Monday Linkage
Monday linkage — some things from off the beaten path:
• Jeremy Grantham calls markets at a Boring Fair Price!, and he is Waiting for Markets to be Silly Again; Since early March, the market has had the type of strong speculative rally that often follows extreme declines.
• After calling for a generational bottom in early March, Doug Kass now likes Cash (TheStreet.com)
• Tenacious G: Inside Goldman Sachs, America’s most successful, cynical, envied, despised, and (in its view, anyway) misunderstood engine of capitalism (NY Mag)
• 10 Members Send Letter to Federal Reserve on Goldman Sachs Gambling with Government Money
• Subprime Sequel: Mortgage fraud has doubled since 2007, according to the FBI—and the fraudsters include everyone from individuals fudging loan forms to thieves who steal millions from lenders and victims alike. The danger is with Mortgage fraud skyrocketing, the housing market won’t rebound if it’s tainted by sleaze. (Reader’s Digest)
• UBS Bans Leveraged, Inverse ETFs (ETF Database)
• Fear, Falling Demand Keep Loans: The total amount of loans held by 15 large U.S. banks shrank by 2.8% in the second quarter, and more than half of the loan volume in April and May came from refinancing mortgages and renewing credit to businesses, not new loans, an analysis by The Wall Street Journal shows. (MarketBeat)
• Three months EHS in a row means what? Are EHS Improvement stretching three months something special? Was it in 2006 or 2007? (The Mess That Greenspan Made)
• The despicable Ben Stein (Felix Salmon)
• Earnings game: Don’t take the spin Because it’s let’s-play-beat-the-number season (i.e., when corporate earnings are reported), let’s look at what a game it is (Bill Fleckenstein)
• Real Yields Highest Since 1994 Aid Record Debt Sales: Treasuries are the cheapest relative to inflation since 1994 after consumer prices fell 1.4 percent in June from a year earlier. (Bloomberg)
• Get ready for banking’s next headache: Though housing markets remain weak, analysts expect credit problems over the next year to center on $1.8 trillion worth of commercial real estate — mortgages on office and apartment buildings and shopping malls, as well as construction, development and industrial loans. (Fortune)
• Distressing Gap: Ratio of Existing to New Home Sales: In many areas, home builders cannot compete with distressed and REO sales, and this has pushed down New Home Sales (Calculated Risk)
• Why Counting Money Can Make You Happier (Time)
• Funny stuff: The Associated Press discovers the Web
Anything else clickworthy?
July 27th, 2009 at 12:41 pm
I missed this one:
No. 2 Texas bank expects to fail (CNN/Money)
http://money.cnn.com/2009/07/24/news/companies/guaranty_financial.reut/index.htm?postversion=2009072421
July 27th, 2009 at 2:13 pm
Reader’s Digest?!
Leave no stone unturned…
July 27th, 2009 at 2:32 pm
BR,
Re: Guaranty…they’ve been “expected” to fail for a long time now (months)… I think on deathwatch for three weeks solid.
What? is the FDIC just biding their time before breaking the news?
Same applies to Corus.
July 27th, 2009 at 3:03 pm
http://www.fool.com/investing/small-cap/2009/07/24/are-you-preparing-for-financial-armageddon.aspx?source=ihpsitota0000001
July 27th, 2009 at 3:09 pm
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7n1KdXsCEEY
“More than 5,000 properties in the 10 biggest U.S. metropolitan areas got at least one default notice in March, marking the first time that’s happened in First American records going back to January 2003.”
July 27th, 2009 at 3:11 pm
http://ndn.org/blog/2009/07/noticing-and-solving-problem-jobs-and-wages
July 27th, 2009 at 3:19 pm
Check out Hussman this week too.
SRS hit a new low today.
July 27th, 2009 at 3:26 pm
@hope: Got stopped out of SRS (again). Think I’m done with this pig (for now anyway), which means it’s probably ready to run a bit.
July 27th, 2009 at 3:26 pm
Clearly, Jeremy Grantham is using some variant of the term “fair value” that I am unacquainted with. I suppose that if one values markets by price movements relative to recent movements, then one might consider the markets to be “fairly valued” here. But I would have expected “fair value” to relate more to economic fundamentals rather than chart action. And unless one is also using “chart technology” to predict an economic rebound in employment, discretionary household capital (i.e., consumer buying power), and a floor under housing prices, I just cannot see the forward view vs the current stock prices as being in a “fair value” relationship to one another.
Perhaps if one were to consider only the dividend yield of stocks vs the bond yields, and make the assumption that there will be no widespread wave of bond defaults or dividend cuts, that might indicate “fair value” as well, but again, I just can’t fit the “fair value” meme into the prevailing economic outlook.
Personally, I’m looking for a “cash for clunkers” program for the stock markets. There are a number of “clunkers” out there that ought to be retired and sent to the equity recyclers.
July 27th, 2009 at 3:31 pm
@constant: But we must separate the markets from the economy. Fundamentals ceased to matter in the markets a long time ago. Investing in actual companies based on their actual financial health has been dead for a long time now, but this just seals the deal. It’s all about trading and speculation now, “technicals”, if you will and fudging the numbers to “beat” (lowered) “expectations”.
July 27th, 2009 at 3:36 pm
http://www.calculatedriskblog.com/2009/07/report-5000-cre-nods-in-march.html
I man i wonder if the FDIC is saving up to take down those banks?
July 27th, 2009 at 3:40 pm
U.S. ban on naked short-selling made permanent
http://www.theglobeandmail.com/globe-investor/us-ban-on-naked-short-selling-made-permanent/article1232641/
July 27th, 2009 at 3:47 pm
mannwich-
dude- put on your happy face- the illusion of prosperity is what we are all about- actual prosperity- not so much- but it doesn’t matter- because- the push is for a stock market recovery- who knows- maybe all the way to 14,000-
new bull market- based on . . . hmm?? . . . I don’t know- but again- it doesn’t matter-
it’s all about happy times and recovery- for those making the big $- the regular folk- well- who really cares about them
July 27th, 2009 at 3:50 pm
@ahab: Sad but true enough. However, despite my general irritation with the ridiculous disconnect in the la-la land markets these days, I am having a pretty fabulous green shooty summer for myself overall.
Let the smoke & mirrors economic recovery continue. I think I’m going to become a convert.
July 27th, 2009 at 3:51 pm
Lip smackin’ good: LVS puts and SBUX puts.
I’ve no doubt that SBUX could still run up for a bit…but LVS?? Not unless Ben’s helicopter drops are in C-note denominations only
July 27th, 2009 at 3:53 pm
the member letter to GS was excellent. In a nutshell.
So where’s the fed on this and regulatory agency to slap GS with another earth shattering $10 fine?
TBTF TCTF
Definitely above the law.
And BS Obama is presiding over all of this! HAH
July 27th, 2009 at 3:53 pm
Working in my favor for SBUX puts: Jim Cramer likes ‘em…says their recovery is real.
LOL!
July 27th, 2009 at 4:00 pm
Arrgghh!!! Shiver me timbers! Does this bull have the blood of a phoenix? It just will not stay down.
July 27th, 2009 at 4:02 pm
http://www.marketwatch.com/story/bernanke-explains-crisis-to-average-americans-2009-07-26?siteid=rss&rss=1
July 27th, 2009 at 4:07 pm
@Uno,
I know someone else that likes SBUX that might not make you quite as happy as knowing that Cramer likes them.
July 27th, 2009 at 4:08 pm
@AmenRa: There is wisdom in peace. Trade small. Control risk. Find 10-baggers or don’t play in the street. It’s summertime, and the beaches bloom with opportunity. Breathe.
July 27th, 2009 at 4:09 pm
@ben22: Are they gainfully employed…?
July 27th, 2009 at 4:11 pm
This is not exactly a novel thought, but could this be the Put that ends all Puts (the “Ben Put” if you will). Here’s what I mean – - it seems that market participants (there are no “investors” or even “inwestors” anymore) all believe that Banana Ben and his merry banker cabal will not allow the market to crash or even dip all that much, so could it be this collective belief (meaning, psychology) alone that is keeping the market rising higher in the face of dubious fundamentals? Let’s face it – - we’ve had two consecutive enormous market bubbles that were engineered by the Fed doing similar things to monkey with the markets, so why not again, but this time even bigger and longer? Can someone please explain why this is wrong?
July 27th, 2009 at 4:19 pm
@Mannwich. The markets are non-linear…meaning that they do not (and should not) make sense to the rational mind. Asking ‘why’ questions is just drama (see “why questions”).
All of the above offered in the spirit of trying to be helpful. The Truth just Is.
July 27th, 2009 at 4:21 pm
@uno: Totally agree but lately it’s been pretty linear (only UP) to me, and has defied the credo that “markets never move up or down in a straight line”. Aside from a tiny pullback, it’s seems pretty linear to me lately – - again, UP.
July 27th, 2009 at 4:24 pm
@uno: My point is mass psychology seems to be THE important driver for the markets, especially today with the use of technology and the government constantly intervening. If enough in the herd believe something that isn’t true, it can take a while for that “truth” to matter (e.g. “fundamentals”). If enough market players believe (even if true or not) the “don’t fight the Fed” credo, then we can keep creeping higher and higher in the face of any logic. That’s all I’m saying.
July 27th, 2009 at 4:33 pm
@Mannwich: I call this sort of move “laminar flow”, as opposed to “turbulent flow”.
Quoth the Gump: “It happens.”
July 27th, 2009 at 4:36 pm
Last thoughts: “There is no (causation) spoon.”
July 27th, 2009 at 4:48 pm
@ uno:
You’re on my “long” team. Digging the comments, yo.
July 27th, 2009 at 4:50 pm
@ uno
I knew it was coming because the bears let it get away from them earlier in the day. I’m figuring that the 38.2% retrace at 1015 or the 50% at 1120 (on the S&P) is where we are headed before any real correction.
July 27th, 2009 at 5:48 pm
and i thought markets were suppose to be rational. evidently not
July 27th, 2009 at 6:45 pm
This one’s for leftback.
http://www.calculatedriskblog.com/2009/07/precipitous-house-price-declines-at.html
July 27th, 2009 at 7:41 pm
This is for Bruce!
http://www.ottawacitizen.com/health/reality+check+reality+check/1783177/story.html
July 27th, 2009 at 7:52 pm
I’m gonna get all conspiratorial on everyone, but I think the latest run up in the markets has to do with the Fed needing the US to look like we’re out of the recession so that the Treasury can sell what they are auctioning off….anyone think I’m kooky?
July 27th, 2009 at 7:56 pm
@investorinpa: I definitely think there’s something to your theory. We can’t be viewed as falling apart, so they polish up the turd and present it as “economic recovery”.
July 27th, 2009 at 8:28 pm
investorinpa,
while I always love a little wild theory here and there I’m probably selling your 7:52. Looks more like a short squeeze to me off the failed head and shoulders followed by some renewed buying interest from Joe and Jane Retail, etc.
July 27th, 2009 at 8:45 pm
@ben22 (8:28)
—
x2…
I’m probably more in step with Amen Ra (4:50) at the moment (with A LOT more definition yet to come)…This is TOO NEW to hypothesize on at the moment…
Wine must breathe before it is consumed…
July 27th, 2009 at 8:45 pm
@investorinpa:
They have and easier time selling treasuries when equities are sleeping on the couch.
July 27th, 2009 at 8:49 pm
@investorinpa
True…but the last big auction was kind of set up in a SLAM DUNK fashion…
Maybe they’re trying it “the hard way” this time just to see how it flies…
If the “charts” were telling me this auction was going to be easy I’d be all over it…A “4″ handle was simple…3.75??? let’s see what the cat licks up…
Maybe they’re going to take it a quarter at a time…
July 27th, 2009 at 8:58 pm
Fed scores poorly in public opinion poll
For those who wonder how to do that ^
Creating a hyperlink
July 27th, 2009 at 9:07 pm
“The Recession is Over”
Having survived a near-death economic experience, Americans now need to focus on surviving what’s likely to be a pokey, painful recovery. “I see 1 percent growth in the economy in the next few years,” says New York University economist Nouriel Roubini. “It’s going to feel like a recession, even when it ends.”
http://www.slate.com/id/2223666/
July 27th, 2009 at 9:49 pm
Not to worry, Newsweek cover say, “The Recession is Over.”
http://www.newsweek.com/id/208633
July 27th, 2009 at 10:33 pm
@investorinpa
Why do you think Geithner is talking to China this week in particular?
@cvienne
The S&P has breached its 233ema solidly on 7/23. It also has breached the price needed for a reversal in the monthly 3LB (but it still has yet to close the month above it). The monthly 3LB has been in a downtrend since 1/31/08. Plus I haven’t seen any reversal candles on the daily chart (today looked liked a hanging man but the shadow isn’t long enough).
July 27th, 2009 at 10:41 pm
@cvienne
Almost forgot. The S&P HAS NOT broken the 233ema on the weekly chart (@1169). But it did break the 13ema and the 55ema on the weekly. Now if it gets to the 233ema then it’s abandon all ye shorts the bell doth toll for thee (or something like that).
July 27th, 2009 at 11:02 pm
@AmenRa
Hey…THANKS for those two posts! (10:33)(10:41)…
That gives me something to clue in on…
After the “melt up” (over 960 which was the 233 day MA), I was starting to feel a little lost and directionless…
Actually, I took a GIANT STEP back from the whole thing back at 908 (which was a FIBO retrace BACK to 956 at the time from the July lows)…It went through that and 930 so easy, it was like…STAND BACK!
I’m going to have to take a look at that 1169 as an outward bogey and watch the behavior inbetween…
I’m still BEARISH long term, but as I posted the other day…”I don’t like to F*** with aliens”…
July 27th, 2009 at 11:05 pm
@AmenRa
“Plus I haven’t seen any reversal candles on the daily chart (today looked liked a hanging man but the shadow isn’t long enough).”
Interestingly, the VIX candle today looked a little like a hanging man…I’m not surprised…I think many went in to today expecting some profits from equities to get ready to buy some of the auction…
It didn’t seem like much was proven there (which accounts for the VIX stick perhaps)…
July 27th, 2009 at 11:08 pm
“It’s going to feel like a recession, even when it ends.”
Another point I’ve been trying to make with all the recovery talk. Does it really matter? When the realization sinks in that there’s not much growth coming after the cliff diving, the market won’t be happy (kind of like ‘02 but MUCH worse). And the folks out there slogging through their daily lives sure won’t notice the difference.
But the market doesn’t care, until it cares, then – uh oh.
July 27th, 2009 at 11:18 pm
@Onlooker: Excellent point. We can debate all these stats all we want (e.g. GDP), but who really cares if those things are improving if it feels like a recession? Well, CNBC cares because Wall Street and the markets (their masters) will be happy…..
July 27th, 2009 at 11:38 pm
@Onlooker from Troy
quote: “But the market doesn’t care, until it cares, then – uh oh.”
I’m still laughing at this comment. You’re right. The market cares about growth and when they realize there won’t be any growth then look out below.
July 27th, 2009 at 11:43 pm
@cvienne
Just took a quick look at the VIX chart. The shadow is way too short for a inverted hanging man. It should be at least 3x the body of the candle. Also it should gap down. This would indicate that the bulls put in a floor (they can’t take the pain anymore). Then a close above the high of the candle would give confirmation of the reversal.
I’ve read all of Nison’s books but my favorite one on candles is “Candlestick Charting Explained” by Gregory L. Morris.
July 27th, 2009 at 11:49 pm
Inverted hammer not inverted hanging man