Data Points to Ongoing Economic Woes
Despite the cheerleaders best efforts, the latest set of data to come out is filled with signs that the recovery — when it finally arrives — will be unimpressive. The best word for it is probably “sluggish.”
My belief has been the government stimulus, cash for clunkers, and first time buyers tax credit has partly obscured the ongoing weakness, making it appear better than it really is. As these programs sunset, what is left behind is a wounded economy, healing very slowly.
Employment: I am not a huge fan of the ADP Report — its useful for trend only, but its precision and accuracy is somewhat wanting. However, the downside surprise this morning lends evidence that we will not see a notable improvement in NFP on Friday.
“Companies eliminated more jobs than forecast in August, a private survey indicated today, signaling that employers have yet to gain confidence about a recovery from the deepest recession since the 1930s.
The 298,000 drop followed a revised 360,000 decline the prior month that was smaller than previously estimated, according to figures from ADP Employer Services.”
Retail Sales: No money, no sales. With hiring soft, wage gains flat, and various costs of living like health care and education seemingly immune to deflation, the consumer is pinched. (Don’t blame me, I am doing my part).
WSJ:
“Shoppers are focusing on deals and limiting buying mainly to necessities, based on August sales estimates that herald another tough holiday season for beleaguered retailers.
Despite sales tax holidays in several states designed to spur sales, back-to-school spending remains lackluster, according to industry experts. Retailers’ recent efforts to shake customers from deep discounts and spur buying by tightly controlling inventories are fizzling.”
Housing: I have long argued that against reading seasonality as an improvement in real estate, yet that was exactly what we got in the recent string of NAR data.
The”annualization of seasonality,” as Mark Hanson calls it, completely misstates the reality of the housing market. Hansin notes that on a “real” — not-seasonally adjusted basis — the national pending sales fell out of bed: It was down 7.4% m-o-m.
The Northeast plunged 20.9%, Midwest 15.2% and South 5.6%. The West was up 7.9%, which was likely due to end of the $10k New Home tax credit I highlighted over the weekend. In addition, the West had been lagging other regions so part of the jump could be end of the season buyers just ‘going for it’. The drop in the Northeast was startling — perhaps this will result in fewer condo sales in the region in the next existing sales report.”
And that’s before we even get to the issue of commercial real estate, as detailed in this mornings NYT:
“Even though industry lobbyists were able to persuade Congress to extend a loan program aimed at prodding the stalled securitization market back to life, several analysts said it was unlikely to head off a spate of defaults, foreclosures and bankruptcies that could surpass the devastating real estate crash of the early 1990s. “It will prop up a few deals, but you can’t stop the wave that’s coming,” said Peter Hauspurg, the chief executive of Eastern Consolidated, a New York brokerage firm.
The distress is still in its early stages, analysts said. “We are between the first and second inning,” said Richard Parkus, who directs research on commercial mortgage-backed securities for Deutsche Bank. “We’re going to have to get through a very difficult period.”
Finally, the ISM was a more positive datapoint, but it is essentially a survey (diffusion index) and not an actual measure of production, sales or hiring.
~~~
The bottom line is that this not a healthy situation, and it is not likely one that is on the verge of snapping back anytime soon.
Regardless of the “message of the market” — a 50% rally from deeply oversold conditions is not the same as an improvement in Hiring, Sales, Income, Industrial Production or Housing.
Beware those who tell you it is . . .
September 2nd, 2009 at 9:05 am
No suprise, how far has an employment recovery been pushed back. How can retail, housing etc recover without a jobs recovery, are we going to get a stimulus every Q?
September 2nd, 2009 at 9:24 am
“Regardless of the “message of the market” — a 50% rally from deeply oversold conditions is not the same as an improvement in Hiring, Sales, Income, Industrial Production or Housing.
Beware those who tell you it is ”
Franklin – take note.
September 2nd, 2009 at 9:30 am
Boy, the media really shits the bed occasionally:
September 2nd, 2009 at 9:34 am
“Despite the cheerleaders best efforts, the latest set of data to come out is filled with signs that the recovery — when it finally arrives — will be unimpressive. The best word for it is probably “sluggish.”
______________
I still wonder why anyone is expecting recovery (a definition of the concept would probably help). There is nothing on the horizon — as there has been nothing for 2 years, or so — that would give any glimmer of hope that any “recovery” is in our future. This is still the beginning of a new paradigm (please forgive my use of the word), and any expectation of a return to what we would historically view as “normal” (economically or socially) is premature, at best.
September 2nd, 2009 at 9:36 am
“Bailed-Out Banks’ Executives Set to Cash In Again”
http://www.cnbc.com/id/32652870
cool- love those banksters
September 2nd, 2009 at 9:42 am
The reality of the trickle-down economy:
http://www.nytimes.com/2009/09/02/us/02wage.html?_r=1&ref=us
Citizen: Officer, I believe I’ve witnessed a crime being committed.
Cop: Move along, bub, or I’ll taze you.
September 2nd, 2009 at 9:54 am
O.K. I’ll define a recovery in two parts. A recovery begins when YoY% changes in GDP, Employment and high-frequency data (IndProd, Real Sales, DurGoods, etc.) is better than it was; i.e. the 2nd derivative turns positive. A real recovery begins when YoY changes cross the zero line. YoY GDP was -3.9% this last time and was bigger (more negative) than the prior three quarters. We’ve stopped falling off the cliff but are lying broken, bleeding and splayed on the rocks in the ravine. Now we have to start crawling across those rocks and face a terrible climb out on the far side.
The real indicator is Employment was is still dropping and will be for some time. Everybody forgets this last “recovery” never reached a self-sustaining organic growth, that jobs kept falling into ‘03 and tipped back over again in early ‘04. Not good. The last time we “recovered” only thru the artificial stimulus of the Housing ATM. The l.t. forecast is for 2.5% growth in real GDP which is barely enough to breakeven on new jobs requirements. Sluggish is an optimistic description IMHO.
The really interesting point is that nobody is paying attention and is substituting denial, ideology and shibboleths for analysis, data and “facing brutal realities”.
If you like metaphors compare this to WW2 on the Eastern front. Last fall was Moscow, we’re still wrapping up the Stalingrad campaign and must now face Kursk (‘43 btw) with a long war to fight after that. Russia almost died at Moscow with troops from the Far East marched thru the streets straight to the Front. It almost died at Stalingrad (see the movie and imagine yourselves there) again. Kursk was luck, skill, resources and German mistakes. To take it farther Stalin created this nightmare of surprises by ignoring the intel from Richard Sorge that told him Germany was going to attack. Now we’re ignoring the intel that tells us this will be “sluggish” for a long time after ignoring the systemic threats and non-organic nature of the lead-ins.
September 2nd, 2009 at 9:55 am
Trickle down, it’s in the name. Rich people taking a piss on poorer people
September 2nd, 2009 at 10:00 am
S&P couldn’t break 998. We have another red candle day ahead of us. Holding my shorts tight.
September 2nd, 2009 at 10:05 am
There isn’t much solid data backing this “data points” post. The only real data point Barry cites is ADP, which he concedes is always wrong.
I suggest an alternate explanation: sour grapes.
September 2nd, 2009 at 10:14 am
Sour grapes huh?
Anyways…
The most important question striking the I is:
Why do the “cheerleaders” feel the need to cheer?
Its beyond the sophomoric interpretation of “data”… surely they cannot be this obtuse… over and over and over in their attempt to spit shine shit.
And there is still that pesky question of if the banks are really solvent or not. Just for fun… lets see the balance sheets ex financial chicanery of the major and regional banks, and really dig our teeth into those commercial and construction loan portfolios… you know, the ones no one wants to talk about…
Oh yeah… and there is still that issue floating around with just “what” is on the balance sheet of the most corrupt financial institution in the US… The Federal Reserve.
I suspect the answers to these questions get to the root of why the cheerleaders feel the need to cheer…
September 2nd, 2009 at 10:22 am
@I-Man
While bank balance sheets are marked-to-make believe, FVs of loan portfolios are being disclosed (how realiable those numbers are is questionable). Some banks, like C, report a difference between carrying and FV that isn’t large, but others like BAC and Regions have huge differences. At Regions, it’s so large that marking to FV would more than wipe-out all of the banks equity. For BAC, it’s not so bad but tier 1 would be wiped out. So if Regions solvent just bc the Fed calls is well capitalized? I don’t think so.
September 2nd, 2009 at 10:23 am
sour grapes: Over what?, BR has been long since early spring. Get a clue already.
Along the lines of this post:
http://www.calculatedriskblog.com/2009/09/first-time-home-buyer-nar-numbers.html
September 2nd, 2009 at 10:25 am
Recovery? Recovery from what? Recovery from the nearly-destroyed financial superstructure of an economy whose foundation is crumbling? If we get “recovery” it will only mean that we’ve successfully plastered and patched the superstructure of economy to give it the illusion of stability, but without repairing the foundation. It will soon enough crash again, and will continue to do so, until the foundation is rebuilt. No economy dependent on the monetary mischief of government miscreants can long stand.
September 2nd, 2009 at 10:34 am
Clearly there will be a rally, the question is when and how weak? It will be weak, you know…
Interesting to see the 2-year tag 0.89% and gold rallying this morning. The fear gauges are rising.
September 2nd, 2009 at 10:35 am
I posted this one last night….
Taleb’s latest missive…..
http://www.guardian.co.uk/commentisfree/2009/aug/16/nassim-nicholas-taleb-economics-cameron
September 2nd, 2009 at 10:44 am
http://futuresource.quote.com/charts/charts.jsp?s=HG%20U9&o=&a=V%3A60&z=660×300&d=medium&b=bar&st=
Copper is doing its part. This dip might be the real deal. One more day that follows the chart (60 minute interval for several days) and hotchie mama, the shorts might finally have something to work with safely.
It’s really cool to see the high volume and downward emphasis … the HFT kiddies are very likely not capable of performing well in this scenario. In spite of the hype, they are best used to generate high velocity and markets that creep higher at a slow rate. They create and capitalize on a form of asset inflation. And are particularly effective when they control most of the market volume. Today, they are just being swept downstream by the current, and are probably trying to retain dignity while being flushed. The HFT kiddles are probably the ones behind the volatile jumps, hoping to snag a few suckers to play with.
September 2nd, 2009 at 10:50 am
Short gold was not the way to go today.
September 2nd, 2009 at 10:50 am
OK DH — when you say “HFT kiddies” I can’t help but think Hot For Teacher
September 2nd, 2009 at 10:52 am
@leftback
“The fear gauges are rising.”
Clearly… The VIX is back up near 30…
I wouldn’t be surprised to see some heavy whiplash action for the rest of the week…
Perhaps 988 holds, a bounce back to 1008, then the rug gets pulled out and we get that 10% correction.
September 2nd, 2009 at 10:52 am
Franklin411,
I am not as optimistic as Barry Ritholtz who apparently thinks that the worst of this crisis is behind us, although he is obviously more pessimistic than you are. You seem to think that the biggest problems have already been solved, the crisis is basically behind us, and everything is getting better from here and will be just fine in a couple of years. Your views agrees strongly with the economic projections of the Obama-administration for the next years that just have been published. I think you and the Obama-administration are both delusional, though.
In contrast, I say the probability is high that the worst is yet to come. I just can’t tell you the exact timing for when it is going to play out. Do you want to know the real data from which I draw this conclusion, in case you say I don’t have anything “real” to back up this statement? The data is a mountain of debt of about 52 trillion US dollars in United States, i.e. the total debt to US GDP ratio amounts to about 375%, the biggest debt bubble maybe in history, about twice as big than the one that deflated during the Great Depression, and there is no way that this debt crisis in United States can be solved just by normal economic growth and diverting a higher fraction of income to pay off the debt and w/o massive defaulting of debtors and following chain reaction in economy (massive losses on the side of the creditors and choking off economic growth) due to debt deflation. The open question is when will it really start, how long can the government postpone the inevitable.
Here you can read the math, which I use to support my argument:
http://www.ritholtz.com/blog/2009/08/history-repeats/#comment-210616
rc
September 2nd, 2009 at 10:54 am
There’s been four trillion in US wealth created in the stock market in a few months.
We always have had the gov’t deficit spending that increases the GDP, we just have a bit more now. It’ll keep on through next year.
Bond market and equity market disconnect? That’s because of quantitative easing, the central banks around the world are driving down interest rates. P/E ratios are fine, since interest rates are dirt cheap.
Employment is marginally down, by consumption is largely driven by the rich, who don’t depend on employment
Even though the Fed balance sheet doubled, there’s been no collapse in the dollar, no permanently high plateau in oil, gold, nat. gas etc and Americans, who are now saving are buying Treasury debt. In fact the Fed balance sheet has been shrinking all year.
The gov’t program, “Cash for Clunkers” worked. Meaning gov’t programs are more likely, even some that work.
House prices have generally flattened allowing people to buy, with mortgage rates so low
Recent economic numbers on Productivity, ISM, new orders, manufacturing are all good and there’s very little talk about more stimulus. If there is a need for more stimulus, China can provide it. The same Chinese who are buying our debt like there’s no tomorrow.
All the negative talk (See WSJ) emboldens the shorts, which is bullish.
Obama’s poll numbers are still above 50, even after all the tough political medicine he’s doling out. He’s a leader.
September 2nd, 2009 at 10:56 am
Whammer Says:
September 2nd, 2009 at 10:50 am
OK DH — when you say “HFT kiddies” I can’t help but think Hot For Teacher
reply:
————
From what I’ve read, the HFT kiddies are uber math and computer nerds, who specialize in pattern recognition and reactive strategies. Some of them are said to be pretty young. Hot for Teacher is probably one of the themes they look for on Red Tube or elsewhere, as I can’t imaging many are socially capable of meeting real girls.
September 2nd, 2009 at 10:56 am
“Perhaps 988 holds, a bounce back to 1008, then the rug gets pulled out and we get that 10% correction.”
Agreed, it almost seems too easy, like there must be a lurking vampire squid to suck the life out of the shorts and take the market rocketing to 1050. But sometimes we think too much, eh, my friend? Like yesterday, for example, when LB slapped on TBT and PST as a hedge when maybe he should have done… nothing.
“Don’t think, Meat, just throw the ball”
September 2nd, 2009 at 10:57 am
@VennData: “The Fed balance sheet has been shrinking all year?”
Which balance sheet are you looking at, pray tell?
September 2nd, 2009 at 10:59 am
@LB
““Don’t think, Meat, just throw the ball”
Appropriately named “Crash”, the author of that quote.
September 2nd, 2009 at 11:02 am
VennData = Robert Gibbs
September 2nd, 2009 at 11:04 am
So, the big question is, when the HFT kiddies stop painting the tape, how far will the stone drop and how many bounces will it make? I smell blood. I hope some people are thanking the HFT kiddies for their generosity and selling into there beneficence.
September 2nd, 2009 at 11:06 am
VennData said:
“There’s been four trillion in US wealth created in the stock market in a few months.”
Fictitious wealth. Real wealth in society can’t be created just by circular buying and selling of things and assigning a higher price in every transaction.
rc
September 2nd, 2009 at 11:07 am
“Beware those who tell you it is . . .”
It is interesting to note: The G8’s average market gains since the March lows, taken from the “Global stock market performance roundup” thread is 50% not surprisingly, just like ours. So, if nothing else, the cheerleading is consistent around the world. Oops…
September 2nd, 2009 at 11:07 am
Dow 3600 !
September 2nd, 2009 at 11:12 am
“There’s been four trillion in US wealth created in the stock market in a few months.”
Sure, whatever you say, “VD”. There was several million “created” in AIG and FNM stock in the last week, but that doesn’t mean it will still be there by the middle of next week. A lot of “millionaires” were “created” during the housing bubble and now they are collecting unemployment benefits.
September 2nd, 2009 at 11:12 am
Bingo rootless. Bingo. But, hey, we’re all rich if we trade worthless paper to one another, right? At least it feels good to think that way.
September 2nd, 2009 at 11:14 am
@rc
good point!
as an ADD-ON to your statement, the simple change in FASB rules earlier this year conveniently removed how many trillions of losses from balance sheets?
Moral of the story… You can make up any numbers you want…
I can count, however, how many tomatoes I have growing on vines at the moment, how many potatoes & onions are in the ground, and how many ears of corn are ripe for picking…
September 2nd, 2009 at 11:16 am
@Venn
How did CFC “work” exactly? Estimates are for SAAR sales of 13.7 million units. I’d consider that awful considering where car sales were a year+ ago sans stimulus. Not to mention it added some $13 billion of consumer debt to already strapped consumers.
What I think a lot of people who think a sustainable recovery is here are missing is the unsustainable nature of economy before the collapse. By that I mean the ever increase amount of $s of credit needed to create $1 of GDP. If econonic growth is dependent on credit expansion and credit is doing the opposite, where does growth come from?
September 2nd, 2009 at 11:16 am
@Iman
Everyone is entitled to their views, but when a man comes out and says the data sustains his point of view, yet he is unable to provide said data, then I reserve the right to call him disingenuous. Barry has not provided any reasonable data to justify the title of this thread. He should have titled it:
“6th Sense Points to Ongoing Economic Woes”
September 2nd, 2009 at 11:21 am
EUR:JPY is rallying, european markets responded first.
@f411: Half a million new claims every week doesn’t count as economic woes? You live in an alternate universe.
“If growth is dependent on credit expansion and credit is doing the opposite, where does growth come from?”
Exactly. Peak Credit. Zero velocity. Ask small business where their growth is coming from, as investment dollars are directed into impaired and unproductive assets and companies.
September 2nd, 2009 at 11:23 am
cvienne Says:
September 2nd, 2009 at 11:14 am
… the simple change in FASB rules earlier this year conveniently removed how many trillions of losses from balance sheets?
reply:
———–
http://www.fasb.org/cs/ContentServer?c=Pronouncement_C&pagename=FASB%2FPronouncement_C%2FSummaryPage&cid=1176156241421
But a few things might be put back on, effective January 2010. Rules concerning variable interest entities have changed and imply more transparency and additional disclosure. As applied towards real life, it’s too early to say if this is a non event or if it is Act II, with Act I being fair value accounting a couple of years ago.
September 2nd, 2009 at 11:24 am
@Cohen
Re: CFC
This… courtesy of Bruce yesterday…
http://money.cnn.com/2009/09/01/news/companies/auto_sales/index.htm?postversion=2009090117
“Cash for Clunkers left dealers with limited inventory of new vehicles once the program ended and also with fewer buyers interested in buying cars now that they are no longer eligible for $4,500 in rebates.
Caldwell said that the pace of sales went from a seasonally-adjusted annual rate of 15 million vehicles while the program was in effect in August to only about 8 million currently.
“Cash for Clunkers sent the sales rate on a wild roller coaster ride,” she said.”
…..15 down to 8…..very, very interesting….
September 2nd, 2009 at 11:28 am
Partisans, don’t bother arguing with their blind faith. Their biases run so deep as to make their thoughts void of objectivity. But if you enjoy the sport then have at it. I won’t partake because it just goes nowhere and usually degenerates into ad hominem attacks.
September 2nd, 2009 at 11:30 am
@leftback: Debating a political/ideological partisan of any stripe is a complete waste of time or energy. They’re too busy waving pom-poms to engage in thoughful debate of any kind.
September 2nd, 2009 at 11:31 am
@Onlooker
I like the debate because while I have my views, I’m far from infallible and I like to see where others with opposing views stand and why.
September 2nd, 2009 at 11:34 am
@ F411…
BR has been posting “said data” consistently for over a year now, and dissecting the new data with a critical eye upon every release… ad nauseum.
You, on the other hand, have done absolutely zero “dissecting” of data that I’ve seen… and prefer to take the spun out spoon fed data that the current administration is feeding you at face value.
Then you have the nerve to come onto BR’s blog and give him shit for his interpretation of the data?
Alright, thats enough… back to the ignore list for you. I like the stoned Franklin way bettah.
September 2nd, 2009 at 11:34 am
@dh
Perfect! Think about how this is all going for a second…
What we’ve basically got is the following:
The economy can “show signs” of bottoming (or recovery) due to an avalanche of things that came about in 2009…
1. The “stimulus package” (basically, in practice, the EXTEND THE UNEMPLOYMENT BENEFIT program)
2. operational cost cutting (payrolls cut, productivity up)
3. some inventory re-stocking
4. some “one-offs”, like CFC
5. cupcake YOY comparisons Q3&Q4 ‘08 vs. the same in ‘09
6. weak dollar for most of the year
7. hide the books accounting (FASB)
Needless to say, the END OF THE LINE will be when the Q4 ‘09 earnings get reported in January ‘10… That will be the LAST TIME I expect to see the term “better than expected” used for a long while…
So as far as FASB is concerned, they might as well not bother to implement any of the rules changes until that time… (Why piss on the parade in the middle of it)?
Oh, and did I mention TAX CUTS expiring?
September 2nd, 2009 at 11:34 am
“There’s been four trillion in US wealth created in the stock market in a few months.”
Ha ha ha, are you serious. How much was lost last year and how does that compare to this four trillion. That was a Kudlow comment last night btw. Good company. Oh and btw, the people that actually need their wealth to increase probably didn’t get hands on much of that 4trillion.
“Employment is marginally down, by consumption is largely driven by the rich, who don’t depend on employment”
The U-6 unemployment rate was at 16.5% at the end of June, more than twice the rate it was at the end of the depression.
Unemployment for workers age 45 and older is at record highs since data was tracked (1948)
Part time work is at record highs, over-time is at record lows.
employment is hardly “marginally” down.
Oh, speaking of the rich, can you please explain sales figures at places like Saks for me? ML ran a study last year that showed the average million dollar investor at ML had a 34% decline in Net Worth last year.
“The gov’t program, “Cash for Clunkers” worked. Meaning gov’t programs are more likely, even some that work.”
Yes, it worked like a charm, added roughly $12 B in new debt to American households. It’s called keeping the debt bubble going. It was not a win because you got a one month spike in sales, by that logic the checks that were passed out last year “worked”. Now data is showing that many of the buyers already have remorse, which in turn can potentially cut back on their consumption somewhere else in the coming months. I think you are doing the whole counting the chickens before they’ve been hatched bit here.
“House prices have generally flattened allowing people to buy, with mortgage rates so low”
What data are you looking at that shows this exactly. Please provide it.
“Recent economic numbers on Productivity, ISM, new orders, manufacturing are all good and there’s very little talk about more stimulus. If there is a need for more stimulus, China can provide it. The same Chinese who are buying our debt like there’s no tomorrow.”
Also incorrect on many counts. You are using good in a relative way here are you not? The Chinese are buying less debt, and that is due to the shrinking trade deficit we run with them. It’s math. Mish had a good post on this if you’d care to educate yourself.
“All the negative talk (See WSJ) emboldens the shorts, which is bullish.”
A statement blind bulls use which is also not true. You have very bullish readings on all surveys, money managers have levels in cash that are as low as they were since the peak, etc. etc. What is bullish for shorts is the fact that bulls keep using this argument about sentiment but it doesn’t actually exist. The current pyschology is not bullish for longs, you are in dreamland.
September 2nd, 2009 at 11:35 am
@Cohen
“If economic growth is dependent on credit expansion and credit is doing the opposite, where does growth come from?”
Precisely. That’s that path we chose to take years ago, and once you get on that path you are ever reliant upon increasing amounts of credit to come out of every downturn. At minimum you have to retrench every once in a while to reduce debt to sustainable levels before leveraging up again. But we found that to be unacceptable and so the Fed just threw money at us every time a blip came along and threatened a healthy downturn/recession.
We have to retrench and pay down or default debt. We don’t have the option of spending our way out of it because we’ve already done it too many times without a pause for retrenchment.
That’s the Inconvenient Truth.
September 2nd, 2009 at 11:37 am
Cohen
Have at it (debating with partisans), but realize it’s not an honest and open debate. And so will be quite unsatisfactory.
September 2nd, 2009 at 11:41 am
Silver is getting very close to 15.22. I haven’t punted yet but short silver is a huge loser at this point.
September 2nd, 2009 at 11:41 am
onlooker says-
“Partisans, don’t bother arguing with their blind faith . . I won’t partake because it just goes nowhere and usually degenerates into ad hominem attacks.”
true- but it doesn’t mean that venndata shouldn’t be called out for being a partisan and that by being so he discredits any point he may have-
as i have said before- being a partisan makes it easy- no thinking is required
September 2nd, 2009 at 11:43 am
you know it’s so obvious that VD and Franklin411 are Obama Fanboys so I find it hilarious that they all the sudden agree with almost all the recent points being made by Larry Kudlow.
Nice.
September 2nd, 2009 at 11:45 am
“so I find it hilarious that they all the sudden agree with almost all the recent points being made by Larry Kudlow.”
Indeed, deliciously ironic, isn’t it? I really can’t take Kudlow; really, really can’t. I watched that clip with Kass, which was the first time in months I’d watched Kudlow. I won’t be doing that anymore. What a dishonest jackass.
September 2nd, 2009 at 11:46 am
“Obama’s poll numbers are still above 50, even after all the tough political medicine he’s doling out. He’s a leader.”
hahahahahaha- good one- tough political medicine?- wow- not even sure what that means- but makes me chuckle- he’s a leader? yes- just follow bush’s lead-
obama- no different than bush- the same as bush
September 2nd, 2009 at 11:47 am
@ B22…
SLV is looking rather bullish to I-Man… strictly technically speaking. Not saying that to goad you, just saying that because I am not in that position, and sometimes thats the cleanest way to see it. That SLV chart looks alot different now than it did on last thursday… thats for sure.
September 2nd, 2009 at 11:49 am
SPX 1000 certainly looks like it wants to act as resistance here. EUR:JPY went on a run but we’re waiting for that to crap out, and also waiting for a $ rally to get started in the wake of the yen strengthening. Safety trades are on.
September 2nd, 2009 at 11:51 am
@ben
I hear ya on the SLV… It’s getting kinda sketchy there, but I’m actually willing to let it push through 15.22 and not act on a hairpin trigger…
I’m in the FEBRUARY calls, so I have some time to see if it’s just a head fake or not…
I’m still not convinced that Silver or Gold are going to break out at this point…
In fact, I’m kind of leaning towards the idea that $$ coming out of oil is going back into precious metals as a weigh station (before it eventually moves to the dollar)… I’ve always had a CONSPIRACY THEORY trade in my mind that precious metals seem to reach their reversal points in conjunction with either a European or American holiday (where markets on one side or the other are closed for the day while the others are open)…
Labor Day approaches…
September 2nd, 2009 at 11:52 am
@ben22: I punted on my ZSL. May come back to it, but had to move on for now.
September 2nd, 2009 at 11:56 am
[...] tax credit programs continue to overshadow weakness in the economy, FusionIQ CEO Barry Ritholtz writes at The Big [...]
September 2nd, 2009 at 11:56 am
SLV and GLD definitely seem to be breaking correlations to USO, SPY, and UUP… someone commented on MM today about that too.
Definitely a sketchy trade any way you slice it. I really raised an eyebrow at JP being in that trade… Fleck is in too. Neither of those guys I like to fade.
I prefer to stick to shorting crude (SCO)… its been good to me thus far. The lower highs and lower lows way more pronounced.
But for the 50/50 breakout junkie in me… I would be a buyer of SLV here, and looking for a reversal at 16. Over 16, its on like donkey kong.
Dont plan on making that trade though.
September 2nd, 2009 at 11:57 am
@ahab
“Tough political medicine”…LMFAO
It’s bailouts, clunkers, & $8,000 homebuyer tax credits for everyone… Raise that debt ceiling away to $9 trillion!
Don’t worry Americans, you don’t have to do anything, we’re so smart, we’ll take care of everything for you…
THE GOVERNMENT
Heck, back in 1990, the Government seized the Mustang Ranch brothel in Nevada for tax evasion and, as required by law, tried to run it. They failed and it closed.
Now we’re trusting the economy of our country, our banking system, our automobile manufacturing, and possibly our HEALTH CARE to the same nit-wits who couldn’t make money running a whore house and selling whiskey!!!
September 2nd, 2009 at 11:58 am
“$$ coming out of oil is going back into precious metals (before it eventually moves to the dollar)…”
I think that is a good call, my farming friend. Nasty surprises await the gold bugs – seen it all before…..
September 2nd, 2009 at 12:00 pm
This should probably go in the other thread Barry just posted – But with all due respect, I find incessant negative posting and posters as annoying as I do the unrelenting positivity coming out of most of the MSM. There are only so many ways you can say “The data is wrong” “These numbers are being misrepresented to the public” “Nothing is getting better” before it starts sounding like a broken record.
There are a couple of regular posters here who never have a positive thing to say on any subject. I find myself skimming past these posters because they tend sound like broken records. There are only so many times you can say “America is in decline, our empire is ending” before people start tuning out. When all you have to say, all the time, is something negative, one has to wonder how much of that is a personality trait rather than real concern for our future.
Something between the two (overly optimistic, overly pessimistic) is what most appeals to me. Being the antithesis of F411 is not, in my opinion, a good thing.
September 2nd, 2009 at 12:02 pm
@I-man/CV/Manny,
Iman, I hear you bro, it does look way different in the last few days, there seems to be real buying interest for silver. I’m still using 15.22 before I bail as that was the high point when the downtrend started that I was using but 15.18 is where we are so that’s not far away at all. That’s the way it goes.
September 2nd, 2009 at 12:03 pm
I-Man
Fleck is all in on the inflation trade. He won’t be budged from it, even if there’s a bout of deflation coming (which he’s highly doubtful of) he sees inflation as the inevitable long run result and is positioned that way.
He could be wrong in the short term just like last year.
September 2nd, 2009 at 12:04 pm
I suppose it’s accurate to say I’m not on top of silver but the gold trade, I’m glad I’m not trying either side of that right now. I’m finding both the bullish and bearish case on gold to make sense so I’m inclined to watch it, hear some of you others trade it. That’s just as much fun for me.
September 2nd, 2009 at 12:09 pm
cvienne Says:
September 2nd, 2009 at 11:34 am
That will be the LAST TIME I expect to see the term “better than expected” used for a long while…
reply:
————
Not so on this point. Never. Won’t happen. This would completely destroy the CNBC business model.
September 2nd, 2009 at 12:16 pm
Looks like the HFT kiddles were trying to build a pretty zig zag upwards chart. Maybe one more blast, or maybe they will hold the line until 3:30 then give it a power burst. It’s too soon for them to quit and let the correction happen.
September 2nd, 2009 at 12:18 pm
@Thor (12:00)
I hear what you’re trying to say, but I think different ears hear the complaints to different degrees…
FWIW – I tend to categorize the “complaints” into several categories… I definitely notice an uptick in pessimism when something occurs that is blatantly adverse to a trading position… There is a feeling of “helplessness” and the reaction is to lash out a little… (for example, let’s say you are “short” financials, and you hear that the Fed is in there juicing AIG & Citi stock prices – You’re like, “Holy Crap”, my own government is screwing me with my own taxpayer dollars)…
Other times, it’s just dull crowing about, about THINGS HAVE NOT CHANGED A BIT…
Other times it’s HEATED again, because of some wingnut comment brought about by one side or another…
Basically what I’m trying to say is, one has to understand the motivation of the posters on this blog before you can outright call them negative, positive, or whatever…
Are they a TRADER like LB?
Are they a thoughtful wordsmith like MEH?
Are they a ‘partisan’ like you know whom?
Are they a research contributer like Andy T or SB?
Are they just waiting for DOW 3600 like gloppie?
Are they stoned like 420d? (jk there bro – I knew you would laugh)
Are they a clown like CV?
September 2nd, 2009 at 12:24 pm
Can I be a “Trader”?!
I wanna be a trader…
September 2nd, 2009 at 12:25 pm
VennData,
“We always have had the gov’t deficit spending that increases the GDP, we just have a bit more now. It’ll keep on through next year.”
Actually, GDP hasn’t increased by deficit spending by the government alone, is has increased even more by private deficit spending in the years before the recession. See Table D.1 in the Fed’s Flow of Funds report, http://www.federalreserve.gov/releases/z1/Current/z1.pdf
Yes, the US government will be able to do more deficit spending. After all, Japan’s government debt has reached about 200% of Japan’s GDP, and the US government will probably do the same and continue to solve the debt crisis by creating even more public debt and stimulating private debt creation. Like pumping oxygen in a house on fire to save the trapped inhabitants from suffocating.
“Employment is marginally down, by consumption is largely driven by the rich, who don’t depend on employment”
How do you back up this claim?
Data for Q2 2009 at seasonally adjusted annual rates in billion US-dollars:
Wages and salaries: 6,229.8
Proprietor’s income:1,029.4
Rental income: 259.4
Corporate profits: 1,250.3
Interest and misc: 797.5
(http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=53&Freq=Qtr&FirstYear=2007&LastYear=2009)
The data tell me consumption is largely driven by wages and salaries and, therefore, by the ones who depend on employment.
rc
September 2nd, 2009 at 12:25 pm
I think that idiot of a senator Jim Demint had it wrong…it’s not healthcare that will be Obama’s waterloo, it’s his handling of wallstreet and the bankstas. I gotta say, I’m not terribly encouraged. I can see myself not voting for him again in 2012…not that I would ever vote for anything that will come out of the cesspool otherwise known as the republican party.
September 2nd, 2009 at 12:27 pm
Way OT but I’m hoping we get another post from Steenbarger today. He’s had two really solid posts here while BR has been on vaca. Really have enjoyed reading them. Just sayin.
September 2nd, 2009 at 12:27 pm
…and this is what i’m talking about. arrggh!
“Bailed-out bankers to get options windfall: study”
http://finance.yahoo.com/news/Bailedout-bankers-to-get-rb-728839500.html;_ylt=AiXUa313fFuLp1XPba.Qf_K7YWsA;_ylu=X3oDMTE1Z2NzZzUwBHBvcwM5BHNlYwN0b3BTdG9yaWVzBHNsawNiYWlsZWQtb3V0YmE-?x=0&sec=topStories&pos=7&asset=&ccode=
September 2nd, 2009 at 12:32 pm
Ok why isn’t anyone talking about the great ISM numbers – now there is a green shoot in a brown lawn if there ever was one – Pay no mind it is a dandelion..
@Ben22 U-6 unemployment at 16.5% – So what, have you taken into account perhaps ¼ of those are 25 and younger – well they are young and have their health, why would the want to work? Lets say there is another ¼ that are 55 and older, well they are older with ailing health, why would they want to work? Ok U-6 unemployment is now cut in half so there for we only have a national unemployment rate of 4-5 % .
Ok everyone on 3
1………2………3………
GREEN SHOOTS!!!!!!
I don’t know about the rest of you, but I feel so confident in this turn around I am starting a new restaurant – My specialty will be fried fedora’s – Hope to see you there.
September 2nd, 2009 at 12:33 pm
@I-Man
You can be anything you want! EXCEPT for a clown…
cv reserves that domain exclusively for himself!
September 2nd, 2009 at 12:34 pm
@bubba: Right on, regarding banksta bailouts and the cesspool. One can only hold out hope (as I do in my more hopeful moments) that the Big O – or maybe Bwarney Fwank – has a few nasty little surprises up his sleeve for the bankstas and that they will be bending over very soon in regard to compensation. Imagine a second set of bailout requests down the line, and there is no way we don’t see compensation restructured. Pitchforks!
@I-Man: I and I be RIGHTEOUSLY tradin’, bro.
September 2nd, 2009 at 12:36 pm
@ben22 @420d
OK…I’m going to try and do my best “Steenbarger”, and provide some philosophical insight, using 420d’s dandelion reference…
This all ties into the concept of American Culture…
GOD AND LAWNCARE
GOD:
Frank, you know all about gardens and nature. What in the world is going on down there on the planet? What happened to the dandelions, violets, milkweeds and stuff I started eons ago? I had a perfect no-maintenance garden plan. Those plants grow in any type of soil, withstand drought and multiply with abandon. The nectar from the long-lasting blossoms attracts butterflies, honey bees and flocks of songbirds. I expected to see a vast garden of colors by now. But, all I see are these green rectangles.
St. FRANCIS:
It’s the tribes that settled there, Lord. The Suburbanites. They started calling your flowers ‘weeds’ and went to great lengths to kill them and replace them with grass.
GOD:
Grass? But, it’s so boring. It’s not colorful. It doesn’t attract butterflies, birds and bees; only grubs and sod worms. It’s sensitive to temperatures. Do these Suburbanites really want all that grass growing there?
ST. FRANCIS:
Apparently so, Lord. They go to great pains to grow it and keep it green. They begin each spring by fertilizing grass and poisoning any other plant that crops up in the lawn.
GOD:
The spring rains and warm weather probably make grass grow really fast. That must make the Suburbanites happy.
ST. FRANCIS:
Apparently not, Lord. As soon as it grows a little, they cut it-sometimes twice a week.
GOD:
They cut it? Do they then bale it like hay?
ST. FRANCIS:
Not exactly, Lord. Most of them rake it up and put it in bags.
GOD:
They bag it? Why? Is it a cash crop? Do they sell it?
ST. FRANCIS:
No, Sir, just the opposite. They pay to throw it away.
GOD:
Now, let me get this straight. They fertilize grass so it will grow. And, when it does grow, they cut it off and pay to throw it away?
ST. FRANCIS:
Yes, Sir..
GOD:
These Suburbanites must be relieved in the summer when we cut back on the rain and turn up the heat. That surely slows the growth and saves them a lot of work.
ST. FRANCIS:
You aren’t going to believe this, Lord. When the grass stops growing so fast, they drag out hoses and pay more money to water it, so they can continue to mow it and pay to get rid of it.
GOD:
What nonsense. At least they kept some of the trees. That was a sheer stroke of genius, if I do say so myself The trees grow leaves in the spring to provide beauty and shade in the summer. In the autumn, they fall to the ground and form a natural blanket to keep moisture in the soil and protect the trees and bushes. It’s a natural cycle of life.
ST. FRANCIS:
You better sit down, Lord. The Suburbanites have drawn a new circle. As soon as the leaves fall, they rake them into great piles and pay to have them hauled away.
GOD:
No!? What do they do to protect the shrub and tree roots in the winter to keep the soil moist and loose?
ST. FRANCIS:
After throwing away the leaves, they go out and buy something which they call mulch. They haul it home and spread it around in place of the leaves.
GOD:
And where do they get this mulch?
ST. FRANCIS:
They cut down trees and grind them up to make the mulch.
GOD:
Enough! I don’t want to think about this anymore. St. Catherine, you’re in charge of the arts. What movie have you scheduled for us tonight?
ST. CATHERINE:
‘Dumb and Dumber’, Lord. It’s a story about….
GOD:
Never mind, I think I just heard the whole story from St. Francis
September 2nd, 2009 at 12:41 pm
@cvienne: Brilliant!
September 2nd, 2009 at 12:41 pm
“I can see myself not voting for him again in 2012…”
Which is why that’s when all the economic chickens will come home to roost about then. Obama will face a terrific battle for re-election–something about the same as Carter or Bush I–and the economic tides usually turn at the hint of instability in the political sphere. The fraudulent fundamentals attendant to an economy addicted to the fed’s jungle juice will be revealed in the instability. So, sit back and enjoy the ride while it lasts. (Can I get an award for most metaphors? …chickens, tides, jungle juice and ride, all in one post)
And for Thor:
America is in decline, our empire is ending.
September 2nd, 2009 at 12:42 pm
@leftback
“Right on, regarding banksta bailouts and the cesspool. One can only hold out hope (as I do in my more hopeful moments) that the Big O – or maybe Bwarney Fwank – has a few nasty little surprises up his sleeve for the bankstas and that they will be bending over very soon in regard to compensation.”
yup, exactly what I’ve been thinking. that’s why i’ve been willing to give him the benefit of doubt. we’ll just have to see.
September 2nd, 2009 at 12:43 pm
That was awesome CV… some of your finest… you wordsmithing clown you.
September 2nd, 2009 at 12:43 pm
thor-
dude- many folks unhappy w/ preferential treatment to large palyers at the expense of the rest of the peeps- also that they are being played by the market makers and Fed-
many have lost $$ based on reasonable assumptions only to have unreasonable market action play out-
thus the anger in the posts-
but feel free to skim over- no-one said you had to read every post
September 2nd, 2009 at 12:43 pm
beautiful cvienne…
September 2nd, 2009 at 12:44 pm
@I-Man @Manny
That wasn’t me…It was a story I picked up from an UNKNOWN Author… I just loved it!
September 2nd, 2009 at 12:46 pm
@cvienne:
GLORIOUS
September 2nd, 2009 at 12:49 pm
@ cvienne
heh heh good stuff
September 2nd, 2009 at 12:50 pm
cv-
funny you mention the whole “grass thing”- i just watched a Penn and Teller show las t night- Bullshit on Showtime -about how ridiculous it is- the growing and maintenace of lawns-
even showed a dude who was thrown in jail becuase he did not follow the covenants of the neighborhood about keeping his grass green- no matter that he was having financial difficulty and was behind on his mortgage
September 2nd, 2009 at 12:51 pm
Beware the pump, if we clear spx 1000, the pumping team will set their sights on 1015. Rotation back out of gold and Treasuries and into equities for a couple of days seems to be on the cards here.
September 2nd, 2009 at 12:55 pm
@LB
(12:51)
I like that as a trading call… It might just happen…
September 2nd, 2009 at 12:57 pm
What is the chatter about a bank failure coming this week? Anyone know if there is any truth to this rumor?
September 2nd, 2009 at 12:59 pm
Mannwich,
“But, hey, we’re all rich if we trade worthless paper to one another, right? At least it feels good to think that way.”
I don’t do it to feel good. Although the wealth in society isn’t created by buying and selling of things, the markets are a big machine that re-distributes wealth. I am in because I try to be on the lucky side in this game by applying the skills I have, knowing someone else will lose when I win.
rc
September 2nd, 2009 at 12:59 pm
Something novel from across the pond:
http://news.bbc.co.uk/2/hi/business/8233491.stm
This is the antithesis of the 0% down 125% LTV mortgage. 40% DOWN, and 1.99% rate.
LB would take that deal tomorrow – if any unfortunate banksta would like to sell his castle for HALF-PRICE.
How about it, Timmy? Wanna make a deal? Sell now, or be shut out for ever….
September 2nd, 2009 at 1:04 pm
@ahab
“how ridiculous it is- the growing and maintenace of lawns”
DEFINITELY
A full acre of my property in WVA used to just be this big old lawn space (which required about 3 gallons of gas per week for 24 weeks of the year to mow)…
So I plowed it over and planted crops…I have well water there…
Off the farm…In MD… It’s just a small 1/4 acre which doesn’t require much, however, I PAY for city water there so I refuse to water it… Instead, I cut out the rain spouts off the house and funneled the outflow into 1,500 gallon storage tanks (for a water supply)…
All around the area there are trees that are constantly getting removed… The tree removal companies don’t know where to dump the wood chips (and have to PAY to haul them to the dump)… So I tell them all to dump it all on my property and I spread it around during the fall under the tree & flower beds…
Works like a charm and saves me a couple of thousand each year…
September 2nd, 2009 at 1:05 pm
LB feels that there is a distinct possibility that gold bugs may awake from slumber on Tuesday with a sore bottom.
September 2nd, 2009 at 1:08 pm
manhattanguy-
do you have a link?
September 2nd, 2009 at 1:11 pm
cv-
i am with you there- decide only this year that next spring i was going to take out what grass i have in my back yard and plant a herb garden-
legal herbs by the way- in case anyone was wondering
September 2nd, 2009 at 1:11 pm
Still good stuff, cvienne. Loved it.
September 2nd, 2009 at 1:12 pm
@LB
“40% DOWN, and 1.99% rate. LB would take that deal tomorrow”
I would too… I paid 100% down on the farm… I have good credit, but when I went to finance only a crummy 10% of the equity (to pay off some other bills), I was snuffed out by the banks…
That was back in March though and I haven’t bothered to try again… I don’t think I even will… I’ll wait until the economy takes its next big leg down next year… By that time, they’ll offer under 4%, and probably give out a $16,000 tax credit… So I’ll figure out a way to quit claim the title to my dog and have ROVER sell it back to me!
September 2nd, 2009 at 1:14 pm
@rootless: I hear you and was being snarky. My point was reiterating yours in that much of what we’ve seen isn’t real “wealth” per se, but merely an illusion thereof.
September 2nd, 2009 at 1:16 pm
@ahab
FWIW – Sometimes if you’re just getting started, it’s better to put the herbs in containment (pots, barrels, etc.)… Since they’re generally smaller & more delicate, the “weeding” isn’t something you need to contend with…
If you’re going to plow over what was grass, make sure you go down a couple of feet (and do a thorough job of sifting, raking and hoeing the grass & weed debris)… If you don’t, well, you’ll understand why later…
September 2nd, 2009 at 1:17 pm
@ahab – sorry i don’t have a link. But Art Cashing mention this on cnbc today (read it online). Also it was mentioned in a message board. But it could just be a rumor for all i know. But I won’t be surprised if it was true either.
September 2nd, 2009 at 1:18 pm
Timmy still hasn’t called. Probably holding out, because “the market always comes back”. Lovely wallpaper.
Every time gold has spiked up to the GLD 96 area it has been met with a sharp reversal within a few days. A lot of bugs don’t understand – every time they run up the yellow metal, their chums from GATA start selling their stash.
Deceit is everywhere in the financial House of Cards.
September 2nd, 2009 at 1:19 pm
@bubba,
hey, we agree! def. think that the bankster issues trump the healthcare stuff. I’m still holding out “hope” like you and LB, but that’s on thin ice at this point. Who would the other people be worth voting for in 2012? I don’t really follow that stuff for up and comers.
@CV,
Nice post.
off to read the steenbarger post that popped up.
September 2nd, 2009 at 1:23 pm
CV-
My corn crop got “crowed” while I was gone last week… little bitches. I guess my dogs do a good job of keeping them away usually.
Sucks. I got a total of 12 ears off of a full 10×4 bed. Great stuff though… ate a few ears raw they were so sweet. Goes good in pico too.
September 2nd, 2009 at 1:27 pm
Wonder if today’s gold buggery is being driven by traders who are CONVINCED that the trapdoor is about to open and lead the dollar down into the depths of depravity, whence it will never return…. seems overdone.
Most of the bank solvency chatter we are hearing suggests that someone in Europe is in difficulty. The problem banks in the US we already know about, and the backstop remains in place. LB guesses a Swiss bank, the Swiss were selling CHF and buying USD in an odd move this week, perhaps related to dollar-denominated liabilities?
September 2nd, 2009 at 1:29 pm
@I-Man
Love that corn! I was growing yellow/white…you?
September 2nd, 2009 at 1:31 pm
“Timmy still hasn’t called. Probably holding out, because “the market always comes back”. Lovely wallpaper.”
LOL
He is also holding the “My house in Westchester still rocks” wallpaper.
“LB guesses a Swiss bank, the Swiss were selling CHF and buying USD in an odd move this week, perhaps related to dollar-denominated liabilities”
That’s possible. Given that Swiss banks were forced to hand out customer accounts. Customers closed their account for safety from the bank might have caused a cascade?
http://www.webcpa.com/news/IRS-Assigns-Corporate-Auditors-Swiss-Bank-Cases-51542-1.html
September 2nd, 2009 at 1:34 pm
@ CV: all white this year. I’m going to grow some Hopi Blue next year though along with the white. I plan on digging up a new plot strictly for corn next year, not going to raise it like my others though.
September 2nd, 2009 at 1:34 pm
Several bug letters had a story today about China buying gold instead of $ – as if they would be buying “up here”.
It’s almost 1.45. Look out below !!!
September 2nd, 2009 at 1:39 pm
@I-Man
I got a good crop due to some pretty good weather overall… I under fertilized, so it was smallish… but good…
September 2nd, 2009 at 1:47 pm
@ben
well, if it turns out that Big O’s idea of cleaning up wallstreet is just a nice little “Sí, se puede!” speech to the bankstas about not going back to their old greedy ways, then eff him, I’ll be hoping and rooting for any primary challenger. I do think he is smart enough to recognize that there is a lot of seething anger out there. A neighbor of mine has a blazing sign: “Jail Greedy CEO” on the back of his SUV. He says everywhere he goes folks were giving him the thumbs up!
September 2nd, 2009 at 1:55 pm
cvienne
You’re a man after my own heart. I also am aghast at how much energy and resources is put into the quest for the “perfect lawn”, particularly in this country (if not almost exclusively; I don’t know if the Canadians have also caught this virus). I couldn’t say it better than that little dialogue you wrote.
And I’ll add that out here in the sticks the folks just can’t wait to gather up their leaves and BURN them. Instead of just raking them off the lawn and letting them lay in the adjacent trees where they will do so much good, they instead pollute the air on beautiful fall days. It makes me crazy. I gather a small amount of the great mounds of leaves that fall to add them to my compost. It’s fabulous stuff.
I also have to reiterate one of your points that always leaves me shaking my head. When people spend great time and energy raking the leaves from beneath shrubs and trees to dispose of them. WTF? There’s this compulsive urge to “clean up” the outdoors in a manner similar to the indoors. It’s very misguided. I could go on and on.
The positive point is that there have been efforts around the country in recent years to gather organic material in more urban/suburban areas to compost instead of adding to landfill. I’m hoping that the economics of reducing landfill will stay strong enough to keep this trend going and expanding.
September 2nd, 2009 at 1:58 pm
@OT
I pointed out before that the story was from an UNKNOWN author…
It’s a great little fable though that I loved and have saved on my computer… I share it now and then…
September 2nd, 2009 at 1:58 pm
very impressive gold move today. this is why traders don’t bother with a market in a triangle until it busts out of the triangle. Given the overwhelming long bias in gold, this move means one of two things:
1) We’re heading for 1100 in the next few months on some sort of “event.’ If this is the case, then gold may simply disconnect from other things as people just panic. i.e. the Dollar and Gold may trade completely separate from each other….which they sort of have for a while now….
or
2) This is a big fat bull trap for traders buying the “breakout” and this move is merely an e-wave “throw over” that occurs sometimes. If this is what’s going on, then the next 48 hours will tell the story. Bulls need to see gold sideways/lower congest…not accelerate lower. And certainly, the trendline break that occurred this morning must be maintained….bulls cannot let this market get down back into the triangle. Otherwise, it will look very bad.
September 2nd, 2009 at 2:00 pm
” I gather a small amount of the great mounds of leaves that fall to add them to my compost. ”
We could easily recycle TBTF banksters in much the same way. LB guesses that their unique talent can be replaced.
September 2nd, 2009 at 2:07 pm
cv
Yeah, I searched the web after posting that to see if it was original material (and then also saw your post saying it wasn’t). But it did sound like something you’d pen! It is classic, regardless of the author. I’ll have to share it with family. We sound like peas in a pod regarding all this; and I’m sure we could talk for hours about it. It is my passion and source of enjoyment and fulfillment. It’s why I moved to the MO countryside in the shadow of a state park.
September 2nd, 2009 at 2:07 pm
@Andy T
The Gold move today is like this big flashing neon sign in front of a strip club thats says GIRLS – GIRLS – GIRLS…
So your standing there mesmerized, with a whole lot of money in your pocket…
and for those that can’t resist the urge, and go in…
well, what is the state of their POCKETS when they leave the club?
September 2nd, 2009 at 2:09 pm
ben
I’m not sure if you’re aware of this but Steenbarger has a web site:
TraderFeed
September 2nd, 2009 at 2:14 pm
@bubba,
““Jail Greedy CEO” on the back of his SUV. He says everywhere he goes folks were giving him the thumbs up!”
Wow, nice observation. Underlying social mood anyone?
@Onlooker,
thanks, that just got added to the bookmarks.
September 2nd, 2009 at 2:16 pm
That’s not money in my pocket, cv, that’s a flashlight….
@AT: Seems like some gold shorts/dollar longs had a panic this morning. If FOMC talks up the dollar in any way, then there will be a fleecing of the gold bugs overnight. LB extended his short position today.
September 2nd, 2009 at 2:19 pm
cv: Well, it’s been many years since I’ve frequented such establishments, but I never left with any money.
lb: You’re a braver trader than me…as of right now there’s nothing bearish about what happened today….that view may change in the next 24-48 hours depending on the price action…. I wish you the very best.
September 2nd, 2009 at 2:21 pm
Ten-year yield is approaching the july lows, this bears watching
September 2nd, 2009 at 2:24 pm
@ben22
“Underlying social mood anyone?”
I pointed out anecdotal stories of the same palpable anger that I see around town recently on this blog.
I was attacked viciously in a way that made all of the observations I’d made with my own eyes were some kind of organized publicity stunt. Also, the MSM prefers to act in a state of denial that anyone has any reason to be angry.
Reminds me of that SUPERTRAMP song:
http://www.youtube.com/watch?v=M1lr_EULZS8
The Logical Song
When I was young, it seemed that life was so wonderful,
A miracle, oh it was beautiful, magical.
And all the birds in the trees, well theyd be singing so happily,
Joyfully, playfully watching me.
But then they send me away to teach me how to be sensible,
Logical, responsible, practical.
And they showed me a world where I could be so dependable,
Clinical, intellectual, cynical.
There are times when all the worlds asleep,
The questions run too deep
For such a simple man.
Wont you please, please tell me what weve learned
I know it sounds absurd
But please tell me who I am.
Now watch what you say or theyll be calling you a radical,
Liberal, fanatical, criminal.
Wont you sign up your name, wed like to feel youre
Acceptable, respecable, presentable, a vegtable!
At night, when all the worlds asleep,
The questions run so deep
For such a simple man.
Wont you please, please tell me what weve learned
I know it sounds absurd
But please tell me who I am.
September 2nd, 2009 at 2:27 pm
@AT,
Start your own blog eh?
@LB,
you are one brave mofo on that gold short trade. I’ve been pushed out of silver shorts, for a loss of course. And that’s the way it goes. I also wish you luck.
What’s Karen thinking about Gold today?
September 2nd, 2009 at 2:30 pm
@LB
“If FOMC talks up the dollar in any way, then there will be a fleecing of the gold bugs overnight”
Oh as usual, the FOMC will be a day late and a dollar short (no pun intended)…
So gold will, in fact, break out, dollar will tank (giving everyone the cover they desired to go even LONGER on the trade… Then, AFTER the technical levels have been breached, they’ll make their dumb ass statement…
Way to go BB… Way to make everyone lose money!
September 2nd, 2009 at 2:32 pm
@ben
I’m not bailing yet on my SLV shorts… For better or worse, I’m going to hold onto that one thru the Labor Day weekend… Perhaps on Tuesday I’ll be poorer, but sometimes you just gotta say WTF?
September 2nd, 2009 at 2:52 pm
attempting to catch up on today’s posts and just received a text, “What is up with gold!?!?” my reply, “Just wait! I think it’s a fake out before the slam down.”
September 2nd, 2009 at 2:55 pm
Productivity and Costs, Second Quarter 2009, Revised
http://www.bls.gov/news.release/prod2.nr0.htm
QtoQ looks better going up 6.6% but it does not reflect what I see around my neck of the woods.
September 2nd, 2009 at 2:55 pm
The moves in GLD and SLV are impressive today, but I’m not going to take anything from it until GLD breaks $99 to the upside or $85 to the downside. We’ve pretty much been in that range the entire year.
I’m long both, but not sure where it’s going since I dropped and broke my crystal ball =)
HCF
September 2nd, 2009 at 3:03 pm
think Hansel and Gretel… or think GIRLS GIRLS GIRLS as cvienne so aptly analogized.
September 2nd, 2009 at 3:06 pm
Holy TLT… man that thing is a stud.
September 2nd, 2009 at 3:09 pm
Agree, Gold is not going anywhere but down imo.
September 2nd, 2009 at 3:12 pm
AIG had another short opportunity today. Added more to $AIG and $COF shorts with tight stops. Today’s low was less than yesterday’s low which make me think that markets will go down further this week.
September 2nd, 2009 at 3:29 pm
I-Man Says:
September 2nd, 2009 at 3:06 pm
Holy TLT… man that thing is a stud.
——
The BVs keep dropping pianos on it to no avail. Must be very frustrating. If this is how it behaves when the dollar is languishing, what happens when the /DX starts climbing?
I tend to agree with the thesis that the jump in gold is part of a misplaced flight to safety. Look at the ramps in junk muni funds. These things are teetering on the abyss, but JR “knows” that munis never default.
I am loving these desperate rushes at SPX 1000. Should be an entertaining EOD.
September 2nd, 2009 at 3:47 pm
Indeed the bond market doesn’t seem to be buying the recovery thesis. And I’ve heard some folks (Bloomberg radio podcasts with Tom Keene) saying they think the bond mkt has it wrong and stocks have it right. How often is that the case? It’s not often (if ever) that you want to bet that way. Bonds are usually, if not almost always, the prescient market.
September 2nd, 2009 at 3:48 pm
When peeps we aint heard from in a year call up and want to buy GLD…
You might be on to something Leftback!
September 2nd, 2009 at 3:51 pm
“the bond mkt has it wrong and stocks have it right”
Never happens, even at equity market lows you see Treasuries start to sell off and spreads start to narrow well before stocks begin to rally – remember that one group are professional investors and the other group contains a number of InvestTools™.
Johnny seems to be chasing gold higher. You just know that this will continue AH and it isn’t going to end well.
September 2nd, 2009 at 4:05 pm
PPT AWOL!!
September 2nd, 2009 at 4:07 pm
“…….but sometimes you just gotta say WTF?”
Heh….I’ve been saying that since Mar/April…
September 2nd, 2009 at 4:09 pm
That was a jaw-loosener in gold.
September 2nd, 2009 at 4:18 pm
“When peeps we aint heard from in a year call up and want to buy GLD…”
RUN SCREAMING FOR THE EXITS, I-MAN !!!
The herding instinct of people never ceases to amaze LB. Who knows what today was, but LB guesses a major player was generating a little PUMP in the yellow metal so that they could DUMP. A modest 1.5% reversal ($14) in gold – to $966 and LB will be ITM. A 3% melt to $952 and LB will be laughing all the way home.
September 2nd, 2009 at 4:22 pm
China’s Exports, Not Altruism, Fund U.S. Deficit
Interesting article by Caroline Baum with some very good, if basic, points. I’m wary because of the supporting quotes from Jim Glassman, who’s credibility is suspect in my eyes as he’s of the “vigorous, strong, V recovery” mindset. Actually compares now to 1982, I believe. But aside from that it’s typically good stuff from Baum.
September 2nd, 2009 at 6:48 pm
I see numerous negative comments on here re: gold and/or gold bugs with no relevant data to support either. It’s not a one day phenomena as; “Gold has rallied 11 percent this year while the dollar index is down 3.6 percent. Big-fund buying gold from the $960-an-ounce level drove the market higher”. Read the entire article here:
http://www.bloomberg.com/apps/news?pid=20601012&sid=a5C27uzIKmeY
September 2nd, 2009 at 8:01 pm
@Pat G
Let me put it to you this way…
I’ve told you SEVERAL times before that I own a lot of physical gold… Interestingly & Ironically, if gold were to break out here, it would increase my NET WORTH considerably (because pound 4 pound, asset for asset, the value my PHYSICAL GOLD would be largest percentage)…
The last time I bought physical gold was 2004 (I don’t own any paper gold)…
I don’t plan on SELLING any either, but… right here, right now… I’d consider melting some down and putting it into some of those vending machines, or selling it to the folks who are calling I-Man…
September 2nd, 2009 at 8:04 pm
@Pat G
IOW – Patience Pat…
Gold will go up… It’ll break $1,000… Hell, it may break $3,000 someday…
What’s the rush?
Same way with the S&P… It’s going to take out the 666 to the downside…eventually…
What’s the rush? Enjoy the ride!
September 2nd, 2009 at 8:30 pm
Pat, long bonds have rallied 8% since June. That’s not a “one day phenomenon” either. And yet I’ve seen you make “numerous negative comments” about the case for deflation without providing any “relevant data” on the bond market.
September 2nd, 2009 at 8:34 pm
I dont really know shit about the bond market, but I know I want to be long TLT… I cant even read the quotes on the tape for bonds actually.
September 2nd, 2009 at 8:42 pm
@I-Man: I’m still kicking myself for not staying in TLT after buying in the high 80’s/low 90’s. Wasn’t patient enough with that one.
September 2nd, 2009 at 9:23 pm
@Manny @ I-Man
The TLT has been the one mofo that has kept me positive on the year (all in the options space)…
Back in June, I bought out of the money Jan ‘10 calls for 80 cents, and sold at a double… Then, I bought the same friggin calls at 40 cents and, as of today, they’re a TRIPLE (but I did already sell half of that position before)…
All of my other action in ‘09 (trying to “short” market tops, has met with mixed success)… I’ve made some, I’ve LOST some (mostly I’m net negative on those trades)…
But the TLT has been a BEAST MONSTER for me… It’s the HUGH HENDRY trade FWIW…
That said… It’s a little long here (and I actually nibbled off a little more today on the remaining calls I owned)… I hope it pulls back… I’ll jump right back in…
Right now I keep going long the USD… I’m not “balls to the wall” yet, but I’m getting there… It could end up being my waterloo for ‘09 (or It’ll do nice)… It’ll never be the ultimate waterloo for me because I have MORE than that position in gold hedged against it…
But TLT… I LOVE YOU BABY!
BTW… Other small trading positions? I’m short a little silver here (in OTM ZSL calls)… I’m mildly short the S&P (hoping for a rally tomorrow or friday to re-test 1008 so I can add)…
That be it, just about…
September 2nd, 2009 at 10:07 pm
@I-Man @Manny
More on TLT…
I want to re-iterate that I don’t know shit about anything (except for what goes on in this CLOWN head of mine)… But here’s how CLOWN logic works (if you ever wondered)…
TLT bets (all along, since I first put them on in June) were a proxy for a stock market crash… I figured I’d rather be LONG LONG bonds than anything else… Why? Well largely because I don’t trust Obama, BB, the SEC, or the USG to do anything rational… Therefore, let’s say (and you have to initiate your thinking from a May ‘09 timeframe) you see the stock market as overvalued vs. fundamentals (vs. anything OTHER than f411 rhetoric)… But let’s say ALSO you see a new President who has no problems cozying up to bankers and putting the entire economic future of the country into the hands of thieves simply because he either has no balls to do otherwise, or is just plain STUPID…
Well, I don’t trust criminals such as those… I believe that if a market selloff were to occur, their own reputations would be soiled (as they perceived it in their polling numbers)… In fact, if a meltdown were to occur, the unscrupulousness of their very nature might be to enact some kind of THWARTING mechanism… (Closing the markets, bank holidays, short selling bans, etc.)…
So I figured… Why be shorting stocks at all?… What if I actually made money, but that some law came out that prevented me from collecting?
Note: I have NEVER considered any measures such as these before in my life, but with what I have seen from this recent Administration, I have opened NEW CHAPTERS of cesspool governing…
So in that light, What is the safest bet?… What does this whore government need MOST OF ALL… Answer?… Money…
Now, bonds are usually boring… (they don’t move much in normal times)… But in crazy times such as we live, they seem to have the potential to move about wildly… Look at ‘08 for example… One good crash in ‘09 could sent the TLT from 80 – 120 if things got bad…
So I took those odds…
I priced in a median number of 105 (for the Jan ‘10 calls)… That’s a PAR number… Meaning, paying a dollar for those calls was a 1:1 (even money) bet that they would reach that level…
Less or more…
I’ve had in the back of my head all along that if a REAL market crash occurs in September or October of ‘09, then 105 -110 – 115- even 120 could be reached on TLT… That would be up to a 15-bagger based on premium…
For now, I’m happy to play the fluctuations on PAR… IOW, under 80 cents they are interesting, over a dollar twenty, I sell some… I’m still keeping some calls purchased at 40 cents for the duration… They’d be a 30-bagger…
But we’ll see… Actually, I’m hedging on ‘ditching’ my market crash scenario for Sept-Oct ‘09…
Oh it will come, it will come (the crash)… But right now I’m leaning more towards the idea of a 10% correction now, then a rebound through the end of year…
For now, my “crash” is more in the July 2010 area (with the downturn beginning in the Jan-Mar ‘10 time period)…
It’s too early to buy CALLS on that yet, or PUTS… (except for crap like Macy’s & Capital One which I bought 2011 PUTS on this summer when the VIX was down at 22)…
That’s how we clowns roll…
September 2nd, 2009 at 10:13 pm
@ Seattle Chill
You got me there. I don’t know squat about the bond market. Never has interested me. But I have provided relevant data and links which support my numerous negative comments on the deflation theory. But I am also hedged to take advantage of it, if I am incorrect because in these manipulated markets who knows?
September 2nd, 2009 at 10:24 pm
@cvienne:
Ah, the TLT has been a faithful girl, hasn’t she?
September 2nd, 2009 at 10:24 pm
@ cvienne
I’m in no rush. Through thick or thin, my plan is to hold my positions until 2011. Then I’ll see where I go from there. You know, there’s nothing saying you can’t take a little profit if you are so inclined. I’m enjoying the ride. It just pisses me off when people talk about precious metals as if they were some kind of 2nd class asset. They’ve been around a lot longer than equities, Treasuries, corporate bonds, money markets, CDs–I think you get my point. Give them some respect for longevity if nothing else as they’ve stood the test of time.
September 2nd, 2009 at 10:33 pm
pat g says-
“Give them some respect for longevity if nothing else as they’ve stood the test of time.’
good point pat
September 2nd, 2009 at 10:43 pm
@ ahab
Like us, right? LOL
September 8th, 2009 at 7:12 pm
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