Stock Market: Another Up Day
Submitted by
CalculatedRisk on Fri, 03/13/2009 - 12:21pm (116 comments)
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Did you miss the bottom?
Nope.
STATEMENT FROM HEARTLAND PAYMENT SYSTEMS
March 13, 2009
"Heartland was certified as PCI-DSS compliant in April 2008 and expects to continue to be assessed as PCI-DSS compliant in the future. We’re undergoing our 2009 PCI-DSS assessment now, which Heartland believes will be complete no later than May 2009 and will result in Heartland, once again, being assessed as PCI-DSS compliant."
Visa Sanctions: Heartland Issues Statement : Information Security Resources
There's a joke in there somewhere.
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Michael, I must go to patrol the peremeter. I suggest you reboot, flush your cache, and disable the internet for 544908 seconds.
The bottom has passed.
I sent you a secret message. Only those who know will break this code!
ova - I just sent you one. Did you get it? I cant figure out how this works. Cheers!
Yeah, the bottom has passed something but I don't want to step in it.
A lot of used car salesman talk on CNN about buying in to this. Tripping tongue of Bernstein says "we have to give this chance a plan to work".
He mispoke himself correctly. Where exactly is the Plan? A table along the following 2 column format would work:
What went wrong.......What we did that fixed it.
A plan of more and more debt holes and digging won't cut it. No matter how many shiny shovels are hired.
This rally doesn't look as strong as the one in November,
looking at the daily S&P chart for the last six months.
Love this graph.
It makes you wonder if "that's all" like in red or green, or if "more to come" like the grey.
Never in those other graphs was so much money thrown at the still-unidentified problems.
Yeah once the stock market turns around...uhhh... then consumer confidence will...errr...and credit spreads...hmm. why are news peoples talking about this?
Guest says:Today, 4:35:48 PM EDT
The bottom has passed.
Sorry for the repeat, but for the sake of those who may have missed it, here are the bear market rallies that occurred during the Great Depression.
November 1929 - April 1930: +48%
June 1930 - September 1930: +12%
December 1930 - February 1931: +21%
May 1931 - June 1931: +27%
October 1932 - November 1931: +35%
July 1932 - September 1932: +72%
Bear market rallies during the Great Depression - Morningstar
I can't look at the bottom chart anymore and not see the Mortgage Pig.
re Madoff: anybody tried to make a Ponzi model on a spreadsheet? Using extremely simple assumptions: opening balance, fixed intake per year, payout to "investors" 12% could only make the thing run 10-12 years before total red ink.
10 years is a good run for a Ponzi scheme.
EF there is no doubt he was skilled. I want to say he probably lived a pretty miserable life the last 20 years. Imagine always waiting to be exposed. You know the day is coming you just dont know when. People think money makes people happy. I bet he was a stress case and miserable. Of course his next twenty years will probably be much worse
"Of course his next twenty years will probably be much worse"
I'll bet he doesn't last 18 months
It is amazing how good millions of dollars can make you feel, though.
Comrade Elmer Fudd, don't forget to include leverage in your Ponzi calculations. By borrowing at 30 to 1 against assets, you can keep the thing going several years longer. (Yes, I know you have no real assets, but you don't have to tell the lender that.)
"anybody tried to make a Ponzi model on a spreadsheet?"
Lots of stockbrokers used to get their start using blank golf/tennis tournament drawsheets. Enter successful cold call connections in 1st round blanks. Tell half that ABC Company's stock is going up, half it's going down. Call back the ones you gave the correct direction and tell half XYZ is going up, half it's going down. After 3 rounds, you have some true believers and you can try to sell them something. Try to get enough info to determine which ones have real money. Sell them good investments. Unload the firm's pump-n-dump crap to the others. Go back to the well if they ask for it.
I wonder if this will be a Bear Market Rally like the oe that occurred in months 2-7 during GD-I?
dead cat bounce ride bounce
O:-)
If only Bernie Madoff hadn't tricked all those minorities into taking out subprime loans.
-Atrios 09:57
RD, you referred to looking for diamonds once the "real" bottom around, presumably after this bear market rally fades and crashes. Any particular industries, companies on your shopping list?
I can't see a bounce of more than 20% with the current atrocious economic conditions.
Astronomers Are Just As Dumb As Economists
xaxa
Texas Gov. Perry rejects $555M in stimulus funds - Dallas Business Journal:
Texas Gov. Perry rejects $555M in stimulus funds
(Screw the unemployed... )
It's worse. Unemployment benefits are immediately passed through to the broader economy since they are typically all spent. But perhaps the Texas Governor is concerned about overheating their economy. DONT_KNOW
Let me add to that...I can't see a bounce of more than 20% with the current atrocious economic conditions, and the amount of deleveraging left to unfold.
the darn thing looks like it's following GD1 to the tee...even this bump...eerie..I just did a spread sheet on one of our customers and avg credit score for last 3 months for shoppers was 586....top 10 Honda dealer in US....yikes..
Astronomers Are Just As Dumb As Economists
OT but it's Friday.
The original Prophet of Doom, Jasemiah, was stoned to death by his own people after the crash he had long foretold came about. It is not known if he was a social retard. O:-)
check
"I can't see a bounce of more than 20% with the current atrocious economic conditions."
true but it will make shorting so much ... "affordable",
re Ponzi: assumed $20b open and 1.5b/yr intake. Opening balance and next 3 years make money over 12 years. Invested assets when the money runs out about $37b.
this is all buy and hold. Wonder if Madoff accounts were in the till when the ponzi opened in '92?
I see that the WSJ has updated its Market Data Center page for the P/Es of the Major Indexes...
Dow is at about 24.
Both the S&P and the Nasdaq are about 15.
This is using trailing twelve month earnings, as of the market close today.
We still need to get these P/E's down into the single digits, IMHO.
Just in case you didn't see my happy dance with regard to BankUnited, as per the previous thread. . . .
Liz waggles hips and sneers in the direction of Fred, BankU honcho.
As to Madoff.
Maybe he was excited and aroused each day, seeing how he was getting away with it.
Did he expect to go back to his penthouse until sentencing.
Also, NPR was saying that if you are counting the total at the bottom of the financial reports, 50 billion is too small, it's 60 something billion, including the interest. But if you take off the interest, which was always imaginary unless you cashed
out, it's a mere 17 or so billion. NPR guy pointed out that the loss is the whole amount to the investors, 'cause they thought the money was theirs, not just the amount they invested 10 years prior.
be interesting to see a similar 4-bear plot for U3/U6 unemployment figures, with GD represented as best as possible from reconstruction of data.
IIRC their unemployment was only 8-9% after 12-18 months, then really spiked in the second year.
yeah, realize totally simplistic. suppose some accounts let the money accumulate and others withdrew, operating costs, etc. the guy supposedly didn't make any trades, though. not a new comment, but really incredible that this guy (and who else) could burn a $67b hole like this.
Would like to know, just curious, (1) total dollars withdrawn from (say) July 2008. (2) Total amount paid to employees/management, including bonuses, from July 2008.
Unless there has been systematic data destruction (not reported, as far as I know), it should be possible to get these numbers.
Gee, lama, I would have never thought of something like that. I guess I just don't have a mind for crime.
I am ignoring the market until it and rationality come within shouting distance. They don't have to overlap or anything, just come within shouting distance.
Introducing, BACdad Bob: http://realize.org/cr/BACdadBob.jpg
Cramer say buy-buy-buy-bye-bye
Woo-Hoo!!!
Go Bulls!!! :-$
Interesting to see GS stock gain 50% while C and BAC were losing about 80% of their value...during a widespread bank-stock panic of the past few months.
Is everything really cool at GS? The price of Put options suggest not.
GS and JPM did not do mortgages.
2 good posts on zerohedge in recent days
this rally is over, I really wish they could have held it in a bit longer... didn't come close to 20%
How do you know?
First '60 Minutes' -- Is Facebook next for Ben Bernanke? Capitol Report - MarketWatch
First '60 Minutes' -- next Facebook?
Getting to know Fed Chairman Ben Bernanke
WASHINGTON (MarketWatch) - News that Federal Reserve Chairman Ben Bernanke is going to appear on CBS's "60 Minutes" on Sunday night is setting off a frenzy of speculation on Wall Street about what he might say.
But investors who end up rearranging their plans to catch the program may be disappointed.
Fed watchers say a "60 Minutes" interview isn't the format for big news from the central bank.
"I wouldn't expect any policy initiatives to be announced in this format - this type of appearance is meant for other purposes, perhaps the Fed wants to improve public confidence in policy," said Dean Maki, chief economist at Barclays Bank in New York.
It looks like Bernanke may be letting the media have a peek at his personal life rather than whether he will end up buying longer-term Treasurys in order to try to get the financial markets moving again.
But if that is the strategy, are Facebook or Twitter far behind? Will Bernanke answer the recent Facebook survey requesting a list of 25 interesting random facts about one's life. The "60 Minutes" interview is already complete. Reporters who saw Bernanke trailed by CBS camera crews over the last week said the focus seemed to be on Bernanke's hometown Dillon, South Carolina. Bernanke returned to Dillon last weekend to attend a formal ceremony where a highway interchange was named in his honor. If Dillon is the story, you can be sure that the report will feature the ironic news that Bernanke's boyhood home is in foreclosure. The interview could still riveting, but not for bond traders. Many historians are keen to hear Bernanke discuss his upbringing in the South. Others are interested in the role his religion plays in his life. Bernanke grew up in a Jewish household, a minority in the heavily Christian community. A clear shift towards greater transparency Analysts do see clear signs that Bernanke favors much greater transparency at the central bank than his predecessor Alan Greenspan.
Last month, Bernanke received plaudits for being the first Fed chairman to appear before a National Press Club luncheon, opening himself up to written questions from reporters and their lunch guests for about a half hour. Greenspan disdained public press conferences and he laid down strict rules for interviews. Reporters were not allowed to quote him directly. As a result, all but a handful of reporters were left with little to do but listen intently to Greenspan's appearances before Congress for clues on his thinking.
But there, Greenspan seemed to revel in his oblique answers. He even told one hapless member of Congress that if the congressman understood him, he was more than likely wrong in his interpretation.
But over the last decade, there has been serious economic research showing...
We still need to get these P/E's down into the single digits, IMHO.
+1111111111
"We still need to get these P/E's down into the single digits, IMHO."
I have been trying to imagine that happening and here is where I get stuck. Let's say the trailing 12-month earnings for the S&P 500 gets down to $50. Of course, that is terrible news and the P/E "should be" about 9. Thus, SPX would be 450.
My view of the constant pump-monkey chatter is that just when we are about to reach that point, analyst consensus will predict a massive Q4 rebound (or second half, or whatever) and a prediction of $60 in earnings.
Of course, jumping from $50 to $60 is a 20% increase, and that deserves a multiple of at least 15, so the widely-expected target is now SPX 900. There is no way that the index gets to 450 with every talking head on CNBC flapping gums about 900. So maybe we get down to SPX 600, which gives you a trailing P/E of 12.
I would love to hear proof/discussion that this analysis is in error.
Earnings are going down, and they will stay there
With each time an "analyst" is proven wrong, they lose credibility
People are withdrawing from the stock market now because they actually no longer trust the system. That's not an on-off switch
I would love to hear proof/discussion that this analysis is in error.
Not bad. I contend the media is the single-largest driving force behind consumer confidence plummeting, and therefore corporate America's earnings.
I wish people weren't so dim. Why do they have to be so wrapped up in what the TV tells them? Or Hollywood for that matter. I hate our society. No one gives a damn.
Regarding P/E ratios going down to single digits...
I refer you to ComstockFunds.com, as they do an awesome analysis of the history of PE ratios at bottoms, and also just a good analysis of the confusion over how the PE ratio should be measured (i.e. which PE ratio should we use, and why?).
Economic Recovery on Life Support
Also Hussman has some good comments in his free weekly commentary this week, regarding why stocks might need to get very cheap before we bottom:
Hussman Funds - Weekly Market Comment: Current Archive
It will happen by many iterations of two steps down, one step up - as with all secular bear markets.
Frank Zappa's Stimulus Package.
The biggest criminals are the ones in Congress.
Yours In Socialism,
Kilgore Trout
Madoff said he started covering losses thinking he'd make it up with the next years' gains. This is not totally implausible. I found this happening to all sorts of companies' CEOs when I used to be an internal auditor. The problem compounds itself when the management focuses too much on managing results as they then take their eyes off the real business. That becomes a death spiral.
I always said I could audit a company more effectively by constructing the work program on the executive bonus computations rather than follow the standard audit program.
steinly says:Today, 5:08:00 PM EDT
be interesting to see a similar 4-bear plot for U3/U6 unemployment figures, with GD represented as best as possible from reconstruction of data.
IIRC their unemployment was only 8-9% after 12-18 months, then really spiked in the second year.
"In the four years ended 1937, real GDP excluding
real federal government expenditures grew at a compound annual rate of growth of 9.0%. In
the four years ended 1937, industrial production grew at a compound annual rate of 12.9%
(see Chart 3). Although this vigorous real economic recovery did not bring the unemployment
rate back down to anywhere near where it was before the 1929 recession commenced, the
unemployment rate did fall from a cycle high of 25.6% in May 1933 to a cycle low of 11.0%
in July 1937 (see Chart 4)."
http://web-xp2a-pws.ntrs.com:80/content//media/attachment/data/econ_research/0902/document/ec020909.pdf
N.B.: Chart 4 is on page 3
Popeye: http://web-xp2a-pws.ntrs.com:80/content//media/attachment/data/econ_research/0902/document/ec020909.pdf
I suspect overlaying this plot on our current dip will be informative over the next year or three
This is comparable to U6?
We still need to get these P/E's down into the single digits, IMHO.
+1111111111
We shall know soon enough.
Amazing how closely the recent uptick in the market follows the very temporary upteck in the 1929 market. Eerie. Now watch the SP500 start another catastrophic downleg. Sooner or later the bullfools will give up.
lama said;--"Madoff said he started covering losses thinking he'd make it up with the next years' gains. This is not totally implausible."
It is implausible if you don't invest any of the money. He was fronting for someone or some organized group--either mafia type or governmental.
Mel,
Understood, but I don't think anyone except Madoff (and his co-conspirators) knows for sure at this point that he never made trades. He may have tried to trade for a few years. When that didn't work out, he may have just given up on that and lived off the deposits and accretion.
This scam goes back to an era of paper transactions. I hope it's now available digitally. I have an acquaintance piecing together reality for one of Madoff's victims. He's going to be victimized again with accounting fees.
The Latest from Ritholz:
Madoff in Prison
"He even told one hapless member of Congress that if the congressman understood him, he was more than likely wrong in his interpretation."
The Delphic Oracle. A great empire will be destroyed.
"astronomers are just as dumb."
Maybe one named Duncan Steele will have the last rueful laugh.
"GS and JPM did not do mortgages."
wut?
Sorry, that's Steel without the 'e'.
"GS and JPM did not do mortgages."
But they did securitize them. Kind of like the difference between he drug king-pin or the low-level associate on the street.
C'mon can we just get the BKUNA take down notice? Sheila's getting hungry.
Former Congressman Calls for Investigation of CNBC's Jim Cramer
Former Congressman Calls for Investigation of CNBC's Jim Cramer
Hussman Funds - Weekly Market Comment: Current Archive
"I suspect that the markets are about to get volatile, possibly to an extent beyond what we observed in October and November"
Wow. Genius analyses. If only I could get paid for that kind of knowledge.
*Palm to the face.
S&P Gets Its Earnings Wrong
The Jim Cramer Indictment: Five More Counts
The Jim Cramer Indictment: Five More Counts - Jim Cramer - Gawker
"Wow. Genius analyses. If only I could get paid for that kind of knowledge.
*Palm to the face."
And of course you cherry pick one sentence and ignore the well-thought preceding paragraphs.
From July 2, 2008 through March 11, 2009 there have been $359.02 bn in equity mutual funds redeemed according to Trimtabs (I did the addition myself from their press releases)
Multiply that by the the marginal leverage... serious impact
The Jim Cramer Indictment: Five More Counts
This guy is scum.
"preceding paragraphs."
you mean.. proceding.
and yes, I did read the article. but good lord, what a moronic statement to make. especially coming from a Phd.
I refuse to believe in Madoff version. It just fails to convince me.
If you don't buy now, you are going to be sorry when the DOW hits 3,500.(in today $ - it could hit 350,000 in Mugabe Jr
Go out there and make me proud!
Annualized Total Returns
as of 2/28/09
1 Year -2.28%
3 Year 6.80%
5 Year 6.41%
Since
Inception
(09/12/02) 7.17%
Obviously the guy can invest though. Regardless of his academic theory.
"preceding paragraphs."
you mean.. proceding. "
"preceding
pre.ced.ing \pri-'se-d-in\ aj : that precedes : going before PRIOR, FORMER,
ANTERIOR mean being before. PRECEDING usu. implies being immediately before
in time or in place; ANTECEDENT applies to order in time and may suggest a
causal relation; PREVIOUS and PRIOR imply existing or occurring earlier,
but PRIOR often adds an implication of greater importance; FORMER implies
always a definite comparison or contrast with something that is latter;
ANTERIOR applies to position before or ahead of usu. in space, sometimes in
time or order SYN syn PRECEDING, ANTECEDENT, FOREGOING, PREVIOUS,"
proceding wasn't found in the dictionary, but here are some similar words:
preceding
proceeding
providing
No believe I meant precede given that procede doesn't exist.
The Latest from Mish:
Uptick Rule Nonsense
@ATM Card and $19 in the bank
Conjure and I use the present value approach, which is what I was taught many years ago.
Price Earnings Ratio (PE)
There are a number of reasons why PEs must come down, not the least of which are lower growth rates due to de-leveraging, changes in the perception of risk and higher inflation going forward. If Mr. Market doesn't match our numbers, then I say to hell with it and do something else.
I could go on for days about this subject. The commentary you're referring to sounds like utter bullshit. Most of these so-called analysts can't justify their valuations; they pull numbers out of thin air.
Don't get me wrong. Mr. Market could zoom off and leave me behind, but that doesn't mean Mr. Market is right. If it does zoom out of sight, so be it, there are other less risky ways I can play.
Not sure why you think this is a moronic statement by Hussman.
"I suspect that the markets are about to get volatile, possibly to an extent beyond what we observed in October and November"
It's actually pretty bold to predict that we'll surpass the volatility of October/November, considering that the VIX was at an amazing level of 80 during that time. Take a look at this chart of the VIX since 1990...
http://finance.yahoo.com/echarts?s=%5EVIX#chart1:symbol=^vix;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined
I have an acquaintance piecing together reality for one of Madoff's victims. He's going to be victimized again with accounting fees.
After which he'll no doubt hire a lawyer.
ShortCourage
we will hit october-like vix numbers in the near future, problems are worse and defences are weaker
The Depression Dow never bested its previous lows from this point forward. Our current updraft is already there. Odds are it has hit its ceiling. If it hasn't, we may be seeing a bottoming. Can't think why it would, though.
Anonymous says:
Today, 6:07:07 PM
The Depression Dow never bested its previous lows from this point forward. Our current updraft is already there. Odds are it has hit its ceiling. If it hasn't, we may be seeing a bottoming. Can't think why it would, though.
Gauge <> Plane
Hugh Hefner Raising Cash
$3835/sq. ft -- no, it's not the mansio
EvilHenryPaulson, that may be true. It might not surprise folks here in doom-and-gloom land. However, it seems odd that somebody would be termed a moron for suggesting that volatility will exceed those extreme levels again, with the implication being that it's sooooo obvious that it's an inane prediction.
Former SEC Lawyer Indicted in Alleged Stock Scheme (Update1)
Former SEC Lawyer Indicted in Alleged Stock Scheme (Update1) - Bloomberg.com
now don't eat the link this time
"The Depression Dow never bested its previous lows from this point forward. Our current updraft is already there. Odds are it has hit its ceiling. If it hasn't, we may be seeing a bottoming. Can't think why it would, though."
If I'm reading it correctly the DOW topped it's previous low 3 times from this point forward until it's final bottom. Look at the CR graph.
we will hit october-like vix numbers in the near future, problems are worse and defences are weaker
Barring another war or political calamity, I don't see how that could happen. I don't think the markets have bottomed out yet.
I think we're in for a long, slow, cruel unwinding of the rest of the garbage clogging the system. Bad credit card debt, Alt-A.
That said, I was pretty baffled as to how C could claim that they're on track to post a profit this year.
How??
Banks will do very well in the future.
MP
I find you eminently sensible and wise when discussing investment strategies, especially since you are laying off the emoticons today.
Your response to ATM is based entirely on a sound theory of valuation, as I think a good strategy should be based.
But another response to ATM's hypothesis would be to meet his argument on its own terms (for purposes of analysis of the political economy, as opposed to investment strategy). Could PEs fall to single digits even though CNBC is pumping S&P expectations at 900? The proof is recent history. The S&P fell to 666 from over 1500, and all that went against CNBCs cheerleading, did it not? This is not a game that CNBC and other media outlets control, although they have had some very deleterious influence, as has been pointed out by comedians more funny than me.
Regards to Conjure, as always.
ShortCourage, I'm not concerned with the reputation of Hussmann and I have accepted that people believe deeply in their disbelief in the real world. Just felt like making a comment, and that was about all there was to comment o
"That said, I was pretty baffled as to how C could claim that they're on track to post a profit this year.
How??"
Suspend mark-to-market valuations and Presto!
lama
on an operating basis, they don't consider any losses from actions prior to 2009 as belonging to them
EHP, not sure what you mean. Unless you mean any write-ups for prior year are supposed to go directly to Retained Earnings. Is that what Congress is proposing?
There's still the current year anyway.
Did Sheila get the $500 BILLION yet?
I suspect that for a long while Madoff didn't get many withdrawal requests. Who would want to withdraw from a fund getting such good
returns, unless they absolutely needed the cash? In the last year
or so, many probably needed cash, which brought the whole
house of cards down.
Anonymous says:
Today, 6:12:43 PM
That said, I was pretty baffled as to how C could claim that they're on track to post a profit this year.
How??
Profit ex everything.
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C got a pretty big gift from the Treasury - No interest payments/dividends on that $50 billion or so that got converted to common. Hell, they may use it to buy back some of their high coupon debt, since they don't intend to lend any money out anyhow and now get a pass on capital ratios. They could make money when capital comes in for free.
MP and Joe Schmoe:
I appreciate the feedback. I take seriously predictions that the market has farther to fall (and also the historical precedent for single-digit P/Es), but it is difficult for me to get a sense for how & when reality is likely to trump sensationalistic optimism. Your comments help.
Short Courage,
I commiserate with you over this kind of abuse by anonymous posters. You posted a useful link to an article that made a reasonable and non-trivial argument, and - I will emphasize this - you insulted no one. Your contribution was a net positive for everyone here, whether individuals agree or disagree with the information you provided.
In reply an anonymous poster got all pissy and demeaning with you, offering nothing but an insult. Fine payment for being good spirited and sharing links.
I had a dose of this sort of thing this morning, and it really pissed me off. I vented out a reply earlier. But on reflection I think the only way to deal with anonymous wise-asses of this type is to ignore them completely.
Anyone who takes a potshot like that without a trackable handle does not deserve to be engaged in discussion because they are not engaging in a good faith discussion.
Anonymous comments that contribute something of substance or value without insult are completely different, of course.
$3835/sq. ft -- no
A small region of Kendra Wilkinson?
Love that compression retrace. We're months ahead of GD 1.
Trade well.
C
"..JPM didn't do mortgages" ???
Beg to differ - they did them under both their JPM and Chase names, per the legal notices for foreclosures that appear in the weekly local rag in DuPage County IL - think Oak Brook and Hinsdale and $1MM to 5MM houses. I think many of the forclosed in the whole area appear to be real estate brokers-turned-builders and not nouveau-riche subprime buyers in these never-lived-in-monstrosities.
Should the S&P 500 follow Todd’s forecast, the index would tumble to 560 and then surge 47 percent to finish 2009 at 825. Wall Street equity strategists lost credibility last year when none predicted a down year and the average forecast was for a gain of 11 percent, according to data compiled by Bloomberg. The stock index plunged 38 percent, the steepest decline since the Great Depression.
These investment banker bullfools have zilch credibility left. He is probably right about the big drop but the subsequent zoom upward is sheer stupid fantasy. When the SP500 drops into the 500s its next move will be into the 400s. God what fools these people STILL are.