Nikkei 225: Now, 75% Off!
By Barry Ritholtz - June 12th, 2009, 7:16AM
Amazingly, the recent rally in the Nikkei Dow means it now over 10,000 — down from 40,000 in 1989. It has lost 75% of its value since 1989.
Congratulations to the Japanese for their outstanding zombie banks, fiscal and monetary policies. We enjoy them so much we are trying to do the exact same thing!
>
Nikkei Dow 1970 – 2009
chart courtesy The Chart Store
>
See also:
Dollar Rises as Yosano’s Comments Ease Diversification Concern
Ye Xie and Matthew Brown
Bloomberg, June 12 2009
http://www.bloomberg.com/apps/news?pid=20601110&sid=aKoxh.PKaVB0
Tweet
Facebook
Reddit
Digg this!
June 12th, 2009 at 7:53 am
BR-
so . . . don’t buy and hold? Dang- just when I thought it was getting easy
June 12th, 2009 at 8:14 am
should overlay a Dow/Gold ratio Chart on that pretty picture..
June 12th, 2009 at 8:16 am
It is ironic that even this rally is based on the green shoot fantasy in the face of continuing bad numbers, e.g. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=arcluzVNj_QM
It is also being fueled by the commodities bubble based on China’s alleged recovery. Here is an example of how that is going:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=al8v4wR00eSo
Of course, all the quotes are about how this must be the bottom since it can’t possbly get worse. China is also sitting on/producing a real estate bubble that may be bigger than ours. Hugh Hendry of the “monkeys pic bottoms” fame shot this video this year showing enormous buildings sitting empty. Most have been builts so that that corrupt politicians and developers can get their cut with the bank pressured to lend on the basis of an implied government guarantee. The other ticking bomb is that a large proportion of the income of local governments came from selling real estate to developers, minus the politicians’ take. This source of income is drying up there will either have to be taxes or subsidies from the central government. At some point they will have to make Uncle Ben look conservative in his absorption of bad debts.
http://www.youtube.com/watch?v=ektMQGbW3wk
http://www.feer.com/economics/2009/june53/Chinas-Real-Estate-Riddle
The theory is that all those empty buildings will increase or hold value sounds a lot like what we heard earlier this decade. The only question is how long before that bubble collapses. A reasonable scenario is that people need to raise cash and try to sell and, finding no buyers, are willing to sell at a loss. This cascades just like here.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=al8v4wR00eSo
June 12th, 2009 at 8:16 am
That puts us at around 1991.
June 12th, 2009 at 8:18 am
Sorry for the repeated link and typos. Once again: WordPress sucks as an editor.
June 12th, 2009 at 8:23 am
How about adjusting that for inflation? Looks like investing in a 401k may not turn out to be a great idea for some agegroups.
~~~
BR: 20 years from the peak? Geez, whack another 50% off of the remnant at 10k
June 12th, 2009 at 8:23 am
August 31, 1992
July 31, 1995
October 31, 1998
April 30, 2003
Those were all moments (curiously on the last day of each month) that the “green shooters” came out and had a parade.
The succesive peaks were when the storm clouds came out and said “not so fast”!
June 12th, 2009 at 8:27 am
A “green shoot” in Japanese is liking putting too much wasabi in your mixture.
A little dab of it adds flavor, but if you hammer people with it on the MSM, it winds up creating a volcano that makes you end up blowing soy sauce out of your nose.
I speak ancient wisdom from the I-Ching.
June 12th, 2009 at 8:33 am
Looks like investing in a 401k may not turn out to be a great idea for some agegroups.
that’s like saying “whats the return on a Roth IRA?”
to the thread, as MEH suggests above, overlay that with the DOW priced in real money (Gold) and we don’t look any better.
In nominal terms, it looks very similar to the NAS over the last decade.
Conclusion: People better get to trading, or stay on the sidelines.
June 12th, 2009 at 8:34 am
But, have they had run-away-inflation, like everyone on the planet seems for certain the U.S. is headed for? I was an inflationista earlier on, but now I am not so certain, given the lack of traction that the stimulus is having. (Don’t believe the hype – it is in Hedge Fund and Mutual Fund’s best interest to pump these markets up in order to “win back” some of their earlier losses). Oh and just wait and see what happens when the Euro comes ‘ a ‘ crashing.
June 12th, 2009 at 8:36 am
Google “Japanese Government Buys Equities” or something similar. Even just a quick review of the replies shows that the Japanese Government was buying equities as early as 2000. Therefore, the Japanese stock market was not / and probably is not real. It’s a concoction of the Japanese government … A Japanese Put – to their stock index that prevents a fall to market levels. Without Japanese government intervention, it would probably be a lot lower.
We very likely have an Obama Put running our markets now. Markets will not be allowed to fall below a given level. A little story in Section 3 of the WSJ today notes that the late day pump is the result of ETF funds buying to support massive purchases in their funds. In other words, the tail is wagging the dog in the stock markets. Index funds control the market, as opposed to index funds reflecting the market. Where’s the money coming from? To me, it looks like the risk element is missing.
The proposed Fed transparency bill would shed some light on this program, if it exists. Right now, it just looks bizarre that iBanks would pour hundreds of millions into ETFs on a daily basis as if the cash flowed like water, ignoring the risk that comes from fundamentals that don’t support a rising US market like those at this time. Obviously, they are profiting or they wouldn’t be doing it. But I suspect the profits are easier to come by when you know the playbook and have access to cash.
The stock market, like GM, Chrysler, AIG, CitiBank, is apparently too big to fail and I wonder to what extent is has been socialized by Uncle Stupid.
June 12th, 2009 at 8:40 am
@Mark (8:14)
Speaking of gold.
Look at that GLD chart. I’ve got the premarket bid on that at 92.04. That’s going to hit the support of the trendline from 5/22.
Probably we’ll see a little some gap fill work from the 5/21 day, but after that it looks destined to go try and carve a right side shoulder at 91.5 by around Tuesday.
June 12th, 2009 at 8:41 am
The joke’s on you, Barry Ritholtz. The Japanese don’t have a reserve currency like we do. We can print dollars to reflate the Dow like there’s no tomorrow and they can’t. In fact, we coerce them and everyone else to print money to make sure their respective currencies don’t get too strong versus the dollar.
It’s laughable how you imply the rules for the rest of the world applies to Americans!
June 12th, 2009 at 8:44 am
@ben22 (8:33)
My 8:40 was a trade idea. I was long DZZ about two days ago, I might trim on the open today, then re-up.
Any quick 5-8% in these markets and it apeears to be prident to say “sayonara”.
June 12th, 2009 at 8:45 am
Goddamn grammar! You really know how to rile me up in the morning, Ritholtz.
June 12th, 2009 at 8:45 am
appears – prudent
Sorry, I’m not usually into the sake this early in the morning, but BR got me going early.
June 12th, 2009 at 8:46 am
justine-
this headline just popped up on CNBC-
“Import Price Index Up 1.3%, Suggests Deflation Risks Rising; Export Prices Up 0.6%”
may help you with your inflation/deflation quandry
June 12th, 2009 at 8:49 am
where is spell check when you need it?- “quandary”
June 12th, 2009 at 8:52 am
@ben22
Also, I was spying on you the other day and picked up ZSL at $7.44 as a synthetic go long dollar play.
At least it will be a nice reward on the open. If the dollar can sustain a rally, and CNBC starts talking about “deflation” (like ahab just mentioned), hopefully ZSL can rally to $10.00.
June 12th, 2009 at 8:56 am
call me ahab Says:
June 12th, 2009 at 8:46 am
this headline just popped up on CNBC-
“Import Price Index Up 1.3%, Suggests Deflation Risks Rising; Export Prices Up 0.6%”
comment:
—————–
Taking this headline at face value … Can someone tell me why CNBC thinks a 1.3% increase in import prices 0r a .6% increases in export prices (aka inflation) is Deflation??? Is something missing or are they attempting to redefine economics? Maybe if they shout at everyone long enough, it will become true??
June 12th, 2009 at 8:58 am
dead hobo Says-
“The stock market, like GM, Chrysler, AIG, CitiBank, is apparently too big to fail and I wonder to what extent is has been socialized by Uncle Stupid.”
something we’ve all been wondering
June 12th, 2009 at 8:59 am
@dead hobo
I could explain it to you. But I’d need an octbox full of yelling people to do so.
Then I’d have to kill you.
June 12th, 2009 at 9:01 am
got this open box (gonna fill it) …
maybe the Fed and nature are telling some of us ..
that a living can’t be extracted from markets for day to day living expenses ..
markets were only meant to store capital for 30 years down the road for old age
June 12th, 2009 at 9:01 am
ahab, between your spelling and my grammar…sheez. I answered your question about The Road on the other thread.
What really pissed me off this morning is the Republicans’ energy plan of building 100 nuclear reactors. Do the Republicans even think before they say things anymore? We don’t even have the trained manpower to build, much less maintain, 5 new reactors. Each of these things cost $10 billion or more, never mind the safety and waste disposal issues and that no one wants them built near their house. The US is the only country in the world where a political party this stupid can continue to exist.
June 12th, 2009 at 9:05 am
dead hobo-
further in the article-
year-over-year, import prices declined by a record 17.6 percent-
export prices are down 6.5 percent over the year.
June 12th, 2009 at 9:05 am
CNBC Sucks, you took the words right out of my mouth, with the exception of your first sentence and antagonistic inference. : )
June 12th, 2009 at 9:07 am
ahab, here is my quandry: if most of the commodity price rise is do to traders bidding the price up and that flows through to gas pump prices, is it really a “pull inflation,” being created by demand, or an unsustainable inflation, once the deflation spiral kicks in? Simple minds need simple answers.
June 12th, 2009 at 9:09 am
CNBC sucks-
I would think the vision of nuclear reactors would fit in nicely with the forlorn landscape of “The Road”
June 12th, 2009 at 9:10 am
call me ahab Says:
June 12th, 2009 at 9:05 am
dead hobo-
further in the article-
year-over-year, import prices declined by a record 17.6 percent-
export prices are down 6.5 percent over the year.
comment:
—————–
OK. I relent. Incompetent headline writers don’t surprise me. I just chose to act like most people and not look beyond them when I responded. I wanted to look like a professional TV economic analyst or pundit. How’d it go.
June 12th, 2009 at 9:11 am
CNBCsucks, why are the liberal French able to do it?
June 12th, 2009 at 9:16 am
If we open at 934 and spend most of the day drawing lines between 930 – 934, how many of you out there see Monday as being a day where we gap down (reverse gap of May 29) to 910 at the open.
That ought to start opex week with a bang!
June 12th, 2009 at 9:17 am
This news item might tell us where all the money went:
http://www.japantoday.com/category/crime/view/2-japanese-carrying-134-bil-worth-of-us-bonds-detained-in-italy
2 Japanese carrying $134 bil worth of U.S. bonds detained in Italy
June 12th, 2009 at 9:19 am
justin-
leftback posted something last night from a dude named Gleason (not Jackie Gleason) that seemed pretty convincing Re the inflation argument-
http://www.gleasonreport.com/emails/2009-02-tgr.pdf
a bit of a long read- but it has many interesting observations as well- so may be worth your time-
I however, am still not convinced Re inflation
June 12th, 2009 at 9:23 am
BlackRock plus BGI will create yet another bank that’s too big to fail.
June 12th, 2009 at 9:26 am
deadonarrival Says:
June 12th, 2009 at 9:16 am
If we open at 934 and spend most of the day drawing lines between 930 – 934, how many of you out there see Monday as being a day where we gap down (reverse gap of May 29) to 910 at the open.
That ought to start opex week with a bang!
comment:
——————
If this were a real market, as opposed to one that is completely manipulated by massive ETF purchases, I think your speculation might be interesting. It’s how markets are made.
Rather, the market will do whatever is in the playbook for today. Just like it has for several weeks. You’re not in an honest game now. Knowing all the fundamental or technical rules won’t matter squat.
Probably the most important advice I heard in my youth was “never play someone else’s game”. You can’t win. Ever. (Under favorable circumstances in different areas of your life, you might get someone to play your’s. It’s always fun to have a Dogbert moment. Those are some of my fondest memories.)
June 12th, 2009 at 9:27 am
@ben22
I hope you followed up on your ZSL idea the other day (when it was back at 7 and a quarter)
It looks like it’s going to paint that 7.80 – 7.90 hole today, then be up at 8.60 by next week.
June 12th, 2009 at 9:31 am
@d hobo
Of course you’re right. Play the tape as it comes to you. But I sense volatility returning. There4 I like to come up with a few ideas on my own. Playing with tight stops.
If you reference what this thread is all about, the Nikkei, it seems ‘trading’ is the only way to survive. You’ve gotta be ready to be wrong though.
June 12th, 2009 at 9:36 am
deadonarrival Says:
June 12th, 2009 at 9:31 am
If you reference what this thread is all about, the Nikkei, it seems ‘trading’ is the only way to survive. You’ve gotta be ready to be wrong though.
reply:
—————
I respectfully disagree. This market has nothing to do with trading. It has traders taking the other side of the pump like Pavlov’s Dogs.
June 12th, 2009 at 9:44 am
mregan-
weird- theft?
June 12th, 2009 at 9:46 am
@hopeImwrong: I think that the path we are on is neither emo or indie, but brootal.
@Justin:
The French have 59 nuclear reactors because they made the conscious decision that the pastoral beauty of Monet and Renoir’s French countryside wasn’t hampered none too much by the presence of nuclear plant cooling towers, plus they conveniently give us all their nuclear waste, which we store in South Carolina. Also, being Socialists, the French were able to subsidize 100% of the cost…the government still owns the predominant share of those nukes.
In the USA, the Republicans want taxpayers to pay for the majority of the cost of these nuclear reactors – the cost being imported engineers from France, uranium from Canada, Australia, and Russia, and materials from everywhere else but here – except of course those nukes will be owned by FPL, Duke Energy, Xcel, and Exelon.
These utilities have stated that they would not build one nuke without generous direct subsidies – never mind the vast indirect subsidies such as Price-Anderson – from Uncle Stupid, so everytime you see anyone promoting the merits of nuclear power, that person is not asking for relief from the tyrannical suppression of the Left (and communities scared of their children dying of leukemia), but for a boatload of money from you and everyone on this blog.
@Ritholtz: I am afraid that I have hijacked your thread again. Sorry, chap. Continue.
June 12th, 2009 at 9:47 am
I’m sure we’ll be celebrating Dow 10,000 again in 2020..
June 12th, 2009 at 9:50 am
@d hobo
You don’t have to be respectful with me I have thick skin :-)
I’m even more full of crap than your average guy.
But just for s***s & giggles. The S&P bounces around between 939 – 942 all day today. Then, at 3:30, when everyone is ready for the weekly pump, it sells off and closes down at 933.83.
Monday, it opens ‘gap down’ at 910 and rallies back to 920 by 10:30 AM.
Note: Disclosure, I’m not ‘playing’ any move like that with real money (although I’m thinking about it). I’m just saying that being a bear (which I am, as I agree almost 100% with the comments made in this forum regarding the macroeconomy), I haven’t been able to make much money at all since March, so I’m forced to try and be clever and trade.
It’s not even my nature. feel free to poke holes, because I’m thick skinned :-)
June 12th, 2009 at 9:51 am
@Justin: WordPress eatey eatey my comments. Let me see if it will allow me to post if I keep to one paragraph. The French have 59 nuclear reactors because they made the conscious decision that the pastoral beauty of Monet and Renoir’s French countryside wasn’t hampered none too much by the presence of nuclear plant cooling towers, plus they conveniently give us all their nuclear waste, which we store in South Carolina. Also, being Socialists, the French were able to subsidize 100% of the cost…the government still owns the predominant share of those nukes. In the USA, the Republicans want taxpayers to pay for the majority of the cost of these nuclear reactors – the cost being imported engineers from France, uranium from Canada, Australia, and Russia, and materials from everywhere else but here – except of course those nukes will be owned by FPL, Duke Energy, Xcel, and Exelon. These utilities have stated that they would not build one nuke without generous direct subsidies – never mind the vast indirect subsidies such as Price-Anderson – from Uncle Stupid, so everytime you see anyone promoting the merits of nuclear power, that person is not asking for relief from the tyrannical suppression of the Left, but for a boatload of money from you and everyone on this blog.
June 12th, 2009 at 9:52 am
Justin – WordPress ate my comments. I tried replying four times.
June 12th, 2009 at 9:54 am
Gaming, front running the ETF’s seems to be the new preferred method of manipulation.
June 12th, 2009 at 9:59 am
deadonarrival Says:
June 12th, 2009 at 9:50 am
I haven’t been able to make much money at all since March, so I’m forced to try and be clever and trade.
comment:
—————
I’m trying to be clever by waiting it out. Even Uncle Stupid can’t defy gravity forever. I’ll buy the next dip, even if I have to wait months for it. The profits will spend just as nice if I wait for it as opposed to allowing myself to be jerked around by scam artists.
Rather than buy and hold, I suggest a sell and wait strategy. Big dust clouds and running in circles JUST DOING SOMETHING is not productive to me. Waiting it out isn’t good for the commission and fee types and is generally frowned upon by ‘Professionals’ (HA HA HA), but it works.
June 12th, 2009 at 10:00 am
Consumer sentiment came below expectation..well what do you expect.
CNBC Sucks: As an indie I do support building more nuclear plants in this country.
June 12th, 2009 at 10:00 am
I often tell people about the Japanese experience through the debt deflation of the 1990s and all of those lovely 50% rallies in the Nikkei, all of which faded again, not to mention the continued low yields of JGBs. Of course they look at me as though I was discussing Martian architecture. The relevance of something happening in the Japanese stock market is lost on InvestTools. After all, Japan is hardly ever mentioned by Larry “Green Shoots” Kudlow.
A few interesting things this morning. Our improving dollar trades are improving. We had mentioned shorting gold a week or so ago, what with the absence of either panic or inflation, the traditional underpinnings for gold.
Doug Dachille was excellent on CNBC this morning on MBS, banks and Treasuries. They had a Quadrabox where he was on with Santelli. Doug’s face when Jack Boroodjian was talking bollocks as usual was priceless.
June 12th, 2009 at 10:07 am
@leftback
Kudos to you senor for peering through the noise and making the “dollar rally” call!
I happened to play it synthetically via a “short silver” trade.
Gold tends to be more of an armageddon trade than a short dollar trade (in my opinion), whereas Silver tends to do better when the ‘inflationistas’ are roaring, but sells off when the “D” word replaces it.
And I’m a connisseur of Martian architecture (as you may well have determined by now).
June 12th, 2009 at 10:09 am
Article by Art Laffer on the inflation threat:
http://online.wsj.com/article/SB124458888993599879.html#
June 12th, 2009 at 10:10 am
It is also being fueled by the commodities bubble based on China’s alleged recovery. Here is an example of how that is going:
One could argue that the US has had two bubbles in a row while most Asia has really just has had one and is having a go. It does look like parts of Asia are embarking on a government assisted phase II credit bubble as we had here in the US from 2001-2007. It’s going to be hard to have a government assisted bubble phase III here, but the possibility at least still exists in many other countries (I still think it’s unlikely or will be short-lived).
Remember that a world that prints money is fundamentally a world without laws. Anything can happen, though without logic, conscience and order those things are likely to be bad.
June 12th, 2009 at 10:10 am
manhattanguy – It’s not that I am opposed to building nuclear plants, per se. I want the best, most cost effective source of energy, accounting for all costs and externalities, and at minimum subsidy. Unfortunately, that is not nuclear power.
June 12th, 2009 at 10:10 am
This chart and the Nasdaq 2000 popping should all be fair warning to anyone who looking for a big rebound in stocks after this credit collapse. Bubble collapses take a long, long time to recover from.
I need to find the analysis, but I once read a study saying that some large % of people NEVER EVER come back to stocks after a big bubble crash. It basically takes an entirely new generation to grow up and have money before the stocks can start their next secular bull market.
The point is a lot of “money on the sidelines” are folks who will NEVER EVER consider buying stocks again, after getting screwed by the Nasdaq.bomb collapse and now the trashing the market took last year.
Unfortunately, these things can take decades to unwind and work themselves out…
June 12th, 2009 at 10:11 am
@deadon,
Yes, the silver short is looking good so far. I got in, but really small, it’s just a trade. I’m in Indiana right now for a wedding so I’m away from the action right now. I think I can get an even better price again before this countertrend rally is over. I’m also long UUP, bigger, with an average cost of 23.90, so basically it’s gone nowhere for me….yet.
On another note, and sorry BR, way off topic for the thread:
has anyone read this weeks Barron’s? I don’t have it with me right now but there is a section towards the back that discusses mutual funds and it is touting a handful of funds that were up btwn 12-17% or so for the year, then it reveals that they were all down 38-45% or so last year. I think to myself, these guys get highlighted in Barron’s? Clearly they don’t know how to manage risk and they will all say goodbye to the returns this year if what I think can happen does.
Also, I saw an analyst late last night saying that BAC should double or triple over the next five years!
June 12th, 2009 at 10:12 am
@leftback
Also, another thing about gold.
I think we’re starting to see the pullback on yet another failed attempt at $1k.
But I don’t think whatever pullback might occur will be all that deep in the long run. You’d got guys like Einhorn in there who won’t blink an eye if gold gets back to $880. In fact, he’ll probably be in there picking off all the ‘weaker’ longs that read the “goldbug press”.
Note: I’m ‘hedged’ short against a long position (which is something that I hate to do, but what the hey).
June 12th, 2009 at 10:13 am
AT,
Re: 10:10
spot on man. I think we should see all time record desire to hold cash before the bear market is over. while cash allocations were very high at the March bottom, they should go higher still.
June 12th, 2009 at 10:15 am
AT,
Are you long the $ with LB and I? I thought you were the only other person that commented on Peter’s post a few weeks ago about the fibbo retrace in the dollar. That coupled with the extreme bulls on the Euro and all the dollar bears and chatter about China dumping the dollar, and it’s collapse was enough to push me in.
June 12th, 2009 at 10:17 am
@Andy T (10:10)
That’s what makes me laugh at all the people running into ‘financial’ stocks right now.
I mean, look at the Nikkei chart (as this thread refers to), and use the NAZ 2000 as references.
Plus, you have all the ‘dilution’ issues with the bank shares now – and – you have ‘default nation’ coming down the pipe on everything.
People who rushed into financials during the past 4 months are either great ‘traders’, or jackoffs (which sometimes means the same thing as is the case with yours truly).
June 12th, 2009 at 10:17 am
Everyone, sorry for the off-topic nuclear detour on this thread, including my multiple posts due to WordPress glitches (cleanup on Aisle 5, Ritholtz).
Let me now bring myself back on topic by closing: The Japanese have been big users of nuclear power, and look what it did to the Nikkei!
June 12th, 2009 at 10:18 am
Good Squawk Box interview with Jim Grant in the video section and the Ron Paul bill to audit the Fed. FYI, ZH is reporting that the bill now has the 218+ sponsors required for passage.:
http://www.ritholtz.com/blog/2009/06/auditing-the-federal-reserve/
June 12th, 2009 at 10:18 am
@lb: i agree with dollar trade. In fact I pointed out that last week when dollar recovered from its bottom last week. But I am not sure Gold is such a great trade. It can’t get past the 1000 area. I much prefer shorting Oil (DUG). I think Oil will trade between 50 and 70 in the foreseeable future.
June 12th, 2009 at 10:19 am
No wait. I just remembered that I never bought the financials during this rally, so I guess that reduces me to a simple jackoff. :-)
June 12th, 2009 at 10:22 am
Ben22- I was curious if you have made a decision on a financial firm? I am looking for an advisor and would like to know how to contact you? Thanks
June 12th, 2009 at 10:24 am
Hearing from more and more friends who expect to be laid off in the coming months. Hopefully for them it happens by summertime so they can enjoy the green shoots and good weather.
June 12th, 2009 at 10:24 am
@Transor Z (10:18)
Although I think that is a great idea. I can see it now.
drumroll
“A Fed Czar” – and it will probably be Larry Summers. Party on Garth, Party on Wayne. Fish face, Fish face!
June 12th, 2009 at 10:25 am
@Mannwich
You need better friends. My friend was supposed to come up this weekend to visit but she got a new (and better) job.
June 12th, 2009 at 10:25 am
Re $ trade-
UUP- or -better a short Euro ETF
June 12th, 2009 at 10:27 am
@f411: Go fuck yourself.
June 12th, 2009 at 10:27 am
@manhattanguy
A 50% ‘fibo’ on oil (from $72 – $32) would take you to $52. Gosh I’m a good mathematician!
In any case, your call sounds very reasonable (unless all those tankers at sea holding all that oil suddenly capsize). Does anyone know how the Iran elections are turning out?
June 12th, 2009 at 10:28 am
DoA: Agreed completely that gold will not go far below $900 (if at all), we are just picking off an opportunistic trade. (Because that’s what we do).
Some more room below for oil here as well and we are short the drillers as well. Not talking a really big $ rally like last fall, but 84 is possible, if only because people have overestimated the strength of the Euro and underestimated the weakness of the economy over there in Yoorp.
June 12th, 2009 at 10:28 am
Not all of us can hide in the la-land of academia.
June 12th, 2009 at 10:31 am
@Franklin411
She got a job! Good for her!
Was it GS-15? I hope so for her (as it would be a ‘snub’ to you if it were anything like a G-1).
And let’s hope for goodness sakes it wasn’t one of those ‘census’ jobs!
June 12th, 2009 at 10:32 am
@DOA:
I believe the bill proposes reporting to the CBO, not GAO, OMB or Treasury. So my guess is that the accountability structure would be more akin to the Warren Senate COP then the czar phenomenon.
June 12th, 2009 at 10:33 am
@leftback
How do you pronounce ‘Yoorp’ in the UK?
June 12th, 2009 at 10:33 am
than
June 12th, 2009 at 10:37 am
franklin411 Says:
June 12th, 2009 at 10:25 am
My friend was supposed to come up this weekend to visit but she got a new (and better) job.
comment:
——————-
At least she didn’t tell you she had to wash her hair. Her boyfriend is probably helping her with that.
June 12th, 2009 at 10:39 am
@ahab
FWIW – With Latvia about to blow up, “short euro” might be an interesting idea.
June 12th, 2009 at 10:39 am
Franklin:
You may be a first for the species…a clueless, broke-ass snob. Good thing you weren’t in the military, you’d have been sent to walk point until someone shot you, so that the rest of the platoon could have survived…
June 12th, 2009 at 10:41 am
ben22: I’m a dollar bull for the next few years. Shorter term, the 78.50 level was big for me last week and it held it like a champ. I think it’s carving out a bottom here shorter term. Wouldn’t want to see 78.37 (recent lows of last week) taken out….
June 12th, 2009 at 10:41 am
@Bruce: Nah, I think he’d be a serious candidate for fragging.
June 12th, 2009 at 10:41 am
@dead
Nope, she’s working as an HR management trainee at a major hotel chain. This is her first real/career type job since she graduated last September. She was working part time in retail and sent out tons of resumes but got no bites for a real job. Then starting around April she began receiving calls for the resumes she had sent out so long ago that she forgot about them.
If I were her, though, I’d tell her to take a job in the Federal government. There is a never-ending need for good, hard working Americans to sacrifice in public service, whether that means carrying a rifle, a grade book, or a regulatory handbook.
June 12th, 2009 at 10:41 am
franklin – Think more about what you post please. I have invested a lot of time and effort using my Republican Jedi mind tricks to support the Obama / Democratic / progressive cause on this blog (which has a HUGE silent audience), but if you keep pissing off people as you seem to be doing, Obama will not get reelected and I will have to fight off gay Southern Republican cannibals in a few years.
And if you are gonna pick a fight, franklin, pick on one of the Libertarians.
June 12th, 2009 at 10:44 am
@Andy T (10:41)
With the 30 year T auction yesterday having been considered a success, I think the $ might just hold here.
Even the 10 y has backed down 2 straight days now off of the “4″ handle.
So far, so good!
June 12th, 2009 at 10:45 am
@franklin411: HR management. Now that’s a field with a bright future. I think not (and I say this from direct experience). 95% of all HR people have little to no business acumen (hence, a clue about how things really work at their companies) and are akin to the useless “hall monitors” in school. Let me guess – she’ll be involved in setting compensation for executives? I’m sure that will make them very happy as they fill their pockets at everyone else’s expense.
June 12th, 2009 at 10:47 am
franklin Says-
“If I were her, though, I’d tell her to take a job in the Federal government. There is a never-ending need for good, hard working Americans to sacrifice in public service, whether that means carrying a rifle, a grade book, or a regulatory handbook.”
fuck your weird
June 12th, 2009 at 10:47 am
@Franklin411
“Nope, she’s working as an HR management trainee at a major hotel chain.”
—
What happened was that they ‘fired’ the guy making twice her salary and hired her in a half price to cut costs because they are going under.
So she’d better keep her resume out there for one of those “G” positions.
June 12th, 2009 at 10:49 am
grammar, grammar- that’s “you’re” NOT your
June 12th, 2009 at 10:49 am
Tools>Options>Settings>Ignore [Type "f411"]
Can also be accomplished by clicking the “Mute” button on your universal remote.
June 12th, 2009 at 10:50 am
ooh…
I’m missing my marks here putting the whammy on Franklin.
The S&P just hit 943. That’s the high print of the day IMO. we’re at 910 Monday morning on the open.
June 12th, 2009 at 10:50 am
The good news is she’ll likely have the happy task (and job security in perpetuity until her day comes, of course) of whacking employees in this climate. Fun work if you can get it. Actually, some sadistic sons of bitches in HR like this kind of work, from what I’ve seen. Must be fun for the sadist to see peoples’ lives ruined and actually playing a small role in it.
June 12th, 2009 at 10:52 am
HR dept……. watching the smokers smoke outside and maybe book a massage for the top exec.’s
Girly job …always smirk when I run into guys who fill this gig…
June 12th, 2009 at 10:52 am
CNBC sucks-
at least you make rational comments that are not vapid, superficial nonsense- and you have a sarcastic wit about you-
I wouldn’t claim franklin if I were you
June 12th, 2009 at 10:54 am
Claim Franklin, what!?
Prize goes to dead hobo with: “At least she didn’t tell you she had to wash her hair. Her boyfriend is probably helping her with that.”
June 12th, 2009 at 10:55 am
@CNBC Sucks: You’t don’t have to worry about me. The way things are going, this “Democrat” will not be voting anymore, period.
June 12th, 2009 at 10:56 am
mannwich-
no kidding- its a no heads they win tails we lose dilemma
June 12th, 2009 at 10:59 am
Mannwich-
I think we’re going to have a very hard time not seeing 4% and above on the 10yr given the Fed’s reluctance to expand their treasury and MBS purchase program. The Treasury still has plenty of supply coming to market, and if the Fed is unwilling to absorb more of that, the Chinese are going to be none too happy about picking up the slack. They’ve already made one request for Renminbi denominated issuance (laughable, I know), but there are far more overhangs to the U.S. govvie market than it can handle at this point. 5% by year end is not out of the question, especially if the Fed starts to lack consensus and ends up behind the curve…
June 12th, 2009 at 11:06 am
Renminbi denominated T-note? What?
June 12th, 2009 at 11:08 am
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5473491/Top-Chinese-banker-Guo-Shuqing-calls-for-wider-use-of-yuan.html
June 12th, 2009 at 11:08 am
@The Macrobat
I just forwarded your thread to the NAR.
They’re working on a way to spin that idea into green shoots.
They just fired their PR person and hired Franklin’s friend as a HR director to get the proper staffing in place for that campaign.
June 12th, 2009 at 11:10 am
Damn – all you East Coast people get to have all the fun long before I even get to work in the morning!
June 12th, 2009 at 11:11 am
Transor Z @10:18-
did you catch Jim Grant’s comment that inflation is caused by too much money and that the money can be used to chase skirts? . . . and then he went on to mention oil and other things-
I wonder if he was thinking of Becky Quick when that slip of the tongue came out-
it was about 6 minutes into the video
June 12th, 2009 at 11:14 am
Dead-
If ANYONE can spin higher rates, it’s the NAR. I think my realtor had to get targeted botox injections to make her smile permanent.
June 12th, 2009 at 11:14 am
DoA: Agreed completely that gold will not go far below $900 (if at all), we are just picking off an opportunistic trade. (Because that’s what we do).
Some more room below for oil here as well and we are short the drillers as well. Not talking a really big $ rally like last fall, but 84 is possible, if only because people have overestimated the strength of the Euro and underestimated the weakness of the economy over there in Yoorp.
Macro Man has an interesting commentary today on why Treasuries may not be toast after all – US households are following in the footsteps of Mrs Watanabe’s JGB holdings (back to Japan again) by buying Treasuries.
http://macro-man.blogspot.com/
June 12th, 2009 at 11:17 am
Anyone notice the newest post in TBP? Seems like the Reagan vs Bush debate should be good for a lot of discussion!
June 12th, 2009 at 11:18 am
@Macro
LOL. I can hear it now. “Rush to lock in these generational low rates”.
@Thor
Get some coffee & pull up a chair! The daily Franklin bashing has only just commenced! jk :-)
June 12th, 2009 at 11:19 am
@Macrobat: Wow, thanks, and nice blog you are building there. I know the dog’s bark is still bigger than its bite, but why didn’t you cover this, Ritholtz?
@ahab: I saw that Jim Grant slip of the tongue! I was stunned. I am not a big Arianna fan, but she looked pretty good from the back too…I think the combination caused Old Bowtie to short circuit.
June 12th, 2009 at 11:24 am
@Thor (11:17)
re: Anyone notice the newest post in TBP? Seems like the Reagan vs Bush debate should be good for a lot of discussion!
I’m not going near that topic. I’ll stick to the “sushi” theme on this thread.
June 12th, 2009 at 11:24 am
For the record: I don’t suscribe to “bashing” franklin411 (I welcome a spirited debate) or anyone else here TBP but when someone insults me or my friends and family, that’s over the line for me.
June 12th, 2009 at 11:25 am
@CNBC: Thanks…I’m no “Macro-Man” just yet, but I’m working on it. Quid-pro-quo: just checked out your site, and I think I’m going to make your “posterity” post my wallpaper.
June 12th, 2009 at 11:25 am
@ CNBC sucks-
I know-pretty funny- I can only imagine what was going through his mind- Becky & Arianna in black leather underwear possibly
June 12th, 2009 at 11:27 am
Manwich – HR management. Now that’s a field with a bright future. I think not (and I say this from direct experience). 95% of all HR people have little to no business acumen.
I would disagree (slightly). A big part of working your way up the ladder in a lot of companies today is back stabbing and office politics, something the typical HR people are pretty good at ;-)
June 12th, 2009 at 11:28 am
@ahab:
Yes. I think Jim Grant has a bit of an intellectual impulse control problem for MSM purposes. :) I grouped the “skirt” comment with the Zimbabwe comment earlier. Kind of off-the-cuff dry professorial type humor, I think. You’ve got to be careful with that kind of thing because a lot of people aren’t in synch with it and react to it literally.
June 12th, 2009 at 11:29 am
@Thor: That’s one thing I agree with. HR performance can’t really be measured, so it’s ALL about politics and nothing else. So little at stake but the knives are even longer there. It’s pathetic, actually.
June 12th, 2009 at 11:32 am
@Mannwich (11:24)
I probably mis-phrased that by saying “bashing”.
I certainly wasn’t referring to your earlier retort to Franklin.
In fact, I don’t think anyone here on TBP is either insulting, or over the line. I think that some have a way with words, but that doesn’t make them mean spirited.
If there weren’t the ‘snark’ element, what fun would it be? I think we need a few Sam Kinison types to liven things up. You never know, they might be ‘puppydogs’ in real life (but express themselves on a blog as an alterego).
June 12th, 2009 at 11:39 am
ben22
re: “Also, I saw an analyst late last night saying that BAC should double or triple over the next five years!”
Doug Kass is saying exactly that, I believe. I can’t find a reference but I’m almost positive I saw that in print. Overall he seems pretty sensible and mostly right lately, and God knows I’m no bank analyst, but I can’t imagine how anybody really thinks these banks will have that kind of earning power over the next several years with their balance sheets chock block full of these terrible loans. We know that they won’t fail because of the taxpayers’ backing, but I can’t see how they’ll be wonderful earnings machines. They’re just big black mystery boxes for me.
June 12th, 2009 at 11:44 am
Nice rally in Treasuries and the $. Wait for this BAC surge to end and then the XLF will start to slide again.
The news on the Hartford is just a sign of how bad things are at insurance companies and many pension funds.
Eventually the genii who run these funds will have to do some more liquidating.
June 12th, 2009 at 11:47 am
@Onlooker
A government backstop and steep yield curve are two very powerful arguments for continued strength. That said, what the government giveth, the government taketh away. Shifting political winds can be as fickle as the Dow. Just a few months ago, “bank nationalization” was being tested in the poll waters by quite a few members of the current administration. Now, you couldn’t get these same proponents to admit to it under oath….
June 12th, 2009 at 11:51 am
@leftback (11:44)
Just to give you an “anecdote” on Hartford. TI4WIW.
I know more than a few retirees who have annuities in Hartford. Many are considering redemptions as we speak after this recent stock market run-up. They want their cash under the mattress.
June 12th, 2009 at 11:56 am
That’s it.
You hit your 50% fibo retrace from this morning on the S&P.
This thing probably needs to push past 942.50 in the next 20 minutes or so or we’re going down.
June 12th, 2009 at 12:05 pm
trading stopped @ NYSE
June 12th, 2009 at 12:13 pm
So Summers job today is to prop up the market by speaking and answering questions for over an hour. Well the market has been flat pretty much the duration of his speech, Does he plan on keeping the Q&A going until the market close? Or will they send someone else out during the final hour of trading.
btw thanks to the marginally higher close of the S&P my reversal point in my 3LB has narrowed. Now it reverses before we get to the rising window (which would become additional confirmation).
June 12th, 2009 at 12:15 pm
Chief White House Economic Adviser Lawrence Summers said Friday that government aid to banks and auto companies was driven by necessity and not by any wish to unduly intrude in business.
AP
Lawrence Summers
——————————————————————————–
“Our objective is not to supplant or replace markets,” Summers said in remarks prepared for delivery to the Council on Foreign Relations.
http://www.cnbc.com/id/31318327
LMFAO :-)
June 12th, 2009 at 12:16 pm
@CNBC Sucks: (Late West Coast arrival) Nuclear reactors? Won’t happen. Coulda shoulda.
France kicked our nuclear power butts with breeders. Safer, simpler, make more fuel than they burn.
With Rickover and Westinghouse help we got hung up on boiling water fission reactors, you know the kind that are perfect for nuclear subs.
Nuclear power in the US has been dead for thirty years and will stay dead here. But not the rest of the world. Brew it there and beam it here. The next Asian import.
June 12th, 2009 at 12:35 pm
@leftback
What are you doing pushing those big block trades through and jamming the NYSE’s server on a Friday afternoon for?
June 12th, 2009 at 12:56 pm
Why do I have the feeling holding exposure over the weekend on the short side (no overnight bets from me for 9 months) is the right thing to do here? Especially if there is a last hour pump.
June 12th, 2009 at 12:57 pm
Maybe that means I should go long with leverage?
June 12th, 2009 at 1:07 pm
Anyone here parking cash waiting for the definitive top to this rally besides me? After losing a few toes w/probing short trades, I am raising cash into this leg of the rally.
If so, what are you using for short term cash to get a little yield?
I took some cash out of some MLP’s after they ran up, and am considering TIP for parked cash.
Then at some point between now and the end of summer, I expect to move into the SDS, maybe losing a few toes but eventually expecting to be vindicated before Dec 09.
Thanks in advance
June 12th, 2009 at 1:17 pm
@Boots or Hearts
FWIW
I don’t think we’ve put in the top just yet, but I also think we might pull back here.
Just so as to frustrate everyone and buy some more time.
June 12th, 2009 at 1:32 pm
Boots: Looking at the bond market, the long end of the Treasury market has been pounded and represents short term value relative to TIPS according to many FI observers. Not only is this usually a decent midsummer trade, but in 2H 2008 it was THE trade other than shorting (remember many funds are bonds only and basically trade the spreads, while other funds can change asset classes but cannot short).
If the rally in JNK and MBS, materials and energy is indeed as overdone as it appears, then a Treasury rally is by no means out of the question. We put on some long positions in the 5s and 10s and 30s this week on weakness. Of course we will not hold these forever….
June 12th, 2009 at 1:37 pm
DOA:
Thanks, I agree I think we pullback to 880 (maybe lower) fairly soon, then another rally leg takes us to somewhere north of 1000.
1100-1200 seems like fair game if people really get crazy. What a good short 1200 would be imo…..!
Of course what I think does not matter to the market, thats how I hope to play things though
June 12th, 2009 at 1:49 pm
@Boots or Hearts
I’d listen very closely to what “leftback” had to say there (1:32).
In other words – we “could” pull back to 880 – we “could” rally to 1100.
But whether we do or not (either way). I believe the move is going to be dictated by the long bond market.
Probably LB’s move into the long end was a great trade for early summer. That area (as well as the dollar) is going to be the “parking lot” for a lot of the cash that has been levitating in commodities & equities over the past 3 months.
There’s probably plenty of time still to let the last of the “investools” get lured into equities. When that is played out, there will be a lot of room on the downside.
June 12th, 2009 at 1:55 pm
oil is a show- manipulation?
June 12th, 2009 at 2:12 pm
DOA thanks for the comments appreciate them.
Leftback: Somehow I did not see your post, but now that I have read it thank you for the insight. In particular on TIP versus the 5,10 and 30.
I put on a small position in uup last week about 1 % lower than it is now, other than that watching for now.
June 12th, 2009 at 2:37 pm
Now that you mention it, the yield on the 30 does look like it is nearly done going higher (for now).
June 12th, 2009 at 2:47 pm
hurx,
Thanks very much for asking. While I’d be happy to talk to you, I’m not sure that is appropriate given the fact that BR runs FusionIQ with his partners and they are taking new clients and expanding. Since this is his blog it seems fair to give him first shot.
I still haven’t made up my mind to answer your question about firms, it’s down to 2, but I am talking to BR’s people so perhaps it won’t matter. I’ll let you know.
@Onlooker,
It wasn’t Kass but I suppose I’m not shocked to hear that about him. I like Kass but he’s made a buy the banks call many many times over the last 10 months or so. It seems like the new argument is that they will make gobs of money in the short term and lose gobs of money in the short term but eventually they will just make a lot of money. Not for me, financials that is, I’ll stay away. I’m a deflationist so I’m not interested in owning the banks. Clearly there is money to be made elsewhere and with the risk associated with investing in banks I’d prefer to just smile at the commentary.
Last, I see Franklin went and made another stupid comment and it ended up taking up about 40 posts on this thread. too bad, it started out well with good investment ideas and some smart commentary.
BR, start charging! Franklin spent his last $40 bucks on the new Blackberry.
June 12th, 2009 at 2:54 pm
I meant hurx above. Damn WP.
@ Ahab,
Re $ trade-
UUP- or -better a short Euro ETF
If you were a real dollar bull perhaps the highest reward would be a short commodity trade but I don’t think a Euro short is a bad idea at all right now fwiw.
AT,
Count us in the same camp re: dollar bull.
June 12th, 2009 at 2:54 pm
really I mean: hrux , wow, that’s bad.
June 12th, 2009 at 6:58 pm
Ah, Japan, a look at Christmas Future. Tip ‘o the hat to Mr. Dickens.
June 13th, 2009 at 9:00 am
Dollar is going to strengthen once deflationary forces come to the forefront. This talk about inflation is way off base, but psychologically needed for the psydo-support of the market. But make no mistake this rally is the mother of all bear market rallyies