I’m back in a day or so, so let’s try this one more time: The thread is open, the forum live, the margaritas cold (sorry).
I will note that this works best when its market/economics/trading related; Politics seems to be the worst subject matter.
So what stood out the past few days? As much as I occasionally rue watching the market tick by tick, it goes along way in feeling out the nature of the beast. Having missed the daily flickers this week, I’m curious as to what really grabbed you.
I am interested in any thoughts you may have on tomorrow’s NFP — and what might the ADP number mean (if anything)?
Your thoughts . . .
The “market” went sideways today, but the headline story will say the DOW was up 73……
It was about MO and MO only. You know, the company that makes the (legal) product that if used correctly WILL KILL YOU.
*Am I banned or am I still allowed to post here?*
Much as I despise the smell of cigarette smoke in my clothes, now that I am back in California with its deliciously draconian public smoking restrictions, I no longer mind MO. It’s a legal product, like DEO’s. Let ’em sell it to those who wish to kill themselves with it.
The market still looks weak to me, but I have scaled back on my shorts to some extent, though I can’t let go of the homebuilders until I think the news flow looks less negative. Look at BHS; net new order down 50% YOY. You have to be short that stuff.
Otherwise, I keep looking for a bit of a reaction rally, though I guess everyone else is, too.
It’s generally not a good sign for bulls if tech isn’t leading the way. And tech has been lagging.
Isn’t this the jobs numbers that show summer (temp) hiring? Could be high.
Hopefully there is enough fear in the market so that the jobs number will be bought hard tomorrow, no matter what the actual number is. I still fear that we’re in a trading range during this mid-term election year “seasonal” correction, and that eventually we’ll bust out to new highs. Now. Later. Ah… wish I knew. I’ve just positioned myself for upside and will ride out the trading range and *hope* we’re not entering a new bear market.
Where is my stock market crash? My leaps are down and out. I’m getting sad :(
I’m very long natural resources (have been for several years) on the long term belief that the Fed will, ala the 70s, permit inflation to seep back in (more). I am most interested in this. Shorting the market overall is fine. I traded the last short call on the Qs for about 10% myself, which is OK, though not my usual thing as a long term, +/- value guy. Interesting on parallels of bonds versus 1974. Thinking reducing positions & own more bonds. How did oil stocks do during this period. That would be interesting.
Charter subscriber to RR.
ADP figures are always wildly wrong and usually ignored, just happened that there was little else to look at yesterday. My guesstimate for NFP is 100-135k with some upward revision of last month’s disaster into the same range. I don’t know if that will be treated as good or bad by Monsieur Market. The interest rate obsessed will see it as good, the realists who realize what it means will shudder.
But if Dear Leader launches another missile volley, that will probably overshadow the NFP and make for another nice gold sniper trade. Then again, my speculation is that previous the LongDong II launch failed mainly because it ran into an energy beam of one kind or another which is why they kept launching missiles to see if they could figure it out. Rest easy Alaskan Pete, weapons systems are the only thing that we still do well and I think that we’ve got these guys in a box. :)
Cramer said on Mad Money last night that the Fed is done raising.
Kohn said today that interest rates may need to keep rising. From Bloomberg:
Comments from Fed Vice Chairman Donald Kohn that further interest-rate increases may be needed even if the economy cools also hurt stocks.
“The market is praying on both knees that the Fed’s going to stop,” said Michael Vogelzang, who oversees $2.3 billion as president and chief investment officer at Boston Advisors LLC in Boston. Investors, he said, are “worried the Fed is going to raise too high and choke off corporate earnings growth and economic growth.”
http://www.bloomberg.com/apps/news?pid=20601084&sid=aWf5Qq_S6fRI&refer=stocks
Personally, my money’s on Kohn. I’d say it’s a pretty good bet the Fed keeps raising.
Nonfarm Payrolls: + 300K (secondary to summer temps)
Average Hourly Earnings: + 0.3%
Unemployment: 4.6%
Average Workweek: 33.9 hrs
Dow down 80 points tomorrow
MO down 2% tomorrow
Fed Rate: 5.5% in August
I do not see folks with common sense buying and holding shares over the weekend.
What will happen to the Dow on Monday if N. Korea fires another missile and it flies over Japan and lands somewhere near Hawaii?
They are getting jealous about all the bribes offered to Iran.
N. Korea is desperate for our attention.
I agree with Kohn and the crash is about 2 weeks away. Get short good fellows….
the market WILL go higher because i am short. its that simple. GO very LONG and take my money. Thanks in advance.
ADP is probably right and the GOV’t data is probably fudged. I am sure the people at ADP have been scratching thier head … as they had back tested to 90% accuracy. As soon as they started to release the GOV’t probably said ” we cant have the truth be known” … I am sure that is what is going on … and yes BUY up the market … buy buy buy.
I noticed Cramer is getting back into MO after unloading it not too long ago. Whatever that means.
My take: it was a short week, not much volume or conviction either way. Not many new highs or new lows. What stands out is the drop in the dollar, slight upward movement in gold, and the sustained high in oil, which should surprise no one.
I find myself wondering how raising interest rates can have much of an effect on the upward price movement of oil and other commodities, if that is what the Fed is trying to do. Sopping up liquidity? Containing speculation? Seems like a lost cause. Commodity prices are rising because supply is limited and demand is growing. Inevitably, these higher prices will bleed through to all economic sectors and fuel inflation.
I am also long global natural resources.
per slick rick:
“Where is my stock market crash? My leaps are down and out. I’m getting sad :(”
At ease, soldier. :) If you have LEAP puts, there is no reason to be in a hurry, one day they’ll just magically go green which is why I like them, very little time pressure. I buy them deep in the money so that the intrinsic value is within $.50 of the purchase price and they behave pretty much like the underlying does without regard to options pricing theory (about which I have become very skeptical).
I have never lost doing that but have usually lost buying near term, at the money options. It basically let’s you play something that costs $100 for $10 and doesn’t get you into much time-based premium deterrioration since the price was mainly intrinsic value anyway. You won’t get rich doing this, but you won’t get your ass handed to you either if you are paying attention.
I took less time for the Fed hawks to squawk than I thought it would:
LONDON, July 6 (Reuters) – The vice chairman of the U.S. Federal Reserve, Donald Kohn, said on Thursday he was aware of the risk of raising rates more than necessary but saw a need for higher global interest rates to maintain stability.
“A rise in global interest rates is a necessary condition … for stability going forward,” Kohn told a seminar arranged by the European Economic and Financial Centre in London.
“Global interest rates have been very low for a number of years. We have had strong global growth for several years now,” he said. “If low rates were allowed to persist then we would risk inflation.”
AUG 45 PUTS ON ANN EXPIRING THE 19th…
Huge run up
Consumer ready to be F’ed by the oil, No More Cash out
Hugh Expectations baked in..
Reports excellent same store sales and stock goes up first then takes a hit a heavy volume…
Earnings on the 18th of Aug.
Nice article on thestreet.com about it
Caught a mid-day downgrade
THinking its the beginning of the end???
The ANN chart doesn’t scream “short me” to me. I know there are some solid fundamental reasons for wanting to fade this rally but I prefer that my short candidates be pointing toward the lower right of the monitor instead of the upper right.
A lot seems to hinge on the central bankers in Europe and Japan, as well as Bernanke and company here. Ideally, monetary policy will be coordinated to remove excess liquidity and rebalance the world economy.
Another possibility is panicked lowering of interest rates around the world, and runaway inflation. Japan is already showing some signs of wavering in this respect, according to an article I read recently…
ANN chart looks funny to me, like maybe some hedge funds have been playing both sides intraday. I wouldn’t touch either side.
Personally I think Oil and Gold are at or near another top. Energy BP is also getting up there and I feel Energy will roll over soon and take S&P 500 down with it. 2-3 days at the most. Go long Nat Gas and short Oil is the obvious play for the mid term ( 3-6 months )
“Mad Money” on CNBC I am willing to bet his shows peak ratings corresponded with the SP top – I cant find any data to back that up yet but if nothing else screams top…
Many are skeptical about ADP numbers and positioning themselves for a rally tomorrow. ADP estimates are twice as much as the consensus numbers. I guess the government could manipulate the data, aka “make adjustments to account for seasonal ups and downs”, and come up with 170K. In any case, many will be surprised/disappointed tomorrow (I hope, I am not one of them) – buckle up for another market rally or sell-off.
Two questions tonight:
The first is on advertising. Has anybody used advertising as a leading economic indicator? I am watching Canwest up in Canada(certainly not as a buy but the company I work for is connected to them so I have a vested interest in their well being which forces me to watch them). They have advertising holdings(television and newspapers) in Canada, New Zealand and Australia and all are showing flat to negative revenue growth with a report that their national advertisers(financial and telecom) in their newspapers dropped right off in the second half of the quarter. I’m thinking that since advertising is the first thing people do to get their product to the public a slowdown/pick up in that would be a very good barometer of forward market conditions. Does anybody have hard evidence to back that up? Should that be an industry to keep an eye on?
A question for Barry also. You appear to have an extensive reading list and you mentioned you were taking many books along with you for your holiday. I was wondering if you had ever taken any speed reading courses or have you just built up a good/effective reading rate due to good time management and practise, practise, practise.
I have been thinking of going the speed reading route but I am so cheap I don’t want to shell out the hundreds of bucks they usually charge. It would, although, probably double the volume of material I could take in and hopefully comprehend so it would be worth it if it worked
Any comments would be appreciated
DavidB: Unless I’m missing the point about speed reading altogether, it strikes me that the bottleneck is comprehension of “high-density” or (conceptually) elliptical material, rather than raw reading speed.
DavidB,
As a financial headhunter/CPA (see website… this is not a plug…), I am a leading indicator… lol! The last two times I heard the candid, disspiriting and dispairing god-awful observations about financial executive expectations vis a vis employment opportunities were 1982 (the bottom before the bull market that ended in 2000) and 1990 (when in SoCal the defense industry and real estate were on life support).
Sure, profits and free cash are high. But no ones got a real business plan to reinvest or grow profits… they all want to buy someone else’s business with carry trade money or buy back their own stocks to make option comp worth something in this deflating market (ignore the man behind the curtain and the dead cat bounce).
There are no atheists in fox holes; truly sanguine hearts among the wiser insiders. Many are not optimistic as they look forward to 2007 and beyond.
Just me dos centavos….
ANN looks more like a sell than a short to me …
It seems like everybody is tilted toward a strong jobs number. If that’s true, then there’s room for surprise.
I think the early June lows were a big deal, similar in type if not magnitude to the October 2005 lows. A short-term top over the next few days with a mild correction that would draw in doubters would be good fuel for a test of the April highs.
Who is this kohn guy and why does he say we are 2 weeks from a crash ?
me2200: “Who is this kohn guy and why does he say we are 2 weeks from a crash ?”
Kohn is the Vice Chairman of the Fed, and he said the Fed might keep raising rates. It was Larry saying that a crash is two week’s away.
As to the ADP report, it estimates 368,000. If off by 50K, then NFP is 300-400K? That is way above the consensus view of 185,000. I don’t know what sort of machinations and manipulations are used to get to number they release tomorrow. Any thoughts?
Also, the bigger question of how the market reacts?
You can get books on speed reading. From the library if you don’t want to spend money. From what I have seen, reading speed is primarily determined by how often you have to move your eyes. You can’t read while your eyes are moving. Speed reading is mostly a matter of improving your high-resolution peripheral vision. However, if you read too quickly, you don’t have time to think about what you are reading. Which is fine for novels, but you probably want to think about things when reading non-fiction.
Hi Barry,
Just wanted to throw in that I liked (and agreed/had been watching) your take on AAPL. It’s been below significant MAs for a few weeks now, and other technicals are abysmal as well.
The run since last Oct. was based (as you’re probably aware) on the rumor mill spinning great new video products and pumping up the stock until the very dissappointing show in Cupertino in January.
My question is, how low can it go? It’s now at 28 PE, and the Apple growth story is far from over.
I believe Cheech & Chong took the Evelyn Woodhead Speed Reading course. You might try their Los Cochinos CD for more information.
Inflation v Deflation: which is it gonna be? I believe I understand how they work (money supply/raw liquidity vice supply/demand) but I’m wondering what will “work” in a possible deflationary scenario (in ’07-’10? following the real estate crash?) It seems when all liquidity is drained, even gold & metals would get washed out. Just thinking aloud here; I’m guessing this thread has died by now…
Does anyone else think that the markets are a bit schizophrenic when it comes to economic data. It seems that they don’t know what they want.
Jobs data at 120K is okay. Yesterday jobs data at 350K was okay.
We think the fed should pause because we like liquidity. No wait, we need higher rates because we don’t want inflation to get out of control.
Weak dollar, strong dollar, medium dollar. Yes, no maybe?
The consumer is strong which is of course great. The consumer is weak which is great because we need a soft landing.
There is enough head spinning here to make the excorcist two :)
You are looking at only one aspect – the slowing economy. You forgot the inflation and the possibility of stagflation.
Bonehead economists used to say that Bernanke is over-reacting to a non-existent inflation threat given the absence of wage pressures. However, this naive view misses the point that rising wages, just like other prices (wages are the price paid for labor), do not cause inflation, but result from it. More importantly, wages usually are among the last prices to adjust upwards in response to inflation, which is one reason that inflation is so damaging. “Waiting for an up tick in wages to confirm inflation is analogous to waiting for the caboose to evidence an oncoming train.”
Today these boneheads received the healthy dose of reality. Average hourly earnings in June rose 0.5 percent, up from 0.1 percent a month ago. Boneheads expected a 0.3 percent gain. This jump makes year over year wage inflation the highest since 2000.
Wage costs are accounting for 70% of the expenses for an average business (compare it to energy as 5% of the expenses, the price of oil that everybody is so worrying about)
I hope you understand now why the markets are freaking out today. By the way this is only the beginning of the things to come.
As a financial headhunter/CPA (see website… this is not a plug…), I am a leading indicator… lol! The last two times I heard the candid, disspiriting and dispairing god-awful observations about financial executive expectations vis a vis employment opportunities were 1982 (the bottom before the bull market that ended in 2000) and 1990 (when in SoCal the defense industry and real estate were on life support).
Posted by: David Sternfeld
so is there an easy way of charting you David ;)
I am sure you have all read the recet WSJ interview of Kenneth Heebner, where he talks about the housing market and housing stocks.
I have a great deal of respect for Heebner. The numbers he has put up on the board speak for themselves.
However, there is an internal contradiction in what he says that I can’t quite get my head around.
In that interview, Heebner makes the following statements in response to questions:
WSJ: How is the housing market?
Mr. Heebner: A significant decline in prices is coming. A huge buildup of inventories is taking place, and then we’re going to see a major [retrenchment] in hot markets in California, Arizona, Florida and up the East Coast. These markets could fall 50% from their peaks.
* * *
WSJ: What areas of real estate are you most excited about?
Mr. Heebner: We’re investing in office and apartment REITs, like Archstone-Smith Trust, Essex Property Trust Inc., SL Green Realty Corp. and AvalonBay Communities Inc. Apartment rents are going higher [as rising interest rates makes homes less affordable for many consumers, and a strong economy encourages rent increases].
* * *
WSJ: Many apartment-REIT stocks already have climbed. Aren’t rent increases baked into the stock price?
Mr. Heebner: Yes, people assume rents are going up, but the question is the magnitude of the increases. Consensus appears to assume 5% increases in the next year but I think the increases will be a lot more than that. Demand will grow, but supply of apartments won’t because construction costs are increasing significantly and supply constraints will limit new developments in California and parts of the Northeast.
http://online.wsj.com/public/article_print/SB115204791463597636-_dwtqavFBN5w_kTARC8T9SKB_Fs_20060711.html
The contradiction I can’t get my head around is this: If home prices in California, et. al., have reached a “new permanently high plateau,” I can certainly see why rents will need to increase significantly in order to catch up.
However, if (and I think he could very well be right about this) home prices decline (become more “affordable”) by 50% in these markets, what is that going to do to rents?
I am posting this here in the hope that maybe some of you bright lights can tell me the answer.