Media Appearance: MSNBC’s Morning Meeting
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This morning, I will visiting with Dylan Ratigan & Co. on MSNBC’s Morning Meeting at 9:15 and 10:00 am. We will be discussing Housing, and possibly Bernie Madoff’s first prison interview (Madoff: Can’t Believe I Got Away with It). As I noted back when Bernie was arrested, the I worked alone story Smells Funny.
The most recent Housing data has been grossly exaggerated — its been mediocre to poor at best — and is not remotely the proof of a bottom its been portrayed.
It it important to note that many of the same analysts and reporters who missed the warning signs of the Housing collapse are now very keen to declare a bottom. If they lost you money missing/ignoring the top, is there any reason to buy into their bottom calls?
The sad truth is that many media reporters who cover Housing and the Economy are innumerate — mathematically illiterate — and simply do a poor job of sifting thru monthly statistics (I do try to highlight the exceptions here all the time).
Anyway, MSNBC at 9:15 and 9:45/10:00 am
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Previously:
Why Economists Missed the Crises (January 5th, 2009)
http://www.ritholtz.com/blog/2009/01/why-economists-suck/
Madoff Story Smells Funny (December 14th, 2008)
http://www.ritholtz.com/blog/2008/12/madoff-story-smells-funny/
Worst June New Home Sales Since 1982 (July 29, 2009)
http://www.ritholtz.com/blog/2009/07/more-charts-on-new-home-sales/
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July 29th, 2009 at 8:45 am
El Erian is on CNBC now. Interesting: no growth til we see that the deleveraging is coming to an end and he hasn’t seen any sign of it nationally or globally. Can have a 2-3% GDP before we get to that point, but that’s meaningless.
July 29th, 2009 at 8:47 am
Noticed that after these statements, Joe announced that he was sorry El Erian had to leave so quickly. Makes you wonder.
July 29th, 2009 at 8:48 am
Did you actually read the consumer confidence report yesterday? If not, this is the summary:
http://www.nasdaq.com/asp/EconodayFrame.asp
Highlights
Right when investors are gaining confidence, consumer confidence is eroding. The Conference Board’s consumer confidence index fell a sizable 2.7 points to 46.6 in July, making the hope of May’s 54.8 peak a dim memory. The assessment of the current jobs market is the central weakness, with 48.1 percent of consumers saying jobs are hard to get, up from 44.8 percent in June and 43.9 percent in May. The outlook for jobs isn’t any better with fewer, 15.0 percent vs. June’s 17.5 percent, seeing more jobs six months out. This is spilling over into expectations for income where only 9.5 percent see an improvement six months from now, down from June’s 10.1 percent. More also see a decrease in their income, at 18.8 percent for a 6 tenth increase.
Housing data has been on the mend but readings in this report don’t point to any further improvement as only 2.1 percent say they plan to buy a house, down 5 tenths from June. Fewer also expect to buy a car and fewer expect to buy any major appliances. Inflation expectations are declining, reflecting the drop in pump prices and also the weak business conditions. Twelve-month inflation expectations are at 5.5 percent, down 4 tenths from June.
This report, together with the Reuters/University of Michigan consumer sentiment report, are pointing unfortunately to continued recession, at least they are raising that risk. Job losses may be easing but workers, many of whom are now losing their benefits, are having a hard time finding jobs. Stocks and commodities fell in immediate reaction to the report while the dollar gained — all evidence of risk aversion.
July 29th, 2009 at 9:09 am
Rattigan’s good. Called down some congressman who objects to a government option in the health care bill because it doesn’t protect the private insurers. Of course he doesn’t realize that’s what he’s saying.
July 29th, 2009 at 9:09 am
here you go BR-
“High-End Hamptons, NYC Real Estate Slammed, But Don’t Pity the Sellers”
http://finance.yahoo.com/tech-ticker/article/291957/High-End-Hamptons-NYC-Real-Estate-Slammed-But-Don‘t-Pity-the-Sellers
“In the Hamptons, which is to New York what Nantucket is to Massachusetts, things are so bad “even the brokers have stopped trying to deny it,” according to Vanity Fair.”
July 29th, 2009 at 9:10 am
Bruce: good point on the number expecting to buy a house.
Wonder if there’s a correlation with home sales and that figure.
July 29th, 2009 at 9:11 am
I was listening to NPR this am…and there was a short story on their business segment about the demise of pubs in England. A very large amount of this is from the recession, but in this segment they went into the huge increase in national taxes on beer in England over the last two years. Up 20%. This has caused a large mug of beer in the average pub in England to be just north of 6 dollars per. They simply cannot compete with the supermarket that sells beer that the patron goes home and drinks alone or with others at his home.
I wonder where all these new taxes to pay for all the big government ideas are going to come from? Will they have the same unintended result that higher beer taxes are having on pubs in England?
July 29th, 2009 at 9:17 am
Didn’t notice that the price of a beer was particularly high this spring. Of course the pound was down to 1.50 and I was in a tourist area. My big complaint that the staff were all eastern European where we went.
Didn’t see that many pubs, but from what I saw and read, one reason for the demise of the traditional pub is that many are being bought up by chains and many are becoming gastropubs catering to yuppies. The later is probably taking a hard hit in the depression. Haven’t looked, but the buyouts may be following the traditional LBO model: the dealmakers extract large fees and leave the business with huge debts.
July 29th, 2009 at 9:27 am
Anybody else noticed Dylan’s hair looked funny? Don’t know if it’s baldness or covering gray or what. If he establishes himself as a serious host, he should gradually move to a more natural look.
July 29th, 2009 at 9:41 am
Banning smoking in pubs hasn’t helped either.
July 29th, 2009 at 9:45 am
“even the brokers have stopped trying to deny it,”
But I’m sure they’re still saying that it’s never been a better time to buy a home (or to catch a falling knife with your face)
July 29th, 2009 at 9:59 am
TC Says-
“or to catch a falling knife with your face”
just trying to create that picture in my mind- most definitely painful and possibly fatal- LOL
July 29th, 2009 at 10:33 am
Barrry:
Good job and no charge for the use of my ideas from the comment on the New Home Sales thread :)
Hope Dylan’s program catches onto/helps fuel a moderate populist wave to replace the status quo and force adoption of policies favorable to average Americans as opposed to very wealthy. However, I think the fate of the Gracchi showed this is probably impossible.
July 29th, 2009 at 11:11 am
Durable goods orders declined -2.5% in June (consensus -0.6%) while the May number was revised down to a 1.3% increase from an originally reported 1.8% increase.
http://briefing.com/Investor/Public/Calendars/EconomicReleases/durord.htm
…SPEAKS FOR ITSELF…..B IN T.
July 29th, 2009 at 11:16 am
Playing some $DUG for a trade. Looks like oil is done.
July 29th, 2009 at 11:21 am
Look at DTO go. Up over 10%. Very nearly pulled the trigger on that one.
@karen: Did you stick with that one?
@manhattan: Am still playing DUG for a trade as well.
July 29th, 2009 at 11:34 am
@Mannwich: Glad you are
Check out the move in Dollar (UUP). It wasn’t building a nice base around 23.4 for no reason. Dollar rally will put an end to this over extended market.
July 29th, 2009 at 11:35 am
manhattanguy and manwich: be nimble and careful of the big guns. Any possible bullish news on employment or GDP will be spun to death.
July 29th, 2009 at 11:38 am
I’ve been playing the ZSL as the dollar proxy
July 29th, 2009 at 11:40 am
I might take a bow and exit here though…
July 29th, 2009 at 11:45 am
You want the ‘Liberal Media’ to go out there tonite and say housing ain’t as good as it seems, after lastnites pumping/pimping of housing….You got balls, pal.
July 29th, 2009 at 11:50 am
jeff, sold my dto today.. maddeningly 3 pts too early.. still made quite a bit, tho.. this market is making me so crabby.. it is so untrustworthy! you never know what is coming out of left field.. as someone at macro man posted today: I hate 5 minute macro – as soon as something goes your way you are almost obliged to cover half the position.
f
July 29th, 2009 at 11:51 am
Bruce – and yet the spin has already begun – From Bloomberg
U.S. Durable Goods Orders Rise Excluding Cars, Planes (Update2)
July 29 (Bloomberg) — Orders for U.S. durable goods, excluding automobiles and aircraft, unexpectedly rose in June, signaling manufacturing may expand in the second half of the year.
July 29th, 2009 at 11:53 am
Like I was holding my breath for this deal to happen. If you ask me, they both are losers in this game. I guess Microsoft already concluded just a month after its Bing launch that it isn’t working out.
“Microsoft, Yahoo strike search deal”
http://www.marketwatch.com/story/microsoft-yahoo-to-team-up-at-long-last-2009-07-29
July 29th, 2009 at 11:55 am
karen says-
“this market is making me so crabby.. it is so untrustworthy! you never know what is coming out of left field”
you nailed exactly the way I feel- and probably many of us- gut wrenching to take any kind of position
July 29th, 2009 at 11:57 am
@Mike in NOLA
“Any possible bullish news on employment or GDP will be spun to death.”
That’s kind of what I have my eye on at the moment…Many (including myself) have been waiting to see the dollar finally show some life…Many (including myself), have taken it as a cue that an equity selloff would accompany that move…
Now that that day has sort of arrived, I’m watching it and seeing it’s more commodities & emerging markets that are getting schellacked…There is more of a volatility gap in those types of shares so I’m not that surprised…
But what it suggests to me is the following:
The S&P is in a tight little horn up here between 982 and 968 (which could probably be widened to 960)…I might just maintain that configuration until after NFP numbers come out next Friday…”The spin”, etc. etc…
So if commodities manage to hold the lower levels of their volatility range during this period, it could set up for one more blowout to the upside…I’m not expecting much (perhaps 1007-1008)…During that time, I’d expect commodities & emerging markets to test their downtrend lines one more time…
Then FINALLY I think this rally can call it quits…
Kind of convoluted – but JMO
It’s still a TRADE at the moment the way I see it…
July 29th, 2009 at 11:59 am
Charts don’t move markets……Stories move markets! Long GS till they do the handcuff shuffle!
July 29th, 2009 at 12:04 pm
@Mark Down
Yeah I’m sure those computer algorithms have their ears all pricked up waiting to hear what Dennis Kneale has to say…
July 29th, 2009 at 12:05 pm
@cvienne,
I haven’t pulled the trigger just yet again on the ZSL but it’s looking worthy again after the big drop from 10.50, after that run up from the mid 7′s when we first brought it up.
Feeling better today about breaking Gartman’s rule when I added to my losing FXP position as that second lot is now solidly in the green, still down overall however on that trade.
AT’s charts this morning were interesting, lots of different scenario’s, I have virtually nothing long now, once my target was hit I didn’t see the point in trying to hold on for every last penny. I’d go long again on the pullback, which could be starting today, maybe last through Monday, and try to trade a few things up on the last leg higher, from there though, between 1k and 1,100 its time to start to load up on the short side imo.
On another note cvienne, got any tips for getting rid of poison ivy besides normal anti-itch stuff. I was doing yardwork two weeks ago and I’ve got it all over my legs, driving me absolutely crazy right now.
July 29th, 2009 at 12:06 pm
I feel the inner bear in Karen slowly coming out….
July 29th, 2009 at 12:11 pm
Hey, I made a funny :-)…
I used Dennis Kneale & “prick” in the same sentence without resorting to calling him one (clever as I am)…
@ ben
Good thing about ZSL now is that it feels like the support has been put in…I took off my position, but I’m going to try and trade back in on a pullback to around 9…
I saw AT’s charts this AM too…VERY COMPREHENSIVE…It kind of underlined my feelings (after 960), that we are in “la-la” land right now (so anything from 1200 to below 600 seems possible)…
July 29th, 2009 at 12:17 pm
@ben
Re: Poison Ivy
I’ve heard tea tree oil works…If you can’t get that, you can even try just using some used tea bags on a local area to see if you get any relief…
I’ve also heard that flaxseed oil might help, and that milkweed can help (but it may cause a sudden burst of extra itchiness followed by overnight healing)…
July 29th, 2009 at 12:18 pm
ben, you can make the itch disappear for a while by running the hottest water you can stand over it.. the itch will be intense for a minute then subside.. then your body makes more itch chemical and you have to repeat the process..
July 29th, 2009 at 12:30 pm
@karen
OUCH!…it sounds like the cure is worse than the problem…
For that matter…it sounds like a government solution to a problem…You MUST be crabby today girl!
July 29th, 2009 at 12:31 pm
cvienne and karen,
thanks for the tips. At this point I’m willing to try anything.
July 29th, 2009 at 12:33 pm
I think the claims number will be > 600k tomorrow. For the last two weeks, seasonal adjustment factor was 1.28, effectively reducing the NSA numbers. Now it reverts to 0.9, effectively INCREASING the NSA number.
Compared to 2008, each week we have had at least 40% more NSA claims. If we scale up last year’s number by 40% and then apply the correction, we get 605k.
Not sure what that will do to the market though…
July 29th, 2009 at 12:34 pm
Ben,
What do you think of LQD here?
July 29th, 2009 at 12:39 pm
@Bruce
…He probably doesn’t think it’ll help his poison ivy…:-)
Hey Bruce, you’re a doc…help Ben out with that a little…
July 29th, 2009 at 12:55 pm
Ben:
You’d probably do better with OTC 1% hydrocortisone cream applied 3 or 4 times a day…nothing will cure it, but this is probably the better idea..
July 29th, 2009 at 1:07 pm
@Ben
What works for me…
Thoroughly wet affected skin with hydrogen peroxide, scrape like hell with edge of a popsicle stick or chopstick. Rinse with more H2O2. Pat dry and apply both an anti-itch ointment (with Pramoxine Hydrochloride 1%) and a hydrocortisone cream.
July 29th, 2009 at 1:12 pm
On another thread…?
wasn’t there a graph on one of barry’s post yesterday of S&P P/E range of values calculated from top-down and bottom up?
Can’t locate it on TBP or any other blog I frequent, and it’s driving me crazy.
Just like that chart Barry posted this morning on SPX earnings…, now gone too?
Where do these things go when he de-posts them?
July 29th, 2009 at 1:33 pm
Anyone else struck by the SP500′s “resilience” today in the face of the energy getting walloped and the DX ripping hard from a possible “double bottom”…..this SP500 just hanging in there. Either everything else is just a headfake or the stock market is going to get rolled hard very soon….
July 29th, 2009 at 1:33 pm
Re: Poison Ivy
The best thing I’ve found is Zanfel for relieving the itch. http://www.zanfel.com/help/
It will help a lot but won’t solve the problem if you have systemic exposure, the urushiol oil has gotten into the blood stream. If that is the case, and it sounds like it, you need to head to your doctor and get a scrip for prednisone. That stuff knocks it out right quick! I wish I could get prednisone without the scrip, I’d never fear poison ivy again!
July 29th, 2009 at 1:34 pm
“Either everything else is just a headfake or the stock market is going to get rolled hard very soon….”
While I am prepared for both scenarios, my view is that markets are pretty extended and due for a sharp correction.
July 29th, 2009 at 1:43 pm
@ AT:
There may be some new shorts sucked in on this breach of the box at 970…
But I suspect there will be a bounce at 966.
I actually took a bite of UCO at 10.30 an hour ago… that tells you how I feel about that.
And would be looking to snag some SSO if we either:
A. Recapture the 50 period MA on the 15 min charts
OR
B. Pivot reverse off of 966
July 29th, 2009 at 1:44 pm
Andy T,
The technicals are shouting that this market is going to turn-over. But trader’s are probably betting Friday’s GDP number will come out better then expected, and that could be the catalyst for the next leg up.
July 29th, 2009 at 1:45 pm
@AT
I was confused about that when I saw the move in the dollar…the one trade to rule them all doesn’t seem to be as powerful as I was thinking…
July 29th, 2009 at 1:59 pm
I would imagine that the President gets an early look at all the numbers.
I wonder if Obama is sharing something about the remaining economic numbers this week:
Obama: U.S. may be starting to see recession end
July 29th, 2009 at 1:59 pm
cvienne: although I don’t attempt TA, I agree with your analysis in general. I had said a month ago and awhile before that that while I though this rally was bs, wouldn’t be surprised to see it hit 1000. All those computerized traders out there, esp. the big boys, could drive the market up quickly, esp if they generate a short squeeze. Was wondering that was part of the game today: drive it down on bad news, get people to go short and then squeeze. It’s not like the markets are honestly run.
At some point when things get bad enough, they will have to join the bears. It’s just when.
July 29th, 2009 at 2:04 pm
@Mike in NOLA
You must be referring to my post from earlier this morning (11:57)
I’d paste the link here, but for some reason my CTRL + C key isn’t working…
Frankly, I’m a little surprised, but I trade what I see (which at the moment is NOTHING, just wait & see)…
Although I did have some ZSL that I sold out of this morning, and I’m still holding onto some way far off, way out of the money calls on the TLT…
July 29th, 2009 at 2:07 pm
spoonman.
“the one trade to rule them all doesn’t seem to be as powerful as I was thinking”
Perhaps….but I would trust the clues coming from the Forex market much more than the stock market…. maybe just some weird cross currents today….
July 29th, 2009 at 2:10 pm
I think the DOLLAR move may need a couple more days of follow through…
It’s really not out of the woods yet…Maybe it was all kind of a knee jerk reaction to the overnight move in China…
I think copper has seen its high for the year though…
July 29th, 2009 at 2:12 pm
If I had to guess, the action today follows through tomorrow morning and we test the 956-966 area. GDP report friday surprises and we make a leg-up off support. Great setup. Why am I bullish on GDP? simple
Y = C + I + E + G
G = up on stimulus
E = up on lower imports, higher exports thanks to a weak dollar.
July 29th, 2009 at 2:17 pm
does anyone see the possibility that a crash would eminate out of China- which the asian indexes collapsing- starting a global sell off-
then programmed trading would accelerate the sell off in US Indexes- causing a halt in trading-
my thinking is that if the US consumer does not resume buying Chinese goods- then China cannot continue to expand- stimulus can only work so far- then reality will set in that the US consumer will not be coming to the rescue- then-
collapse
July 29th, 2009 at 2:20 pm
call me ahab,
I think a crash can be precipitated by even a minor event such as small nation defaulting on debt or liquidating t-bills.
July 29th, 2009 at 2:20 pm
@ahab
Oh I absolutely see that not only as a possibility, but a PROBABILITY…
In fact, my two biggest catalysts for a meltdown at the moment are…
1. China speculative bubble burst
2. European bank meltdown
That’s while everyone here in the US has their heads up their a$$es
July 29th, 2009 at 2:21 pm
To all,
Man I love TBP, I come here for econ and stock information and I can even get tips on my PI issue. Thanks very much for all the responses.
@Bruce,
If I recall you were buying callable CD’s in the not too distant past so you may be looking for some safety with LQD but with a higher yield? If so, perhaps you’ll want to double check BND before you buy the LQD. I use BND for a lot of clients. Couple things that jump out at me. BND is a little bit cheaper than LQD @ .14 vs. .15 but that’s not overly compelling. Looking at the holdings are though. First, the Vanguard fund has a slightly shorter average maturity so for me, given my fear of credit deflation, I’d prefer a shorter duration in bonds, and I’d still prefer treasuries (like schilling says, we aren’t buy govies for the yield). Next, notice the credit quality ratings on BND vs. LQD, over 20% is rated as “other” whereas the BND has roughly 80% rated Aaa, with only ~7.5% of the portfolio rated below A. Both had a large drop in the October period last year so if you still have some concern that such credit tightness can occur again in the future then this is still not something for buy and hold, you’ll have to watch it. Last, the LQD has a better yield, and has outperformed BND for the year but as I say above, higher risk as well. It’s now well known that the higher beta holdings have been the best for this rally, I’m not sure I’d want to bank on that lasting much longer at this time, and there are certainly better things to trade than LQD if you were just looking short term. For me, if I’m looking for bonds, I’m looking for safety right now, and would be more than willing to give up some % on the yield for it so I’m not overwhelmed by the higher payout on the LQD vs BND.
Hope this helps.
AT,
First, nice letter this morning, or last night, whenever you sent it. Second, dollar is all over for me right now. That’s all I’m watching and not so much the market. Yesterday was odd given the consistent relationship btwn stx and the $ but I don’t think we can call an end to that trend on one days outcome. Today seems closer to what we have been seeing. I’m going to ask Prechter or Vikram via the EWI message board about your question about the wave 5 down in relation to wave 1 as discussed in the outlook this morning to see if they can give us some comments on that, the other wave followers I talk with made similar comments as you did about the structure of that 5. They typically respond quickly so I will let you know what they say, might not get us anywhere but at least we will understand the rationale better.
July 29th, 2009 at 2:23 pm
call me ahab:
Chinese is so incredibly screwed it’s beyond words. How would you like have fashioned your entire economy around being the world’s largest exporter at a moment when the world dramatically curbs consumption/imports.
Also, everything I read about how the government is forcing banks to make loans, regardless of credit quality, just boggles the mind. I don’t think it ends well there.
China in 2007 = USA in 1929.
July 29th, 2009 at 2:24 pm
regarding GDP this week, it is entirely possible that any upside “surprise” in GDP has already been baked into the market, or was it a short squeeze only that led to an 11% rally? I’m thinking it was more than just that so I’m not sure that the market will love bte on the GDP on Friday. Plus, I can’t imagine a lot of traders will hold longs going into this weekend, why would you want to, so we could also spike up quick on Friday off the news but then slowly grind down the rest of the day.
July 29th, 2009 at 2:25 pm
@ahab:
I think a meltdown originating from China and/or emerging markets in general is a reasonable probability event. Right now, so much of the financial community has gone back to the la-la land mentality of decoupling, but the fact remains that the EMs are not sufficiently uncoupled from the U.S. or Europe for all of us not to sink or swim together.
HCF
July 29th, 2009 at 2:27 pm
b22-
good hypothesis-
alternatively- if WTE- then possible mass stampede to the exit doors
July 29th, 2009 at 2:27 pm
@Bruce,
Too add to my post above, also be careful b/c both BND and LQD trade a premium to NAV.
https://personal.vanguard.com/us/funds/holdings?FundId=0928&FundIntExt=INT
http://www.etfconnect.com/select/fundpages/fixed_etf.asp?MFID=93839
July 29th, 2009 at 2:31 pm
To add one more point on China…
We have to separate financial meltdown in China vs. social unrest. The former primarily screws the relatively small, urban middle class and foreign investors/speculators, while the latter is the other billion or so people. China seems to be taking actions to ensure that no chaos takes hold if/when the crap hits the fan (stocking up commodities/oil/etc.). As long as people can eat, and are nominally employed, internal order can be maintained. Therefore, the Chinese government’s concern about U.S. treasuries, financial markets, etc. are ALL secondary issues.
HCF
July 29th, 2009 at 2:31 pm
Tim Seymor on Fast Money is the decoupling king. He’s so bent on that thesis that I don’t think he can ever change his mind. That guy has rec’d BIDU more times than I can count, and while there has certainly been good times to trade that bad boy, rec-ing it all the way down doesn’t work Timmy.
July 29th, 2009 at 2:34 pm
HCF-
good points
July 29th, 2009 at 2:34 pm
Andy T:
ya beat me to it about China. Long been my thesis. They have the functional equivalent to Smoot Hawley in their increased subsidies to exporter and the rest of the world is starting to push back.
http://mpettis.com/2009/07/squeezing-out-the-exporters/
Their recent boom is built on speculation and leverage. If the credit slows even halfway, cracks will start appearing and likely a chain reaction.
Oops! looks like the SPARCS have been unleashed for their daily squeezing.
July 29th, 2009 at 2:38 pm
I still see a very resilient market here, in the last 3 sessions we have closed well off the lows. I would like to see us close at the low of the day for once before calling a top. I think that’s enough reason for traders to hold into the weekend.
The difficult trade at the moment is not to go short, but to hold long.
July 29th, 2009 at 2:40 pm
CapitalistCanuck :
GS and JPM have plenty of money to bounce the market around since it’s not really about value, but makeing a few cents on volatility. Hard to call a top until there are some real breaks.
July 29th, 2009 at 2:44 pm
Fanboys: You should read this:
http://blogs.chron.com/techblog/archives/2009/07/your_iphone_soon_to_be_ipwned.html
July 29th, 2009 at 2:50 pm
Realtors pushing more giveaways to boost home sales:
http://www.cnbc.com/id/32203319
What’s really interesting is talk from the NAR about 50 year mortgages.
July 29th, 2009 at 2:54 pm
@CC,
Yes, that is a good point @2:38, there was more going on here than just short covering so far as I can tell, there is real buying interest right now for equity, even if it doesn’t make sense to a lot/most/all of us. Still, the almanac data on Th and Fr. performance vs. M/T/W is compelling and I think even more so given the massive rally over the last couple of weeks so I’m just inclined every week to be more bearish thursday and friday.
July 29th, 2009 at 2:55 pm
didn’t japan have 50 year mortgages or longer in one attempt to stop the credit bubble from bursting there? why wouldn’t we do that if that is the case, we are basically copying pretty much everything else they did.
July 29th, 2009 at 3:02 pm
b22-
yes- 100 year intergenerational mortgages
July 29th, 2009 at 3:03 pm
thanks, Ben. Always appreciated…
B in T
July 29th, 2009 at 3:03 pm
@ben
I know Europe was auctioning off 50 year gilts…
July 29th, 2009 at 3:06 pm
re 100 yr mortgages-
“Such long mortgages come perilously close to indentured labor, mortgaging your work life and that of your children to the bank or to foreign investors. As Michael Hudson has noted, it is more reminiscent of preindustrial, feudal economies than of modern democracies.”
July 29th, 2009 at 3:10 pm
@ahab
Whose to say that the USA is a democracy anymore…I’m more inclined to think of us as a feudal economy…
July 29th, 2009 at 3:11 pm
yes- 100 year intergenerational mortgages
I’m sorry but that just seems insane to me. Not to mention, some of these boxes Toll Brothers and the like are slapping together probably don’t even have a 100 year life.
July 29th, 2009 at 3:13 pm
another thing, what to people think at closing when they agree to a 100 year mortgage and see the total payments over life of loan line. Again, insane.
July 29th, 2009 at 3:16 pm
Mike – interesting article, we’ll see tomorrow won’t we. Don’t own an iPhone so not to terribly concerned with it. I’m a fanboy of their desktop OS by the way, not the company itself.
July 29th, 2009 at 3:19 pm
@ben22
Re: S&P support/duration
I’ve been seeing a lot of “mirror images” in trading lately…
The recent run-up (in vector & velocity) was almost a mirror image of the rally off the March 6th bottom…
also…
If you look at the plateau we’re on right now…If you’re into rulers and crayons, you could draw a line from the base of the June 1st open through the 7/23 BREAKTHROUGH of 960 (assuming that would be a base)…and it conforms more or less to a support line…
The 6/1 – 6/11 plateau basically lasted 9 days and didn’t break support until 2 days later…
The present version (assuming it is a mirror) would assume we might reash a high next Tuesday, start to wobble a little on Wednesday & Thursday, then make a sharp correction on Friday (NFP day)…
Of course, that would then put us right in front of OPEX week, so a break there would give the players yet another week of clowning around…
FWIW – my 2 cents…
July 29th, 2009 at 3:21 pm
ahab
Yep, I remember reading about those 100 yr mortgages just recently in a post by Ed Harrison at Credi Write Downs. It was a cautionary tale about buying RE in Japan in ’94 at what SEEMED to be a great discount, when looking at the peak prices. The fatal error, of course, that many have made and will be making here for a while.
Debt slavery is all that is.
July 29th, 2009 at 3:24 pm
@ben22 3:13
They’re thinking about 100 more yrs of kickass SUVs off home equity loans
July 29th, 2009 at 3:26 pm
And that’s why people really need to walk on their mortgages if they’re severely underwater vs. modifying into a quasi-Option ARM that just leaves them being a renter, in reality. And it keeps prices propped up at unrealistic levels that freezes people out or brings about such things as 100 yr mortgages for those foolish enough to go there.
It will be better for all in the longer term, even if it feels like crap in the short term; for those going through it and for those who didn’t participate in the madness.
July 29th, 2009 at 3:27 pm
@ben22
“what to people think at closing when they agree to a 100 year mortgage and see the total payments over life of loan line. Again, insane.”
—
x2…insane
There was a time in my life where I thought it meant something to have the 5,000sq ft. house with the VIEW…But I got over it…My house in Umbria was like that…castle view, the whole 9 yards…but in the end it was kind of pointless wandering around a bunch of empty rooms…
An economy cannot prosper with small sized families crowded into overpriced homes…It would be better to have LARGER families and more LAND…
The Chinese are going to find out that very quickly after their little migration experiment blows up on them…
July 29th, 2009 at 3:27 pm
@ CV:
I think we’ll see alot of clowning around between now and the fall. Thats fall the season, not fall… “the fall”.
I have my sights on what will probably end up being the neckline of that ginormous Inverse H&S on the weekly charts… approx 1015… or 1050… or if its really going to be juicy… 1100.
I’d say thats a good enough upside target before reality sets in again. Pretty much the same as what everyone else here has been saying, once they’ve come to the conclusion that there aint no fading this thing during the summer.
July 29th, 2009 at 3:28 pm
@cvienne,
interesting theory, your last calls around opex were spot on too.
July 29th, 2009 at 3:30 pm
BTW…
My little dip into UCO was short lived. Dont really have the tolerance for trades that dont work out immediately at this point.
July 29th, 2009 at 3:30 pm
Afternoon, homies… well, this is a but more like it for those of us who are short gold and other reflation trades.
Looks like the oil specs finally gave up the bull(sh*t) run, I see. This may be THE TURN in the ONE TRADE – the US$ – that we have been waiting for, but having been teased before by the greenback I will reserve final judgement until we see a higher low off what looks like a double bottom. As always I will be listening to AT and Karen.
@CV: LB does enjoy your interesting posts and insights. I really like your collapse catalysts, European bank failures and China meltdown are my #1 and 2 also.
We are sort of expecting a bounce tomorrow on “not-so-bad” claims numbers and then some Green Shootery and Bensteinery into the weekend. Next week looks more important unless some critical supports are taken out.
July 29th, 2009 at 3:34 pm
@I-Man
You might be right…
The higher this goes the better IMO…I simply refuse to play it on the upside though…UP is still “countertrend” for me (because I have a long term bearish outlook)…I don’t see any point in playing “countertrend” for a lousy 10% (or whatever the potential upside is)…
Even the VIX is still firmly in a down channel (despite the past couple of days)…
Probably as puts get cheaper & cheaper, the GS & JPM boys will start picking those off…
Meanwhile, time drags on…
July 29th, 2009 at 3:35 pm
Gotta go my friends…
Happy last half hour!…I don’t suppose I’ll miss anything important…
Ciao!
July 29th, 2009 at 3:37 pm
They’re thinking about 100 more yrs of kickass SUVs off home equity loans
LOL. Yeah, that’s probably true, but hybrid SUV’s right? One of my fav stats, the numbers may not be exact but close:
Q2 2006 MEW = $232 bil
Q2 2008 MEW = $9.5 bil
Helps put consumer spending, or a lack thereof moving forward, into perspective.
July 29th, 2009 at 3:38 pm
@AT and all
How can I get AT’s charts?
July 29th, 2009 at 3:40 pm
LB is not making any upside trades here. Holding a few dividend stocks and everything else is cash, Treasuries, TIPS and trades from the short side, still mainly in quick-hit mode with the trades as well… until Red October…
Bloody hot up here in the day time, especially for Maine. Good thing LB has nothing to do but watch the twins practice their synchronized swimming routines…
BTW, Barry, got the GPS in the car? Nobody up here can give directions. Half the locals know the way to the next town and the other half couldn’t find their arse in the dark with a flashlight.
July 29th, 2009 at 3:41 pm
Barney Frank is such a buffoon-
“House chairman threatens banks that if they don’t stop foreclosures, Congress will make them”
as Dorothy always had the ability to go home because of her ruby shoes-
borrowers always have the ability to lower their housing expense- by defaulting- IT IS A NON-RECOURSE LOAN- borrower’s can walk away at will
July 29th, 2009 at 3:41 pm
I really like your collapse catalysts, European bank failures and China meltdown are my #1 and 2 also.
Ok, maybe this is too easy, but the collapse catalyst can still come from here no? I don’t hear much mention outside of here and there of the coming Alt-A and Option ARM issues. The schedule I have makes these look like a major hurdle that could cause some serious disruption again. Or, is this too easy a call b/c everyone already knows what the fallout from subprime was?
Another internal issue could of course be CRE and what it continues to do to regional banks and lets not forget, we are coming into hurricane season. I remember 2005 all too well, the market was pretty tough for several months then.
July 29th, 2009 at 3:43 pm
@hope,
you can e-mail him here:
andystechnicals@gmail.com
July 29th, 2009 at 3:45 pm
“House chairman threatens banks that if they don’t stop foreclosures, Congress will make them”
http://finance.yahoo.com/news/Frank-threatens-banks-to-stop-apf-1701955541.html?x=0&sec=topStories&pos=4&asset=&ccode=
as Dorothy always had the ability to go home because of her ruby shoes-
borrowers always have the ability to lower their housing expense- by defaulting- IT IS A NON-RECOURSE LOAN- borrower’s can walk away at will
July 29th, 2009 at 3:46 pm
Well you wont find me calling any tops any time soon or being short at the top… catalysts or not. From now on, you will only see me short on the lower high.
“Screw the cheese, let me out of the trap.”
July 29th, 2009 at 3:49 pm
man it’s infuriating when you are trying to post something and you cannot figure out why it keeps getting eaten by WordPress-
who knows maybe it will show up tomorrow
July 29th, 2009 at 3:52 pm
@I-Man: Remember there’s no need to short the top. The second mouse gets the cheese…. :-)
@ben: There are any number of catalysts we KNOW about, but cvienne was being a bit more BLACK SWANNY…
LB does enjoy a little bit of IMITATION of his friends STYLISTIC IDIOSYNCRACIES. CV is a smart dude, eh?
Until tomorrow, chaps and the Mistress.
July 29th, 2009 at 3:58 pm
CV is a smart dude, eh?
yeah, I think that he is. At the very least, he’s an interesting dude. Steve Barry said something though about what has happened here saying that we shouldn’t call it a Black Swan because the delevering after all, was, at some point, inevitable. I thought that was good insight.
July 29th, 2009 at 3:59 pm
@ Left… I know… trying to call the top was so vain… and costly. Damn narcissism. Get ya everytime.
July 29th, 2009 at 4:05 pm
This ramp up in the final 30mins is laughable but was not unseen. We have 3 hangman candlesticks and a cute triangle setup with lower highs and a base of 969. The longer this plays out increases the likelyhood of a downside breakout as dip-buyers and bulls become exhausted. Still too much resilience and I am content to not play either side of the trade.
LB
On the dollar, I think it is more important politically than anything else. I do agree with you that at some point it will rally, but only when politically necessary. Right now a weak dollar is ideal because it threatens Chinese exports and reduces their buying power as the expense of US domestic consumer inflation – which would be ideal for corporate profits. I do not believe the administration is concerned about a weak dollar – I believe it’s strategically so.
July 29th, 2009 at 4:08 pm
ben: True. Black Swans are generally white swans to TBP habitués. A flu pandemic might be a Grey Swan.
I-Man: LOL. The LB Bottom call cured me of narcissism. Lightning doesn’t strike twice. There was no LB Top.
July 29th, 2009 at 4:09 pm
ben
Indeed. Complacency has settled in as NOBODY seems to think there’s anything here in the good old USA that could possibly shock the markets and get any kind of serious downdraft started. Unbelievable how “comfortable” the market has gotten with our HORRIBLE economic condition, ain’t it?
Re: HEW or lack thereof. Yep, when you think of that and the complete lack of savings that coincided, and the huge loss of asset value wealth we’ve had, and the destruction of so many jobs (etc.), it’s just so obvious, isn’t it? How anybody can look past all that and think it won’t matter is amazing. We’ve been SOOOO conditioned to the easy money Fed fix that people think it’s like some kind of magic, making all our problems just go away.
July 29th, 2009 at 4:16 pm
So, this was the first big down day in 13-15 trading sessions? Down .46%? ….in the face of 5% crushing in energy….and a stronger dollar. And futures are even ticking up a little bit into the 4.15pm close…nearly UNCH.
Can’t keep a good market down Baby!
July 29th, 2009 at 4:27 pm
@AT: It’s called the “Ben Put”, the Put to end all Puts………
If enough market participants believe that Banana Ben & Co will do everything in their power to support asset prices (and I mean EVERYTHING short of, and maybe including, a dollar collapse), then we’re no longer trading (or surely not investing) in a real market anymore. The feds are in up to their eyeballs and will never be able to get out. The minute they dip one toe out that door, the whole thing falls apart. Some extraneous force or event will have to force them out.
July 29th, 2009 at 4:34 pm
“Down .46%”
Andy- maybe it will be down .46% for the next 100 trading sessions- with the open price of 979.62 that would put us at 612.94 in 100 short trading days
July 29th, 2009 at 4:41 pm
@ben22 – thanks. I now have the charts.
July 29th, 2009 at 4:43 pm
@mannwich – the ben put. I can’t even begin to invest based on the Ben put. I wish I could. Now that I have seen how the Greenspan put ended, I just can’t do it.
July 29th, 2009 at 4:46 pm
@hope: I fear the Ben Put is going to end far worse than the Greenie Put did.
July 29th, 2009 at 5:32 pm
The SPX is having trouble breaking through the 55ema on its weekly chart. So far the 3LB monthly reversal on the SPX is still valid (2 more days to go) and it’s still has a way to go to for a reversal on the daily 3LB. Now it did work off its overbought condition on the Williams %R (4) so it could continue to rally (unfortunately). The daily 3LB for GLD reversed the other day so my guess is someone is selling gold (probably to pay for treasuries since indirect bidders are taking the week off).
July 29th, 2009 at 5:47 pm
Keen analysis there Ra. Thx.
July 29th, 2009 at 7:33 pm
I’m back in the saddle now (after 3 hours at the gym)…
I wanted to second I-man…
Thanks for that perspective AmenRa…
and also…thanks again for the TA, AT, (hey isn’t that cute?)…No, I mean it…your charts really get the broader picture into focus for me…and AmenRa, I thank you for pointing my attention to some things that I might have overlooked…You did that the other day as well and I was mighty pleased…
July 29th, 2009 at 9:00 pm
BTW @AmenRa
I’m sure I don’t have to tell you…
But if the 55ema “weekly” actually does get taken out to the upside, then it might put the 89ema into focus…
…as we speak, the 89ema is sitting EXACTLY on Goldman’s year end target of 1,060…
Just a casual observation…
July 29th, 2009 at 9:02 pm
89ema WEEKLY…to be clear
July 29th, 2009 at 11:29 pm
ahab,
w/this: “as Dorothy always had the ability to go home because of her ruby shoes-”
tread carefully, in that fine Book, her Shoes were Silver..
thereby the Tale..
July 30th, 2009 at 7:51 am
@cvienne
I hadn’t looked at the 89ema. I’ll check it out. Usually I have 3 MA’s on my charts. the 13ema, 55ema, and 233 ema. Breaking the 55ema has been shown (to me) to give a better signal for a change of trend.
July 30th, 2009 at 8:00 am
Just checked it out. You’re right. So is GS using TA in its calls? Also the 50% retrace at 1120 is very close to the 144ema at 1129 on the weekly chart. That is going to be major resistance eventually.