"The current environment increasingly reminds me of the long, scorching summer of 2007."
credit bubble report
Saturday, August 07, 2010
A TALE OF 2 REALITIES
Folks, reading one of my most trusted subs this AM, besides what the coffee usually does to me, I got inspiration for this post.
If at times, the stock market movement makes no sense to you, that is because you are equating your own personal experiences into the mix, and perhaps other opinions...things you read...Gulf Oil SPill....unemployment...record food stamps.....record foreclosures.....in the end you have to make a CHOICE....do you want to take what the STOCK MARKET is willing to give you or don't you?
From the depressing lows of March 2009 when it looked like the financial system would be burnt to dust, one of the best buying opportunities of a lifetime was approaching.....at that time most were calling their brokers to SELL SELL SELL. ( I had been safely on sidelines since early 2007 when I made my bear mkt warning call)......human behavior will repeat over and over again, and when EMOTIONS rule your investing decisions, USUALLY that spells losses!
There is ONE fundamental rule that can control almost all pricing of things...that is THE LAW OF SUPPLY AND DEMAND
If on any given thing there is MORE DEMAND than the SUPPLY for that thing, the price will rise.
If you don't like that thing, or read something that says that THING SUCKS....the law of supply and demand could care less......others want it.....few are selling it....prices rise.
SO, IN THE FACE of a declining economy, few job opportunities, record foreclosures, a swan diving US $, depression like yields on interest rates, record deficits, war, oil spills, expensive oil, possible tax increases, financial regulation, a populace turning away from the stock market and overall down in the dumps attitudes.......the stock market primary rally since March appears to be still alive and kicking.....because it doesn't care what you think.
And never before do we see such demand for stock with public opinion on things stuck at RECESSIONARY LEVELS (consumer confidence).....and we do have a Consumer economy.
I will continue to give an overall view, opinions on many different topics, yes on fundamental issues.....because SOONER OR LATER they will effect supply and demand......but I will also trust my charts and the measures I get, the data that SHOW ME REAL underlying demand or not...to help guide any investing DECISIONS I will make......IMHO if you only keep a bull or a bear jacket on (based on your actions) you will lose.
Now the thng that DOES bother me, is the positive trendd mentioned above is coming with some of the lightest volume of any bull market, the trend in place almost this entire BULL CYCLE is one confounding issue....VOLUME RISES ON THE DECLINES (on avg) and VOLUME FALLS ON THE RALLIES.
In a bull market that is not supposed to happen.
Market sold off Fri on lack of emeployment data, but recovered at close......so it would appear it doesn't care......and wants to go higher.
We look for DIVERGENCES to help spot market turns, even if short term. I see some along with current OVERBOUGHT indicators......so should I WANT to make a few bucks long, I would like to see them resolved.....but any decline is likely to be brief and shallow.
When the law of supply and demand (from whom??????? black boxes???) turns against market with a vengeance, if it does......it will show on the charts.....we should be able to figure if and when the BEAR MARKET which I think is not over will return.......according to many, those same laws say the I'S have control.
D
If at times, the stock market movement makes no sense to you, that is because you are equating your own personal experiences into the mix, and perhaps other opinions...things you read...Gulf Oil SPill....unemployment...record food stamps.....record foreclosures.....in the end you have to make a CHOICE....do you want to take what the STOCK MARKET is willing to give you or don't you?
From the depressing lows of March 2009 when it looked like the financial system would be burnt to dust, one of the best buying opportunities of a lifetime was approaching.....at that time most were calling their brokers to SELL SELL SELL. ( I had been safely on sidelines since early 2007 when I made my bear mkt warning call)......human behavior will repeat over and over again, and when EMOTIONS rule your investing decisions, USUALLY that spells losses!
There is ONE fundamental rule that can control almost all pricing of things...that is THE LAW OF SUPPLY AND DEMAND
If on any given thing there is MORE DEMAND than the SUPPLY for that thing, the price will rise.
If you don't like that thing, or read something that says that THING SUCKS....the law of supply and demand could care less......others want it.....few are selling it....prices rise.
SO, IN THE FACE of a declining economy, few job opportunities, record foreclosures, a swan diving US $, depression like yields on interest rates, record deficits, war, oil spills, expensive oil, possible tax increases, financial regulation, a populace turning away from the stock market and overall down in the dumps attitudes.......the stock market primary rally since March appears to be still alive and kicking.....because it doesn't care what you think.
And never before do we see such demand for stock with public opinion on things stuck at RECESSIONARY LEVELS (consumer confidence).....and we do have a Consumer economy.
I will continue to give an overall view, opinions on many different topics, yes on fundamental issues.....because SOONER OR LATER they will effect supply and demand......but I will also trust my charts and the measures I get, the data that SHOW ME REAL underlying demand or not...to help guide any investing DECISIONS I will make......IMHO if you only keep a bull or a bear jacket on (based on your actions) you will lose.
Now the thng that DOES bother me, is the positive trendd mentioned above is coming with some of the lightest volume of any bull market, the trend in place almost this entire BULL CYCLE is one confounding issue....VOLUME RISES ON THE DECLINES (on avg) and VOLUME FALLS ON THE RALLIES.
In a bull market that is not supposed to happen.
Market sold off Fri on lack of emeployment data, but recovered at close......so it would appear it doesn't care......and wants to go higher.
We look for DIVERGENCES to help spot market turns, even if short term. I see some along with current OVERBOUGHT indicators......so should I WANT to make a few bucks long, I would like to see them resolved.....but any decline is likely to be brief and shallow.
When the law of supply and demand (from whom??????? black boxes???) turns against market with a vengeance, if it does......it will show on the charts.....we should be able to figure if and when the BEAR MARKET which I think is not over will return.......according to many, those same laws say the I'S have control.
D
Friday, August 06, 2010
BDI PAINTS UNCERTAIN PICTURE
ALso check adjusted monetray base much different picture painted here.....far off the peak and not growing.
What you see lately in the US stock market is not the votes of Millions of Americans, I believe it is the votes of massive black computer boxes.....and if the wierd action, HFT, lack of real FINREG (not lame shit they passed off), people are catchng onto the stock market game....and losing faith and interest...and in the end the stock market IS NOT a place where we all can win......where we can ALL make money, all retire off of, count on 8% yearsly gains.....it has been exposed as one big ponzi scheme and if you don't get in early enough the risks rise greatly you will get screwed.
Does the stock market always reflect economic reality? I don't think so, we have eroding financial and economic data.....jobless "recovery" contracting, deflating data....they cannot afford to let the main US asset stocks deflate TOO! and I DO believe that some ATLAS is under this thing.....and the putrid weak, limpass volume is ratting it out.
The stock market is a game of MUSICAL CHAIRS of sorts, yes it has avoided collapse for now, it appears it doesn't want to correct or resume its Bear Market......until its sure.....only the are out safely and don't see what is coming....the chairs will be on fire...the door will be a-closing.....people will run like they did on the TITANIC to one end as the boat shifts...one end sinking as the other end lifts high into the air....and then it all goes down! damn Im cheery
I don't know what others are looking at.....but at this juncture in the scheme.....I need more than JUST rising prices not to get happy feet....NOPE, I'll sit this one out, on the sidelines....and scratching my head why more are not talking about the 2.82% YIELD ON THE 10 YR BOND...holy cow!
D
PROGRESS AND RECOVERY
"Food Stamp Usage Hits Record High At 40.8 Million"
"An average of 40.5 million people, more than an eighth of the population, will get food stamps each month in the year that began Oct. 1, according to White House estimates." zero hedge flesh out
D
"An average of 40.5 million people, more than an eighth of the population, will get food stamps each month in the year that began Oct. 1, according to White House estimates." zero hedge flesh out
D
FRI AM DATA UP at 8:30
AM DATA on employment and unemployment rate, so futures pointing to flat open until everyone knows that number....SPX traget of 1150-1170 still possible or slightly higher before rally completes......hard to say whether this number gets jobbed at all, subject to revisions......heavy layoffs are behind us, most companies already did bulk of firings...forcing existing workers to do more, not worrying about wage growth in this environment.
It's job growth is problem, may be key to overall economy....this far into "recovery" it hasn't shown up.......downside target I have is 800-900 with lower test of March lows possible, SPX potential when smoke clears. 2.9% 10 yr note isnt acting like recovery is here....I will be on road this AM, will be back later
D
It's job growth is problem, may be key to overall economy....this far into "recovery" it hasn't shown up.......downside target I have is 800-900 with lower test of March lows possible, SPX potential when smoke clears. 2.9% 10 yr note isnt acting like recovery is here....I will be on road this AM, will be back later
D
Thursday, August 05, 2010
IN YOUR FACE AMERICA
"First lady under fire for her glitzy Spanish vacation"
"Yet the bigger public furor concerns the cost and appearance of the trip. In a scathing editorial published Thursday, New York Daily News writer Andrea Tantaros trashed Michelle Obama as a "modern day Marie Antoinette" for taking such a glitzy vacation while most of the country is struggling to make ends meet"
THANK G-D WE GOT CHANGE!
D
BLUE SKIES THROUGH A FILTER
Sentiment is BELOW Recessionary levels and FAR below TRUE recovery readings, see for yourself
The ringing in my ears is from all the MSM sources which continue to ring the bell of normalcy, of recovery, of FED got your back......of we're "strengthening MINUTE BY MINUTE"...
...but my friends I don't believe that is anywhere close to the truth....and here is why.
A figure of final sales in the GDP are usually ringing in 4% advances by this far into recovery, currently that's closer to 1.2%
Credit is in contraction mode, not expansion. Credit lending standards have STIFFENED, banks more reluctant to lend.
With "LOWEST MORTGAGE RATES IN HISTORY".....housing lays dormant near the bottom of its devestation.
GDP this far into recovery should be humming along at 5-6%.....even higher, but instead we are limping in at 2.4% and many say that will be reduced further next revision.
The 10 YR yield staying below 3% is a dire warning sign and stands in repudiation of the market rally and recovery crowd.
Sentiment this far into recovery for consumers should be soaring, INSTEAD Consumer sentiment is BELOW RECESSION LEVELS.
SMall BUsinesses are particularly hard hit, the polls that express what they see is at Recession levels.
Reading the data from the credit card companies, they report that transaction are about the same as in 2009.....the so called bottom? Can't lie here, in March on Mastercard:
"Nearly all of the growth in earnings came as a result of cost cutting within the firm and even the 6% increase in revenue was primarily a function of currency fluctuations and not a real growth in business "
...but my friends I don't believe that is anywhere close to the truth....and here is why.
A figure of final sales in the GDP are usually ringing in 4% advances by this far into recovery, currently that's closer to 1.2%
Credit is in contraction mode, not expansion. Credit lending standards have STIFFENED, banks more reluctant to lend.
With "LOWEST MORTGAGE RATES IN HISTORY".....housing lays dormant near the bottom of its devestation.
GDP this far into recovery should be humming along at 5-6%.....even higher, but instead we are limping in at 2.4% and many say that will be reduced further next revision.
The 10 YR yield staying below 3% is a dire warning sign and stands in repudiation of the market rally and recovery crowd.
Sentiment this far into recovery for consumers should be soaring, INSTEAD Consumer sentiment is BELOW RECESSION LEVELS.
SMall BUsinesses are particularly hard hit, the polls that express what they see is at Recession levels.
Reading the data from the credit card companies, they report that transaction are about the same as in 2009.....the so called bottom? Can't lie here, in March on Mastercard:
"Nearly all of the growth in earnings came as a result of cost cutting within the firm and even the 6% increase in revenue was primarily a function of currency fluctuations and not a real growth in business "
Add to misery is oil above $82 ! and in last 2 months a US $ that has fallen 10% in value! If as the stock market insists we have a recovery that's strong, where is the volume? WHY is 70% of volume from a few sources and HFT? WHY is the FED funds rate still 0%? WHY keep paying on the excess reserves banks hold and don't lend? WHY is the 10 yr bond yielding under 3%????
As seen before unless short of memory, in 1999-2000, again in 2006-2007......reality can be escaped...ignored....fundamentals skipped over......then the smoke clears and even a newborn can see the forest is burning.
Is the smoke going to clear and all we see are blue skies instead?
Duratek
BULLISH HEADLINES
"Mortgage Rates Drop to Lowest Level on Record- AP
Mortgage rates dropped to the lowest level on record for the sixth time in seven weeks, offering the most attractive opportunity in decades for those who qualify to refinance or purchase a home.
NEW YORK (Reuters) - Retailers posted July sales below analysts' expectations in the latest sign that skittishness about high unemployment and the economy in general are causing consumers to cut spending and focus on essentials"
RATES “LOWEST ON RECORD”………FORECLOSURES AT RECORD, LOWEST SALES ON RECORD.
Mortgage rates dropped to the lowest level on record for the sixth time in seven weeks, offering the most attractive opportunity in decades for those who qualify to refinance or purchase a home.
NEW YORK (Reuters) - Retailers posted July sales below analysts' expectations in the latest sign that skittishness about high unemployment and the economy in general are causing consumers to cut spending and focus on essentials"
RATES “LOWEST ON RECORD”………FORECLOSURES AT RECORD, LOWEST SALES ON RECORD.
CLAIMS AND COUNTER CLAIMS
How about that only 479,000 claims......instead of falling towards 400K we've been steadily climbing back towards 500K.......near the WORST it ever was during LAST 20001-2003 Recession. Shaded area is 4X the size and time period or previous.If interested Yelnick has assembled an assortment of near term technical charting
"A top Is near"
Claims of jobs being created but 17 months from March 2009 bottom, we still have 450K per week in claims. Claims of a bottom in housing but we still have escalating foreclosures greater than previous year.
Credit/bank loans are harder to come by, standards of course after SUPER LAX BUBBLE PERIOD have become very stringent. Contriction of loans does not equal expanding economy.
Gov stimulus is pretty much done, accounting for 100% of GDP during this period.
FED rates are at 0%, where to now? Most prices deflating, except some natural resource putting the squeeze on embattled consumers with oil now rising to above $82 along with some grains etc.
Last weaker GDP report will most likely be revised down below 2%.......Consumers who make up 70% of our economy show rising saving rates near 6%, wages flat, spending flat to down.....trying to pay down debt.
How many mortgages are NOT BEING PAID? HOW LARGE IS THE "SHADOW HOUSING INVENTORY?" probably keeping a lid of home prices for some time to come.
Where are Banks in realizing ACTUAL LOAN PORTFOLIO VALUES? ARE PROFITS BEING OVERSTATED? IF SO SPX PROFIT REPORTING A SHAM......we don't need accounting fiction......we need a dose of truth and fairness for once.
Presidential speaches fall on deaf ears......decisive, jobs producing action is what is needed with REAL AID to small business.
D
Wednesday, August 04, 2010
DANCING
63% up volume against aoverbought readings should bring a few days of weakness, but there is no evidence of a return to the bear market has begun or is imminent, not based on supply and demand data.
SO you have a few choices, you go with flow, you stand aside.....being patient is the hardest thing to do in investing.
IMHO the fundamentals don't jive with the market action. But that currently is not making any difference. Then any data even slightly skewed positive is made into a mountain from molehill.....so you can play their game.....or not.
On NPR radio, they were reporting on how this year there were MORE foreclosures than in 2009 !!
".....the legal and financial issues have not improved....." and the main reason given for the problems was not subprime loans it was "THE ECONOMY"....mostly loss of job.
So the market is up 80% from the depths of the problems, and the foreclosures are INCREASING, worse than at MArch 2009 market bottom.
That's dancing to the beat of a different drummer......the US $ is losing any foothold to value......the US MKT in terms of value of our DOLLAR has basically done absolutely nothing since March of 2009....and our growth can be near 100% accounted for from gov stimulus....
D
SO you have a few choices, you go with flow, you stand aside.....being patient is the hardest thing to do in investing.
IMHO the fundamentals don't jive with the market action. But that currently is not making any difference. Then any data even slightly skewed positive is made into a mountain from molehill.....so you can play their game.....or not.
On NPR radio, they were reporting on how this year there were MORE foreclosures than in 2009 !!
".....the legal and financial issues have not improved....." and the main reason given for the problems was not subprime loans it was "THE ECONOMY"....mostly loss of job.
So the market is up 80% from the depths of the problems, and the foreclosures are INCREASING, worse than at MArch 2009 market bottom.
That's dancing to the beat of a different drummer......the US $ is losing any foothold to value......the US MKT in terms of value of our DOLLAR has basically done absolutely nothing since March of 2009....and our growth can be near 100% accounted for from gov stimulus....
D
PERCEPTION 9/10ths OF LAW
Reports of "job growth improving" and most other data used to try and convince investors recovery is on track are pushed on the thinnest of margins and have no credability...BUT
After trips to VIX 80 and a grossly oversold freaked out market MArch 2009 may have set the lows for many years to come. The act that the Bear lows of 2002 were surpassed is one caveat, where previous bear lows were violated, not sure that has happened in 100 years of stock action....but it does point to a more SECULAR trend potential....a STAGNATION....trading range.....Deflation has helped JAPAN move lower and lower over 20 years....this is a REAL possibility as we have not come to grips with credit bubble bust.....we have bought some time.
And because timing is so critical, I don't advocate short positions....for most investors this is too risky.
The reality is economic data point to a weakening of recovery, very little growth in jobs or wages, and a weak housing market that has 1 in 4 underwater.....consumers have cut back and are increasing their savings.....since we have consumer driven economy how is that good for growth?
If indeed we are in a LONG TERM BEAR MKT....I have laid out what was present at other SECULAR BOTTOMS.......so even as the market may move higher....even as it did from 2002-2007 it ecventually made a new low in 2009. IMHO we are in cyclical BULL that may run higher......but it is my belief that we have not enterred into a LONG TERM BULL and the return to the bear when it comes will be horribly painful.....for now the bEAR CROSS has given us choppy action....I will continue to monitor the action and look for clear signs one way or another......AD lines rising to new highs cant be seen as bearish....at this point.
VIX at 22 warns volatility has not been put to rest.
D
After trips to VIX 80 and a grossly oversold freaked out market MArch 2009 may have set the lows for many years to come. The act that the Bear lows of 2002 were surpassed is one caveat, where previous bear lows were violated, not sure that has happened in 100 years of stock action....but it does point to a more SECULAR trend potential....a STAGNATION....trading range.....Deflation has helped JAPAN move lower and lower over 20 years....this is a REAL possibility as we have not come to grips with credit bubble bust.....we have bought some time.
And because timing is so critical, I don't advocate short positions....for most investors this is too risky.
The reality is economic data point to a weakening of recovery, very little growth in jobs or wages, and a weak housing market that has 1 in 4 underwater.....consumers have cut back and are increasing their savings.....since we have consumer driven economy how is that good for growth?
If indeed we are in a LONG TERM BEAR MKT....I have laid out what was present at other SECULAR BOTTOMS.......so even as the market may move higher....even as it did from 2002-2007 it ecventually made a new low in 2009. IMHO we are in cyclical BULL that may run higher......but it is my belief that we have not enterred into a LONG TERM BULL and the return to the bear when it comes will be horribly painful.....for now the bEAR CROSS has given us choppy action....I will continue to monitor the action and look for clear signs one way or another......AD lines rising to new highs cant be seen as bearish....at this point.
VIX at 22 warns volatility has not been put to rest.
D
Tuesday, August 03, 2010
SHORT TERM SET UP
Target for SPX initially is 1170 area. It would take significant selling to change a more bullish ST outcome....odds favor higher prices especially if 100 SMA is taken out.
D
CONSUMER SPENDING STAGNATES
Link to NY TIMES ARTICLE
Selling the news. LOTS of hype last week leading to todays RIMM unveiling of their "iphone killer".....stock steadily rose.....phone gets intro today....stock off $1.45
Let's get something straight, most avg Joes are gone from the market, some for a lifetime, many not only NOT adding to 401K's but trying to take money OUT!
No proof business are hiring much, no proof housing is ready to rise from the dust. Banks still don't recognize the losses but DO scrutinize anyone wanting a loan.....add to that loan demand is down.
So everyone is trying to do business with the government, the government is spending like no tomorrow.....where is the funding for $1.5 TRILLION deficits coming from?
WHY are 10 year notes near 2.9% ???? WHY are people still talking about inflation? HOW ABOUT $82.35 OIL and a U S$ still falling now 80.58 !!
Read the credit bubble report I just posted the link for..... what will happen to the stock market if the economic data continues to come in LIGHT?
WILL businesses this far into STIMULUS FED recovery all of a sudden....hire like no tomorrow?
Recovery from a debt bubble hangover will take much longer than most consider.....oh there's business out there......just a lot less than there used to be and THAT was FED by EASY CREDIT....you got a face we got a loan credit.......it LFOWED LIKE WINE!......now it's like a constipated child.
D
Selling the news. LOTS of hype last week leading to todays RIMM unveiling of their "iphone killer".....stock steadily rose.....phone gets intro today....stock off $1.45
Let's get something straight, most avg Joes are gone from the market, some for a lifetime, many not only NOT adding to 401K's but trying to take money OUT!
No proof business are hiring much, no proof housing is ready to rise from the dust. Banks still don't recognize the losses but DO scrutinize anyone wanting a loan.....add to that loan demand is down.
So everyone is trying to do business with the government, the government is spending like no tomorrow.....where is the funding for $1.5 TRILLION deficits coming from?
WHY are 10 year notes near 2.9% ???? WHY are people still talking about inflation? HOW ABOUT $82.35 OIL and a U S$ still falling now 80.58 !!
Read the credit bubble report I just posted the link for..... what will happen to the stock market if the economic data continues to come in LIGHT?
WILL businesses this far into STIMULUS FED recovery all of a sudden....hire like no tomorrow?
Recovery from a debt bubble hangover will take much longer than most consider.....oh there's business out there......just a lot less than there used to be and THAT was FED by EASY CREDIT....you got a face we got a loan credit.......it LFOWED LIKE WINE!......now it's like a constipated child.
D
CREDIT BUBBLE BULLETIN READ
If anyone wants some real educated insight into our current predicament, they will read summary at end of Doug's weeked commentary and stats
It's called QUANTITATIVE EASING TWO well worth the read and reread if necessary.
D
It's called QUANTITATIVE EASING TWO well worth the read and reread if necessary.
D
AT THE CORE
How many $TRILLIONS and 0% FED FUNDS RATE been thrown at the deflating economy to see this limp result for CORE INFLATION?
Now do you understand why 10 yr Bonds yield sub 3%? YES, the bond bubble will burst, but there are still a few smart economist who think that bull may have another year or 2 to go....as most investors of the avg ilk seek income not risk.....that leaves WHO to buy this overvalued stock mkt?
You see, we had been in a bull mkt since 1980, some say as early as 1974....1982 is the yr most refer to, til either 2000 or maybe 2007......after such a LONG RUN, what follows to reach a bottom for the next run a SECULAR BEAR...at those bottoms we find 5% PLUS yields on the SPX 500 (currently 2%) and PE ratios in single digits.
If we refer to history...we ain't there....
D
Subscribe to:
Posts (Atom)
