“We are finally beginning to see the seeds of a bottoming [in the housing industry. The U.S. is] at the edge of a major liquidation [in the stock of unsold properties, which may help to stabilize prices].
—Alan Greenspan, May 12 2009

“I don’t know, but I think the worst of this may well be over.”
—Alan Greenspan, October 2006

>

Why does the public — and the Press — constantly seek out reassurances from the same people who misled them time and again in the past?

That was the question on my mind as I pondered yet another declaration from Alan Greenspan that the Housing Market has bottomed. That he has consistently made similar such statements before is cause for doubting him here. That these prior bottom calls were as far back as 2006 is cause for ridicule.

Few people have been worse than Greenspan in analyzing the Housing market. In fact, the only person / group I can think of with a consistently worse track record than Greenspan’s of analyzing the housing market was the group he spun his foolishness to yesterday: The National Association of Realtors.

Indeed, consider this golden oldie from David Lereah, the NAR’s chief economist, circa December 2005:

Home sales are coming down from the mountain peak, but they will level out at a high plateau, a plateau that is higher than previous peaks in the housing cycle.

That 2005 declaration, made 5 months after Hosuign prices had topped out, was typical of the reality denial we saw from the NAR over the entire housing cycle. They continuously got it wrong, spinning all data, good or bad, in a shamelessly self-promotional manner.

That this group of blind flacks paid Greenspan $100,000 plus to spin them lies is somewhere between ironic and pathetic. At least it wasn’t taxpayer monies . . .

>

NOTE:  These older Greenspan/Lereah quotes were were pulled from Chapter 21, The Virtues of Foreclosure, Bailout Nation.

Previously:
Pending Home Sales Index, NAR Housing Market “Bottoms” (January 2008)

http://www.ritholtz.com/blog/2008/01/pending-home-sales-index-nar-housing-market-bottoms

Sources:
Greenspan Sees ‘Seeds of a Bottoming’ in U.S. Housing
Vivien Lou Chen and Dawn Kopecki
Bloomberg, May 12 2009

http://www.bloomberg.com/apps/news?pid=20601087&sid=af__GYb21Pz4&

Greenspan: Housing Market Worst May Be Over
Reuters, October 9, 2006,

http://www.msnbc.msn.com/id/15198805/

Greenspanity
Economist.com, August 14, 2008

http://www.economist.com/blogs/freeexchange/2008/08/greenspanity.cfm

Historically Strong Home Sales Expected in 2006
NAR Publication, Business Wire, December 12, 2005

http://www.allbusiness.com/economy-economic-indicators/economic-indicators-existing/5174031-1.html

See also Balloons Not Bubbles
http://
rodomino.realtor.org/research.nsf/htmlarchives/ResearchUpdate121505

Category: Real Estate, Really, really bad calls

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

212 Responses to “Yet Another Greenspan Housing Bottom Call”

  1. Mike in Nola says:

    I though Larry Yun was your favorite real estate liar?

    Heard a piece on NPR this morning from the meeting. Someone was praising the new plan to allow the new homeowner tax credt to be used as a down payment. So, now we get to both finance what will quickly become negative equity loans as well as providing the down payments. I suppose they are dancing on the tables.

  2. bizprof says:

    Maybe he took the $100K and paid his meat supplier, apropos of the earlier post…

  3. VennData says:

    I can assure you, he will be right, eventually… and should be allowed to keep his Miss USA title.

  4. krice2001 says:

    I’m with Venn, let Greenspan keep his Miss USA title… despite all the naked pictures you have of him. Besides, he’s become entertaining, hasn’t he? Much like the NAR. I mean what’s the harm? Maybe just causing those that might actually listen to him to make terrible personal and professional financial choices. Oh yeah, I guess there’s that…

  5. Marcus Aurelius says:

    VennData:

    Greenspan won that competition because he dominated in the bikini competition. When it comes to high finance, he should keep his opinions to himself.

  6. ben22 says:

    Someone said to me 3 days ago, that if Greenspan were still Fed chair this would not have happened.

    I didn’t even bother responding.

    That might help explain why when he speaks lots of people still listen.

  7. Yogizuna says:

    There is a very good reason why some like to call “Sir Allen” Mr. GreenSPAM.

    Why bother listening to the same “broken clock” who is right twice per day…

    So of course, he will eventually be right on something, someday.

  8. call me ahab says:

    Greenspan’s policies have been thoroughly discredited- why anyone wants to hear what he has to say is beyond me- Bernanke is following the same policy prescriptions- stimulation at all costs-

    maybe a time will come when we will view Americans as something more than “consumers”- and allow the economy to contract naturally by removing all the debt induced consumption that has been so much a part of our economy over the last 30 years or so

  9. austincompany says:

    Greenspan should get out of his Washington bubble more often. In Austin there is a growing supply of homes over $500k as there is in California, Florida, etc. because of the lack of Jumbo financing. Once again our great leaders attempt to solve one problem (foreclosures of homes under the Fannie limit) but total ignore the growing flood of homes over the limit.

  10. Mike in Nola says:

    Ahab: A link posted by Barry last weekend explains why people want to hear Greenspan:

    http://www.theonion.com/content/news/nation_ready_to_be_lied_to_about

    All this reality is really depressing; even the Chinese are tired of it:

    http://mpettis.com/2009/04/this-is-getting-tiresome-so-please-let%e2%80%99s-declare-the-crisis-over/

  11. Transor Z says:

    http://money.cnn.com/2009/05/13/real_estate/April_foreclosure_stats/index.htm?postversion=2009051304

    Careful, we’ve got a stray “worse than expected” data point on the loose.

  12. Marcus Aurelius says:

    austincompany Says:

    “In Austin there is a growing supply of homes over $500k . . .”
    _______________

    This is a snapshot of the problem – a glut of half-million dollar homes. I don’t care what they look like, or what level of luxury they have, the price is way too high. I guarantee they will moulder to dust before anyone but the indebted (the current occupant, and then the bank holding the note) admit the fact that they are on the wrong side of this pricing scam.

    Social change will come down like a hammer before this is over.

  13. Marcus Aurelius says:

    Hey BR:

    Can we get an edit comment function in here?

    Last comment should say:

    “. . . before the indebted . . .”

  14. Chubby Davis says:

    Baba Waters ask Alan Greenspan if she should buy into hoity toity eastside co-op for 350K, Alan told Baba she was buying at he top of the market… so don’t do it!

  15. call me ahab says:

    Marcus Says:

    “Social change will come down like a hammer before this is over.”

    I like that – nice ring to it- I hope this includes the American public eschewing their ways of the past 30 years and becoming a more frugal society

  16. Mike in Nola says:

    Marcus: “Social change will come down like a hammer before this is over.”

    You should change the name to Savonarola :0

    Transor: doubt that it will have a lot of impact. It’s green shoot season.

  17. ben22 says:

    YoY import prices down 16%, but of course CNBC only shows the MoM change. Typical.

    Doug Kass just made a great point. Many companies are cutting completely or reducing qualified plan matching contributions. I count 23 companies in my general area that have done this. Either cut completely or reduced. This will further (or should) the push up in personal savings.

    That’s trouble for spending moving forward, which means trouble for growth.

    Credit Deflation is here.

  18. Bruce N Tennessee says:

    Published this on the last thread, but there are all kinds of little socialist ideas to get us out of this mess:

    http://www.silobreaker.com/rich-norwegian-fined-109000-for-drunk-driving-5_2262312642481750021

    Rich Norwegian Fined $109,000 For Drunk Driving

  19. call me ahab says:

    Mike in Nola-

    the Onion is so close to the truth- like the stress test and the subsequent rally- please tell us another lie so we can all start wetting ourselves with excitement before the hammer comes down- (sorry Marcus-had to use it)

  20. dead hobo says:

    Retail Sales worse than expected and not spinnable. At least not at this moment.

    Also, I told you so. About three weeks ago I noticed things looked pretty dismal on a shopping trip and posted it here. I knew it. Last week I noticed things were even worse, so May’s report should really suck. June should be horrible if oil and gas don’t fix themselves soon. It’s fun being handsome and smart.

    HeyF411, how does this fit into Mayberry?

  21. cvienne says:

    The Greenspan comments got Franklins green shoots all the way up to the level of June corn…

    Anecdotally, the corn I planted this year is WAY AHEAD of itself versus traditional years due to some abberrent fortuitous weather…

    It usually takes until June for me to see it this high

  22. cvienne says:

    @dead hobo

    Yeah, gas prices at the pump are back up to $2.35 in my area…AND WATCH NAT GAS…If those spot prices get high and then we have a real hot summer and people flick on their AC…

    Well, maybe they’ll head to the shopping malls for the cool air…

    More green shoots!

  23. Mike in Nola says:

    dead hobo: ” It’s fun being handsome and smart.” I know the feeling :)

    Don’t know if any of this will stop the rally, though. May just temporarily halt it til something spinnable comes out, like fewer than expected jobless claims.

  24. dead hobo says:

    ben22 Says:
    May 13th, 2009 at 7:56 am

    Someone said to me 3 days ago, that if Greenspan were still Fed chair this would not have happened.

    reply:
    —————
    Your friend was spot on. If Greenspan was in charge, things would be much worse. Thus, THIS wouldn’t have happened. Something more terrible would be here now.

    Also, I normally ignore F411 but wondered a couple of things. 1) Is his shtick an intentional parody of 1950s – 1960s Establishment Speak. It fits. Kind of a Colbert wannabee without being clever. As circumstantial proof, I suspect his name is really an old 5 digit phone number, FR-411. Ha Ha. Busted.

    Else, education is a growth process. If he ‘s really as ignorant as he posts, then he’ll eventually come around if he hangs out long enough. I may be perpetually handsome, but I wasn’t born this smart.

  25. NattyGas is up over 1/3 off their lows..

    http://quotes.ino.com/chart/?s=NYMEX_NG.M09.E&v=dmax

    looks like another 1/3 is on tap..

  26. The Curmudgeon says:

    The funny thing is that all this catastrophe in the housing markets (Greenspan’s idiotic comments notwithstanding) is happening in the face of massive cash infusions from the Fed.

    Interest rates are at truly (not just mortgage broker talk) historic lows. Yet no one is buying, or hardly even refinancing, although practicallly all I am seeing are refinances.

    The local retail mortgage branch of a TBTF bank with whom I do business has already let go its temp workers that Bernanke, Geithner and Bill Gross (yes, he should be in that list) told them to hire in anticipation of a “busy summer”.

    And what kind of an observation is “seeds of a bottoming”? What the hell does that mean? Oh, I guess that’s just the point–to say something that sounds like it means something but that doesn’t, mixed metaphors and all.

  27. Mike in Nola says:

    dead hobo: And you said Macy’s report would suck:

    CNBC: “Macy’s Posts Narrower Than Expected Loss ”

    So you were wrong. They only lost $88M. :)

  28. cvienne says:

    @dead hobo

    yesterday someone conjectured that Franklin is actually BR in disguise…drumming up business

    I concur with that notion

  29. dead hobo says:

    Mike in Nola Says:
    May 13th, 2009 at 9:01 am

    Don’t know if any of this will stop the rally, though. May just temporarily halt it til something spinnable comes out, like fewer than expected jobless claims.

    reply:
    ————–
    I think the rally is spent. whoever was pushing it will now make money on the way down. My guess is that it will fall comparably to March. I’m going to start dollar cost averaging in when it drops below 800 … how far below 800 depends on the velocity of the fall and the back story that is powering it. I’m ecstatic over the rally just completed. The next one should be even better. I’m going to make some money. I also suspect thee might be mini sucker rally on the way down.

  30. dead hobo says:

    Mike in Nola Says:
    May 13th, 2009 at 9:05 am

    dead hobo: And you said Macy’s report would suck: CNBC: “Macy’s Posts Narrower Than Expected Loss ”

    So you were wrong. They only lost $88M. :)

    reply:
    ———–
    I bet they’re relieved at Macy’s.

    cvienne Says:
    May 13th, 2009 at 9:10 am

    yesterday someone conjectured that Franklin is actually BR in disguise…drumming up business. I concur with that notion

    reply:
    —————-
    It fits.

  31. call me ahab says:

    regarding the oil trade-

    what is everyone’s read- USD to trend down- oil up-

    my impression is the world recession will keep a lid on oil prices due to demand-

    does anyone see a replay of oil to $100- hard for me to believe

  32. Dan Duncan says:

    “Why does the public — and the Press — constantly seek out reassurances from the same people who misled them time and again in the past?”

    It’s not necessarily “reassurance seeking”.

    Rather, it’s a society that’s too dialed in financial speculation. Everybody’s a F*ing trader.

    At the direct level, these kinds of comments from Greenspan aren’t taken seriously. By the previous sentence, I mean…few rational people say to themselves, “Greenspan said X, therefore it must be true.”

    But plenty of rational people say to themselves, “Greenspan said X. I haven’t a clue as to whether he’s correct. And frankly I don’t care. But I bet a lot of other traders will bet that other people will take it seriously, therefore, I had better play along.”

    This kind of garbage happens all the time.

    Employment Reports…another example.

    8:30…drumroll, please…CNBC reads the results

    “Minus 539K jobs!!!!”

    The calculus isn’t “what does this mean?” [As if that could be delineated from a single report...] Rather, the calculus is “what do others think this means?”

    And the subsequent flurry of activity results in a rapid feedback loop where people forget that no rational person actually takes a single comment or a single report seriously…

    …And the news people report on the matter as if they did.

  33. The Curmudgeon says:

    Actually, I’m Franklin 411…in drag.

  34. Cursive says:

    I know LB is the boss of Schadenfreude Asset Management, but I’m feeling a bit of it myself after warning f411 yesterday about the EU’s immenent anti-trust decision on INTC. So much for that green shoot. At $1.45B, it represents 4.5% of INTC’s annual revenue. Protectionism is on the rise and it doesn’t necessarily take the form of Smoot-Hawley. For anyone who is waiting for the government, any government, to solve our economic problems, I would only remind that person of New Orleans after Hurricane Katrina.

  35. davossherman@gmail.com says:

    “Only monkeys pick their bottoms” ~ Hugh Hendry

    http://economicedge.blogspot.com/2009/05/hugh-hendry-on-latest-rally.html

    I suppose that makes Easy Al a monkey…

  36. cvienne says:

    @dead hobo

    One characteristic of the RALLY was that there would be several UP days followed by a “single” vicious down day (which then got supported)…

    I’d suspect this pullback mirror that pattern to keep everyone on their toes…In other words, AFTER the first move (which might be today), that collapses some of the technical indicators, we might see some GRINDING days down followed by quick 1 day rallies…

    Anyway, that’s just a theory (or pattern) that I look for…but I don’t have anything to support it…

    My main theory when trading is this:

    “try to figure out what scenario would cause the greatest deal of pain to BOTH sides of the trade and THAT is what’s likely to occur”…That way, the market can punish EVERYONE…

  37. cvienne says:

    @Cursive

    INTC has always “lived or died” based on their margins…

    So the main thing that has me worried about them has less to do with any “anti-trust”, and more to do with the fact that they’re going to increasingly have to rely on lower margin chips in the near future…

    Although the “anti-trust” case is an interesting one to consider when you apply it to the 360 degree spectrum of industry…

  38. dead hobo says:

    cvienne Says:
    May 13th, 2009 at 9:22 am

    @dead hobo

    One characteristic of the RALLY was that there would be several UP days followed by a “single” vicious down day (which then got supported)… I’d suspect this pullback mirror that pattern to keep everyone on their toes…In other words, AFTER the first move (which might be today), that collapses some of the technical indicators, we might see some GRINDING days down followed by quick 1 day rallies…

    reply:
    ————
    Good call. I think you got it.

  39. cvienne says:

    @ davossherman

    Hugh Hendry is a hoot!

    I lived in Europe for 12 years where I basically only had access to CNBC Europe and he was on there all the time…He cracks me up! :-)

  40. hopeImwrong says:

    I don’t care what anyone says, Franklin411 is on the verge of breaking into my “top 5 favorite posters” list.

  41. Marcus Aurelius says:

    Mike in Nola Says:

    re: Marcus: “You should change the name to Savonarola”

    If I’s gonna’ change it to somethin’ revolutionary and anti-establishment, I’d rather it’d be John Brown. But I ain’t lookin’ to be a martyr, so’s I ain’t a’gonna’ change it.

    MA is my aspiration.

    A few quotes from the man, in light of our present circumstances:

    A noble man compares and estimates himself by an idea which is higher than himself; and a mean man, by one lower than himself. The one produces aspiration; the other ambition, which is the way in which a vulgar man aspires.

    Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth.

    Look back over the past, with its changing empires that rose and fell, and you can foresee the future, too.

    Natural ability without education has more often raised a man to glory and virtue than education without natural ability.

    Poverty is the mother of crime.

    That which is not good for the bee-hive cannot be good for the bees.

    The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane.

    To understand the true quality of people, you must look into their minds, and examine their pursuits and aversions.

  42. Cursive says:

    @ cvienne

    I view the INTC news as yet another example of why you can’t be constructive about any company’s earnings for the foreseeable future. Not that we’ve ever had unfettered markets, but the level of government intervention is frightening. It was Greenspan’s easy money that created this bubble, now the FED and Treasury are trying, in vain, to re-inflate it. The actions of the government have replaced and are continuing to crowd out private capital, therefore the real economy is shrinking and we are going to get more wasted “mal-investestments.” In that environment, aggregate S&P earnings will be below historical highs for years to come.

  43. Transor Z says:

    David Rosenberg called it months ago. We saw a big drop in consumer credit last week and people aren’t jumping on the sub-5% mortgage rates. The US consumer is still deleveraging. Not surprisingly, retail sales are down with a drop in credit usage. One of the mantras here is that so much of the US economy was based on credit — and Rosenberg pointed out the 14% share of income allotted to servicing household debt.

    Speaking of Hugh Hendry, he also makes the point that so much of global GDP is illusory because it was based on credit.

    @MA: Love the quote about escaping the ranks of the insane.

  44. Mannwich says:

    Apparently We The (delusional) People enjoy being lied to.

  45. Ny Stock Guy says:

    Well, if Greenspan has called a bottom that must mean we’re due for another big drop and it’s time to head for the hills!

  46. Mannwich says:

    More green shoots, franklin? B…..bu….but, your Costo’s doing just great, right?

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aAVTaAOx8t3g&refer=home

  47. cvienne says:

    @Cursive

    Unless they decide to come up with yet another USG Agency…Like the “Office of S&P Earnings Reporting”…That ought to keep those green weeds popping up…

  48. franklin411 says:

    Interesting retail sales numbers…Gasoline sales slipped (fine w/ me!), but construction materials and autos increased. We went from -1.3% to -0.4%, and the expectation was for 0%. The individual numbers show definite improvement, however:

    Autos…-2.0% to +0.2%
    Gasoline..-3.2% to -2.3%
    Electronics..-7.8% to -2.8%
    Construction..-0.8% to +0.3%

    That’s a pretty hefty improvement if you ask me. It’s not a V-shaped recovery (was anyone predicting that?), but it’s definitely improvement. Nothing ever goes from “Excellent > Horrid > Excellent.” It goes “Excellent > good > less good > bad > horrid > bad > less bad > slightly good > good > excellent.” We’re at the “less bad” stage.

    I see no fuel for the torches and no iron for the pitchforks to supply the Armageddon scenario people like to advance in these comments.

    One more thing: We haven’t even begun spending the stimulus money yet. Only $14 billion out of $787 billion has been spent so far.

    Green shoots, friends. Green shoots.

  49. I-Man says:

    BR:

    Why does the public — and the Press — constantly seek out reassurances from the same people who misled them time and again in the past?

    I-Man:

    Because 90% of the public is dumb.

    Let’s all strive to be the 10%!

  50. cvienne says:

    @Transor Z

    With credit usage down, that means more people paying CASH instead of using credit or debit cards for transactions…

    So the # of “transactions” for V and MC dwindles…

    Of course, when they kick GM out of the Dow, there’s speculation that V might become a new Dow component…It would be just like the DJ crew to make this type of re-shuffling move…

  51. ben22 says:

    @hobo,

    Good call on my comment. You are right, it would have been worse.

    @Mark,

    Nat gas has been booming but yes, looks like more is on the way. Happy days for people that picked up some XTO or CHK late last year, among others.

  52. Andy T says:

    This was a nice article written back in 2002 by Faber on the “treacherous nature of bear market rallies.” It’s worth a read. It was very timely as the market soon reversed course and tanked to new lows. I like the parts in their where he cites all the “authorities” who were bullish on the way to new lows back 1929…..

    http://www.ameinfo.com/16529.html

  53. Transor Z says:

    @cvienne:

    Are you sure that is correct about debit card transaction #s also being down? Debit card transactions are normally real-time draws from checking/savings accounts . . . IOW ATM draws without the trip to the ATM kiosk.

    Also: Someone (Barry?) made the point the other day that *you would think* an actual industrial should be added to replace GM instead of a financial.

  54. cvienne says:

    @Franklin (9.51)

    Great Franklin…So does that mean that when we get to the next crisis (where the equity markets are testing the march lows, and breaking it to the downside), will the Government then say we NEED MORE STIMULUS to go on to[p of the $499 billion that we are still holding back from the previous stimulus?

    More and more, this all sounds to me like…”OK let’s get authorization for as much money as possible for as long as possible but we’ll keep that money in our pockets”…We’ll start spending it about 6 months before my RE-ELECTION campaign gets underway…

    Economic Recovery & Re-Investment Act, OR Re-Election Act?

  55. cvienne says:

    @Transor

    All I know is that V & MC get fees on the number of transactions…Less transactions mean less revenues…

    As far as the Dow is concerned…I’ve heard many different companies nominated (CSCO, V, etc.)…BR is probably right in that an industrial “should” replace GM…But what then would replace an AIG or a BAC should they get kicked out as well?

  56. scm0330 says:

    Franklin, as you parse the retail sales numbers, and consider their implications, do your economic projections include what the GDP, unemployment and other macro numbers will look like with a multi-week shutdown of auto production from Chrysler and GM? Have you thought about what might come of consumer confidence numbers in the aftermath of the GM filing? I think it’s gonna play as a pretty big story. CNBC will have to report it, much as they’d prefer not to.

  57. ben22 says:

    Franklin,

    All those figures you spout off are MoM not YoY. BR has taught us all not to use that to build any kind of investment or economic thesis. Most of us here are going to pick up on that right away. Also, in case you missed it, all the retail sales data was revised DOWN for the month of March.

    I wouldn’t try to read too much into retail sales directly during tax refund time. There might be some short term spikes there but you clearly aren’t paying attention to consumer behaivor. Most adults did not run out and buy the new Blackberry like you buddy. The average person out there is still very afraid right now.

    I saw you say yesterday that all your money is in an IRA. I can only think that’s a Roth so there can’t be all that much in there. Lucky for you b/c I think you are going to lose a lot of money if you are actually investing based on what you are saying on this board.

    Good luck to you.

  58. cvienne says:

    @scm0330

    On top of that, what do you think the ramifications to confidence are going to be when it is finally announced that GM simply decides to move most of its production overseas?

    Pour $$ down the rathole, then watch ‘em skip town…

  59. Transor Z says:

    YoY March retail is down 10% — and auto sales are down 20%.

  60. ben22 says:

    @cvienne,

    I know what you are getting at but debit card usage is actually now, for the first time, equal to that of credit card usage. In other words, more people are paying cash for things.

    The WSJ just published a nice article about this with a pretty chart on page C1 maybe two weeks or so ago. I talked about it here at the time, for me, it spelled more credit deflation. Just one of many areas I’m seeing it with each passing day.

    This will blow a hole in anyone who is saying retail sales will rebound. Average household income when adjusted for inflation has gone nowhere in the last decade, the incremental increases in spending came from credit or mortgage equity withdrawal. No both are out and unemployment is still ticking up.

    Chinese citizens don’t have the fire power to pick up that slack in spending. It’s getting easier to put this all together.

  61. Transor Z says:

    April, sorry.

  62. leftback says:

    @ben 22: At this point I am wondering if Franklin is actually the brother of Lawrence Yun, the famed NAR spin doctor.

    @ Cursive: You are certainly allowed to join Schadenfreude Asset Management™ as an associate. For a fee. Leftback would be falling down on the job if he were not to be remunerated here in the land of 2 n 20.

    I expect a sell off in crude and firming of the US$ soon if not today. Bullish energy long term but not here.

  63. ben22 says:

    Despite all my bearish posts I am still short term bull. I’m still looking for 965-1k on the S&P before a crash but we’ve got to hold 850. We were due for a pullback clearly so I’m not sure I’m reading too far into the market action just yet. time will tell.

  64. scm0330 says:

    @cvienne

    i doubt the Rattner/Administration axis will allow too much of that to happen. Remember, UAW will be owning the GM carcass (no pun). Will they permit the offshoring of the enterprise. This is going to be sprawling, messy, and needlessly costly because we’re going to “zombify” the domestic car business and not let capitalism take its natural course. And pity F. Trying to compete honestly against government-subsidized businesses.

  65. cvienne says:

    @ben22

    To further your point on “seasonality”…The present numbers are actually “juiced” a little because of the $250 one time check that Social security recipients just received…

    That class of consumer WAS most likely to spend that money as many of them (like my mother), perhaps are some of the lucky percentile that own their own homes and have no debt…She spent her $250 on a nice dinner for my birthday…

    Anyway, keep in mind the “factor” of those $250 checks…They ain’t coming in June

  66. Mike in Nola says:

    Marcus: used to have a small book of his meditations in my office in Pre-K New Orleans. Guess it’s in storage now. One of the best early “christian” philosophers. Also, he and the son, like Bush 1 and Bush 2 were good examples of the fact that competence is not an inherited trait.

    Re: oil
    Speculation driven, based on the inflation trade and china stockpiling to no purpose. Take a look at last year’s chart, in the midst of collapsing demand. Remember the $200 oil talk. The market is no indicator of anything but what people are willing to pay at the moment.

  67. sherm says:

    hey i got my login back!

    franky,

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aAVTaAOx8t3g&refer=home

    “The second quarter is going to be tough,” Bill Cheney, chief economist at John Hancock Financial Services Inc. in Boston, said in a Bloomberg Television interview. “Consumers are losing their jobs, concerned about losing their jobs and losing wealth.”

    it has been gorgeous the last few weeks here in kc and the country club plaza has been dead. never in the 5 years i have lived here have i seen the ccp as empty as it has been the last few weeks. case in point, kona on a wednesday night with the windows open is usually a*****es to elbows. i walked in and got a table. nice for me but bad for kona.

    cheers all
    wps

  68. call me ahab says:

    ben22-

    please expound on your short term bull stance- that case is hard to make outside of some technical factors I may be unaware of

  69. ben22 says:

    @LB,

    Yes, oil is getting real interesting here and the $US is right at the bottom of the trend channel that I’m seeing on the charts. I suppose that even when it starts to rise higher, as I predict the $ will, the market could also move higher for a time and push up to the 200 day ma, but eventually that will reverse and they will move opposite each other.

  70. ben22 says:

    ahab,

    my short term stance is purely technical, as was the whole reason I got bullish when I did. There is no particular formula I came up with to use my targets, just the level I think emotions will take us to before we crash and burn again. as you can probably tell from my posts, fundamentally I think we are beyond being in deep sh*t.

    @cvienne,

    yes, that is also a good point about the SS checks. If any of those poor folks just got a pension cut, certainly all that money was spent. Too bad for them they aren’t going to get the COLA increase they got for this year.

  71. cvienne says:

    @ben22

    This is NOT a warning, JUST a perspective…

    I can TOTALLY see your 965 – 1k thesis (and have agreed with you in the past about this), but be careful…

    I TOTALLY MISSED this rally NOT because I didn’t see it coming so much as I was arrogantly waiting for numbers to be hit…

    I was CONVINCED back in March that the S&P would print something in the 640-600 range so I was waiting for that capitulation (and it NEVER CAME, then NEVER LET ANYONE after the initial surge)…And back then I was ‘refusing’ to buy even 720-750…

    So I’ve been on the sidelines for this entire rally…I actually NEVER exited the ‘shorts’ I had on at 666…I simply started incrementally ADDING to those shorts eventually at 875, then 900, then 930…

    So we’ll see what happens…Ultimately I expect we’ll test the lows for real (and I’m still convinced we’re going lower)…

    I do hold HOPE to see your 965 – 1K call…Even ‘cheaper’ to short…But since I got ‘cheated’ on that last 7% on the downside, I’m wondering if the market will ‘cheat’ those waiting for 1k the last 7% on the upside…

    Just a theory…It doesn’t matter either way…

  72. call me ahab says:

    Mike in NOLA-

    agree w/ you take on oil- I see the worldwide recession keeping a lid on prices-

    LB-

    what is your long term horizon for oil- future inflation hedge?? deflation I think will be our fate for a while

  73. cvienne says:

    Looks like we’re in GAP FILLING time here for a few hours…

    Or is the market simply “breathlessly awaiting” the next comments from Greenspan?…

  74. cvienne says:

    @call me ahab

    Probably Boone Pickens is in there “singlehandedly” calling up oil to a $60 print so he can be CORRECT with his “on air” prognostication two months ago that oil would hit $60 before $40…

  75. Marcus Aurelius says:

    Mike in Nola (sorry to everybody else for the OT):

    Meditations is a good book, but MA was far from a Christian (maybe you’re thinking Costantine). MA saw the Christians as nothing but a threat to the Republic and Stoic philosophy. His biggest screw up was to let Commodus succeed him as emperor. GHW an GW Bush is a fairly apt analogy.

    Oil:

    It’s still a dwindling resource. Yes, global demand is shrinking, but so are easily recoverable reserves. Profitable extraction is the other economic brick wall oil will soon hit (mid term — a decade, or so). The cost of extraction, in units of energy, is getting pretty close to the yield, in units of energy. When we hit that wall, oil will be a dead industry.

  76. jm says:

    I note that Greenspan said we are, “…at the edge of a major liquidation…”. Although he didn’t say which edge, it would be nonstandard usage for him to mean the trailing edge. And he said this contained the “seeds of a bottoming”, not the bottoming itself. Moreover, what he said implies, at least to me, that the bottom being seeded is far below current wishing price levels.

    So I think his comments may be justified. How much longer can the people owning the nearly 1000 overpriced, mostly-vacant homes listed on my local Chicago northwest suburbs MLS hold out? Most of these have been on the market more than a year. I, too, suspect that we are on the edge of a major liquidation, which will contain the seeds of a bottoming, and that that major liquidation will send prices crashing to the levels of the early 1990s — a reasonable level to bottom at.

  77. leftback says:

    @ahab: Oil is going to explode upwards at some point (late 2010?), but until we see sustained declines in supply and/or a plunge in the US $, we will probably be in a range, maybe between $50-$80. We have seen the lows, obviously. Unfortunately, asset and debt deflation and oil, commodity inflation may at some point co-exist.

  78. ben22 says:

    @cvienne,

    Good looking out. I’ve got trailing stops on everything and now, instead of being net long, for the last 2 1/2 weeks or so I’ve been neutral with market exposure easing more money into short term bonds (no muni’s though in my taxable accounts) and cash and out of equity. I haven’t bought any equity on anything in above a month now and I don’t plan on it. Stocks in general are very expensive IMHO. If I’m wrong about my targets, which I will almost certainly be, I’ll just let the market take me out without giving back all of my gains. I won’t be upset if I don’t sell right at the top with my equity holdings. I just try to buy low and sell high, not buy lowest and sell highest.

    since I can’t usually call bottoms and tops like AT or Lefty I typically will set a range and begin buying (if bullish) or selling at the start of my range, so if we hit 965 that’s when my exits will start, I won’t be waiting for 1k. When this all started, like you, I thought we could go to 600 (still think we will and lower eventually) but I started my buying at 700 using a reverse pyramid building strategy on the stocks I had targeted. I’m not a day trader but like most of us, I’ve been forced to become much more active due to where we are at. Ideally I’d just be sitting in cash right now but I felt since November there were things I could really take advantage of that I thought went to far. I’ve posted a lot of examples of what I’ve been using over the last several months.

    If we don’t get there (965-1k) then all is not lost as those stops kick in and I can still move out with some very nice gains on a few things I’ve picked up.

    This rally has been good for me but I am afraid of overstaying my welcome, that is always in the back of my mind.

  79. call me ahab says:

    Marcus-

    agreed- but folks have been saying that for a long time- I am sure it will happen- but the question is when- oil will eventually become very expensive and scarce- Mad Max anyone- but you could get crushed with too early of a position on that occurring

  80. Mike in Nola says:

    cvienne: I understand you. I waited til the market got up to 900 to short, but still taking a hit waiting for it to reverse. Hoping it will go to 1000 so I can feel comfortable shorting more.

    The last year has taught me that things will always be more irrational and not based on obvious long term trends that you think. Just wish I would remember that when I place trades :)

  81. call me ahab says:

    leftback-

    if we do enter into a slow downward spiral a la 1931- don’t you think oil prices will decline- outside of the USD trade- I think oil prices have just as much chance to go down-

    could be wrong of course- but I have feeling we are in for a longer contraction than the pundits are expecting

  82. leftback says:

    Sold some of my materials longs, which had led the rally. Real weakness in that area as XLB hit the 200DMA.
    XLF also off. The leaders are fading. Draw your own conclusions regarding the rally.

    Doug Kass this morning mentioned that he is net short and sees a 7-10% pullback. I think we see 875 here and then a bounce, before heading lower. I am playing small and just taking what I see for now.

  83. leftback says:

    @ ahab: You would be correct – except for all the printing and a limited recovery in emerging markets.

  84. Marcus Aurelius says:

    Ahab:

    The longer they say it, the truer it gets. I use very little of it, anyway, and I don’t own any oil stocks. OTOH, it is the basis of our culture (personal transportation and plastics), so the health of the industry is something to keep an eye on.

  85. cvienne says:

    @jm

    Well then Greenspan ought to have called it the “bulbs” of a bottom not the “seeds” of a bottom…

    Bulbs are things you plant in the fall but then sit there dormant for a long freezing winter before sprouting the next spring…

  86. matt says:

    lefty – I was thinking about darting out of these uranium stocks that I’ve been holding after this rally. Sound like you’ve already left the building :D

    How ’bout that retail?

  87. DL says:

    Ahab @ 10:48

    Oil is going to start hauling ass before long.

  88. Andy T says:

    I see we jumped to some oil talk…..

    One thing is for certain….that enormous move down in such a short period of time was not some decades’ long secular bull market correction. That was only an initial “A” wave down of some sort. We’ve been doing a classic “B” wave now. Not sure when and where it ends, but when it does, we are certain to have a “C” wave lower at some point. I don’t have a great feel for top tick targets on oils, but if you’re bullish I would use the uptrend line from the lows as definite stop out point. When those trend lines break, we’ll probably be heading for new lows.

  89. Mannwich says:

    @karen: Enjoying my GDX over the past few weeks. Slowly rising.

  90. ben22 says:

    AT,

    Prechter shows his future resistance line for oil, lets just say it’s much lower than where it’s trading right now. He’s calling it just like you are.

    I don’t follow the oil markets as close as a lot of people but it seems like China has caused a lot price action over the last month and half. I’m thinking it is the same thing happening to coal. The KOL is up something like 130% since November 21/08.

  91. ben22 says:

    @karen,

    Any new opinion on gold? Still tracing out that big head and shoulders? As you know I have been bearish but my case is weak obviously. Not sure what to think of it lately. We still haven’t been able to go back to the Feb highs and gold has a history of making movements early in the year to start a trend. Just watching that from the sidelines now, no exposure and I don’t have any physical gold.

  92. karen says:

    Jeff, about to jump on a plane but I did sell-off about 1/3 of my gold holdings yesterday… fwiw.

  93. Mannwich says:

    @karen: Thanks for the heads up. I was thinking about dumping some of it in the coming days. Maybe even today.

  94. leftback says:

    @Matt: Can’t argue with a 200% gainer, old chap. :-)

    Wonder how Johnny Retail is liking those bank stocks he bought last week? When he bails, FAZ is going to fly. Right now, it’s the smart money that is dumping the XLF, the people who rode the squeeze up.

  95. cvienne says:

    @Mannwich

    Longer term I like GOLD as well, but take a look at Andy T’s most recent post…

    If he is right, and oil is going to do a “C” wave down, then gold is going to come with it for a ride…

    Oil has been playing “catch up” to gold recently (and still hasn’t caught up frankly)…

    Technically, gold could pull back to $680 and still have a VERY STRONG bullish upwards chart in tact…

    It always seems to me that whenever I hear the INFLATION rhetoric on TV, we sunsequently see bouts of DEFLATION (and vice versa)…

    So I’m in the “short term” DEFLATION camp for the time being…Which I don’t think is going to be good for equities over the next 6 months…

  96. leftback says:

    @Karen: Fly safe, we’ll watch the markets for you. I have a surfing lesson this afternoon….

  97. Andy T says:

    gold looks a bit “uninspired” here…circa june futures….see a little more room to 937, but should be some resistance there. If we can jump 937, it clears room to 967 where there will be formidable resistance.