Afternoon Reading
By Barry Ritholtz - October 22nd, 2009, 3:30PM
These look interesting:
• Kass: The Earnings Season Racket (The Street.com)
• Investors still struggling to put fear behind them (Reuters)
• The growing case for a jobless recovery (Federal Reserve Of Atlanta Blog)
• Home-building rises, but worries persist (WaPo)
• Dollar hegemony for another century (Telegraph)
• Principles written in the blood and tears of lost money (W-Street)
• They Shoot Porn Stars, Don’t They? (Susannah Breslin)
• Microsoft Tries to Shrug Off ‘PC Guy’ Image With Windows 7 (Bloomberg)
What are you reading?
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October 22nd, 2009 at 3:34 pm
http://www.cnbc.com/id/33426690
Chavez Urges 3-Minute Showers to Conserve Water
“Some people sing in the shower, in the shower half an hour. No kids, three minutes is more than enough. I’ve counted, three minutes, and I don’t stink,” he said during a televised Cabinet meeting.
“If you are going to lie back, in the bath, with the soap and you turn on the, what’s it called, the Jacuzzi … imagine that, what kind of communism is that? We’re not in times of Jacuzzi,” he said, to laughter from his ministers.
…I went to Guatemala to repair cleft lips and palates once. The shower was just so, get it in 2 minutes or it was cold as spring water. Not exactly sure if I stank or not, but I certainly learned how to get soap all over me REAL fast. I think you’d have had to use slow-motion replay to even see my hands….
October 22nd, 2009 at 3:43 pm
“Investors still struggling to put fear behind them”……
Well, yeah~!
520k first timers
CRE looking dire
RRE so manipulated and with such an overhang, who can tell Adam from idiot..
Taxes guaranteed to be higher
…is this the type of environment that fosters confidence? When our central bank is doing everything in its power to crush our dollar, but says it is not?
Who are we going to believe them or our lying eyes?
October 22nd, 2009 at 3:46 pm
http://www.businessinsider.com/walmart-this-christmas-will-suck-2009-10
Walmart & eBay Agree: This Christmas Will Suck (WMT, EBAY, AMZN)
October 22nd, 2009 at 4:05 pm
Bruce
Sounds like showers during basic training; when you got ‘em!
October 22nd, 2009 at 4:07 pm
Yes, basic at Fort Polk, La. ….Only a skip from paradise, is how I remember it.
October 22nd, 2009 at 4:10 pm
The growing case for a jobless recovery – Today’s initial claims didn’t scare Mr. Market but they scared the hell out of me. We are still in the layoff mode even after clunker cash, housing credits, stimulus outlays, and 12 months of o% IRs. I wasn’t too impressed with yesterday’s beige book either . Both of which mean the market will continue to climb the wall of worry I guess…….
October 22nd, 2009 at 4:12 pm
the crime scene?
http://baselinescenario.com/2009/10/20/revisiting-the-crime-scene/
change in the way banks are viewed?
http://baselinescenario.com/2009/10/21/the-consensus-on-big-banks-begins-to-move/
TBTF spin?
http://baselinescenario.com/2009/10/22/big-banks-fail/
the rating game?
http://baselinescenario.com/2009/10/21/the-problem-at-moodys/
if the US chamber of commerce protects small business…why are they supporting the TBTF?
http://baselinescenario.com/2009/10/20/why-is-the-chamber-of-commerce-defending-big-banks/
what happens if the US doesn’t recover and power up the worlds economy…again?
http://econompicdata.blogspot.com/2009/10/what-if-us-is-unable-to-power-global.html
October 22nd, 2009 at 4:14 pm
long term unemployment peaking?
http://blogs.reuters.com/felix-salmon/2009/10/22/unemployment-datapoint-of-the-day-4/
October 22nd, 2009 at 4:26 pm
AMZN beats..
45 cents vs 33 cents est. (beat by 36%)
June Q: 32 cents vs 31 cents est. (beat by 3%)
March Q: 41 cents vs 31 cents est. (beat by 32%)
Dec Q 08: 52 cents vs 39 cents est. (beat by 33%)
30 of Wall Street’s finest provided these incredibly precise estimates of the earnings of the incredibly complex business of the online retailer. Great Quarter guys! Bonuses are on me (and you).
October 22nd, 2009 at 4:28 pm
Re: Jim Powers, porn film director:
After graduation, he went into sales, which he despised. One day, he ran into a former frat brother who was earning a ton of money as a stockbroker—of sorts. Not long after, he moved to New York, where he became a “pump and dump” broker. “If you’ve ever seen the movie ‘Boiler Room,’ I basically worked for that firm,” he explains. “It was a big shell game. They were manipulating stocks.” Eventually, the SEC shut the company down. He took a similar job in Atlanta. The SEC shut them down, too.
October 22nd, 2009 at 4:33 pm
Bruce: I posted yesterday evening why I believe retail will be a great short after October retail sales come out. Many retailers are giving rosy pictures of Oct but the holiday season can’t be good. No way.
-Consumer was benefit of retailers forced to give goods away last year and are now seeking big price drops and sales. They won’t get them to that magnitude this year. Less inventory (retailers learned a lesson last year) mean less pricing power for margins sake. They’re stuck with a consumer who wants BIG sales and less of an ability to offer discounts.
-Unemployment. Definitely higher this time around. Some could argue that consumers were afraid of losing their jobs and didn’t spend last year. Maybe but more likely you simply have less buying power from Joe Public. They are less employed.
I could go on but patience on the retail short that I’m looking to initiate after Oct. Retail Sales will reward handsomely IMO.
October 22nd, 2009 at 4:38 pm
willid3 Says: October 22nd, 2009 at 4:14 pm
That is a good article. Unemployment is twice as high and for twice as long. It is surprising that people are hanging on as well as they have up to now. There must be quite a bit of family support to keep people off of the streets. Guess we’ll see over the next couple of years how this plays out.
October 22nd, 2009 at 4:41 pm
Ritholtz, The Great CNBC Sucks contributes to “What are you reading?” for the first and maybe final time.
First, there is this:
http://www.politico.com/news/stories/1009/28589.html#
As a registered Republican and registered Christian (I am sure it is registered SOMEWHERE), I paraphrase the Apostles Mark and Matthew: What does it profit a political party to dominate a country if that country becomes full of hate-filled, ignorant people whose primary response to our inevitable and continuing economic decline will be to find others to blame?
And then, there is this:
http://news.yahoo.com/s/ap/20091022/ap_on_bi_ge/us_speedy_warship
As someone who assembled an entire TASK FORCE of plastic Navy warship models as a kid, this development is way cool. America is unexcelled at building weapons. But I have to ask: Do we really need 55 of these to look for terrorists in the desert? Ohhh, these are for fighting off Somali pirates! Or wait, maybe to protect us from the menacing Chinese…from whom ironically we would have to borrow the money to build these ships? Either way, we better start collecting protection money from the rest of the world to justify these babies. And yet, I know that any mega military subsidy for LMT or GD will be easier to pass through the US Senate than any healthcare bill.
And, I must repeat, these days, I always follow this: http://www.peopleofwalmart.com/
October 22nd, 2009 at 4:42 pm
HW – Walmart had actually raised prices this year and I think that kept some retailers alive who would have folded otherwise. Now Walmart is cutting prices to regain and take market share. Would not be surprise at all if some well known names are no longer around after this Xmas season.
October 22nd, 2009 at 4:43 pm
Regarding Doug Kass’s article: yes, earnings reports have been turned, twisted and manipulated for quite some time. Remember internet days? CSCO beat by a penny every quarter forever. The bubble was just about to pop and they announced (had no choice) that they missed by one penny. The Naz started its crash.
But it struck me that volumes have dropped and remain low, strikingly so on the various indices. Tells me the retail investor is afraid to get burned yet again. (The other article above discusses this). Isn’t it possible that the indices can become their very own entity trading in something has absolutely nothing to do with the economy? Sort of like Vegas. It’s there and the players play the house or each other but most people have nothing to do with. They don’t even care that Vegas exists.
You’re stuck with this bizarre world of traders betting against each other and the house regardless of what the broad community does. My guess is the retail investor is on to this to some extent although I’m sure they don’t know why other than fear. They may not come back, leaving this weird world of trading that is completely disconnected with the reality of the economy.
October 22nd, 2009 at 4:45 pm
bsneath: Yes, WMT is going to be very aggressive this season, they’ve already stated that. That will indeed put the pressure on everyone else, who I will remind you, don’t have the pricing leverage with lowered inventories this year that they had last year.
October 22nd, 2009 at 4:47 pm
@bsneath: Seeing many more “For Rent” signs popping up lately. I have no data to back this up, but something tells me that people are moving back in with family and/or doubling/tripling up with friends. CR reported last night that rents were falling big-time out west in Cali. I imagine this will be the trend around the country, as more people double/triple up and move back in with family, sleep in the couch, if you will. This will put further downward pressure on housing prices.
October 22nd, 2009 at 4:54 pm
Regarding “The growing case for a jobless recovery (Federal Reserve Of Atlanta Blog)”:
There is no such thing as a jobless recovery. None. Zero. The disconnected stock market can run up as long as its participants desire but recovery/growth with no job creation? Can’t happen. You can have a mini economic boom with inventory restocking which we’re seeing but that’s not sustainable.
You need good old fashioned demand to create jobs. Actually, you need to make things that the rest of the world wants/desires/requires – we don’t do a whole lot of that. So where will the jobs come from is my question on the magnitude that can create demand in this country which is truly the only way to sustainable recovery/growth?
October 22nd, 2009 at 5:06 pm
And oh, I have had a jump in traffic due to searches for Caroline Wozniacki. I thought it was breast-related because I have had recent boosts from searches on Meghan McCain (the Twitter thing) and Eva Amurri (the Californication topless thing), but it turned out to be just a tennis match-fixing scandal.
Hey Wanger — a whole nation wants its flag back.
October 22nd, 2009 at 5:08 pm
re Kass’s article-
what everyone already knows-
re $ hegemony for the 21st century-
hmm . . .possible i guess- my prediction-
$ ends at zero and the S&P goes to 1,000,000-
so- get in now to get the next 999,000 points- cashing out may prove to be disappointing though
October 22nd, 2009 at 5:15 pm
HW – For over 20 years the economy has evolved to accommodate ever increasing levels of consumer discretionary spending. It is not coming back, nada, nope, never.
We as a society are getting older. Older people do not buy much – they have it already. Consumers will be working on restoring balance sheets and retirement savings for at least a decade. We will have a permanently lower percentage of the population working and earning wages due to retirements and a lack of employment opportunities. My very rough, back of the envelope guess is that our economy will settle in at between 80% – 85% of its former size as a new baseline after the waves of contraction have played out.
To create jobs we must either make things that other people want or make more of the things that we use. Smart government policy would be to encourage all domestic energy development, massive road and highway construction to remove all distribution bottlenecks, greater incentives to encourage nascent technologies, etc. Somehow we need to make America the place where everyone wants to come to again in order to make the stuff of the future.
October 22nd, 2009 at 5:38 pm
“Is $5,500 Golf Cart Credit Emblematic of “Tax Policy in the Age of Obama”?
Cash for Clubbers: Congress’s Fabulous Golf Cart Stimulus:
We thought cash for clunkers was the ultimate waste of taxpayer money, but as usual we were too optimistic. Thanks to the federal tax credit to buy high-mileage cars that was part of President Obama’s stimulus plan, Uncle Sam is now paying Americans to buy that great necessity of modern life, the golf cart. The federal credit provides from $4,200 to $5,500 for the purchase of an electric vehicle, and when it is combined with similar incentive plans in many states the tax credits can pay for nearly the entire cost of a golf cart. …
This golf-cart fiasco perfectly illustrates tax policy in the age of Obama, when politicians dole out credits and loopholes for everything from plug-in cars to fuel efficient appliances, home insulation and vitamins. Democrats then insist that to pay for these absurdities they have no choice but to raise tax rates on other things—like work and investment—that aren’t politically in vogue. If this keeps up, it’ll soon make more sense to retire and play golf than work for living…”
http://taxprof.typepad.com/taxprof_blog/2009/10/is-golf-cart.html
~~
“Financial insider and commentator Yves Smith wrote an essay last week entitled “MSM Reporting as Propaganda” arguing that the government has been using propaganda to make people think that things are getting better, no one is angry, and – therefore – no one should get upset:
The message, quite overly, is: if you are pissed, you are in a minority. The country has moved on. Things are getting better, get with the program…
Per the social psychology research, this “you are in a minority, you are wrong” message DOES dissuade a lot of people. It is remarkably poisonous. And it discourages people from taking concrete action.
Is Smith right? And even if she is, isn’t “propaganda” too strong a word?
http://www.washingtonsblog.com/2009/10/herding-sheep.html
~~
“There are clear limits to the power of the federal government and clear realms of power for the states. However, the simple and clear expression of purpose, to secure our natural rights, has evolved into the modern expectation that the national government has an obligation to ensure our life, to create our liberty, and fund our pursuit of happiness.
The national government has become a complex system of programs whose purposes lie outside of the responsibilities of the enumerated powers and of securing our natural rights; programs that benefit some while others must pay…”
http://www.tenthamendmentcenter.com/2009/10/20/they-cant-push-us-around-forever/
~~
October 22nd, 2009 at 5:41 pm
This is pretty funny.
http://www.zerohedge.com/article/787-billion-federal-stimulus-createssaves-593-jobs-rhode-island
October 22nd, 2009 at 5:48 pm
manny-
saving 5.93 jobs in RI makes me proud as an American-
it’s always worth it whatever the cost- whether 1 job or 5.93 jobs- lol
October 22nd, 2009 at 5:49 pm
Kass and Fleckenstein could do a duet.
Reuters article: Here we go again. Here kitty, kitty.
Hegemony? I agree but in 100 years most of us won’t be around. Once, a strong national currency was a source of pride for its government and therefore its people. A bet that the USG will come to its senses before it blows up our currency? I don’t know…
October 22nd, 2009 at 5:51 pm
CNBCS — I was wondering how long it was going to take for somebody to notice the flag…
October 22nd, 2009 at 5:52 pm
@ahab: I especially love the .93 part. Imagine if you lived in R.I. and saw that? If I lived there, I’d almost rather see zero than 5.93. It’s insulting.
October 22nd, 2009 at 5:57 pm
I also made a special note of this while sweating at the gym today (Bloomie was on). Good to see that bailout money in NYC being put to fine use the Hamptons.
http://www.zerohedge.com/article/dear-middle-class-thanks-you-hamptons-sales-surge-32-five-year-high-upcoming-record-bonuses
October 22nd, 2009 at 6:00 pm
well manny- some Americans are not 100% Real Americans-
thus 93%
Bergsten-
i already commented on HW’s flag last night-
CNBCS alway trying to steal my thunder
October 22nd, 2009 at 6:04 pm
Pretty amazing numbers from AMZN. So that being the case how did this happen?
“UPS profit down 43% on fewer package shipments”
October 22nd, 2009 at 6:08 pm
@Manny — .93 aside, it works out to $262,333 per job. Where, pray tell, did this money go, considering that if a job is “saved” the person was already on the payroll.
How does one get on this particular gravy train? I know people making minimum wage — can I collect $262K per head and pay them their going rate, thus “saving” their jobs?
@ahab — sorry, missed your “scoop” on the flag…
October 22nd, 2009 at 6:13 pm
check out these two headlines-
one is from Yahoo Finance and the other is from CNBC- care to guess which belongs to whom?
“AmEx reports 21 percent decline in 3Q profit” (hmmm… sounds pretty bad)
“American Express Profit, Sales Beat Expectations ” (WOW- sounds great!)
October 22nd, 2009 at 6:22 pm
The only time I ever see CNBC is during my workout and it coincides with the idiotic Fast Money show. In case you’ve never seen it, it goes something like this:
-Talk about whatever stocks are rising AH regardless of why and never, ever mention the ones that fall. If you have to, as in Ebay’s case, make sure you rave about the future.
-Never mention any economic indicators from the day such as Claims, Beige Book, Home Prices, etc. unless they are BTE and cause the market to go up.
-Always be condescending toward any guest with opposing viewpoint.
Guy Adami gets a pass most of the time from the above statements. And ahab, before you ask, I’m not on that show.
October 22nd, 2009 at 6:37 pm
Harry Wanger said: “But it struck me that volumes have dropped and remain low, strikingly so on the various indices. Tells me the retail investor is afraid to get burned yet again.”
I hear this a lot and I don’t understand it. S&P 500 and Dow volume doesn’t seem low to me. Yes, they’re a lot lower than during the price melt down but we’re looking at numbers now that would have been normal in most of 2008 and very high in any previous period. Volume growth has been exponential at least since the 80′s so maybe the growth in volume is less than expected but I’m not convinced of that. If you look at the broad markets in terms of money flow (price * volume) the markets are recovered to 2008 levels. I sure wish that was mostly a function of price recovery, but it isn’t. But, I also am a little skeptical that volume growth is typical of or needed for a big sustained price recovery. Volume and volatility correlate but I think volume and price less so… I suspect I’m missing something here. Any help?
October 22nd, 2009 at 7:20 pm
M: Regarding price recovery and volume – I agree. I don’t think you need sustained big volume for price recovery. We’re seeing it happen right now. The point is the volatility aspect of it. They do correlate. The lighter the volume the greater chances of big swings in price action.
The biggest volume time periods we have seen recently were Sept/08 – Dec/08 with three distinctive spikes. The massive volume came in Feb/09 – May/09. We’ve dropped substantially from those levels to levels more appropriate of 1/08 – 9/08. So did the massive volume indicate the retail investor sold out in those time frames (excluding 401(k)s? I don’t believe there is any institutional sideline money sitting out there that just about every analyst rants about simply by looking at the normalized volume you pointed out historically.
Contributions to 401(k) programs, adjusted for unemployment obviously, have indeed dropped. That’s a direct indication of fear, IMO, of the retail investor. While he may not have sold out on the drop, he’s certainly not looking like he wants to get back in. My feeling is the market becomes a game increasingly between the “professional gamblers” with less participation from Average Jane. That creates a greater propensity toward its disconnect with the overall economy in general.
October 22nd, 2009 at 7:30 pm
I alway try to steal your thunder?
I didn’t know I alway did that.
October 22nd, 2009 at 7:32 pm
Microsoft Tries to Lose ‘PC Guy’ Image With Windows 7
Summary:
The corporate monopoly has released a new product that is touted as less bad than the previous version and the primary selling point is “it’s cheaper than a Mac”.
October 22nd, 2009 at 7:44 pm
Thought this (probably) summed up Windows 7: http://xkcd.com/528/
October 22nd, 2009 at 7:46 pm
Price comparison services like Shopzilla and Nextag must have retailers grinding their teeth – esp if you’re a guy shopping for “stuff” and you’re not out for a shopping “experience”.
Walmart is offering a monthly cell phone plan “Straight talk” which runs on the Verizon network for $30-45 (unlimited), amazing, short Sprint!
Consumers are demanding the best value, they have to these days and retailers like Walmart and Amazon are driving stakes into the hearts of their competitors
October 22nd, 2009 at 7:47 pm
@CNBCS, Ahab — how does one go about “stealing” thunder anyway? What do you keep it in? Where do you store it? How long does it keep? Is this one of these rappers sampling pieces of other people’s music?
Think I could get Andy Rooney’s job when he kicks off (assuming he hasn’t already)?
October 22nd, 2009 at 7:52 pm
A long article on the peculiar financial incentives for mortgage servicers. Real estate seemed crazy on the way up with phony appraisals and borrower incomes etc but it’s even crazier on the way down.
http://www.istockanalyst.com/article/viewarticle/articleid/3573054
October 22nd, 2009 at 7:58 pm
Bergsten/CNBCS-
Idiom:
“steal (someone’s) thunder”
“To use, appropriate, or preempt the use of another’s idea, especially to one’s own advantage and without consent by the originator.”
so- it’s an expression-
but i was i no way serious- guess i should have used a happy face emoticon
October 22nd, 2009 at 8:22 pm
@ahab — Yeah, I knew that, I was just practicing my (annoying) Andy Rooney imitation.
Like, “I told you a million times” — if what I told a million times you took 10 seconds each, it would take 7.61 years to do it.
October 22nd, 2009 at 8:47 pm
Hey BR. Can we get a heads up on work safe readings. Kind of embarassing.
October 22nd, 2009 at 9:42 pm
Congressman Mike Rogers on Health Care plan. Seems someone in Congress actually has a clue
http://www.youtube.com/watch?v=G44NCvNDLfc&feature=player_detailpage
October 22nd, 2009 at 9:44 pm
http://theburningplatform.com/economy/american-pie-1
October 22nd, 2009 at 10:37 pm
ahab, I alway knew that. I wasn’t being snarky about you saying that I try to steal your thunder. You are alway helpful to me, and you are alway my friend.
Yours alway,
The Great CNBC Sucks
October 22nd, 2009 at 11:00 pm
CNBCS-
alright, alright- so i forgot the s-
who gives a shit-
glad you have time to re-read your posts a million times before posting-
consider a job as an English teacher
as alway-
Ahab
October 22nd, 2009 at 11:59 pm
this: http://www.w-street.com/Prin.aspx
from the, above, links, is worth the ink & paper to Print.
and, if you’re using ‘Toner’ .. http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Inhalation+hazards+of+printer+toner
do you yourself a favor, increase your likelihood of Health, and the Quality of your Printing, by getting rid of it..
October 23rd, 2009 at 3:11 am
http://finance.yahoo.com/expert/article/futureinvest/195907
The Crisis: Keynesians vs. Monetarists
Monetarism finishes Strong
“But on the subject of the policies to get us out of the crisis, the Monetarists shine much brighter…”
….Whaddyaknow? This bubba agrees with me, the Keynesians weak point is the lack of endgame…as Vinnie Barbarino might say,” Before today, I knew nothing about economics, and today I are one…”
B in T
October 23rd, 2009 at 8:29 am
Bruce in Tn .. signed in (again) to say I checked into your Jeremy Siegel, PhD article on Keynesians vs. Monetarists ..
this human bean couldn’t go much past the 5th paragraph … I am totally commited* to pushing for a new money for labor & daily bread system/sop .. and neither of those sops get it for me in the 21st century .. like its been 6000 years pushing cash around for labor output .. can’t you geniuses think of something else that would work out for the best for all ?
* totally commited going crazy :-)