Rock & Roll!
By Barry Ritholtz - November 5th, 2009, 1:46PM
Dow up 181!
Upon closer examination, the market likes the FOMC announcement . . .
In any great organization it is far, far safer to be wrong with the majority than to be right alone. —John Kenneth Galbraith
Macro Notes
US$ rally continuesPeter Boockvar
Asian currencies continue to sell off vs the $ on the heels of the news yesterday that South Korea said they will look into hot money inflows stemming from the $ carry trade and the Bank of Indonesia said they are looking into the foreign buying of bills. This follows the news a few weeks ago that Taiwan was limiting foreign deposit holdings and Brazil was taxing foreign inflow transactions. As I mentioned yesterday, we may have reached a short term pain threshold in terms of $ weakness and foreign countries are fighting back as they certainly won't wait for...
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November 5th, 2009 at 2:00 pm
of course-
the hollowing out of America continues unabated- policies that promote specualtion not investment- savers bent over- BK entities rewarded-
something wrong w/ that picture-
as Hugh Hendry opined- i refuse to be take part- and look to capital preservation above all else-
my guess- next elections- anyone and everyone who leads a crusade for the common man against the banks wins
November 5th, 2009 at 2:13 pm
also-
BR- can you start a thread on the Fannie Sale-Rentback program?
a charade- an all out attempt to keep houses of the market- de facto USG ownership of homes- all for the puported benefit of helping struggling homeowner’s stay in their homes-
ZH has a great thread on the same subjecton where i have left a few comments for those interested
November 5th, 2009 at 2:16 pm
“…the market likes the FOMC announcement . . . ”
1) Initial UI claims: higher YoY: i.e.: more firings now (resulting in higher initial claims) vs. a year ago.
2) Productivity: NF output fell + hrs. worked fell faster. This is totally unsustainable. At some pt. Co’s. cannot cut the bottom line further. Then what?
3) Fannie Mae: “Deed for Lease” – i.e.: rent vs. mark-to-market. Fantasy accounting lives on. The gov’t will do whatever it takes to postphone the inevitable.
4) Stocks “jump”
On the 1st 2: “There are three kinds of lies: lies, damned lies, and statistics.” – Mark Twain
On the 3rd: “During times of universal deceit, telling the truth becomes a revolutionary act.” -George Orwell.
On the 4th: Yeah, those are all “good news” reports. Barry: Please keep tight stops/hedging on my FusionIQ accts.
Today it feels like I just fell “through the looking glass”.
Good luck trading to all.
November 5th, 2009 at 2:22 pm
… getting close to going one way or the other for David Singer’s beware-of-failed-head-and-shoulders chart pattern of a couple of days ago …
http://www.ritholtz.com/blog/2009/11/another-failed-head-shoulder/
I confess to having no idea which way things will go. Eagerly watching, finger on trigger.
November 5th, 2009 at 2:23 pm
How is volume ???
Is this jump any more different than countless jumps we have seen till now ? Pump on low volume, dump on high volume.
November 5th, 2009 at 2:35 pm
Wall Street sure does like it’s free ponies.
November 5th, 2009 at 2:38 pm
Deutsche Bank AG (DB, DBK.XE) said Thursday that the PowerShares DB US Dollar Index Bullish Fund (UUP) had run out of new shares and wouldn’t be able to issue any more until it gets clearance from the Securities and Exchange Commission. The move could lead the $822 million exchange-traded fund, which helps investors bet on the U.S. dollar against a basket of foreign currencies, to trade at a price that is substantially higher than its underlying value. A number of ETFs that follow commodities like oil and natural gas have also had to suspend issuing new shares amid worries speculators are driving up commodity prices. It wasn’t immediately clear why a currency fund would face the same problem.
November 5th, 2009 at 2:42 pm
Still bullish, tight stops. The trend is your friend.
November 5th, 2009 at 2:44 pm
manny-
corporate welfare = Wall Street-
if any one of them consider themselves capitalists or free traders they are a living a lie-
but then again we have BR himself riding the bubble train for what it’s worth-
should not even the dumbest schmoe want the same thing
November 5th, 2009 at 2:46 pm
go get ‘em Daffy- you’re the man-
maybe you and BR should write a book together
November 5th, 2009 at 2:48 pm
@ahab: Wall Street = the new “Welfare Queens (& Kings)”.
November 5th, 2009 at 2:49 pm
I give up…this huge upswings can make one vomit
November 5th, 2009 at 2:51 pm
ahab,
love to.
November 5th, 2009 at 2:51 pm
i’m surprised that BR suprised..
November 5th, 2009 at 2:54 pm
I suspect the US markets liked the latest productivity numbers more than anything else but market signals are always noisy so it could really be anything.
From BLS at http://www.bls.gov/news.release/prod2.nr0.htm
“Nonfarm business sector labor productivity increased at a 9.5 percent annual rate during the third quarter of 2009, the U.S. Bureau of Labor Statistics reported today. This was the largest gain in productivity since the third quarter of 2003, when it rose 9.7 percent.”
9.5% (annualized) is a very big number but it looks like corporations are getting a lot more work from fewer workers and/or lower wages more than anything else. That’s good news for the shorter term, to say nothing of executive bonuses, but for the longer term economic health of most citizens and, by extension, consumption I’d guess not so much.
November 5th, 2009 at 3:13 pm
Translation of the Fed statement:
We will continue to print and give out free money to banks so that they can speculate, horde, and/or pay out bonuses with it, while debasing the savings of and f**king the average American for the forseeable future.
When you translate it like that, is there any wonder why some might like what the Fed’s doing?
HCF
November 5th, 2009 at 3:15 pm
With a day like today, the job “whisper” numbers must be awful!
November 5th, 2009 at 3:17 pm
Incidentally, am I the only noticing the movement on the dollar? UUP seemed to spike midway through the day on very high volume. And recent history suggests that a rising dollar leads to…
HCF
November 5th, 2009 at 3:21 pm
Mannie: Good campaign slogan on welfare. Somenone could get a lot of mileage out of that.
BTW, Sen. Grayson is already running in that vein.
November 5th, 2009 at 3:22 pm
HCF,
See VT’s comment above on same. This kind of screws up UUP’s utility as a dollar proxy.
November 5th, 2009 at 3:25 pm
@10 cc:
Damn I am blind! That explains it =)
HCF
November 5th, 2009 at 3:32 pm
Interesting article:
http://pragcap.com/the-suspicious-dollar-trade-placed-yesterday
November 5th, 2009 at 3:48 pm
just a little sampling of the group mind … what percentage constitutes “tight stops”?
More complex answers (e.g. relating to a function of beta or any other metric) are welcomed.
November 5th, 2009 at 3:59 pm
@constantnormal:
For me, a “tight” stop would be ~5% or so. I typically have a 7-8% stop on stocks/ETFs, though I met let it loosen to 10-12% on a leveraged ETF. Of course, my timeframe is on the order of weeks to months, so I am somewhere between trader and investor…
HCF
November 5th, 2009 at 3:59 pm
More art than science. Depends on the instrument. I’m comfortable with anywhere from 3 to 10 percent.
Definitely not complex for me.
November 5th, 2009 at 4:26 pm
HCF,
I have followed UUP and options on it very closely for months now. I commented on AT’s blog today that you you can’t say for sure what is going on in that thing. Calls on the UUP are cheap, everyone and their mother is long gold right now. It could only be a hedge, I saw similar call buying spike back in August and to a lesser extent in September. The calls that were getting bought yesterday were in 10k increments or higher for the most part, it’s not Joe Blow buying, that was big money coming in. I wonder if PTJ, or an Einhorn or Paulsen were in there protecting all that gold they recently bought.
All that said, I’m very bullish the dollar right now.
November 5th, 2009 at 4:30 pm
Close your bold font tag! It’s enveloped the entire blog!
November 5th, 2009 at 5:07 pm
We made money again today here at 85 Broad, and we’ll make money tomorrow. That’s all that matters….
November 5th, 2009 at 6:35 pm
November 5th, 2009 at 6:37 pm
hmmm. still not above 1078
November 5th, 2009 at 8:34 pm
@ben22:
I agree with you on UUP. I initiated a call position in it about two weeks ago explicitly to hedge my long positions in commodities and metals ETFs. So far, so good. If it doesn’t work, I lose $0.10. If it does, it actually makes me money. Not too bad…
HCF
November 6th, 2009 at 8:05 am
@HCF,
Yeah, I think there are several strategies you could implement right now trading options on the UUP. I’m working mainly with the March 2010 contracts right now, have only started looking at the Junes.