Afternoon Readings
By Barry Ritholtz - October 20th, 2009, 4:14PM
A short list:
• The Energizer Rally: Contrarian analysis continues to reach bullish conclusions (Marketwatch)
• Which Came First: Government Ownership or Catastrophic Losses? (Big Money)
• Mortgage modification schemes see ‘disappointing’ results (FT)
• Homes: About to get much cheaper (CNN/Money)
• Bruce Bartlett: Supply-Side Economics, R.I.P.
• How to Grease a Palm: The $20 Theory of the Universe (Esquire)
What are you reading?
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October 20th, 2009 at 4:22 pm
Wow! Some really strong tech earnings again this afternoon. Yahoo, Sandisk, Seagate all had great Q’s and outlook. As with Apple yesterday, we’re seeing many of these tech names that are consumer related really having excellent Q’s. October is also surprising on the retail apparel side. We could be coiling the spring right here.
October 20th, 2009 at 4:26 pm
Wow… The fact that the “Which Came First: Government Ownership or Catastrophic Losses?” had to be written is a sad reminder that there are people who will try to contort any fact to suit their anti-American, anti-government agenda.
October 20th, 2009 at 4:40 pm
Happy to follow up today’s first two posters with this. Here’s the Onion “American Voices” from the other day. The first response really cracked me up.
http://www.theonion.com/content/amvo/republican_site_crashes
October 20th, 2009 at 4:43 pm
BR: Bummed that Esquire had to put out the $20 article. Sort of ruins it a bit now.
October 20th, 2009 at 4:48 pm
“America’s spy agencies want to read your blog posts, keep track of your Twitter updates — even check out your book reviews on Amazon.
In-Q-Tel, the investment arm of the CIA and the wider intelligence community, is putting cash into Visible Technologies, a software firm that specializes in monitoring social media. It’s part of a larger movement within the spy services to get better at using ”open source intelligence” — information that’s publicly available, but often hidden in the flood of TV shows, newspaper articles, blog posts, online videos and radio reports generated every day.
Visible crawls over half a million web 2.0 sites a day, scraping more than a million posts and conversations taking place on blogs, online forums, Flickr, YouTube, Twitter and Amazon. (It doesn’t touch closed social networks, like Facebook, at the moment.) Customers get customized, real-time feeds of what’s being said on these sites, based on a series of keywords. ..”
http://www.wired.com/dangerroom/2009/10/exclusive-us-spies-buy-stake-in-twitter-blog-monitoring-firm/
“Spies may soon be bugging conversations using actual insects, thanks to research funded by the US military.
The US Defense Advanced Research Projects Agency has spent years developing a whole host of cyborg critters, in the hopes of creating the ultimate ‘fly on the wall’.
Now a team of researchers led by Hirotaka Sato have created cyborg beetles which are guided wirelessly via a laptop…”
http://www.dailymail.co.uk/sciencetech/article-1221438/Ssh–conversation-bugged-cyborg-beetle.html#ixzz0UPANqHop
this isn’ your Grandmother’s Police State, this stuff, and its hundreds of related programs and projects, will make Hoover look like the pansy he was..
October 20th, 2009 at 4:57 pm
@Transor: Great post. That’s a classic.
October 20th, 2009 at 5:00 pm
@Wanger: I should do this but I’m going to anyway. All of Yahoo’s profits were a result of cost cutting (e.g. layoffs). Revenues were down. How exactly are these “strong” earnings? The other tech biggies should do well with the weak dollar. This is ’05-’07 all over again in that regard.
October 20th, 2009 at 5:00 pm
This isn’t news to readers of TBP:
http://finance.yahoo.com/tech-ticker/article/357319/Niall-Ferguson%3A-U.S.-Empire-in-Decline%2C-on-Collision-Course-with-China
The news is that its news.
October 20th, 2009 at 5:01 pm
HUD Secretary Donovan-
“I am also aware of the strong support in Congress for doing more to support the housing market, including extending the First Time Home Buyer Tax Credit beyond 2009. At the same time, I am mindful that these proposals can be very expensive, especially at a time of significant budget deficits. I can assure you the Administration will work with Congress to fashion appropriate and effective home buyer incentives, mindful of both their benefits to stimulating new demand and their costs to the American taxpayer. ”
sounds plausible from the statement that the tax credit WILL NOT be extended-
will common sense prevail?
also- HW-
not everyone can have normal or better intelligence- a “dull normal” is not so bad- it appears you can at least type
October 20th, 2009 at 5:03 pm
LEFTBACK is reading NOTHING from now on but the posts of the great trader, Harry WANGER, and is as grateful as any trading wretch could be for the pearls of wisdom that drop from Harry’s pen -
and so, another day is over, and the GREAT ONE forges on, leading the recovery and RIDING HERD over the markets, like JOHN WAYNE – with no thoughts of MACRO, FX or any of those pansy-ass CREDIT MARKETS. HARRY’S eyes are on the PRIZE, on earnings, revenue, and GUIDANCE, with the indices leading, as ever.
October 20th, 2009 at 5:06 pm
Good news over at SUN. The SUN is shining. Higher profits on cost-cutting and lower revenues. Seems to be a common theme that’s shaping up.
News Alertfrom The Wall Street Journal—————————-Sponsored by NASDAQ OMX—————————- Sun Microsystems will eliminate up to 3,000 jobs as part of arestructuring plan and in light of the delay in the closing of Oracle’s planned $7.4 billion takeover.
October 20th, 2009 at 5:09 pm
Flash drives showing higher capacity than they really are:
http://sosfakeflash.wordpress.com/
And, though dated, “fake eggs”:
http://www.youtube.com/watch?v=0US7JEfhsrA
October 20th, 2009 at 5:13 pm
From Bruce Bartlett’s piece:
“…Keynes, who was in fact deeply conservative. He developed his theories primarily for the purpose of saving capitalism from some form of socialism.”
Anyone heard of any new theories being developed to once again save capitalism from socialism? Not only are we NOT trying new theories to forestall it, but we’ve decided to go ahead with socialism as the de facto system until something/someone better comes along.
If you think about it, the 9/11 attacks may have actually achieved the goal of ending American capitalism. The business cycle was interrupted, the losses were financially catastrophic, they led to an even more catastrophic engagement (Iraq), to unimaginable and unsupportable government expenditures, to a bubble burst that couldn’t be overcome, and finally to the end of capitalism itself and the implementation of socialist policies and programs with this Democratic Congress and administration.
Or am I giving al Qaeda too much credit?
October 20th, 2009 at 5:35 pm
@worth: I don’t think this is “socialism” per se. “Fascism lite” is probably a more apt term. A corporatocracy.
October 20th, 2009 at 5:35 pm
$20′s work nicely.
But if you do a lot of international travel try the $2. It’s practicaly free and most people haven’t seen them.Toss one in the mix and everyone will remember you.
Your bank can order them so ask for a couple hundred and keep a stash.
October 20th, 2009 at 5:36 pm
wow, that MarketWatch link is a joke right? I mean seriously, I laughed by the end…..
I’m curious where the September numbers were, huge spike in DSI via trade-futres on 9/23, when the S&P was basically where it is right now. Talking only about rec’d equity exposure in newsletters hardly fully describes sentiment, where it’s been and where it is now.
And please, the idea that contrarian analysis gives bullish conclusions now is a complete joke.
October 20th, 2009 at 5:37 pm
I like Wanger, he’s making money. Mr. Ritholz was 60% long the last time I looked and he understands the macro picture. Why not hammer on him? What is the obsession with Wanger?
October 20th, 2009 at 5:39 pm
After five centuries of strife, the Catholic Church finally compromises with the Anglicans.
http://online.wsj.com/article/SB125604916994796545.html?mod=WSJ_hpp_MIDDLETopStories
(the Onion should close down now)
October 20th, 2009 at 5:39 pm
Worth, I think you are giving AQ too much credit. Terrorizing the economy was an inside job. The banks and the politicians from both sides of the aisle.
October 20th, 2009 at 5:44 pm
@Daffyorbugs: How do you KNOW he’s making money?
Wabbit Season! Duck Season! Wabbit Season! Duck Season!…
October 20th, 2009 at 5:54 pm
@Daffyorbugs,
Are you really saying that BR is the same as Wanger b/c they were long stocks? That’s a stretch.
And, this idea that nobody should say anything to Wanger b/c he is making money, please. I said more times than I can count how many stocks I was buying on this board in March, do you know if I actually did it? His comments speak far louder than any money he is making, the fact that he claims to manage OPM is even more crazy to me but then, he’d fit right in with most reps I know. Barry was long early, the people getting long now will never make the kind of money you made by buying earlier this year and sadly Harry only hung out at the super smart Yahoo message boards when the rally was in it’s infancy. While BR was recently buying shorts to protect profits, Harry shit his pants during the first serious pullback and claimed to dump all, or most of his longs, only to buy them back a few days later.
They are hardly doing the same thing…..
October 20th, 2009 at 5:56 pm
@ben22: I was going to respond as well, but if he has to ask, then it’s probably not worth your time explaining.
October 20th, 2009 at 6:03 pm
What Manny said . . .
October 20th, 2009 at 6:09 pm
ben22: Go back and read. I keep stating that any pull backs would be shallow 2-4% – anything worse I would sell. I suspected the market would react as it did on 10/1 on 9/1. I didn’t want the risk and sold, except a huge position in AAPL. When there was no follow through on the selling, as there should have been if it were real and as I stated, I bought indices again. That’s how you make money.
At the time Barry said, he was taking positions in QID after the big pullback day. I stated the following day when there was no follow through that I hoped he had tight stops. I’m sure he did since successful traders always do.
Been posting here quite a while now and market keeps going up. Talk to the crowd at MW about HW and you’ll hear the same nonsense from the doomers who said I was crazy buying the Dow in the 8000′s. Those who listened and email me, are thankful for the advice and have been rewarded handsomely.
October 20th, 2009 at 6:13 pm
Mannwich: YHOO tripled, yes, tripled 3Q profit from last year. Yes, they cut costs to do so but the name of the game is to profit. Would you prefer they not cut costs and let their business fail? Has anyone here ever run a business?? It’s tough, you have investors who want returns and profit. You do every thing you can to deliver. Yahoo delivered that to its shareholders. That’s great news.
October 20th, 2009 at 6:16 pm
DaffyorBugs: There is a mentality floating around out there called the Failure Caucus. People hate to be wrong and look like fools. These guys here (most, not all) have been calling for some sort of Armageddon type scenario for some time and it never happens. They keep pushing it down the line saying it’ll happen next Q or next year. Guess what? We’re seeing improvement in economic numbers, we’re seeing better earnings and we’re seeing a great market run. If that’s too hard for the Caucus to understand, then too bad for them.
October 20th, 2009 at 6:26 pm
you’re weird dude-
creepy strange- why do you give your advice so freely? as if anyone cares- which no-one does-
you are not BR- and you are not too bright- your comments alone show you have little grasp of finance and economics-
your posts appear to me you are begging for someone to put the stamp of approval on your opinons-
when it is apparent no-one cares-
also- my guess- daffyorbugs will learn to vomit every time you post- as i do
October 20th, 2009 at 6:34 pm
ahab: You stated: “creepy strange- why do you give your advice so freely? as if anyone cares- which no-one does-” Yet everyone cares about your advice.
Let’s see what’s weirder, complaining/whining constantly about the economy/earnings, etc., etc., etc.? Or, making money off what is clearly a mini economic boom we’re in the beginning phases of.
What’s weirder, complaining about your leaders in the country and sticking your head in the sand playing fantasy football or actually trying to support the capitalism that has made this country’s standard of living infinitely better than just about anywhere in the world?
Yes and my professors who awarded me a Masters Degree in Business from one of the most prominent universities in the country would laugh in your pock marked, stupid ass junior college face!
October 20th, 2009 at 6:39 pm
HW-
“Yes and my professors who awarded me a Masters Degree in Business from one of the most prominent universities in the country would laugh in your pock marked, stupid ass junior college face”
wow- now that’s some funny shit- LMAO :D
good one HW- maybe you’re not so bad after all- also-
Fantansy Football- what can I say I have a weakness- but at least i don’t watch “Dancing With the Stars”
October 20th, 2009 at 6:41 pm
Long and tight stops sounds like a good strategy to me. It seems bulls aren’t welcome here, which I think is a big mistake.
October 20th, 2009 at 6:47 pm
@ahab — “Dancing” — them would be fightin’ words if my wife saw them! She saw them in person and on ice.
October 20th, 2009 at 6:51 pm
Careful Ahab,
Keep pushing his buttons and pretty soon you’ll be a big poopie head.
October 20th, 2009 at 6:52 pm
bergsten-
to tell you the truth- I don’t even know what it is- my daughter last night dropped the info that her mother (my ex-wife) was watching “Dancing with the Stars”-
doesn’t take a genius i guess to understand what the show is about though-
not up my alley
October 20th, 2009 at 6:54 pm
I humbly direct everyone’s attention to this very articulite posting of “Blog Etiquette” (on a completely different Blog having nothing whatsoever to do with Mr. Market), notably points 3-6:
http://johnkstuff.blogspot.com/2009/10/blog-comment-etiquette.html
It explains some common “commenter” personalities, and if nothing else, the drawings and pictures are great.
October 20th, 2009 at 6:55 pm
“big poopie head”
those be fightin’ words Foghorn- lol
October 20th, 2009 at 6:55 pm
Daffyorbugs: “It seems bulls aren’t welcome here, which I think is a big mistake.”
-You are correct, it is a mistake. So far, it’s been a really big mistake for the Caucus. But as Newsweek put it, “This crowd is downright hostile to the optimists.”
October 20th, 2009 at 6:55 pm
@ahab — I’d say “you’re lucky” but someday, somehow, my wife would trip across this Blog and I’d be skinned alive.
October 20th, 2009 at 6:58 pm
I’d much rather be a member of the failure caucus than a pathological liar.
October 20th, 2009 at 7:03 pm
Well obviously you’re both. Aren’t you going somewhere? Didn’t you have a flight to catch or something?
But back to the topic that BR has proposed: “What are you reading?” How about this?
Oct. 21 (Bloomberg) — BHP Billiton Ltd., the world’s largest mining company, said first-quarter iron ore production rose to a record as steel demand rebounds.
Output of the ore was 30.1 million metric tons in the three months ended Sept. 30, compared with 29.8 million tons a year earlier, the Melbourne-based company said today in a statement. Rio Tinto Group recorded a 12 percent jump in iron ore output to a record 47.5 million tons in the same period.
-Pretty impressive.
October 20th, 2009 at 7:04 pm
Foghorn – that’s how you push his buttons
October 20th, 2009 at 7:04 pm
daffyorbugs-
bulls definitely welcome- BR’a a bull- at least for now- so how can they not be welcome?
it’s the macro picture that has everyone “up in arms” – so -
being a bear does not mean you are in the “failure caucus” as HW opines- it means you want long term problems addressed sooner- not later- when it is too late and even more difficult to address-
all is not well- and saying it is doesn’t make it so
October 20th, 2009 at 7:18 pm
Also reading:
The Comeback American Consumer?
Here’s some good news for the United States and the rest of the world: the American consumer may not be dead after all. Conventional wisdom holds that typical U.S. shoppers are so traumatized by high debt and rising unemployment that their spending will remain subdued for years. That means, the reasoning goes, that the world’s largest economy will be mostly a follower in any global recovery. With consumer spending representing about 70 percent of gross domestic product, lackluster buying will hobble the U.S. expansion and provide little benefit for America’s trading partners.
Don’t believe it, says economist Susan Sterne of Economic Analysis Associates. Consumer buying is already propelling the U.S. recovery and will continue to do so in 2010, she says….”People have a tendency to look backwards,” she says. “They’re not looking at what’s happening now.”
October 20th, 2009 at 7:26 pm
The macro situation in the seventies was horrible. We got through that. Maybe this is the culmination of thirty years worth of credit excess and everything explodes next week. Maybe not. I’m just saying be more flexible and don’t get married to a position or an outlook… marry Karen–she’s non-judgmental, smart, and she lives by the beach.
October 20th, 2009 at 7:31 pm
Anyway the Esquire article was excellent. Reminds me of The Goodfellas scence where Ray Liotta “twenties” his way up to the top table via the kitchen.
http://www.youtube.com/watch?v=sWYe-Ef3u5M
October 20th, 2009 at 7:32 pm
Since the american consumer’s income continues to fall the only way they can increase spending is to stop paying the mortgage on their underwater homes – after reading the banks aren’t going to foreclosure anyway!
October 20th, 2009 at 7:35 pm
Daffyorbugs – Some people prefer to look on the bright side, to see the positive in everything. There are those of us who prefer to prepare for the worst.
Although I would very much like to see us pull ourselves our of this mess, I’m going financially plan for a continued economic decline at some point.
Why is this bad? I find the “you’re leaving money on the table” or “you’re missing out on all these huge gains” attitude to be (to put it bluntly) disgusting. Psychologically, I think there is something wrong with people who want as much as they can possibly get. More money, bigger house, faster car.
Profit at any cost is not what this country was founded on and is, in my opinion, the quickest way to our ruin.
October 20th, 2009 at 7:37 pm
rktbrkr: from the same article about consumers quoted above:
“Stern also says that the adverse effects of heavy debt loads and high joblessness have been exaggerated. Debt burdens have actually declined dramatically, she reports. Monthly interest and principal payments paid by average households peaked at 15.8 percent of disposable income in August of 2007; now they’re only 13.5 percent, which is typical of low points during recession. Americans have paid debts or defaulted on them, and interest rates have dropped. Both have contributed to lower debt burdens. Meanwhile, the recovery in stock prices and, to a lesser extent, real-estate values has stabilized households’ net worth (assets minus liabilities). By her estimates, U.S. household net worth will rise 3.7 percent this year and 6.9 percent next year; by contrast, there was a 17.2 percent drop in 2008. That, too, bolsters confidence.”
October 20th, 2009 at 7:47 pm
If CNN/Money article about continuing falling home prices in the sand states is correct – then all I can say is WOW! They’re projecting 70-80% declines from peak prices. Since they’re talking about average prices in a region then the price declines on individual foreclosure sales with cash purchases might be 90%.
Who is going to continue paying their mortgage when they are that far underwater? Completely irrational.
As strategic defaults, “jingle mail” becomes socially acceptable every big mortgage issuing bank is going to be on the ropes. Those purchases of WaMu,Countrywide,Wachovia/Golden West will become millstones for the big banks. Then it will be crunch time again, another round of bailouts or armageddon. Nothing has been fixed, we only bought time.
October 20th, 2009 at 8:45 pm
“marry Karen–she’s non-judgmental, smart, and she lives by the beach.’
i think she’s married dude- anyway- marriage-
been there- done that-
not a lifestyle i will go back to- also-
in the 70′s the debt binge was just starting- party has to end sometime- my guess- our whole financial system has a negative balance sheet-
of course the Fed can print money- but – how does that solve anything in the end?
October 20th, 2009 at 9:24 pm
@Daffyorbugs,
Bulls aren’t welcome here? No, that’s not correct. I posted lots of bullish comments here very early in the year, don’t remember one single person doing to me what so many here are doing with Harry. Not one.
October 21st, 2009 at 2:14 am
Recent ‘Momentum’ Influences Choices Of Baby Names, Professors Find
http://www.sciencedaily.com/releases/2009/10/091013104336.htm
ScienceDaily (Oct. 14, 2009) — How do people choose a name for their child? Researchers have long noted that the overall popularity of a name exerts a strong influence on people’s preferences—more popular names, such as Robert or Susan, are more frequent and, by their sheer ubiquity, drive more parents to adopt a similar choice.
However, new research by psychologists at New York University and Indiana University, Bloomington suggests that the change in popularity of a name over time increasingly influences naming decisions in the United States. Like momentum traders in the stock market, parents today appear to favor names that have recently risen in popularity relative to names that are on the decline.” . . .