REBear, I don't know what it is about round numbers - but people are definitely attracted to them including me (there is probably some insightful psych papers that explain why!).
What I find interesting is the change in investor sentiment - all of sudden investors realize there will be no 2nd half economic recovery and there are many more write downs to come.
Not sure we can call it an official bear yet--Sebastian is still in the black. Back on March 23 he announced he was planning on going long the following day on ABAX, ARD, BMRN, BRKR, EGLE, and INCY. I created a Yahoo tracking portfolio for those stocks (assumed buying an equal $ amount of each at the opening price on the 24th). As of right now that portfolio is still up 5.5%. Purists might note however that ARD is an oil company and it's up almost 50% since March, so there's a bit of a commodities play in this portfolio. Excluding ARD the portfolio is down about 3%.
CR, the Dow may be much lower than what it was earlier in the year, but the value of a lot of sector index funds is still higher than the values earlier in the year (some of them considerably higher .... probably due to the oil).
The CNBC reporters just repeated a "blame the media and Presidential candidates for the negative consumer sediment. I guess that will change everyones outlook.
Sebastian long on INCY? I had the pleasure of working there a few years back. Now I know for sure that he's a contrarian indicator. He's not just drinking kool-aid, he's snorting the powdered form.
Hard to believe stocks haven't fallen more than yesterday--who would want to be long over this weekend? I think the PPT is working to stabilize things--but "it's hard work."
FRANKFURT -(Dow Jones)- Siemens AG (NYSE:SI) (SI) plans to cut a total of 17,200 jobs worldwide as part of a wide-ranging drive to streamline its cost structure, with the company's sector units accounting for 13,600 job cuts, a person familiar with the matter told Dow Jones Newswires Friday.
Siemens' Industry sector will account for 6,800 job cuts, and 4,000 jobs are to be cut in its Energy sector, the person said. The company's Healthcare sector faces 2,800 job cuts.
Around 1,800 jobs each will be cut in regional business operations and cross- sector functions, the person said.
The scary thing is the Used up of A is not in control of its own destiny anymore. Back in the day if we lowered rates everybody else did. Now our currency is weak due to horrible deficits and nobody wants to play the GAME. Also any of the OPEC countries can shut off the oil and control our economies on a whim. Funny they used to say that as GM goes so goes the country, eerily that is still true.
The average bear market since WWII has seen the Dow decline 29.7% over 14 months. That would put the Dow around 10,000 by the end of the year. Since stocks typically start to rally about 6 months ahead of an economic bottom, that points to a Q2/09 bottom, which kind of makes sense to me, given what we know is coming down the pipe re. foreclosures, bank writedowns and consumer retrenchment.
I really, truly am surprised that the I-bankers/schmucks/PPT are letting the Dow flirt with 20% down. On a Friday, making for a gloomy weekend? One business day before quarter end?
Watching Paul Krugman do sommersaults trying to vanquish Michael Masters and his testimony the other day (evil speculators are responsible for half the price of oil), this was interesting:
Have you guys seen the ads the FDIC is running in Business Week? Holy S__! Full page ads, Insuring deposits up to $100,000 without anyone losing a penny.
The funniest part is that the $100,000″ is represented by a picture of a circa 1934 $100K gold certificate, implying that the FDIC guarantee is as good as gold.
I noticed the gold certificate says that it is payable on demand in gold, backed by gold in the Treasury. Ah, the good ole days.
I showed it to the wife this morning. See honey, this is why we have the gold, the canned goods, the water, the supplies, the garden, the firepower, etc.
The fact that they feel the need to run those ads does not inspire confidence.
Many rating agencies use The Great Depression as a metric or range for worst case correlations, but these types of models and theories that are "official" fail to recognize the vast differences between correlated time periods which have no relational relativity.
The economics of The Great Depression era and things like GDP have zero correlation value and I'm not trying to knock the thought of a Bear Market (by CR) I'm just saying that the derivatives and synthetic-based financial system of today with globalized collusion -- has no relationship to the quaint and somewhat honest good ol days of 1929. In 1929 and probably up until 1969, there was perhaps 50 years of mortgages that were simple long term contracts that were linked to 30 year streams of somewhat predictable cash flow between homeowners and localized banks. The new improved and de-regulated banking era that has resulted in the Subprime Tsunami the most corrupt period of economic engineering chicanery that has ever been witnessed in the history of mankind.
The Bush Ownership Society is pure evil and the amount of destruction that is unfolding has years to go and IMHO, we have seen the tip of the iceberg from afar at night with low power binoculars. Every possible economic and financial model is void of reality and correlative relationships -- and this is what I think one would expect in a time of The Next Great Depression -- this is chaos and there are no familiar landmarks or lifeboats that will be havens of safety. This is a combination of a Depression, liquidity trap, stagflation and global systemic crash that will result in epic starvation and massive death and IMHO, we can point a collective finger at Bush, for being a retarded asshole that should have been impeached 7 years ago! Fuck him and all the Congress and Senate bastards and I hope they rot in hell ASAP!
"I think the PPT is working to stabilize things--but "it's hard work."
cant you visualize Ben and Hank and Tim in the basement of the NY Fed Reserve,,,
their shirt sleeves rolled up, sweet dripping down their foreheads...
as the crank the arm of an old printing press turning out a gazzillion hundred dollar bills
then the rest of the FOMC with wheel-barrows hauling the cash to offices on liberty, and Broad and Wall etc and dumping it on the floors of the offices of the primary-Dealers.
Naaaaa
they just pick up the phone and stroke a few keys.
Apart from the gold certificate, which is a silly mistake, I'm not annoyed or scared by the FDIC ads. The FDIC only serves its purpose if it prevents the bank run in the first place.
Reminds me of a trenchant remark by a well-educated man back in the day:
"What good is a doomsday device if no one knows about it? Whvy didn't you tell ze vorld!!?!?!"
It's odd that many of the untrashorts haven't even reached their March highs yet even though the market is lower. Take SDS (double inverse S&P). It's still not at it's March highs.
"we can point a collective finger at Bush, for being a retarded asshole that should have been impeached 7 years ago! Fuck him and all the Congress and Senate bastards and I hope they rot in hell ASAP!
"
Gold prices on Friday surged to one month high level of $927 an ounce in global markets after crude oil skyrocketed to high levels boosting demand for the precious metal as a hedge against inflation.
Gold futures for August delivery gained USD 9.90, or 1.1 per cent, to USD 925 an ounce in the New York Mercantile Exchange, after touching a high of USD 927.80.
Crude-oil futures touched an all-time high of USD 142.26 a barrel on Friday.
Bear markets, on average, only have one bear market rally. Since this bear has already had a nice rally (courtesy of the Fed mind you), a retracement of more than 8% probably indicates that this one is over. Mind you, these are some of the most seriously f*%$#d up capital markets I've ever seen, so all bets on averages are definately caveat emptor.
I agree. All rallies are to be sold hard, but not quite yet.
Even if you, or anyone reading this, doesn't buy the Proshares (or short the 2x long ones), just pull up a chart of DXD. That thing must correct by either going sideways for a week or doing a retracement.
It's not the end of the bear market if the DOW climbs 250-400 points only to give it all back.
The Dow will close in the red, but not low enough to satisfy this group.
The weak shorts will continue to cover and most folks on this board will continue to refer to their covering as the "PPT".
Patience is a virtue, but society wants instant gratification - regardless of whether it is a society of bulls or bears...
The Daily and Weekly Charts show the Dow has violated major support in grand fashion and could be on the verge of a very bearish decline ahead. The Weekly Chart shows the Dow has now violated the neck line of a large head-and-shoulders pattern that has developed over the last 18 months. This pattern actually predicts a target of about at least 10,000, which is quite a ways down.
Morgan Stanley may be on deck for a downgrade. They have been far too quiet lately. Perhaps a bit frightened to open their mouths? When you're sitting on a pile of Alt-A dynamite being quiet is prudent.
George Bush: what he said
George Bush and his wife, Laura, gave a joint interview to Sky's political editor, Adam Boulton. Here are some of the key quotes
Bush on whether the credit crunch is America's fault
I think we have our own problems. I mean, to the extent that America's economy helps drive a lot of the world economy and to the extent that we've slowed down - therefore, you know, part of it has to do with America's slowdown. But high energy prices aren't America's fault. High energy prices are the fault of demand relative to world supply. And we're getting our house back in order.
It's just a confluence of some bad events that came together, and yet our economy is still growing.
Bush on high fuel prices
There's not a magic wand for today. I mean, politicians would love to be able to say to the consumers: "OK, your price of gasoline is dropping precipitously because I said it has to." It took us a while to get in this problem and it's going to take a while to get out of it. Now, in America, what we need to be doing is drilling for more oil and gas.
As a result of the Democratic Congress not letting us drill for oil and gas in America, our consumers are paying a higher price for gasoline.
Again guys when you look at the length of the average bear market you have to take out the past 20 years. The feds intervention created an artificial down side risk.
Anybody out there invested in the equity markets in the 70's. Now that was a bear market. The market went dead, no action nobody made money Now the Fed is out of bullets and has no good options.
Seems like you are happy that the market is tumbling.Strange that you are happy people are losing money?Maybe it's becausew you are short in the market , thus making money.Greed at the expense of lots of people losing money.
I knew there was a reason my bullshot meter went off on Goldman's paired trade on short C, long MS. One half is out in the open, don't think C is gonna pre-announce. Perhaps they were able to unload enough assets to keep the leaky ship another Q.
Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero".
"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."
I was making more of a historical observation than a prediction. That being said, a severe bear market requires seriously overvalued stocks or a serious recession. We have neither at the moment.
The Senate confirmed banker Elizabeth Duke for a seat on the Federal Reserve on Friday, but declined to act on two other long-stalled nominees to the central bank.
"Moody's Investors Service warned on Friday it is likely to cut its credit ratings on Morgan Stanley...saying the U.S. investment bank has made expensive trading mishaps and it's unclear if it can improve its risk management."
Those of us who live in Reality have known this for a long time.
I'll be tuning in to Fantasy Island later today to see what Tattoo has to say. For those of you who are unfamiliar Fantasy Island is Kudlow and Company and Kudlow is... Tattoo or Mr. Rourke?
Who would want to be long financials going into this weekend? I can't believe the market isn't down far more... Headlines over the weekend are going to be decisively negative.
Seems like you are happy that the market is tumbling.Strange that you are happy people are losing money?Maybe it's becausew you are short in the market , thus making money.Greed at the expense of lots of people losing money.
MooseH | 06.27.08 - 3:07 pm
Rules of the Road, MooseH.
Read the blog for a few months or six, then, make a comment.
(An exception may be made for son-of-curtis who appears to have a very credible handle on reality.)
Now, if the Solar Bears would just adapt and grow black coats, they could stay warm and happy like thems of us what's shorting dollars like there's no tomorrow, 'cause there isn't.
Seems like you are happy that the market is tumbling.Strange that you are happy people are losing money?Maybe it's becausew you are short in the market , thus making money.Greed at the expense of lots of people losing money.
Welcome to the stock market. Everytime you win, somebody else loses.
Maybe FFDIC could explain the State loan to deposit ratio, it seems like 90% is the magic number(except for a couple of outliers like NoDak @ 170%) for bubble/non bubble dividing line.
Funny how the media loves to obsess about arbitrary metrics like "20% drop, or no bear market". Or, how it accepts heavily manipulated BLS & NBER numbers on unemployment & GDP to determine whether or not we're in an "official" recession. As though a hundredth of a percent on a politically gamed statistic really means anything.
Funny how the media loves to obsess about arbitrary metrics like "20% drop, or no bear market".
Doesn't bother me in the least, HARM. If the market drops 19.9% and the media is quiet, then all the 401k bunnies stay asleep. When 20% happens, the bunnies overreact, scatter and hop about like mad.
Sebastian went to the beach! Give him some credit, he checked in yesterday, took his beating, and said where he would be. A wise decision - perhaps he was trying to restrain himself from the multiple buy signals that are going off in his home office ....
You cannot make comparisons to other bear markets because this one is going to be a grizzly bear market like the USA has never seen before.
Why ?
The USA needs $2B a day from China et al or could not keep its economy stable or spare the dollar from collapse.
The USA already has close to $10 Trillion in national debt
The USA has a trade deficit of $800B/yr
Americans are already overwhelmed by personal debt racking up a household debt-to-income ratio of 1.42 ( for total of $13.8 trillion in debt including mortgages ) that already matches the countrys $14 trillion G.D.P.
Like I said this is going to be grizzly bear market like the US have never seen before and ugly for many many Americans that still are looking at it through rose colored glasses.
We'll see how it closes. I don't use oscillators; mainly benchmarking volume off swing points, Fibonacci projections, candlestick charting.
Oil particularly looks like a daily reversal (perhaps more?). Gapping up, then climbing 2-2.5% higher only to give it all up and then close under previous day's high.
Plus, as I've mentioned a number of times (after I sold my DXD), some of these indexes are going parabolic to the down side. They have to "do something" other than keep going down - unless they crash.
Oil particularly looks like a daily reversal (perhaps more?). Gapping up, then climbing 2-2.5% higher only to give it all up and then close under previous day's high.
That is interesting but the market still deteriorated even after the oil sell off.
Appreciate your input.
..."Roll Return" is the difference between the current spot (what you pay if you "consume" the commodity today) and the futures contract price. It is also the return a futures contract holder would earn if the spot price stays constant until the expiration of the futures contract - in which case the price of the futures contract would gradually converge to the spot price. Assuming the spot price is held constant, a futures contract holder will earn a positive roll return if the price of the futures contract is lower than the spot price (this behavior is termed "backwardization"). Conversely, a futures contract holder will experience a negative roll return if the price of the futures contract is higher than the spot price and is converging to it over time (this is termed "contango")"...
It seems that a speculator long an oil contract would have strong incentive to roll over to the next period contract should the current contract get bid up too close to spot price. Then you get momentum bid because the contract price is moving up. Of course spot price gets bid up because the contract is moving up. A positive feedback loop...
Naked Capitalism points to a possible solution: "Exchanges could impost a "liquidation only" requirement, which was last used to break the Hunt brothers' attempted corner of the silver market in the early 1980s "...
Thanks, I think it may be an ADD-thing, but not to worry, I'm busy with abstract painting and getting the garden ready for The next Great Depression.
CR ( & The Ever-Missing Tanta) are nice to allow me opportunities to contribute here, versus running me out of their town. I have pissed off Tanta a few times, but then she beat me into a pulp, and now I'm always on high alert!
Organic George: IMO it's been a trading market since 1999. Buy and hold hasn't worked since then; that doesn't mean it hasn't been possible to do very well. Focus on stocks in special situations (long or short). It's been berry berry goo to me since 1999.
I agree I don't see a reversal but the fact that volume didn't come in after it went down may be significant although it is Friday and it had a helluva run this week.
Connecticut Democrat Christopher Dodd and Alabama Republican Richard Shelby sent a letter to the Federal Reserve, the Treasury Department and the Securities and Exchange Commission inquiring about a Fed-SEC agreement being developed to share information on investment banks.
Dodd chairs the banking committee and Shelby is its top Republican member.
"We ask that no action regarding implementation of the (agreement) be taken before we can determine that it is in the best interests of our nation's economy and the well being of its citizens," the letter said.
My brother used to work there. The division he worked for was one of the most backwards, sluggish, and behind the times group of "geniuses" one could find. When he was tasked to do a study to see if doing a study for a possible project someday, he started looking for another job. He's happily employed elsewhere now, thankfully.
The Senate is going to vote on the Dodd-Countrywide $300 billion bailout on July 7th.
It's not even a politically smart bailout because FHA will collapse while these guys are still in office. In 2009, they'll be funding the FHA with a direct appropriation for the first time in its 74 year history, and that's whether Dodd-Frank passes or not.
At least FDR and LBJ had the sense to create new government programs that lasted more than a year or two.
jg writes: I really, truly am surprised that the I-bankers/schmucks/PPT are letting the Dow flirt with 20% down. On a Friday, making for a gloomy weekend?
I have never really understood this whole PPT thing. Maybe someone can clarify for me - do they hold their intersocial parties with the Knights Templar or the Illuminati?
Because I got invited to one and I don't know whether to wear my tinfoil hat or my black cloak. Sorry, I know - I need to brush up on my "shadowy organization protocol."
Thanks, I think it may be an ADD-thing, but not to worry, I'm busy with abstract painting and getting the garden ready for The next Great Depression.
CR ( & The Ever-Missing Tanta) are nice to allow me opportunities to contribute here, versus running me out of their town. I have pissed off Tanta a few times, but then she beat me into a pulp, and eow I'm always on high alert!
Y2KX | 06.27.08 - 3:46 pm Re: latest incarnation
Thanks, I think it may be an ADD-thing, but not to worry, I'm busy with abstract painting and getting the garden ready for The next Great Depression.
CR ( & The Ever-Missing Tanta) are nice to allow me opportunities to contribute here, versus running me out of their town. I have pissed off Tanta a few times, but then she beat me into a pulp, and now I'm always on high alert!
Y2KX | 06.27.08 - 3:46 pm
I'm conflicted about assuming nom-de-bloggage-du-jours ever since being upbraded by Cliff-whatever-his-handle-is. (If there's an "anonymous" out there who needs a catchy nom, let me know. I have millions of them.)
I mostly read without adding comment, because my insights are dirivative, for the most part. This isn't the first blog I've frequented ad nausium.
That said, I'm dolefully convinced, (without s-o-c's eloquence,) that we are well and truly Eeff Euuu Cee Keed
What I promulgated on another blog, in another time, was that (ok, I digress - I didn't put in economic terms), we have relatively little effect on our collective outcome. Were we to have a volition of outcome, it would manifest itself in generational terms in the almost inconsequential of local terms.
AOTC - operationalize that for me? How does the reverse of BWII work given our trillion dollar a year twin deficits and low savings rate?
Hint: I've thought that one through a long time ago - to weaken the euro vs. $$$ it means Europe would (in effect) have to be the MBS bag holder - not our Fed, FDIC & US taxpayer. There is no other way to 'support the dollar' given our fiscal failings (gov't debt & negative personal savings rate) EXCEPT for somebody else to pick up our debts.
But maybe you see a different way out. Love to hear it...
Re: Bosch: [lost my train of thought. will/ would-on-request resume my deliberations on request.]
Let it out man, let it drop and don't fight nature. My newest philosophy has slipped my mind, but it had to do with letting go...oh yah, that was it, i.e, just let it go!
There is no other way to 'support the dollar' given our fiscal failings (gov't debt & negative personal savings rate) EXCEPT for somebody else to pick up our debts.
How about this really unpopular partial solution?
Let the SSA pick up the debt. Have the US treasury "default" on its $4 Trillion debt to the SSA. Not that anyone under 40 thinks it's going to be around anyways.
As a result of the Democratic Congress not letting us drill for oil and gas in America, our consumers are paying a higher price for gasoline.
Kona Gold | 06.27.08 - 3:02 pm | #
kona gold you are wrong on three counts
first: pres bush, the first, signed the executive order restricting off shore drilling...last time i checked he too was a repub
second son Jeb, brother of the current prince...i mean president...forbid drilling off floridas coast
number three, yes it is true most dems are against off shore drilling
my brother, father and friends are petro geologist and oil traders. and nobody who knows shit about oil says we can drill our way out of this energy crisis.
Kona Gold...be partisan if you want to but get the facts straight
ps north slope oil would supply the USA for a year or two based upon our daily consumption verses proven reserves
Furthermore, there is no rule or law that requires the majors to sell north slope oil only in the US in fact much alaskan oil goes to Nihon.
Am watching the headlines closely, the stakes have been raised. Betting Trichet will do his duty but we'll see.
BB | 06.27.08 - 4:58 pm | #
I'd love to see Trichet raise rates - companies I work with have targeted Europe big time - we had conference calls this week regarding this - they are one of a growing number of firms doing to Europe what Chinese & Japanese firms did to us. Of course China & Japan ARE ALSO doing it to Europe too now that we are sick.
Imagine a 'Mechantilist Sandwich'... the world is gradually taking bigger & bigger bites out of middle.
It will take 20 years to hollow out Europe - but industrial regions like the Ruhr will look like Detroit if Europe doesn't weaken their currency & soon.
But that is their choice - not mine.
Then all they'll have will be I Bankers until they don't.
Now if the MSM would only report the other half - that it won't get better until we get our deficits in order and that means paying for shit public & private (or buying WAY less).
Spared big subprime losses, Japanese banks are looking abroad
ALMOST two decades ago seven of the worlds top-ten banks were Japanese and their cheap loans supported Japanese investment, from the Rockefeller Centre in Manhattan to Californias Pebble Beach golf course. After Japans property and stockmarket bubbles burst, the banks, buckling under bad debts, retreated home. More recently, the caution born of that fall from grace spared them the huge subprime-loan losses that have hobbled their American and European peers. Now their relative financial health has pushed Japanese banks tentatively abroad again.
dryfly- If the ECB cuts, the Euro will fall. The Euro is overvalued-compare the price of a Big Mac in New York vs Paris. It's not like the Eurozone is in fantastic shape; Germany is doing OK, France so-so, Spain and the other southern countries are hurtin'. And many of the European banks are already bagholders (UBS, Barclay's).
Currencies don't necessarily go down because of trade/budget deficits-they should, but they don't. Throughout the 80s, the US ran big budget and trade deficits, yet the $ strengthened. And look at Canada; all through the 90s they had budget and trade surpluses and the loonie fell; my family in Canada called it the northern peso. It only strengthened when oil went up in the last 5 years.
'Fraid the 'second part' of that memo breaks the first rule of finger-pointing.
And if we really wanted to know how much oil prices are swayed by speculation, we'd impose 'liquidation only' on the futures market. Think Hunt brothers. That's Dan Dicker's idea, not mine, but I like it.
Additional offshore drilling (we've already granted 80% share), would only give another 1 Mbrl/day (best case estimate, btw).
Pop the CAFE standards up by 25%, and you save twice that.
Why is it that the people who want one, are against the other? If you're so desperate for oil you'd poison your tourism and fishing industries, why not advocate for saving some gas, too?
BTW - drilling and CAFE would kick in about the same time, 15 years out... which is really too darn late anyway.
Peddle your partisan junk elsewhere, I'm not buying it here.
Gee, ya think the S&P might need some more price declines to get that PE down to a "normal" ratio of about 16-17??? It sure won't get there via earnings growth in this climate!
And if we really wanted to know how much oil prices are swayed by speculation, we'd impose 'liquidation only' on the futures market. Think Hunt brothers. That's Dan Dicker's idea, not mine, but I like it.
burnside | 06.27.08 - 5:47 pm | #
Me too - and less margin. Make the suckas put more of their own skin in the game. Skin makes people smarter.
It will take 20 years to hollow out Europe - but industrial regions like the Ruhr will look like Detroit if Europe doesn't weaken their currency & soon.
The Ruhr already looks like that.
The rest of Germany(even the ost) is bopping along (China decided to start automating processes now that Jao Sixpack wanted better than coolie wages)
The ECB isn't the problem, there rate is where it needs to be. The US, Japan and China CBs are at fault
"Liquidation-only" trading destroys the futures market. The oil market will then move to another location where real hedging and speculation can actually be performed.
I am quite certain that the UK, Qatar and even Iran would love such a development. I am not so sure though that the U.S. would appreciate the consequences of such a huge market moving offshore.
"Liquidation-only" trading destroys the futures market. The oil market will then move to another location where real hedging and speculation can actually be performed.
Anonymous poster who asked about the "PPT," I think Detroit Dan's link to the Wikipedia entry on the Working Group should answer your question.
Many events are attributed to the long reach of the mysterious PPT at times here, like some all-powerful Trilateral Commission of the financial system.
And, you guys talking about drilling in Alaska: ANWR is not really on the North Slope; it is substantially southeast of it, well east of Prudhoe Bay. We presently drill for oil on the North Slope; that's what's in the Trans Alaskan Pipeline today.
Moreover, if you think ANWR oil and resolve a contemporary crisis, consider how quickly we could drill for oil and build a system off TAPS to gather it. It took something like ten years AFTER the discovery of oil on the North Slope before we pumped any of it south on TAPS. And we started drilling almost immediately after the War.
ANWR is just symbolic politics. There's no there there.
Yearning to learn...
I was nervous yesterday, more so today, then i read your thought that a rally could be due. Yes, because...
Looking at dotcom plus current bear markets, avg intra bear market (IBM) decline is 43 days, today is only 38 days past may 19 IBM high, but same length as the last one that ended mar 10.
IBM decline usually ends with 8-10 sharply lower days, with at least one day down 2.5%+, and with bottom at or below previous bottom (mar 10).
Market turns often occur at or just after fed meetings.
SKF at 52-week high.
And, not least, starting to see bear market blog entries worrying about a rally...
Could go lower... but pulled plug. Sold skf, srs, twm, closed shorts leh, wa, wm, ruth. Whenever IBM bottom occurs, initially violent rally likely will last at least 9 days, avg 31, recent longest (end may 19) 69. Next one might be on the brief side.
Bought a little itb, nicely volatile.
IMO final bottom end 2009, trailing P/E's at or under 10, dow at 5-7k. Now ending third inning...
Starting to worry a little about oil falling in aug, as usual, pumping the market, vs. sept. iran attack and hurricanes.
Good luck.
Oh, one more dramatic unintended consequence, it would hasten the demise of the dollar as the reserve currency as oil priced in dollars is one of the last cornerstones.
Just look what pressure the U.S. is applying in the ME to make sure that the Gulf States continue to peg their currency to the dollar.
Currencies don't necessarily go down because of trade/budget deficits-they should, but they don't. Throughout the 80s, the US ran big budget and trade deficits, yet the $ strengthened. - AOTC
That wasn't an accident - it wasn't market forces - check out what was happening with the Japanese surpluses & the yen at the same time. That was the prototype all the Asian Tigers & BRICs have followed ever since...
As for the Loonie - I knew companies putting plants in Canada back in the 90s SPECIFICALLY due to the weak CAN$... those plants are closing now for the opposite reason. Believe me there is a link.
Deficits absolutely matter - take the issue up with Setser on his blog - provide a link so I can ease drop okay? I'll pop the popcorn - he'll fry your fish.
These things have huge lags & aren't immediately linear - but I saw research YEARS ago showing correlation between exchange ratios & deficits lagged and it was very high. Yen dollar was one of the key examples - pre and post Plaza.
The lag is critical though - contracts take to time to wok through & capital is not that liquid. I've been involved with those... sometimes 3-4 years are required to re-source.
I fully agree the euro is too strong - I doubt just cutting rate on their part will be enough to move the USD:EUR point a lot. They will have to intervene like Asian - buy our crap and like it if they want the euro to fall much against the dollar. I don't see them doing it.
Then what does Tricky gain from the meeting?
peAkcredit | 06.27.08 - 6:05 pm | #
I think its pure photo-op. Both sides have to look like they are on the job. In reality they are constrained by their own agendas.
My guess is Paulsen WOULD LOVE to have the ECB buy (or back EU banks buying) some of our troubled financial assets - it would flood euros outside Europe (weaken euro vs. $$$) and take some of the pressure off US I Banks.
Paulsen wouldn't mind seeing the $$$ strengthen due to that kind of 'cooperation'.
I don't see what's in it for Trichet - do you?
I mean what else can Paulsen offer him that won't submarine the US economy worse (in the short run)? Nothing. So they do lunch, smile & take pictures.
I grant your points regarding COMEX and the silver market.
I brought this up because liquidation only is on the table now, along with less draconian measures. Your point, if I have it right, is that this would be difficult to implement today and would have severe effects on commodities futures.
True as all that is, I understand it's under consideration.
The ECB isn't the problem, there rate is where it needs to be. The US, Japan and China CBs are at fault
Alec | 06.27.08 - 5:59 pm | #
US-China-Japan are playing chicken & Europe is caught in the middle. That thing is coming to a head - I can see the dollar getting a lot weaker unless the Asians (or somebody) steps up and buys our crap financials pretty much forever. When they stop - we are right back where we are now except with bigger debts & larger imbalances.
How long can it go on? As long as they keep buying our crap financials.
True as all that is, I understand it's under consideration.
burnside | 06.27.08 - 6:26 pm | #
As is the industry threat to move it all offshore. Sort of like mfgrs looking for the best place to pollute - you can either breathe their crap or let them go somewhere else.
Realistically, wouldn't the long list of economies adversely affected by inflated energy prices be inclined to cooperate?
Hard to say, I know. But it seems to me this pits speculative investors against the working world with a kind of startling clarity.
But I'm beginning to bore.
burnside | 06.27.08 - 6:38 pm | #
They all cooperate as long as their base agenda is served. That has broken down.
The problem is US over-consumption supported by manipulated currency exchange rates (Asian merchantilists). Europe really is caught in the middle.
Asia can't develop & consume to produce for use and we consume more on top of that (while borrowing a bunch to do it) at the same time without something giving. Oil & food & metals prices is where the 'give' is.
There is only one way to reverse - less consumption somewhere most logically in the US - meaning everybody is going to hurt some but SOMEBODY is going to hurt A LOT - major job losses & recession. I see no way they agree to spread the pain evenly even though that might seem 'fair' and even wise.
Last time we did this was 'Plaza' where we got relief and Japan got pain. Over a decade of it. No one is stepping up to volunteer for that duty this time. They saw what happened last time.
dryfly-I think there will be a move to strengthen the $ against the Euro and it will work, at least for some time. Europe has severe economic and political conflicts-look at the failure to ratify the Lisbon treaty. There will likely be a quid pro quo, perhaps a move to reduce budget deficits.
It will happen by the election; the Euro folks will be so happy to see W leave they will want to make a warm welcome for Obama.
Just my opinion, but I am short the Euro for the last few months. It hasn't gone anywhere in that time, but I see a down move much more likely than an up move.
Anyway, that's enough on "the market" for me. As you may know I prefer to focus on the limited universe of those stocks my feeble brain can pretend to understand and leave "the market" to its unfathomable mysteries.
dryfly-I think there will be a move to strengthen the $ against the Euro and it will work, at least for some time. Europe has severe economic and political conflicts-look at the failure to ratify the Lisbon treaty. There will likely be a quid pro quo, perhaps a move to reduce budget deficits.
Their move will fail UNLESS somebody in Euro Zone (Trichet, that would be you) buys or backstops the buying of a whole lot of US assets or additional goods to push the dollar/euro exchange back down.
If they buy more goods then that means more plant closings & lay offs in Europe & even more political & economic pressure there.
That is exactly how the Asians have been pushing down their currency vs. $$$. No reason Europeans can't buy into a little of that action too.
And Paulsen knows where that stuff can be found - he made some of it - but I doubt Europeans will want to buy it.
I think the euro will fall - but not until the economy tanks in Europe. If they start running a serious CAD across the whole of Euro Zone then it will happen - job losses will do it to them. They are even more sensitive to exports than we are.
ECB knows what they need to do to strengthen the $$$ - buy more US MBS & ABS & Agency & Treasury - I doubt they do it. JMHO.
Failure of the Lisbon treaty in Eire is a popcorn fart, Eurozone economies will be chugging along fine for at least another year as central/eastern expansion continues, the velocity of money increases post-Schengen and Russia 's consumers spend til they drop. This is a macro trend.
Spain's housing troubles are directly related to the UK market and will be regional only(imagine the US housing crisis limited to Miami - W. Palm Beach.
Dryfly is right that in the long term Eurozone needs to buy USD paper, but also manufacturers would need to invest here (instead of c&eastern Europe) for interest rate arbitrage to alter the euro, but in the interim the only way the dollar strengthens is interest rate differentials changing for the better and it's note gonna happen on either end at this point.
BB should have raised 25bp just to keep the level of accommodation the same, 50 if he really wanted to tighten. All talk no action. They jawboned it down to $1.54, but in 3 days they gave it all up. If BB matched the ECB the USD would only get to 1.25 at best.
Trichet will not cut, FULL STOP.
Eurozone med countries still need labor reform, keeping therates up to inflict a little pain is the only way to press on this matter.
CB intervention will keep EUR/USD from breaking 1.60 for now, but if the ECB hikes, it'll blow through that wall like wet toilet paper.
No, I think the Euro is so overvalued that a 25 bp cut would be sufficient to drop it back to 1.45 or so. That will make European manufacturers and the Spanish much happier. What's to lose? Inflation? IMO, that would drop oil $15-20/bbl, so any inflationary effects would be negated. I'm not sure Trichet will do it, but I think he should.
Some how, I feel that a rally is coming. It will depend on Monday and Tuesday's volume but somehow, I see a short but violent rally coming up. Too many people are talking about going short. Even CNBC has an article about going short this market. I suspect that oil will drop next week and you will see a rally.
Monday will be a down day.
Tuesday won't be.
This is a sucker's game for those trolling for shorts.
Monday close will have the slaughter-sheep gleaming they did the right thing; they went short and exited their longs. Tuesday will be surprise to them.
This is the right shoulder waterfall that this ignorant has been discussing at Mish's site for the past 2 weeks.
DJIA 11000 probably won't be reached, this time, but next time, it's a non-number.
The rally will clean the clocks of the shorts who entered today and Monday. Then it will be back to the work at hand.
In spite of CR's belief this is a recession, moderate at that, this has been a full scale Depression since the October 2007 high (which, 4 days after, this immodest called, also at Mish's website.)
This is the Depression move I've waited a lifetime to witness. For those who have studied the worst markets, and how they move, this is the more classic than any prior, from 1929 to the present.
As a cheat sheet insight, the odds of seeing 9500 are around 100%. And 6000 has a probability of 50% at this time. That's what's in store. So, get ready for your moderate recession, and hold onto that rental and underwater ditty because they'll help you sink faster, so you can get to the bottom and start all over again sooner.
RE wrote:
"Liquidation-only" trading destroys the futures market. The oil market will then move to another location where real hedging and speculation can actually be performed....
nonsense
there isn't anything we the people..ie our government cant tax , tariff, or regulate as our borders are crossed...
REs arguments about regulation of the oil futures market sound similar to those of Enron regarding the California energy market. Of course, we know how that ended...
Timber!!!!!!!!!!!!!!!!!!!1
Bear market yes, but what I'm really wondering is if this it "it" or not.
Seems like it is.
246 bears online.
I guess that means we were right.
Glad we cleared that up.
Picnic time
Stagflation. Get used to the term.
For now it is getting staggier and flatier. GE under $27? I need a drink.
But is it a brown bear or a black bear? Or perhaps polar?
REBear, I don't know what it is about round numbers - but people are definitely attracted to them including me (there is probably some insightful psych papers that explain why!).
What I find interesting is the change in investor sentiment - all of sudden investors realize there will be no 2nd half economic recovery and there are many more write downs to come.
Hoocoodanode?
Best Wishes.
Good thing I dumped my entire 401k into "guaranteed income" back when the Dow was at 12.7 or so.
As of now, S&P return over the last 10 years is at under 2%, but my nice stable value fund is returning 4% reliably...
Methinks it won't be Polar Bears.
Sebastian, when I called the recent rally a "Bear Market Rally" you scoffed.
I suppose you'll call this a slight correction in your bull market?
all of sudden investors realize there will be no 2nd half economic recovery
Anyone seen this in print yet? ie besides the usual bear blogs.
Not sure we can call it an official bear yet--Sebastian is still in the black. Back on March 23 he announced he was planning on going long the following day on ABAX, ARD, BMRN, BRKR, EGLE, and INCY. I created a Yahoo tracking portfolio for those stocks (assumed buying an equal $ amount of each at the opening price on the 24th). As of right now that portfolio is still up 5.5%. Purists might note however that ARD is an oil company and it's up almost 50% since March, so there's a bit of a commodities play in this portfolio. Excluding ARD the portfolio is down about 3%.
WHAT???
"no 2nd half economic recovery"
It was only just days away! Now you tell us?
btw, there's a time zone where Happy Hour is starting right Now.
Pretend you're all here with me. (Yes, I'm pretending too.)
CR, the Dow may be much lower than what it was earlier in the year, but the value of a lot of sector index funds is still higher than the values earlier in the year (some of them considerably higher .... probably due to the oil).
Regards
In honor of 20%, I will pull a live salmon out of the stream and eat it on the rocks...
that is all...
The CNBC reporters just repeated a "blame the media and Presidential candidates for the negative consumer sediment. I guess that will change everyones outlook.
JP, here is an article in the Chicago Tribune: Recovery hopes dim
The consumer woes have cast doubt on the economy's ability to rebound in the second half of the year, as many on Wall Street had once expected.
I'm sure there is more.
Best Wishes.
Sebastian long on INCY? I had the pleasure of working there a few years back. Now I know for sure that he's a contrarian indicator. He's not just drinking kool-aid, he's snorting the powdered form.
But o-joe told me that the March low was the low for the year?
Anonymous Bosch writes:
Methinks it won't be Polar Bears.
I do hope someday to make it to the north pole to see the bears before my time is up or theirs.
Wish me luck.
We still have 3 days to the 2nd half, I am not giving up yet!!
gold, it's not just for breakfast any more!
up against all majors
Aussi Dollar,Real, British Pound,\tCan Dollar, Yuan , Euro, Rupee, \tYen, Mex Pesos, Rus Ruble, S.Af Rand \t and finally
drum roll
the swiss Franc
point being...the "problem" is larger than just our federal reserve.
others have behaved in globally dysfunctional ways too.
(not that we are thus absolved of our sins)
Hard to believe stocks haven't fallen more than yesterday--who would want to be long over this weekend? I think the PPT is working to stabilize things--but "it's hard work."
so i guess the wright b is wrong
something tells me Seb will be a long time at the beach.
mock turtle writes:
gold, it's not just for breakfast any more!
Will celebrate if it can breach 935-6 and hold 930 for the session.
Till then am cautiously optimistic.
Grats on your holdings here.
What is after bear?
Goat?
Siemens to cut more than 17,000 jobs: reports
Thanks CR.
I look forward to those who called for a back-half recovery issuing corrections. /sarcasm
Sparhawk writes:
Good thing I dumped my entire 401k into "guaranteed income" back when the Dow was at 12.7 or so.
I did the same thing with my 401k last October. +3.5% is much better than -20%.
How long is the refractory period for Seb and O-Joe? Get it up and bounce back, boys!
MarketWatch main head:
"Crude Tsunami Swamps Dow"
Do we judge tsunamis on whether they're crude or polite? Is there a metric for that? A scale?
JP, here's another:
The last hope for a second-half rebound began to fade earlier this month...
from Steven Perlstein's column in today's Wa. Post entitled "This Recession, It's Just Beginning."
Steven Pearlstein - This Recession, It's Just Beginning
C'mon, sellers, crush the PPT! Down 20% with the Dow! And S&P 500!
Ken, that is mean, tracking Seb's stock picks. Remind me not to cross swords with you.
Siemens Plans To Cut 17,200 Jobs Worldwide -Source
FRANKFURT -(Dow Jones)- Siemens AG (NYSE:SI) (SI) plans to cut a total of 17,200 jobs worldwide as part of a wide-ranging drive to streamline its cost structure, with the company's sector units accounting for 13,600 job cuts, a person familiar with the matter told Dow Jones Newswires Friday.
Siemens' Industry sector will account for 6,800 job cuts, and 4,000 jobs are to be cut in its Energy sector, the person said. The company's Healthcare sector faces 2,800 job cuts.
Around 1,800 jobs each will be cut in regional business operations and cross- sector functions, the person said.
The scary thing is the Used up of A is not in control of its own destiny anymore. Back in the day if we lowered rates everybody else did. Now our currency is weak due to horrible deficits and nobody wants to play the GAME. Also any of the OPEC countries can shut off the oil and control our economies on a whim. Funny they used to say that as GM goes so goes the country, eerily that is still true.
Before the Spirits (of Pyrat XO Reserve) carry me off to napland,
"Good Luck, BB!!
Try this while you still can, BB
The average bear market since WWII has seen the Dow decline 29.7% over 14 months. That would put the Dow around 10,000 by the end of the year. Since stocks typically start to rally about 6 months ahead of an economic bottom, that points to a Q2/09 bottom, which kind of makes sense to me, given what we know is coming down the pipe re. foreclosures, bank writedowns and consumer retrenchment.
I really, truly am surprised that the I-bankers/schmucks/PPT are letting the Dow flirt with 20% down. On a Friday, making for a gloomy weekend? One business day before quarter end?
I honestly expected a major pump today.
Maybe we will get it over the next two hours.
Watching Paul Krugman do sommersaults trying to vanquish Michael Masters and his testimony the other day (evil speculators are responsible for half the price of oil), this was interesting:
Fisking Michael Masters -- Seeking Alpha
The only background I can find on a Michael W. Masters is most likely for another MWM: Michael W. Masters - Speaker Biography
Wikipedia has something on a Michael Masters, soccer player turned Wall Street guy.
This is the man of the hour:
Masters Capital Mgmt, LLC: Private Company Information - BusinessWeek
Why is/was his company based in the virgin islands?
There are mentions of a partnership he made with Wilbur Ross to invest in Nanotech back a few years ago, with some principals to be based in VA.
There is a linkedin entry for a Michael Masters, describing someone with Harvard Univ. education, and who works in the "Military" industry.
Curious stuff. Anyone have a detailed cv on this guy?
Have you guys seen the ads the FDIC is running in Business Week? Holy S__! Full page ads, Insuring deposits up to $100,000 without anyone losing a penny.
The funniest part is that the $100,000″ is represented by a picture of a circa 1934 $100K gold certificate, implying that the FDIC guarantee is as good as gold.
I noticed the gold certificate says that it is payable on demand in gold, backed by gold in the Treasury. Ah, the good ole days.
I showed it to the wife this morning. See honey, this is why we have the gold, the canned goods, the water, the supplies, the garden, the firepower, etc.
The fact that they feel the need to run those ads does not inspire confidence.
Re: "official bear market"
Many rating agencies use The Great Depression as a metric or range for worst case correlations, but these types of models and theories that are "official" fail to recognize the vast differences between correlated time periods which have no relational relativity.
The economics of The Great Depression era and things like GDP have zero correlation value and I'm not trying to knock the thought of a Bear Market (by CR) I'm just saying that the derivatives and synthetic-based financial system of today with globalized collusion -- has no relationship to the quaint and somewhat honest good ol days of 1929. In 1929 and probably up until 1969, there was perhaps 50 years of mortgages that were simple long term contracts that were linked to 30 year streams of somewhat predictable cash flow between homeowners and localized banks. The new improved and de-regulated banking era that has resulted in the Subprime Tsunami the most corrupt period of economic engineering chicanery that has ever been witnessed in the history of mankind.
The Bush Ownership Society is pure evil and the amount of destruction that is unfolding has years to go and IMHO, we have seen the tip of the iceberg from afar at night with low power binoculars. Every possible economic and financial model is void of reality and correlative relationships -- and this is what I think one would expect in a time of The Next Great Depression -- this is chaos and there are no familiar landmarks or lifeboats that will be havens of safety. This is a combination of a Depression, liquidity trap, stagflation and global systemic crash that will result in epic starvation and massive death and IMHO, we can point a collective finger at Bush, for being a retarded asshole that should have been impeached 7 years ago! Fuck him and all the Congress and Senate bastards and I hope they rot in hell ASAP!
ok maybe no bear market today
And the bear market ends dow 11361. Sigh of relief.
Mel wrote (and i agree)
"I think the PPT is working to stabilize things--but "it's hard work."
cant you visualize Ben and Hank and Tim in the basement of the NY Fed Reserve,,,
their shirt sleeves rolled up, sweet dripping down their foreheads...
as the crank the arm of an old printing press turning out a gazzillion hundred dollar bills
then the rest of the FOMC with wheel-barrows hauling the cash to offices on liberty, and Broad and Wall etc and dumping it on the floors of the offices of the primary-Dealers.
Naaaaa
they just pick up the phone and stroke a few keys.
yes i know hank isn't part of the open market committee
To follow up from prev. thread, I sold the rest of my 2x inverse ETFs after my computer froze 10 minutes ago.
I think we have a s.t. bottom.
In my best bubblevision voice I proclaim:
The bear market that we never predicted and refuse to acknowledge is now over.
Apart from the gold certificate, which is a silly mistake, I'm not annoyed or scared by the FDIC ads. The FDIC only serves its purpose if it prevents the bank run in the first place.
Reminds me of a trenchant remark by a well-educated man back in the day:
"What good is a doomsday device if no one knows about it? Whvy didn't you tell ze vorld!!?!?!"
-Dr. Strangelove
I'm still the biggest bear in the cave...
But I think we close green.
Note: I'm not long. Don't go long in a bear market.
Anonymouse writes:
To follow up from prev. thread, I sold the rest of my 2x inverse ETFs after my computer froze 10 minutes ago.
A sure is happening, but i still think we shall finish in the negative.
Grats on your profits.
It's odd that many of the untrashorts haven't even reached their March highs yet even though the market is lower. Take SDS (double inverse S&P). It's still not at it's March highs.
Turbo
This decline will not follow the old averages. If you bet the bounce you will lose your ass
BB writes:
Sure = surge, rally.
"we can point a collective finger at Bush, for being a retarded asshole that should have been impeached 7 years ago! Fuck him and all the Congress and Senate bastards and I hope they rot in hell ASAP!
"
MAN, YOU SAID IT WELL.
Gold prices on Friday surged to one month high level of $927 an ounce in global markets after crude oil skyrocketed to high levels boosting demand for the precious metal as a hedge against inflation.
Gold futures for August delivery gained USD 9.90, or 1.1 per cent, to USD 925 an ounce in the New York Mercantile Exchange, after touching a high of USD 927.80.
Crude-oil futures touched an all-time high of USD 142.26 a barrel on Friday.
Anonymous:
Yes am dissapointed gold didn't manage to hold above 930.
Bear markets, on average, only have one bear market rally. Since this bear has already had a nice rally (courtesy of the Fed mind you), a retracement of more than 8% probably indicates that this one is over. Mind you, these are some of the most seriously f*%$#d up capital markets I've ever seen, so all bets on averages are definately caveat emptor.
Turbo, I told you the bear market is over.
oh... here's why Masters Capital Management is based in the V.I.:
'Fair and Reasonable' - March 6, 2006 - The New York Sun
(well it was obvious, but evidence is always welcome)
Seriously, I was considering covering at the end of the day, but if we stay down less than 100 pts I will stay short.
Can anyone explain why trading is currently halted for IMB? Is it because it's cheaper than a piece of bazooka bubble gum?
Ah, there's the pump that we've all come to expect.
C'mon sell pressure!
jg,
Yeah, they're pushing it to make a s.t. bottom, no doubt about that now.
IMB is toast. Suspect the announcement at end of day. Bank failure Friday....
Massive pump going on right now. Time to short into the rally...
*Corn prices again set record, farmers give up replanting
*More thunderstorms, flash flood warnings on Friday
Midwest levee breaks, corn price at new high
| Reuters
I am cornholio!
This is a combination of a Depression, liquidity trap, stagflation and global systemic crash that will result in epic starvation and massive death
Yes, but I'd go a step further. I think it may be the end of what we consider to be modern civilization.
yup...bought sds 5 mins ago!
Gavshire Hathaway,
I agree. All rallies are to be sold hard, but not quite yet.
Even if you, or anyone reading this, doesn't buy the Proshares (or short the 2x long ones), just pull up a chart of DXD. That thing must correct by either going sideways for a week or doing a retracement.
It's not the end of the bear market if the DOW climbs 250-400 points only to give it all back.
squeezed,
People who bought SDS a month ago are now selling to you. Be warned of a serious draw down.
unirealist: Yes, but I'd go a step further. I think it may be the end of what we consider to be modern civilization.
Oh for the love of all that's soft and furry, could you slow down a bit. I can't attitude-adjust fast enough to keep in pace.
WaMu: Day's Range:\t4.76 - 5.22
Fitch may downgrade Wachovia on weak housing market
The Dow will close in the red, but not low enough to satisfy this group.
The weak shorts will continue to cover and most folks on this board will continue to refer to their covering as the "PPT".
Patience is a virtue, but society wants instant gratification - regardless of whether it is a society of bulls or bears...
People who bought SDS a month ago are now selling to you.
Yes but I expect lots of selling in the last few mins. It was just a nibble...bear solidarity.
Grrrrr!
Stop all the crap with polar bears being endangered if the polar ice cap melts.
There's plenty of zoos that need polar bears. And they treat them well, too!
The trick is to get them into the airplane.
o one going to be long the weekend no matter how much PPT pumping. -100 if not 11300.
Anonymous writes:
The Dow will close in the red, but not low enough to satisfy this group.
I'll be satisfied. It's gold that am pissed about.
SignalWatch LIVE!
The Daily and Weekly Charts show the Dow has violated major support in grand fashion and could be on the verge of a very bearish decline ahead. The Weekly Chart shows the Dow has now violated the neck line of a large head-and-shoulders pattern that has developed over the last 18 months. This pattern actually predicts a target of about at least 10,000, which is quite a ways down.
squeezed,
I really have no business saying anything about what others buy or sell. I don't know anyone's specific risk parameters or time frame.
Just wanted to remind everyone that there are bigger fish than you, and whales bigger than them, and they all love to take everyone's money.
Morgan Stanley may be on deck for a downgrade. They have been far too quiet lately. Perhaps a bit frightened to open their mouths? When you're sitting on a pile of Alt-A dynamite being quiet is prudent.
Business, financial, personal finance news - CNNMoney.com
"The average bear market since WWII has seen the Dow decline 29.7% over 14 months. That would put the Dow around 10,000 by the end of the year."
But this is not the average bear, Yogi.
the credit numbers have'nt changed, so there's no reason the equity market numbers should change(for the better)
Hoocoodanode?
I-coodanode, if only I invested in a more expensive crystal ball...
"Just wanted to remind everyone that there are bigger fish than you, and whales bigger than them, and they all love to take everyone's money"
I am like one of the barnacles on the whales just along for the ride, if I was driving we would not be headed this way.(maybe another dumb way)
PPT trying to push close above 11400 (and oil below 142).
rich: There's plenty of zoos that need polar bears. And they treat them well, too!
The trick is to get them into the airplane
Of course, rich. How silly of me to suggest a dire outcome.
trading halted on IndyMAC
currently at 79 cents a share
how is this bank still operational?
George Bush: what he said
George Bush and his wife, Laura, gave a joint interview to Sky's political editor, Adam Boulton. Here are some of the key quotes
George Bush: what he said |
Politics |
guardian.co.uk
Bush on whether the credit crunch is America's fault
I think we have our own problems. I mean, to the extent that America's economy helps drive a lot of the world economy and to the extent that we've slowed down - therefore, you know, part of it has to do with America's slowdown. But high energy prices aren't America's fault. High energy prices are the fault of demand relative to world supply. And we're getting our house back in order.
It's just a confluence of some bad events that came together, and yet our economy is still growing.
Bush on high fuel prices
There's not a magic wand for today. I mean, politicians would love to be able to say to the consumers: "OK, your price of gasoline is dropping precipitously because I said it has to." It took us a while to get in this problem and it's going to take a while to get out of it. Now, in America, what we need to be doing is drilling for more oil and gas.
As a result of the Democratic Congress not letting us drill for oil and gas in America, our consumers are paying a higher price for gasoline.
Again guys when you look at the length of the average bear market you have to take out the past 20 years. The feds intervention created an artificial down side risk.
Anybody out there invested in the equity markets in the 70's. Now that was a bear market. The market went dead, no action nobody made money Now the Fed is out of bullets and has no good options.
It will get very ugly but not end of world ugly
USO giving key reversal signal if this level holds.
Perfect excuse for equities to retrace short term.
For those with a round number fetish, the Dow is now off more than 20% from the peak last October.
Oh CR you sexy blogger you... stop teasing us Mr. Dow!
Seems like you are happy that the market is tumbling.Strange that you are happy people are losing money?Maybe it's becausew you are short in the market , thus making money.Greed at the expense of lots of people losing money.
Go Bears! Ditka 44, Kudlow -2,838!
"Strange that you are happy people are losing money?"
People no.
Bankster and fraudsters...YES!
Re: Morgan Stanley
I knew there was a reason my bullshot meter went off on Goldman's paired trade on short C, long MS. One half is out in the open, don't think C is gonna pre-announce. Perhaps they were able to unload enough assets to keep the leaky ship another Q.
epiphany risk
The sudden realization that you did something terribly, terribly stupid and will cost you a lot of money,
Howard Davies - director of the London School of Economics and Political Science
I live in a mostly gay neighborhood and coming home today - I can't report that it is indeed a bear market.
Barclays warns of a financial storm as Federal Reserve's credibility crumbles
Barclays warns of a financial storm as Federal Reserve's credibility crumbles - Telegraph
Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero".
"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."
mish has a sense of humor
Mish's Global Economic Trend Analysis: Financial Experts Reassure Nervous Investors
I was making more of a historical observation than a prediction. That being said, a severe bear market requires seriously overvalued stocks or a serious recession. We have neither at the moment.
Looks like the PPT is coming to work right on time...
Welcome from mighty Mo!
MooseH - go pound sand. A good portion of us left the table long ago when the food was still edible. It makes no sense to gamble on crumbs.
The Senate confirmed banker Elizabeth Duke for a seat on the Federal Reserve on Friday, but declined to act on two other long-stalled nominees to the central bank.
UPDATE 3-Senate confirms a Fed nominee, two others languish
| Reuters
Yum, yum new meat.
"Moody's Investors Service warned on Friday it is likely to cut its credit ratings on Morgan Stanley...saying the U.S. investment bank has made expensive trading mishaps and it's unclear if it can improve its risk management."
This can't be good.
Steelhead -
Yah, it has nothing to do with people covering shorts. Definately the PPT. Short covering is a myth.
Those of us who live in Reality have known this for a long time.
I'll be tuning in to Fantasy Island later today to see what Tattoo has to say. For those of you who are unfamiliar Fantasy Island is Kudlow and Company and Kudlow is... Tattoo or Mr. Rourke?
MS..NO SELL TICKETS, you here, NONE!
Who would want to be long financials going into this weekend? I can't believe the market isn't down far more... Headlines over the weekend are going to be decisively negative.
MooseH
It is now unpatriotic to sell a market? Please.
Some of us got out and/or shorted the market last year when the shit hit the fan, instead of believing the "experts" who told us not to sell equities.
Meanwhile the money center banks and brokers have desererted the stock market in favor of commodities.
Stocks Flirting With Bear, But There's No PanicYet
Stocks Flirting With Bear, But There's No Panic - Yet - CNBC
Love the headlines, this shows that the best is yet to come. Counting on Trichet to do his duty.
Seems like you are happy that the market is tumbling.Strange that you are happy people are losing money?Maybe it's becausew you are short in the market , thus making money.Greed at the expense of lots of people losing money.
MooseH | 06.27.08 - 3:07 pm
Rules of the Road, MooseH.
Read the blog for a few months or six, then, make a comment.
(An exception may be made for son-of-curtis who appears to have a very credible handle on reality.)
Now, if the Solar Bears would just adapt and grow black coats, they could stay warm and happy like thems of us what's shorting dollars like there's no tomorrow, 'cause there isn't.
I think it is time for Herman's Hermits:
YouTube - Hermans Hermits - The End of The World
Seems like you are happy that the market is tumbling.Strange that you are happy people are losing money?Maybe it's becausew you are short in the market , thus making money.Greed at the expense of lots of people losing money.
Welcome to the stock market. Everytime you win, somebody else loses.
You want win-win? Get a dog.
RBS issues global stock and credit crash alert.
RBS issues global stock and credit crash alert - Telegraph
More people waking up?
That was a really bad song; sorry!
Maybe FFDIC could explain the State loan to deposit ratio, it seems like 90% is the magic number(except for a couple of outliers like NoDak @ 170%) for bubble/non bubble dividing line.
Sebastian checked out for the weekend, or so he wrote in another thread. He knew people would be lusting to rub his nose in something or other.
Funny how the media loves to obsess about arbitrary metrics like "20% drop, or no bear market". Or, how it accepts heavily manipulated BLS & NBER numbers on unemployment & GDP to determine whether or not we're in an "official" recession. As though a hundredth of a percent on a politically gamed statistic really means anything.
JP says: You want win-win? Get a dog.
Dogs are more like a win-win-lose.
Dogs are like buying a boat. So much invested in the animal and then it costs more and more as it gets older until it goes belly up.
one question. I know the PPT is moving the markets.....but how???????? where do they get the $$$$$$$$$ and where does this show up??????????????????
Funny how the media loves to obsess about arbitrary metrics like "20% drop, or no bear market".
Doesn't bother me in the least, HARM. If the market drops 19.9% and the media is quiet, then all the 401k bunnies stay asleep. When 20% happens, the bunnies overreact, scatter and hop about like mad.
Oh sure, it's only a little bunny rabbit.
Sebastian went to the beach! Give him some credit, he checked in yesterday, took his beating, and said where he would be. A wise decision - perhaps he was trying to restrain himself from the multiple buy signals that are going off in his home office ....
I'm seeing daily reversal signals all over: on IWM, SPY, QQQQ, USO, EEM...
But no weekly reversal signals indicating an intermediate bottom has formed.
And the monthly charts? They hardly ever look this ugly.
down we go again...
Anonymouse do you follow oscillators closely. I don't see anything significant right now
Yo! Kona... whatever...
Is this the latest incarnation of ... Scotty at, like, whatever...
If so, glad you're into the good sh+t.
(btw, loved your late-night interminable pastes of fun-stuff-to-read.)
Most banks selling off on heavy volume, so probably drop fairly fast now
Organic George,
I was in the markets from 68-82, the period of the last stagflation. 1974 was a bummer, man. Down 45% peak to trough.
It was purely a trading market for 14 years. If you bought and held the Dow, you lost 67% of your money, inflation adjusted.
All eras are different but this one is eeriely similar. Overlay a chart with 68 over 2000.
Just a thought.
You cannot make comparisons to other bear markets because this one is going to be a grizzly bear market like the USA has never seen before.
Why ?
Like I said this is going to be grizzly bear market like the US have never seen before and ugly for many many Americans that still are looking at it through rose colored glasses.
warp 10,
We'll see how it closes. I don't use oscillators; mainly benchmarking volume off swing points, Fibonacci projections, candlestick charting.
Oil particularly looks like a daily reversal (perhaps more?). Gapping up, then climbing 2-2.5% higher only to give it all up and then close under previous day's high.
Plus, as I've mentioned a number of times (after I sold my DXD), some of these indexes are going parabolic to the down side. They have to "do something" other than keep going down - unless they crash.
Anonymouse writes:
"USO giving key reversal signal if this level holds."
Had USO on my screen all morning but that 17 month parabolic uptrend from Jan. '07 still looks like European gas prices to me.
"Greed at the expense of other people losing money" is a great summary of the last seven years, actually.
Man, if I knew what I was doing, it would be fun to be a trader with this volatility.
But, for my boring short sale of 2X S&P 500, it may be a reasonable day anyway.
Away PPT scum, away!
Ross,
I know only one person that made good money of this period. He bought the 14's of 11 at deep discounts when ever he had cash.
When rates came down he sold the bonds at a premium and went 100% equities when the Dow broke 1000.
He was good.
Oil particularly looks like a daily reversal (perhaps more?). Gapping up, then climbing 2-2.5% higher only to give it all up and then close under previous day's high.
That is interesting but the market still deteriorated even after the oil sell off.
Appreciate your input.
Merrill Lynch CEO John Thain May Sell All or Part of Firm's 49% Stake in BlackRock to Raise Capital (Story to Come)
Next week will be better.
RE: Oil market speculation
The Importance of the "Roll Return" in Commodity Futures Returns
..."Roll Return" is the difference between the current spot (what you pay if you "consume" the commodity today) and the futures contract price. It is also the return a futures contract holder would earn if the spot price stays constant until the expiration of the futures contract - in which case the price of the futures contract would gradually converge to the spot price. Assuming the spot price is held constant, a futures contract holder will earn a positive roll return if the price of the futures contract is lower than the spot price (this behavior is termed "backwardization"). Conversely, a futures contract holder will experience a negative roll return if the price of the futures contract is higher than the spot price and is converging to it over time (this is termed "contango")"...
It seems that a speculator long an oil contract would have strong incentive to roll over to the next period contract should the current contract get bid up too close to spot price. Then you get momentum bid because the contract price is moving up. Of course spot price gets bid up because the contract is moving up. A positive feedback loop...
Naked Capitalism points to a possible solution: "Exchanges could impost a "liquidation only" requirement, which was last used to break the Hunt brothers' attempted corner of the silver market in the early 1980s "...
Man, this will not be good for the holdout money managers and retail investors, if the Dow closes down 100+.
Bosch,
Re: latest incarnation
Thanks, I think it may be an ADD-thing, but not to worry, I'm busy with abstract painting and getting the garden ready for The next Great Depression.
CR ( & The Ever-Missing Tanta) are nice to allow me opportunities to contribute here, versus running me out of their town. I have pissed off Tanta a few times, but then she beat me into a pulp, and now I'm always on high alert!
Organic George: IMO it's been a trading market since 1999. Buy and hold hasn't worked since then; that doesn't mean it hasn't been possible to do very well. Focus on stocks in special situations (long or short). It's been berry berry goo to me since 1999.
Warp 10
There is an important aspect missing fom your tech data on oil.
Low low volume.
If this had happened with high volume I would agree with you. Reversals come with a bang not a wimper
Organic George writes:
Warp 10
There is an important aspect missing fom your tech data on oil.
Actually that was my comment, he just left off the quotes.
And a key reversal signal in my TA work is light volume - the big fish can't push it up (no volume), then they bust it down.
George
I agree I don't see a reversal but the fact that volume didn't come in after it went down may be significant although it is Friday and it had a helluva run this week.
The consumer woes have cast doubt on the economy's ability to rebound in the second half of the year, as many on Wall Street had once expected.
The economy will rebound in the third half of the year.
yep. you heard it here first.
From finance.yahoo.com at 3:41 or so
DJIA \tNaN \tNaN \tNaN%
looks like a floating point exception...
sidd
http://thebouncingbetty.com/
Oh sure, it's only a little bunny rabbit.
JP | 06.27.08 - 3:31 pm | #
Yeah, the little bunny rabbit from Monty Python and the Holy Grail.
Huge volumes being pumped into SKF right before the close. Very impressive!
Expecting another bank failure/bailout this weekend?
Connecticut Democrat Christopher Dodd and Alabama Republican Richard Shelby sent a letter to the Federal Reserve, the Treasury Department and the Securities and Exchange Commission inquiring about a Fed-SEC agreement being developed to share information on investment banks.
Dodd chairs the banking committee and Shelby is its top Republican member.
"We ask that no action regarding implementation of the (agreement) be taken before we can determine that it is in the best interests of our nation's economy and the well being of its citizens," the letter said.
Senior senators warn on Fed-SEC bank info deal
| Reuters
Pull the other one.
Uh oh, the PPT may have to rely upon a 'post-close adjustment' to keep the Dow from falling more than 100.
@jg
Foregone conclusion?
come on
come on
99.99
Don't forget our Second Amendment Celebration Sale. Guns and alcohol spice up any weekend.
If there's any large failures this weekend I think it would be time to dump SKF on a "buy on rumor, sell on news" principle.
ah, season cliffhangers.
93.39? Nice work boys, got it down. Couldn't have sheeple worried about their portfolios over the weekend.
We are not in a bear market. Whew! What a relief!
See! It's not officially a bear market and not officially a recession!
sidd writes:
From finance.yahoo.com at 3:41 or so
DJIA NaN NaN NaN%
Sidd,
One of my apps have been using querying ^DJI, feeding off every 15 seconds, and I didn't get those NaN's. Weird...
awgee writes:
We are not in a bear market. Whew! What a relief!
Wait for next week. Banking on Trichet.
BB & others,
You were right - no green on the major indexes. I'm flat but still a huge bear. Hope to re-enter short when this thing retraces.
From finance.yahoo.com at 3:41 or so
DJIA NaN NaN NaN%
looks like a floating point exception...
sidd
sidd
All it needs to say now is "hey-hey-hey, goodbye!"
Anonymouse writes:
BB & others,
You were right - no green on the major indexes.
Strength of the dollar and Trichet will be driving markets next week. Place your bets and good luck.
And I am disappointed with gold... for now.
Time for another Bank Failure Friday post? Lets see it CR!!!
Does anyone have the Dow confirmed close #? Still fluctuating wildly on my Ameritrade account.
"Siemens to cut more than 17,000 jobs: reports"
My brother used to work there. The division he worked for was one of the most backwards, sluggish, and behind the times group of "geniuses" one could find. When he was tasked to do a study to see if doing a study for a possible project someday, he started looking for another job. He's happily employed elsewhere now, thankfully.
104.71
some poor trader at the "working group" is in deep doo doo.
The Senate is going to vote on the Dodd-Countrywide $300 billion bailout on July 7th.
It's not even a politically smart bailout because FHA will collapse while these guys are still in office. In 2009, they'll be funding the FHA with a direct appropriation for the first time in its 74 year history, and that's whether Dodd-Frank passes or not.
At least FDR and LBJ had the sense to create new government programs that lasted more than a year or two.
Too bad I can't short the FHA.
Ha, ha, squeezed!
Victory for light! Defeat for dark!
At least for today.
Don't rule out a reverse Plaza Accord intervention to support the $$.
Sarkozy Aide Says Euro Strength Is `Unbearable' for Europe - Bloomberg.com
Naw we love this close.
False hope for longs BWAHAHAHAHAH !
jg writes:
I really, truly am surprised that the I-bankers/schmucks/PPT are letting the Dow flirt with 20% down. On a Friday, making for a gloomy weekend?
I have never really understood this whole PPT thing. Maybe someone can clarify for me - do they hold their intersocial parties with the Knights Templar or the Illuminati?
Because I got invited to one and I don't know whether to wear my tinfoil hat or my black cloak. Sorry, I know - I need to brush up on my "shadowy organization protocol."
Re: latest incarnation
Thanks, I think it may be an ADD-thing, but not to worry, I'm busy with abstract painting and getting the garden ready for The next Great Depression.
CR ( & The Ever-Missing Tanta) are nice to allow me opportunities to contribute here, versus running me out of their town. I have pissed off Tanta a few times, but then she beat me into a pulp, and eow I'm always on high alert!
Y2KX | 06.27.08 - 3:46 pm Re: latest incarnation
Thanks, I think it may be an ADD-thing, but not to worry, I'm busy with abstract painting and getting the garden ready for The next Great Depression.
CR ( & The Ever-Missing Tanta) are nice to allow me opportunities to contribute here, versus running me out of their town. I have pissed off Tanta a few times, but then she beat me into a pulp, and now I'm always on high alert!
Y2KX | 06.27.08 - 3:46 pm
I'm conflicted about assuming nom-de-bloggage-du-jours ever since being upbraded by Cliff-whatever-his-handle-is. (If there's an "anonymous" out there who needs a catchy nom, let me know. I have millions of them.)
I mostly read without adding comment, because my insights are dirivative, for the most part. This isn't the first blog I've frequented ad nausium.
That said, I'm dolefully convinced, (without s-o-c's eloquence,) that we are well and truly Eeff Euuu Cee Keed
What I promulgated on another blog, in another time, was that (ok, I digress - I didn't put in economic terms), we have relatively little effect on our collective outcome. Were we to have a volition of outcome, it would manifest itself in generational terms in the almost inconsequential of local terms.
This blog (CR - recursive)
, is a port-amid-the-lies for a weary traveler.
[lost my train of thought. will/ would-on-request resume my deliberations on request.]
Anonymouse writes:
"And a key reversal signal in my TA work is light volume".
All the 20 or so USO downside key reversals over the last year and a half occurred during a parabolic move up from 42 to 144.
So - what's the BIG key reversal going to look like - the one that ends the parabolic move still pointing toward $7 gas ?
Correct that move to 114.
BB,
You shouldn't be disappointed with gold. It is doing reasonably well despite the fact that this is the worst period of the year for gold.
Gold Seasonals 2000-2006
sorry everyone. lurker here. what is or who are the "PPT"?
Aheadofthecurve writes:
Don't rule out a reverse Plaza Accord intervention to support the $$.
Bloomberg.com
ne...orld_currencies
Aheadofthecurve | 06.27.08 - 4:23 pm | #
AOTC - operationalize that for me? How does the reverse of BWII work given our trillion dollar a year twin deficits and low savings rate?
Hint: I've thought that one through a long time ago - to weaken the euro vs. $$$ it means Europe would (in effect) have to be the MBS bag holder - not our Fed, FDIC & US taxpayer. There is no other way to 'support the dollar' given our fiscal failings (gov't debt & negative personal savings rate) EXCEPT for somebody else to pick up our debts.
But maybe you see a different way out. Love to hear it...
dryfly writes:
Aheadofthecurve writes:
Don't rule out a reverse Plaza Accord intervention to support the $$.
Hint: I've thought that one through a long time ago - to weaken the euro vs. $$$
=============================
Treasury's Paulson to meet with ECB's Trichet
Treasury's Paulson to meet with ECB's Trichet
| Reuters
Am watching the headlines closely, the stakes have been raised. Betting Trichet will do his duty but we'll see.
ppt = Plunge Protection Team ... See Working Group on Financial Markets - Wikipedia, the free encyclopedia
Re: Bosch: [lost my train of thought. will/ would-on-request resume my deliberations on request.]
Let it out man, let it drop and don't fight nature. My newest philosophy has slipped my mind, but it had to do with letting go...oh yah, that was it, i.e, just let it go!
BB,
I'm presuming Paulson prefers Trichet to hold at 4%.
Given his mandate, can he?
There is no other way to 'support the dollar' given our fiscal failings (gov't debt & negative personal savings rate) EXCEPT for somebody else to pick up our debts.
How about this really unpopular partial solution?
kona gold wrote
As a result of the Democratic Congress not letting us drill for oil and gas in America, our consumers are paying a higher price for gasoline.
Kona Gold | 06.27.08 - 3:02 pm | #
kona gold you are wrong on three counts
first: pres bush, the first, signed the executive order restricting off shore drilling...last time i checked he too was a repub
second son Jeb, brother of the current prince...i mean president...forbid drilling off floridas coast
number three, yes it is true most dems are against off shore drilling
my brother, father and friends are petro geologist and oil traders. and nobody who knows shit about oil says we can drill our way out of this energy crisis.
Kona Gold...be partisan if you want to but get the facts straight
ps north slope oil would supply the USA for a year or two based upon our daily consumption verses proven reserves
Furthermore, there is no rule or law that requires the majors to sell north slope oil only in the US in fact much alaskan oil goes to Nihon.
Treasury's Paulson to meet with ECB's Trichet
Page Not Found | Reuters.com
p...745384320080627
Am watching the headlines closely, the stakes have been raised. Betting Trichet will do his duty but we'll see.
BB | 06.27.08 - 4:58 pm | #
I'd love to see Trichet raise rates - companies I work with have targeted Europe big time - we had conference calls this week regarding this - they are one of a growing number of firms doing to Europe what Chinese & Japanese firms did to us. Of course China & Japan ARE ALSO doing it to Europe too now that we are sick.
Imagine a 'Mechantilist Sandwich'... the world is gradually taking bigger & bigger bites out of middle.
It will take 20 years to hollow out Europe - but industrial regions like the Ruhr will look like Detroit if Europe doesn't weaken their currency & soon.
But that is their choice - not mine.
Then all they'll have will be I Bankers until they don't.
I'm presuming Paulson prefers Trichet to hold at 4%.
Given his mandate, can he?
burnside | 06.27.08 - 5:13 pm | #
I don't think so. JMHO.
That's why they 'need a dual mandate' [/sarcasm]... that way the ECB can do whatever they want & 'splain it all away just like our FRB.
Breaking News. The MSM is finally getting the memo.
"When you pay more for oil and other imported goods, that's the fault of the weakened greenback."
Dollar pain reflected in higher oil, imported goods prices - Jun. 27, 2008
mock turtle,
maybe I'm the ass, but re-read his post.
Sebastian you bad pooch
I, we, know you are reading this.
Take your medicine!
You doo doo-ed off the paper and now we get to rub your nose in it.
Bad Dog!
Breaking News. The MSM is finally getting the memo.
"When you pay more for oil and other imported goods, that's the fault of the weakened greenback."
CNNMoney.com: 404 Page Not Found ...sion=2008062715
Argento | 06.27.08 - 5:35 pm | #
Now if the MSM would only report the other half - that it won't get better until we get our deficits in order and that means paying for shit public & private (or buying WAY less).
Anon
maybe i'm the ass..i often am
yes i will re read
sounds like i jumped to a conclusion took his quote out of contex.
i always read the entire thread before i post, but read it fast sooo i guess i goofed
thanks for the correction...
This one is for ac - from the Economist
Spared big subprime losses, Japanese banks are looking abroad
ALMOST two decades ago seven of the worlds top-ten banks were Japanese and their cheap loans supported Japanese investment, from the Rockefeller Centre in Manhattan to Californias Pebble Beach golf course. After Japans property and stockmarket bubbles burst, the banks, buckling under bad debts, retreated home. More recently, the caution born of that fall from grace spared them the huge subprime-loan losses that have hobbled their American and European peers. Now their relative financial health has pushed Japanese banks tentatively abroad again.
Watch that yen go!
Anon at 536
you are right
i thought his last sentence was his own, but i was wrong
upon re-reading looks like the last sentence is part of the bush quote
thanks for the correction
Kona Gold
i wrongfully picked an argument with you about off shore drilling,
i made a mistake and didnt read your post carefully
i apologize.
dryfly- If the ECB cuts, the Euro will fall. The Euro is overvalued-compare the price of a Big Mac in New York vs Paris. It's not like the Eurozone is in fantastic shape; Germany is doing OK, France so-so, Spain and the other southern countries are hurtin'. And many of the European banks are already bagholders (UBS, Barclay's).
Currencies don't necessarily go down because of trade/budget deficits-they should, but they don't. Throughout the 80s, the US ran big budget and trade deficits, yet the $ strengthened. And look at Canada; all through the 90s they had budget and trade surpluses and the loonie fell; my family in Canada called it the northern peso. It only strengthened when oil went up in the last 5 years.
My take, Trichet will raise rates and cause havoc in the EU which is within his right.
The FED will not raise rates this year, but will come up with creative ways to show slow growth and help those that are too big to fail stay afloat.
Key to this game is time. Will a recovery or capitulation come first?
Under normal circumstances they come one after the other, but these are abnormal times.
dryfly,
'Fraid the 'second part' of that memo breaks the first rule of finger-pointing.
And if we really wanted to know how much oil prices are swayed by speculation, we'd impose 'liquidation only' on the futures market. Think Hunt brothers. That's Dan Dicker's idea, not mine, but I like it.
Additional offshore drilling (we've already granted 80% share), would only give another 1 Mbrl/day (best case estimate, btw).
Pop the CAFE standards up by 25%, and you save twice that.
Why is it that the people who want one, are against the other? If you're so desperate for oil you'd poison your tourism and fishing industries, why not advocate for saving some gas, too?
BTW - drilling and CAFE would kick in about the same time, 15 years out... which is really too darn late anyway.
Peddle your partisan junk elsewhere, I'm not buying it here.
Weekly update on the PE ratios (trailing twelve month earnings) from the WSJ$$ Market Data Center:
Dow = 76.91
Nasdaq = 28.60
Russel 2K = 73.97
S&P 500 = 21.24
Gee, ya think the S&P might need some more price declines to get that PE down to a "normal" ratio of about 16-17??? It sure won't get there via earnings growth in this climate!
And if we really wanted to know how much oil prices are swayed by speculation, we'd impose 'liquidation only' on the futures market. Think Hunt brothers. That's Dan Dicker's idea, not mine, but I like it.
burnside | 06.27.08 - 5:47 pm | #
Me too - and less margin. Make the suckas put more of their own skin in the game. Skin makes people smarter.
Mock Turtle,
Don't take it to hard, it's a Bush quote, impossible to follow.
After everything we've been through since 2000 the most amazing thing to me is that he was President, let alone twice.
Appropo, but amazing none the less.
It will take 20 years to hollow out Europe - but industrial regions like the Ruhr will look like Detroit if Europe doesn't weaken their currency & soon.
The Ruhr already looks like that.
The rest of Germany(even the ost) is bopping along (China decided to start automating processes now that Jao Sixpack wanted better than coolie wages)
The ECB isn't the problem, there rate is where it needs to be. The US, Japan and China CBs are at fault
"Liquidation-only" trading destroys the futures market. The oil market will then move to another location where real hedging and speculation can actually be performed.
I am quite certain that the UK, Qatar and even Iran would love such a development. I am not so sure though that the U.S. would appreciate the consequences of such a huge market moving offshore.
This is simply a silly proposition.
RE writes:
"Liquidation-only" trading destroys the futures market. The oil market will then move to another location where real hedging and speculation can actually be performed.
Hong Kong and Dubai are setting up oil markets.
Anonymous poster who asked about the "PPT," I think Detroit Dan's link to the Wikipedia entry on the Working Group should answer your question.
Many events are attributed to the long reach of the mysterious PPT at times here, like some all-powerful Trilateral Commission of the financial system.
And, you guys talking about drilling in Alaska: ANWR is not really on the North Slope; it is substantially southeast of it, well east of Prudhoe Bay. We presently drill for oil on the North Slope; that's what's in the Trans Alaskan Pipeline today.
Moreover, if you think ANWR oil and resolve a contemporary crisis, consider how quickly we could drill for oil and build a system off TAPS to gather it. It took something like ten years AFTER the discovery of oil on the North Slope before we pumped any of it south on TAPS. And we started drilling almost immediately after the War.
ANWR is just symbolic politics. There's no there there.
Yearning to learn...
I was nervous yesterday, more so today, then i read your thought that a rally could be due. Yes, because...
Looking at dotcom plus current bear markets, avg intra bear market (IBM) decline is 43 days, today is only 38 days past may 19 IBM high, but same length as the last one that ended mar 10.
IBM decline usually ends with 8-10 sharply lower days, with at least one day down 2.5%+, and with bottom at or below previous bottom (mar 10).
Market turns often occur at or just after fed meetings.
SKF at 52-week high.
And, not least, starting to see bear market blog entries worrying about a rally...
Could go lower... but pulled plug. Sold skf, srs, twm, closed shorts leh, wa, wm, ruth. Whenever IBM bottom occurs, initially violent rally likely will last at least 9 days, avg 31, recent longest (end may 19) 69. Next one might be on the brief side.
Bought a little itb, nicely volatile.
IMO final bottom end 2009, trailing P/E's at or under 10, dow at 5-7k. Now ending third inning...
Starting to worry a little about oil falling in aug, as usual, pumping the market, vs. sept. iran attack and hurricanes.
Good luck.
Oh, one more dramatic unintended consequence, it would hasten the demise of the dollar as the reserve currency as oil priced in dollars is one of the last cornerstones.
Just look what pressure the U.S. is applying in the ME to make sure that the Gulf States continue to peg their currency to the dollar.
dryfly writes:
"I'm presuming Paulson prefers Trichet to hold at 4%."
"Given his mandate, can he?
burnside" |
"I don't think so. JMHO."
Then what does Tricky gain from the meeting?
Currencies don't necessarily go down because of trade/budget deficits-they should, but they don't. Throughout the 80s, the US ran big budget and trade deficits, yet the $ strengthened. - AOTC
That wasn't an accident - it wasn't market forces - check out what was happening with the Japanese surpluses & the yen at the same time. That was the prototype all the Asian Tigers & BRICs have followed ever since...
As for the Loonie - I knew companies putting plants in Canada back in the 90s SPECIFICALLY due to the weak CAN$... those plants are closing now for the opposite reason. Believe me there is a link.
Deficits absolutely matter - take the issue up with Setser on his blog - provide a link so I can ease drop okay? I'll pop the popcorn - he'll fry your fish.
These things have huge lags & aren't immediately linear - but I saw research YEARS ago showing correlation between exchange ratios & deficits lagged and it was very high. Yen dollar was one of the key examples - pre and post Plaza.
The lag is critical though - contracts take to time to wok through & capital is not that liquid. I've been involved with those... sometimes 3-4 years are required to re-source.
I fully agree the euro is too strong - I doubt just cutting rate on their part will be enough to move the USD:EUR point a lot. They will have to intervene like Asian - buy our crap and like it if they want the euro to fall much against the dollar. I don't see them doing it.
RE,
Do you imagine the Hunts were frozen out by the Comex acting in isolation?
I note the futures market survived 1980.
Any other points need demolishing? Sheesh.
The silver market isn't exactly the oil market of today. It is and was tiny. Huge difference!
The COMEX at the time was by far the largest commodity exchange in the world and U.S. power was at its peek.
What a different world today!
Then what does Tricky gain from the meeting?
peAkcredit | 06.27.08 - 6:05 pm | #
I think its pure photo-op. Both sides have to look like they are on the job. In reality they are constrained by their own agendas.
My guess is Paulsen WOULD LOVE to have the ECB buy (or back EU banks buying) some of our troubled financial assets - it would flood euros outside Europe (weaken euro vs. $$$) and take some of the pressure off US I Banks.
Paulsen wouldn't mind seeing the $$$ strengthen due to that kind of 'cooperation'.
I don't see what's in it for Trichet - do you?
I mean what else can Paulsen offer him that won't submarine the US economy worse (in the short run)? Nothing. So they do lunch, smile & take pictures.
RE,
I grant your points regarding COMEX and the silver market.
I brought this up because liquidation only is on the table now, along with less draconian measures. Your point, if I have it right, is that this would be difficult to implement today and would have severe effects on commodities futures.
True as all that is, I understand it's under consideration.
The ECB isn't the problem, there rate is where it needs to be. The US, Japan and China CBs are at fault
Alec | 06.27.08 - 5:59 pm | #
US-China-Japan are playing chicken & Europe is caught in the middle. That thing is coming to a head - I can see the dollar getting a lot weaker unless the Asians (or somebody) steps up and buys our crap financials pretty much forever. When they stop - we are right back where we are now except with bigger debts & larger imbalances.
How long can it go on? As long as they keep buying our crap financials.
True as all that is, I understand it's under consideration.
burnside | 06.27.08 - 6:26 pm | #
As is the industry threat to move it all offshore. Sort of like mfgrs looking for the best place to pollute - you can either breathe their crap or let them go somewhere else.
Fed Reviews Bank Investment Rules to Channel Capital to Lenders
Fed Reviews Bank Investment Rules to Channel Capital to Lenders - Bloomberg.com
More creative moves coming.
dryfly,
Realistically, wouldn't the long list of economies adversely affected by inflated energy prices be inclined to cooperate?
Hard to say, I know. But it seems to me this pits speculative investors against the working world with a kind of startling clarity.
But I'm beginning to bore.
Realistically, wouldn't the long list of economies adversely affected by inflated energy prices be inclined to cooperate?
Hard to say, I know. But it seems to me this pits speculative investors against the working world with a kind of startling clarity.
But I'm beginning to bore.
burnside | 06.27.08 - 6:38 pm | #
They all cooperate as long as their base agenda is served. That has broken down.
The problem is US over-consumption supported by manipulated currency exchange rates (Asian merchantilists). Europe really is caught in the middle.
Asia can't develop & consume to produce for use and we consume more on top of that (while borrowing a bunch to do it) at the same time without something giving. Oil & food & metals prices is where the 'give' is.
There is only one way to reverse - less consumption somewhere most logically in the US - meaning everybody is going to hurt some but SOMEBODY is going to hurt A LOT - major job losses & recession. I see no way they agree to spread the pain evenly even though that might seem 'fair' and even wise.
Last time we did this was 'Plaza' where we got relief and Japan got pain. Over a decade of it. No one is stepping up to volunteer for that duty this time. They saw what happened last time.
So that's where we are...
dryfly-I think there will be a move to strengthen the $ against the Euro and it will work, at least for some time. Europe has severe economic and political conflicts-look at the failure to ratify the Lisbon treaty. There will likely be a quid pro quo, perhaps a move to reduce budget deficits.
It will happen by the election; the Euro folks will be so happy to see W leave they will want to make a warm welcome for Obama.
Just my opinion, but I am short the Euro for the last few months. It hasn't gone anywhere in that time, but I see a down move much more likely than an up move.
Anyway, that's enough on "the market" for me. As you may know I prefer to focus on the limited universe of those stocks my feeble brain can pretend to understand and leave "the market" to its unfathomable mysteries.
dryfly-I think there will be a move to strengthen the $ against the Euro and it will work, at least for some time. Europe has severe economic and political conflicts-look at the failure to ratify the Lisbon treaty. There will likely be a quid pro quo, perhaps a move to reduce budget deficits.
Their move will fail UNLESS somebody in Euro Zone (Trichet, that would be you) buys or backstops the buying of a whole lot of US assets or additional goods to push the dollar/euro exchange back down.
If they buy more goods then that means more plant closings & lay offs in Europe & even more political & economic pressure there.
That is exactly how the Asians have been pushing down their currency vs. $$$. No reason Europeans can't buy into a little of that action too.
And Paulsen knows where that stuff can be found - he made some of it - but I doubt Europeans will want to buy it.
I think the euro will fall - but not until the economy tanks in Europe. If they start running a serious CAD across the whole of Euro Zone then it will happen - job losses will do it to them. They are even more sensitive to exports than we are.
ECB knows what they need to do to strengthen the $$$ - buy more US MBS & ABS & Agency & Treasury - I doubt they do it. JMHO.
AOTC,
Pardon my french, but you're crazy.
Failure of the Lisbon treaty in Eire is a popcorn fart, Eurozone economies will be chugging along fine for at least another year as central/eastern expansion continues, the velocity of money increases post-Schengen and Russia 's consumers spend til they drop. This is a macro trend.
Spain's housing troubles are directly related to the UK market and will be regional only(imagine the US housing crisis limited to Miami - W. Palm Beach.
Dryfly is right that in the long term Eurozone needs to buy USD paper, but also manufacturers would need to invest here (instead of c&eastern Europe) for interest rate arbitrage to alter the euro, but in the interim the only way the dollar strengthens is interest rate differentials changing for the better and it's note gonna happen on either end at this point.
BB should have raised 25bp just to keep the level of accommodation the same, 50 if he really wanted to tighten. All talk no action. They jawboned it down to $1.54, but in 3 days they gave it all up. If BB matched the ECB the USD would only get to 1.25 at best.
Trichet will not cut, FULL STOP.
Eurozone med countries still need labor reform, keeping therates up to inflict a little pain is the only way to press on this matter.
CB intervention will keep EUR/USD from breaking 1.60 for now, but if the ECB hikes, it'll blow through that wall like wet toilet paper.
No, I think the Euro is so overvalued that a 25 bp cut would be sufficient to drop it back to 1.45 or so. That will make European manufacturers and the Spanish much happier. What's to lose? Inflation? IMO, that would drop oil $15-20/bbl, so any inflationary effects would be negated. I'm not sure Trichet will do it, but I think he should.
Some how, I feel that a rally is coming. It will depend on Monday and Tuesday's volume but somehow, I see a short but violent rally coming up. Too many people are talking about going short. Even CNBC has an article about going short this market. I suspect that oil will drop next week and you will see a rally.
And if my aunt had balls she'd be my uncle.
If that's your basis for going short you must like knife juggling.
July 1 is Tuesday, so Monday should be a paint job rally.
If they can't even manage that, look out below. A slow and painful summer will ensue(not that it wasn't gonna happen, just faster.)
A newbie here, but liking what I see.
ja
Monday will be a down day.
Tuesday won't be.
This is a sucker's game for those trolling for shorts.
Monday close will have the slaughter-sheep gleaming they did the right thing; they went short and exited their longs. Tuesday will be surprise to them.
This is the right shoulder waterfall that this ignorant has been discussing at Mish's site for the past 2 weeks.
DJIA 11000 probably won't be reached, this time, but next time, it's a non-number.
The rally will clean the clocks of the shorts who entered today and Monday. Then it will be back to the work at hand.
In spite of CR's belief this is a recession, moderate at that, this has been a full scale Depression since the October 2007 high (which, 4 days after, this immodest called, also at Mish's website.)
This is the Depression move I've waited a lifetime to witness. For those who have studied the worst markets, and how they move, this is the more classic than any prior, from 1929 to the present.
As a cheat sheet insight, the odds of seeing 9500 are around 100%. And 6000 has a probability of 50% at this time. That's what's in store. So, get ready for your moderate recession, and hold onto that rental and underwater ditty because they'll help you sink faster, so you can get to the bottom and start all over again sooner.
RE wrote:
"Liquidation-only" trading destroys the futures market. The oil market will then move to another location where real hedging and speculation can actually be performed....
nonsense
there isn't anything we the people..ie our government cant tax , tariff, or regulate as our borders are crossed...
if the pres and congress have the nads
RE | 06.27.08 - 5:59 pm |
REs arguments about regulation of the oil futures market sound similar to those of Enron regarding the California energy market. Of course, we know how that ended...
Everytime Obama speaks the market tanks!