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Oil is evil unless you own it. Then it is nice.
Time to short the multi-nationals. A sustained dollar rally will cream their earnings.
Whoever figures out the price of oil is lying.
No recession, rally time, party on.
CR, it would be heresy to the folks at McKinsey as well.
McKinsey & Company - The U.S. imbalancing act: Can the current account deficit continue? - June 2007
I would be careful getting long the dollar...A lot of people are waiting to dump dollar holdings
If we hit the S&p 50 day MA today or mondy 1300 I look for us to retest the July lows by the end of next week (options ex). some think we could test the 200 day MA but the financials will be too much of a drag IMO
BTS | Table 1-17: New and Used Passenger Car Sales and Leases (Thousands of vehicles)
Government Auto Sales Stats
I took a crack at figuring out how changing auto sales will effect oil consumption in the US. Basically, the sudden shift from selling large to small cars/trucks in the US could result in a 1.7% annual increase in MPG if sales trends continue. If miles driven doesn't increase (recession, slowdown) we should expect a decrease in oil demand in the US. In addition, diesel demand is setting the price of oil, so gas prices will not drop as much as oil (suppressing demand)
Oil demand growth internationally is largely a function of subsidies, which are not sustainable.
Those two factors point to a significant reduction in demand, and should result in lower oil prices. I think we should see oil prices decrease below $100. The fed will likely start raising rates at some point which will also help move oil lower (dollar up).
adios exports!
We have seen the non-oil current account deficit in the US collapse. And now oil is off the top, the oil deficit will shrink as well. We are seeing a profound reduction in the banking multiplier. China and India have entered cyclical downturns. We have seen the CRB Rind index of non-traded commodities the index least susceptible to financial speculation and an excellent long lead on inflation - fall a third from its peak. We have seen cement prices in the US crack lower. And the markets are certainly beginning to sniff it out.
My theme for the next six plus months is The end of inflation. And that has some pretty big investment calls riding on it. Short oil, copper & gold, long US stock indices and long specific US and Asian consumer stocks. Long the dollar, long Australian rate futures, short Eastern European banks and currencies.
Whats notable here is that this is completely at odds with the broad investment themes of the past few years. Im calling for a reversal of the six year commodity bull, the five year dollar bear, and the one year drop in stocks.
check the crack spread... heads up was given last week. spread was almost negative. not to late to get in on improving refiner margins.
INO Futures and Commodities - Energy - RBOB CRACK SWAP Dec 2009 (NYMEX:RM.Z09) Price Chart and Quote
Dollar rally is technically driven. News always trumps technicals and the news is more bearish than ever. Careful dollar bulls...trap.
Dollar rallies then buy this: DRR
Ciao
MS
stuart writes:
adios exports! X 1 million
This was the only positive story for U.S. GDP - buh bye!
heard on CNBC: there should be more insider trading, it "should be legal"...
Yay
Geo - political events not withstanding:
Aug. 8 (Bloomberg) -- Russian Prime Minister Vladimir Putin said war has started'' over the breakaway region of South Ossetia as Georgian President Mikheil Saakashvili accused its neighbor of awell-planned invasion.''
Saakashvili said in a Bloomberg Television interview that his nation of 4.6 million people is fighting to secure its borders'' amid afull-blown military aggression'' involving thousands of Russian troops
CR,
Despite your genius in many areas, you have been consistently wrong in predicting a falling U.S. trade deficit, and you will be consistently wrong again.
We are stuck with this trade deficit for the time being. Whatever help falling oil gives (and it may not be much) will be offset by falling export volume and rising import costs.
Babydoll writes:
...long US stock indices and long specific US and Asian consumer stocks.
Not until we get a test of the July lows. Highest volume month ever - it will get tested count on it.
Erm, when the market finally figures out that inflation wasn't the problem, deflation was, I don't think it'll be going up.
I'm getting seasick from this up-down-up-down action though.
So with a strong dollar, US citizens will once again be able to buy cheap electronics and travel to international locations with ease, once we can persuade the banks to get those HELOC brokers* back in here and turn those credit machines back on.
I'd call a stronger dollar in this environment the one missing element for a perfect storm. The poor and the middle class are now screwed.
*OK, not-very-poetic license
Hey Babydoll,
I agree, but not on US equities. They still could get hit becuase of declining profits and higher employment. I think the fed will start raising rates which will also be negitive.
I think getting long debt is more in order than equity, but I haven't figured that out yet.
Not until we get a test of the July lows. Highest volume month ever - it will get tested count on it.
++++++++++++++++++++++++++++++++++1
only on bubblevision can that comment even get on the air.
I'm sure they were having an orgasm about MBIA's reduced liability turned into an "unexpected profit" too....
Correct me if I am wrong but since the market needs retail people how are these moves supposed to instill confidence??
If you want some real entertainment watch Bloomy at night when Bernie is on. It's better than most TV shows. He must have naked pictures of someone since he calls BS on quite a few "pumps".
We must have a few banks going "offline" soon....
Ciao
MS
Babydoll...your thoughts on deflation and it's role in your strategy?
I think the respite is temporary. As I discussed recently, Oil prices long term will go back up due to the following main factors:
we export to u.s again! we have olympics, we have good products, we have good country!
Agree that the dollar rally is news, but it's probably bad news for the world economy.
The dollar is presumably rallying not because the U.S. is doing well, but because the rest of the world appears to be terribly weak.
Just wait until the U.S. manufacturers start laying people off. We might get close to your 8%, CR!
banks going offline soon...
Is it true that the IndyMac banks are still open?
OT: DJIA up nearly 300, oil down and yet we have almost 300 visitors. Disconnect?
Disconnect here is that the treasury yeild is moving down to flat while we have this rally. I think bond traders know there will be no rate cut this year , next year or the year after...
I am slowly moving into GDX I call BS on this dollar rally I think it will end after options ex...
Okay, CR, I will note your 'the bottom for the dollar is probably in' call.
Next year, after the panic, when the Chinese, sheikhs, and Japanese dump their plunging-in-value Treasuries, is when we'll see the bottom in the dollar. That dollar value will be mighty low, and the price of oil will be mighty high.
babydoll,
i suppose the pretending could go on for a while as has been the precident of the last decade. Your trade is essentially a Bill gross call, sneak under the fed unbrella and hide. I suspect that umbrella may hold for a bit, but nowhere near strong enough for the approaching gales (or inversion)
Tim,
I think bond traders know there will be no rate cut this year , next year or the year after...I call BS on this dollar rally
That looks like a disconnect, itself. Lack of cuts while Europe, Japan and China slow = dollar strength based on relative rates. Mayhap you meant no rate increases?
u.s export expensive sucky product. we export affordable product. we michael jackson, you tito!
OT: DJIA up nearly 300, oil down and yet we have almost 300 visitors. Disconnect?
Well if you're short oil (not me) or have FXE puts (no comment) it's like Christmas morning.
orbital bebop,
Worst. Fake. Chinese. Ever.
Next year, after the panic, when the Chinese, sheikhs, and Japanese dump their plunging-in-value Treasuries, is when we'll see the bottom in the dollar.
I don't think we will ever truly see a bottom in the dollar. Countries used to use it as a reserve currency... I think the dollar will decline then flounder with the health of the US and world trade...
ac,
CR doesn't attract the Xmas morning crowd. More like the "party" after the funeral. Hence my puzzlement.
The CA deficit is going to shrinnk because global liquidity is going to dry up, but if you think that is bullish for stocks think again!
Some global markets are going to melt down and other sectors in the US are going to be to reflect tigher credit. UE is going to head way up.
So the global economy is deflating. What about the financial effects? My guess is that assets (stocks, bonds) will join in the deflation this time around. Overseas demand for U.S. stocks and bonds will drop. Such demand helped to keep equity prices up in the past, why wouldn't we get the reverse effect now?
tim-
As far as I know they are......I got my mortgage bill so I guess it's "business as usual"....
I saw a clip about the FDIC having some "trouble" finding a buyer for what's left of them.
Trouble finding a buyer.....ya think!!?
Ciao
MS
look at the charts i9n the cuirrencies and compare them to the spike in the banks after the fed interviened...theme developing...
dollar strength based on relative rates. Mayhap you meant no rate increases?
Yeah I meant no rate cuts...
Yeah I meant no rate cuts...
Dammit, screwed up again, damn tumor I meant no RATE INCREASES.
rising dollar oh there goes NYC real estate
MS I wonder if they are taking applications???
I'm confused!
I HAVE to spend dollars (many) on euros next week (Tues).
Should I try to delay this till the end of the week?
The whole thing is making me very nervous!
I think it's no longer safe to short the US Treasuries. With inflation moderating presumably and less risk for dollar declines, bonds might get a nice bid. Demand was strong this week. Bernanke can cut to 1% without fear.
Puzzling that dollar can get cheaper in US and more expensive in Europe. To what extent do suppliers have flexibility to choose their market?
Careful.... some of you sound like Larry. King $ is not quite back on the throne.... the big rally in Treasuries this week isn't really consistent with the strong $ thesis.
This $ rally has come a long way, quite fast. I would be cautious about expecting this to continue beyond USD:JPY 110 and EUR:USD 1.50.
Gold has already bounced off its lows for the day and we are well overdue for a reversal of the commodity correction.
We could be range bound between JPY 105 and 110 for a while, and we are at the top of that right now. Carry trade unwind usually is not good for stocks.
"we michael jackson, you tito!"
Thanks for this one. I could see that one becoming a recurring phrase.
Bernanke can cut to 1% without fear.
I agree never like the Short bond trade if money comes out of stocks some of it will go into bonds. that said I wouldn't buy them here either below 2% rates won't come for another year or so...
Getting slaughtered today. SRS creamed!
ac,
CR doesn't attract the Xmas morning crowd. More like the "party" after the funeral. Hence my puzzlement.
Could be a very interesting day for the short dollar + long SRS + long commodities crowd.
OT Is today's the kind of parabolic rise in stocks we get when they are peaking out?
The US could go FIFO in this recession - or it could get double-dipped because the rally in US exports will die when the rest of the world recedes. I think you are right about the dollar low, however.
For the Fed, it will be a 'win' on inflation (wink, wink)... giving them an opening to raise - but will a double-dip in US exports prevent that?
Fred (Freddie?)
Sit right back and I tell you a tale
Last Aug home down my friends street was for sale in SF, CA for about 949k. It sat on the market for two months finally sold for about 920K. It got me thinking don't people know that home prices are falling every week. Don't they watch the news? Turns out the buyer was from Taiwan. 6 months later houses like that are going for about 740K Amazing. In 1998 similar homes sold for about 350K on the high end.
And it looks like a kind of capitulation in the gold market.
This is also more evidence of deflation (as others have pointed out). What looked like inflation was bubbles atop deflation... US wages are also in decline. As debt is destroyed, money is destroyed and it gets more scarce - deflation.
"The US could go FIFO in this recession
can't there are already couple of countries in Europe that went FI(LO)
there are lot of bottoms today- none of which may not be real.
GO RALLY (300+!!!) should provide such nice short-selling opportunities.
With all the market manipulation going on today there must be a big pile of shit coming down the pipe next week.
Wassup with that Goldman Sachs $200 a barrel estimate out earlier this summer?
jg, the dollar is very hard for me to predict.
I was 100% confident in 2005 that we would see a housing bust. And I felt pretty strongly that we would see a credit crunch follwed by a CRE bust.
Remember in late '06 and early '07 when I was using the word "credit crunch" and being laughed at by some in the comments? ROFLOL.
Those were pretty easy calls, but oil is more difficult (because of supply issues), and the dollar is even harder. But I'll try anyway.
Part of the reason I've been forecasting a mild-to-moderate but lingering recession is that I felt oil prices would fall, the trade deficit would fall, and the dollar would gain some traction (instead of being in free fall).
We will see. There are many problems ahead, especially for housing and credit - and that will be a drag on the economy for some time. Alt-A is going to be disaster.
It should be interesting!
Best Wishes.
barely
Just filled a limit order for SRS at $85. Got one in each of my accounts set up for $80. I'm hoping the big boys have enough juice to fill those today too.
Seems like not everyone saw those graphs about how the overbuilding in the hotel industry. Works for me
Detroit Dan writes:
So the global economy is deflating.
Ding! Ding! Ding!
We have a winner. Demand is going through the floor, and commodity prices are following it. Barnacke continues to prop up speculators instead of putting money in the hands of consumers to stabilize consumption.
We have been in a climate of relative deflation since Volcker, and reaped the benefits before it turned into a crisis of excess liquidity. We may now be about to enter a period of actual deflation.
People are going to have to worry about a lot more than their investment portfolio.
Conjure is making noises like he is becoming bullish on the US dollar.
We have ten year more of "recession". Minimum. I just don't know how else to say it.
We have a lot of bone-headed mistakes to clean up. A LOT. And it's going to take time.
Expect ups and downs, but know that the overall decade long trend is down.
Also I think we have quite a bit more deflation to witness, before the REAL inflationary spike comes.
"OT Is today's the kind of parabolic rise in stocks we get when they are peaking out?"
SPX just broke through 1292 with some authority. As did OEX. The Nasdaq is behaving like it's the CrackDaq. All kinds of technical indicators (especially RSI) pointing more and more strongly to overbought land. If this isn't a blow-off top, then I seriously picked the wrong year to quit sniffing glue.
Think Great Depression from Germany's economic point of view....and you have some fuzzy picture of the US economy's future path.
And it looks like a kind of capitulation in the gold market.
You'd want to see higher volume selling
GS call for $200 oil....
Probably the same place the call for second half slowdown went....that was last friday.
I guess today is the gift for the chinese.....keep buying those notes.
Ciao
MS
I meant to say that OEX jumped its 50DMA, not 1292. THAT would be one hell of a parabolic day.
Mike,
Excellent Airplane follow-up.
If this isn't a blow-off top, then I seriously picked the wrong year to quit sniffing glue.
Gotta hit that 50 day MA, 1300 and close above it IMO
this decline in oil prices will have a significant impact on the overall deficit, and might mean the dollar has finally bottomed (heresy to some I know!).
Not heresy, but perhaps overly optimistic if your time frame is more than a year or so. Barring a very abrupt slowdown, the trade deficit is likely to remain $50B+ for the foreseeable future. That's $600B/year.
And the dollar strengthening means overseas profits of US companies and returns on overseas investments are falling, and our interest payments to foreigners and the prices of our goods are rising.
There's no free lunch here. We had a huge problem when oil was at $30bbl and we'll have the same problem if it falls there again: Americans consume more than they produce.
Conjure is making noises like he is becoming bullish on the US dollar
Egads!
still got 1.5 hours left....with what I've seen today it's totally possible
DOW up 400 by the close is not a fantasy...well it IS but you know what I mean.
Ciao
MS
When does the naked short selling rule expire, Aug 12th?
I guess today is the gift for the chinese.....keep buying those notes.
Elaborate please
Energy stock of the week a tie btwn VLO and TSO
"Just filled a limit order for SRS at $85"
LOL! Me too. And it's still dropping. Bringing my basis lower with every new order...
everything is heading down now. 6 months ago, everyone says US economy will be supported by the weak dollar via the exports. Now what do we have? a lousy banking system, a global slowdown, a still plunging housing market. Mish is right, deflation is here....
This market looks like its getting ready for one hell of a fall. Just don't know when sentiment will turn in this schizophrenic environment.
Mike: SPX just broke through 1292 with some authority.... All kinds of technical indicators (especially RSI) pointing more and more strongly to overbought land. If this isn't a blow-off top, then I seriously picked the wrong year to quit sniffing glue.
Agreed. VIX increasing from a very low
Hot money flooding like a tsunami into dollar or is this part of deflation and the necessary component of destroying too much hot money?
Treasury's seem to be catching a bid as well, there doesn't seem to be much rotation from them into equities today...or what?
I'm $USD neutral now but still believe the supply/demand equation for oil is not favorable so overall I've become very defensive: Virtually since 1998 economies and markets alike seem to reflect a contest between the forces of deflation and inflation with the end result pretty much wrecking the joint and basically going nowhere; like Doctor Dolittle's Pushmi-pullyu, the beast with 2 heads, one at each end, that just couldn't make much progress.
Those who are investing under the assumption of a continuing $USD decline may find the following Random Roger Guest post by currency trader David Andrew Taylor* at Random Roger: A Blogger Comes Back? of interest; see also French Finance Minister Christine Lagarde comments on the latest G7 finance talks at Lagarde Says G-7's Dollar Shift on Par With 1985 Pact (Update2) - Bloomberg.com (link in David's post).
*Those who used to visit the blog Dismally.com will remember David well; may he blog again.
Regardless of oil prices and dollar exchange rates, Americans will be consuming less going forward due to the massive credit contraction. That means at least stability if not decline in the trade deficit with China.
Music for the day:
If buttercups buzz'd after the bee,
If boats were on land, churches on sea,
If ponies rode men and if grass ate the cows,
And cats should be chased into holes by the mouse,
If the mamas sold their babies
To the gypsies for half a crown;
If summer were spring and the other way round,
Then all the world would be upside down.
(
The World Turned Upside Down)
we buy calif buildings. we buy ny buildings. we wait more low dolar. after buy lots ny buildings, we name village "bom bing".
Also, China is still experiencing wage inflation, which means that their goods will be more expensive than they had been the last few years, which will put pressure on China's trade surplus.
What, no bank closures today, that ole wonderful savings and loan is still standing???
For the record, <a href="http://www.haloscan.com/comments/calculatedrisk/5707918285170716390/?dt=1213085438#489843>this is what I wrote back on June 9th:
"Everyone here who's bearish the dollar vis a vis many currency, simply open up an account and sell the USD against that currency. In fact, leverage yourself if you're so sure. I think the USD has bottomed against the EUR, Pound, Canadian $, Australian $, NZ $; it's about to fall significantly against the YEN. I want to be clear I'm speaking on a longer, 6 month - 2 year basis, not necessarily this week/month."
I'm always curious as to who runs the FASB and all the accounting fraud:
Robert H. Herz, Chairman 2012
George J. Batavick 2008
Thomas J. Linsmeier 2011
Leslie F. Seidman 2011
Lawrence W. Smith 2012
Teresa S. Polley was appointed President and Chief Operating Officer of the Financial Accounting Foundation (FAF) in May 2008, Previously, Ms. Polley was a Senior Accountant with Arthur Andersen & Co.
Is she the guy who helped Enron?
Meantime, Russia and Georgia ( the country not the state ) start fighting a war !
The telegraph reports that a new chapter in instability in Pakistan opens - The Army Chief of Staff asks President Musharraf ( who only gave up his Army Chief post 6 months ago) to resign !
None of the economic aspects of the USA change.
I just HAVE to go more short, URE, UWM, URE and DDM - at the end of the day.
-skk
Just like the spike to $140+, this is a short term overreaction. The long term trend is nowhere but up as worldwide supply is flat at best.
Its a Wonderful Life, you have to wait until bank closing time. West Coast banks usually get closed around 8 PM ET on Fridays. So we might have a little wait ...
Best to all.
Today's parting words from gold market analyst Ned Schmidt. He tenders an explanation for the dollar's rally that may not make the conventional headlines, but it is one you might want to take note of. "As is readily evident, the US$ has staged an incredible rally. That rally is one of the strongest to occur without some underlying causal event. In short, nothing readily apparent is happening around the world to cause such a move. Now, consider the weekly purchases of U.S. debt by official institutions, essentially central banks around the world. These numbers are reported weekly by the Federal Reserve, the depository for these bond holdings. In the week ending Wednesday, official institutions made the largest net purchase of U.S. debt ever recorded. They bought the annualized equivalent of $1.457 trillion. Those purchases created a shortage of dollars which created a massive short covering rally in the dollar. That buying pushed the dollar up almost 3% in the past week, or at a 320% annual rate."
Kitco - Commentaries - Jon Nadler
"I just HAVE to go more short, URE, UWM, URE and DDM - at the end of the day."
I agree. With this ridiculous pre-weekend pump, I have to think that TPTB are expecting a the next 48 hours or so to bear some resemblance to Weekend at Bernie's. The only question I have is who is playing Bernie? WaMu? Merrill? Downey? Is Downey a big enough star to justify today's pre-premiere hype?
Oil could zoom upward rapidly if there were an attack on Iran or if the conflict in Georgia escalates. I would not bet heavily on the continuing decline in the price of oil.
OT, but I'm dying to see the news materialize on WaMu. I'm preparing for a week in the Rockies, so at this point, I'm ready to just make something up.
Notable comments.
Since reaching a record high of $1.6038 on July 15, the euro has dropped 6.3 percent. The so-called trading envelopes, which measure how far from the mean a price has strayed, show the euro's decline has doubled the typical changes versus the dollar in the past 20 days.
The most important aspect of the dramatic collapse in the euro dollar is the absence of confirmation from other markets,'' said David Woo, global head of currency strategy at Barclays Capital Inc. in London.None of the typical drivers of the euro-dollar in the past couple of years could have accounted for the magnitude of this move, which leads one to conclude that this is a technical-driven move. From that point of view, we do not think that this move is sustainable.''
`Undervalued'
The euro is about 2.5 percent ``undervalued'' against the dollar, according to Barclay's models, Woo wrote in a research note to clients today.
The European currency has declined 3.1 percent against the dollar in its fourth weekly decline, the worst losing streak since May 2007. Against the yen, the U.S. currency has advanced 2.1 percent, heading for its biggest weekly gain in almost two months.
The Dollar Index on the ICE futures exchange reached 75.903 today, the highest since Feb. 21.
Mohamed El-Erian, co-chief executive officer of Pacific Investment Management Co., said the U.S. government's efforts to support Fannie Mae and Freddie Mac will lead to greater Treasury issuance and a weaker dollar.
``It's ultimately inflationary as long as the global economy doesn't collapse,'' El-Erian said in an interview on Bloomberg Radio.
Patrick, supply can be flat for some time...with demand falling...so will price.
I actually believe that supplies will rise once prices fall below 100 dollars a barrel. I think many have been leaving oil in the ground.
In the week ending Wednesday, official institutions made the largest net purchase of U.S. debt ever recorded. They bought the annualized equivalent of $1.457 trillion.
But why did they purchase so much US debt?
BTW, if Sheila is reading, JP said it last, so any resultant implosion of a certain large PNW financial institution is no longer my fault. I guess I'm still on the hook for Merrill and Downey.
Tim-
it's simple really. Who has the largest accumulation of our debt?
Who NEEDS to keep buying it in order to continue the charade?
Driving up the market is our way of saying "jump in the water's just fine see?"
YouTube - Jaws Trailer 1975
Ciao
MS
Swiss bank UBS AG has agreed to buy back $19.4 billion of debt securities whose value collapsed during the global financial crisis and to pay $150 million in fines to settle charges it misled investors, Massachusetts' top securities regulator said on Friday,
RPT-WRAPUP 2-UBS to buy back stricken debt securities
| Reuters
That ought to make these insolvent bastards want to lend a bunch of money. Credit is going to suck up tighter then a bulls ass when the rest of these clowns get in line for their ass beating.
Patrick writes:
Just like the spike to $140+, this is a short term overreaction. The long term trend is nowhere but up as worldwide supply is flat at best.
That was taken as a given in the early 1980s too. The world was running out of copper, oil, this, that....
Real prices of just about all commodities have been falling for the last 100+ years.
I'm not predicting where oil will go from here. Maybe it will be headed back up, or maybe gradually sink in real terms.
I just don't believe a fall in the price of oil really deals with the fundamental problems both the U.S. and the world are confronted with. Commodities fell like rocks from 1929 until 1932 or so. It didn't provide much of a boost with liquidity drying up.
Anyone link an article or explain the market this week? How with an active battle going on in Georgia is oil falling and the market having a huge rally week? How can all us bears be wrong?
Conjure is making noises like he is becoming bullish on the US dollar
Remember, to escape the bear you don't have to run faster than the bear only faster than the slowest runner. Currencies are like that.
Official institutions purchased large amounts of US Treasuries because it is the safest place to put their cash that they can think of.
With respect to oil, new supply that will be coming on line in the next year or two will add to downward pressure on oil prices.
"Oil could zoom upward rapidly if there were an attack on Iran or if the conflict in Georgia escalates. I would not bet heavily on the continuing decline in the price of oil."
Georgia's on my mind. I'm hoping George Bush (Georgia/George, hmm) is smart enough or cynical enough to stay out of it -- either will do.
Anonymouse how long do you think the dollar rally will last???
MS I see... are we setting up for a collapse in treasuries and stocks in the same Month???
I hope the Russian's don't move south and bomb Florida!
Poor presidential candidates. As soon as they start talking up an issue it disappears. Obama starts his campaign on the Iraq War and we start winning.
Ooops!
McCain decides gas prices will be his
issue.
Ooops!
Guess will have to decide this election on the basis of more traditional considerations. Race vs. Age!
euro down dollar up relatively as trichet jawbones on behalf of the buck
Gold ends down as dollar up on home data
| Reuters
not a surprise that oil peaks... speculators are under the watchful eye of senator maria cantwell as the light is turned on and the cockroaches scurry away
http://www.wtopnews.com/?nid=116&sid=1446474
and the imf dumps gold to pay for their lavish appetites
Gold reserves to hit sale block
none of this will last, the fundamentals dictate the dollar will again drop and relative to a variety of, not all, commodities.
but first we must see the money changers escorted from the temple
look for a return to something resembling fundamentals after the election...or uh inauguration
meanwhile the fed says,...bartender, financial white lines all around...put it on my tab...(which is your tab)
we are all fed-ucked
This is my Sheila Pull Your Hair Out Watch list which needs to be cross referenced with CDARS exposure:
CDARS.COM - Where to find CDARS
Bank Ratings
The Bank Implode-O-Meter - Your play-by-play for the end game of modern banking.
First National Bank of Arizona: Scottsdale, AZ
Bank of Bonifay: Bonifay, FL
Federal Trust Bank: Sanford, FL
First Florida Bank: Naples, FL
Freedom Bank: Bradenton, FL
Ocala National Bank: Ocala, FL
Vision Bank: Panama City, FL
Fremont Investment and Loan: Anaheim, CA
PFF Bank & Trust: Pomona, CA
Security Pacific Bank: Los Angeles, CA
Now that oil is dead cheap again stocks are going to continue to surge.
Simple math on Bizarro world: while oil price double stocks fall 20% off high; Now oil down 20% stocks to double!
No se Tim but I have to think that the large buyback in the yen (that started last week) is somehow linked back to the "large treasury purchases" of earlier this week.
Wouldn't surprise me at all if it were the CIC (or some other chinese front) doing it for real this time. But you know it's gets reported as the yen-carry trade.
I would think that if our wonderful banking system were still doing it it would somehow show up but you know how they like transparency
Total shot in the dark but I have not been able to come up with much else to explain this.
I also second what stuart writes as well.
Ciao
MS
Retarded quotes of the day:
"Weakness in housing should continue to adversely affect financial results into 2009, Fannie Mae said.
And housing's expected to remain squarely in the doldrums: The company forecast that home prices would decline by 7% to 9% this year and by 15% to 19% as measured on a peak-to-trough basis.
Analysts have raised the possibility that weak quarterly results for Fannie and Freddie could prompt the government to step in and aid them.
"We've not asked them, and they have not offered," Mudd said Friday.
Analyst Brian Gardner of Keefe Bruyette & Woods said continued access to the debt markets should head off any need for a government backstop.
"As long as the companies can go to the debt markets and fund themselves, then Treasury can sit back and not intervene," he said Friday morning."
One more time:
Treasury can sit back and not intervene
Keerist! I hope they have a defibrillator in the studios of CNBC for Kudlow's program this evening.
I fully expect him to get so excited he's going to vaporlock sucking in air as he expounds upon King Dollar and Goldilocks.
ooops looks like mista Market kist & ran ganst SMA's all ova da place ha ha ha
the other quote of the day:
"Citi to combine research and analysis into single unit"
Like that haven't been already...
Ciao
MS
MS thanks
It's interesting how the whole securities industry caved to regulators on auction rate securities in just a few days.
Up until about a week ago, all their bluster had been directed at investors and it was more than a little defiant.
There's going to be a multi-billion dollar cost for this cave, although it will be divided among several firms. In addition to the fines and buybacks, they'll probably also be exposed to civil suits and class actions now.
But why did they cave so fast?
Remember: it's the federal regulators who have been giving them everything they want, and it's state regulators who have prosecuted auction rate cases.
I think the answer may be in part -- how financially desperate the states are, and fears of the industry that they could be exposed to many other costly cases (e.g., municipal bond insurance fraud, mortgage-backed securities fraud) if they played hardball with states now.
OT
i just have to share:
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seems at odds with this...
Citi to combine research and analysis into single unit"
Brilliant now why doesn't someone put research and development together???
regarding oil...this is just a blip in the road. These institutions, notably GS, are in Hank's back pocket. They are trying to balance a need to elect a republican and the coming invasion of Iran. Drop oil and you reload to take the next ride up when that event occurs. Drop oil for a long enough time-frame and you can give credit to W who then goes on the offensive for McCain. Thus keeping most of the current administration intact.
I still think Cheney factors into all of this at some point. Like still being the VP or some other cabinet level position. Stranger things can and do happen.
Ciao
MS
I think the answer may be in part -- how financially desperate the states are...
Regulators at the federal level aren't motivated by fines and settlements; if anything, most of my "regulator" classmates are biding time, making connections, before moving to the industry side. On the other hand, state AGs are rainmakers for states starving for revenue. Cuomo, Galvin, et al have basically provided the blueprint for every single state to jump on the bandwagon.
As an aside, Maria B can simply not be contained today.
Massive on-air orgasm day for Ms Bartiromo. Looks like Mr Radigan has a woody too!
they just keep a-coming:
"Fannie reins in mortgage support in blow (job) to market".
I added job.....hehe
Ciao
MS
How can all us bears be wrong?
Wrong only short term, I suspect. There was a nice article in "seeking alpha" that detailed the bear market rallies in the past. There were a large number of 300+ days on the Dow during past bear markets. But then the market just dropped some more. I myself am keeping my powder dry for better opportunities.
Makes sense, rich.
The rally in the US$ and oil is purely a speculative momentum play. The hedge funds, IB traders, etc. will continue to pile on until a major player floats to the surface, belly up. Any guesses who it will be?
Rate cut within three weeks. Ben can't sit still longer than that -- watch and learn!
"a major player floats to the surface, belly up. Any guesses who it will be?"
The U.S. consumer base.
Ciao
MS
You know, maybe the Chinese figured out they better prop up the markets, at least until McCain is elected. Obama and the democrats would be bad for them if they really forced anything close to fair trade. Maybe we shall see DOW 13,000 soon... as crazy as that is.
[Anonymous writes:
Babydoll...your thoughts on deflation and it's role in your strategy?]
We move forward in waves of disinflation and deflation. As oil fall, and markets are oversold, its right to buy disinflation; US autos, global airlines, Western and Asian consumer stocks, even bombed out financials.
Then, when markets have bounced, its right to bet on the next wave of debt deflation this time in Europe, especially Eastern Europe.
And through the whole thing, if Im right, its right to be long the dollar, and short commodities.
Then, when markets have bounced, its right to bet on the next wave of debt deflation this time in Europe, especially Eastern Europe.
If you believe its a disinflation boom (growth with diminishing inflationary pressure or more likely here, slowing growth, with surprisingly rapid diminishing inflationary pressure) then you buy the biggest, lowest cost producers, you buy US and Asian consumer and insurance plays, Asian and Latin real estate, you buy bonds, the dollar, and you sell commodities and resource stocks and you buy the best bombed out bank.
In Asia it is stocks like Tsingtao Breweries and China Mobile. In the US its the Cokes and Walmarts. GM doesnt win on costs, but it hits the ball out the park on sales to market cap.
Sell all the small stocks in the inflationary sectors. Small cap oil and junior miners are toxic in a world like this.
oil will hit 75 a month after election; ( i am betting $ on it
)
Oil will continue to rise. It is basic economics. Oil is running out, and is limited supply. The demand however is increasing. Prices will continue going up.
I really wish my fellow bears would stop making everything into a conspiracy theory.
Babydoll, you are right deflation is already in eastern europe and the economy in czech republic, poland, hungary, rumunia, bulgary even slovakia and latvia estonia is going down the tubes. it isnt official but the latest currency speculation for CEE currencies were quick death for growth. how do you plan in a country whichs currency appreciated in 18 months 30-40%?
and now sorry, i am going to read english.pravda.ru these western MSM are just like pravda from 30 years ago, just plain propaganda. now those who lived under communism can read between lines, the people who never knew oppresion cant.
seems like the day has arrived when us is building socialism while russia is the calm one. just think about current situation like this. what would us do if kuba were to launch an attack on puertorico?
Dr. Chaos-
Have a looksey at the oil trade from August '06-Nov. 15th This was the re-jiggering of the GSCI to force sales.
I'd clock out of it on or right after Nov. 6th
FWIW.
Ciao
MS
Just in case the South Ossetia conflict wasn't enough to make anyone with access to a map of southwestern Asia more than a bit queasy about where this could lead, here's a story claiming that Israel had been providing military advisors to Georgia in preparation for the offensive on Tskhinvali (South Ossetian capital city) that apparently touched off the fighting.
War in the Caucasus: Russia and Georgia
Powder keg, meet fuse. Fuse, meet match.
Yikes.
CR: The answer to that is a clear no.
Fiat currencies can do whatever they may against each other, but against hard, unlevered assets, they will fall until interest rates rise enough.
No bull market continues unabated.
Some are getting a bit carried away here (Babydoll)
low oil is a sign of global recession. The dollar rise today was a sign of unwinding of long term $ trades as that reality is recognized.
However, to suggest to buy US stocks would be to assume they will go up because economy in the US is less lousy than in Europe, but it is more likely that US stocks willcontinue to fall, racing down the foreign indices, just like the long term trend STRONGLY in place since January indicates on the charts (compare monthly charts of SPX, CAC40, DAX, FTSE). Nothing new that the charts have not been telling us for 6 months.
we also knew that the oil rally was coming to a "plateau" in the 140s (charts). let us see how that support at 110 (100) does first.
Inflation?
Asia is not going back fifty years because the US is in recession, the trend of change (and commodity prices-oil) may just stabilize in a range. Inflation in the US may "stick".
Fed stays on hold, for a loooooong time
As for the move of the day, nice day trade in the financials: huge volume in the am and same volume (dump ) at the end of the day.
Dollar bottom? Keep an eye on the TED spread -
The election is less than 60 days away. Of course oil prices are starting to fall. We need McBush in the White House.
Anonymous@3:07pm : I don't agree that oil is being left in the ground. I'm not aware of any data to support that claim.
Bob_In_MA: I think peak oil is a reality. The data is compelling. This was not the case in 70's and 80's when production was till increasing and discoveries relative to consumption were not so dismal. Even the recent Brazilian finds - which are staggeringly expensive to exploit - are a drop in the bucket at 85 million barrels a day.
Go to theoildrum.com for more info.
What I learned this week:
I managed to watch Kudlow for 5 minutes this week just before I went to workout.
He told the viewers that that recent price declines were due to George Bush opening up offshore drilling. Prior to watching that, I would have thought it would take more than a few days to get that oil out of those reserves and through the entire wholesale network. I would have also thought releasing price controls in China and India, as well as unwinding transactions might have influenced the price.
And that's what I learned on Kudlow this week.
Europeans just zoomed past us to the bottom that is. It is the race to see who will ground first.
I'd hate to point this out, but it appears that an awful lot of "anti-dollar" trades in foreign currencies, commodities appear to be awfully correlated and are going straight down.
One possibility is that was a wee bit of leveraged speculation behind them, and a lot of speculators are facing margin calls at the same time.
It's probably too early to make a definite conclusion, but perhaps the Fed was right not to panic about the imminent end of the dollar after all.
Guys,
Please check this link, it is at least thought provoking; it does a nice job at connecting all the dots -- yen carry trade unwinding, $ raising (temporarily), Oil down ( and will fall more), equity markets gyrating wildly (as they finally collapsed globally), Fed and ECB failing to recapitalize insolvent banks, etc etc, makes a very compelling argument
Euro and US Dollar Headed Lower as Yen Carry Trade Continues to Unwind :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website
keep seeking the truth!!!
bond guy,
Hedgies blowing up exiting a crowded trade?
"energyecon writes:
bond guy,
Hedgies blowing up exiting a crowded trade?"
Yup. It's purely a guess on my part, based on the historical pattern - correlations go to one, getting big daily moves (EUR moved 3 big figures Friday; the aussie dollar is in complete disarray). It's a sign that margin calls are hitting people who had the same trades on in a number of markets.
But it probably just won't be hedgies; banks' prop trading desks and real money managers may have the same trades on, so they are all under pressure to exit at the same time. But people focus on hedge funds since they blow up immediately; the other players just muddle through and just announce terrible results at next year end.
US oil consumption is being managed downward. $4 gas was a memo to industry and it is mission accomplished, without a doubt. The propaganda machine is in full swing, SUV's are as stylish as pet rocks and their owners are the new town fools- dumb rednecks with little willies who owe a lot of money for useless junk.
Gas will go down to about $3.00 by November so everyone can buy a turkey and by next June it will be $4.15 and a year from then it will be $4.40 and so on.
China doesn't give a shizzle about anything but energy right now. China gets what it wants (oil) in exchange for a stay of execution for the dollar empire.
Oil is priced in dollars because the USA is the biggest consumer. In 15 years the USA will relinquish that role, and everything else will be easy enough to negotiate. When that happens it will be June in January, forever.