>
I will be on BLOOMBERG’s Taking Stock with Pimm Fox and Karen Moskow this afternoon from 4 pm – 5 pm EST.
The discussion is about GM’s bankruptcy, the changes in the Dow, bailouts
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.
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof. —John Kenneth Galbraith
Retail Sales in Jan rose .4% headline m/o/m, .7% ex auto's, .6% ex auto's and gasoline and .7% at the core. The headline figure was less than expected while the rest were slightly better. But, with respect to non headline sales, because Dec figures were revised lower, taking the two months together were about in line with forecasts overall. Sales rose in electronics, building materials, food/beverages, clothing, sporting goods, dept stores and restaurant/bars and fell interestingly for online retailers, health/personal care, furniture and motor vehicle/parts. Bottom line, headline sales were below expectations due to the greater than expected fall m/o/m...
read more »
Tweet
Facebook
Reddit
Digg this!
June 1st, 2009 at 3:50 pm
Here’s a theory.
Rather than piecemeal conspiracy theories of GS and the SLP and the like, I think something a little more comprehensive might be in play. I’m wondering if the pump is not just a greed play by opportunistic investment banks, but a plan to use speculators to help recapitalize the banks, and a fiscal play that has not yet been triggered to help finance the spending of the stimulus package without raising taxes. Speculators caused the bust up. Speculators are going to pay to fix it. Part 1 is the run up. Part 2 will be a ‘correction’ designed to stimulate stock sales and capital gains taxes.
Unfortunately, innocents who think it is safe to jump in will be collateral damage. But, mostly, this is a speculator’s market and speculators will be a source of funds for recapitalization and for tax income.
If true, a ‘correction’ will happen at some point soon, and it will be managed to motivate profit taking.
June 1st, 2009 at 3:53 pm
The correction is also necessary in order to prevent complete collapse of the mortgage and muni markets. :-)
June 1st, 2009 at 4:01 pm
Leftback,
Yeah, and a nice correction will strengthen the dollar for a few weeks. Especially if there’s a nice commodity bubble burst, until the next managed bubble later this year.
Ultimately, these are interesting times, as in the Chinese curse. Bigass inflation is a given in a few years. But I bet speculators can be drained of tax income and can be used to recapitalize depleted mutual funds via managed market pumps if things are managed correctly.
June 1st, 2009 at 4:18 pm
“Bigass inflation”.
Not to be confused with big gas inflation.
June 1st, 2009 at 4:26 pm
They’ll keep juicing the markets until corporations finish with their secondary offerings. After that, the crisis will have to come back so Uncle Scam can borrow cheaply again.
June 1st, 2009 at 5:56 pm
Wow…
“Bigass Inflation” and “Uncle Scam” in the same thread… nice work gents.
June 2nd, 2009 at 9:51 am
DH,
Re: your theory
I had a similar thought over the weekend and I remembered that in March, Obama came out and said that it was a good time to buy stocks. I think the rally may have started a couple of days after that. So now the president’s word is on the line as far as stocks go and if there’s a huge downdraft, he’ll look like a fool for telling people to get into stocks. So now presidential credibility is on the line if we get another crash. This, in my mind, creates a strong incentive to for the admin support stock prices (by whatever means). If you wanted to manipulate the stock market to go up (as opposed to engineer a sustainable recovery), Summers/Rubin et al are just the right guys to have. Obama’s not stupid, so he must have SOME reason for keeping these guys on. The existence of the Presidential Working Group is no secret (although its purpose and activities are) and the major broker dealers are beholden to him through TARP and the various other rescues, so he certainly has the tools to do so at his disposal.
If you assume the above to be true… What’s your move as an investor? In my mind there are a few key questions….. How long can “they” keep it up (I’m guessing at least a year min)? What are the unintended consequences (inflation….)? What is the best bet to put your money on?