This is one tough market to keep down.

But I want to reiterate that I do not believe that this is Mr. Market anticipating a full economic recovery (and I see Mish agrees).

As noted last week, we can look at this in two distinct phases: Part 1 was the typical recession bear market — from late October 2007 to early September  2008 (pre-Lehman). That was down from 14,200 to about 11,500, and lasted about ~10 months.

Phase II was the world ending, economic system collapsing, 5,000 point fall from 11,500 to 6,500 over the next 6 months.

I believe — or at least rationalize after the fact — that the rally off of the lows reflects the unwinding of that 5,000 point anticipation of Armageddon.

>

Recession Bear Market vs Armageddon ?

DOW 2007 - 09

>

Previously:
What Does the Economy Have to Do with the Market? (October 6th, 2009)

http://www.ritholtz.com/blog/2009/10/what-does-the-economy-have-to-do-with-the-market/

The Most Hated Rally in Wall Street History (October 8th, 2009)

http://www.ritholtz.com/blog/2009/10/the-most-hated-rally-in-wall-street-history/

Category: Markets, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

77 Responses to “Buoyant Market”

  1. DeDude says:

    I agree that since the stimulus package was passed the armageddon scenario lost credibility with all but the most diehard bears. Question then is what exactly is Mr. Market pricing into the future right now. A double dip, a slow L-shaped recovery or a quick V-shaped recovery?

  2. SINGER says:

    Did Armageddon happen? Let’s say that their were no bailouts or expansion of Fed balance sheet, etc. What would the the S&P500 look like now???

    I’m trying to figure out if we: a) avoided armageddon or b) experienced armageddon but were saved by gov. intervention?

    Is it even possible for any market to go down when the amount of stimulus, low rates, QE, bailouts happens on a global scale?

    If the market overshot 450 points to the downside because of the ” anticipation of armageddon”, than perhaps forecasting is far more imprecise and the market is even more volatile than almost anyone previously imagined.

  3. Thor says:

    Key phrase here:

    “at least rationalize after the fact”

    If the market ends up falling off a cliff again I wonder how many economists and bloggers are going to say they knew it was going to happen all along.

  4. Bruce in Tn says:

    @singer:

    I still think the kid in the Big Red One is right. Debt has killed us….

    We’ve increased worldwide debt…by transfer to the taxpayer.

    The fed says no rate increase until joblessness declines….

    Joblessness will not decline in 2009.

    Therefore we will see increased government debt.

    If this is going to work out for our equity market in the long run, then why didn’t the Japanese return to the highs of the Nikkei after 1990? Are we different than they are? The similarities have been discussed innumerable times, yet easy money in Japan didn’t put the horse back in the barn…

  5. HarryWanger says:

    Yes, Barry, you are right on. We were pricing Armageddon and it didn’t happen. Now, as you so aptly pointed out and I’ve been saying on this forum for months, is that we will be fairly priced at 11,500. Exuberance will take us higher, however to the 12,500 area before a pullback.

  6. kcowan says:

    The chart looks to me like it has recovered from the panic selling and reached where the recession line would have reached without it. So unless the recession is over, it seems that it will resume its downward trend but be less severe and might start “bottoming out” in anticipation of a recovery.

  7. call me ahab says:

    yeah BR-

    just your typical recession-

    i guess collapse of Lehman and Bear Stearns, Freddie Mac, Fannie Mae, Wamu and Countrywide and total shut down of securitization is pretty typical of most recessions- massive debt – including 1.4 trillion current deficit- no big deal- just like all other times we had a bit of a dip-

    good call BR-

    keep up the good work

  8. b_thunder says:

    Sorry, your argument gets a “Conviction Sell” from me

    What you describe as “typical recession bear market — from late October 2007 to early September 2008 (pre-Lehman),” IMHO started on May 9-10, 2006, but was PREMATURELY ABORTED by the incredible, unstoppable and UNPRECEDENTED orgy of leverage buyouts and stock buybacks (assisted by the Fed policy and SEC incempetence policing derivatives, CDOs and SIVs) between Jul 2006 – Oct 2007.

    Let me explain: In May 2006 the DJIA was around 11700. Q3-2006 was when econ. growth peaked, profits and profit margins largely reached the highs for this cycle, and real estate rolled over in most locales; when John Snow was forced out and Henry Paulson “parachuted” from The Street to DC. Market correctly predicted the Q3 net earnings “top” and sold off in May. The market bottomed around 10700-10800 and rallied from there (thanks to Hank Paulson @Co.) The gains of late 2006-2007 were 0% economy/profit driven, and 100% leverage/buybacks driven. The net earnings didn’t matter (just like now.) The EPS were “juced” by buybacks and money was flowing from Banks to PE firms and then back to the market.

    What BR describes as a “typical recession bear market ” from 14200 to 11500 IMHO is the process of undoing the Paulson/Bernanke/PE/Buybacks/leverage bubble of 2006-2007. The 11500 mark is the highs of 2006, it’s nowhere near what the bottom of what should have been a “normal” bear market following the 2003-2006 “bull.”

    IMHO, perhaps the 5000-poing post-LEH panic selloff was excessive, but there’s no way that 11500 was the “typical recession bear market” bottom. That “bottom” IMHO is somewhere between 11500 2006 “typical” cycle peak and 6500, possible cycle low.

  9. b_thunder says:

    P.S. That doesn’t mean one shouldn’t have participated in the 2006-2007 “bull” market – of course one should have! But one should’ve been aware of what kind of “bull” that bull market was made off, and exited it at the 1st signs of trouble (Bear funds, Barclays writedowns, etc)

  10. Mannwich says:

    @b_thunder: Great analysis. I’m with you on this one. This rally is mostly the result of money machinations and transferring corporate losses by our gov’t to the taxpayers of the nation. It’s a MASSIVE transfer of wealth, basically theft, from the many to the few. Nothing more, nothing less.

  11. Myr says:

    @ call_me_ahab,

    I would add: (1) government guaranteeing all money market funds, (2) $24 trillion of support for the finance sector, (3) trillion dollar deficits as far as the eye can see, (4) Goldman, Morgan, Merrill, Citi, BoA, and GE all saved from bankruptcy by the Fed/Treasury, (5) QE of $1.3 trillion and counting. It’s really just a typical recession.

    This is no ordinary rationalization by Barry…it’s the mother of all rationalizations.

  12. rootless_cosmopolitan says:

    Barry,

    How do you define “Armageddon” in this context? The market low for the S&P 500 in March was at 666 or so. This implies about 40 to 50 dollars annual reported earnings, assuming an P/E ratio of 14 to 16. What does this have to do with anticipating “Armageddon” and economic collapse?

    I don’t agree with “typical recession”. It’s a debt crisis that hasn’t been solved yet, only painted over. The mountain of debt in the system is still higher than before the Great Depression. This is a very different economic context compared to the other recessions after WW II. The debt crisis is not over yet, despite maybe getting a few quarters of GDP growth due to unprecedented deficit spending by governments all over the world.

    rc

  13. Mannwich says:

    Me-thinks that Barry is making big dough on this rally, hence the rationalizations. Sorry Barry, gotta call ‘em like I see ‘em here.

  14. Harry Wagner says:

    Why Mannwich if you had been buying the upswings and selling on th 1-2% dipps, you would be making money off of this HOG economy too, isn’t it nice to hear it start roaring to life mini boom-Boom-BOom-BOOm-BOOM.

    Now come on Mannwich get on the HOG and take it for a ride.

  15. Super-Anon says:

    I don’t think it’s useful to justify price levels because they haven’t been justifiable since the mid-90s (with maybe the brief exception of this March).

    I think you have to view the market in terms of the leveraging and deleveraging of an economy dominated by bubble producing industries.

    I.E. there’s no justification of stock prices in any absolute sense — stocks are simply a tool now used to loot the wealth of “mainstream” investors who aren’t as mobile or as informed as the folks doing the looting. The fluctuation of prices is what’s relevant to the extent that they facilitate the redistribution of wealth.

    I say this partly as a critic, partly as somebody who is actively trying to benefit from this redistribution.

  16. gloppie says:

    Bring on the locusts !!!

  17. Super-Anon says:

    Barry,

    How do you define “Armageddon” in this context? The market low for the S&P 500 in March was at 666 or so. This implies about 40 to 50 dollars annual reported earnings, assuming an P/E ratio of 14 to 16. What does this have to do with anticipating “Armageddon” and economic collapse?

    Yep. A 1982 type low which was hardly “armageddon” and occurred during a less severe recession would have taken us to something like 350-400 (I forget the exact numbers).

    Monetarism has destroyed the utility of the markets as a valuation mechanism and hence their utility to the real economy.

    Now they are only useful for socioeconomic parasitism.

  18. Mannwich Says: October 13th, 2009 at 12:54 pm
    @b_thunder: Great analysis. I’m with you on this one. This rally is mostly the result of money machinations and transferring corporate losses by our gov’t to the taxpayers of the nation. It’s a MASSIVE transfer of wealth, basically theft, from the many to the few. Nothing more, nothing less.

    x2

  19. rustum says:

    Everything looks spot on in hindsight.

  20. Mike in Nola says:

    Barry,

    I understand what you’rew sayng, but according to most rational people including you, Rosie, Mauldin and Mish, nothing has really been fixed and the Fed has created enormous problems in avoiding armageddon last year. On top of that, China has created huge bubbles with its stimulus. What are the consequences of that? It seems like the CB’s have just put things off and set the stage for Armageddon II.

    Manny: of course BR is making big money off this rally. Wish I had listend to him.

  21. Mannwich says:

    @Mike in Nola: My point is that those who are making big money off this rally and doing OK are the ones who rationalize that maybe things aren’t as bad as we thought the were. Well, of course they’re not bad for THOSE people but what about everyone else who doesn’t have much or any money in the markets and didn’t time this rally correctly? What about those people? This is where I think the pundits (even Barry here) are missing the bigger picture – the fact that nothing has been solved. Things may be just peachy for YOU personally, but I believe this may cause many in that elite group to lose sight of the big picture because the hardships this nation is experiencing is out of THEIR sight, thus out of THEIR mind. Off to the Hamptons they go in their new ride. All is well, right?

  22. HarryWanger says:

    Barry, be careful, you might lose your readers. The doomer crowd seems pretty upset that you’re not calling for collapse pt. II. They can’t get it through their heads that basic economics say we’re in a recovery and a pretty strong start of one at that. Seems like I’m the only one that agrees (maybe a couple of others who aren’t posting today) – at least we’ll continue to make money.

  23. dss says:

    This rally has served many purposes. Does anyone really think we have hit bottom in the economy? I see signs of an echo recession in my town. There was the first drop off the cliff when the shit hit the fan last year, many homes for sale, for rent signs in the shop’s, big corporate businesses closing. Now one year later I am seeing even more homes for sale, complete devastation in our little affluent downtown, many more white collar folks out of work, talk of depleting savings, and also talk of how the stock market rally makes people feel better, even as their home’s value continues to plummet. Those who are recession bullet proof are very quiet as the suffering around them gets worse, not better.

    A stock market rally, or less worse numbers in consumer confidence, housing, employment, or manufacturing doesn’t erase the trillions of national debt, the trillions of consumer debt, or bring back tens of millions of jobs needed to grow this economy and service the debt.

    Recovery will not happen until the debt is written off, paid off, or inflated away. Money spent servicing the debt is money that is not spent on consumer goods.

    IMHO, I agree with BR, but I also do not see any meaningful recovery. The stock market is not the economy! The pendulum over swings both ways. Can this rally continue? Yup.

  24. rootless_cosmopolitan says:

    Harry Wanger,

    Where is this great recovery coming from, which you are predicting with so much confidence? For the last 30 years it has needed a doubling of private debt every decade to get economic growth in the expansion phases of the business cycle. Please explain what is going to fuel this great recovery. Will it be another doubling of private debt, i.e., will households and businesses load on their balance sheets another 25 trillion dollars of debt (this would be the number based on the current debt levels w/o the financial sector) over the next decade?

    What about some analysis instead of permanent posing? Or am I asking too much from you?

    rc

  25. km4 says:

    The Triumph of the Banking Oligarchs will continue until enough Americans wake up and/or take action on a dysfunctional economic system dependent on increasing debt, faux GDP growth, ponzi schemes and bubbles with politicians on both sides kicking the can down the road.

  26. call me ahab says:

    also BR-

    make sure you get on your knees and genuflect towards 20th and Constitution- the almighty Fed made it all possible-

    and remember- follow the big bank’s lead- they have chokehold on the markets- and will make money even as the propsperity of the whole country is extinguished-

    and this country- who cares– what the fuck’s it good for anyway- might as well make some money on the way out

  27. HarryWanger says:

    rootless: I have been asked this for weeks now and I’ve replied with detailed responses regarding economic growth here and globally. I’ve posted ad nauseam regarding job growth. If you haven’t read those responses, please just look at the economic numbers coming out now for the past month or so. That should sufficiently answer your questions.

  28. HCF says:

    True, perhaps armageddon is off the table, but we are trading one calamity for potentially a much larger calamity down the road… So if we didn’t prop up the banks with trillions of dollars of preferred investment, asset backing, supporting the money markets, QE, stimulus, etc., then WE WOULD HAVE ALL DIED??? No, we would not have… INVESTMENT BANKS would have died! Correction, LARGE investment banks would have died… Fuck them… I don’t see a huge benefit from them anyways. Plenty of commercial banks would have been fine. Plenty of boutique investment banks would have been fine. Plenty of hedge funds would have been fine. Yes, the recession would have reached a much deeper nadir than we saw, and it might FEEL like the world is ending. But the system would be flushed out, and we as a society would know where the weaknesses in the economy are and actually work to buffer our system from future shocks.

    As far as I am concerned, the zombie banks are basically giant turds that are stuck in the anus of society…

    HCF

  29. worth says:

    As dicey as this “recovery” seems, the prospect of the resumption of this particular recession is still not what I most fear.
    What keeps me up at night is simple math: boomers going away. All of those bi-weekly 401k contributions, by all of those people at their earnings peak, hitting retirement age – or, more accurately, being unceremoniously “early retired” against their will in their early-mid 50′s. I saw my own parents go from huge contributors to withdrawers 10-15 years before they should have, and that was before this carnage transpired.
    Where’s the rising tide going to come from that will lift all stock market investment ships? It ain’t China: they will go the way of the Soviet Union, who, overnight, went from “the threat behind the iron curtain” to the biggest economic shambles the modern world had witnessed. We don’t know what’s really going on in China, but when the dust clears, there will be lots of shiny new infrastructure and no consumption to drive real economic growth. I could go on, but why?

  30. leftback says:

    Saved by Zero! But for how long….?

    “please just look at the economic numbers coming out now for the past month or so.”

    Tepid data, Harry, really – in the face of MASSIVE stimulus the like of which the world has never seen. Hmm…..
    Remember when the prop desks want to sell, all the happy talk in the world ain’t gonna keep this sucker afloat.
    Banksters are still the 800 ton steamroller here, playing with government liquidity. Don’t be in the way when they decide to turn around, Wangster.

  31. HCF says:

    @rootless:

    >HarryWanger Says:
    >rootless: I have been asked this for weeks now and I’ve replied with detailed responses regarding economic growth here and globally.

    Translation: “The rally is only because of relentless pumping of money into the system, but I don’t care, because it means the Dow is going to 11,500 by year end and my Apple shares are going to $250 lickety split!”

    HCF

  32. HarryWanger says:

    HCF: I guess you didn’t read any of the detailed numbers I posted previously. Regardless, we’re going to 11,500 EoY on a mini economic boom. And yes, my AAPL is going to $250 within 6 months.

  33. Harry Wagner says:

    HCF – The economy is on the mends and headed toward mini-booms, because of astute market fundamentals, with shallow, pull backs then sharp gains, if you people would have the foresight and wishdumb to understand this you people could be helping us recover instead of all your non-sense doom and gloom.

    I mean jeez, I have posted and posted and posted and used succinct and direct arguments that none have been able to refute, and if you follow the indices correctly it would be easy – peasy for you also.

  34. drey says:

    Here’s another possibility, Barry:

    The March low CORRECTLY priced in Armageddon and the rally since is a product of massive stimulus, low bond yields, and a euphoric sense that we avoided disaster which is utterly disconnected from economic fundamentals.

    Granted this could (and probably will) last a little longer but anyone who goes into the new year unhedged is playing with fire and deserves to get burned, IMHO.

    Lots of unfinished business on the downside…

  35. Super-Anon says:

    The March low CORRECTLY priced in Armageddon…

    Stocks are just legal contracts. Somewhere long before you get to Armageddon you get to the dissolution of the government and the legal contracts issued under them. In other words, sufficient political instability can render stocks worthless long before you get to a Mad Max type scenario.

  36. speaking of: “This is one tough market to keep down.”

    who likes fading the GOOG Oct 520p @ ~11.70, ahead of earnings on Thurs.?

    http://finance.yahoo.com/q/op?s=GOOG

    the 500s look like lay-ups..@ 4.60

    though, remember, the cover is to Short the underlying..

    another way ’round is to buy the 490c and sell the 540c @ a net debit of ~28.50..
    and, that, too, could be coupled w/ the p sale..

  37. rootless_cosmopolitan says:

    Harry Wanger,

    “I have been asked this for weeks now and I’ve replied with detailed responses regarding economic growth here and globally.”

    I haven’t seen any. Please post some of the links to these detailed responses you allegedly have brought here. This is possible in this blog and it should be easy for you to find some of them, then. Or you are just lying now.

    “I’ve posted ad nauseam regarding job growth.”

    There hasn’t been any job growth for a while. Job eliminating currently going on has been w/o example after WW II, though. What is supposed to follow from this? Or are you predicting great job growth like you boldly predict everything else w/o any explanation, probably from reading your crystal ball? Predicting job growth doesn’t explain where it is supposed to come from.

    “If you haven’t read those responses, please just look at the economic numbers coming out now for the past month or so. That should sufficiently answer your questions.”

    The improved economic numbers for recent months can be clearly linked to recent unprecedented deficit spending by governments. But what numbers that have come out recently are particularly supposed to answer my question in what way? I wouldn’t know. Please explain.

    rc

  38. Bruce in Tn says:

    @rootless:

    Wasting your time…I will say that my main complain here is that the government seems to not realize that debt creation may not solve the problem…but I am getting fatigued about this affair, since it is 13 months since the “crisis” began.

    I haven’t the slightest doubt that we haven’t fixed the problem. Not one.

    Posted this a couple of days ago, but if you missed it, it is worth pondering….

    http://www.atimes.com/atimes/Global_Economy/KJ06Dj04.html

    Obama’s permanent depression

  39. impermanence says:

    Barry writes:

    “I believe — or at least rationalize after the fact — that the rally off of the lows reflects the unwinding of that 5,000 point anticipation of Armageddon.”

    Barry, you very clearly delineate your point of reference. If you are using the term, “Armageddon,” in the biblical sense, it’s unlikely that such a cosmic event would occur. But, there are small armageddons going on all over the place. Millions umemployed, millions losing homes, massive bankruptcy, etc.

    Like most people living in sheltered environments, you seem to miss the calamity slightly out of view. When you add up all the human pain/loss that has/will come down on account of this little economic event, it will be enough Armageddon for us all.

    I realize that you probably live a privileged life, perhaps completely of your own doing, but sometimes you write as if you forget the millions who do not.

  40. Thor says:

    Agree with Bruce – Rootless, you’re wasting your time.

  41. worth says:

    Bruce, thanks for the Asia Times article reference.
    It contains multiple mentions of the retiring Boomers problem that we’re facing, which gave it added credibility. When you go from contributing $20k/year, plus a corporate match, to withdrawing $50k a year, plus an early withdrawal penalty, and doing that for 10-15 years because you were put out to pasture when you were 52, times a whole lot of people for the next 20 years, that will [continue to] make a dent in the market.

  42. worth,

    Right? Gens X & Y, already, believe that they won’t get anything from SocSec, but, it seems, they haven’t put it together re: 401(k)-onfiscation) acct.s..
    http://www.thefreedictionary.com/confiscation see def.#2
    ~~
    note, re: above GOOG synthetic longs
    Arthur Levinson resigned from the board of Google Inc. under pressure from the Federal Trade Commission, which is still “investigating” Google and Apple Inc. for having “overlapping” directors. Levinson and Google CEO Eric Schmidt previously served on both the Apple and Google boards. Since the FTC views the two companies as direct competitors, the agencies believe Schmidt and Levinson’s double-service violated the Clayton Antitrust Act.

    FTC Chairman Jon Leibowitz gloated over his latest victory:…”
    http://blog.mises.org/archives/010825.asp#
    a longer-run, potential, ‘fly-in-the-ointment’
    ~~
    funny how the FTC can get ‘all Clayton Anti-Trust Act’ on GOOG/AAPL, but are silent on the TBTFs/AIG, et al..

  43. [...] S&P 500 “This is one tough market to keep down,” FusionIQ CEO Barry Ritholtz opines. “But I want to reiterate that I do not believe that this is Mr. Market anticipating a full [...]

  44. ben22 says:

    This idea of Armageddon was dumb the moment it came out.

    Isn’t Armageddon supposed to be a final battle? Was the GD considered Armageddon, and if so, how did we manage to go on afterward?

    This will get all of us about as far as the whole is this GDII or just a Great Recession conversation. That is to say, it’s a waste of time. None of these terms actually matter.

    Trying to have an adult discussion with someone named Harry Wanger, or HarryWanger, the same person that said this:
    “I don’t quite get the credit contraction’s role in this economic recovery. ”

    Is an equal waste of time. Though, maybe only one of them said that, who knows….who cares.

  45. HCF says:

    >I mean jeez, I have posted and posted and posted and used succinct and direct arguments that none have been able to refute
    I’m glad that Harry Wagner makes so much more sense than Harry Wanger…

    Will the real slim shady please stand up?

    HCF

  46. Graphite says:

    I don’t really get the constant reference to “Armageddon” and “the end of the world” in the context of precipitously falling equity prices. Even after huge, 90%-plus crashes such as the South Sea Bubble burst and the 1929-1932 liquidation, the sun kept coming up in the morning. Of course, our modern conceit is that the policymakers of those times were complete rubes, and our wise overseers now know how to prevent such outcomes. We’ll see.

    And as others have pointed out, the 666 March low in the S&P was really not that much of an “Armageddon print” on a valuation basis. It only brought us back to the levels of the mid-late 1990s, which were arguably bubble valuations themselves, and in the context of a much healthier economy than we have today.

  47. HCF says:

    @Harry Wanger:
    > I guess you didn’t read any of the detailed numbers I posted previously.

    I have read pretty much all your posts. The “detailed numbers” consist of manufacturing and sentiment numbers coming in slightly above 50 (mildly expansionary) and employment and earnings coming in at “less bad than expected.”

    HCF

  48. leftback says:

    LB can hardly tell the difference between the real Wanger and the ersatz Wagner. Hilarious.

  49. Andy T says:

    Yeah, just a typical recession….no issues here at all….

    Funny stuff….

  50. call me ahab says:

    Graphite Says-

    “Of course, our modern conceit is that the policymakers of those times were complete rubes, and our wise overseers now know how to prevent such outcomes. ”

    truth in that- as if accounting tricks will solve the problem and QE and the FED’s ballooning balance sheet are the cure for what ails us

    also – I take offense to the word “buoyant”- as if all is “happy” and “good” w/ the market-

    well “gosh darn”- just can’t keep a good market down-

    when in fact “manipulated” and “fabricated” would be more accurate terms

  51. batmando says:

    Bruce in Tn at 3:12 pm
    links to http://www.atimes.com/atimes/Global_Economy/KJ06Dj04.html
    which contains what Harry can’t see or refuses to address:

    “In short, the rise in US stock prices has less to do with economic recovery than with the drop in the global price of American assets. The dollar can only fall so far, however, because other currencies can only rise so far before a rising currency parity damages competitiveness. “

  52. leftback says:

    “The dollar can only fall so far, however, because other currencies can only rise so far”

    Thank you! This is what the ALL-AMERICAN BULLS can’t see because they are myopic and know nothing about macroeconomics. It’s just stocks going up, lead by the indices, so who gives a flying one about Asia and Yoorp?

    Do you think HARRY would know what a “leveraged dollar carry trade” was if he saw one?
    Probably not – he won’t understand any of this until it unwinds and the reversal knees him in the goolies.

  53. Mike in Nola says:

    For those dumping on Barry for allegedly buying into the recovery and for those like Harry who have bought into it, please reread Barry’s post from the 6th on the ability of the securities markets to be completely disconnected from the “reality” of the economy. I don’t think he’s buying into a recovery, but he’s willing to make money off the irrationality of the markets. As he said then:

    “Such is the result of giving two million primates lots of money and keyboards and a belief they can make a living based on numbers and letters moving around — on a screen, in a futures pit, on an exchange floor, or even under a buttonwood tree.”

  54. dss says:

    It is better to ignore those who operate under delusions of grandeur or infallibility. HW reminds me of a brother-in-law who watches a PBS documentary on volcanos and then based upon the immense knowledge gained through watching said documentary, now a proclaims himself to be a volcanologist, expounding on theories he doesn’t understand and makes proclamations that have no basis in reality.

    Or the other brother-in-law who bloviates about subjects that he has no real knowledge of and then bullies those around him who are much more learned and intelligent because they ignore his rantings.

    Truthfully, I believe that HW is a very young man (only the most immature male would pick such a ridiculous name and he obviously delights when he gets people to repeat his little joke) who is just young and stupid enough to believe that people have been fooled into believing he is a stock market expert because he can actually post his thoughts here on a serious blog, and gets seriously defensive when called out on his lies, misstatements, and omissions.

  55. batmando says:

    @LB
    That with which Americans in the real economy are not prepared to deal (psychologically, financially or otherwise) is what “a rising currency parity damages competitiveness” will mean for their standard of living in the interim. No consumer-led recovery for sure.

  56. Daffyorbugs says:

    Here’s my theory–Harry is Barry! I gotta agree with ‘em.

  57. Daffyorbugs says:

    I’m thinkin’ Harry-Barry owns some intc.

  58. Onlooker from Troy says:

    I’d also like to voice my disagreement with the notion that the March bottom was pricing in “Armageddon” or any such thing. Valuations were not anywhere near previous extreme bottoms. Only in the context of the last decade plus of extremely rich valuations was that a “cheap” market. Of course the market doesn’t move in straight line for that long, but if the govt and the Fed hadn’t turned on the giant easy money hose and thrown billions and billions at the banks the market would have continued down to more rational levels of valuation. But we don’t do pain for our financial oligarchy here. We just can’t have that.

  59. Onlooker from Troy says:

    And there’s also the complete denial in the accounting business that ignores the losses and assumes and hopes that all will be well again.

  60. JasRas says:

    To say we have avoided anything at this point is still a pretty audacious comment. We experienced a terrifying panic Feb-Mar of this year and through a number of things the abyss is not what happened. Regardless of size or duration, this is still a “classic” low quality relief rally. The lowest quality companies with the highest debt loads bounced the hardest on the relief and hope that we are now “through” with this horrible episode. The next stage will be the slow drip of harsh reality. Will we ever test the low of March? Don’t know, don’t care. I will guess that we still go higher as the retail client base is still running to bond funds. (ie. the “wrong way”) They’ll get frustrated–if the market continues an upward trajectory– and go back to equities. Then the market will bleed down after it has captured the maximum number of victims. That’s just the way it works. When your Grandma finally decides to stop rolling CD’s and buy anything equity related–you are screwed.

    Before we’re screwed we have to see the market rotate away from low quality and try to transition to higher quality. Maybe we’ll get a Nifty Fifty effect! Oooooo that would line up with all those working off a 1970′s analog! Oh who knows—but crap leads the initial bounce–in the end it languishes. Haven’t seen that just yet. Remember tech had a massive bounce during the tech wreck before continuing a fall down to the lowly levels it has been stuck at for most of this decade.

  61. wunsacon says:

    >> …reminds me of a brother-in-law who watches a PBS documentary on volcanos and then based upon the immense knowledge gained through watching said documentary, now a proclaims himself to be a volcanologist,

    That’s better than my BIL. He watches Star Trek and now claims to be a Vulcanologist.

  62. leftback says:

    They didn’t get a Bonfire of the Vanities bond market breakdown in Japan in the 1990s, the dead cat Nikkei bounce burned out and investors rotated back into JGBs sending yields to very low levels and burning the arse of many retail and institutional bulls. Why should we be any different?

    Why does everyone think we will have inflation? Look around, are we listening to the Yes album, wearing big Afros and platform shoes? Is this an alternate universe?

    Who ya gonna believe? Dave Rosenberg or Larry Kudlow?

  63. Mike in Nola says:

    LB:

    “LB can hardly tell the difference between the real Wanger and the ersatz Wagner. Hilarious.”

    Do you see that many Wangers? :)

  64. leftback says:

    LOL. Lately there are more plonkers on this site than one can ever remember.

  65. dss says:

    @wunsacon

    Yup. We all know that type.

    @leftback

    Dunno why the inflation trade is going wild. It is deflation as far as my eyes can see. I will know we are reflating when a. the big spec house down the street gets sold after 4+ years and counting. b. when restaurants stop going out of business in my area c. when the number of rented store fronts exceeds the “for rent” store fronts. d. when one of the b-i-l actually gets a real job instead of watching PBS all day.

  66. Thor says:

    DSS – That sounds like where I live. Where are you? ;-)

  67. franklin420d says:

    @Thor – Sounds like DSS could be from “AnyTown” USA

  68. jc says:

    It’s time to party like it’s 1930!

  69. jc says:

    Nothing about this market and the coordinated governmental actions the past couple yeras has been anything like an ordinary recession/bear market

  70. call me ahab says:

    unless your initials are BR

  71. JasRas says:

    I guess it is helpful to have a belief of what may happen, but I think we all perhaps need to be more like BR and manage our assets based on what the market is now, not what it might be at an unknown point. He’s been long and strong through this “ridiculous” rally of over seven months. He successfully separates the economic data and research he sees from the decisions he makes for market involvement. The are few times when it all makes sense–most of the time it is just plain frustrating trying to reconcile it–because it can’t be until it wants to be. And that is after almost everyone has given up.

  72. catman says:

    All – Of course BR is making big money on this rally. He’s agnostic and needs a couple of new cars. HW is poking the bears with a stick and getting snapped at, but hey, somebody has to put sand in the oyster… Market isnt a monolith – hedge and prosper – can we get a hand signal to go with that? More that one finger please.

  73. dss says:

    @thor

    Chicago area. Some suburbs are doing better than others. Mine is or I should say “was” fairly affluent. I am sure that the most of the big wigs are still doing ok, but the rest seem to be struggling. It feels like one of those bombs that only kill people went off down town. The house that is for sale is only one of many in my town, but it is the most egregious in terms of price and time for sale.

  74. Mike in Nola says:

    Had occasion to get lost in the Houston tunnel system under downtown a few days ago and was shocked at the number of For Lease signs where there had been businesses n the tunnels a year ago. Same houses are still for sale nearby. Big oversupply of luxury apartments being discounted.

    Of course, the hucksters haven’t given up. I’ve seen several real estate seminars with Trumps name on them. There’s a guy who’s projects never go bankrupt. Apparently they just use his name. Here’s a description of a recent one:
    http://swamplot.com/trolling-the-town-for-trump-chumps/2009-10-08/

  75. constantnormal says:

    Definition of “armageddon”: when Harry Wanger buys the dips and is repeatedly given a severe haircut.

    The trading graveyards are filled with those who considered themselves invulnerable to the chaotic movements of the markets.

    Kinda like the guy who says, beer in hand, “hey y’all, watch THIS!”

    He may amaze his audience for a while, but eventually they’ll wince and say, “Ewww”.

  76. HarryWanger says:

    Meanwhile the doom squad, you all know who you are, are hit with smack in your face blow out Intel earnings. Of course you’ll all say they’re meaningless/rigged/manipulated/cooked because it doesn’t fit your way outdated doomsday scenario. Just remember who called this mini economic boom, that we’re now seeing in front of us all the way to your moldy bunkers in Nebraska somewhere.