Tuesday, March 31, 2009
Intro by Ron Smith to above
Tuesday, March 31, 2009 Ron Smith
“Overborrowing always ends badly, whether for an individual, a company, or a country. Sooner or later, credit conditions become tighter and no one will lend you money on anything close to affordable terms.” – Simon Johnson.
This quote comes from an article in The Atlantic by Mr. Johnson, a former chief economist for the International Monetary Fund. In it, he lays out a strongly put argument that the current economic crisis has revealed some very unpleasant realities about the United States, most importantly how “the finance industry has effectively captured our government – a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises.”
We are, says Mr. Johnson, under the thumb of an unholy alliance between Wall Street and Washington that created an oligarchy that has run amok, frighteningly similar to how the oligarchs in Russia and other emerging markets have acted in more localized crises.
*You can sit back and take it...as they lean forward....and take it.
Monday, March 30, 2009
As we have seen 90% downers tend to come in groups....sometimes interrupted by 2-7 days of rally.....
President Obama and the majority of our leadership on both sides of the aisle are confident that the right mix of monetary and fiscal policy can restart the spending party that defined America for a generation. And as the bleary-eyed revelers wisely reach for a cup of black coffee or stumble into a rehab center, Obama is pouring grain alcohol into the punch bowl hoping to lure the walking zombies back onto the dance floor. Europe and Asia fully understand that Obama will ask them to lend the booze.Washington is telling us that our problems result from a lack of consumer spending. Therefore, the solution is for government spending to pick up the slack.
However, if Americans are too broke to spend, then how can our government spend for us? The only money they have is taken from us through taxation. To postpone immediate tax hikes (adding interest for good measure), Washington plans to borrow more from abroad. However, if our foreign creditors refuse to pony up, much of the money will simply be printed instead.
THIS FROM USATODAY.COM
By Christine Dugas, USA TODAY
The current financial crisis is all-inclusive; our path to prosperity or even simple financial stability seemingly obliterated.
With every furlough, layoff or stock market drop, Americans of all ages and backgrounds are seeing their incomes dwindle, bills pile up and financial options disappear.
The number who are suffering has increased by 3 million the past year, according to a recent Gallup-Healthways survey. Some 37% of us said we were worried about money last week. Last year, 3.2 million consumers contacted the National Foundation for Credit Counseling, up from 2.2 million in 2007 and 1.4 million in 2006.
"What's happening to families is a perfect storm," says Bob Manning, a finance professor at Rochester Institute of Technology.
Is the BEAR MKT RALLY OVER? I think a close BELOW SPX 800 (more importantly on weekly basis) might signal so.
The horse isn't NEAR the water....in fact may not know how to swim.....where in the ANALS of history is the disease a cure for THE DISEASE?
Sunday, March 29, 2009
A government big enough to give you everything you want, is strong enough to take everything you have. -- Thomas Jefferson (Thanks P for inspiration)
You can take THAT to the bank.....or can you?
Saturday, March 28, 2009
More detail on Schiff's contentions.
Gov deficits as far as the eye can see, gov spending usurping consumer spending and saving, gov penalizing saving when that is exactly what is needed. Coercing MORE DEBT? when the DEBT BUBBLE HAS BURST? ONLY GOV HAS THE ANSWERS? certainly not the bald headed bubble minded dumbasses we have running things....
Friday, March 27, 2009
Wednesday, March 25, 2009
Last Update: 25-Mar-09 08:53 ET briefing.com
Like some other data of late, the February durable goods report turned out to be better than expected. Specifically, orders for durable goods increased 3.4% (consensus -2.5%), breaking a six month streak of declines. Excluding transportation, orders rose 3.9% (consensus -2.0%).
The January numbers, however, were both revised noticeably lower with total orders down -7.3% (prior -5.2%), and orders, excluding transportation, down -5.9% (prior -2.5%). Taking these revisions into account, the February data ends up being much closer to expectations.
The latter point notwithstanding, the February data still don't look as dour as the prior month when declines in orders and shipments were seen for just about every industry grouping. Notably, new orders for machinery increased 13.5% in February. Computers and electronic products orders were up 10.1% and defense aircraft and parts orders were up 32.4%.
Nondefense capital goods orders, excluding aircraft, jumped 6.6%, which is a hopeful sign for business investment. However, it is too early to read too much into this one month increase, which could be more of a temporary bounce after a -11.3% drop in January and a -5.9% decline in December.
Unfilled orders declined -1.3% and inventories dropped -0.9%.
Total shipments fell -0.5% in February, following a -5.2% decline in January, so the business investment component of GDP can still be deemed to be on the poor side of things.
IMHO FED and GOV action cannot reverse what has JUST BEGUN to unwind, reaching % heights not even seen in last Great Depression, some of the methods now being used may prolong and or make matters worse.
PUMPING the real estate bubble in 2003 worked as housing had yet to rise in parabolic fashion, consumers hardly held back last mini Recession in 2001, which as TECH Bubble deflated....last Bear was to bring us back to norm and reset ourselves for the next expansion.
Instead we PILED on MORE DEBT, and now day of reckoning is here. But most do not see the FED as the problem, no we need to make Geithner's powers such as he would be KING? He was at FED during the period of our discontent.....and was architecht of the favortism going on now for Goldman Sachs as $12B was funneled to them from AIG....no one sees that FOX is in the HEN HOUSE.....No one sees the reshaping of the financial world and WHO comes out ahead and WHY!
Did not the FED or GOV SEE the Real Estate explosion? No ONE saw the condo's going up overnight in Miami? The CRANE's in Shanghai? or Dubai? THE RAMPANT speculation that was ALLOWED?
Maybe the GOV has to take over spending when others will not, but we are losing more and more the ability to operate in a free market system and have a say so in how our futures unfold.
Tuesday, March 24, 2009
45% of SURPRISE HOUSING DATA that helped spark HUGE RALLY was "foreclosure sales" also helping figures was weather pattern for comparison between JAN/FEB.....but it got reported as if turnaround was guaranteed.
5 90% UP VOLUME DAYS IN LAST 10 trading days is unprecedented!
IMHO, and it's a good one, maybe first since Bear started in OCT 2007, this IS a bear mkt rally, NOT a NEW BULL MKT only BULL is what CNBC and media/gov/FED are feeding us.
CALLS vs PUT buying is at some of its WILDEST extremes......AAII poll shows dramatic reversal of bull bear per cent....it didn't take much.
VIX ended day above 42....http://stockcharts.com/h-sc/ui?s=$VIX&p=W&st=2000-01-01&id=p83054640202&a=163869814 VIX TELLS A STORY
Monday, March 23, 2009
BURDON has been shifted from wrongdoer to US!! but rally continues maybe to 850 area
Rasputin - Sun, Mar 22, 2009 - 08:54 AM *Thanks to Rasputin from WALLSTREETBEAR.COM
In the one year since the collapse of Bear Stearns, the Federal Reserve has created the following "Alphabet Soup" programs to fight this epic debt and derivatives collapse:
1. Maiden Lane, LLC (I and II) For Bear Stearns bailout.
2. Term Auction Facility (TAF)
3. Central Bank Liquidity Swaps (CBLS)
4. Primary Dealer Credit Facility (PDCF)
5. Term Securities Lending Facility (TSLF)
6. Term Securities Lending Options Program (TOP)
7. Asset-Backed Commercial Paper MMF Liquidity Facility (AMLF)
8. Commercial Paper Funding Facility (CPFF)
9. Money Market Investor Funding Facility (MMIFF)
10. Term Asset-Backed Securities Loan Facility (TALF)
11. Outright ownership stake in AIG
12. Numerous other "loans" to JPM, Citi and BofA after the Lehman Bros. collapse
13. Outright monetization of Fannie/Freddie MBS and debt
14. Outright monetization of U.S. Treasuries
15. Expansion of TALF to support the soon-to-be-announced Treasury/FDIC/Fed program to offload dead, toxic "assets" from banks.
Total amount flung or committed to be flung by the Federal Reserve:
Approximately ELEVEN TRILLION FIATSCOS!
In addition to the massive, unprecedented, insane amount of fiatsco-flinging by the Fed outlined above, the U.S. government has also been busy creating the following programs:
1. The original stimulus bill of 150 billion fiatscos which handed out checks directly to the sheeple
2. The "Bazooka Bill" of 800 billion fiatscos to bailout Fannie, Freddie and the FHLBs
3. The Troubled Asset Relief Program of 750 billion fiatscos
4. The second stimulus bill of 750 billion fiatscos
Total amount of flung or committed to be flung by Congress:
TWO-POINT-THREE TRILLION FIATSCOS!
...which brings the grand total of all fiatscos flung or promised to:
THIRTEEN-POINT-THREE TRILLION FIATSCOS!!!
So, after an entire YEAR of the Fed and Congress flinging fiat at the debt and derivatives collapse AND the total amount now OVER thirteen trillion fiatscos, here we sit.
Now, here are my questions:
1. WHY HASN'T THE PROBLEM BEEN SOLVED?
2. Why aren't the banks now solvent?
3. Why isn't lending back to 2005-2006 bubble levels?
4. Why have housing prices collapsed by thirty-percent?
5. Why are stock markets down fifty percent?
6. Why are so many businesses laying off workers and filing for bankruptcy?
And, I must admit that this massive, epic, unprecedented debt and derivatives collapse has exceeded even my gloomiest forecast--made in August, 2007--of three trillion fiatscos of debt destruction and ten trillion in derivatives decimation.
Furthermore, please keep in mind that I am ONLY counting the U.S. collapse, not the nearly-identical amount that Europe's financial systems have also melted down.
So, in actuality we are looking at:
OVER TWENTY TRILLION FIATSCOS IN DEBT AND DERIVATIVES COLLAPSE!
...worldwide. So far.
ALso, as I pointed out in a post yesterday, the central banks and governments haven't shown any sign that they will ever give up fighting this unprecedented worldwide collapse either. The U.S. Fed and federal government are in fact INCREASING their responses as opposed to backing off and allowing the collapse to run its course to the natural conclusion ("Great Disintegration I").
Moving forward to addressing the soon-to-be-announced Turbo Tax Timmy program to offload the dead, toxic "assets" STILL on the books of the banking system (which, as I pointed out above, SHOULD HAVE ALREADY BEEN DEALT WITH VIA ALL THESE PROGRAMS AND BAILOUTS), I can state with utmost certainty that this is nothing more than another attempt to offload on the taxpayer additional trillions of fiatscos of losses.
And you cant bet that we will NEVER be told exactly of what these "assets" consist, although I already know:
1. Completely worthless mortgages
2. Equally as worthless auto loans and leases
3. Just as worthless student loans
4. Other dead debt
5. All the myriad derivatives of the above (MBS/ABS, CDOs/Squareds/Cubeds/CDS) that were pyramided on top of the previously-listed dead debt
...all of which must total MORE than the thriteen trillion fiatscos flung or promised so far, or the financial system would have ALREADY been restored to order, right?
(Conclusion): We are so scroomed that it is becoming impossible to pretend otherwise anymore. Also, even IF the governments and central banks could possibly absorb all these losses, they will NEVER be able to either unwind all the dead debt and derivatives or, more importantly, re-incite the "Animal Spirits" required in the minds of the sheeple to bring the borrowing markets back to the:
FOUR TRILLION FIATSCOS PER YEAR, EVERY YEAR, YEAR-AFTER-YEAR
...amount required in the U.S. alone to keep the Ponzi Economy from continuing to implode, UNLESS TPTB decide to really pull the "Weimar/Zimbabwe Switch" and start maling one-hundred thousand fiatsco checks directly to the masses.
So, here are our stark choices:
1. Either "Great Disintegration I" continues despite all the efforts by TPTB (which it so far has)
2. TPTB manage to pull off "Weimar/Zimbabwe" for a few more years before we revert to #1 above
I wish I could come up with some other, more benign, scenario. But I can't.
Sunday, March 22, 2009
Our Social and Economic landscape is being changed and IMHO the IN CROWD is more in.....
Saturday, March 21, 2009
MUST READ OR BE CLUELESS
Thanks to friend Pieter V. L. for above and heads up on IMPORTANT ARTICLE!
Last page of an 8 page article http://www.rollingstone.com/politics/sto....In essence, Paulson and his cronies turned the federal government into one gigantic, half-opaque holding company, one whose balance sheet includes the world's most appallingly large and risky hedge fund, a controlling stake in a dying insurance giant, huge investments in a group of teetering megabanks, and shares here and there in various auto-finance companies, student loans, and other failing businesses. Like AIG, this new federal holding company is a firm that has no mechanism for auditing itself and is run by leaders who have very little grasp of the daily operations of its disparate subsidiary operations.
In other words, it's AIG's rip-roaringly shitty business model writ almost inconceivably massive — to echo Geithner, a huge, complex global company attached to a very complicated investment bank/hedge fund that's been allowed to build up without adult supervision. How much of what kinds of crap is actually on our balance sheet, and what did we pay for it? When exactly will the rent come due, when will the money run out? Does anyone know what the hell is going on? And on the linear spectrum of capitalism to socialism, where exactly are we now? Is there a dictionary word that even describes what we are now? It would be funny, if it weren't such a nightmare.
Friday, March 20, 2009
The frantic passage of the Populist Rage Tax was a new low in the US government's response to this crisis. It shows just how likely we are to doom ourselves to a decade or more of misery--by choking our markets, closing our borders, turning our banks into tools of social policy, and wrecking what's left of our economy
what is this?
THE REVISED MONETARY
The measure of the monetary base that
was published by the Federal Reserve Bank
of St. Louis through September 1996
included most, but not all, deposits at
Federal Reserve Banks held by domestic
depository institutions. The new measure,
presented in this article and published by
the Bank since October 1996, includes all
such deposits. The revision increases the
level of the base by an amount that varies
from zero in 1980 up to about $6 billion in
1994 and 1996.
Sources and uses of high-powered
money for the U.S. economy in December
1995 are shown in Table 1.1 Most of the
high-powered money supplied by the Federal
Reserve and the Treasury is represented
by currency in circulation and the
deposits of domestic financial institutions
at Federal Reserve Banks; together, these
constitute the monetary base.
How could a plan crafted by total idiots, bills (stim etc) passed by bigger idiots who dont even read them.....plan crafted by those who got us HERE....a PRes who thinks getting on Letterman was good idea, a GAY ELMER FUDD leading the DEM charge, unconstitutional tax bill to cover up THEIR SHORTCOMINGS....outrage should be directed to Congress and Federal Reserve!
THIS GAMBIT IS DOOMED TO FAIL..............HOW CAN HOMES BE BOUGHT in enough volume when 650K a month are losing their jobs? CONSUMERS ARE DOWN THEIR FOXHOLE AND NOT EASILY COMING OUT.
LAST GREAT BUBBLE IS NOW FORMING IN US COMMODITIES forced out by weakening US$ and flight to something REAL......DEMAND TO DO SOMETHING WITH OIL, STEEL ETC IS NOT THERE.
The 40 yr generational cycle (1929, 1969) is PEAKING NOW. (Harry Dent)
I still believe the greatest bubbles in history and excesses and total credit mkt debt FAR excededing the Great Depression ends with similar stock retrace and consequences....with potential 80% retrace or more from the top....
If Bank profits are SHOWN to BEAT expectations and it is HYPED next report as WORST IS OVER for financials...sure rally could be propped......it would be as thin as paper and offer another great opp to get short as hell IMHO (or sell if already hadnt at higher prices IMHO)
STIM THAT DOESNT STIM?
NEW YORK (CNNMoney.com) -- Big money often spurs big battles. A month after President Obama signed the $787 billion economic stimulus law, governors and state lawmakers are already fighting with Washington and each other about putting the money to use.
At least two governors are asking the White House for special consideration in applying the funds meant to shore up state budgets.
And several governors, saying they don't want to expand eligibility, have turned down millions of dollars of unemployment benefits. This, in turn, has pitted some against their own state legislatures and prompted some lawmakers to threaten to take matters into their own hands.
RON PAUL KNOWS http://www.house.gov/paul/ "can't re-inflate the bubble" youtube video
I am NOT sure how far current rally can take us, maybe even FARTHER than I think given our situation, Bear Markets LURE IN as many as possible to take their money. UNPRESCEDENTED MONEY has been thrown at this problem, maybe it has to go somewhere, the gambit is FED makes your today money worth LES AND LESS by trying to DEVALUE IT....FORCE RATES DOWN to unheard of levels which will cause many on sideline to incur addt'l debt....and move housing inventory.....but it may also have unintended consequences.
Thursday, March 19, 2009
Duratek g-d help us all!
Wednesday, March 18, 2009
WASHINGTON (MarketWatch) -- The Federal Reserve surprised financial markets and committed to buy $300 billion in longer-term Treasurys to help the economy recover. The Fed was more pessimistic about the outlook, in a statement released after its two-day meeting. Officials removed language saying they expected the economy to recover later this year. The Fed tweaked its other credit-easing programs by committing to buy more mortgage-backed securities and agency debt and include more asset-backed securities under a new credit facility starting this week. The Fed repeated that deflation was a risk to the economy. The vote on the statement was unanimous
*In the end it doesn't matter what we think, or what SHOULD be, the market IS rallying and the 800 SPX threshold may be taken out.
Price is coming right to my downtrend line, so should I go long in some manner I will be able to set up a reasonable stop loss.
Admitting FED not seeing or KNOWING the end to this crisis, by removing that language....doesn't give me a warm fuzzy
In an interview on CNBC that aired March 5, GE's chief financial officer Keith Sherin acknowledged that GE (GE, Fortune 500) has a credibility problem with investors. "We've got to earn that trust back." he said.
"We recognize that we've made statements about both not raising equity and about not cutting the dividend and we've had to backtrack on those," Sherin said. He blamed these reversals not on on the uncertain economy.
He said that the best way to regain trust is to be as transparent as possible, and that Thursday's presentation about GE Capital should help provide that clarity.
*GE is main DOW component, if mkt reacts well to Thursday meeting, what they say, COULD provide HUGE upside to market.
Bulls have been regaining some control,
IMPORTANT ARTICLE ON GE
Tuesday, March 17, 2009
Great post SSK
Into RESISTANCE ZONE ON SPX......FED bullishness...break of SPX 800 chink from bear armour
Last Update: 17-Mar-09 08:52 ET briefing.com
The February Housing Starts report produced better-than-expected news, with starts increasing 22.2% from January to an annualized rate of 583,000 units. That compares to the consensus estimate of 450,000, but is still 47.3% below the year-ago level. Permits, meanwhile, increased 3.0% to an annualized rate of 547,000 (consensus 500,000), which is still 44.2% below the year-ago level.
The primary swing factor for starts was the increase in multi-unit structures. Specifically, starts on dwellings with five units or more surged to 212,000 from 118,000 in the prior month. Single-family starts, on the other hand, rose just 1.1% to 357,000 units.
NEW YORK – The percentage of auto loans past due 60 days or more rose 8.9 percent in the fourth quarter of 2008, compared with the prior-year period, according to credit reporting agency TransUnion. And the numbers point to auto delinquencies shooting to their highest point in a decade by the end of the year.
The rate rose to 0.86 percent for the three months ended Dec. 31, compared with 0.79 percent in the 2007 fourth quarter.
Auto-loan delinquencies tend to be cyclical, with the fourth quarter typically showing the fewest problematic payments. But the recession appears to be changing those patterns.
Folks, the porblems are going DEEPER than any Recession I can remember, than most of us can remember.
GOV has added $199B this year and $399B next year (election yr !) to help revive economy, when $TRILLIONS have been destroyed this is like pissing in the wind.....or severing an arm and sticking a bandaide on where it used to be.
Forcing banks to loan? HELOOOOOOOOOOOOOOOOOOO....banks lent to unfit borrowers and aided our demise, some forced by democrats wanting fairness in lending to minorities most of whom are now defaulting.
Banks are trying to TOUGHEN lending standards so money going OUT will COME BACK, nothing is going to change that. Secondary market for these loans (most maybe good now?) has been desestroyed.....it will take TIME to regain trust.
Consumers HAVE CUT BACK SPENDING, BUSINESSES HAVE CUT BACK SPENDING.
There has been NO LETUP in the data showing us a BOTTOM in employment or housing valuations, or delinquencies...will changing way Banks have to value these TOXIC ASSETS change anything? WILL FORCING SHORTS to wait for UPTICK change anything?
What anything is worth is what anyone WILL pay you for it at that moment in time, not tomorrow, not yesterday.
Putting (tax cut stim?) $7 a frickin week in your paycheck going to turn this around?
ADDING 8,500 GOV earmarks to spending bill going help? show Gov restraint?
WHY is PRES OBAMA going on David Letterman show? WTF is that?
Bernanke on 60 minutes must see TV? mkt sold off Monday but surely didnt RALLY hearing the bald guy say MAYBE end of 2009 we get recovery....IM so excited!
$8,000 check in your hand 1st time home buyer....thing is many get the check didnt know about it when they bought.....one in townhouse development, bought one of 3 unsold homes, got $70K hair cut too...but didnt that just lower everyone elses mkt value?
IMHO TOO MANY (LOTS OF EX BEARS TOO) CALLING THE BOTTOM......
EMployment picture #1 area I need to see bottom out and begin to heal and improve....more people working, more people spending, saving, putting into IRA's instead of asking to pull money OUT (hardship which forces Mutual Fund selling to raise cash), more people confident to BUY homes. buy furniture and appliances, do landscaping, buy new car....there's your trickle up or down.
NEW WAVE OF LAYOFFS COMING if current rate of business and consumer spending isnt lifted and soon.
We don't make much anymore, we are Service economy, we have 75% consumer led economy........and they ain't doin' so good.... SO NO....I do not believe we have seen bottom in economy nor in the stock market, do as you must and see fit.....but this is one bear that doesn't like what he sees rally or not. And has NO confidence in those supposed to help heal it.
The AIG situation is just as disgusting as Bernie Madoff....how can anyone have confidence in Gov when they know what has or hasnt been done with $100's of $Billions of tax dollars?
Monday, March 16, 2009
Saturday, March 14, 2009
It PAYS to understand some about technical analysis, when NEWS and fundamentals seem not to make sense, or confuse, chart action may help to clear things up.
Both sides of argument presented because we REALLY don't know, some I know have DIPPED TOE long, certainly going all in predicting a bottom is not sound behaviour.
Remarkably, Domestic Financial Sector Debt Growth accelerated from Q3’s 6.8% pace to a 7.2% rate of expansion. On a Seasonally-Adjusted and Annualized Rate (SAAR) basis, Total Financial Sector borrowings jumped to $1.222 TN during the quarter. This was in the face of the Asset-Backed Securities (ABS) market contracting SAAR $616bn. This critical contraction in private sector Credit was, however, largely offset by combined GSE debt and MBS growth of SAAR $569bn. Bank Commercial Loans expanded SAAR $858bn, while Open Market Paper increased SAAR $341bn.
For all of 2008, Treasury securities outstanding increased an unprecedented $1.239 TN, or 24.3%. Meanwhile, Agency securities (GSE debt and MBS) jumped $716bn, or 9.6%. Combined federal and quasi-federal securities outstanding ballooned an incredible $1.955 Trillion in just one year. For comparison, Treasury and the Agencies combined to increase debt securities $1.146 TN during 2007, $514bn in 2006 and $390bn in 2005. This ramp up of government Credit growth is outdoing even the historic surge in mortgage Credit during the Mortgage Finance Bubble years.
Federal debt growth offset a contraction in several key sectors of private-sector Credit intermediation/creation. Total Mortgage Debt (TMD) expanded only $78bn during 2008. TMD Growth reached about $1.4 TN annually during ’05 and ’06 and averaged $1.177 TN annually during the six Bubble Years 2002 through 2007. For comparison, TMD expanded on averaged $270bn annually during the nineties. With the Mortgage Finance Bubble now burst, the ABS (including Wall Street’s “private-label” mortgage-backed securities) market is in disarray. Through the first eight years of the decade, the ABS market ballooned 240% to $4.50 TN. Annual growth peaked in 2006 at $912bn. In an historic reversal of fortunes, the ABS market contracted SAAR $616bn during the fourth quarter and declined $442bn for all of 2008.
Nowhere was the implosion of “Wall Street finance” more apparent than it was with the Securities Broker/Dealers. Broker/Dealer assets contracted nominal (non-annualized!) $785bn during the final three months of the year, although much of this was likely reclassification of Lehman and Merrill assets. It is worth noting that Miscellaneous Broker/Dealer Assets contracted SAAR $1.726 TN, while Treasury holdings expanded SAAR $774bn. For the year, Broker/Dealer assets were down $875bn, or 28%, to $2.217 TN.
Friday, March 13, 2009
It is true the mkt can see 9 months ahead. It is my humble opinion we are in a DEPRESSION of some type, the word RECESSION just doesn't seem to cut it to describe what we are witnessing and the MAdoff style destruction of capital.
Eact time a Recession appears, a Bubble BUrsts, the men in white do not want to feel the pain, do not want to heal the prior excesses, so a bigger and badder bubble MUST be inflated.....and I think THIS TIME they really did it. 3 of the top 5 investment banks went POOF. C and BAC have been reduced to penny stocks and the lie has been exported all around the globe, bankrupting some countries like Iceland.
"We must STIMULATE the world economy" G20 meeting coming up, will the rest of the world follow the US lead?
Household debt levels in 3rd qtr were 96% of GDP and 130% of disposable income. A more historic level would be 60%.
WHAT inning are we in for deleveraging? Return to the norm?
Rally predicated on 2 things....C profitable? Retail sales "better than expected?"
&P Says February Retail Sales Shortfall Not a Set Back for Economy
NEW YORK, NY -- (March 14, 2002) -- Standard & Poor's, a global leader in financial information and investment analysis, today said that the Government's Retail Sales figures for February do not indicate a setback for economic recovery. According to data released by the US Government this morning, retail sales figures fell short of market expectations in February. Finding the official numbers still quite respectable despite failing to meet lofty expectations, Standard & Poor's concludes that consumer spending remains robust. Additional commentary from Standard & Poor's can be found at the subscriber website, http://www2.standardandpoors.com
"Our GDP forecast for the first quarter of 2002 remains at 4.5%, with a solid 2.8% growth rate in real consumption,
**CONSUMER NEVER HEALED LAST RECESSION!!
NEW YORK (Standard & Poor's) March 10, 2009--Globally, 82 entities, with rated debt totaling US$209.13 (€166.43) billion, are listed as potential fallen angels, a new 18-year high, said an article published today by Standard & Poor's. This surpasses the previous record reached last month of 75 potential fallen angels, defined as entities rated 'BBB-' with either a negative outlook or ratings on CreditWatch with negative implications, according to the article, titled "Global Potential Fallen Angels (Premium)." By comparison, 2008 averaged 47 potential fallen angels each month, increasing steadily since the second quarter of 2007.
Sectors poised to lead fallen-angel incidence include nonwater utilities with 10 entities, followed by consumer products and banks with nine entities each, and media and entertainment and homebuilders/real estate companies with six entities each. By debt volume, the line-up among potential fallen angels is led by finance companies, followed by the automotive and retail and restaurants sectors.
CREDIT CRUNCH IN EARLY STAGES
KING report for WED
RETAIL SALES A SURPRISE?
Like the January report, the February retail sales report provided some positive surprises. In particular, total retail sales declined just 0.1% versus a consensus estimate that called for a 0.5% decline. Excluding autos, retail sales increased 0.7% versus an expected decline of 0.1%.
Once again, increases were evident in February across most sectors. Gasoline station sales led the way with a 3.4% jump, which was tied to the 8.0% month-to-month increase in average gas prices. Clothing & clothing accessories followed with a 2.8% jump as bargain hunting continued in the post-holiday period.
The areas of weakness won't surprise too many. Motor vehicle and parts dealers led there, with a 4.3% decline in February, followed by food and beverage stores (-0.7%), food service and drinking places (-0.2%), and building materials (-0.2%).
*WHY are GAS SALES IN THIS FIGURE????????????????
Markets are rallying because it is NOW seen as economic downturn may IMPROVE sooner than expected based on the last few tidbits......sure
SHOULD I decided to speculate long I would consider etf's like SSO 2X SPX......I could focus on ONE THING and not multiple companies...and set STOP LOSS to CONTROL RISK....I may wait for 2nd mouse....
Thursday, March 12, 2009
There will be a lot more bankruptcies. Moody's places 283 companies on its bottom-rung list, up from 157 a year ago. Since the quarterly list was last updated, 73 additional companies have fallen to the bottom rung. Twenty-four companies made their way off the list - but mostly because they defaulted on their debts. Only one company, Landry's Restaurants, got off the list because its circumstances improved.
[See why bank nationalization terrifies Wall Street.]
Companies exposed to consumer spending have it toughest. The industries most represented on the list are media, automotive, retail and manufacturing. Companies in the most acute danger are those with reduced cash flow and a high debt load. A lot of big, well-known companies are in danger. On the list: Advanced Micro Devices; AirTran; AMR (parent of American Airlines); Chrysler; Duane Reade; Eastman-Kodak; Ford; General Motors; JetBlue; Krispy Kreme; Palm; R.H. Donnelly; Reader's Digest Association; Rite-Aid; UAL (parent of United Airlines); Unisys; and US Airways.
Many of the other firms on the list are second- or third-tier suppliers to automakers, airlines, and other troubled firms. Being on the list doesn't mean a firm is destined for bankruptcy. But it does mean the company faces severe constraints in terms of raising new capital, making new investments, and hiring. Instead of expanding, it may be far more inclined to sell assets, streamline or close divisions, and lay people off to cut costs and raise cash.
[See 6 possible upsides to a GM bankruptcy.]
America's malls are going to end up looking a lot different. The retail sector is obviously getting hammered, with chains like Circuit City and Linens 'n Things already out of business. Many other retail chains are in trouble. Also on the bottom-rung list: Barney's; BCBG Maz Azria; Blockbuster; Brookstone; Claire's Stores; Eddie Bauer; Finlay Fine Jewelry; Harry & David; Loehmann's; Michael's Stores; Oriental Trading Co.; and Sbarro. Again, this doesn't mean the company is doomed. But many of these firms will restructure, close outlets, shrink, and find ways to transform themselves. So if you ever go back to the mall, and your favorite shop has disappeared, you'll know why.
Wednesday, March 11, 2009
A return to SELL THE RALLY would bring in question, LOW CPC reading bothers me, but NOT a deal breaker.
A VIX shattered maybe below 40 tick would be helpful as well.
NO NEED to rush in, if indeed mkt has found some kinda b0ttom, we have time, yes some powerful gains will cone initially.....but a safer setup is in distance....IMHO if this is true.....
Always good to make list of stocks you loved at MUCH higher prices....mkt has been sawed in half.....could fall another 50% but...there are BEAR MKT RALLIES...we MAY be set up for one......I will be watching closely.......I dont see a change in BIZ....not here, not yet, not at all...if I just think of all I know I would IGNORE MKT 100%.
I think this is built for NIMBLE TRADERS, I am skeptical of return to LTBH
Tuesday, March 10, 2009
Monday, March 09, 2009
NY Times: "When Will the Recession Be Over?"
by CalculatedRisk on 3/01/2009 02:32:00 PM
The NY Times asked several economists and forecasters 'When Will the Recession Be Over?' Here are a few excerpts:
Beware the False Dawn By STEPHEN S.ROACH (Chairman of Morgan Stanley Asia)
IT would be premature to declare an end to America’s recession at the first sign of a resumption of growth. After the unusually steep declines in the economy late last year and early this year, a statistical rebound in the second half of 2009 would hardly be shocking. ... But any such whiffs of growth are likely to herald a false dawn, because the consumer remains in terrible shape. ...This points to an unusually anemic upturn, at best — not strong enough to keep the unemployment rate from rising to near 10 percent over the next year and a half. Since it’s hard to call that a recovery, it looks to me as if this recession won’t end until late 2010 or early 2011.
A Long Goodbye By A. MICHAEL SPENCE (Stanford Professor, Nobel prize, economics)
THE short answer is not soon. The recession is global: exports, production and consumption are in high-speed descent. The headwinds are powerful because of excessive leverage, damaged balance sheets and the resulting tight credit. ...Governments and central banks are the only major sources of credit, liquidity and incremental demand ... If governments are quick and clear in their intentions and intervene in a coordinated way in both the real economy and the financial sector, we will probably have an unusually long and deep global recession through 2010. If they don’t, it is likely to be worse than that.
An Ordinary Crisis By GEORGE COOPER
TODAY’S financial crisis is the biggest in recent history, when measured by its speed, the scale of its capital losses or its global reach. Yet viewed from another perspective the crisis is surprisingly ordinary, following the same path as dozens of previous bubbles. ...If we go by the first measure [started in mid'80s] we may see two or more decades of readjustment. If we go by the second [started turn of the millennium], we are still probably in the early stages of the credit correction, meaning that while the technical recession could be over by the end of the year, the broader credit cycle will likely remain a significant drag on economic activity well into the next decade. Either way, we have a long way to go.
Saturday, March 07, 2009
We may be at a Short Term bottom near here, 6,000 was my first target. I am PONDERING using SSO (etf 2X spx long) with stops and SHORT LEASH. I dont have a signal for it, with AAII 70% bear reading, oversold mkt in many ways....it should lead to something....capitulation? NO......hardly anyone left optimistic? YES
Could MARK TO MARKET accounting be suspended? one catalyst I been thinking.....ST Rally normal in OCT and MArch too.....lows could bring 3,500- 5000 DOW 2009-2012 ish
Friday, March 06, 2009
Thursday, March 05, 2009
I'm beating a dead horse....read below.
http://market-ticker.denninger.net/authors/2-Karl-Denninger excellent site, he has been more right than most!
More GE (IMPORTANT)
Off the wires, no link.
"DJ reports GE Capital credit default swaps worsen even as GE released a statement emphasizing its strong cash position. The CDS are most recently quoted at 17.5 points up front, from 16.5 points up front earlier today, according to Phoenix Partners Group. That means investors must pay $1.75 mln up front, plus a $500,000 annual fee, to protect $10 mln of GECC senior bonds against default for five years."
That means the first year cost is $1.75 + $500k, or $2.25 million.
That's 22.5% first year cost to insure $10 million against default!
This means that the market is saying that the odds of GE going bankrupt within the next twelve months is greater than one in five, and that assumes zero recovery.
If the bonds would recover more than 80% in the event of a default then it is implying more than a 100% risk of default, which is obviously impossible.
This is occurring despite GE's CFO appearing this morning on CNBC making the case quite clearly that there is no risk of default under any materially possible scenario. In other words, his assertion is that the odds of default are zero.
One of two things must be true:
GE's CFO is lying and must be indicted for doing so.
This so-called "market segment" (CDS) has become so ridiculously overlevered, unsupervised and able to cause failures that it is now within days or even hours of CAUSING GE to fail - not due to GE's own internal problems, but due to positive feedback that the CDS market is capable of and is generating on the initiative and as a consequence of the action of participants in that market.
Either way a major change needs to occur right here and now, lest we find ourselves with no pensions, no Social Security, no Medicare, no annuities and no government.
THIS CAN NO LONGER BE DELAYED OR TOYED AROUND WITH; WHEN "THE BEZZLE" REACHES THE POINT THAT IT STARTS DESTROYING THE NATIONAL CORPORATE INDUSTRIAL GIANTS THAT MAKE UP OUR ESSENTIAL INFRASTRUCTURE, MILITARY AND COMMERCIAL ENTERPRISES THROUGH NO FAULT OF THEIR OWN IT IS A NATIONAL SECURITY EMERGENCY AND MUST BE DEALT WITH IMMEDIATELY.
Liaten LIVE WBAL>COM 3-6 for conservative talk and some truth
SO what good are previous data? pure BS
Wednesday, March 04, 2009
The Federal Reserve's new snapshot of business activity nationwide, released Wednesday, showed the economic picture darkening over the last two months and revealed little hope for a quick turnaround.
Ten of the 12 fed regions said economic activity worsened, while the Philadelphia and Chicago districts said economies "remained weak."
"National economic conditions deteriorated further," the Fed's survey concluded. "The deterioration was broadbased, with only a few sectors such as basic food production and pharmaceuticals appearing to be exceptions."
Tuesday, March 03, 2009
BEAR MARKETS are major destructive forces. And they help to bring things back into order, help to correct the previous expansions excesses and helps to rat out the creeps, like MAdoff.
We are witnessing a "not your ordinary" bear market. There is still potential for additional severe losses. Using forward 12 months SPX earnings, dividend yields, PE Ratios and technical analysis I can safely surmise the BOTTOM is not IN YET, all IMHO of course.
Think of all the companies laid to waste, all the financial and insurance firms, the retail stores like Circuit City, the auto companies, home builders, shippers, Fannie Mae and housing in general. Las VEgas is suffering. PEOPLE all over the world are suffering.
But know this, from this devestation, the stage will be set for a REBIRTH. And if one can time it decent enough MAYBE the buys of a lifetime.
With lots of comeptitors knocked out there will be room for growth again. I just don't know WHEN.
I see the potential for SPX 300-400,
The key to this is....... SURVIVING it, To not be loaded down with DEBT, to have raised cash to have lived within your means.
SIMPLE TA could have helped avoid disaster. Most opinions uselss, news uselss. TV useless.
WE cannot live like each day is our last, but like each day is the beginning of the next and we have a future and all is not lost.
But the preceding excesses were so great, mighty have fallen, there is lots to be done and this has to work itself out. IT is possible GOV can make it worse and they aren't answer to everything.
This is something that cannot be fought, it needs to burn itself out. We are FAR closer to its end then from its beginning.
Good luck and best to all