 16′s. 50 cents on the downside, 2 to 3 dollars on the upside on the short position looks good to me.

  59. ben22 says:

    lol Franklin using quotes from Jeff Immelt.

    Priceless.

    Hey Franklin, did you ever hear him say this one:

    “the dividend is safe”

    LB,

    don’t forget to add the following to your 10:10

    13% dollar bulls last friday at trade-futures vs. 93% Euro bulls. Little crowded if you ask me. If that reverses we go back to the correlation with the markets, dollar down stocks up, dollar up, stocks down.

    Still, we are awash with optimism right now, as was so easy to call when this rally started, even I predicted it. That should be good enough for one last push above those 200 days, but we’ll see what happens.

  60. hopeImwrong says:

    I like Franklin. I’ll make him the poster of the day right now, because he deserves it.

  61. franklin411 says:

    @AmenRa
    If you read the whole Chicago PMI report, you’ll notice this passage:

    “If this were an average recession, it would end four months after the low point in the barometer. Based on the current reading, August 2009 would mark the end of the recession. Since this is not working out to be an average recession, a more conservative rule appropriately draws an analogy to the 1981-82 recession. Using such a rule, the end of this recession would be projected to be nine months after the lowest value of the Chicago Business Barometer. With March 2009 as our best current estimate of that minimum, the recession can be projected to end in December 2009.”

    Three observations:
    1. The discussion has shifted from “the recession will never end!” to “what month will the recession end?”
    2. This is not an average recession, but the 1981-82 recession did not have the benefit of a meaningful stimulus package to kick-start a recovery. So I would say the recession will end somewhere between August and December.
    3. Green shoots, gentlemen! Green shoots!

    http://www.kingbiz.com/reports/ISM-C%2009%2005.pdf

  62. karen says:

    my ears were ringing.. yup, i still have my gold short (but i’m also long from long ago.) they are trotting this story out again so who knows what will happen with gold:

    http://www.commodityonline.com/news/IMF-gold-sale-US-Congress-approval-next-week-18234-3-1.html

    you’d think the big money would and could jam it down, just to buy it back again..

    now if you want to talk about my pain, it’s in my oil short.. lowered my cost basis today, but i’d hate to see crude at $70.

    i’m long sso, and my shippers are making me very happy, tho..

  63. Transor Z says:

    @Bruce:

    Roubini made a similar point re: long-term debt servicing. Basically, according to him, the USG will need to set aside 3% of spending just to service the debt we are creating. VAT anyone?

  64. call me ahab says:

    alright- just got back from a run- not raining out here in good ol’ Virginny for a change-

    and the headline-

    “U.S. business activity contracted at a faster pace than forecast this month as orders and employment dropped.”

    well there is some good news

  65. dead hobo says:

    About TA and the S&P: I read a book on TA once and it described a formation that is appearing again.

    The S&P has topped several times around 910, but the local bottoms are consecutively higher, with the bottoms converging on 910. This might be the pennant formation people have written about recently. The book said that, absent and significant fundamental news, the market moves against the pennant. So if the tops are stable, this means a big drop is likely.

    I recall seeing this formation at a recent bottom but didn’t believe it as a possible prognosticator. It apparently was as the market went up a lot.

    Psychologically, I can see relevance in this formation providing it reflects current events and not a decade of magic charts.

  66. cvienne says:

    @dead hobo

    Re: Computers making the decisions…

    I’ll take a stab at that…

    OK look…It’s sure as hell ain’t your computer or my computer that are making those trades (or our bank accounts)…

    So who can possibly do that? yes! Goldie & Co…

    So you look at the S&P and say, HEY, I’ve got an easy floor here at 881…& I’ve got a 200MA up at 930 today (which is declining at the rate of 2 points a day)…There are 10 trading days between now and Friday, June 12th, and 15 trading days before the June 19th OPEX…At the rate of descent, I could keep the RANGE in the S&P established for that long pretty easily…

    -On June 12th you’d have 200 day MA at 910 and floor at 880
    -On June 19th you’d have 200 day MA at 900 and floor at 880

    So you WRITE both “puts” & “calls” on the SPY for the June contract (sell 88 puts, sell 91 calls)…

    Then you go do your “computer trade” thingy…Every time the S&P challenges to the downside, you have buy orders ready, everytime it gets up to the high end of the “moving” end, you have sell orders ready…Uncle Ben in Washington is giving you free money to do it, so if you just borrow what you need at the short term window…

    I doubt VOLUME is really an issue anyway (because they have been anemic on both sides for the past month – yet the VIX is still around 30 so that’s some pretty good premium)…

    Let the other poor hacks battle it out…

    Then I’d say “let the pigeons loose” on June 12th (one week before expiry)…

  67. Mannwich says:

    @karen: As per your recommendation, I also grabbed some DRYS as a while back. Nice call. Gonna hold that one for a bit, I THINK.

  68. I-Man says:

    That bond vigilante article on bloomberg today was very good, and sums up a lot of the bond market rumblings of this week… I’ll throw it in here because its not on BR’s list:

    http://www.bloomberg.com/apps/news?pid=20601087&sid=akW9GQw.X9KM&refer=home

    Pretty much required reading IMHO. Which is certainly… humble.

    And on the crazy indirection in the market… consolidation patterns are the cause of many a Short’s frustration and consternation… dont ask me how I know this… :)

    Cvienne, I think you are onto something at 9:22 and 10:03… fwiw.

  69. DL says:

    dead hobo @ 9:33

    If you exclude food and energy, I think we could go another 3 years without seeing any inflation.

    Ha.

  70. franklin411 says:

    @ahab
    We’re reading the same article. Perhaps you should have read past the headline:

    “The report ran counter to others this month that indicated manufacturing was starting to improve this quarter, perhaps signaling that Chicago’s proximity to the auto slump in neighboring Detroit may be affecting the entire Midwest.”

    “Other regional figures earlier this month were more upbeat. The Federal Reserve Bank of New York factory index rose to minus 4.6, the highest level since August, and the Philadelphia Fed gauge climbed to an eight-month high.”

    http://www.bloomberg.com/apps/news?pid=20601087&sid=ae_x0dWSTGsk&refer=home

  71. call me ahab says:

    consumer sentiment is driven by the pundits on TV telling everyone “everything is a go” for economic recovery- absolutely nothing to do with facts on the ground-

    I am certain General Custer wasn’t too optimistic when faced with reality- outnumbered and surrounded by Indians (sorry- Native Americans)-

    but I am sure he felt cocky enough- with his troops following- before he realized things were not going to end well for him

  72. ben22 says:

    My daily rate email just came through:

    30 year fixed w/pt is at 5.5%

    15 year fixed w/pt is at 4.875%

    Here is what’s funny, without points it shows:

    N/A on the 30

  73. dead hobo says:

    DL Says:
    May 29th, 2009 at 10:33 am

    dead hobo @ 9:33

    If you exclude food and energy, I think we could go another 3 years without seeing any inflation.

    reply:
    ——–
    You are now qualified to sit on the FOMC. Take the rest of the week off.

  74. CapitalistCanuck says:

    Like some of you, I’m short oil, long USD so I feel your pain…

    I don’t buy the commodity play – at least in the short run. It reminds me of the housing bubble, people want tangible investments, they want diversification outside of equities and apparently did not learn their lesson with oil at $147 then to $35.

    When in all of HISTORY has a rise in input prices preceded an economic recovery??? Unless productivity improves, we are unlikely to see any improvement in PROFITABILITY until input prices decline and I don’t mean labor. There is more deflation ahead.

  75. DL says:

    Transor Z @ 10:25

    I’m sure that “Mr. O” would love a VAT (on top of his carbon tax).

    But, the higher the rate on the VAT, the more cheating one can expect.

  76. karen says:

    Try this link for the bond vigilante article, it works better.

    http://www.bloomberg.com/apps/news?pid=20601009&sid=akW9GQw.X9KM&refer=bond

  77. cvienne says:

    @ben22 (10:36)

    What’s WORSE is that they have been SEVERELY understaffed at all the mortgage desks…

    There was a 45-60 day WAIT due to backlog to get a loan closed before the “bomb” that hit on Wednesday…Most of what was in the pipeline was stuff that was waiting around to get 4.5% or so (and that literally wouldn’t qualify otherwise)…

    So now, it’s BACK TO SQUARE ONE for everybody…We might as well be back in March and rates are 5.5 and higher…It takes a good month (if everything goes well) for things to get back 100 basis points…It never will…even if it did, the loans wouldn’t be closing until sometime in September…That’s too late…we’ll be in another world by then…

    The whole operation is blown up…

  78. call me ahab says:

    I think the VAT talk is a trial balloon- to get an idea how much opposition could be expected if pitched by the administration-

    if it is pitched as a way to pay for universal health care- well- it may work-

    one thing universal health care creates is opportunities- maybe someone would be willing to strike out in their own- start a business- change careers- if they knew their family’s health care was covered-

    just a thought

  79. AmenRa says:

    @f411

    Who said March 2009 IS the low for the Chicago PMI? No increase in production, new orders fell, inventories increased, employment fell, supplier deliveries fell and prices paid increased. The green shoots are looking more like poison ivy.

  80. ben22 says:

    cvienne,

    I just made that point yesterday as a matter of fact. Lots of people are going to find out in the next week or two that they weren’t able to lock in the rate they thought they were gonna get.

  81. franklin411 says:

    @AmenRa
    Who said May 2009 isn’t an outlier? There are better indicies of manufacturing/production (Philly Fed, for example, is a more pure index of manufacturing. Chicago PMI is a mix of service/manufacturing) and we’re seeing dramatic improvements in those regions.

    Anyway, that’s a quote. The economist who wrote the passage seems to think that March 2009 was the low, so perhaps if you disagree with his conclusions, you should also be questioning the reliability of his data.

  82. Mr. C. Cheese says:

    Indy to LGA…Big time author flying commericial!
    Spend the coin…. fly private!

  83. cvienne says:

    @Franklin411

    So consider this (and you have to read several of my posts today to piece this together)

    - Obama’s MORTGAGE plan just got blown up by the bond vigilantes this week.
    - The end of this commodity price spike is going to cause round #2 of bond vigilantiism this summer
    - That will effectively blow up HEALTH CARE REFORM
    - & it will blow up CAP & TRADE
    - The PPIP is an abject failure
    - & the “confidence indices” (which have been bolstered by equity prices), will REVERSE leading to a new round of pessimism

    I’ll be interested in seeing the approval ratings come this fall…

    Oh yeah, remember that at that point GITMO will still be in operation, we won’t have had reduced troop levels in Iraq by anything, the war in afghanistan will have escalated, Iran & Israel will be at each other’s throats…

    Anybody want to chime in with any other ideas?

  84. Onlooker from Troy says:

    Have you guys seen some of the spin on interest rates rises lately?

    Here’s one via TPC’s blog: http://pragcap.com/misinterpreting-the-bond-sell-off

    I’ve seen a couple others out there. Basically saying that the rises are due to the normal interest rate pressures in an economic recovery. These things are always terribly complex (global markets are hard to really nail down) but it’s really beyond comprehension how somebody can make this argument in the face of the current global economic situation.

    It’s something I’d expect from Kudlow and Luskin. Maybe they’ve been making this argument. I don’t know, I stay clear of them lately. Can’t stomach the B.S.

  85. Mannwich says:

    @ben22: My mortgage broker didn’t sound too happy about these developments yesterday. I believe they believe that unless rates get below 5 again, they’re done and this whole thing blows up again. Not real green shooty. What’s plan B?

  86. dead hobo says:

    franklin411 Says:
    May 29th, 2009 at 10:52 am

    Anyway, that’s a quote. The economist who wrote the passage seems to think that March 2009 was the low, so perhaps if you disagree with his conclusions, you should also be questioning the reliability of his data.

    comment:
    —————-
    Just because 50 billion flies eat shit, that doesn’t mean it’s good food. You claim to be studying economic history for a paper. I hope that means you are acquiring the ability to put pictures together on your own without using the conclusions of others as ‘facts’. For crying out loud, stop looking foolish and read past the headline.

  87. Mannwich says:

    @Onlooker: Of course they’d spin it in a positive way. Better than expected, right. The whole thing is beyond a farce at this point.

  88. drollere says:

    @Bloomberg “Getting Technical”: “To be sure, all technical patterns can and do resolve in either direction.”

    rule 1 of technical analysis!

  89. Greg0658 says:

    “expect A LOT of the HOPE for the big utopian society will end up getting ____”
    was watch’g tv last night .. scene: asian teens at party gather’g of run of the mill Americans: an innuendo begets a shove escalates to a punch then escalates to pulling of a gun then onto an apology backoff (Hollywood)

    saw on tv minutes ago the US steel melt abilities .. brought to mind Conan and his god Krom and the 3 things that are best in life for the warrior king

    It’s one thing to be right and another to make money .. and another to be strong (self contained strong)

    .. martial law is an avenue .. the SPR would require in such a state for bs job holders not burn fuel .. so visit readydotgov

    gold is up .. time to boil down your 8088s and 4:3 tvs .. cash in smelt for ____

    BN2.0 .. Begger Nation sell Hollywood on that take

  90. DL says:

    call me ahab @ 10:46

    VAT will be a disaster.

    And universal health care will also be a disaster, unless “Mr. O” makes a serious attempt to limit costs. So far, no one has a plan to limit costs.

  91. ben22 says:

    Kedrosky predicts dow 10k/1-1.1k s&P “considerably higher” by year end. See the video’s section.

    He does say though, just a bear market rally.

  92. Transor Z says:

    @ahab:

    Full disclosure: I’m a convert to single-payer universal healthcare. It’s too bad that Michael Moore was the mainstream messenger in “Sicko” because he is so polarizing. IMO there is an awfully compelling case to be made for scrapping the US health insurance framework. Bill Moyers showed a clip of Obama speaking at a town meeting and stating that the US has a “tradition” of employer-provided healthcare insurance, implying that it is too entrenched to dismantle without great disruption.

    Ask the average HMO staffer whether he/she would mind being hired into a state or federal job as part of a national health agency — expanded Medicare or whatever it would be. Ask the top execs and obviously you’ll get a very different response . . .

  93. ben22 says:

    Manny,

    What’s plan B?

    QE 2, ……3, 4, 5, ?

    Hell if I know. When this all started the Fed didn’t even have a plan A.

  94. cvienne says:

    @Franklin411

    &BTW Franklin…

    If you’re using equity markets & what appears to be ‘bullishness’ in the commodity space to bolster your argument for whatever the “article du jour” you happen to pick off, just understand this…

    It is HIGHLY LIKELY that you’ll continue to have your way for AT LEAST another 2-3 more weeks…

    Anything could happen at any moment, but there is ENOUGH “stuff” out there right now that either support equity prices right now (or in fact, could give it just A LITTLE more juice to go higher)…

    So have fun while it lasts…

    By July-Aug-September you may start to see what people on THIS BLOG have been saying all along…

  95. DL says:

    Mannwich @ 10:57

    Plan B…? Obama’s going to end up learning a thing or two about how the bond market works. Clinton learned a few things about that in his first term.

    That being said, mortgage rates are still pretty low by historical standards.

  96. cvienne says:

    @ben22

    So Kedrosky can draw lines on charts…goody for him…raise his pay!

  97. Mike in Nola says:

    Hey guys and girls. Been reading but my long post is still “awaiting moderation.” Another name for the maw of Cthulhu. Guess I had too many links in it. I’ll post them separately. Agree with the majority.

    Hyperinflation:
    Regardless of the politics, I think Krugman has it right about the lack of danger of immediate hyperinflation. Money that is printed and sits in vaults has no effect.
    http://www.nytimes.com/2009/05/29/opinion/29krugman.html?_r=3

    Mish has been talking about this for the last six months:
    http://globaleconomicanalysis.blogspot.com/2009/04/money-multipliers-velocity-and-excess.html

  98. Mannwich says:

    @DL: I agree they’re still low, but psychologically people were/are thinking they can lock in under 5 for quite a while now, so anyone holding a pretty big mortgage is going to feel the difference big-time and might not even be able to afford it or qualify at these higher rates. If this thing goes to high 5′s, it’s game over for the housing market.