Sunday Night Open Thread
By Barry Ritholtz - May 3rd, 2009, 9:24PM
OK folks, a busy week ahead –
Whats on your minds? What are you paying attention to?
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Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
May 3rd, 2009 at 9:29 pm
Here in my potemkin village (Shenzhen) there doesn’t seem to be a recession or pig flu. The rest of the country I can’t vouch for. I don’t really understand how China’s GDP is forecast to grow 6-8% this year if exports drop 30-40%.
May 3rd, 2009 at 9:44 pm
Because China, like Indonesia where I live, has an economy comprising 70%+ domestic consumption, more if you include the “Grey” economy? Despite falling exports, both economies will grow in mid single digits. Also remember in the case of China’s exports, the net value added is VERY small. The profit mostly accrues offshore to MNC’s manufacturing in China via transfer pricing of raw materials, management fees and trademark/licensing agreements, after having closed manufacturing facilities in the US.
To answer Barry’s question,I’m thinking about why new regulations (Other mark to solvency) are taking so long? America has a short memory and the longer things get left the more likely the “Venal Bankers” (To quote Charlie Munger) are to weasel their way out of reform in favour of more “Self-regulation”. We all know where that got us.
May 3rd, 2009 at 9:48 pm
Just had dinner with my brother who’s a “pull the lever” democrat. Obama is apparently a master marketeer. My brother said Bush’s deficits were larger than Obama’s because of all Bush’s off the books tricks.
[full disclosure. i'm not a dem or a republican. i think they're both nuts.]
More near term. After a huge March and April. I plan to short all opening gaps up in May and close at the end of the day. If May turns out to be a +8 to +10 percent surge (like March and April), I start buying puts in June with both hands.
May 3rd, 2009 at 9:54 pm
whats on our minds? This crazy rally thats going on for ~7 weeks now, without any higher low being established yet. There is surprising strength in the market amidst all the news/events over last couple of weeks. Looks like the market will see 1000s after the next higher low (in 700s) established, before it finally sees 600s/500s sometime later this year. That, i hope will be the bottom.
May 3rd, 2009 at 9:55 pm
developing story about Perella Weinberg being strongarmed by the white house…… White and Case are out in front of the story but it could get interesting. This combined with the Ken Lewis claims start to paint a pretty unsavory picture of WH tactics. The Rahminator is NOT to be messed with.
May 3rd, 2009 at 10:07 pm
This turned out to be interesting. Now I am wondering if it is so.
The White House Threatened To Destroy Perella Weinberg’s Reputation
http://zerohedge.blogspot.com/2009/05/white-house-threatened-to-destroy.html
May 3rd, 2009 at 10:08 pm
repost for humor…
http://researchnews.osu.edu/archive/homeequity.htm
rt
May 3rd, 2009 at 10:09 pm
philcassens,
The Perella Weinberg story and Mr. Lauria’s allegations recall the Rick Santelli incident a couple of months ago when Robert Gibbs called him out during a WH briefing. I remember at the time thinking that Gibbs’ response to a question about Santelli’s “tea party rant” seemed a little scripted. Way too smooth. Gibbs’ usual MO is verbose hemming and hawing, not the well-crafted response he gave. Remember, Gibbs had with him (why?) a paper copy of the bailout plan which he held aloft like some kind of flea-market retailer hawking the latest technology in stain removal. Then, too, was Gibbs’ little joke about having a cup of coffee with Santelli — “decaffeinated” (hearty laughs all around). Way too good not to have been planned beforehand.
In light of recent allegations with Chrysler’s creditors, I wonder if the Santelli thing isn’t part of a larger pattern of targeting Obama’s critics through the WH press corps. Of course this is speculation, but still, it would be worth looking into (no doubt the WH press corps will jump right on this and investigate it fully).
May 3rd, 2009 at 10:10 pm
More pain ahead for the bears in the short term. I can feel it in my bones. Spring has sprung and there’s hope in the air, if not delusion. This could take a while.
May 3rd, 2009 at 10:11 pm
Residential real estate prices are just starting to go down in rural areas east of Dallas. Call me crazy but I am buying, because life circumstances are what they are, not because it is an investment. I believe there is still a long way down to go. The rally is all smoke and mirrors combined with utter denial. Unemployment is going to mess with this so-called recovery. MSM is going to take a hit soon, that bubble is fixing to pop too.
“Dow 3600″.
Thanks Jack, Barry and all for your informative and insightful comments.
May 3rd, 2009 at 10:16 pm
sex?! no, okay, champagne? wine? food? music? oh, politics… i will try to come back with something pertinent. wish i could post the photo of my arugula, smoked salmon, avocado, salty french crumbled cheese, and black pepper salad, drizzled with 18 yr old balsamic vinegar and luscious, organic, extra virgin olive oil salad.
May 3rd, 2009 at 10:22 pm
karen:
When in doubt, go with sex (or make it plausible by going with sex, drugs/alcohol, and rock and roll).
May 3rd, 2009 at 10:27 pm
Damn Karen
I must be getting old, that dinner sounds sooo goood.
May 3rd, 2009 at 10:27 pm
Meredith Whitney on the current bank status esp BoA:
http://www.youtube.com/watch?v=ZEEPbhFe2ZI&feature=player_embedded
May 3rd, 2009 at 10:28 pm
OK, i’ve come up with some relevant topics. $gold… i’m one of the few that has kept the faith, so to speak. but then, if you been in since under $300, you know there is no stopping it. inflation adjusted, we are looking at $1650 or so from the 80 peak… that’s why i had such a hard time with Andy’s retort about you don’t have a r h&s at the top of a move… we are nowhere near the top… 2 other really important commodities are $copper and $wtic… yup, on on the inflation train. : )
May 3rd, 2009 at 10:29 pm
I’m watching government bonds. Major breakouts in yield across the curve last week. It will be interesting to see how far these breakouts extend, especially in light of the massive issuance next week (and the week after that, and the week after that one…).
If/When the bond market calls BS to Bailout Nation and starts to dislocate we will have our come to Jesus moment not just in the equity markets, but as a a nation.
I’m also watching for an uptick in google searches for “bond vigilantes”. That will be an early tell if this story is gaining momentum.
May 3rd, 2009 at 10:32 pm
I’m finding Call premiums to be pretty lush..the O.I. in the Calls seems to be getting a little too well Marbled, as well.
as a +, with i-rates creeping up, Rho is fattening.
something tells me this is the week to fade Calls more aggressively, a little DOWn-side would be a + for BenBer’s impossible task, as well..
~~
past that, anyone make a habit of fading Puts to initiate Long positions, and, really, if not, why not?
~~
karen,
speaking of Olive Oil, does any from Syria ever make it out to the W. Coast? the Syrian stuff around here is some of best of any, and, as another +, trades at a discount b/c most peep think OO only comes ‘from Italy’..
May 3rd, 2009 at 10:35 pm
Seems relevant.
http://www.mtvmusic.com/springsteen_bruce/videos/106385/glory_days.jhtml
May 3rd, 2009 at 10:38 pm
mark, nothing syrian that i know of, lol. you are esoteric to the extreme… on every subject!
doctormad mad an interesting post. i think we should take special note. But, i’m with Marcus, let’s just go with sex.
May 3rd, 2009 at 10:39 pm
Karen are you talking about the perception of inflation? Buffet mentioned it last week, but is it really coming anytime soon? I guess you are getting in the train before it leaves. This train will probably make a couple of more stops during the summer before it leaves. What are you using to ride the train?
May 3rd, 2009 at 10:39 pm
Did karen mention sex?
http://www.mtvmusic.com/zz_top/videos/34022/legs.jhtml
May 3rd, 2009 at 10:40 pm
@ Karen that salad sounds just like sex to me. I’m with you on gold and Oil. Looking for Cigar Butts as well. Earnings, I’ve decided, do count.
PS I’ve just finished reading The Snowball by Alice Schroeder. I highly recommend it.
http://www.amazon.com/Snowball-Warren-Buffett-Business-Life/dp/0553805096
May 3rd, 2009 at 10:40 pm
Perella Weinberg say they weren’t threatened:
http://dealbook.blogs.nytimes.com/2009/05/03/white-house-perella-weinberg-deny-claims-of-threat-to-firm/?hp
May 3rd, 2009 at 10:43 pm
This Floyd Norris blog entry caught my attention:
May 3rd, 2009 at 10:45 pm
As long as the bar continues to be set so low that anything constitutes a “surprise” to the upside, this market will continue to go up. It will continue to defy reality until it doesn’t. Who wants to be caught short right now with the feds manipulating everything about our markets and economy?
May 3rd, 2009 at 10:49 pm
Worries Rise on the Size of U.S. Debt
http://www.nytimes.com/2009/05/04/business/economy/04debt.html
The nation’s debt clock is ticking faster than ever — and Wall Street is getting worried.
As the Obama administration racks up an unprecedented spending bill for bank bailouts, Detroit rescues, health care overhauls and stimulus plans, the bond market is starting to push up the cost of trillions of dollars in borrowing for the government.
Last week, the yield on 10-year Treasury notes rose to its highest level since November, briefly touching 3.17 percent, a sign that investors are demanding larger returns on the masses of United States debt being issued to finance an economic recovery.
Looks like the exit door has been opened.
May 3rd, 2009 at 10:49 pm
phx, i lived in nj from 4th to 12th. my father was born in belmar, nj… too funny.. i never got into springsteen much preferring steely dan; but zztop i liked in the 10-11th grade! loved your pick! they say about me, “who’s the girl with the legs?” not much else going for me, tho. lol.
BR probably wants us on topic, however.
May 3rd, 2009 at 10:59 pm
simon, i can’t read that book but here’s a mineweb article for you with a buffet (i’m not a fan) mention:
http://www.mineweb.co.za/mineweb/view/mineweb/en/page34?oid=82710&sn=Detail
the salad, the salad, i had to have two bowls full… i’m still numb : )
May 3rd, 2009 at 10:59 pm
BR probably wants us on topic, however.
on an ‘open thread’? if you can devine that, you’ve something else going on other than, merely, ‘legs’ ~!
karen,
here’s some background: http://www.oliveoilsyria.com/history.htm
LSS: remember, as well, something had to go East on the Silk Road..we owe a lot to Aleppo..
Jeff,
getting paid to go Short gets covered with a simple Buy of the underlying..as you know, now especially, it’s R v. R ..
May 3rd, 2009 at 11:00 pm
First, probably going to have to take the middle schooler to see the new Star Trek in Imax because, um . . . because she really wants to see it. ;)
Second, Pakistan.
WGBH now has 94 of its “Frontline” documentaries available for online viewing:
http://www.pbs.org/wgbh/pages/frontline/view/
I highly recommend “Medicating Kids” [Mark -- see Nosferatu in action :) ]
WRT Perella Weinberg and general interest:
A very UN-bullish column from Bob Lenzner on 5/1 with the “insidious Steve Rattner” in his crosshairs:
http://www.forbes.com/2009/05/01/bank-of-america-personal-finance-investing-ideas-crony-capitalism.html
May 3rd, 2009 at 11:00 pm
Last week, I noticed some bizarre movement in the USD. I’ll keep monitoring that.
The government has been timing its bailout/”everything is fine” announcements and stringing them along with optimal time in between each to sucker in the most retail. The “stress test” results have been “delayed” to Thursday. I think it will probably be a good time to reload those shorts (sort of buy the rumor, sell the news).
I’m staying heavy in cash and Ag commodities. Maybe I’ll pick up more MCD for my retirement account to satisfy the buy and hold impulse.
May 3rd, 2009 at 11:01 pm
Interesting stuff from SeekingAlpha:
http://seekingalpha.com/article/134633-long-term-treasury-yields-likely-to-rise-pressuring-dollar-lower
“Long term Treasury yields were low because there was a flight to quality and because inflationary expectations were low. Unless there is another major shock to the system, I believe that the flight to quality is over and is in the process of being reversed. In addition, I believe that the Fed will continue to monetize the debt in increasing amounts, as the Fed also emphasized in this week’s minutes that they will “stay the course” in the fight against an economic collapse. For both of these reasons, I feel that pressure will continue for long term Treasury yields to rise and for the value of the dollar to fall.”
John Mason
May 3rd, 2009 at 11:03 pm
I’m still thinking about the battle scene in Braveheart. . . Hold, Hold, HOLD, HOOOOOLLLLLD, NOW!
Follow the line of least resistance. Follow the trend. The trend is your friend. -Jesse Livermore
Right now that trend is still going up. I am going to kill longs soon before it switches. I’m thinking May 21 before labor day weekend for a top day at around S&P950.
If and when the trend reverses, I was thinking of establishing a short position on an UltraLong ETF such as SSO, but may just stay cash and Tips.
My premonition of one of the Big 3 going BK has finally come true. . . the implications involved in many more people losing their jobs portends my next prediction of S&P474 beginning in October to eventually come true. I just hope I’m not one of the Jobless, or I’ll get foreclosed on and will be moving back in with my parents at 29. Oh well, life goes on.
If and when the S&P 500 hits 500, I’m going to begin establishing long positions in high margin, high ROE, dividend yielding stocks, with stable demand for their products, payout ratio of less than 50%, and low debt ratios compared to current assets and NI. Watchlist includes ADM, BAX, BHP, BDX, BP or CVX, GSK, JNJ, MON, MMM, PCU, SIAL, UL, VIVO.
May 3rd, 2009 at 11:03 pm
Petersticks, you are new here, and i barely caught your post.. I have too many nicknames on BR’s site to mention, but as a minimum, i am the token mascot inflationista.
May 3rd, 2009 at 11:04 pm
@karen: Used to go to NJ a lot on business. Morristown, Holmdel, Basking Ridge, etc etc etc. Always enjoyed the Steamers, soft shell and getting down to Asbury Park, there was a small bar there that was quite the ….. Also used to really enjoying getting to Princeton when I could. The Narragansett (sp?) Inn with the Norma Rockwell mural. Was really depressed last visit when I discovered they had remodelled and the Rockwell was no longer behind the bar where it was intended.
My son lived in Ho-Ho-Kus briefly until he ran away from home and back into the Soho area of the Big Apple.
It is on topic kind of because NJ shows a lot of the signs of what’s been going on with the economy for decades. Glory Days is not a recent song. A lot of Springsteen’s work is about the changing economic and manufacturing scene in America.
Belmar does not ring a bell. Where is that?
May 3rd, 2009 at 11:05 pm
Hatton got crushed by Pacquiao last night- also-
as a 180 degree turn from Karen- I had a hamburger w/ guacamole onions and bacon- oh yeah- and lettuce- pretty good- had no crumbles of any kind- greasy- just the way I like it
May 3rd, 2009 at 11:06 pm
I’m not particularly a fan either. That’s why I recommend the book. It tells a story, is very revealing, informative.
I’m a fan in as much as he’s someone who you can learn from. His life encapsulates a fair fraction of American corporate and some social history. It’s intriguing.
I mean I could never love an awful 90 year old woman because she was a good businessperson who make a lot of money selling furniture. Buffet could. Also I spend far too much time with my family to achieve significant business success. On the other hand what I do have I’d like to make work for me and I’ve still got almost half my life ahead of me. Plus investing is an intriguing enterprise that engages you with the world in a meaningful way. That I like.
May 3rd, 2009 at 11:09 pm
oh, phx, belmar is next to Asbury Park! got it, got it, and you are so right on your NJ as a bellweather. amazing state. most of it is pine barrens.. 25% is chemical and oil… i left at age 18, too heavy for my young heart.
May 3rd, 2009 at 11:09 pm
@DiggedyDan: My smart friends think the market is going to cook until the second half of this year and then the wheels will come off. A Big 3 BK would be just the ticket.
May 3rd, 2009 at 11:17 pm
@ Karen, I followed that minweb link. Thanks. Oddly the author was one of my first twitter followers, perhaps because I subscribe to minweb, he was making updates during the BRK meeting.
May 3rd, 2009 at 11:18 pm
phx, sounds right to me.
May 3rd, 2009 at 11:19 pm
@Karen: I never knew that the good stuff Balsamic is syrupy until I went to northern Italy about 10 years ago and got yelled at by a restaurant owner for asking if salad was served first. “Not in my restaurant!” he snarled and got all red-faced. After that I started paying attention to salad so I wouldn’t get yelled at again.
May 3rd, 2009 at 11:19 pm
Got it. Now that you mention it I recall Belmar as being just north of Asbury Park. Thanks.
May 3rd, 2009 at 11:21 pm
The Swine Flu has gotten out of hand people! The cases are piling up, unfortunately there has been no deaths or convictions, but hopefully it’s not too late!
The list of virus breeders and their vehicles is long and disgusting:
George H.W. Bush
Slick Willy Clinton
Hillary Clinton
Robert Rubin
Phil Gramm
Alan Rand Greenspan
Henry Kissinger
George Dummy Bush
Dickless Cheney
Donald “Tamiflu” Rumsfeld
Robert Gates
Condi Rice
Hank “the Toilet Tank” Paulson
Colin Powell
Helicopter Ben Bernanke
Barrack Insane Obumer
TIMMEH! Geitner
Larry Summers
John “the Stain” Thain
Stan O’Neil
John Mack
Dick Fuld
Hank Greenberg
Jim “ADHD” Cramer
James Cayne
James Dimon
Vikram Pandit
Kenneth Lewis
Barney “Keep Away from the Kiddies” Frank
Warren “the Oracle of TARP” Buffet
Paul Volcker
Chris Cox
John Stumpt
Lloyd C. Blankfein
Ian McCarthy
Angelo Mozilo
Joe Cassano
Frank Raines
Kathleen Corbet
Richard N. Haass
Richard Holbrooke
Their Vehicles:
CNBC
Bloomberg
CNN
BBC
FOX
CBS
NBS
ABC
Remember, the government is not the cure, it is the mucus that keep the disease alive….
May 3rd, 2009 at 11:24 pm
re Warren Buffett
The man obviously knows how to do money, but when watching his interview? with perky lil Becky Quick a month or so ago, he came across as a doddering old fool.
Everything was compared to Pearl Harbor in such a nonsensical way, as to be somewhat absurd.
Food for thought.
What if he is the next Bernie Madoff?
Farfetched?
If somebody had written a book five years ago and named all the current players, all the current situations, etc. He would have been transferred to the nuthouse.
What do the next five hold in store for us?
May 3rd, 2009 at 11:29 pm
The big Kahuna story is the treasury market and how it is going to force Ben’s hand. Watching with popcorn. How it unfolds will dictate the other markets.
May 3rd, 2009 at 11:33 pm
Stuart-
are you talking about QE?
May 3rd, 2009 at 11:35 pm
@ronin:
Obviously, government is not the cure. Crime is the disease and Cobra is the cure:
http://www.youtube.com/watch?v=4onSR2v0pys&feature=related
May 3rd, 2009 at 11:37 pm
Perhaps I missing something but it appears to me the Fed is trapped on many levels. If they induce a flight from Treasuries into riskier assets (e.g. stocks), which is what seems to be happening now, then interest rates will rise, so the Fed will have to do more QE in order to keep interest rates low for mortgage re-fi’s, which will weaken the dollar and probably spur inflation? Am I getting that right, karen?
I’ve been slowly buying TIPS and GDX for my longer term holdings in preparation for this.
May 3rd, 2009 at 11:37 pm
Listening to Pandora (right now) is the cure…….
May 3rd, 2009 at 11:39 pm
I wonder if his month’s option expiration will have an upward crescendo to burn the shorts for good, or it’s time for the usual suspects to reverse course and catch the bulls who have been enjoying the upward move.
I know that the bears are the hated bunch but GS will squeeze grandmas widows and orphans if that were profitable.
I also bet that Obama’s checks the stock market on a regular basis.
The question I have is which hole is Bernanke going to fill first? BANKS, BONDS, STOCKS, CRE, GE, GM, CHRYSLER, INSURANCES, THE FED?
In my humble opinion, the big bang is near. It would be deafening. Starting in Eastern Europe. Yes I did get the phone call.
Hasta maňana.
May 3rd, 2009 at 11:46 pm
this is nice: “”In late March, as public outrage over bonuses paid to executives of bailed-out financial firms exploded, Citigroup CEO Vikram Pandit met with Senate majority leader Harry Reid. Accompanying the under-fire CEO to the meeting was Jimmy Ryan, one of the banking conglomerate’s top in-house lobbyists. Ryan was a familiar face to Reid and his staff. Up until 2003, he was the Nevada senator’s chief counsel, and since then he has remained close to Reid. The senator, according to Reid spokesman Jim Manley, merely discussed with Pandit the financial state of Citigroup and the economy in general. If Pandit and Ryan had hoped that Reid would take action to benefit their company, Manley maintained, this effort was unsuccessful.
“Whether or not Ryan was able to win any sympathy (or anything else) from his old boss, the episode highlights one aspect of Washington bailout politics: Financial firms seeking big bucks and favorable terms from Congress and the White House are deploying Capitol Hill aides turned lobbyists to win favorable treatment from the congressional lawmakers who are managing various aspects of the financial recovery—overseeing or appropriating nearly $3 trillion in spending and lending. And some lawmakers—including Sen. Chris Dodd (D-Conn.), the chairman of the Senate banking committee—have declined to disclose whether they have had contact with former aides now lobbying for the financial sector.
“Corporations hiring departed congressional staffers as lobbyists is a ho-hum practice on K Street. But the stakes are particularly high when these Capitol Hill vets are sicced on programs and legislation that are crucial to the country’s financial recovery and that involve massive amounts of government spending. In the past year, top bailout recipients, from Goldman Sachs to Bank of America to JPMorgan Chase, have dispatched more than 100 past congressional staffers and ex-government officials to shape the bailouts to their liking. This crew of well-connected lobbyists includes ex-employees of the congressional committees on banking, finance, and commerce; one-time aides to Democratic and Republican leaders; former Treasury officials; and a past aide to Rahm Emanuel, now the White House chief of staff.”
http://www.motherjones.com/politics/2009/04/revolving-door-bailout-edition
May 3rd, 2009 at 11:47 pm
@Foghorn:
Re: Buffett…that same thought crossed my mind. Two points…why is Buffett the only “investor” to my knowledge who has been able to structure his portfolio like he has? Is there another publicly traded holding company the size and scope of Berkshire, so dependent on one man?
Perhaps Buffett is just a statistical oddity…given a long enough timeframe and a room filled with monkeys typing, one will randomly produce the entire works of Shakespeare…maybe the debt fueled bull market of 1982-2007 had to produce a legendary investor and that guy happened to be Buffet.
May 3rd, 2009 at 11:50 pm
London Calling:
Weather great here for those on the Gulf Coast. Highs in the upper 50′s. Everything cheaper thanks to the collapse of the Pound and airfares. Still not a cheap city, but better. Only $1500 for a week in a moderately nice place. Full day at the Britsh Museum and Courtald Gallery. It’s a great place. Woke up and it’s 4am here.
Anyways, for those who think China is the bees knees (in keeping with the WWII theme), here’ s Michael Pettis on how it’s just like hereL: lots of government action to make things look good, but the money not going to productve use. As here, government direction can’t really duplicate a healthy market, although it might temporarily produce some good-soundng numbers. The Potemkin village is gonna burn down eventually.
http://mpettis.com/2009/05/distortions-in-the-chinese-lending-environment/
May 3rd, 2009 at 11:50 pm
Speaking of Steely Dan on topic:
http://www.youtube.com/watch?v=UVQKiqCZ9No
There was a great band in Arlington Heights, IL named Katy Lied, as a Steely Dan knock-off that included some of the Steely Dan crew. It was a total blast to catch them in a small pub setting complete with a killer horn section.
Apparently they are no longer around and a British group is using that name now:
http://www.myspace.com/katyliedband
Most consider Katy Lied Steely Dan’s best album. And most revealing. Quite a story I’m told.
May 3rd, 2009 at 11:51 pm
“are you talking about QE?”
Yes, but more so the “head wind ” effect on those efforts by a continuous tsunami of new issues coming to market.
May 4th, 2009 at 12:00 am
I’ve often wondered what would happen if the treasury auctions failed- the Fed obviously the buyer of last resort- but really- how long could that continue
May 4th, 2009 at 12:09 am
euro repatriation, similar to yen and dollar repatriation seen last fall. should substantially strengthen the euro vs dollar and give a false inflation signal.
May 4th, 2009 at 12:11 am
off topic. barry, can you add disqus comments?
~~~
BR: Its an open thread — nothing is off topic!
May 4th, 2009 at 12:11 am
Steve,
Can’t answer your points.
Was really looking forward to listening to the great oracle of omaha.
Guess he is just a member of the lucky sperm club.
May 4th, 2009 at 12:19 am
re: inflation — eventually, yes. This year — prolly not. Bernanke needs to print a lot more money, maybe a trillion over the $300B (which he has not finished printing yet). The continuation of the global economy shrinkage will keep commodities in a shallow glide lower (including gold, barring any unforeseen scary stuff that momentarily spikes the barbarous relic).
The reflationistas are gonna have as rough a road as the permabears have had so far this year.
Just an observation, Obama is no different from any other president in recent memory — job one is to get re-elected, and the entirely of the first term will be reactive crap designed to float the status quo and not bother to address ANY of the really serious problems in the system. That’s why the permabears and the reflationistas will be frustrated. We’re just drifting, building creds with the banksters so they will back his play for re-election in 2008.
The water torture continues.
May 4th, 2009 at 12:22 am
I meant 2012. brain is broke.
May 4th, 2009 at 12:24 am
Phx, Asia was my favorite by Steely Dan… and then Fagan went on to do Nightfly. Also great.
9:30 Pacific Time is my bed time… can’t wait for tomorrow.. : )
May 4th, 2009 at 12:34 am
I think we’ll remember this rally like the oil run last year.
$100/bl, really? well ok
125? that’s crazy
$135 I’m in
$145 I’m rich . . . hey, what’s going on?
May 4th, 2009 at 12:35 am
On New Jersey, isn’t it now the richest state in the nation? Interesting qualification for bellweather…
May 4th, 2009 at 12:48 am
You all wish you made as much sense as Peter Schiff:
http://www.youtube.com/watch?v=4IBD0W5En2E&feature=channel_page
~~~
BR: He may make sense, but he was down 60% or so according to the WSJ and Mish:
http://globaleconomicanalysis.blogspot.com/2009/01/peter-schiff-was-wrong.html
http://globaleconomicanalysis.blogspot.com/2008/11/peter-schiff-hugely-right-enormously.html
May 4th, 2009 at 12:59 am
Really curious to know who exactly is behind Zero Hedge and what their goals are.
May 4th, 2009 at 1:02 am
@constantnormal
spot-on analysis of Obama and the Banks. They will drag this out well into summer, perhaps beyond, before “deciding” to do anything about the banks except to provide the booze for the Zombie Dance Party. As others have mentioned, however, the breakout in yield on the 10-year Treasury and the problems in Eastern Europe (haven’t gone away, just no news for now) will likely lead to another “crisis” situation. How will they do then? Unemployment, pension shortfalls (probably later rather than sooner) and ARM resets (again, watch the bond market) will all likely be a problem for 2012.
Crazy, crazy world.
May 4th, 2009 at 1:04 am
“WHAT will they do then?” (and “How”)
May 4th, 2009 at 1:09 am
@Outlier: NJ is a real dichotomy. PArts of Northern NJ are very much a luxury suburb of Wall Street, as in Saddle River. And NJ has been replete with a lot of hi-tech, thanks mainly to AT&T and Bell Labs having huge facilities there. Well, they used to anyway.
But there used to be a lot more manufacturing in NJ. The area of Asbury Park, Springsteen’s home town, and other areas used to have a lot more. It went off-shore or died.
Bellweather, perhaps in the sense of overlay. Manufacturing replaced by hi-tech, information, and financial. But even those are getting tired.
May 4th, 2009 at 1:23 am
I just spent the last few weekends reading up on 19th century France, the French revolution, Napoleon I & III etc. Fascinating study. It actually all started here when someone referenced Marie Antoinette. I looked her up on wiki and got hooked from that point forward. I’m up to the third republic at this point. The great thing about Wiki is all the off shoots you can take. It can get absurd but you can get lost on topics like the Crimean war, Devil’s island, France’s conquest of Algeria or 1848, the year of European revolution. A lot of what we have today was either shaped or a reaction to what was going on in the 1800′s and it is a great time reading about the second strongest power on the face of the earth at that time and how they struggled with power, democracy and growth
Two points stuck with me. The first revolution started because 2% of the population controlled most of the wealth and power in the country. That is not very different from today. It is amazing how the more things change the more they stay the same. Another thing that stood out was Napoleon’s military success. From what I understand he was one of the first military leader’s in Europe to reduce military nepotism and establish promotions based on merit. This allowed the better officers to rise to the top making his army a lot stronger IMO
Also, a lot of 19th century France’s success was due to Louis XIV and all his R&D in the century before
One of the best parts of the study is all the great art that surrounds the time. Since photography didn’t get a real foothold until about 1850 or so most of the stories were illustrated by painters
Here is the study and the second link is a great reference tool
http://en.wikipedia.org/wiki/French_Revolution
http://chnm.gmu.edu/revolution/browse/timeline/
May 4th, 2009 at 1:56 am
I’m watching Eastern Europe as a bellweather for what will hit Western Europe this summer. Two of Swedens top banks, SEB and Swedbank, hold 80% of the mortgage paper in the Baltic States according to recent coverage I’ve read. It looks like all three Baltic nations – Lituania, Lativa, and Estonia – are teetering on the brink of becoming failed states. A blog by an American-Latvian journalist living in Riga is my source material for the “feet on the ground” info of what is unfolding there – http://thoughtsfromlatvia.blogspot.com/ . More info on the Baltic crash can be found in stories like this one – http://www.kyivpost.com/world/40449. According to a recent JP Morgon report, Sweden’s unemployment rate will top 11% in 2010. With a looming banking crisis on top of a crash in exports and very high unemployment it looks like an economic tsunami is about to hit the Nordic region.
I take the Nordic situation as a model for most of Western Europe. Swiss banks are also on the hook for a large chunk of Eastern European mortgages in place like Poland and Hungary as are many banks in the UK.
Spain is in utter economic freefall with Italy and Greece not far behind. France and Germany are sliding rapidly downhill as well. And we all know that the British Isles are in serious doo-doo with gilt auction failures and downgrades on government debt portending a deficit financing disaster scenario and rapidly increasing interest rates in the near future.
Since the EU makes up around 38% of world GDP (if memory serves) this is going to be one tough summer…for all of us.
May 4th, 2009 at 2:02 am
In a similiar vein to the home equity thread I wonder how buyers are currently buying in this market. I have been doing public record pulls for the last year and creating a scatter chart of demand:
http://effectivedemand.blogspot.com/2009/05/ventura-county-january-2009-loan-to.html
This is January for Ventura County, FHA is becoming increasingly dominant. Many borrowers are starting out in new homes with negative equity. The long term effects on the market will be lowered mobility and move up buying. I don’t think en masse FHA buying is doing anyone any favors but the powers that be are desperate.
May 4th, 2009 at 3:58 am
1.Re: Bank stress test. Ok here do your own due diligence. All regulated financial institutions are required to file quarterly financial information
2.For banks this report is formally known as the Report of Condition and Income but is generally referred to as the Call Report
3.So to find info about call report go here https://cdr.ffiec.gov/public/Default.aspx
4.So instead of waiting for stress test results and to be ahead of everyone else by Friday, do this
5.Make a list of the 19 banks, research latest report thru “Call report”
6.Rank the banks on a key ratio: (capital+reserves-nonperforming assets) / total assets.
7.This is tangible capital ratio after taking account reserves and writing off all nonperforming assets (past due 90+ day, nonaccrual & OREO).
8.Or total equity plus loan loss reserves minus nonperforming assets (past due 90+ days, nonaccrual and OREO) all divided by total asset
9.Here let me sum it up like this. Somone already ran the scenario thru. C came in at 6% & we know they need 10 billion. So let’s compare
10.There are 882 banks worse off than Citi, of which 137 have negative ratios and are, for all practical purposes, book-value insolvent.
11.What does that say about these other 882 banks? Oh sorry I forgot. How could I be so stupid. Of course! Bull market back! Banks safe!
May 4th, 2009 at 5:12 am
Hi there, I’m from Montreal, Quebec, so I’m paying more and more attention about the problems with the Caisse de Dépôt et Placements du Québec. In fact there’s an outrage going on here, because the truth is being covered about the loss due to asset backed commercial paper. It seems the Caisse invested a lot in commercial paper, 12,5 billions, 40% of all commercial paper bought in Canada, and half of it without any guarantee (série E). This contradicts declarations made by officials.
The new President Michael Sabia is controversial, he’s considered like an outsider from Quebec, he didn’t do very well with Bell Corporation (BCE), anyway he has a lot to do with the Caisse de Dépôt puzzle.
The ex-president Henri-Paul Rousseau who was in charge when the Caisse bought so much commercial paper is keeping is mouth shut, giving no explanations, he’s now working with Power Corporation. Mr Rousseau once declared: ” I manage the money of Quebecers and I will do it with caution ”.
Now we have a big mess here, our own financial mini-disaster, well I hope its not too disastrous, its hard to know the whole truth about it, and the Prime Minister Jean Charest has been slow to act.
The Caisse was considered a reference in investments here, ”If its good for the Caisse, then its good for me”. We’ll see in the next years if the Caisse will reestablish itself as a reference, and for that it will need more contribution from the paychecks of all Quebec workers…
May 4th, 2009 at 6:35 am
One of the people who had the piggy flu is an acquaintance. His experience was that it was just a nasty flu that lasted a week or so, not some horrible death-plague. Fever and chills and exhaustion and a cough, with a couple days of feeling lousy, a couple days of feeling really lousy, and then he got better. I haven’t seen him in person — he’s not nearby — but he reports that he’s completely recovered except for a bit of lingering cough, and it was “no big deal”. As he put it, it was just “bleah, I’m sick”, not “oh shit, I’m in danger”.
Anecdote does not equal data, and I am aware of past flu patterns that involve a mild spring flu manifesting into something much more severe later in the year, but I do wonder whether the present hysteria is much ado about not much.
May 4th, 2009 at 6:42 am
If Pomboy is correct in this week’s Barron’s magazine about the housing bubble contributing a froth of corporate profits amounting to 388% then we are looking at a dismal road ahead indeed. Is it any wonder the corporate insiders have been selling this huge rally?
Mr. Ritholtz, thanks for this website.
May 4th, 2009 at 7:08 am
I just replaced ZoneAlarm Internet Suite with Norton Internet Security 2009 and my computers work great and run faster now. On top of that, I bought a license off eBay for deep discount and saved a bundle.
Using ZoneAlarm, my Vista pc had become routinely unstable, but the XP ones still ran ok. Using Norton, my pcs run like new machines.
Security is augmented by Keyscrambler and Sandboxie.
May 4th, 2009 at 7:27 am
Well, did stick my toe back in this morning. Asia. Let you know.
May 4th, 2009 at 7:37 am
http://www.marketwatch.com/news/story/Smaghi-makes-case-against-EU/story.aspx?guid=%7BF00CCD2E%2DA365%2D4EF4%2D8EBB%2D634E9E37C1B0%7D
Smaghi makes the case against EU quantitative easing
“He voiced some very real doubts. They include whether an increase in the monetary base results in easier monetary conditions; whether banks would actually pass on the additional liquidity in the context of de-leveraging; whether inflationary expectations would rise; whether central banks would suffer large losses by buying a high prices and selling at low ones. “
May 4th, 2009 at 8:24 am
Since this is open thread, I might as well advertise this awesome blog: http://cnbcsucks.wordpress.com/
May 4th, 2009 at 8:28 am
LLouis:
Hi!
I just left Montreal last year for Ottawa. Could see the burst coming. I just got the feeling that Americans would print their way out of this disaster and that would force all other countries to increase their debt to GDP. Since out National Defence Dept has been underfunded for the last 20 years and we have natural resources to protect, I guessed that all the roads to money would lead to Ottawa.
I lived in the West Island and could see the construction sites popping up. My commute was already taking 45-60 minutes. But I have to say that winter smog, a new phenomenon, really hit a nerve.
If you look at what Rousseau accomplished at the Laurentienne, it is obvious that he would just replicate it at the CDP. He put all his energy on the treasury placing bets and leaving when all the pins were up. McManus was left with the broken pieces.
They’ll try to make him the scapegoat but those who hired him knew what they wanted. They wanted something for nothing. The Fonds des Générations is a perfect example… pure leverage.
Anyway, Quebec is going to have one huge bill to pay. And I get the feeling that the entire pension system will get totally nationalized. CARP is asking for it with 19% contributions!!! The lobbying is starting.
I still find it hilarious that they still believe in trying to beat the market… they are so huge they are the market! This leads them into all kinds of fads but they are just doing what everybody else in the world is doing.
When are people going to understand that making money as a shareholder is leveraging other peoples’ work and that when a huge % of the population is expecting others to do the heavy lifting for them, there are no huge returns?
If the whole nation is a shareholder, then that is socialism and the returns you get are equal to GDP growth. If you get more, it’s because the books are being cooked.
May 4th, 2009 at 8:38 am
For those of you interested in nj here is a good article on the foreclosures in the ‘affluent’ counties. Not a pretty picture. Also Ridgewood nj is home of the Valley Bank which the FDIC took over on Friday.
http://www.northjersey.com/business/realestate/Even_affluent_towns_see_rise_in_foreclosures.html
Also found out that the NYSE is building a data center in mahwah nj which will receive very high level of security.
I live in ramsey nj.
May 4th, 2009 at 9:01 am
Correction on prev post.. bank that failed was Citizens Community in ridgewwod nj.
Link to article on NYSE data center:
http://www.northjersey.com/business/news/Mystery_firm_rings_a_bell.html?c=y&page=1
May 4th, 2009 at 10:22 am
Lets see how long we can keep the OT going… anyone still short here? I definitely thought about clipping out of my QID, SRS, and FAZ… but I just cant do it.
Small initial position sizes make this a doable option… one of the best things I’ve learned over the past year.
Love Mark E. Hoffers idea of fading puts here to pay for a back door long entry…
May 4th, 2009 at 10:46 am
i bot ure on friday…
Cassandra is has a good post “Financial Gitmo” http://nihoncassandra.blogspot.com/
May 4th, 2009 at 10:56 am
Here’s something else! Did you know the Philadelphia Spectrum was to be demolished? I saw my very first concert there, Eric Clapton. So, The Dead played the last show on May 2. My brother was there with about 35 friends.
May 4th, 2009 at 10:58 am
I-man/Karen
still have some QID but mostly cash-
respective views on SKF (ot FAZ) going into this week- it would appear that the TBTF banks will have to issue new shares or the government will convert to common- dilution obviously-
usually not a positive development for share prices-
opinions?
May 4th, 2009 at 11:11 am
well, the other day i said it looked (from the charts) as tho faz would be in the 4s soon. I have to say I still think that having just looked again.. that would put the skf at about 45… if and when those prices are tapped, i might get interested in buying. otherwise, i’m standing clear.
May 4th, 2009 at 11:16 am
The way this is spun confuses me to no end. I consider it outright money printing. Now, is gold up because of QE or is gold up because of the Pakistan nuclear weapons issue…
Fed buys $8.5 billion in TreasurysFont size:
11:08 AM ET 5/4/09 | Marketwatch
NEW YORK (MarketWatch) — The Federal Reserve Bank of New York bought $8.5 billion in Treasurys on Monday, its biggest purchase to date under its program aimed at improving conditions in private credit markets and spurring lending. The debt bought included notes maturing between 2016 and 2019. Dealers submitted about $29 billion in debt to be purchased. The Fed will continue its buybacks with another operation on Wednesday, heading towards purchasing $300 billion in Treasury securities over the next six months. Ten-year note yields pared an earlier increase but remained higher by 1 basis point to 3.17%. Yields were higher before the buyback as a report on pending home sales buoyed hopes that the housing downturn may be ending, supporting stocks to the detriment of bonds.
May 4th, 2009 at 11:24 am
Karen I wouldnt have pegged you as a Dead fan… The real GD played some great shows at the Spec back in the day. Way before I-Man’s day. But I had some of those tapes but…
As for THE tape:
I’m also paying some close attn to the VIX… that bullish divergence is a bit too coincidental looking… watch that 35 level.
Also, COMPO at the 200day SMA has not avoided my attention either.
XLF needs to make a big move over 11.35 for me to bail on FAZ…
URE huh? Interesting… SRS keeps finding a bid at 22-23… and we know there is more than meets the eye going on in the CRE story… we just havent seen it on the books of the banks yet due to their shrewd balance sheet alchemy… but we will. And until we do, SRS will keep attracting a bid down here.
Eventually, these failed reversal patterns on the Q’s, DIA, and SPY will confirm themselves… only a matter of time. Seriously… which side would you objectively take on this… fundies, emotions, and prayers aside? Sure, it could go the other way, but its gonna take mad volume, and who’s coming in to this dance now that has the conviction to load up? The ball is in the bulls court right now, its all on them.
I’m still holding on to some longs in the commodity/industrial space… but not in my tactical account. Energy might give us a little juice this week if WTI Crude can break out from its base… but ultimately its financials and tech that have been leading this beast of a rally, and those are precisely what seem to be running out of steam IMO. To be continued…
May 4th, 2009 at 11:30 am
I’m not a Deadhead, I-Man, my brother is/was : )
I thot $VIX was going to 33. 31 is more likely. SRS i want under $22
May 4th, 2009 at 11:33 am
test
May 4th, 2009 at 12:53 pm
karen,
the Spectrum is being torn down to be replaced by More shopping + a Hotel ‘complex’..
also, it’s days/times like these that it’s nice to be with Physical, no?
there’s some bad news ahead, the Commodities are getting into a serious uptrend, even NatGas has turned around..
~~
I-man, right? If you’re fixin’ to go Long, why should it cost you?