Reversal Open Thread
By Barry Ritholtz - May 27th, 2009, 8:07PM
The green shoot theorey continues to wilt under close scrutiny. Yesterday’s low volume boom gave way to today’s whimpering reversal.
What gives? What are you looking at, what’s interesting and worth reading?
| DJIA* | 8300.02 | -173.47 | -2.05% |
| Nasdaq* | 1731.08 | -19.35 | -1.11% |
| S&P 500* | 893.06 | -17.27 | -1.90% |
| Japan: Nikkei 225 | 9430.92 | -7.85 | -0.08% |
| DJ Stoxx 50* | 2138.47 | 12.92 | 0.61% |
~~~
What Say Ye?
May 27th, 2009 at 8:14 pm
The KEY THOUGHTS here are “green shoots” & “whimpering”
BOTH get me to be thinking about Franklin
…I can’t help it…
May 27th, 2009 at 8:20 pm
i found these interesting
http://economistsview.typepad.com/economistsview/2009/05/feldstein-has-the-us-recovery-begun.html
http://economistsview.typepad.com/economistsview/2009/05/us-and-european-employment-rates.html#comments
http://economistsview.typepad.com/economistsview/2009/05/bill-clinton-i-should-have-raised-more-hell-about-derivatives-being-unregulated.html
Trust must be earned
Trust must be earned
05/26/2009, 05:20 [National Post]
Consumers, employees and governments are all looking on business leaders with suspicion in the wake of failed U. S. banks, the AIG debacle, auto companies that can no longer make a buck and calls for bailouts from firms across the Western world. Every day, consumers watch, hear and read stories about today’s difficult times that raise doubts about the integrity of businesses. And there are countless difficult conversations taking place between companies, their customers and employees who together have to find new ways of working together.
At the same time, business leaders need to ensure they find ways to measure and sustain the trust that is essential to building sustainable enterprises.
Step one is to make sure their own house is in order. Do their customers trust their business? What about their employees? Research has demonstrated there is a direct link between how employees feel about their employer and the way in which they deliver customer service. Employees who doubt the integrity or ability of their organization to cope with challenges will deliver poor customer service.
The strategy most organizations use to assess trust levels is to conduct a customer satisfaction survey. While these surveys are necessary, it is not a sufficient measure. There are three reasons why: – First, satisfaction takes a rear-view perspective and is transaction-based. It asks an existing customer how they found your service after they completed their transaction with you.
It doesn’t speak to whether they intend to return in the future and it certainly doesn’t speak to the unhappy, dissatisfied or cynical customer whose business you will never know you lost or never had an opportunity of having. – Second, satisfaction is but one element of a trusting relationship. Trust is deep, lasting and relationship-based. It takes time to build and, once damaged, is difficult if not impossible to recover. – Third, while loyalty questions begin to get closer to issues of trust they don’t reveal what the person is loyal to. Often, the person is loyal to their contact at a firm but not necessarily to the firm itself. It is critical that a business own its customer and to understand how to do that, they need to understand what underlies loyalty. An institution is too vulnerable if trust resides only with select employees. When they leave, customers leave.
Most business leaders think they know what it means when they hear the word trust, but it is contextually based and changes under different circumstances. It is also personal and comprises both attitudes and behaviours. It is important that leaders use a survey instrument designed to specifically measure trust.
What are the steps a company must take? – Survey customers about their trust in the organization and its employees. It is important to establish a benchmark that managers can compare against later. – Survey employees. It is important to know how they feel about the organization and their experiences with customers. – Examine strategies and programs against the survey results. If found wanting, make adjustments. – Make sure internal communications and external communications are aligned with the trust message. The customer must see continuity between what a firm says it will do for them and what they experience when interacting with its employees. Any discontinuity in this area will hurt your integrity. – Make changes and remeasure in six months. There must be a positive shift in attitudes by both employees and customers. If not, continue to make adjustments until trust scores improve.
It takes years of hard work to achieve a reputation of trust — yet it takes an incredibly short time to lose this asset. The sooner companies begin to repair any damage that may exist, the sooner they will have their business on a secure footing for the future.
— – Deborah Nixon, PhD, is the president of Trust Learning Solutions, which helps companies elevate trust levels to accelerate sales cycles, lower costs and increase profitability.
[(c) 2009 National Post . All Rights Reserved. ]
May 27th, 2009 at 8:21 pm
I am hard pressed to believe in green shoots- too much debt- banks kept alive by government intervention and manipulation of loan rules with FHA, Fannie,Freddie -&- Fed buying 10 yrs to lower mtg rates-
my impression- simple man that I am- is that the only way the economy to move forward is to unwind all the massive debt-
a long term contraction to me is not necessarily a bad thing- I believe in simplicity- let’s reset the economy for a sustainable and healthy future
May 27th, 2009 at 8:22 pm
i also saw a story that Porshe was in big trouble (like bankruptcy) back in March, and will see a repeat of that problem in June (the first). They had to get a loan from VW (who they tried to buy or did).
May 27th, 2009 at 8:23 pm
Well, I’m still a novice at this. The S&P formed a dark cloud cover and closed below the 10EMA on the daily chart. The S&P keeps getting close to a turnaround/reversal on the 3LB (daily) but then moves higher. Currently the range of the 3LB is 929.23 to 877.52. Eventually it closes higher and the trend continues or lower and the trend is reversed. I use GLD to follow the trend in gold. It reversed on 4/24/09 and started trending up on 5/12/09. Currently the range on GLD is 94.15 to 91.55.
Waiting for your book and read the intro to “Elliot Wave Principle” by Frost and Prechter.
May 27th, 2009 at 8:24 pm
Dern your hide, Barry, wife’s out of town and me and the pups are here with the night off and I tried to post my little 2 cents earlier, and now you offer an open thread! Work faster!
Anyway, http://www.bloomberg.com/apps/news?pid=20601009&sid=aeEBnXC73gOc&refer=bond
companies are bailing on Britain…this makes the PIGS less than AAA and soon Britain follows. Do I think someone prudent would bail on the US debt market here? Sure, don’t you?
Rates up just as we are having a crisis on high end homes…I noted from Zero Hedge that the 30 year mortgage was up to about 6.58% today, a massive one day jump. This too, my friends will prove interesting in the housing market. Why on earth would a banker ok a mortgage here if he’s afraid rates will be MUCH higher in 6 months? Why not keep your powder dry?
GM and Chrysler both BK in a period of a few weeks? Dealers? Suppliers?
I see Doug Kass thinks there can be a permanent bear thought process that keeps you from making money at any time…maybe so. I may “resemble that remark”…as they say, but I do think the only true engine here is Obama/Benny/Timmmmaayyyy and I do so like Buffett’s idea that first of all don’t lose principal.
I like Franklin’s enthusiasm, but I spend more money in a month, very often, than he makes in a year. I have people depending on me to run my business well. I think, even with the run-up, that stocks are hard here, for all the reasons we know.
May 27th, 2009 at 8:25 pm
I’ve been planting some “green shoots” waiting for California to legalize a certain plant since they have absolutely no way to fund this state unless they legalize and tax drugs and prostitution.
May 27th, 2009 at 8:25 pm
I’m sorry BR
I realize that was a crap post…I spent the day involved in family matters and wasn’t too altogether involved with the markets…
Seriously?
Well heck this is easy…
We’re coming up on the 200 day MA…I think it will be a definite struggle to get through because despite the MSM hoopla about “green shoots”, I don’t see the S&P as having traditional P/E #’s to support this level…How’s that?
Could the market go higher?…Sure…If it somehow manages the courage to BREAL the 200MA to the UPSIDE you could see a charge to 1k…Many on this blog have suggested it, and many others have at least acknowledged the POTENTIAL despite questioning the fundamentals for doing so…
I love Andy T because he paints “many” possible outcomes…My favorite is the scenario that we CORRECT here (personally, I don’t know where, but I think that even if the market corrects to BELOW 800, you’d get a rebound by the end of the quarter to AT LEAST 798 so as to “print” a positive quarter)…
Then, you get a slight “relief rally” through JULY (which DOESN’T EXCEED whatever level we reach in June)…
I personally hold to a downward trendline that starts in the WEEK b4 the February 27, 2007 selloff and extends through the HIGHEST PRINT that you either saw in May 2009, (or what might be printed in June 2009)…
THAT’S MY LINE…
We ain’t goin’ ABOVE that line for a LONG LONG LONG TIME…
You asked “what say ye?”
That’s what I say…
May 27th, 2009 at 8:27 pm
http://blogs.zdnet.com/perlow/?p=10158&tag=nl.e539
“I propose that the National Archives change its motto from “Littera Scripta Manet” (The Written Letter Abides) to “What, Me Worry?” befitting it’s current lack of data security controls.
While many of you this weekend were firing up your barbecues, cooking grilled meats and drinking chilled beers, you might have missed a small announcement that the National Archives and Records Administration (NARA) made last Thursday having to do with a eensy, weensy, rather trivial data loss — it managed to misplace a TWO TERABYTE EXTERNAL STORAGE SYSTEM containing confidential information from the White House during the Clinton administration.
Click on the “Read the rest of this entry” link below for more.
Those of you who do not comprehend just how much data has been compromised in terms of what two terabytes (2TB) actually represents should read this great piece on the Anderson Cooper 360 site by my friend David Gewirtz, who is a highly-regarded consultant in the field of national infrastructure and data security.
The drive that was stolen was of the type you could buy at Best Buy or Tigerdirect, a consumer grade USB storage unit that costs less than $300. Most importantly, the data that was stored on it was unencrypted and contained large volumes of Clinton administration records, including the names, phone numbers and Social Security numbers of White House staff members and visitors. According to Congressional aides briefed on the matter, the device contained “more than 100,000″ Social Security numbers and Secret Service and White House operating procedures. (EDIT: The drive apparently contained hard disk images of White House PCs that were used by staff during the course of that administration.)…”
I’ll guess that being Sec. of State has it perks..
44–same as it ever was..
May 27th, 2009 at 8:32 pm
What the hell happened to your new laptop thread? Did Apple shut you down?
~~~
BR: Its been bumped to tomorrow nite. Too much other stuff to talk about from today . . .
May 27th, 2009 at 8:33 pm
does any body know why oil is going up? i see where demand has tanked. and that they are even storing huge amounts of oil in tankers cause they have run out of places to store the stuff. maybe the speculators have no place else to put their money for now?
May 27th, 2009 at 8:36 pm
WAIT…let me ‘qualify’ my (8:25) post…
I think we could go ABOVE that line…
But it wouldn’t be until late 2011…
and the 2/2007 level won’t be reached until 2036 or so…
May 27th, 2009 at 8:36 pm
does any body know why oil is going up?
Ten year T- Bonds at 3.72. Dollars are priced in oil, not the other way ’round.
May 27th, 2009 at 8:37 pm
Amazing about no encryption. My wife got a letter from Kelsey Seybold Clinic (Mark will have heard of them). A very big outfit in Houston. Apparently an unencrypted laptop with a bunch of patien records walked off. Inexcusable. If you are just cheal, you can even get very good encryption free with Truecrypt.
May 27th, 2009 at 8:37 pm
any body guess when that hard drive went missing? seems it was last seen October 2008, but nobody looked for it February 2009.
May 27th, 2009 at 8:37 pm
Oh, nuts. I also posted this earlier.. found it from another site, and took “just a glance” at lunch, but found this lecture fascinating…
This lecture by a Harvard prof in 2007 at UC Berkeley…on how she thought we might see the loss of the middle class…as I started to watch it, I found it to be really quite good and possible. If you have a few extra minutes, you’ll like it. (Barry, it even has charts!)
http://www.youtube.com:80/watch?v=akVL7QY0S8A
The Coming Collapse of the Middle Class
May 27th, 2009 at 8:40 pm
willid3
Oil It’s the inflation/dollar devaluation trade, speculation and momentum. IMO
The fundamentals are awful but if you’re looking out there and see inflation, and you see what the market pushed it up to last time (i.e. $147), then you figure, what the heck, pile into crude.
Time will tell. And it will undoubtedly be an interesting story by the time it’s over.
May 27th, 2009 at 8:41 pm
BnT…the middle class collapses along about the same time as the dollar:)
May 27th, 2009 at 8:41 pm
Curmudgeon:
From what I’m reading, folks think the Arabs are “talking up” the price of oil, along with the leftover momentum from the “green shoots” mantra that we’ve heard the last month or so. I certainly, when looking over production numbers and manufacturing, haven’t seen anyone but China with any sort of stability….and it is China. It does seem the price of oil was “talked up” recently…..ummm…
May 27th, 2009 at 8:44 pm
Oil is being driven by hedge funds and maybe Goldman at the moment. Nothing to do with demand or the dollar.
http://bloomberg.com/apps/news?pid=20601109&sid=ayq_NpcZL_CU&refer=home
May 27th, 2009 at 8:48 pm
@Mark
The lost HDD is something that should never have happened, but I suspect that the articles you linked make more of this than actually exists. I worked at the National Archives and I’m familiar with their data processing room setup. It’s not located anywhere near the areas that are open to the public. All doors are secure and require a magnetic NARA badge with the proper clearance level to operate. This means one of two things:
1. The drive was lost on site (this happened at the Los Alamos laboratory a few years back…the drive was eventually found behind a filing cabinet).
2. A staff member with the proper clearance took the drive (unlikely, considering the list of cleared staff is rather short)
Regardless, the drive was a “transfer” drive that contained data as it was transfered from tape storage to hard drives. The tapes still exist, and no data has been lost from the historical perspective.
May 27th, 2009 at 8:49 pm
B in Tn-
I watched the the link you posted-
pretty much sums up what happened to this country in the last 30 years- more expenses less quality time- with family
sad
May 27th, 2009 at 8:51 pm
Do any of yall read Across the Curve? Most of the time I follow the themes, but they had a quote over there that I am thoroughly confused over.
http://acrossthecurve.com/?p=5756
“I will reiterate what I said earlier about convexity traders. They are always the last guys at the party. This could last awhile but we are certainly in the final stages of this iteration of financial ugliness.”
I would love to hear that explained in plain English! Is he saying we are close to being out of the woods with this crisis?
May 27th, 2009 at 8:54 pm
“What say ye??”
It’s all going pear-shaped again Bazza !! Oil is going down, and so are equities. That’s what I say….
May 27th, 2009 at 8:57 pm
Gov. will cook the books on employment numbers… can they afford not to? Nah, they would never decieve “the people”
May 27th, 2009 at 8:58 pm
Geopolitical risk is climbing.
May 27th, 2009 at 8:59 pm
Anyone think $9 air fares are deflationary??
http://finance.yahoo.com/news/New-lowcost-airline-targets-apf-15348934.html?.v=5
May 27th, 2009 at 8:59 pm
Lefty:
What do you think of those evil traders selling the Motherland’s debt?
May 27th, 2009 at 9:02 pm
Bruce: I am long the 2 and short the 10, remember? Evil Lefty strikes again…… f***ing good bear steepener I’d say.
Seriously, I would expect people to realize that govies are oversold fairly soon and fly to quality from equity.
May 27th, 2009 at 9:04 pm
franklin,
“…The biggest, most serious problem with this breach is that the US Government doesn’t precisely know how many records were stolen or lost. They also don’t know who took the storage unit or how this data ended up on a portable, commodity PC storage device rather than in an enterprise-class, guarded, secure system with multiple levels of encryption and passwords and a document management system with sophisticated audit and logging controls…”
“Gewirtz makes a important point that because consumer data storage has now reached a level where it’s easy to transfer huge volumes of data cheaply, that our nation’s most important data is at risk. Obviously, something needs to be done in terms of improving our security controls or God knows what in terms of national secrets could end up in the hands of individuals and governments that legitimately want to do us harm.
The methodology and technology we use to keep our most guarded data safe in the government and in corporations that are trusted with confidential information requires strict regulation and sanity. If anything, we need to figure out how to keep data contained where people can view it as required by their jobs, but not necessarily be able to copy it off a system.
One of the ways I believe this can be accomplished is through a combination of policy enforcement, auditing and technology controls at the user, application and infrastructure levels. Document management software with very granular levels of access control of who can see what and elaborate logging of who looked at what is going to be required…”
from the link..
You, tovarich, are a flippin Hack. I’m really surprised that your “Green” pals haven’t tied you up in EPA Red Tape, for all the G*rbage you spew..
btw, you ready to Trade, our respective, TBP ‘posting rights’, yet?
May 27th, 2009 at 9:04 pm
The last of my Wachovia 6.25% callable cd’s was called this week…at Schwab…I noted the short term (less than 36 months callable) cd’s had risen .4% in yield in just 2 days…I think I will keep my powder dry for another week or two before reinvesting….the Wachovia’s were 15 year callables with an 18 month no-call…
May 27th, 2009 at 9:05 pm
We have just looked at our P/L again. It was a VERY profitable day at Schadenfreude…
May 27th, 2009 at 9:05 pm
Forgot to add a couple of thoughts.
I think we retest the March lows before year end, but it will be a grind, at least at first.
Retail investors are afraid they missed the bottom and will do enough buying at the first few key resistance levels (875, 840, 790, to met at least) to push it sideways for a few days before the move lower continues.
Anybody but any credence in the so-called Smart Money Index? It has moved strongly lower in the past couple of weeks. Lots of late day selling lately.
May 27th, 2009 at 9:08 pm
Wow, can’t type strike that “to met at least” and “but” should be “put”. Apologies.
May 27th, 2009 at 9:16 pm
Bruce said: “I see Doug Kass thinks there can be a permanent bear thought process that keeps you from making money at any time”
Dougie may have usurped the glory of calling what we know as The Leftback Bottom™ (he was several days early) but he has been way off the mark in recent weeks. We may be of the Bearish persuasion but we have been making money more or less every day, usually by fading the big pops in this Sucker’s Rally.
Smart Money? Most of it left the building weeks ago.
May 27th, 2009 at 9:18 pm
I’ve been looking at:
Market ticker: http://market-ticker.denninger.net/
Contradictory articles on bloomberg.com: http://www.bloomberg.com/apps/news?pid=20601087&sid=a8v1JKA2X9ag&refer=home and http://www.bloomberg.com/apps/news?pid=20601109&sid=a3i27FMViXmY&refer=home
This is about consumer confidence and then the “new normal” where unemployment will be higher than we have enjoyed.
I’ve drawn my own conclusions regarding employment with calculated risk graphs about how long it takes employment to regain peak employment levels after recessions. 1981 – 1990 – 2001 have taken longer, and longer and longest to come back to peak employment levels. This depsression will overtake the 2001 46 month recovery in employment. They call the 2001 recovery a “jobless” recovery. This one may be “more jobless” thus the bloomberg article above.
I didn’t even notice the 2001 recession. Didn’t think about it at all because it was limited. This is systemic and feels much different. I am an ordinary person not affiliated with wall street nor anything financial. I am a social worker. In fact, I didn’t notice the 80’s recessions either. I knew we had a banking crisis but it didn’t affect me or my job. My city didn’t have much of a problem meeting obligations and social services were not much affected.
But I notice this one. This one has caused a change in my behavior. Moved from bank to credit union. Bought gold and silver last summer. Moved into foriegn currencies and out of USD. This is the big one people. Paying off debt ASAP (Auto, Loan, no CC debt). Consider my purchases rather than “just doing it”.
Watching the treasuries and am glad didn’t take advice to buy them a while back. Got out of stocks just before crash but did lose some money.
This is different.
May 27th, 2009 at 9:19 pm
http://www.latimes.com/business/la-fi-vat28-2009may28,0,2138324.story
Value-added tax, once taboo, is getting attention in Washington
“Everybody who understands our long-term budget problems understands we’re going to need a new source of revenue, and a VAT is an obvious candidate,” said Leonard Burman, co-director of the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, who testified on Capitol Hill this month about his own VAT plan. “It’s common to the rest of the world, and we don’t have it.”
….and we wants it, our precious….(sorry, Smeagle….)
May 27th, 2009 at 9:19 pm
@Mark
I agree, and I think everyone who works at the Archives would too. The problem is funding. NARA has been underfunded for years, and they have mountains of records that are backlogged for processing.
Think about this. 50 years ago, data was stored on massive tapes. 30 years ago, data was stored on 8 track (I’ve seen them, it’s ridiculous!). 15 years ago, data was stored on high density tape. Today, data is stored on hard drives.
The physical form factor of data has changed dramatically over the last 50 years. Now consider how dramatically operating systems, computer languages, data standards, etc… have changed over the last 50 years. And then consider how dramatically data will change over the next 50 years.
NARA’s challenge is enormous. It has a mandate to make the data already stored secure and accessible to the public. This means putting it in a format that researchers can use (and very few of us have the 1 ton data machine required to access a 1960s era tape) today. It also means putting it in a format that researchers can use 50, 100, or 500 years from now.
I was shocked when I saw how arcane NARA’s operations are, but when the above was explained to me, it actually made quite a bit of sense. I would take the word of the men and women who have been slaving on the Electronic Records Act project over that of speculative bloggers any day of the week.
May 27th, 2009 at 9:21 pm
B in T: VAT added massively to UK inflation in the 70s and led to Leftback climbing in a rowboat to sail West…
May 27th, 2009 at 9:25 pm
http://www.bloomberg.com/apps/news?pid=20601080&sid=aAlTzPDwJULQ&refer=asia
Japan Retail Sales Fall for Eighth Month on Job Woes
“Consumer spending is too weak to support a recovery, given the deterioration in the job market,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “Japan’s economy will remain fragile in the absence of stronger domestic demand.”
…Now let me go back and be sure…writing about Japan or US…let me look…Japan or US…dern…let me look again, Japan or US…where did they put that blue light special thingy….?
May 27th, 2009 at 9:27 pm
@f411
Actually computer languages haven’t that much. Machine language is still the same and assembly language only varies by the chip used.
May 27th, 2009 at 9:28 pm
Lefty:
I heard you had to leave after telling one too many jokes about the Queen’s knickers….
May 27th, 2009 at 9:28 pm
leftie @9:05 -
my UNCLE invests with Shadefruede Asset Management (SAM)
May 27th, 2009 at 9:31 pm
B in T: Flankrin carred:
“NO way Amelica wirr lepeat mistakes of Japanese defration. Amelican attitude totarry diffelent”.
May 27th, 2009 at 9:31 pm
Looking at adding to my fixed income ETF’s. I don’t buy the green shoots, nor do I anticipate a return to the devil (666). Time heals all wounds and I’ll gladly take 4-10% for now while the scar tissue is forming. Besides, they’re AAA rated, which must mean they’re completely safe! Riiiggghhhtttt…
May 27th, 2009 at 9:37 pm
@LB 8:59
A colleague of mine read that and said, “What, they’re gonna strap you to the wing! C’mon 9 bucks, I mean 9 bucks!”
May 27th, 2009 at 9:37 pm
franklin,
you’d hear the Same Excuse in Any Government agancy you care walk into. From their POV, “One Size Fits All”, in regard to that excuse..
You want some Change? Try reading something from the *Real World, about the scene:
http://www.washingtontechnology.com/Home.aspx
If these “Agencies” weren’t in the Business of lying to the American People, they’d be, a lot, less Interested in maintaining so many of their ’stovepipes’–lest the *Real exhaust enter the Room, in plain sight..
LSS: they’ve ‘re-inventing gov’t’ since they made IBM a Fortune 500 Co. , and Perot the First IPO Billionaire..
May 27th, 2009 at 9:37 pm
B in T-
if they can sell the VAT as a way to pay for health care- well they may be able to pull it off- in the end it is how much money they can get from the US taxpayer to pay for what they want-
big social spending folks have never seen a tax they didn’t like-
ask franklin- because I guarantee he’s on board with VAT
May 27th, 2009 at 9:37 pm
@AmenRa
They haven’t changed and they’re still readable. It’s a question of practicality now. Here’s an interesting article on how one woman saved pristine lunar footage because she tenaciously fought to scrape together enough spare parts to get a tape reader operational:
http://blogs.physicstoday.org/newspicks/2009/03/rescuing-nasas-early-lunar-ima.html
And here’s one about COBOL. California’s Governor wanted to cut the paychecks of all state workers to minimum wage last summer, but he wasn’t able to–because the payroll computer system is in COBOL, and the only programmers they could find are all in retirement homes. Apparently, COBOL is so archaic that few working age programmers are fluent in it (how many people do you know who speak medieval Latin?). It would have taken them 6 months to program the computers to pay minimum wage, and another 9 months after that to undo the changes!
http://www.sacbee.com/capitolandcalifornia/story/1132588.html
May 27th, 2009 at 9:41 pm
Franklin:
I know a guy whose first computer courses were in Fortran and Cobol and you had to turn your computer punch cards into the CS grad student who ran them, and then handed you a printout for you to debug. He still own his bamboo slide rule too…
…that would be me.
May 27th, 2009 at 9:42 pm
On the S&P we are probably in a pullback which is most likely the option A I put out a about two weeks ago which was a sharper correction down rather than the zig zag movement up. Unless we go over today’s intraday high of 913.84 I’d remain very short term bearish. A break above that high and I think we just move to the 5/8 levels and then on the way to my countertrend target of 965-1k. An overshoot above the 200 days.
This set back though really started on the 5/8 highs and has been in place ever since.
I-man had asked about closing around/below the 878 level and if it would flip me bearish and I’m still thinking no and that we could see that level any day now, maybe tomorrow. It might take a couple tries to do it because I’m seeing that as a support area. If we got through it quick you might see some bears get a little more aggressive and push it further down but I think as this rally lasts longer the shorts are the weak hands and they are getting easily spooked. From there, maybe someone can help me out but I don’t see any major support level after that. Maybe the S&P then falls down to 825-845. In the short term I think people shorting will take profits there. There aren’t many Steve Barry’s in the world willing to hold on through.
I also wouldn’t be surprised to see the NAS pull back by roughly another 3-5% during this downtrend within the bear market rally. Just like on the S&P if we shoot above the intraday high today we are probably just on the way higher near term target on the NAS.
The 30 year pushed right into the range today that was also discussed here about two weeks ago, I’m thinking in the short term the yields on the long bonds goes even higher as it seems thats where the momentum is but that will come to an end eventually and the Fed will manipulate as best they can in the short term. They won’t be able to do it forever but I don’t think this is the big crack we are all waiting for on the long bonds.
The dollar is really interesting. Karen shared a nice chart today on TNX and it got me thinking about RSI, on that note when looking at the $ it looks like the dollar could be oversold here. Also, trade-futures had only 13% dollar bulls on Friday. That’s getting a little crowded for my liking on the bearish side. I hate being where everyone else is.
Everyone “knows” the dollar is doomed but as I said over the weekend if everyone already knew they would have all already sold right? Each time we get these deeper bearish readings whether it be the market or a currency or a commodity it usually is followed by a bounce. This is still shaky but I remain a dollar bull over the next 12 months. On the other hand you’ve got the Euro which was showing 93% bulls on Friday. This is flashing big time to me.
Sentiment:
I commented today to Wunsacon that franklin is really no longer in the minority camp when he commented we shouldn’t be so hard on him for presenting a different pov than most here. Headlines today showed 90% of economists now expect a second half recovery. While Franklin may be in the minority here at TBP, in the mainstream he’s fitting right in with all the green shoots talk.
I’ve also noticed more and more bullish comments here whether related to the markets, or more of them claiming a housing bottom or arguing with any potential bearish housing data. Did anyone notice all the arguments towards BR last night on the Fast Money thread?
Zero hedge also showed a nice chart of mutual fund money flows over the weekend and those looked like an indicator as well.
I was home until almost until noon today so I watched some bloom and cnbc. Lots of money managers seem to be getting into materials, energy and tech. Also not a shocker. The longer this rally lasts the more risk for money managers “on the sidelines” especially hedge funds though I have to imagine most of them are trading this now. Investors allocation survey showed back at the March low huge movement into cash.
I’m still trying to get my head around the MBS stuff Karen put up earlier.
Last, I think I’m starting to like Diane Olek (spelling) from CNBC. She snapped at Dennis Kneale today which I really enjoyed. He was fawning over real estate numbers and didn’t realize what he was reading, she properly set him straight. It was nice.
Now I’m going to enjoy the rest of the Lakers game.
May 27th, 2009 at 9:42 pm
..me too…
May 27th, 2009 at 9:43 pm
do I get a trophy for the longest ever post? Sorry, that’s lame.
May 27th, 2009 at 9:45 pm
lefty,
was checking my yahoo mail and saw the $9 airline headline, OF COURSE, the first thing in my mind was deflation. Then I thought about it again and I came to the same conclusion. deflation.
May 27th, 2009 at 9:47 pm
What I am reading:
Bankster’s Fantasies revealed: http://market-ticker.org/archives/1065-The-Looting-Has-Become-Brazen.html
Bernanke’s Dilemna: http://market-ticker.org/archives/1066-It-Is-Failing-ALL-OF-IT.html
Bernnanke’s Dilemna (revisited): http://zerohedge.blogspot.com/2009/05/time-for-qe2.html
And my absolute fav (everybody should register for this)!
http://zerohedge.blogspot.com/2009/05/fed-transparency-petition-update_27.html
May 27th, 2009 at 9:47 pm
deflation first
inflation second
$9 = loss leader
May 27th, 2009 at 9:47 pm
Does anybody know what Einhorn/Ackman said at the Ira Sohn conference today? (irasohnconference.com for list of speakers– last year this conf kicked off the bear raid on financials w/ Einhorn’s short Lehman call). Of the other speakers, I heard from second hand sources that Peter Schiff was his usual bear on U.S. dollar denominated assets (suggested Treasury is running a bigger ponzi scheme then Madoff and that we are headed for an inflationary depression– cheery stuff), Chanos pitched short LNCR and APOL, and Kingdon pitched long BAC.
May 27th, 2009 at 9:47 pm
No trophy, but I knight you “Sir Green Shoot”…thanks for the sharing of your ideas…
May 27th, 2009 at 9:48 pm
franklin not sure why so many buy that COBOL is out of date and nobody knows how to use it. it still runs the world. not sure why so many think its hard to get some one that knows it too. my wife graduated about 10-14 years ago, and they were still teaching it. and as for taking so long to do the work, sounds more like a project management problem than any thing else. and payroll systems tend to be packages not home grown stuff any way (to many rules change every year to keep up otherwise).
May 27th, 2009 at 9:49 pm
Three guesses on the location of the missing Clinton administration archival hard drive:
1. Beijing
2. Dick Cheney’s den
3. Hillary has it.
Rush will be running with #3 on tomorrow’s show.
May 27th, 2009 at 9:49 pm
ben22: Diana Olick. I think she has integrity. Most of the time she hides from Larry and Dennis.
Doug Kass today: I think he is dissing on some of us. Remember Lefty OWNS Kass….. I will SCHOOL him.
“The perma-bear cult, of which I have often been accused of being a member, is an especially strange clique that often sees the clandestine plunge protection teams saving the U.S. stock market at critical points. They have never met a government statistic they like but instead see the U.S. government as “massaging” and revising employment, inflation and many other economic statistics in order to paint a positive picture. They express contempt for second derivative economic improvement and never or rarely ever see prosperity. They view seeds of recovery as Superman saw Kryptonite and extrapolate economic/stock market weakness to the extreme.
And they never ever or rarely make money.”
May 27th, 2009 at 9:51 pm
Normally I look at the cracks in the economy, now I’m seeing cracks in the media:
http://thecomingdepression.blogspot.com/2009/05/market-is-rigged-another-analyst.html
http://www.michaelcovel.com/2009/05/26/jeff-macke-goes-nuts-on-dennis-kneale/
http://www.cnbc.com/id/15840232?video=1074021503
http://economicedge.blogspot.com/2009/05/naked-short-selling-redefining-systemic.html
May 27th, 2009 at 9:51 pm
bears
bulls
pigs
sorry for the reference….
May 27th, 2009 at 9:52 pm
Reading Rosenberg’s morning missives thanks to you!
Also have been messing with a chart I’ve created at work… Has the NY floor volume, NY total volume. From that I created a daily spread chart between the two volumes. That chart has various moving averages… Lots of moving parts, but what I’ve noticed is a definite pattern on the spread. Certain moving averages of the spread definitely sloped up in the early stages of the rally this spring (institutional buyers “smart money” increased the total volume, while the floor volume was relatively static.) That slope basically went away at the beginning of May, flattened, and is now sloping downward… (An old adage…Rally are born on volume and die on lack of…) I am interested as this market turns–will the spread widen as “smart money” exits, or are they sitting on so much cash that any downturn of significance will be met with fresh cash and increased volume… either way it should be interesting to watch and maybe add to my various indicators. I seriously wonder how much money is truly in investible hands anyhow… Many discussions at the workplace are about money leaving the market and finding their way to banks. That money won’t return quickly, if at all.
Anyhow, if anyone has done any relational studies on floor volume vs. total volume, please chime in and share. My understanding is much of the big money never sees the floor, hence the huge difference between floor and total volume on the NYSE.
My PnF charts keep on hitting lower highs on the S&P and a twice tried support of 880 on the 5pt chart. The 20pt chart of the S&P is awaiting a move to 860 to reverse into a column of O’s (supply). It’s been that way since beginning of May…
Rosenberg’s views I respect, but not near as much as I would if he actually managed money. It is telling that many longtime bears no longer lean in that directions…Kass, Leuthold, Fleckenstein, Grantham–all have quit their leanings in the bearish camp. Even Rosie’s hedging his retest of 600 levels. The only person I have listened to recently that is still staunchly cautious of what the market may bring for us is Charles DeVaulx and with he being the protege of Jean Marie Evaillard, I listen carefully to his assessment. He readily admits that he will always miss certain opportunities that other would go for, but his attention to risk is like no other.
Has anyone noticed that there hasn’t been a crisis yet since 1990 when the VIX failed to spike a second time? I noticed it…and the second spike seems to occur 33-40 weeks after the first peak… You know how many weeks it’s been since the peak in October of 2008? hmmmm….could be nothing.
May 27th, 2009 at 9:52 pm
@Bruce
Nice! My undergrad college’s library books still had (as of the late 1990s!) punch cards in them. Apparently, they used them to check books out? No idea how that was supposed to work, but it sounds terribly draconian!
@Willid3
Well, to be honest, the state computer system has had “issues” for years. They bought a whole new, extremely expensive system to replace it–and it turned out that the new system was useless. It was a huge scandal. Also, the Controller didn’t really want to cut salaries, so there wasn’t much incentive to find a way around the problem.
May 27th, 2009 at 9:54 pm
That was it Lefty…that what I read…I think he was talking about you and me. When you whop him good, tell him his mother never had any normal children for me….
May 27th, 2009 at 9:54 pm
What I’ve gathered in the last few days on this blog is that making money is bad and talking cr*p is good.
May 27th, 2009 at 9:56 pm
Franklin:
Sometimes you’d be up ’til 2 getting those damn programs to run…all on punch cards…
May 27th, 2009 at 9:56 pm
…..squeeeeeeze…..
May 27th, 2009 at 9:57 pm
@Bruce:
17 minutes into the Elizabeth Warren lecture. Let me just say, forget about it, pal. You and I are both married and I know we are both planning on making Elizabeth Warren our next wife. Let’s just be honest about that. Deny it here if you want.
Unfortunately for you, she’s just a quick ride on the Red Line for me over in Cambridge. She is officially the future Mrs. Z.
Just letting you know. (Thanks — great link.)
May 27th, 2009 at 9:57 pm
BnTn@9:56
…and then your drop the card deck on the way to the card reader…
May 27th, 2009 at 10:00 pm
@b22 9:42
I don’t know about closing around 878, but if, during trading hours, we breach 875 after a bounce I’m putting all KSU’s on red.
May 27th, 2009 at 10:00 pm
BTW– you don’t think this will roil the markets at all do you? This is from the Obama e-mail machine that I still receive…McCain and Clinton quit a long time ago, but this Obama machine acts like they’re still running a campaign! Here’s an excerpt:
“Remember this date: Saturday, June 6th, 2009. We will look back on that day as the moment when the fight for real health care reform began in your neighborhood — perhaps even in your own living room.
On June 6th, in thousands of homes across the country, we’ll gather to launch our grassroots campaign for health care. We’ll watch a special message from the President. We’ll build the teams and draw up the plans for winning health care reform the same way we won the election: Building support one block, one neighbor, one conversation at a time. And we’ll put those plans into action.
These kickoffs are so crucial that President Obama will join confirmed hosts and attendees on a live conference call.
There’s no prior experience required. We’ll send you the details for dialing into the President’s call and provide you everything you need to make your meeting a success.
After the election, people gathered at over 9,000 meetings across every state to set priorities for health care reform. Our voices were heard. Now the race is on to make sure Congress produces a plan that reflects the President’s call for reduced costs, guaranteed choice, and quality care for all.
To make that happen, we need to build a groundswell of support in every district and every state, and we have no time to lose. All summer we’ll be reaching out to our neighbors, knocking on doors, serving in our communities, and building a grassroots network strong enough to win.
These gatherings on June 6th are just the beginning of a battle between those who fought and believe in change and those who would protect a broken status quo. The stakes for our country could not be greater.
Some call this strategy pie-in-the-sky. They say we’ll never have enough volunteers to make a real impact; that you need insiders and Washington lobbyists to make a difference. But you and I know firsthand how wrong they are. Starting June 6th, it’s once again time to show this country how bottom-up change is done.
Please sign up today to host or attend a kickoff near you.”
Obama’s feeling comfortable enough with the financial crisis, the auto crisis, and the world events that he is getting ready to stir it up on healthcare. Hope that ride to the mid 40’s in WLP was fun! Did you get enough lift out of your pharma’s? Because it is all going to be given back if he handles healthcare as delicately as he has the automotive sector… I’m already scoping out my victims while the VIX is low and the premiums are relatively cheap. Good luck to all!!
May 27th, 2009 at 10:02 pm
Punch cards. PDP 11-23s. CIB backup systems. 5 1/4″ floppy disks. Nostalgia….
and then along came Steve. Anyone else have a Lisa or a first generation Mac? So dorky, yet so cool….
May 27th, 2009 at 10:03 pm
Bruce,
Just keep in mind, I might actually be the biggest bear here. While I’m looking for this countertrend rally to move higher excluding any short term pull backs, I don’t think the 3/6 bottom was THE bottom at all. Nope, not even close.
agree with CFA’s comment above, retail is buying this. They are. The poor guy that fixed my water heater today noticed me on the computer and watching the tube and asked what I did. We got to talking and he told me how his 401k lost 50% last year, in his words “I saved for 22 years and lost half in 12 months” He then told me the 401k people, Fidelity, had come in and shared with him it was a great chance to buy and then pressured him with “aren’t you in it for the long term” he was 56 years old! I then helped him pull up his account on line and showed him the safest bond fund in the account and told him he could park his money there if he wanted and he didn’t have to do what Fidelity said. The sad thing is, most people are just going to do what they are told and this is what brokers and advisors are telling people to do for the most part.
The severity of this situation is still not recognized in it’s fullness by enough people so more pain is ahead.
May 27th, 2009 at 10:03 pm
@LB 9:49
Doug Kass is going to be so much fun sub-600 on the S&P.
May 27th, 2009 at 10:04 pm
Bruce:
You must be an old enough fart to remember how hot a PDP-10 with 256k magnetic core memory was. And tty timesharing terminals clacking and spewing paper. And Indian chemistry grad students who were hated because their programs tied up all the cpu time while you were trying to play chess.
May 27th, 2009 at 10:04 pm
i thought about buying a lisa long ago. never could afford it though.
May 27th, 2009 at 10:04 pm
http://www.stltoday.com/blogzone/stl-jobwatch/uncategorized/2009/05/local-recruiter-wonders-if-employed-know-how-good-theyve-got-it/
“Fear Goggles” – Reality is so much easier when it is ignored.
May 27th, 2009 at 10:04 pm
Tranzor, thank you for reminding me.. i’m listening now… i put it aside for the evening..
May 27th, 2009 at 10:04 pm
….PDP 8E…
Compaq’s first portable – boot off of a big ass floppy
memory is good – memory first, Alzheimers second
May 27th, 2009 at 10:05 pm
Karen, we are merely saying things we learned on TV…that is not talking cr*p. Things like “The FDIC is backed by the full faith of the US Treasury”…heard that today…before it had been “Your deposit is backed by the full faith of the FDIC”…Cr*p In- Cr*p Out…..
May 27th, 2009 at 10:06 pm
@call me ahab 8:21 pm
It’s like you say “too much debt”. For financials AND consumers. Nothing has fundamentaly changed. Oops, scratch that. There’s a whole lot more USDs now, thanks to our government. But that’s another issue for another day….
May 27th, 2009 at 10:07 pm
Of late, the equity put/call ratio has been a very good predictor of market direction.
http://tinyurl.com/q8dlzu
For example with the ratio at .56 yesterday it was way too bullish; with a reading this low, it is a contrarian indicator with a bearish tone
May 27th, 2009 at 10:07 pm
Damn Crazy North Korea….there goes my prediction for 50yen/usd….
May 27th, 2009 at 10:07 pm
@JasRas:
Obama is FOS on this one. Single payer is not even on the table. The crap about not building on a broken system is, for lack of a better term, a lie. Bill Moyers discussed last week.
http://www.pbs.org/moyers/journal/05222009/watch2.html
The most smug man in America is at 31:55.
May 27th, 2009 at 10:08 pm
I definitely fit the old fart category…but like a fine wine, I get better with age…
May 27th, 2009 at 10:09 pm
Hey Karen. Making money is good. But it’s fun to talk crap occasionally as well… sorry, drinking and posting.
@Cursive: KSUs are trade-marked by LB: KSUs™.
@ben: At 56 he should have it in the mattress. Before this Bad Bear is over you will save a lot of people their shirts. Good man. Isn’t it amazing that sooner or later the hubristic hordes are going to get soaked AGAIN ???
May 27th, 2009 at 10:09 pm
karen,
I’m going to need you to expand on the 9:54 comment. What was that?
May 27th, 2009 at 10:09 pm
ahab@ 8:21 –
sounds like a man in cash
reset – ctrl-alt-del
let ‘er rip
May 27th, 2009 at 10:10 pm
@ JasRas 10:00
Did you get that from the Onion? Hilarious.
May 27th, 2009 at 10:12 pm
You all are crazy. If you weren’t you wouldn’t watch TV.. further, one of the things HOPEFULLY to come out of this employment mess, is that one parent will stay home and raise the children?! or don’t have any… that was a break even effort in the first place that sacrificed the innocents.
May 27th, 2009 at 10:13 pm
Kass is trying to parlay his little “generational bottom” call into a further rise of his investing genius star, no doubt. And he REALLY needs this rally to go to his targets to continue his guru status of late. So he’s vigorously beating the drum for everybody to jump on this bandwagon. So he’s now goading everybody possible. He definitely has a vested interest. Let’s not kid ourselves.
He may be right about this rally, but he’s not just giving us disinterested advice, like ben22 is. So I view him (Kass) with a skeptical eye.
May 27th, 2009 at 10:13 pm
leftback,
I felt really bad for him, it was only right to try and help him out. He didn’t have a clue and was getting schooled by the Fidelity guy. Terrible.
May 27th, 2009 at 10:14 pm
Here’s what I see:
This whole Bailout Nation (product placement) journey we’ve embarked upon is predicated on keeping interest rates low. If you want to sell new debt, you must realize that “a strong dollar is in our nation’s best interest” (seems I’ve heard that before…..). But then you goose a stock rally by means of a slow leak in the dollar, pissing off your foreign debt holders….you know, those guys we let put shock collars around our throats. Well, they’re starting to press those buttons, and they’ll keep pressing them until we remember:
“A strong dollar is in our nation’s best interest.”
Hope you had fun with the rally, but the way I see it, the hissing sound coming from our currency has gotten too loud to be ignored. No reflation trade for you!
May 27th, 2009 at 10:14 pm
I locked in at 5% 30 year fixed a couple weeks ago….sometimes even blind squirrels find an acorn….
May 27th, 2009 at 10:14 pm
What happened to common sense? That is what I want to know…
May 27th, 2009 at 10:14 pm
Reading right now: Milton’s Paradise Lost, Confessions of Saint Augustine, Dante’s La Vita Nuova, Collected Speeches of John Pym, Will Durant’s History Of Civilization (a bit at a time).
Worth Reading? Augustine: It’s staggering how similar we are to the late Roman period.
May 27th, 2009 at 10:15 pm
Wes: And the really bad part of it was in those old days, there were very few, if ANY, good looking girls who were majoring in engineering or CS…just us ugly mugs…
May 27th, 2009 at 10:15 pm
drinking will commenting on the sire? omg
May 27th, 2009 at 10:16 pm
I like D Kass! But remember, some people are hardwired to be notoriously early on all their calls, Down or UP. He’s been calling for the big down for several years–I keep an archive of his “20 big surprises” and have followed his missives since a time when he was free reading at RealMoney, and not expensive fresh, or free late…
Grantham freely admits that he is early, but is willing to endure the pain b/c his time horizon calculations are still wonderfully positive, so in his mind it is worth it. Kass’ only fault is not freely admitting most of his calls have been extremely early (measure in years, let’s say) March was a one-off lucky hit. Everyone is allow one of those–good for him! But it isn’t the norm.
All the other bears that have left camp are not loud bulls, they are just acknowledging the odds are no longer favorable to take the elevated level of risk that being a bear entails. This is simply good money management and something to take notice of if trying to garner knowledge from successful people.
I like my cash and I like my bonds, but puts in financials are probably not in my future. Maybe healthcare or some other sector…
May 27th, 2009 at 10:16 pm
Common sense??
LOL
That’s funny.
May 27th, 2009 at 10:17 pm
Bruce, don’t degenerate yourself, i bet you are quite handsome, inside and out.
May 27th, 2009 at 10:17 pm
BnTn@10:15 –
how very true…but there were other departments/colleges
May 27th, 2009 at 10:18 pm
I actually like Dougie Kass but as many have pointed out when I tried to defend him before, he has been all over the place since this all started and I was reminded that he did rec. buying the banks many times last year on the way down. My least favorite part about him is when he wistfully refers to his ole’ buddy in his thestreet articles as Jim El Capitan Cramer.
when I really used to like him was when he would appear on kudlow and be the only bear on the show while they all tried to scream him down. He’s also a pretty snazzy dresser.
May 27th, 2009 at 10:19 pm
@Onlooker: Anyone who tries to get ALL the directional calls right in this market will come to grief. Even AT is only right about 85% of the time..
@ben: You really have reaffirmed my faith in human nature, you are a bright light in the brokerage darkness.
Speaking of darkness, I have just realized it’s dark out and the markets open in 11 hours. I’d better get home.
May 27th, 2009 at 10:19 pm
Here in my small midwest flyover town library, Nassim Taleb’s “The Black Swan” has been either checked out or on reserve for over two months now.
Is it possible the ether is wearing off??
May 27th, 2009 at 10:19 pm
Thanks Karen…I have heard Brad Pitt thinks he looks like me, but you know how hard those movie stars want to rise to the top….
May 27th, 2009 at 10:20 pm
@karen 10:12
Are you saying a woman’s place is in the home?
May 27th, 2009 at 10:20 pm
What happened to common sense? That is what I want to know…
Like what? real estate always goes up?
May 27th, 2009 at 10:21 pm
Wes: And now they have COED dorms…
…born at the wrong time….
May 27th, 2009 at 10:22 pm
Bruce, can you give me a quick synopsis of what this woman says, because i get increasing nervous as i listen…
May 27th, 2009 at 10:22 pm
Kass OBVIOUSLY reads TBP and noted the LEFTBACK BOTTOM™ call at 3.45pm on 3/6/09. Enough said.
May 27th, 2009 at 10:22 pm
Karen:
I’m 30 minutes in and she is making a very compelling — chilling, really — case that two incomes are now essential with increased expenses in housing, healthcare, childcare, and taxes vis a vis c. 1970.
We’ve all known that intuitively for some time, but she did the research into how fixed household expenses have jumped over the last 30 years.
May 27th, 2009 at 10:22 pm
@ Cursive — I WISH I got that from the Onion… No, when we were in the election year I subscribed to all three of the viable candidates e-mail lists. I figured it was drinking from the firehose–get the spin before it was respun… Well, I still get e-mails from the Obama team! It never stopped. So I about spilt my drink when I got the one about June the 6th and rolling out health care parties… They may be FOS, but if they grassroot it, it will shake foundations and definitely move stock prices–regardless if anything comes of it.
Ask someone how it felt when Hillary opened her big mouth about socializing the medical system in the early ’90s… It absolutely rocked the pharmas, the insurers, etc.
May 27th, 2009 at 10:22 pm
Karen..what happened to common sense? It went bankrupt! It was unfortunately, not thought, too big too fail.
On the other hand I’m looking at Apple to $145 before June 7th. Long calls.
May 27th, 2009 at 10:24 pm
leftback,
I didn’t get in this biz to make a ton of money, though I’m more than happy with my current income. My dad was a tin knocker and my mom stayed home and raised three kids. They needed help but they were always to small to get real advice. This is why I chose to work with retail investors instead of trying to go to a big wire house. I met with a client tonight that is up 2% since october 2007. I know it’s not much but the personal satisfaction that results from that is hard to describe. We sat in the new kitchen they just had done with savings that we built up for a couple years so they could pay cash for it. It was a great night.
May 27th, 2009 at 10:24 pm
@JasRas 10:16
Kass’s problem is that, like most of the meglomanics on TV, his ego is bigger than the portfolio he manages. Put a microphone in front of these people and fun things can happen. How many successful hedge fund managers get dumber the more time they spend on TV. Cramer anyone?
May 27th, 2009 at 10:26 pm
@karen
That’s a great question!! I believe that you are either born with it or you are not. You can learn it through life’s experiences but most people commit the same mistakes.
May 27th, 2009 at 10:27 pm
Karen:
I thought it was as good an explanation as I’ve heard about why the middle class in the US is on the decline…turns out that basically income is going to much more expensive items that are not able to be trimmed than in the early 70’s. She talks of how much greater a per centage of income goes to housing, health care, post high school education than occured in 1970, and she is spot on….
She also outlines why we’ve become dependent on two members of a family working to get us into the middle class unlike the 70’s…how a college degree is thought to be the key to middle class success, paid for by the individual, when a high school education, paid for by the community, was the vehicle in the early 70’s..
It is an excellent summation of our economic family history of the last 40 years…
May 27th, 2009 at 10:28 pm
I will not reply to cursive, that is an asinine comment, especially because I stated that one parent needs to stay home.. in the early years or semi early years.. I didn’t quite have that luxury but i worked and sacrificed for it quickly… I feel the same way about pets as I do about children, btw… DON’T HAVE THEM IF YOU CAN’T TAKE CARE OF THEM AND GIVE THEM THE ATTENTION THEY DESERVE..
May 27th, 2009 at 10:28 pm
My daughter forwarded me that Obama email last week. Creepy. So we will wind up with the Fed’s subsidizing health care insurers. Really great.
I still get emails from Hillary; she’s trying to pay off her campaign debt.
May 27th, 2009 at 10:29 pm
@LB
In 1985 I walked into “Sears Business Systems” store to buy a IBM PC and walked out with a Mac XL. It was really a rebadged Lisa but there was nothing like it at the time. Had a whopping 5mb drive that did not like to moved.
May 27th, 2009 at 10:32 pm
@JasRas 10:22
Who would not be embarrassed to have penned such tripe? That is an eye-opener…and I remember Hilary’s attempted power grab. BTW, Dick Cheney caught hell for having closed door meetings, but Hilary started it. I can tell you that my brother-in-law, a pulmonologist, is about to have an Atlas-Shrugged moment.
May 27th, 2009 at 10:32 pm
Ben:
What is a tin knocker?
May 27th, 2009 at 10:35 pm
this is interesting:
An increasing amount of neurophysiological evidence supports the idea of social mood as a guiding force, showing that the patterns in financial markets are a result of herd behaviors which lie in the deepest, most primitive parts of the brain, the limbic system. Since the neocortex, or thinking part of the brain, grew out of the limbic system, studies show that the limbic system has the ability to “hijack” the neocortex, especially in matters concerning the survival of the species or the selection of leaders. In the majority of investors, the limbic system, or emotional ruler of behavior, responds according to the wave sequence first observed by R.N. Elliott and now used to forecast the markets
Bruce,
maybe with your medical background you can explain that?
May 27th, 2009 at 10:35 pm
he was a sheet metal worker. he basically put in air ducts all over Erie PA. My hero.
May 27th, 2009 at 10:36 pm
@karen 10:28
Hey, no offense intended. Sorry if you thought it was an asinine comment. I don’t usually hear comments like that. I wasn’t offended. Now, excuse me while I go read bedtime stories…
May 27th, 2009 at 10:37 pm
left,
Kass made a couple of bottom calls prior to March, and they were brutal. I forget when, sometime after Jan 1, he recommended FCX and some other metal stocks. I tracked them, and they were down 26% in just 3 days. So catching the bottom with Kass wasn’t all hearts and flowers.
May 27th, 2009 at 10:38 pm
@Karen
Thank you! Children are not collectables that fit on a shelf, and they require work and sacrifice. We are a one income family mainly because no one will raise your children as well as you can. Carting them off to someplace for 8-10 hours a day while mommy and daddy work is placing too cheap a value on impact these strangers will have on a child’s life. You wanna child, you maka tha sacrifice… I don’t care who stays home, but someone is going to do it. I have a client that sold his business so he could be a stay at home Dad. I think he is probably the most impressive individual I have ever met. He could run a Fortune 500 company or be a hedgie or run Private Equity and be fabulously successful. But his mark on this world will be his children and what he’s pass to them.
May 27th, 2009 at 10:38 pm
Cursive:
I, too, am considering the Atlas Shrugged plan at the end of the year…I mentioned it to my partners last clinic meeting…we’ll see. The reasons are too numerous to bother the room with, but my wife is delighted…but what I do doesn’t really seem like work..never has.
May 27th, 2009 at 10:39 pm
Bruce: didn’t watch the video, but it has been my theory for a few decades that the big rise in house prices in the late 70’s, when interest rates were not low, was not due to inflation, but that the inflation was due to the large number of women entering the work force, resulting in more income chasing goods.
May 27th, 2009 at 10:39 pm
Ben: Wonderful! Thanks.
May 27th, 2009 at 10:40 pm
Mike: You may have channeled the video in your sleep…
May 27th, 2009 at 10:41 pm
Re: Cramer getting dumber the longer he’s been on tv.
I question Cramer’s real ability as a fund manager though maybe someone can set me straight with some data.
Didn’t he run his fun mainly during the 90’s and he admitted to manipulation. He wasn’t actually any good I’m thinking. Who couldn’t make money in the 90’s?
Judging by what he claims to own in that action alerts portfolio he doesn’t seem too magical to me. I have never read confessions of a street addict, maybe that gives more insight.
May 27th, 2009 at 10:42 pm
@Karen:
My wife and I are both attorneys but we had family health issues a few years back. My health insurance is excellent and covered virtually everything — retail hospital bills more than $1.5 million (not a typo). Actual HMO contract reimbursement probably about 50% of that.
But my wife had to go down to part-time status and so there was still a severe strain financially — precisely because of the fixed expenses Elizabeth Warren cites that put families on a hamster wheel. Even a two-professional household.
I agree with your comment about only having kids when you can afford them to a large extent, but it’s important to bear in mind that sh*t happens and the whiplash caused by income volatility can be devastating. That’s the reality of the middle class today and why her lecture is truly chilling.
May 27th, 2009 at 10:44 pm
Ben22:
Actually I went to medical school to be a psychiatrist…took a block my junior year…and said…NOPE! This is not for me. That may have some merit…many think we are still reptiles at heart…but for the last few decades I have been a simple tissue technician….(plastic surgeon)…and terms like limbic system and neocortex frighten simple souls such as I…
May 27th, 2009 at 10:45 pm
how are we defining “middle class” in this discussion?
What does that actually mean to people?
May 27th, 2009 at 10:48 pm
Basically, we have been breeding and cultivating stupid people in the US as far as I can surmise… there is a movie about this, but i can’t remember the title… I actually found it in the Economist magazine.. an under rated movie… excellent.
Now, Cursive, you MUST bring your children up on Mother Goose, Br’er Rabbit, Beatrix Potter, and now Harry Potter… oops not to mention A. A. Milne, Shel Silverstein, Isabelle Allende and Louis Sacher, to name a few…
May 27th, 2009 at 10:48 pm
karen @ 9:54
“What I’ve gathered in the last few days on this blog is that making money is bad and talking crap is good”
Who says making money is bad? Or maybe you’re referring to people who are unwilling to believe that money can be made on the “long” side.
As for talking crap, that’s a whole other subject.
As for watching TV (10:12 post), there’s a lot of factual information to be had.
May 27th, 2009 at 10:49 pm
@karen: what she goes on to say is that because two incomes are required now the risk of severe shocks (job loss/sickness) have increased dramatically. Used to be sickness had one at home to nurse. One job loss meant the other could fill in to some degree. Today, one job loss or sickness spells catastrophe.
“More children experience their parent’s bankruptcy than divorce”. Her quote.
Punch cards? Hell I can remember moving beads across the strings. What about mechanical calculators that if you fed the right problem would grind for hours?
I’m so old I can remember when healthcare and hospitals were Not for Profit.
Isn’t that about when the wheels came off healthcare???? The profit gods must be fed.
May 27th, 2009 at 10:49 pm
And moved to East Tennessee to have more of a reconstructive practice than emphasis on cosmesis…plus the mountains and the rivers and the climbing have all mellowed me out…
‘Night…long day tomorrow.
May 27th, 2009 at 10:50 pm
@ben22: I define “middle class” in terms of standard of living. Two parent family with two or three kids, living in a single family 3BR/4BR with two cars and a white picket fence.
May 27th, 2009 at 10:52 pm
Karen,
I think that movie was Dude Where’s My Car.
May 27th, 2009 at 10:53 pm
“On April 20, I wrote an article, Big Bro’s Cybersecurity ACT: A means to shut down the Internet. Lo and behold, yesterday, this article Obama Set to Create A Cybersecurity Czar With Broad Mandate appeared in the Washington Post.
The Post reported, “President Obama is expected to announce late this week that he will create a ‘cyber czar,’ a senior White House official who will have broad authority to develop strategy to protect the nation’s government-run and private computer networks, according to people who have been briefed on the plan.
“The adviser will have the most comprehensive mandate granted to such an official to date and will probably be a member of the National Security Council [italics mine] but will report to the national security adviser as well as the senior White House economic adviser [Larry Summers], said the sources, who spoke on the condition of anonymity because the deliberations are not final.”
“A White House official,” we are told, “said on Friday that cybersecurity “is vitally important, and the government needs to be coordinated on this.” Of course he/she spoke on condition of anonymity. The announcement meshes with “the long anticipated release of a 40-page report that evaluates the government’s Cybersecurity initiatives and policies. The report is intended to outline a ‘strategic vision’ and the range of issues the new adviser must handle, but it will not delve into details,” administration spinners told reporters last month.
Of course, not delving into details means not telling you what role the National Security Agency, America’s numero uno surveillance agency, will play in “protecting private-sector networks.” Also, think of “protecting” sort of as the Clean Air Act protected polluters and No Child Left behind left behind all the money to make it happen. “Protecting private-sector networks” is Washington-speak for dominating them…”
http://onlinejournal.com/artman/publish/article_4737.shtml
btw, the ‘middle class’ was sold out long ago..think Vietnam/Petro$ timeframe, for starters..
May 27th, 2009 at 10:53 pm
Karen @ 10:28
“…don’t have them if you can’t take care of them and give them the attention they deserve”
………..
“Deserve’s got nothing to do with it” (Clint Eastwood, “The Unforgiven”).
May 27th, 2009 at 10:54 pm
well Transor, I gotta say that’s a hell of a lot different than the middle class family I grew up in. Nothing against you at all, and I don’t know what type of law you practice so don’t take this the wrong way but when I hear someone say there are two attorneys in the house that doesn’t exactly scream middle class to me.
May 27th, 2009 at 10:54 pm
I will make one statement very clear to any young couple reading this blog… you live on ONE salary.. the rest is gravy, savings or slurge, you get to choose.
May 27th, 2009 at 10:57 pm
karen,
good advice. too bad nobody really follows that. most people I come in contact with can hardly live off of two incomes, you know, all the stuff they need.
May 27th, 2009 at 11:01 pm
@karen: Are you referring to the movie, “Idiocracy”?
May 27th, 2009 at 11:02 pm
ben22 @ 10:54
I don’t know what the real statistics are. But I would be that, among attorneys overall, the top 10% are making 90% of the money. Among trial lawyers, probably the top 1% make 99% of the money.
May 27th, 2009 at 11:05 pm
@ben22:
I hear you. Neither one of us does corporate BigLaw. But remember that lawyers have huge student loan burdens. And “middle class” is a range. And attorney incomes vary greatly from year to year when you “eat what you kill,” so to speak. Believe me, the loss of my wife’s income was a huge challenge for us.
@karen:
I think you should watch the lecture.
May 27th, 2009 at 11:06 pm
I found the following information from Brian Pretti of value:
% Increase In Payroll Employment By Decade
Period
1940’s – 38.0%
1950’s – 24.5
1960’s – 31.5
1970’s – 27.2
1980’s – 20.0
1990’s – 19.9
2000 To Date – 1.2
Without jobs the only type recovery possible is the same false recovery provided by Greenspan Bubblemania – only this time there won’t be a rush to overextend on credit; hence, no rapide recovery. We are most likely to see sideways, range-bound markets and modest to flat growth for a number of years to come.
May 27th, 2009 at 11:06 pm
DL,
That might be true, 80/20 rule would probably apply if not, but then again, I’m talking about attorneys compared to everyone else. I have to imagine the average attorney makes much more than the average wage. I’m certain the BLS website could verify this.
I’ve got four attorneys as clients, all in different types of law, not a single one makes under 175k a year. You should be able to live off that, especially in a dual income home.
May 27th, 2009 at 11:08 pm
Transor,
That is a real good pt about the loans. My sisters fiance took a job with the DA in philly and he doesn’t make much at all, I think 50-60k and he’s got 100k plus in loans from law school. I really didn’t mean to take a jab at you when I said that, hope you know.
May 27th, 2009 at 11:10 pm
dl,
any trading today?
May 27th, 2009 at 11:11 pm
ben22
I think I could scrape by on that.
May 27th, 2009 at 11:12 pm
alright way OT but:
I know there aren’t a lot of bball fans anymore but the playoffs this year have been aces.
May 27th, 2009 at 11:12 pm
“FBI’s Use of FISA Increasing
In a report to Congress, the Justice Department revealed a substantial increase in the use of National Security Letters to acquire information on American citizens without court order. In 2008, the FBI made 24,744 NSL requests pertaining to 7,225 persons compared to 16,804 requests pertaining to 4,327 persons in 2007. The report also detailed 2,082 applications by the FBI to the Foreign Intelligence Surveillance Court for authority to conduct surveillance and physical searches. An earlier audit had revealed that some “blanket-NSLs” did not document the relevance of the information sought to a national security investigation and that the statistics were not reported to the Congress. For more information, see EPIC’s Page on Foreign Intelligence Surveillance Act, National Security Letters, and Wiretapping. (May 20)..”
http://epic.org/?refer=true&theme=purple
http://www.usdoj.gov/oig/special/s0703b/final.pdf
we should be wondering how many Attorney’s are twisting the Noose on the Neck of our Freedoms..
May 27th, 2009 at 11:13 pm
@karen 10:48
Whew. My apologies again and glad no hard feelings. Now, I’m more of a Brothers Grimm kind of guy. In fact one of the girls picked “Rumpelstitlskin” tonight. I thought it ironic when I read the title character saying that he would “rather have some living thing than all the treasures of the world.” I agree with your take and that of many others here.
BTW, was the movie “Idiocracy?”
May 27th, 2009 at 11:14 pm
ben22 @ 11:10
I don’t “day trade”, since I have a full time job (unrelated to investing).
I did add a short position today … in FDX. (Transports are looking weak, and IYT was unavailable for shorting).
At present, I have longs and shorts in a 3:1 ratio.
May 27th, 2009 at 11:15 pm
Jeff, yes, that is the movie! the recommend came from The Economist of all places. Thank you for the back up..
http://www.youtube.com/watch?v=akVL7QY0S8A
May 27th, 2009 at 11:17 pm
btw, karen’s point, above, is cut from cloth all too True..
if American Women ever figured out how “Feminism”, a la Steinbeck, Brown, Abzug, et al., was used to ‘empower’ them to destroy the functioning Family, in favor of ever more State Intervention, they might learn something new..
May 27th, 2009 at 11:21 pm
DL,
gotcha, I still haven’t done a short position since my two srs failures earlier in the year. I’ll wait till there is momentum on the downside to do it or when I see bullish levels much higher for the market and less people wanting to sell the rally.
I’m basically neutral in my accounts and I’m slowly selling my longs and moving some to cash over the last month or so, and a few bonds here and there I’m buying, just using some Vanguard ETF’s for that. I’m thinking of taking a position in TLT if the 30 can push up into the 4.8% area but we’ll see if I still think that is a good idea if/when we get there.
May 27th, 2009 at 11:22 pm
Mark,
What do you think all the security stuff means, what conclusions are you drawing?
Re: Feminism, wasn’t that a tax increase scheme? I thought I heard somewhere that some very powerful men helped fund that movement but maybe I’m off in Crazy town right now… or maybe I’ve been hanging with Jeff Macke.
May 27th, 2009 at 11:25 pm
also OT but while the news of the last few days is N. Korea, it’s probably important not to forget to watch Netanyahu closely.
May 27th, 2009 at 11:26 pm
Cursive, Brothers Grimm, horrified that didn’t make my list… along with Hans Christrian Andersen, along with one of my personal favorites by Helen Bannerman, Little Black Sambo..I think have it in every version.. Oh, my, but I am forgetting the Little Red Hen (that’s me) and, of course, Chicken Little, me thur 2007-2008.
May 27th, 2009 at 11:31 pm
@ben22:
No problem at all. I enjoy your comments very much. And your point was well taken.
Budget it out and see what you get. Here are some monthly household numbers to throw in the mix:
Mortgage/tax: 2400
Child care: 1800
Student Loan: 800
Auto (x2): 700
50% Employee health insurance share: 600
There’s $80k for starters. After tax. Assuming a mere $350k mortgage over 30 years. ($350k in the Boston area/suburbs doesn’t exactly get you a mansion.)
This is the REAL housing affordability analysis, btw. Drop one wage-earner w/o warning due to health/job loss and you get a sense of the BIG problems people get into real fast.
The wife and I have working class roots so we aren’t as status conscious as some and made adjustments.
May 27th, 2009 at 11:31 pm
Many times markets are simply in a “gray area.” I sent out a report today titled “S&P 500 – a riddle, wrapped in a mystery…” I think it truly is until the market can show us something different and give us a signal. The longer term is very easy….we’re headed much lower. If we don’t see a 700-handle next few months, I’ll be very surprised. I remain long Sep puts on the S&P futures….a docile position for sure, but I’d rather see more definitive topping action before piling it on.
Energy continues to confuse all the “fundamental” traders, as it grinds into a major seasonal peak. Gold continues to face resistance into it’s larger 61.8% retracement. The DX tries to find support into it’s own key support. Though, I must admit that none of the action anywhere is conclusive yet…..
For those long the TBT, congrats…..but I must caution that the Ten Year Note is on a key support level right now. It’s showing no signs of bottoming for sure, but it may be prudent to take “some” profits off the table. Even if it’s about to enter the biggest bear market off all time, there will be plenty of rallies to sell….Best.
May 27th, 2009 at 11:34 pm
ben22,
re: ’security stuff’ (?) conclusions? None.
“wasn’t that a tax increase scheme?” in what sense? context, bud, need context to understand what you’re asking..
May 27th, 2009 at 11:40 pm
Mark,
I’m not at all a historian on feminism so I may be way off here, but the rise of it, to me, included a big push for rights for women in the work place thereby expanding the labor force resulting in more income tax revs.
Clearly there is still a wage gap btwn male and female, which btw, I think is ridiculous.
Does that make more sense?
@Transor,
No doubt that’s the real affordability analysis. Funny how a lot of people just don’t get that. Slap your federal and state and local taxes on there, oh yeah, and savings, and there isn’t much left, if it even got you that far.
May 27th, 2009 at 11:40 pm
ben22. Second the thoughts on the playoffs. Been a stella’ post-season. Would love to see a Nuggets-Magic finals….I love underdogs….
May 27th, 2009 at 11:43 pm
AT,
No doubt about that. I had no idea Orlando was this tough. I wonder how good they’d be with J. Nelson at the pt.
I’m feeling good that you and I seem to be very much on the same page with the markets right now.
May 27th, 2009 at 11:44 pm
Andy T @ 11:31
Agree about the “gray area”, the 700-handle, and taking profits in TBT.
May 27th, 2009 at 11:51 pm
Check out the charts on this old post:
http://www.ritholtz.com/blog/2009/01/4-crashes/
anyone see a pattern?
May 27th, 2009 at 11:52 pm
uh-oh, major faux pas, I forgot, Dr. Seuss! One Fish, Two Fish, Red Fish, Blue Fish…i could recite that in a coma… not to mention Green Eggs and Ham, or the Cat in the Hat, or the Cat in the Hat Comes Back… lol.
The single most important thing a parent can do for their child is read to them at bedtime… i rteasure that i had a few years of naptime and bedtime…
May 27th, 2009 at 11:55 pm
Follow on note to the 10 yr Note….Funny to look at the 30 yr bond v. the 10 yr Note…While the 10 yr is on a key support, the 30 yr seems to have a little further to fall (rates a little higher) before arriving at it’s key support. So, the ol’ curve steepener that everyone’s talking about probably has a little further to go.
Damn, I should probably switch on CNBC again to find out what those muppets are yabbering about. Is everyone talking about the steepening curve? If they’re all talking about it on CNBC, then I’d say that trade (in the short run) may be getting near an inflection….
On that Note, a Tip of the Hat to Julian Robertson, who months and months ago with Erin Burnett, was talking about having a big curve steepener trade on…..
Julian, if you’re listening, be ready to take a few chips off….
May 27th, 2009 at 11:57 pm
karen, my favorite all time Dr. Seuss was the “Foot Book”…..I read that to my daughters SOOOOOO many time….”left foot, left foot, left foot right…feet in the morning, feet at night….”
I would act it all out for them…..a sight to behold!
May 27th, 2009 at 11:59 pm
BR – haven’t posted in a very long time. Still love the blog, but the comments section is getting too voluminous to read. A handful of opinions are dominating the commentary with multiple postings – is it possible to limit the number of comments per unique user? perhaps a max of 3 comments per blog post.
i think rally could continue higher for much longer than consensus believes. 1000-1100 on spx likely by year end 2009/early 2010… eventually we crater again and retest lows – will just take time to get there.
looking forward to picking up the book.
May 28th, 2009 at 12:02 am
As far as reversals go, the supports are being pulled. Broadly based long positions seem really dangerous to me. I would note that there is evidence of an uptrend in soy which will likely benefit Argentine bonds despite Fernández’s fudged numbers and pension fund raiding (to pump the housing market of all things). Maybe Bunge (BG) will benefit too. Haven’t looked closely.
I would encourage people to look closely at Brazil and to familiarize onesself with a coisa. A woman named Vitoria Saddi has a good blog- macro view, academic but readable. Maybe SID and TS merit a look.
Here is an interesting read on oil production numbers out of Venezuela (I first saw it on Inca Kola News):
http://www.mees.com/postedarticles/oped/v52n18-5OD01.htm
Also, I am reading A Thousand Plateaus by Deleuze and Guattari, in particular, 12. Treatise on Nomadology-The War Machine- a key concept- voluntary servitude.
Also, earlier once again life reached out shook me enough to clear my eyes and reveal my ignorance- I came across a concept I had never heard of called the OODA loop and its author John Boyd. Worth knowing about:
http://en.wikipedia.org/wiki/OODA_Loop
May 28th, 2009 at 12:09 am
AT,
this: ” Would love to see a Nuggets-Magic finals” Here 2.
Ben,
it started with “Schools” first, see Title IX, for instance..
for more, see this: http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Communist+roots+of+Feminism
should connect some dots for those interested..sure to be muy popular~
May 28th, 2009 at 12:09 am
karen
“The single most important thing a parent can do for their child is read to them at bedtime… i rteasure that i had a few years of naptime and bedtime…”
I will surely second that! And about the good Dr. too; the whole series. They’re just the greatest for the little ones. I wonder how many kids don’t get that experience. An awful shame and much to their detriment, no doubt about it.
May 28th, 2009 at 12:11 am
@AT
Most of the EW’ers I read think we are in Primary 2 and haven’t even finished the first leg of an A-B-C correction. They are also talking zig-zag, double zig-zag, x-waves and are generally frustrated with the action. Anyway, P2 assums that we drop and then do a final rise before a devastating P3. Even Mark Liebovit thinks we are probably headed to 1100 on SPX. Very confusing, which I thought was a hallmark of wave 4, but that would put us back in P1. Anyway, I’m trying to play a break of 875, with confirmation, down to 840/820. Once there, will re-evaluate if we bounce or head down to 770/750.
May 28th, 2009 at 12:35 am
Interesting video here with Marc Faber. He has some interesting observations about the bear economists who are no bullish.
http://pragcap.com/faber-hyperinflation-coming-stocks-a-sell
May 28th, 2009 at 12:47 am
cursive. That’s why it always a good market. That’s why it’s NOT a self-fulfilling prophecy….you can have 5 “experts” on technical analysis of various sorts all look at the same chart and reach 5 wildly different conclusions. I’ve see a little of what others are thinking and I can find faults…if they saw my stuff they would find many faults as well….so it goes….I think the biggest KEY is knowing when NOT to TRADE. Sometimes it’s cool to hang out till it’s clear….”wisdom comes in not knowing….”
May 28th, 2009 at 12:58 am
Apols…..butchered that last quote….it should be “wisdom is knowing that you do not know….” I’m sure Hoffer will find the source of that material and the exact quote….ha.
May 28th, 2009 at 1:20 am
Off topic — Zero Hedge has a post on a proposed Fed Transparency bill. Would you believe that one co-signer is Marion Barry (no relation to the former DC mayor)? Talk about a name recognition goldmine.
May 28th, 2009 at 1:23 am
Hmm… A few observations:
1. I don’t recall anyone referring to the daily movement of the stock market as part of “green shoot theory.” Green shoots has to do with the macro environment (IE the real economy, not the cartoonish world of Wall Street).
2. Barry called yesterday’s ~200 point gain on 5.7 million shares a “low volume boom.”
3. Barry called today’s ~200 point decline on 5.7 million shares a “whimper.”
In the real world, 5.7 million shares = 5.7 million shares. If you call 5.7 million share rise a “low volume boom,” then why isn’t a 5.7 million share loss a “low volume drop?”
But forgive me…I don’t live in the uber-bear world that y’all live in where bad is bad, good is awful, and wonderful is death warmed over!
May 28th, 2009 at 2:08 am
tracking the value of tarp investments; the Ethisphere TARP Index:
http://ethisphere.com/ethisphere-tarp-index-report/
saw it on an article in the Nation:
http://www.thenation.com/doc/20090608/kroll
May 28th, 2009 at 2:12 am
@Franklin411
Re: Green shoots has to do with the macro environment (IE the real economy, not the cartoonish world of Wall Street).
A few words about your REAL ECONOMY…
I don’t know what your definition of REAL is…(or ISN’T as the case may be)
– an economy that is losing over a half million jobs a month, well, that’s REAL but doesn’t sound too healthy…
- the necessity to spend $2 trillion (and tax citizens later to stimulate growth) doesn’t sound like a REAL economy.
- the necessity to maintain almost a ZIRP across the globe isn’t REAL in historical terms
- The US government tearing up contracts in the capital structure in automakers and effectively re-writing arrangements isn’t REAL CAPITALISM
- neither are CRAM DOWN MORTGAGES “for the good of all”
- States going bust isn’t REAL HEALTHY
I could go on with this, but all I want to do is point out that any of the “green shoots” that might be visible are ONLY visible due to “artificial” intervention…(artificial money being printed and pumped into a system to make it look like its alive and well)…That can work for awhile (and has the appearances that it IS working to those who allow themselves to be “spoon fed”)…Others aren’t so gullible…
Let me give you a stupid example…
Suppose I lend you $200,000 to build a restaurant…You go to town and hire a designer, then hire a staff, print menus, the whole works…You put up a sign outside the restaurant (while it’s being built) saying COMING SOON…You do all your REVENUE analysis and try to anticipate what your profits are going to be and how many customers you can service…
The ECONOMY in the building process is vibrant (lot’s of people working, doing their jobs, the decor looks great, food tastes wonderful…)…
Then you FINALLY open your doors and nobody comes (or something crazy happens like someone gets a rat in their food on the first day and you get a bad reputation)…
The REALITY expressed by many bloggers here on this site is that people are basically TAPPED OUT financially…There’s NO MORE MONEY Franklin…Balance sheets are TOAST…yet this is an economy that needs people to BUY THINGS to survive (and it needs them to do that in abundance)…
Until people HAVE MONEY again (and don’t need credit to buy things), things are going to be tough…The government simply can’t fill that gap…
May 28th, 2009 at 2:58 am
Okay, I have one to wrap your brains around:
At what point do exploding mortgage (and, while we’re at it, credit card) defaults become a de facto Rent Strike?
What is a rent strike?
“An organized protest on the part of tenants in which they withhold the payment of consideration for the use or occupation of property from their landlord until their grievances are settled.”
(Hat tip: “Rent Strike” – http://law.jrank.org/pages/9770/Rent-Strike.html#ixzz0GmRx7jVG&A)
On a fundamental as well as a personal level I believe what we are staring at right now in the US is the collapse of faith in the financial system that we all took for granted just a few short months ago. And the whole concept of a “Bailout Nation” in which government rushes aid to the architects of our collapse feeds into a sense of betrayal and hopelessness in millions of citizens. THIS is what is now propelling a fresh wave of defaults on all types of debt, every bit as much as job losses and the standard issue economic factors.
I think so many of us are waking up to the reality that we don’t actually own anything–quite the contrary, we are slaves to our houses. Our expenses are mounting (they have been for years, we just didn’t notice) and our income is declining (often literally overnight).
This sensation is disconcerting in the extreme, and yet who will listen to us? Who does Obama listen to? Who did Bush listen to? A bunch of Goldman Sachs thieves turned Treasury Secs and Car Czars. Rattner, with his $200+ million dollars dictating terms to Chrysler and GM–and he never bothered to divest of Cerberus? What kind of open self-dealing are we to tolerate? The more you know, the more maddening it becomes!
So we stop sending our checks, and the world doesn’t end. In fact, there is power in the act. It may be suicidal, but not if millions do it all at once. We are making the power brokers nervous. Jamie Dimon worries about his 24% cc default rate. Good. All of Washington is paying attention. Good. More join the strike every day, and there was never even a memo, a flyer, a website. It’s like magic.
It’s the ultimate weapon of the weak. And I think it’s happening right now?
What do you think?
May 28th, 2009 at 3:06 am
Just for fun I googled “rent strike” and found this steaming fresh piece from tomorrow’s news by the political cartoonist, Ted Rall.
http://www2.hernandotoday.com/content/2009/may/28/time-tax-and-mortgage-strike/
Must be something in the air. May Day came late this year.
May 28th, 2009 at 3:09 am
@Marie Antoinette
Action like that certainly wouldn’t surprise me…
I think it would take another GOING DOWN HARD event to precipitate what you describe…
It was posted earlier in this thread that Americans recovered too quickly from the FEAR & PANIC they felt in the economy just 6 months ago…Someone equated it to 9/11…After 9/11 everybody was all patriotic for a short time but the action to CHANGE THEIR LIVES didn’t live on…
In this economic crisis…the second the market bottomed in March, next thing you know it’s an all out media blitz talking about green shoots…In two short months NOTHING HAS FUNDAMENTALLY CHANGED with regards to the economy, but people are almost starting to act as they always had before…
But I think they’re hiding something…It’s like every individual KNOWS he or she is on borrowed time, but they have nothing in their power to change their own fortune…So they hope someone will bid up stocks, or buy their house, or not fire them…the clock will run out when the clock runs out (when they get that pink slip, or foreclosure notice, or call from the collection agency)…
So the WEIGHT of everything is just going to grind them down…I’m not really sure anymore that there is going to be a “hair on fire” panic, just a slow agonizing grind…
May 28th, 2009 at 3:13 am
…and that’s what ZOMBIES look like…
…our President has decided that the best course of action for America is to create ZOMBIE BANKS and ZOMBIE CAR COMPANIES, ZOMBIE INSURANCE COMPANIES
In short…he is turning us ALL into ZOMBIES…That’s change you can believe in…
May 28th, 2009 at 3:16 am
…A zombie is a mythical creature that appears in folklore and popular culture typically as a reanimated corpse or a mindless human being.
Stories of zombies originated in the Afro-Caribbean spiritual belief system of Vodou, which told of the people being controlled as laborers by a powerful sorcerer…
May 28th, 2009 at 4:14 am
If you want a dump, it would help for those trying to pick a top to give up. Picking tops is one of the most difficult things to do. Short, cover, re short, cover . Just give up trying to catch the very top. If you are bearish, it is good to see shorts becoming nervous longs. This is a real mind f.
May 28th, 2009 at 8:32 am
Visteon goes BK. The entire auto/parts industry will have to go BK or recast their UAW wages & benefits (at least) to stay competitive with their bretheren who go BK. Definitely green shoots here!
http://www.nytimes.com/aponline/2009/05/28/business/AP-Visteon-Bankruptcy.html?th&emc=th
May 28th, 2009 at 10:30 am
Hi,
First time poster. I have been an avid reader of several of you and am interested in signing up for Andy T’s daily commentary/analysis. Can anyone please advise what his email address is and/or how to sign up?
Thanks,
HRux
May 28th, 2009 at 11:24 am
this whole “green shoots”/”garbage chutes” thing has lost its handle. piecemeal predictions are uninterpretable without corralling them all within one context. admittedly the cherry picking of stats — a little shoot here, a little shoot there — is the whole point of the argument, but why let a bad argument suck you in?
the missing piece? we live in a bubble culture. there is no cultural shift toward sustainability, conservation or downsizing. there is no forward looking accountability. babies continue to spew out of the gonads of apes. ape egos continue to pivot on the opinionated consumption of disposable things. the fundamental global mechanism of wealth generation through cheap money and resource depletion is still intact. the current market behavior only suggests to me that a new bubble is trying to form, and as volume increases it will soon begin its inexorable rise. ape wealth wants to breed just like ape gonads do.
posters here point to this or that theory, or this or that “economic fundamental” to predict a market crash. hello! what the hell did fundamentals have to say about the past three decades of bubble on bubble?! where were fundamentals in the dot com years, or the subprime years? and how about those friedman/greenspan theories of free market money! fundamentals and theory have shown themselves to have a very weak connection to the bubble mechanism. probable explanation: bubbles have little to do with fundamentals or theory.
May 28th, 2009 at 2:25 pm
Hrux — you can contact Andy T through AndysTechnicals at gmail dot com
He does some berry berry good stuff…….
May 28th, 2009 at 2:46 pm
and the market goes up and up ….
May 28th, 2009 at 4:06 pm
For those that keep saying that the recovery is upon us, I ask the question: “What is going to drive this recovery?” And I can’t get an answer beyond the notion that the stimulus will turn things around.
The US Consumer is critical to any turnaround and the reality is that the U.S. consumer has been propped up since the last recession by low interest rates and mortgage equity withdrawals. In fact, GDP growth since the last recession would have been – at best – 1% were it not for MEW. See http://www.wikinvest.com/wiki/Mortgage_Equity_Withdrawal_(MEW)
Now MEWs are non-exisitent and many homeowners are under water. What’s going to drive consumer spending and corporate profits now? Anybody? Anybody?!