Yes, Unemployment Is Worse Than Reported
One of our longstanding complaints has been that the traditionally reported measure of Unemployment, U3, dramatically under-reports unemployment in America. It is far too narrow and ignores too many people that want to work full time, but cannot.
We have detailed this over the years, and last summer, modestly proposed the media begin reporting U6, the broadest measure of joblessness. (see Previously, below)
So you can imagine our pleasure when yet another MSM gets hip to this. In the rpesent instance, it is the New York Times, Part-Time Workers Mask Unemployment Woes:
In California and a handful of other states, one out of every five people who would like to be working full time is not now doing so.
It is a startling sign of the pain that the Great Recession is inflicting, and it is largely missed by the official, oft-repeated statistics on unemployment. The national unemployment rate has risen to 9.5 percent, the highest level in more than a quarter-century. Yet it still excludes all those who have given up looking for a job and those part-time workers who want to be working full time.
Include them — as the Labor Department does when calculating its broadest measure of the job market — and the rate reached 23.5 percent in Oregon this spring, according to a New York Times analysis of state-by-state data. It was 21.5 percent in both Michigan and Rhode Island and 20.3 percent in California. In Tennessee, Nevada and several other states that have relied heavily on manufacturing or housing, the rate was just under 20 percent this spring and may have since surpassed it.
Of course, we also know from history that unemployment will continue to rise, even after the recession is officially over (so we got that going for us, which is nice).
Surprisng to see Oregon with the worst Unemployment in the nation — I would have guessed Michigan.
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Click for interactive graphic
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Previously:
A Closer Look at Unemployment (September 2007)
http://www.ritholtz.com/blog/2007/09/a-closer-look-at-unemployment/
Unemployment Reporting: A Modest Proposal (U3 + U6) (June 2008)
http://www.ritholtz.com/blog/2008/06/unemployment-reporting-a-modest-proposal-u3-u6/
Pervasive Pollyannas of Prosperity (July 2008)
http://www.ritholtz.com/blog/2008/07/pervasive-pollyannas-of-prosperity/
NFP: Even Worse Than Reported (December 8th, 2008)
http://www.ritholtz.com/blog/2008/12/nfp-even-worse-than-reported/
Persons “Marginally Attached to the Labor Force” (July 4th, 2008)
http://www.ritholtz.com/blog/2008/07/persons-marginally-attached-to-the-labor-force/
Source:
Part-Time Workers Mask Unemployment Woes
DAVID LEONHARDT
NYT, July 14, 2009
http://www.nytimes.com/2009/07/15/business/economy/15leonhardt.html
July 15th, 2009 at 7:28 am
Yes, it is. This administration seems to think that every idea they have is a good one, and should be acted upon.
http://247wallst.com/2009/07/15/if-uncle-sam-takes-mortgages-and-becomes-landlord/#more-40919
If Uncle Sam Takes Mortgages and Becomes Landlord
“The idea would be that homeowners that are delinquent could surrender ownership of their homes but could continue to live as a renter for several years. Another notion would be to have the government make mortgage payments for borrowers who cannot keep up with their home loans or to get a stipend for house payments along with unemployment benefits. There is another option that Uncle Sam could consider.”
If you are unemployed, by the time this is over you may wonder why you ever worked in the first place.
Dire Straits had a song about getting something for nothing and chicks for free years ago…I may play that as the theme at the salt mine today..
What was it George Orwell said? I love Big Brother…
July 15th, 2009 at 7:33 am
I think the administration looks at a problem and searches for a solution. If you’re going to lose your house, this sees like a second best alternative.
July 15th, 2009 at 7:38 am
All to avoid the banks having to write down the mortgage when they take the property back. That would reveal the true losses and the charade played with the stress tests.
July 15th, 2009 at 7:41 am
Looks like the land of Chicago (bang-bang), formerly the land of Lincoln, has found a solution to the tax shortfall problem: slot machines.
What’s next: Ho’ House ‘Я Us…?
July 15th, 2009 at 8:10 am
@VennData:
My point exactly. The administration is going to be all things to all people. This cannot and will not be paid for by the taxpayer…any rational person knows the national government is bankrupt and that taking on massive new debt for anything and everything is a fool’s errand. My point is, that rapid socialism of the United States will not be the panacea that people think. Polling numbers show that America as a whole is recognizing this too..
This will go down in history as the “Put it on my tab” administration…
July 15th, 2009 at 8:12 am
David Rosenberg has also pointed out in one of his recent notes that continuing claims are much worse than reported since so many are now on Federal extended unemployment benefits which are not reported in the headline data. Counting everyone give a new record not just in absolute numbers but also as a percentage of the workforce.
People dropping off state unemployment rolls and going on Federal. Now that’s a green shoot we can believe in.
July 15th, 2009 at 8:13 am
“Second best alternative”? Surely you jest. From homeowner to renter of your own home? What an idea.!!! “Hey honey, the toilet quit working…call Obama (my landlord)…and tell him to fix it, since we are renting!”
..The gang that couldn’t shoot straight…
July 15th, 2009 at 8:17 am
These full unemployment numbers are getting around the depression level numbers, aren’t they?
July 15th, 2009 at 8:20 am
Interesting article about shadow home inventory, about half a million homes seem to be bank owned, not sure how long they can hold on. CA seems to have 300K distressed homes in various phases of foreclosure and thats about triple the MLS listings. Will this be known as the CA depression?
http://sacrealstats.blogspot.com/2009/07/deutsche-bank-sacramento-resale-market.html
July 15th, 2009 at 8:25 am
Something else I saw yesterday and didn’t have time to comment on…same store sales-Redbook- are still dropping badly, and I know national retail sales were up with cars and gasoline, but down .2% if cars and gas were dropped from the equation….anyway, Redbook seems to think the consumer has effectively closed wallets and that this condition is continuing….
http://www.nasdaq.com/asp/EconodayFrame.asp
Highlights
“Redbook keeps reporting sharp declines with same-store sales at a year-on-year minus 5.7 percent in the July 11 week. Month-to-date, sales are down 1.7 percent vs. June. The report said customers are not responding to women’s fashions which is bad news for department stores. For department stores, this morning’s retail sales report extended a run of very deep declines. General merchandise is also on a long string of declines while clothing is flat. These are the categories tracked by Redbook and ICSC-Goldman which explains why both of these reports have, and unfortunately continue, to report significant weakness. “
July 15th, 2009 at 8:30 am
There comes a time when the old models simply will not work any longer. We have seen that played out on the stage of finance, manufacturing, service and professional careers, jobs, and other uses of the people’s time.
Vonnegut wrote of this time in two of his novels, when work was no longer an option for billions of people. That time seems to have transcended fiction and now is a reality. There has been no work to do for billions of people in third world countries. There is massive global ‘unemployment’ in the sense that
the people either cannot do anything due to geography, demand, or lack of any skills-for-hire.
We are now at the early stages of the same thing happening in many first world countries. And no one is doing anything about this sea-change, this new paradigm that is not going to go away.
Either people are going to take to the streets when the pressure of no money for living becomes too great, since they will be starving and/or homeless, a miracle will happen and magically a new demand will rise for some product or service that will employ millions, or the governments of various countries, states, and cities are going to have to devise new methods to keep people employed in some activity that provides the masses with something to do with their time. The alternative, revolution, is a non-starter.
July 15th, 2009 at 8:32 am
Bruce thanks for that article.
I will take a bow for speculating/predicting a while back that there would be some sort of US superagency that would take custody of the bank owned homes and buy them and resell or rent them at a “fair” price. We’re really in a depression and major states like CA will fail and home values in the sand states will fall 90% if the reckless lenders eventually are forced to unload these properties.If this plan is enacted it will be the ultimate windfall for the biggest banks. We’ll be paying for this as long as we live!
July 15th, 2009 at 8:37 am
Barry – thanks. I notice that your prior readings post has Mort Zuckerman’s WSJ oped piece. Let me also draw everyone’s attention to last week’s Newshour on PBS which has a segment precisely on this topic (actually a couple over a couple of nights). It seems to me this meme is starting to get real traction.
FYI and FWIW my own look at the situation starts by assuming that we need 150K jobs/month to breakeven with pop/labor force growth (& perhaps) productivity. On that basis the weak non-revcovery leading into the Great Recession meant we entered at 4 MILLION jobs in the hole. We are now ~ 12 million in the hole.
“Recovering” from that will take a long and painful time. Worse, while everybody is focused on the short-term the consequences then and now of this deep re-structuring are not on the discussion agenda.
July 15th, 2009 at 8:45 am
jc Says:
May 22nd, 2009 at 8:47 am
I have a prediction – the US will create a superagency to take possession of the abandoned and foreclosed homes and shield the banks from massive losses by paying a “fair” price and then hold and maintain them so local communities receive property taxes and the areas are not blighted and renting them at “fair” prices losing money at both ends – but holding and praying for a housing rebound. A new form a can kicking and loss transferral from banks to taxpayers
I will take a humble bow for this
July 15th, 2009 at 8:49 am
I also suggested here “buy a home, get a grencard” was a partial housing solution before Lefrak and Gary Shilling had their proposal published in the NYT. The unemployment situation here will kill it.
July 15th, 2009 at 8:49 am
http://acrossthecurve.com/
Bond Market July 15 2009
July 15th, 2009 7:34 am
Prices of Treasury coupon securities are posting small mixed changes in overnight trading. In fact some benchmark prices were unchanged while others posted small declines.
Ebullient sentiment in the equity market is still weighing on the bond market. Goldman Sachs posted better than expected earnings as did JNJ earlier. After the close yesterday Intel reported that Q2 revenues would beat forecasts. So all is well with the equity crowd. For now.
If I may digress from my normal morning musings it is hard to paint a sanguine portrait of future economic growth.
In the short run it is certainly possible to conjure up a picture of positive growth in Q3 and/or Q4. Inventory levels are low and will be replenished. In particular the automobile industry is set to ramp up production after a period of very low production. That will certainly give a healthy boost to GDP.
I do not see,though, how growth can be maintained at robust levels. yes, the actions of policymakers have averted financial collapse and Armageddon. However,it is my opinion that the return to 3 percent growth which prevailed for most of the last three decades is most unlikely.
Unemployment (the lagging indicator) will continue to rise and will probably top out close to 11 percent. That does not count the discouraged workers who have left the work force or those forced to work reduced hours at lower wages.
It will be a very slow recovery in the jobs market as the high level of unemployment will weigh on income growth and consequently spending. Without robust consumption corporate profit growth will prove anemic and business investment spending by the corporate sector will suffer.
Consumer balance sheets have shrunk as housing prices have cratered and as equity markets have suffered severe declines. Consumers have responded logically by shoring up their balance sheets with increased savings rate. I believe the last savings rate I observed was 6.8 percent (driven there by some one time factors). For years during the credit driven expansion it ran around zero.
I am not smart enough to know where it will settle in but if it does finally settle in around this level it will represent an enormous amount of foregone consumption. How will that be replaced and if it is not the long term consequences for growth are quite melancholy.
Government policy is currently stimulative but one can see the shift coming. I note that the press reports that the House version of the plan to nationalize health care will include a surcharge on the earnings of millionaires. That is another nail in the coffin of spending.
And at some point several years down the road ( I suspect) the financial markets will call for a healthy retribution for our profligate spending and in so doing will force additional rounds of tax hikes which can only be effective at raising revenue by reaching deep into the middle class brackets.
That does not bode well for growth over the long term either. Nor does the carbon tax which will raise the cost of everything from soup to nuts.
I see a bleak five year period with growth in the one percent to two percent range. That will provoke a clash between domestic political pressures (too high an unemployment rate) and international pressures to curb deficits which I suspect will eventually weigh on the dollar and its status as the world reserve currency.
…And no, B in T does not write this daily bond update…
July 15th, 2009 at 8:50 am
“…Western nations including the United States have gradually implemented virtually all of Marx’s 10 key steps toward creating a dictatorship. What are some examples can you find? Americans would be wise to study the “Ten Planks” and demand that the President and Congress abolish all laws, regulations and agencies which govern these (and all other) unconstitutional seizures of power. Communism was never intended to free man, but to enslave him; indeed the Communist Manifesto promised a “dictatorship of the proletariat” and history proved it always ended up slaughtering millions of the proletariat.
Karl Marx’s “10 Planks” to seize power and destroy freedom:
1. Abolition of Property in Land and Application of all Rents of Land to Public Purpose.
2. A Heavy Progressive or Graduated Income Tax.
3. Abolition of All Rights of Inheritance.
4. Confiscation of the Property of All Emigrants and Rebels.
5. Centralization of Credit in the Hands of the State, by Means of a National Bank with State Capital and an Exclusive Monopoly.
6. Centralization of the Means of Communication and Transport in the Hands of the State.
7. Extension of Factories and Instruments of Production Owned by the State, the Bringing Into Cultivation of Waste Lands, and the Improvement of the Soil Generally in Accordance with a Common Plan.
8. Equal Liability of All to Labor. Establishment of Industrial Armies, Especially for Agriculture.
9. Combination of Agriculture with Manufacturing Industries; Gradual Abolition of the Distinction Between Town and Country by a More Equable Distribution of the Population over the Country.
10. Free Education for All Children in Public Schools. Abolition of Children’s Factory Labor in it’s Present Form. Combination of Education with Industrial Production.
~~
and:
Of important mention here is Saul Alinsky’s “Rules for Radicals”, which is President Obama’s governing textbook. Much has been written about Obama’s (and Hillary Clinton’s) study and use of Alinsky’s strategies for seizing power without concern for ethics or the harm caused. Read the book (try Amazon)–study it and you will better understand Obama’s governing strategy and anticipate his actions. Marx and Alinsky both shared a similar desire to seize power at any cost, hence the listing on this page. It should be of little surprise that Alinsky dedicated “Rules for Radicals” to the devil.
Excerpts from Rules for Radicals
http://www.conservativeusa.org/10planksofcommunism.htm
July 15th, 2009 at 8:55 am
Average hours worked per week is down to 33. That’ the lowest on record since record keeping begain in 1964.
The average worker is already effectively working part-time.
July 15th, 2009 at 8:58 am
I will also predict that the superagency solution will be unimaginably expensive and we’ll be paying for it for approximately the duration of the 30 year mortgages.
In a way it’s a workaround to the stonewall BB has hit trying to force mort rates down to 4%. The US will be the effective 4% lender, unless the magnitude of this program and other gov deficits crushes US credit with our foreign lenders.
It’ll start fairly small targeted at the sand states and other blighted industrial areas. At this point it really has to be done. If the sand states and midwest are hit with -90% RE vals due to waves of foreclosures we’ll have social consequences comparable to the GD. I remember Bush saying his admin would help institutions but not individuals but they let this situation get out of hand. The genie is out of the bottle.
It will be the ultimate in public housing! And the mother of all windfalls for the big banks and other government funded speculators.
July 15th, 2009 at 9:02 am
Market futures are up huge after Intel report. As I mentioned yesterday, don’t fight the tape even though it doesn’t make very much sense. Today’s rally could very well be a head fake. But going “long” in the last few days worked out better than being “short”. I hope to sell my huge $UCO position today and add more to $COF shorts.
@lefty: thanks for the article on $COF
July 15th, 2009 at 9:17 am
And it’s going to get worse, creating a negative spiral. I’ve heard anecdotal stories about consumer spending for substitutes, considered to be ‘personal downsizing’, that WAS adequate to have suddenly disappeared. Campbell’s Soup has a blowout forecast … that’s not great news. GS blowout profits being meekly accepted as normal instead of the result of parasitic behavior and evidence of Government incompetence and complicity is not good unless you work for GS. The concept of hunkering down is going into a higher gear.
No, China is not doing that well either. Yum says that both the US and China markets are doing poorly. If the Chinese aren’t going out for a cheap meal, then how can they be doing well? Stories to the contrary are news fluff.
Obama is going to be a 1 term president. He’s a leadership failure.
July 15th, 2009 at 9:17 am
“…..or the governments of various countries, states, and cities are going to have to devise new methods to keep people employed in some activity that provides the masses with something to do with their time.”
Or break an old favorite….war. Nothing stimulates like an old fashioned shooting war….Wars on ignonymous entities like “Terror” or “Drugs” don’t cut it. WE NEED A REAL ENEMY!!
“Remember the Maine!!”
July 15th, 2009 at 9:23 am
JC:
Is CA still handing out IOU’s? At what point does it become FUBAR out there? A week? A month?
July 15th, 2009 at 9:24 am
Christopher:
We are in two right now so that wouldn’t work either. Unless he’s going to start a war with the Chinese.
July 15th, 2009 at 9:26 am
“Obama is going to be a 1 term president. He’s a leadership failure.”
LOL, 7 months into the job and you can read into the future. Maybe you should give it a try if it’s so easy huh?
Wall Street and actual unemployment won’t mix. Doesn’t matter if it’s reported by NYTimes, people in charge of $$$ ignore real news and create their own. Market recovery has been completely fake so far, gains on no solid grounds…when it does crumble again it’s easy to blame whomever is governing.
July 15th, 2009 at 9:27 am
You angry ‘Gals’ get on with it ..Goldman now Intel… what more do you want?
July 15th, 2009 at 9:34 am
Calvin Jones and the 13th Apostle Says:
July 15th, 2009 at 9:23 am
JC:
Is CA still handing out IOU’s? At what point does it become FUBAR out there? A week? A month?
reply:
———-
Those morons did this to themselves.
July 15th, 2009 at 9:38 am
flipspiceland @8:30 am … how about early retirement with guarenteed living benefits at 45 (then 44 then 43).. imagine that in another ‘ism .. and the USA could begin to gain back good will around the globe with adding each year 1% more of the population into the same plan .. and I think the pyramids were built because the beer was good after a days work and people do want something to do besides read blogs
MEH .. I hear ya on the Marx’ .. I ask, do you think an unorganized individual has any chance in the super-capital’ age of the 21st century with highly engineered processes to manufacture? Can you folks in here imagine a startup in this day and age .. the startup situation for the new guy with reorganization for the old .. short of an all out ad campaign to sink the behemoth …
July 15th, 2009 at 9:40 am
By coincidence, an on-topic post courtesy of the Houston Chronicle:
15,000 Texans to lose checks
http://www.chron.com/disp/story.mpl/breaking/6529471.html
They’ve fallen off the rolls.
July 15th, 2009 at 9:47 am
MEH – “Commu’ was never intended to free man, but to enslave him” … I think commu’ is a grassroots action to try and take control from the super-capital’ of the time .. that never ending fight of power for the people v. power over business
Mark, I don’t need to remind you of all people that MSM and history books are written for the man do I?
July 15th, 2009 at 9:49 am
@ Mark E. Hoffer 8:50 AM
I usually enjoy your comments as I do many others here, but the whole “Obama and Hillary”… “Much has been written about Obama’s (and Hillary Clinton’s) study and use of Alinsky’s strategies for seizing power without concern for ethics or the harm caused”
Please, Mark you’re better than that, I know. Consider your linked source — “conservativeusa.org” — not exactly the objective, unbiased source that I think one should be looking to. Odd, there was no anger directed in your post of Bush and Cheney’s power grab and use of unconstitutional powers that they flaunted during their tenure.
Anyway, I’ m not worried about some devious power grab by this administration and that just seems like a big misdirection of our attention. I’m worried about the course of the U.S. now that 3 or more decades of consumerism, lack of real job creation, lack of savings, and bank and mortgage fraud are catching up with us. Unfortunately, I don’t know if there’s anything this administration or any other could really do right now (given unknowns and political realities) to stop the ‘economic correction’ upon us. I certainbly don’t see this administration doing anything nefarious. Wrong and panicked. But not nefarious.
July 15th, 2009 at 9:53 am
http://dealbook.blogs.nytimes.com/2009/07/15/calpers-sues-agencies-over-ratings-of-securities/
Barry – Did you catch this? “Calpers Sues Agencies Over Ratings of Securities”
McGraw Hill spokeman and everything….I wondered when this would happen.
Here we go…
July 15th, 2009 at 9:59 am
@krice2001
“I certainbly don’t see this administration doing anything nefarious. Wrong and panicked. But not nefarious.”
I’ll agree with that…
I don’t think there are many playbooks lying around to tell anyone how to dismantle an economy that’s based 70% on consumption that’s been using CREDIT & ASSET BUBBLES to consume…
Bottom line is we have to bite the bullet…
Unfortunately it has to happen on somebody’s watch…The person (or Administration that is willing to have the COURAGE to acknowledge that will get my respect)…
July 15th, 2009 at 10:01 am
…on the markets…(today)…
S&P making its expected move to 923…ought to get interesting at that number…
I’m sure the quant computers are getting that nervous sense of anticipation in their microprocessors right about now…
July 15th, 2009 at 10:06 am
LB is not getting short here just yet, although we did start a gold short as GLD piled into resistance.
LB has examined the inflation data and finds the case to be bogus at present, especially as we know that oil is declining on fundamentals and $gaso has already declined, so that next month’s PPI/CPI will be soft. A good day to short oil, gold and get long Treasuries, in our opinion. Andy, if you’re out there do you have a chart for crude?
July 15th, 2009 at 10:10 am
me@9:38am – “the startup situation for the new guy with reorganization for the old” .. all the time as the new guy – your creating from scratch – with materials manufactured by your soon tobe competitor … and/or a derivative by means of your target behemoth which owns stock in the other behemoth companies you must buy from (or worse on the BoD)
July 15th, 2009 at 10:11 am
cvienne Says:
July 15th, 2009 at 10:01 am
S&P making its expected move to 923…ought to get interesting at that number…
I’m sure the quant computers are getting that nervous sense of anticipation in their microprocessors right about now…
reply:
—————
The Y2K bubble was obvious and the fall was easy to predict. I’m still wrapping my head around a stock market bubble that has the S&P at 925. Presumable, Uncle Stupid wants it to stay there until the economy pulls up to it, eventually, and he will use his friends to maintain the floor and provide cash for an occasional pump. Since a lot of earnings last quarter came from cost cutting and not sales improvements, and since the stats don’t look too hot, I suspect the pump will become more important this quarter. It will return.
July 15th, 2009 at 10:12 am
@LB
cvienne is very fond of LB’s view on Treasuries…
While I’m sure that most of this trading is computers, I did notice the TLT start to maneuver before the equities actually reached any apex (which they still probably haven’t reached)
July 15th, 2009 at 10:15 am
@ LB not sure about shorting oil today. I feel that oil just showing some stability at $60. I suspect it will add a few more points before breaking down? Regardless, I am using a trailing stop for $UCO long position to protect profits here. Thanks so much to the panic shorts who covered $COF, I had another fantastic opportunity to short more.
July 15th, 2009 at 10:19 am
hi ho, hi ho…
Reversal waiting fi sho.
July 15th, 2009 at 10:30 am
Not short oil yet… agree there is probably more upside, which we would fade.
I-Man: There will be an SRS buying opportunity here at some point.
July 15th, 2009 at 10:31 am
ok so we all knew today was coming based on INTC last night.
Can JPM, IBM and GOOG push this further tomorrow?
I still think it’s all in the guidance language. Does anyone know if Dimon is presenting tomorrow at all?
Going with my M, T, W, theme from earlier this week, I have my doubts right now and would expect some pullback Th or F, I doubt a lot of traders, many of which just got hit on the short squeeze, will want to hold a lot of longs going into the weekend.
Sold some small long positions this morning that I picked up last week for a trade, 1 loser and two winners for a decent gain. Sitting on mostly cash again now and watching like it seems a lot of other people are doing right now.
July 15th, 2009 at 10:32 am
I own enough already…
If I was a day trader, I’d be getting some shorts primed on crude. Fade the spike. The spike is only to fulfill CV’s prophecy of SPX 923.
July 15th, 2009 at 10:34 am
Big hitter, the Dalai Lama. AKA Barry!
July 15th, 2009 at 10:36 am
i’m laughing hysterically about LB being short gold… he obviously paid no attention to my dollar rant yesterday…
well, i can hope he put the short on today and not yesterday… he’ll lose less money this way.. lol.
July 15th, 2009 at 10:38 am
Morning, Mistress. Big stick you’re carrying today.
July 15th, 2009 at 10:38 am
karen,
I think I missed the dollar rant, what are your thoughts on the near term price action? Are you looking for the $US to go below $78?
July 15th, 2009 at 10:40 am
Wow… hope you wore your cup today LB.
July 15th, 2009 at 10:43 am
@ben22
I see 3 gaps in the chart (on 6/22, 7/2, and today)…
Basically between 905 & 920 level…After this 923 hit…Maybe we fill in that space for a few days…
July 15th, 2009 at 10:45 am
ben, looking for a retest of the June low, that’s for darn sure…
July 15th, 2009 at 10:55 am
LB is well protected, not wishing to feel the cold steel on his balls. Happy indeed that LB wasn’t short this morning. Added to DZZ and got some DUG. That was a big move in the oil stocks.
I-Man, we are right here on your XLF 12.1, but we just don’t fancy shorting the banks here, there is a whole lot of sandbagging going on ahead of these earnings, which thanks to Mark to Magic, can easily be BTE.
July 15th, 2009 at 10:55 am
@cvienne,
yeah I think I see exactly what you are talking about
@Karen,
I’m there with you. I have already bought some UUP but I’d like to see the $index drop to the 78’s before adding to the position.
After the recent bump in silver if it moves a little higher I’d rather try to short that than gold right here. ZSL has had a nice sharp drop the last few days so I think there is a trade there again.
July 15th, 2009 at 10:55 am
Watching this morning’s CNBC clips this morning, it seems that the bulls are coming out of the closet again without impunity… i.e. “There’s nooooo way we test the bottom again, BS, BS, BS….” I swear, I would love to see the S&P 500 break 666 later this year just to spite those people.
HCF
July 15th, 2009 at 11:00 am
“I would love to see the S&P 500 break 666 later this year”
You people are obsessed with LB’s bottom….
ben: thanks for the reminder on ZSL. UUP may indeed retest June lows.
July 15th, 2009 at 11:03 am
On another note, Stewart back to slamming Cramer (& pal/uber-”investor” Lenny Dysktra)…..
http://www.huffingtonpost.com/2009/07/15/daily-show-takes-on-lenny_n_233088.html
July 15th, 2009 at 11:03 am
re: inflation/deflation?
This was an interesting post from Bill Bonner, who had been a fairly consistent gold bug. Seems to be waivering.
http://www.dailyreckoning.com.au/inflation-or-deflation/2009/07/15/
July 15th, 2009 at 11:04 am
thankfully, we’ll never get to see it…
July 15th, 2009 at 11:07 am
@LB,
No problem.
I think UUP will go down more from here as well but I don’t think you’ll see it in the 22’s like you could have bought it last July before the huge rally in the dollar. This would complete what appears to be the five wave down from the 3/6 top in UUP.
The trend of dollar up stocks and comm. down still looks in place to me so I’ll also be looking to finally pick up some shorts as the dollar gets closer to that bottom.
July 15th, 2009 at 11:07 am
@ HCF:
I had a feeling that forming a second right shoulder would get the bulls all giddy and get them bolsterous again… thinking that the correction is over and now its all fun in the sun.
Thats the best part of a complex H&S… you get some shorts shaken out, a short covering pseudo rally, some new longs to buy in… and then the trap is set.
July 15th, 2009 at 11:11 am
I find it hilarious that people still don’t see deflation as a grave threat. Count yourself in the same camp as Erin Burnett if you believe that it isn’t real. I can’t even count how many times I’ve heard her say recently that deflation has been taken off the table. This goes along well with her constant assignment of a silver lining to everything.
As an aside, John Mauldin has put out some really well done OTB letters over the last few weeks. They are free so I would suggest them if people havent’ gotten a chance to check them out. The letter on Japan is just plain crazy.
July 15th, 2009 at 11:21 am
ben22, spx 1000+ wouldn’t be viewed as inflationary to you?
July 15th, 2009 at 11:21 am
Meanwhile…back to cold steel on balls…
924+
July 15th, 2009 at 11:23 am
Haven’t read through all the posts yet so not sure if anyone has mentioned this yet – my Uncle lives in Oregon and when I asked him about the high unemployment there he said that it was due to two things – Technology companies, but mostly logging – no homes being built = not much logging = high unemployment
July 15th, 2009 at 11:25 am
Time to party like it’s October 2007 all over again! Generational buying opportunity, folks.
July 15th, 2009 at 11:27 am
EWZ up 4%, serious squeeze action. Sorry about your balls, I-Man. Hope they don’t blow the top off this pup.
July 15th, 2009 at 11:28 am
not much logging = high unemployment
logging = employment (but global warming)
cap & trade = high energy costs (& profits for GS)
drill drill drill = employment + low energy costs (but global warming)
Oh the perils of being a wing nut…
July 15th, 2009 at 11:30 am
I’m limping in with a small short on SSO and selling some July puts. I’m probably too early to the table as usual like my long SSO call at 900. But I’d like to get ahead of initial claims tomorrow and profit taking on Friday.
Retail sales report was pretty weak, and I expect that as we move further along earnings season some of the steam will be taking out of the rally as results from others sectors flow through particularly retail/industrial/manufacturing.
Maybe we can even retest the high on a push forward as most of the banks have yet to report, I will add more to my short position then. I think eventually we retest the neckline….
July 15th, 2009 at 11:33 am
@ben22
Look on the bright side…The action this week ought to get those AAII numbers right into the sweet spot…
July 15th, 2009 at 11:35 am
karen,
perhaps I’m missing something there but no it wouldn’t, I don’t know how to use the stock market as confirmation of inflation. Maybe you can teach me though why there is a clear relationship there, would love to hear what you think. I’m in the camp that doesn’t buy that the Fed has created any liquidity, that seems to be what a lot of bulls are holding on to. They haven’t been able to reflate anything.
Part of what I get hung up on is the fact that since the stock market is a secondary market no money is actually ever changing hands and given the massive wealth destruction in stocks since 10/07 I’m not sure how 1k + on spx equals inflation.
For me the deflationary cycle is still trumping everything:
Falling demand leads to falling prices, that leads to debt defaults which can then lead to bankruptcy and then that spells layoff’s and wage reductions. I still see this cycle in full effect everywhere I look still today.
Given our 70% consumer economy, the massive wealth gaps that have been created if credit contraction continues as does the current savings rate, I don’t see how that will do anything but eventually deflate stocks if they do in fact get to 1k. We also now have an administration that is even calling for what could be a jobless recovery, which I also don’t see inflation there.
As far as watching something for inflation, wouldn’t you rather see gold eclipse the 08 high than using the stock market?
July 15th, 2009 at 11:37 am
cvienne,
yeah I’m looking forward to watching sentiment the next few days. Should be interesting, recently I suppose I’d describe it as neutral, not too many bulls or too many bears. We were pushing up to some pretty extreme levels back at the top prints just before 6/11 but since then it has really calmed down which is why I haven’t completely given up on the original 965-1k call.
July 15th, 2009 at 11:38 am
My balls are fine… I know how this is going to play out.
Part of my problem is I keep listening to you guys jabber about your day and swing trades… and thats distracting me from the serenity of my position trades.
Maybe I should just dip out for awhile.
July 15th, 2009 at 11:40 am
Re: UE. I’m glad to see the NYT at least acknowledge the problem with UE reporting and talk about U6 (although amazingly they never actually cited that stat specifically).
But they still neglect to specifically point out how comparing the reported UE rates now is apples to oranges with the official UE rates in the ’80s and before and therefore that UE is higher than it was then. It’s kind of hinted at, but not directly stated. I think they chickened out on actually going there.
July 15th, 2009 at 11:41 am
To whoever asked about IUO’s here. Yes, they’re still issuing them, but they haven’t been in the news much. We hear that they’re “fairly close” to hammering out the budget. Last night they apparently were able to come to agreement on cuts to education and the Governator has agreed to a third round of state employee layoffs. This is in addition to the three days a month furlough all state employees are now taking (up from two before the summer)
Hobo – what state do you live in?
July 15th, 2009 at 11:41 am
“some of the steam will be taking out of the rally as results from others sectors flow through particularly retail/industrial/manufacturing.”
Agreed completely. Just don’t want to bend over in front of the banks and get shafted. Hence trading technicals and looking for obvious weakness in fundamentals (oil, gold).
I-Man: I and I is also serene, even while jabbering about my dick-brained counter-trend swing trades. Chillin…
July 15th, 2009 at 11:43 am
@ben22
“I’m in the camp that doesn’t buy that the Fed has created any liquidity, that seems to be what a lot of bulls are holding on to”
—
I’d say that the Fed HAS created liquidity…but it cannot create velocity…
July 15th, 2009 at 11:44 am
The shoulders on this H&S are 927 and 929, BTW, on a closing basis. If those get taken out, it will be interesting.
July 15th, 2009 at 11:47 am
Practical signs of deflation:
Milk prices collapsing because no one wants all that fancy cheese and price of corn has fallen. Here in Houston, can by milk at Kroger’s for $2/gal every day. Last year it was about $3.50.
http://www.bloomberg.com/apps/news?pid=20601012&sid=aariJteNXODM
July 15th, 2009 at 11:47 am
@LB
““some of the steam will be taking out of the rally as results from others sectors flow through particularly retail/industrial/manufacturing.”
Agreed completely.”
…and if that hits just as the dollar bottoms out…
well, we know where that’s going…
July 15th, 2009 at 11:47 am
sorry to break it to the spx shorts… pull out a straight edge and see that we’ve broken up and out of the june/july downtrend. maybe cover on a retest of the breakout? just sayin’…
July 15th, 2009 at 11:49 am
@Mike in NOLA
“Milk prices collapsing because no one wants all that fancy cheese and price of corn has fallen”
—
I’m probably the only one on this site who watches “The Farm Report”, but yes, they are actually culling dairy cow herds in an attempt to put a FLOOR into milk prices…
July 15th, 2009 at 11:50 am
My view is that Oil will top off tomorrow. Until then I will stay long oil and short dollar. Tomorrow will be a good day for initiating $DUG trade.
July 15th, 2009 at 11:51 am
@Mike in Nola: Deflationary signs are everywhere, except for the c@sino markets. We get offers from all sorts of retailers begging us to go buy clothes. I simply wait for a sale before I buy anything these days because I know they’re coming. Every three months I get one from Banana Republic for 25% off of anything. The wife gets them from Macy’s just about daily (50-80% was the most recent one). Others are likely doing the same.
Food prices have NOT gone up here either. They’ve gone down. Perhaps eventually we’ll get inflation of the things that we need and deflation in everything else?
July 15th, 2009 at 11:52 am
@karen
I’m not short the S&P, but basically the same “technical” sign occurred on the break of 880 to the downside…
I think going above 923 was important, but at this point, I’m only putting a RETEST of 956 on the table…
July 15th, 2009 at 11:52 am
@mannhattan: I’ve been sitting on some DUG that I bought a while back and plan to back up the truck for more soon.
July 15th, 2009 at 11:52 am
Already in DZZ – and DUG and SRS, but playing small. Will look at SCO late today/tomorrow.
July 15th, 2009 at 11:54 am
@karen
Basically what I’m saying is that if you happen to see 956, AND, the dollar completing a 5-wave down at the same time…
Well…
July 15th, 2009 at 11:56 am
ben22 re: http://www.ritholtz.com/blog/2009/07/yes-unemployment-is-worse-than-reported/comment-page-2/#comment-193652
Good stuff. Agreed. I’ve been somewhat befuddled by this talk of liquidity created by the Fed pushing the market up. Some really savvy investors have ascribed to that theory, such as Mark Faber and Bill Fleckenstein. But none of them, that I’ve seen, can specifically tell you how that supposedly works. This money creation by the Fed for the banks is sitting in reserve against future defaults, not in circulation. Money velocity is down, that’s a fact.
Dr. Hussman said it very well (and better than I can) in a weekly commentary a couple of weeks ago (http://www.hussmanfunds.com/wmc/wmc090615.htm), and he constantly fights against the “money on the sidelines” meme that is so very popular.
It’s sentiment, pure and simple. It may be sentiment that’s driven largely by concerns of a dropping dollar, therefore the strong inverse relationship. But it’s still sentiment.
Speaking of which that sentiment is very fickle these days, isn’t it? It swings quickly from bear to bull and back again on the slightest trend change. Just more evidence of the extreme uncertainty in our economy and markets these days.
July 15th, 2009 at 11:56 am
What’s interesting to me also is that if the S&P wants to move in “integers” like this, it really doesn’t spell too many problems for the 2x short ETF’s…
Hit those tops with a fury, then ease off with some small mind numbing retests for about 3 months…I’d be happy with that picture…
July 15th, 2009 at 11:57 am
…lower of course
July 15th, 2009 at 11:59 am
This is all a dog and pony show right now, and reality will hit once the economic reports take front and center after earnings season is over.
Wish I had not lost my initial conviction on being long SSO in advance of this spectacle, cvienne and I went back and forth on this last week. But losses can prompt you to re-evaluate your position and I was just happy to get back to even! Even if the S&P breaks out to 1000, we will see 900 again this year.
July 15th, 2009 at 12:03 pm
FXE closing in on July 1 peak. Not much room overhead for Euro, oil or equity bulls here.
The thing is, if you don’t like the $, you are buying the €. Is that really such a good deal?
SPX/gold will not break above 1000 this year – not unless the hounds of inflationary hell are released.
July 15th, 2009 at 12:06 pm
SKF?
Near its all time low. Will they let it run before putting in some kind of trading restrictions when the banks start taking again?
July 15th, 2009 at 12:08 pm
The USG looks at a problem, then figures out how to spin it. In the 1980s the U3 was the U6 and core CPI included oil and food. We, on this blog, know that the numbers are much worse than are being reported.
@Mike in Nola–”Inflation could take much longer to arrive than most people think.” What wavering??
@ben22–”I find it hilarious that people still don’t see deflation as a grave threat.” Really? The headline PPI was 200% > that expected and the core PPI was 500% > that expected. While the core CPI number was inline, the headline CPI number saw its greatest jump since 11-07. Y-O-Y headline CPI is at – 1.4%, mostly due to a 60% drop in oil prices. But Ben, here’s where it gets real interesting; Y-O-Y core CPI is up 1.7% which doesn’t include food and energy as you know. But don’t take my word for it. Gold has maintained its price Y-O-Y while India has decreased its imports by 55% Y-O-Y through the half way point. Somebody is buying it. And the only reason that would be, is as a hedge against inflation.
July 15th, 2009 at 12:08 pm
I have a question – I think it was Ahab that pointed out recently that if we calculated unemployment the way we did during the 1980’s that the number today would be much higher. Has anyone seen, or do they know of a source, what the actual number would be? I would love to see a chart of historical unemployment rates going back to the 1930’s with different lines showing the unemployment rates using methodology employed over the decades. What would the unemployment in the early 1980’s have been using current methodology? What would estimated unemployment have been in the Depression using current or 1980’s methodology?
July 15th, 2009 at 12:09 pm
@Onlooker,
I pay for Faber’s stuff so I know exactly what you are talking about, he’s firmly in the inflation camp and has made some awesome market calls since last fall, and even before that. Thanks to him I made a killing on FCX recently. On this issue however, I do not agree with him that inflation is a threat any time soon.
As for sentiment, yeah, it has been fickle lately which I think can somewhat be attributed to the confusion that is out there. I still think bulls and bears alike are on pins and needles and nobody wants to make a major commitment either way right here, well, except some of the “pros” that trot out the same old stuff on CNBC every week. The sentiment on inflation and deflation seems to move very quickly from week to week, when the market goes down more people will bring it up, when we go up, or we get some BTE meme on earnings, no mention of shit revenues, then deflation has been taken off the table.
In any event, as I’ve said before, if you aren’t trading this market, you probably shouldn’t be in it, regardless of your time frame.
July 15th, 2009 at 12:09 pm
One thing I’m looking at is the TRENDLINE for the “weekly” closes on the SPX going back to the ‘07 highs…
That trendline connects “Lehman week aftermath”, plus, the recent 956 top…
It’s hard for me to tell, but it looks like we’d have to clove ABOVE 920 on this Friday’s close to qualify as a breakthrough on that trendline…
July 15th, 2009 at 12:11 pm
P&F for fxe is 168 : ) we know it can hit 160. well, i do agree in principal and fact that there isn’t THAT much room overhead for oil… i’m done with oil.. since they’re changing the rules and spec positions will be unwound, however a falling dollar will lend some support.
July 15th, 2009 at 12:12 pm
@Thor: I think that would be roughly the U6 number, which is over 16%. Not entirely sure, but I believe this is the case. I think this was changed early in the Clinton administration, if I’m not mistaken.
July 15th, 2009 at 12:15 pm
Pat G.
If inflation is a sure thing, then housing is a terrific buy. Be my guest.
July 15th, 2009 at 12:20 pm
Visa card surprise: $23,148,855,308,184,500
http://www.msnbc.msn.com/id/31920273/ns/us_news-weird_news
My take? It wasn’t a mistake…it was just a couple of wacky politicians having a night on the town…
July 15th, 2009 at 12:22 pm
Hey karen…
The guy got that VISA charge when he swiped his card for gas, so maybe you should look into oil prices again
…
July 15th, 2009 at 12:22 pm
@cvienne: It’s just a prelude to how your credit card bill will look like in the future after inflation kicks-in
Zimbabwe style.
July 15th, 2009 at 12:26 pm
@Pat G,
Yep, all valid arguments and heard all that before.
People love to site golds price action over the last 2 years as some sort of promise of what is to come. People held on to gold longest with this thesis of inflation as it was the last commodity that appeared to “hold up” but the reality is, when credit deflation really started to take hold last year, it came down just like everything else, the people that say things like “it held up better than oil” as an example, might want to remind themselves that it is most likely it held up better than many other commodities because it never went up as high as the others did! Using GLD as the measure, the ror is negative over the trailing 12 months by about 4%. The last 12 months should have been a gold bugs dream come true but you haven’t made any money there.
As for using government data like the CPI or PPI to get a good read coming inflation, or to rule out credit deflation, well… it’s your money not mine.
do you really believe we can once again expand credit at an even greater rate than we already have? I suppose it’s possible, Japan, after all, kept expanding credit for years after 1989. I just don’t find that to be very probable.
July 15th, 2009 at 12:27 pm
I’m short at 920 today. I’m running a stop at 933. Market vigorously testing the 61.8% retrace at 923, which it is prone to do. Trading isn’t that easy, so everyone who sold in front of 923, 61.8%, must feel pressure first….very powerful move here, so being short feels quite uncomfortable, but as long as one controls risk you will always live to fight another day. It’s all about risk v. reward. Best. AT
July 15th, 2009 at 12:27 pm
@ Mike in Nola
No thanks, already own my home. But homes are an asset class. Not money. The type of inflation here is that which comes with everyday purchases….
July 15th, 2009 at 12:28 pm
Mike, housing (the structure) is with rare exception a depreciating asset… the appreciation is in the land. The land (real estate) bubble reached stratospheric heights and popped… it as an asset class will not be re-inflated for years to come, regardless of the inflation/deflation debate.
Pat G., agree with you 100% on gold when you say, “Gold has maintained its price Y-O-Y while India has decreased its imports by 55% Y-O-Y through the half way point. Somebody is buying it. And the only reason that would be, is as a hedge against inflation.”
July 15th, 2009 at 12:28 pm
@manhattanguy
If inflation really does kick in Zimbabwe style, I wonder how happy those urbanite folks living on food stamps in the inner city are going to appreciate the fact that it only buys them a slice or two of bread…
July 15th, 2009 at 12:29 pm
I have a great play for inflation. VIPSX. That’s where I have most of my 401k money is at.
July 15th, 2009 at 12:30 pm
cvienne, he was buying cigarettes at the gas station. you look again : )
July 15th, 2009 at 12:31 pm
And of course, as is always the case, other major markets are also on a precipice. Euro is right into critical resistance and Yen is heading for critical support. Energy’s a head case and should be disregarded for the time being as the government changes the rule during the middle of the game.
July 15th, 2009 at 12:32 pm
Gold is also the ARMAGEDDON trade…(which is why I own the bullion)…
I’d say a number of gold “holders” here (perhaps I speak only for myself), aren’t holding for the inflation hedge (although that is likely to occur at some point down the road)…
July 15th, 2009 at 12:33 pm
@karen
and THAT, my lady is why you’re a better trader than me…
details…details…details…fine eye
July 15th, 2009 at 12:35 pm
AT-
re your short position- what do you think of the idea that GOOG may get some late day action in anticipation of tomorrow’s earnings announcement- thereby giving tech stocks a late day push-
opinions?
July 15th, 2009 at 12:43 pm
TLT support just below here, at 92.36… did the guys with that VISA bill go to SCORES by any chance?
July 15th, 2009 at 12:43 pm
UUP has been sitting on 12.62 for the better part of 3 hours now…
July 15th, 2009 at 12:44 pm
ahab. Wish I could wax philosophically about the prospects of GOOG juicing an index, but I don’t really follow individual issues. Sometimes the best question to ask is: “What’s the most difficult trade to make right now?” It’s normally the correct the trade…. That stated, keep some risk controls in place on whatever you do….good luck.
July 15th, 2009 at 12:44 pm
23.62…I got distracted by looking at the time…
July 15th, 2009 at 12:45 pm
@ben22–”it came down just like everything else, the people that say things like “it held up better than oil” While gold is lumped into the commodity basket, comparing oil prices to gold is like comparing GM share prices to IBM.
“it came down just like everything else,” “The last 12 months should have been a gold bugs dream come true but you haven’t made any money there.” Because of deleveraging.
“Using GLD as the measure, the ror is negative over the trailing 12 months by about 4%.” And what about the ror on any stocks within the DOW 30?
“As for using government data like the CPI or PPI to get a good read coming inflation” Yep, we know those numbers are bogus. So what do you use?
“do you really believe we can once again expand credit at an even greater rate than we already have?”
Absolutely!! In a nation of debtors, living in the largest debtor nation, the last thing that the USG wants is deflation. They are working overtime to create inflation because it suites the purpose of the USG and its people better. You’ve heard the arguement “don’t fight the FED”, right?
July 15th, 2009 at 12:47 pm
@LB
I’m looking at that 50% line around 92.15…
What I’d like to see though would be for the dollar to break down and complete that 5 wave (since March) that ben was talking about…Hopefully the TLT would act in tandem and a great entry point would be achieved…
July 15th, 2009 at 12:48 pm
@Pat G: Me-thinks the massive global deleveraging going on is far bigger and more powerful than the Fed. I, for one, don’t want to fight that. I think the Fed is far less omnipotent than you seem to state.
July 15th, 2009 at 12:50 pm
Not going to get into a debate about what inflation/deflation is. Some say simply an increase/decrease in the money supply. Some say it’s related to velocity.
Only know that I can buy a lot more with my $’s today than I could a year ago before others lost theirs: food, a house, car, etc.
July 15th, 2009 at 12:50 pm
@cv: I am already long Treasuries, 5s and 10s, but am looking to exit a leveraged short of the long bond here.
July 15th, 2009 at 12:52 pm
[...] report just out that unemployment is higher than the government is reporting; here is the link. In some states, “one out of every five people who would like to be working full time is not [...]
July 15th, 2009 at 12:52 pm
Karen and Cvienne, thanks for your support.
July 15th, 2009 at 12:56 pm
Pat G.
Don’t think the question is one susceptible of a vote
I may be right. You may be right.
Will see in time who was right.
July 15th, 2009 at 12:58 pm
@ Manny
Remember, “the massive global deleveraging” is being fought by the massive global QE process. What’s left when the battle is won, are countries who have exploded their monetary base which is what led to the inflation in the the ’70s. With the current unemployment rate, this will be stagflation revisited.
July 15th, 2009 at 12:59 pm
@Pat G
To be clear…I own the bullion for the LONG RUN…
basically I’m saying that I don’t see 1000+ for at least a year out, possibly more…
July 15th, 2009 at 1:02 pm
Another one of my prediction came true.
Bing’s First Month A Bust
http://finance.yahoo.com/news/Bings-First-Month-A-siliconalley-2112757018.html?x=0&sec=topStories&pos=4&asset=&ccode=
July 15th, 2009 at 1:03 pm
manhattanguy, $gold has outperformed your vipsx since it’s inception in 2000… although, i imagine, gold and miners are components in that fund..
July 15th, 2009 at 1:04 pm
Mannwich @ 12:48
When it comes to the stock market, and commodities, I think that the Fed and the ECB are quite powerful.
(That’s not to say, however, that the SPX can’t test the 775 level within the next few months).
July 15th, 2009 at 1:04 pm
Last word on GOLD…
I will say that it’s flagging an impressive base at 900 (which started in early ‘08 and could last clear until 2011 – 2012)…But when it eventually leaves that base for the next base camp up, I’m sure the move will be impressive…
I just don’t think it’s going to be tomorrow…
July 15th, 2009 at 1:05 pm
@cvienne
I’m in it for the long run as well. But I think $1000 is possible…this year.
@Mike
I could be wrong but I see all roads (internally & internationally) leading to inflation. And you are right, only time will tell.
July 15th, 2009 at 1:05 pm
Troy @11:56am http://www.ritholtz.com/blog/2009/07/yes-unemployment-is-worse-than-reported/#comment-193688
what if your at a poke r table and an opponent can click his finger and an associate arrives and provides more chips for him .. you get upset and get up from the table sliding your remaining chips into your bucket .. until the house sets hands on your shoulders and says “not so fast .. your in to the end”
ps – can gold (or a real close simblance) be created yet by other mechanisms?
July 15th, 2009 at 1:07 pm
“$gold has outperformed your vipsx since it’s inception in 2000… although, i imagine, gold and miners are components in that fund..”
That doesn’t mean I was holding VIPSX since 2000, does it? Added VIPSX just a few months ago. I don’t think gold will cross 1000 this year.
July 15th, 2009 at 1:08 pm
@Pat G: Fair point but I believe what we are seeing has never happened before on this scale. Unchartered waters.
July 15th, 2009 at 1:10 pm
“With the current unemployment rate, this will be stagflation revisited.”
Correct, the only unknown is the timing, my friend.
“I could be wrong but I see all roads (internally & internationally) leading to inflation.”
Yes, but we have to have another massive crash before the politicians can sell another stimulus package to us.
“Bing is a bust”
No kidding – and as someone on TV said “Twitter is the Macarena of the Internet..” True dat.
July 15th, 2009 at 1:10 pm
Mannwich,
“Uncharted waters”, yes.
But not just for us investors. The Fed doesn’t know the consequences of its own actions either.
July 15th, 2009 at 1:10 pm
@Pat G: I do think many of us here (including myself) believe we WILL see inflation AT SOME POINT. The question is when. I don’t think that time is now but, as Mike says, nobody really knows for sure.
July 15th, 2009 at 1:13 pm
manhattenguy-
I actually prefer Bing- switched all my computers to using it as the search engine- nice clean design
July 15th, 2009 at 1:14 pm
Jeff! the question isn’t WHEN, but WEN! shame on me for almost skipping macro man today:
Unfortunately, in an act reminiscent of Gordon Brown Stalin, the early 90’s data has been wiped from the historical record. A cynic might suggest that this is because China’s leadership doesn’t want to remind people that one upon a time, money growth was this high and it didn’t end well. Judge for yourselves.
In any event, it’s looking increasingly like the “miraculous” recovery in Chinese growth and equities is simply the result of cranking the ol’ printing presses 24/7. While this seems highly likely to end in a banking crisis, hey- at least Voldy has plenty of FX reserves with which to recapitalize the banking system.
In the meantime, Macro Man is left pondering; given the complaints from the Chinese and others about economic management in the US and elsewhere, where are the moans about the true world champion of money-printing, Helicopter Wen?
July 15th, 2009 at 1:14 pm
manhattan guy:
What kind of article would you expect from a guy who wrote this?
The Life And Awesomeness Of Steve Jobs
http://www.huffingtonpost.com/dan-frommer/the-life-and-awesomeness_b_220510.html
BTW, found it easily with Bing which can sometimes be better for pinpoint searches or shopping for a tech product as opposed to needle in a haystack searches. Bing didn’t even offer to sell him to me
That .4% increase in market share was worth a a good bit more than the advertising, so it’s still a worthwhile investment.
July 15th, 2009 at 1:15 pm
The only inflation I can envision is through a devaluation in USD – which is unlikely to happen – must be nice to hold the worlds reserve currency
Otherwise with credit collapsing, debt overloading and high unemployment, deflation is the bigger concern. The FED has printed what 2 trillion? Last I read the crises has caused 11 trillion in loses.
July 15th, 2009 at 1:19 pm
If you ask me, Microsoft should rather invest in Google or Apple shares than trying out all these “me too” business ideas. At least they have a better chance of making money there
Google share of search engine market is still above 78%. No chance it is coming down anytime soon.
July 15th, 2009 at 1:19 pm
@ Manny
Uncharted perhaps but not unpredictable. As to the inflation trade, I’m “in” early which has always been my tendency when investing. Now, it’s off to the gym on the other side of the house.
July 15th, 2009 at 1:19 pm
There is the ultimate PUT under the gold market…
“Cash 4 Gold” recently upped it’s buyback budget to $200,000,000…
Goodnight, sleep tight, don’t let the gold bugs bite!
July 15th, 2009 at 1:20 pm
Canuck is right. The printing is merely an offset that has prevented a catastrophe. So far.
July 15th, 2009 at 1:22 pm
karen:
Agree with that about China. It will be the focal point of the bigger collapse down the road. The money propping up the current commodity bubble is coming from Chinese speculators with access to cheap loans just like GS. Once that slows sufficiently, commodities will fall again. That is part of my deflation thesis. Just a quesiton of how long it will take to pop.
July 15th, 2009 at 1:22 pm
Pat G,
I’m sure you’ve seen my posts, you are here a lot, and I’ve already answered all the questions in your 12:45 response. I used oil as an example to compare to gold, what would you prefer, platinum? Same story. Because of deleverging gold fell? Are we levering back up? Did I miss that?
I don’t know what you are trying to say with the whole, what about the DOW 30 compared to GLD? It’s exactly what I said above, stocks, because of credit expansion, have gone up far higher than gold, so they fell more than gold during credit deflation, what else is there to say? Aren’t we right back to what you just said was an apples to oranges comparison?
As for what I use to measure inflation, I described the deflationary cycle above, if you don’t think that is going on all around us right at this moment we don’t live in the same place. It’s the best way I know how to measure it and companies keep repeating that cycle, which is why unemployment continues to climb as well as hours and wages getting cut. Have you read any of the earnings reports, it’s all about cost cutting. I got an e-mail just yesterday for a sales rep client that was grossing over $450k per year letting me know his sales comm’s were getting cut in half. Bonus? Not unless you work at GS.
All I can say to this is:
You’ve heard the arguement “don’t fight the FED”, right?
LOL. Are you aware of the fallacy of depending on Fed schemes as a basis for market analysis?
Seriously, what can you say they have accomplished at this point other than displaying how they are masters of reaction?
As for the reason why we can expand credit, because that’s what we do, well, I hope you can come up with something better than that. The inflation that has occured over the last 75 years is because of credit, not cash. I’m curious, if you are so confident we can just continue massive expansion of credit, how high to you think it can go and which people do you know that want to lever up their personal balance sheet right now? You do realize that it is impossible to do that forever right? Eventually the payments on the debt load would become literally impossible to service.
Money is roughly $2t in real cash and $50t in credit, so this is another reason why I’m not afraid to fight the Fed, as if they have printed enough.
Not trying to be rude Pat, clearly I’m pretty hardcore on the deflation side and I’ve got to argue it out being in the minority camp there. Good luck to you man.
July 15th, 2009 at 1:23 pm
Ah, what will we do some day when we can’t argue the inflation/deflation issue?
Or will that day ever come?
July 15th, 2009 at 1:26 pm
manhattan guy:
Shorting Google would be a better play. P/E(ttm) is 31. Stock is probably heading back to the 240’s in the fall.
Some have made the point that Google is now imitating MS with the ambitions about an OS. Android hasn’t exactly set the world on fire. Actually, any new OS from Google will be more of a threat to AAPL, because it will provide a lower cost alternative to the “anything but Windows” crowd.
July 15th, 2009 at 1:26 pm
Just checked on the $wlsh… on the 3 year weekly chart, it came within 12 pts of the 50 dma.. about where it turned down in June, right under that line… keep an eye on it! not sure if the link will work but here goes:
http://stockcharts.com/h-sc/ui?s=$WLSH&id=p45236901427&def=N&listNum=1
July 15th, 2009 at 1:26 pm
@Pat G,
I do agree that at some point we will have inflation, clearly though, I don’t think that is anywhere near today.
July 15th, 2009 at 1:27 pm
@OT
“what will we do some day when we can’t argue the inflation/deflation issue?”
As long as we’re not TWITTERING the argument, I’m fine…
July 15th, 2009 at 1:28 pm
Onlooker, speak for yourself, smiling. I don’t argue the inflation/deflation issue.. do you argue with people that prefer vanilla to chocolate? lol.
July 15th, 2009 at 1:30 pm
karen
No, I don’t want to argue it either. It’s come to be like arguing religion.
July 15th, 2009 at 1:31 pm
cvienne, my son is having a blast on twitter with the tour riders, btw. he’s also on some financial twitters.. TMI for me..
July 15th, 2009 at 1:32 pm
“Google is now imitating MS with the ambitions about an OS”
The announced OS was for Netbooks. MSFT has long dominated the OS market and Windows is such a crappy product. I welcome more competition in this space especially from better innovators such as Google.
“Android hasn’t exactly set the world on fire”
Wrong. Android is slowly eating up Windows Mobile and Rimm’s lunch. It’s the first true open source platform for Mobile devices.
As far as the Google being a short candidate. No arguments there.
July 15th, 2009 at 1:32 pm
Mistress, would you be vanilla or chocolate? Inquiring minds need to know.
LB prefers vanilla (deflation) with warm slightly bitter chocolate sauce (TARP/stimulus cash) drizzled on top.
July 15th, 2009 at 1:37 pm
Well, I guess I’m also in the vanilla camp.
karen,
is that your son that took the CFA exam? How did he do?
I’ve still never been to twitter or facebook and I don’t feel like I’ve missed anything either.
July 15th, 2009 at 1:37 pm
@karen
Now that actually does sound kind of cool (talking to tour riders)…I bet Wes Schott would be into that…
…as for arguing INFLATION/DEFLATION?
my stance is that I really only enjoy arguing with people who argue about INFLATION/DEFLATION
chiaro? va bene…andiamo avanti…
July 15th, 2009 at 1:38 pm
“Google share of search engine market is still above 78%. No chance it is coming down anytime soon”
I think there is animosity building towards Google- entirely too much information regurgitated back to you in advertising- and that they scan your emails- well that kinda sucks doesn’t it- and that they now advertise on the bottom of youtube clips- that pretty much sucks too-
SBUX was cool until it was everywhere- and that’s when people start looking for something different
July 15th, 2009 at 1:41 pm
@ahab
SBUX was cool until everyone realized how silly it was to take out a HELOC on your house to keep your mocha frappuccino habit alive…
Now it’s like WTF? Most just want them to stay open because maybe they’re hiring!
July 15th, 2009 at 1:43 pm
MSFT is more of a closer comparison to SBUX than Google is. Google’s text ads are not as intrusive as the banner ads that you see on most MSFT sites even though MSFT did copy Google’s text ad idea and use it on some pages. Microsoft copying someone’s idea…oh no surprise there.
July 15th, 2009 at 1:43 pm
ben, good question, but you have to have a job for two years before taking part 2 of the exam, apparently.. i’ll check with him and see if he even passed part 1… driving to the test that day in June, he was wondering what good the designation would be anyway… he thinks he fell prey to a marketing scheme… that test is big business, you know.
July 15th, 2009 at 1:47 pm
Gold closing close to $940. A short-term top??
Manhattan guy: good call on oil today. Got buddies at the NYMEX?
July 15th, 2009 at 1:48 pm
@LB
Didn’t we close at 906 or something yesterday?
We’re closing in on your (up 3% day), which would take us to 933…That was about the point of Andy T’s MAX PAIN…
It’s never easy is it?
July 15th, 2009 at 1:50 pm
ben, where would i be without text?! test results come in at the end of the month and he thot the social media graphic was hilarious… oh, yeah, and he had to rub in that he made a FORTUNE w/20k worth of GS calls (monopoly money from thinkorswim.com)… now let me see what he has to say about GOOG.. i know already, tho.. he’s been telling me to buy for two weeks? maybe..
July 15th, 2009 at 1:51 pm
Hey Karen – have your property taxes gone down at all down there in OC? Mine have gone down quite a bit the last two years but my partner out in Riverside County isn’t so lucky. They reduce the value of his home but then jack up the value of the land so that his property taxes have stayed the same . . . .
July 15th, 2009 at 1:52 pm
Karen,
I do know as I’m dealing with CFP exams. Costs some money that’s for sure. I didn’t know that about part 2 of the exam thoughon the CFA. Same sort of deal with the CFP, you can pass the test but if you aren’t in biz for at least three years you can’t use the designation.
July 15th, 2009 at 1:54 pm
Quite a pump today. Very impressive. Reminds me of last summer. Then The Fall hit in the fall. Same thing going to play out this year.
July 15th, 2009 at 1:54 pm
Karen,
pretty cool you can talk to your son about trades. He’d probably be better off in the end learning from you than passing exams, but CFA is a major accomplishment, it takes a lot of study and work to pass it.
July 15th, 2009 at 1:55 pm
Obviously no sense arguing religion in the form of inflation or computers. So, I quit.
Now, what about SKF again? Too scared of the SEC?
July 15th, 2009 at 1:56 pm
@Mike: For what it’s worth, I’m not going near SKF or FAZ right now. Tough to short a sector that can lie about its financial condition with impunity.
July 15th, 2009 at 1:58 pm
Karen,
our office now employees he voice recognition system and I am dictating this note to you over it. I see that you like text but with the system like this I can we not progress? K. you can see that it only makes about 3 mistakes per symptoms and of only been using it about 3 weeks and still have a lot of training to do with it.
July 15th, 2009 at 1:58 pm
Fascinating day. Agree that one can play anything but FAZ. There seem to be “values” in SRS, FXP, etc..
See you at the close.
July 15th, 2009 at 1:58 pm
“Manhattan guy: good call on oil today. Got buddies at the NYMEX?”
Ha I wish:) Thanks, but it’s just purely a technical call. I think Asian markets will push it up a little tomorrow, say around 63?
July 15th, 2009 at 2:00 pm
ben, here’s his GS and Goog take: “both are so well positioned for the next few years. they have every competitive advantage.. But I know you don’t trade on that kind of horizon.” darling son. In an earlier text he said: “Goog is a buy I’ve been saying that. Even bigger buy if earnings disappoint and the price dips but I don’t see that … Strategically they are going to rule computers 4 years out.”
ah, Ahab, now you know who introduced me to NVDA.. I’ve been trading it off and on this year.. sticking with it now.
July 15th, 2009 at 2:01 pm
Why would you mess with banks on the short side with JPM tom?
That seems like a very high risk trade and what could the reward be exactly?
July 15th, 2009 at 2:03 pm
karen,
I bought some goog for my mom not too long ago, she’s made some decent money but I was already thinking about selling, lol.
July 15th, 2009 at 2:05 pm
Voice recognition systems take a long time to train…Karen
July 15th, 2009 at 2:05 pm
Thor, just got my new property tax statement. they raised me the standard 2%.
July 15th, 2009 at 2:09 pm
Bruce, very interesting! thanks for the trial : )
July 15th, 2009 at 2:11 pm
Cold steel time….
July 15th, 2009 at 2:12 pm
Anyone else concerned about volume, we have 2 hours left and not even 50% avg volume on SPY.
Also, I could be looking at the oil inventories report with some bias, but oil inventories down and gas/distillates up. Looks to me like refiners assumed demand would be up for gas/distillates this summer and moved oil to a different part of the supply chain. They would have been wrong!
July 15th, 2009 at 2:13 pm
Here’s a question…
Why is the VIX in rally mode with the markets up 2.5% across the board?
July 15th, 2009 at 2:15 pm
Op ex on Friday…
July 15th, 2009 at 2:17 pm
@CC,
I was just looking at volume and thought the same thing
@I-man,
some have talked about a 16 week cycle in the vix that has been in place since the 10/07 peak and it was set to reverse trend again here in mid july, maybe that’s as good a reason as any.
July 15th, 2009 at 2:19 pm
I’m going to take a shot at FXP here for a short term trade. Stops in place on 4,000 shares.
July 15th, 2009 at 2:29 pm
The VIX is a strange one. Just goes to show there’s more to that than meets the eye. Tracking right up with the market today. Must be strange OP EX dynamics at play as LB alluded to. Definitely above my head. And why I wouldn’t try to trade anything based on it without going to school on it first.
July 15th, 2009 at 2:29 pm
@ Left:
So do you think that is a reflection of peeps buying back puts they sold earlier to cover ahead of opex, or people buying puts ahead of opex…
or just people getting long and buying protective puts?
I dont have any answers… just looking for thoughts.
July 15th, 2009 at 2:31 pm
At this rate, we’ll be at S&P 1,000 by the end of the week! Recovery in full bloom!
July 15th, 2009 at 2:31 pm
“Fed: Unemployment Will Top 10 Percent This Year”
Latest laughable headline on yahoo. Of course it will only reach 10% that’s because people will fall off the rolls and won’t be counted in the survey lol
@ben22 good luck on the trade. I’m feelin a bit of pain on my SSO short but the puts I sold this morning are working out well to cushion the damage.
July 15th, 2009 at 2:35 pm
@Canuck: Aren’t we already at 9.4/5%? Gee, tell us something we don’t already know, Mr. Fed. Heckuva job! “Subprime is contained”…….”housing prices reflect fundamentals”. Did I miss any other good ones?
July 15th, 2009 at 2:39 pm
Classic squeeze day. My voice is already higher than it was this morning, I-Man must be a soprano by now.
Peep must be buying puts knowing full well that this is a bear market rally.
How bad does Morgana* have to do with the Q2 earnings report to trigger a sell-off?
*Morgana the Kissing Bandit used to invade the field at sporting events.
July 15th, 2009 at 2:41 pm
@CC
I think they’re saying that unemployment will “go over” 10% (not that it will “top out” at 10%)…
What made me laugh instead is how they came up with the notion that the economy would improve in the face of that…
July 15th, 2009 at 2:43 pm
LOL.
Nah… just practicing my falsetto today.
My firm resounding baritone will be back in no time.
July 15th, 2009 at 2:46 pm
Re: SKF
Well, I guess I’ll let that one be settled by vote
I just keep getting tempted looking at last year’s chart.
Notice the volume was low. Clearly, not many really have a lot of faith in what the market is doing. I suppose the big boys are hoping today and the Fed statement will suck in the marks, er, I mean retail investors.
July 15th, 2009 at 2:47 pm
@CV: They must mean the green economy in CA. Unemployed peeps spend more time smoking green shoots….
LB is calling a low in the Treasury market RIGHT HERE.
July 15th, 2009 at 2:47 pm
@Mannwich
I think it’s the administrations attempt at transparency.
Geez, I just want one trade to go my way…I got my eye on a new Brietling watch that Mr. Market said he would buy me. :p
July 15th, 2009 at 2:48 pm
I’m singing a little high myself! But hanging in there. Some sanity will prevail again. I can wait.
July 15th, 2009 at 2:51 pm
lb, we can have a bear market rally all the way to 1050.. watch the $wlsh… broadest measure of the economy… and if it wants to march up, no amount of reasoning will bring it down.. maybe it’s discounting 4 years from now… : )
July 15th, 2009 at 2:52 pm
Re: Morgana
She just begged the desire to stick your head in the middle of those things, shake it around and go
BUBUBUBBUBUBUBUBUBUBUBBU….
July 15th, 2009 at 2:53 pm
Even OJ is up. I suppose the recovery will get us to drink more juice.
Well, guess I’ll wait tll tomorrow to lay on some more shorts. If the claims no. is anywhere half decent, CNBC will explode and Dennis will strut.
July 15th, 2009 at 2:54 pm
I’m still looking at 956…
What’s interesting to me is that the 233 day EMA is about 960 right now on the S&P and bearing down hard on 956…
It could be a meeting point…
July 15th, 2009 at 2:58 pm
Painful. But – we can buy FXP before we are “priced out forever”..
July 15th, 2009 at 2:58 pm
The Mother of all Short Squeezes or just her son?
July 15th, 2009 at 3:02 pm
O man….my stop on Sep minis is 931…almost got hit….I HATE getting stopped out….could be a heavy a night of drinking at AT’s house…..
July 15th, 2009 at 3:03 pm
lb:
Don’t talk to me of FXP. I was early on it
Fortunately, only bought 100 shares, but that was at a bit over 20.
Can WEN keep it pumped forever?
July 15th, 2009 at 3:03 pm
@AT: I’m already ahead of you. Stocking up for a little evening boat ride. Much booze will likely be imbibed.
July 15th, 2009 at 3:08 pm
the confidence of the bulls on CNBC is going to be on full display tonight and tomorrow morning that is for sure.
July 15th, 2009 at 3:08 pm
Milagro tequilla (and tonic), Andy. I indulged yesterday. Pilates this afternoon. Wine this evening, most likely. Sitting on my hands for SRS sub 18…
July 15th, 2009 at 3:09 pm
@AT
Before you get too drunk, take a look at TLT and see if that doesn’t look like the starting of a “d” wave…
on the MACD it looks like the 30 min. is about to cross…
July 15th, 2009 at 3:09 pm
I haven’t seen anyone say anything recently about BR’s claim that they were heavy in stocks and mostly tech.
BR is looking pretty damn smart today.
July 15th, 2009 at 3:10 pm
@karen: I’m waiting on the same thing with SRS. Tempting to grab some here before the close.
July 15th, 2009 at 3:11 pm
Okay, just gave back half my sso at 26.81.. will buy a pullback/rsi rest. Wondering if Andy was stopped out.. We gotta get our strategies in sync…
July 15th, 2009 at 3:12 pm
No-one ever said BR was stupid – and if they did, like Don Luskin, they lived to REGRET it.
CNBC will be complete unadulterated full-on bullsh*t tonight. Especially Kneale and Squeal.
July 15th, 2009 at 3:13 pm
Ah… tequila and tonic… the best drink no one knows about.
July 15th, 2009 at 3:14 pm
If CNBC is broadcasting and nobody has it on, does it make a sound?
July 15th, 2009 at 3:15 pm
@ben22:
Yup, that’s why he gets the cool blog and the rest of us just commentate.
Props to the Master.
July 15th, 2009 at 3:18 pm
Mannwich @ 3:14
funny
tequila and tonic, that sounds disgusting to me.
The may sound a little girly but my latest drink is Three Olives Root Beer Vodka with nothing else.
I don’t know how that is deflationary but I’m drinking it lately. : )
July 15th, 2009 at 3:19 pm
Someone is trying extremely hard to pin a number heading into expiration….
Profit taking will begin at 3.45pm if not before.
July 15th, 2009 at 3:19 pm
I’m going to stick with good old fashioned beer this evening. Got some Summit I will bring on Lake Minnetonka. Probably will have more than a few!
July 15th, 2009 at 3:29 pm
lb: must be gregg and his AAPL calls
July 15th, 2009 at 3:34 pm
@CC
Those are nice watches but in general the faces are too big for me to ever buy one. I could see though if you like the outdoors, sailing, or you are a rapper why that would be a good pick.
Was at a shop in Ceasers Palace in Vegas a few years ago looking at them and my buddy asked the sales clerk when they went on sale, his response was when you give me your credit card or write a check.
July 15th, 2009 at 3:43 pm
More on SPX/VIX parallelism and other weirdness from ZH:
http://zerohedge.blogspot.com/2009/07/stop-trading.html
Stay very calm here, people, and remember your fundamentals….
July 15th, 2009 at 3:47 pm
ben22
I thought BR said he got stopped out last week. I can’t remember where (i.e. what post) but I know he mentioned it.
I was wondering what he’d be doing with his positioning during this frenzy.
July 15th, 2009 at 3:58 pm
Added a small amount of SCO/DUG and exited some TBT. LB expects some profit taking in energy tomorrow.
July 15th, 2009 at 3:59 pm
anyone care to comment on predictions for GOOG tomorrow
July 15th, 2009 at 4:00 pm
@ben22
“Was at a shop in Ceasers Palace in Vegas a few years ago looking at them and my buddy asked the sales clerk when they went on sale, his response was when you give me your credit card or write a check.”
LOL funny stuff!
July 15th, 2009 at 4:01 pm
Barry will put up one of his squeeze posts: “WTF was that?”
I-Man, you OK out there….?
July 15th, 2009 at 4:02 pm
@Onlooker,
I don’t think he was exactly stopped out, only hinted that many of the most recent purchases were stopped out but they have been building long positions since March so it wasn’t all of it. he said on Kudlow the other day they were still 60% equity.
July 15th, 2009 at 4:04 pm
I swallowed hard and grabbed small amounts of SRS and DUG at the close. Good night all.
July 15th, 2009 at 4:07 pm
leftback @ 3:43
I was lured in by the low VIX this morning, and put on a bear spread using SPY calls.
(That VIX should get above 30 again soon, I think).
July 15th, 2009 at 4:13 pm
Trading strategy for tomorrow is to sell Oil longs, buy Dollar, short Oil and nibble on some Treasuries long.
July 15th, 2009 at 4:16 pm
I’m holding up surprisingly well given my tendency to throw shit and break things on days like today. My breathing exercises and Seykota channeling must be starting to work.
I knew coming into this week that the financials could make a run and that the SPX could hit 930… I just forgot what it feels like to sit it out and not get all emo.
Just like the last time this happened… when I was short at 930 and had my stop at 950 and had to let it marinate a bit… 956 ended up being the top, and I was rewarded for not bailing out.
I feel the same today. I had a mental stop at 930, and decided to let it marinate. We’ll see if I have one more in me or if I’m just dumb as shit.
My Everlast bag better watch the f*ck out this afternoon though… its going to be one hell of a workout today.
July 15th, 2009 at 4:23 pm
You guys see trading in CIT was stopped? So presumably we will have a bailout announcement soon, or else all hell will break loose – maybe that’s what prompted the big run-up in the VIX. As usual, someone must know already…
I-Man, you go and marinate. It’s always better to be Indie than Emo. Just don’t watch Dennis tonight.
July 15th, 2009 at 4:26 pm
Contributors to this blog are awesome. I love this blog because of Barry (yes), but the level of the discussion in the comments section is not surpassed anywhere else that I can find. Thanks to everyone.
July 15th, 2009 at 4:26 pm
Cintas and Xilinx earnings were total dogsh*t. That ought to cheer people up.
July 15th, 2009 at 4:31 pm
Has anyone noticed the circumstances of the socio-economic dynamic is crescendoing again, as it did last summer. It’s so strange to me how march-may seemed a boring period, and now new dynamics are popping up every day piquing my interest. Once again, I’m having trouble keeping up with it all.
Is it just me? It just feels like we are building to another event.
July 15th, 2009 at 4:33 pm
hopeimwrong – I agree! That’s what keeps me coming back!
July 15th, 2009 at 4:34 pm
Friday will be a wild one, at least the pre-market and the morning trade, before the Hamptons jitney leaves town.
Not only options expiration, but also C, GE and BAC reporting before the bell.
Now, who could be buying all those puts today? Hmm…..
July 15th, 2009 at 4:34 pm
I just read that Intel results were juiced by “atom” chip sales for netbooks. Thats like auto sales rising due to Tata Nano.
PS I still can’t believe milk prices/sales are down, whoever thought of milk as a luxury/discretionary expenditure? I have seen sales on milk here in NJ and yogurt is always on major sales – like 2/3 – as it approaches it’s expiration date.(I always considered out dated yogurt to be over proof! You can never tell when yogurt goes sour!)
http://tatanano.inservices.tatamotors.com/tatamotors/
July 15th, 2009 at 4:36 pm
“It just feels like we are building to another event”
Eventually we will have a big Not TBTF bankruptcy, and rediscover the “inter-connectedness” of the system.
An infinite series of bailouts would lead to a complete breakdown in the bond market. Lines will be drawn.
July 15th, 2009 at 4:39 pm
jc – re:yogurt I used to joke, “how can you tell when yogurt goes bad?” Or, “why is there an expiration date on the yogurt?” Of course, there is a way to tell, but thinkers will chuckle after a second or two.
July 15th, 2009 at 4:39 pm
Another day another bailout. This saga will never end. We are destined to lose AAA status this year.
July 15th, 2009 at 4:39 pm
@Mannwich (3:14)
That gave me a really good laugh. Thanks!!
@ Ben22
And thanks for your thoughts re; the deflation/inflation debate. I enjoyed it. But, in the end we all croak and in the meantime we all experience this time in our lives, together. CNBC will love the sentimentality in that…
July 15th, 2009 at 4:46 pm
“Rep. Barney Frank, chairman of the House Financial Services Committee, said earlier Wednesday that the Treasury wants to find a “responsible” way to provide government aid to CIT.”
man- it never fucking ends
July 15th, 2009 at 4:47 pm
leftback at 3:58 pm
Added a small amount of SCO/DUG
Mannwich at 4:04 pm
small amounts of SRS and DUG at the close
I took DUG/SDS/SRS nibbles from 3:44 into the close.
Just curious, for tomorrow’s open, how tight will your stops be (%-wise) below your SCO/DUG/SRS/DUG bot near close?
July 15th, 2009 at 4:50 pm
Just thinking about gov as landlord for the foreclosed – apparently this is only for primary residences so FL,NV and SC are still shit out of luck.
Talk about this plan makes me think that the -25% underwater proposal announced by Team O’B last week still isn’t enough
http://247wallst.com/2009/07/15/if-uncle-sam-takes-mortgages-and-becomes-landlord/#more-40919
July 15th, 2009 at 4:54 pm
Ahab – ugh, Barney Frank. I’m ashamed he and I play for the same team.
July 15th, 2009 at 5:01 pm
I didnt know you were in congress Thor…
July 15th, 2009 at 5:02 pm
@Pat G,
No problem man, I also enjoy hearing the other side of my stance as well and being challenged, helps me to not fall in love with any one idea, another reason this site is where it’s at.
July 15th, 2009 at 5:04 pm
@Just curious, for tomorrow’s open, how tight will your stops be ?
That depends on whether you are on an IB prop trading desk… LOL. NO STOPS, BABY….
I am a mental stops guy these days, we like to give our trades room to roam, especially when we are right !!
July 15th, 2009 at 5:10 pm
@ Thor
Ok… ok…
I forgot the
July 15th, 2009 at 5:15 pm
I-man – “I didnt know you were in congress Thor…’
I have NEVER been so utterly insulted in my life!
July 15th, 2009 at 5:17 pm
I-man – PS – feel free to tease me all you want, It’s pretty hard to offend me
July 15th, 2009 at 5:18 pm
Hey-
Where did the CIT thread go? It just disappeared…
July 15th, 2009 at 5:22 pm
“…to find a “responsible” way to provide government aid to CIT.”
And bail out their bond holders. Rep. Frank left that part out, of course.
July 15th, 2009 at 7:16 pm
the most enjoyable part of the day is seeing that AT’s call about the H&S was right, everyone saw it, it didn’t happen. Way to go on that call AT.
July 15th, 2009 at 7:18 pm
ben22:
you bein’ sarcastic?
July 15th, 2009 at 7:25 pm
CIT may be in trouble with their bail out from the govt. We may see the inverse of today in the markets if that goes to hell. Bloody interesting times we live in.
http://www.washingtonpost.com/wp-dyn/content/article/2009/07/15/AR2009071503305.html?hpid=moreheadlines
July 15th, 2009 at 7:26 pm
I don’t think he’s being sarcastic. Weeks ago I was suggesting that the H&S pattern being discussed in the media would not happen….BECAUSE it was being discussed too much.
July 15th, 2009 at 7:28 pm
Mike,
No I’m not. I get the emails from AT, he made a claim that the head and shoulders should fool people because so many were discussing it, think he also mentioned this on here. While I wouldn’t be surprised at all to see a pullback for the next two days to go along with my days of the week theme of late today’s action looked quite bullish from my view. That isn’t what was supposed to happen based on the H&S pattern as most people were reading it, most calls were for a drop to the mid to low 800’s. Lots of people were piling on that call. So yeah, I like watching herds get it wrong.
I’ve mentioned on here so many times in the last two weeks that I didn’t think the probability was really on anyone’s side to get really short right now and while I bought some FXP late today it’s only for a short term trade.
July 15th, 2009 at 7:34 pm
ben22 and AT:
Cashin wrote a column today about how too many people were watching it. He must get the emails too.
With this CIT stuff I may miss my chance to buy some FXP that won’t have to double before I’m outta the red
July 15th, 2009 at 7:37 pm
Mike,
I heard him discuss that this morning as well and I was thinking to myself, AT just said that.
Cashin is one of the best on cnbc imho too bad he’s usually only on for only up to a few minutes each morning
July 15th, 2009 at 8:06 pm
@ben22
“I heard him discuss that this morning as well and I was thinking to myself, AT just said that.”
Um…ben…I kinda said the same thing back on July 8th…
http://www.ritholtz.com/blog/2009/07/art-cashin-on-secular-cycles/#comment-191112
http://www.ritholtz.com/blog/2009/07/art-cashin-on-secular-cycles/#comment-191116
July 15th, 2009 at 8:19 pm
Cvienne,
Sorry, feel free to include yourself in my post then from above. You’ve made lots of good calls lately.
July 15th, 2009 at 8:40 pm
okay tooting my own horn here but wtf lol
July 2
http://www.ritholtz.com/blog/2009/07/quarterly-returns/#comment-189414
July 6
http://www.ritholtz.com/blog/2009/07/deeply-oversold-bounce-not-green-shoots/#comment-190209
July 15th, 2009 at 8:41 pm
@B22 and other doubters of the H&S
http://thepatternsite.com/chst.html
There’s a lot more to a H & S Pattern than your classic interpretation. Not saying that this pattern is of the complex class for sure, but it has yet to be ruled out. It has not been fully confirmed. But its definitely a factor in my decision to remain short today.
July 15th, 2009 at 8:44 pm
Complex head-and-shoulders tops are strong performers in a bull market, showing a small break even failure rate and large average decline if traded perfectly. Pullbacks occur almost two thirds of the time, so anticipate them happening.
(From the link.)
July 15th, 2009 at 8:51 pm
@I-man
dude…help me out here…I need to score me one of those trademark (TM) things that lefty uses all the time because I’m going to make another trademark right here right now…
It’s going to be called the ROXBURY H&S…tm
It stands for the guys at the guys from “Night at the Roxbury” doin all those head tilts to the Haddaway song “What is Love”…
because IMO – all the H&S patterns I see nowadays are not horizontal ones, they’re “tilted” ones…
The genre is not DEAD, it just needs a little updating so as to keep the CNBC crew looking like fools…
July 15th, 2009 at 9:00 pm
I trade with pattern recognition in mind not because of how they look on the charts or how privy they are to the general public or not, but because of the underlying human psychology that they reflect in price action, or, our beloved “tape”.
I actually found it amusing how many people were discussing this one, and meanwhile, interpreting the same thing in different ways. Its kind of fascinating to see TA being discussed in the MSM. I thought we were all like banditos or something. I thought the fundy guys got all the press.
July 15th, 2009 at 9:14 pm
@I-Man — do you see any impact to your pattern recognition methodology from about half the trades coming from program traders?
July 15th, 2009 at 9:20 pm
@I-man
My thoughts are this…
I certainly don’t discount “pattern recognition”…in fact, I’m a believer of it…Furthermore, I’m a full subscriber to fibonacci numbers…I mean, those patterns are evident even in ARCHITECTURE of ancient cultures…
But what I’m noodling around with lately is the idea that the PATTERNS that the human eye sees are not the same as what COMPUTERS see…So much “quant” trading is done these days that I try and see destinations that a computer might see…
Maybe they don’t have the same spatial definitions of horizontal & vertical that humans do…and if that is the case, you need to start TILTING your landscape…
July 15th, 2009 at 9:26 pm
I Man
I’m a far distance from being TA expert or investing expert at all, but that’s my thoughts as well. Just because the H&S hasn’t played out in a classic manner, the underlying dynamics at play may still yield the same result in due time. Also the analysis is far from complete by just looking at the pattern. Volume and other market measures have to be taken into account as well. And just about all the technical indicators and market internals are pretty atrocious from what I understand.
I’m still comfortable with the idea that this advance will not hold for any significant period of time. So I will maintain my short bias. It’s still a bear market. And the world’s still a mess but is hanging onto hope in a desperate way.
July 15th, 2009 at 9:33 pm
@cvienne — If I were designing a trading AI, I would be schooling it to watch for the sort of patterns that chartists favor, and use them to herd the slow humans into a box canyon and harvest them. At a minimum, I would be using the trading volume along the pattern as a “wind” to tack against, trimming a little from every expected move along the pattern. That would have the effect of smoothing out the noise in the pattern, and possibly stretching it out over time … I think.
July 15th, 2009 at 9:36 pm
@OT
as I remember, this comment (last week) was directed to you…
http://www.ritholtz.com/blog/2009/07/art-cashin-on-secular-cycles/#comment-191116
Notwithstanding, I’m in TOTAL agreement with you…Fundamentals will eventually play out (quants or no quants)…
One old anecdote that I was reminding myself of today was the following notion:
How many UP 2.5% – 3% days have we had in the S&P since March…I don’t know, but A LOT I’d bet…Those types of moves simply don’t happen in BULL MARKETS with PROPER FUNDAMENTALS…
However, once can go broke playing fundamentals too rigidly…Frankly, I’m happy to stay EVEN during this time when Mr. Hope meets Mr. Obvious (no offense to you karen)…
The time will present itself…The last pullback I ’started’ to see the right tumbler locks fall into place but I didn’t hear the CLICK…we’re getting closer…
July 15th, 2009 at 9:48 pm
@ constant:
I’ll say this: yes I have begun to recognize the prints that the machines leave behind. I cant say for certain because I dont have the techno ability… I dont know anything about Level II either, or really have the inclination for it. So my observations, or my perception of them anyway, are clearly not backed by data…
But nonetheless, I am confident that I can recognize a computer generated “pattern” or “breakout” versus a more natural one.
That being said though, and I am struggling with coming to terms with this viewpoint myself, it really doesnt matter who is doing it or not, or how the tape is being shown, what matters is that its happening, and we need to accept it and make the decision to either trade with it or against it.
To me, I think that manipulation has always been a part of the game and it always will be… if you call what the machines are doing manipulation, well, then…
July 15th, 2009 at 9:53 pm
http://www.nytimes.com/2009/07/16/business/16cit.html?_r=1&ref=business
CIT Says It Won’t Get More U.S. Aid
“We have a comprehensive and aggressive strategy to restore stability to the financial system as a whole so that credit flows to both businesses and consumers and puts us on a path to sustainable growth,” the Treasury said in a statement. “Even during periods of financial stress, we believe that there is a very high threshold for exceptional government assistance to individual companies.”
….Little Lehman or no big deal tomorrow? This apparently is the final word…and if last week’s initial claims were altered by the holiday, could be interesting Thursday…..
July 15th, 2009 at 10:01 pm
@cn
that’s not bad…
In the end too you have to be a bully…If you’re going to box them into a canyon, you have have to have the power to stampede them out…that requires more than a firecracker, you may need a stick of dynamite…
But I think there’s even more to it than that…
Since the March lows, I have noticed a migration into what I’d describe as “sentient” and “insentient” camps…
The “sentient” ones are the ones with SOMETHING POTENTIALLY TO LOSE…The “insentient” ones are the ones who don’t want to lose, but are so loaded with money that they basically say WTF…Let’s just trade the thing and see how it goes…
The “sentient” ones are the ones who embrace fundamentals (who KNOW IN THEIR HEARTS that righteousness will prevail in the long run)…
The “insentient” ones, who are free and clear a couple of mil here and there can clown around about winning or losing 20K per day…So they just TRADE, they go where the prevailing wind takes them…If someone wants to take the S&P up to 1,050, so be it…WHO CARES IF IT MEANS P/E RATIOS WILL BE AT 1,800+…THEY CAN DRINK THEIR GLASS OF WINE AT THE END OF THE EVENING AND EVEN BRAG TO THEIR FRIENDS HOW GREAT THEY ARE…It doesn’t matter to them if, based on how the MSM portrays the “health” of the economy, if a run-up to bubblicious territory actually ends up EXACERBATING the eventual economic demise of this country (hey, they made a half mil “beer money” on the side in the process because they were so smart)…They are the PUPPETTEERS…God love ‘em for it…
The “sentient” ones care about their families, hopefully their clients, and perhaps the general welfare of the citizens of this country…NOBODY WANTS THIS COUNTRY TO GO DOWN THE TUBES…But they realize that the “hard medicine” may be the best thing at this point…So they play it cautiously…In this period of WHO KNOWS WHAT?…they’re probably happy to tread water or break even…
I don’t know…but besides QUANT MODELS…I think THAT is something one has to factor in…And my biggest FEAR (for not going 100% short this market right now)…is the fear of the INSENTIENT folks with a wad of cash they don’t know what to do with…
July 15th, 2009 at 10:02 pm
Bruce — my thoughts are that today was the chosen day to lower the boom on CIT (”allow it to fail”) because JPM is reporting earnings tomorrow and will act as a counter to any fear that a big failure might generate. I expect JPM to have blow-out earnings, in a very similar manner to GS, and MSM will trumpet this more loudly that they gawk at the roadside crash of CIT or examine the implications thereof.
I look to see a coordinated herd of banksters quickly swoop in to hoover up CIT’s business, so as to not inconvenience their customers, and to minimize any collateral damage. That’s what ought to properly happen, in any event.
The way that Lehman was allowed to crash without any planned support for their “dependents” was disgraceful, and IMHO designed to damage the economy.
But that’s just my twisted way of seeing things. Everybody has their own perceptions, and from outside the bubble it’s hard to say what is real and what is orchestrated.
July 15th, 2009 at 10:10 pm
Well, one other thing that has happened here it the extreme volatility of the bond market over such short time spans..actually when you think of it, it has to be this way with this much funny money being pumped into the market…you players must be having a hard time of it here.
And constant…you “allow to fail” remark…isn’t it funny that such a thing just 12 months ago…ONE YEAR AGO…would have been such an alien concept that if you’d told people such a widespread government bailout of all things economic was in full swing in July 2009 they would probably have looked at you funny and then taken the baby inside to be sure it was safe.
There has been remarkable economic history made in less than one year….you traders have my admiration…
Except for Leftback who is coached daily by the twins…
July 15th, 2009 at 10:21 pm
But others — notably in the retail industry — warned that a failure of CIT would pose grave dangers to businesses.
“A failure of CIT would impact thousands of retailers and, consequently, the consumer spending that makes up two-thirds of our nation’s economy,” Tracy Mullin, the chief executive of the National Retail Federation, an industry group, wrote in a letter to the Treasury secretary, Timothy F. Geithner, earlier on Wednesday. “That cannot be allowed to happen at a time when retailers are already struggling to survive the national recession.”
….from the same NYT’s article…Constant I hope you are correct…
July 15th, 2009 at 10:23 pm
Agreed. And just think about the incredible range of possibilities that lie between here and July 2010.
I think that just about anything can happen — mainly because there are apparently no limits to how far the powers-that-be are willing to spin the controls. Scary beyond belief.
July 15th, 2009 at 10:30 pm
I do feel fairly confident (in my complete and total ignorance) that by Monday, the retailers and other businesses that depended upon CIT will not even notice that it’s gone. There really is no reason why it should not play out that way.
I’m sure that CIT has shared its list of exposed customers with the appropriate parties in the course of its struggles to get funding, so they would have all the knowledge to reallocate those business relationships to other lenders. The FDIC is performing this same game every weekend as it closes more and more smaller banks.
July 15th, 2009 at 10:34 pm
@Bruce
This is just my guess…but the volatility in the bond market doesn’t strike me as being particularly odd (by historical measures, yes, but in a small window, no)…
I think there was a tremendous run (probably a lot due to a rare equity run up in which profits were searching a home for the short term – BEFORE THE END OF THE QUARTER mind you)…
Now – there is a side political agenda (the Healthcare Package – a version of which was passed in the Senate)…So the Bond Vigilantes make a ruckus, and the ruckus is in concert with an equity rally which is happening for no other reason than to say WTF? why the hell not?
I predict a return to order in due time…