Meanwhile on Wall Street . . .


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  1. wunsacon commented on Jan 11

    How ’bout the latest US trade deficit and record China surplus?

    All your bases are belong to us!

  2. Eric Davis commented on Jan 11

    so the bears are jumping?

    damn, so no sellers of Wheat and beans….

    No, no inflation!!!!!

    I loved one day when Kudlow said “for inflation, what you need are to many buyers and not enough supply.”

    I was like…. But larry that is what we have!!!!

  3. Eric Davis commented on Jan 11

    “all your base are belong to us”

    to be correct!!

  4. Ross commented on Jan 11

    Eric, 300 acres for sale in my parts of N TX. Already planted in winter wheat.

    Farm land prices are starting up in a big way. Grains up up and away. Meat prices to follow.

    Angus, the new black gold.
    Texas T-Bone

  5. RichardN commented on Jan 11

    Damn it “Schumacher” I thought you were gonna let us in on the PPT’s next day at the beach! When will they return, do you have any idea?

  6. michael schumacher commented on Jan 11

    Only if you ask nicely…….LOL

    most likely at the August lows YET AGAIN….

    But I guess with the just released fundamental news (to go with the fabulous news we already had-LOL) you would be ready and willing to help them out. Since the news is worse than that last pathetic attempt at a rally I’m sure you’re to be out buying with both fists.

    I’m sensing just a bit of location jealousy from you. And where does the Big richard live???

    I would guess but you’d most likely lie to me if I got it correct anyhow.


  7. Moose commented on Jan 11

    “Don’t Panic”

    “But if you do Panic, Panic first”

  8. Byno commented on Jan 11

    Back in 2001, I was at company HQ discussing the markets with the firm’s chief economist, and I asked him whether or not the Naz Bubble was big enough to cause the US to experience a repeat of the Japan debacle (which, at that time, had been going on for over twelve years).

    He didn’t think so, and his explanation was two fold: 1)the US had not experienced a property bubble, and; 2)the financial industry was much more transparent here, whereas in Japan the big banks were engaged in all sorts of shenanigans to hide their faulty loans.

    Npw, almost seven years later, we’ve got the same ingredients necessary for a Nikkei-style collapse across all markets. Granted, the land beneath Time’s Square isn’t worth more than Honshu (the corollary being that the land beneath the Emperor’s Palace was worth more than California in the late 80’s), but a property bubble and some major shenanigans by the big banks are majorly in evidence.

    I really thought we’d see some follow through this AM, but with today taking out most of Wednesday and Thursday’s gains, it’ll be interesting to see if Monday doesn’t elicit the panic selling that would mark at least a temporary bottom.

  9. The Dirty Mac commented on Jan 11

    “Farm land prices are starting up in a big way. Grains up up and away. Meat prices to follow.”

    I’d like to say its a bubble, but with a populace demanding hysterically to put food in their gas tanks I think not.

  10. scorpio commented on Jan 11

    Ken Lewis of BAC may not be the absolute next guy to lose his job for having absolutely no grip on the enormity of the financial mess inside his own house, or the house next door, but he will lose his job over this deal. funny how everyone (Liesman on CNBC) loves finding a bottom in every mis-begotten deal these loons pull out of their — well, hat.

  11. John Borchers commented on Jan 11

    I see a lot of people trying different ways to gauge the market: Charts, Technicals, Sentiment, Etc.

    I like to use facts to determine the future:

    Fact –

    Last time the market corrected to 1300’s the consumer confidence was high and only a few banks looked like they had minor issues.

  12. boomdotbust commented on Jan 11

    Only one thing matters to equities: earnings. And we all know that S&P earnings growth will be negative by close to 10% y/y for the next few reporting periods.

    Just keep following the earnings revisions…and steer clear of the indices until the earnings picture turns the corner.

  13. Byno commented on Jan 11

    Actually boomdotbust, earnings don’t matter a scintilla to the overall stock market in the short term. The correlation between equity prices and earnings is nearly zero over anything less than a three year time horizon.

    Not to mention, there is absolutely no correlation with earnings growth/deceleration and market index performance.

    Earnings matter to individual stocks, but the S&P 500 couldn’t care less about what earnings are doing at the moment.

  14. v commented on Jan 11

    Hah. Nice find BR. I almost chuckled out loud to myself on that one.

  15. Uncle Jeffy commented on Jan 11

    Is that Larry Kudlow standing on the ledge? Or is he the guy climbing through the window?

  16. boomdotbust commented on Jan 11

    Byno – the S&P500 is highly correlated to earnings using inflation as a discounting mechanism. Take a look around the CXO site – particularly their REY model. It contradicts your earlier statement in spades.

    Not a scintilla? Correlation nearly zero? Not quite.

  17. PinkyPouter commented on Jan 11

    Sorrow – Pink Floyd

    The sweet smell of a great sorrow lies over the land
    Plumes of smoke rise and merge into the leaden sky
    A man lies and dreams of green fields and rivers,
    But awakes to a morning with no reason for waking

    He’s haunted by the memory of a lost paradise
    In his youth or a dream, he can’t be precise
    He’s chained forever to a world that’s departed
    It’s not enough, it’s not enough

    His blood has frozen & curdled with fright
    His knees have trembled & given way in the night
    His hand has weakened at the moment of truth
    His step has faltered

    One world, one soul
    Time pass, the river rolls

    It’s not enough it’s not enough
    His hand has faltered
    …. …. ……

    And he talks to the river of lost love and dedication
    And silent replies that swirl invitation
    Flow dark and troubled to an oily sea
    A grim intimation of what is to be

    There’s an unceasing wind that blows through this night
    And there’s dust in my eyes, that blinds my sight
    And silence that speaks so much louder than words,
    Of promises broken….

  18. Stuart commented on Jan 11

    Those bear farts smell like Goldilocks.

  19. Donny commented on Jan 11

    Another sexy week for my portfolio. Thanks Perma-Bulls for setting this up, and making it real easy for me.

    OH … and what a day:

    AMEX says “delinquencies up” & “spending down”

    Tiffany’s says big spenders “rolling over”

    Merrill Lynch doubles write-down to “15 million” WTF?

    Fed gov. says “Stop Obsessing” over rate cuts

  20. Donny commented on Jan 11

    Excuse me … that’s 15 BILLION on ML!

  21. zero529 commented on Jan 11

    Wouldn’t it be funny if these large institutions were buying each other out in order to avoid having to reveal some unpleasant truths . . . only to have some crack reporter dig up the dirt through FOIA after the FTC reviews the merger. A guy can dream, can’t he?

  22. Byno commented on Jan 11

    I misspoke: it’s not that earnings and the S&P aren’t correlated, it’s that earnings have very, very, very little predictive power concerning future returns. the 1970’s as an entire decade are a perfect example. To use another, S&P returns are almost 96% correlated with inflation and GDP growth, but neither are worth a damn in predicting the S&P 500 six months or six years from now.

    Reading through that post, I did come off as disagreeable, and I’m only respectfully disagreeing.

  23. spock commented on Jan 11

    I smile but I also think it is in poor taste to make a joke out of suicide.

  24. lurker commented on Jan 11

    and let’s not forget how bullish it is that the airlines are merging. now with less competition we can start to overpay for lousy service (sort of like Microsoft!).
    REcessions are great times to build up monopolies and reduce competition because the govnm is just so relieved the big uncompetitive corps don’t roll over and die.
    looks like dinosaurs mating to me.

  25. BG commented on Jan 11

    I don’t think we will ever see any waterfall-type market meltdown. Considering all the things that have already happened since last August, it convinces me that the Market Protection Committee is alive and well. There is no other way to explain why we have not seen a drop on any single day of a more than a few hundred points. That’s really nothing when you get up into the 14,000 range. It will always be Chinese water torture going forward from here. There will never be a market meltdown because the people running the show will not allow it.

    In addition to putting a floor under the market, CEOs are now being rewarded for destroying the companies they are supposed to be managing. I get a sense we will see a time very soon when getting money will be (again) unbelievably easy; but the money won’t buy you anything. Remember the picture of the guy with a wheel barrow of cash? We are only a few years away from that. The FED and the politicians will never admit to it; but, you will know it when you see it.

    One last tidbit, it is becoming ever more expensive to live. My property tax is expected to increase over 50% this year. Local governments are grabbing additional revenue anywhere they can get it. I am afraid this thing is going to end badly before too long. This new-wave financing by Wall Street and Federal, State and local governments is about to crack. The numbers just don’t work. At the bottom rung, you are talking jobs, wages, taxes and bills. It’s not imagined. It real. The numbers of every household must reconcile at least form time-to-time. There is no funny business down here. There are a lot of people who apparently have forgotten this basic tenet. The trickle down and the bubble up doesn’t work anymore.

  26. boomdotbust commented on Jan 11

    Byno – thanks for clearing that up. As for the 1970s, it’s actually a perfect example of what happens when the discounting mechanism trumps E/P. Earnings matter, but the discounting mechanism matters equally.

    As for backward looking indicators like past inflation and growth – you’re on the ball, and that was never my contention.

    Look at what’s happening with the market averages since our last market highs. Earnings forecasts are down about 10%, the market is down about 11%, and the inflation forecast (the discounting mechanism) is muted (see CXO for their forward looking inflation forecasting).

    Operating earnings growth is forecast at around -10% for the next reporting period. I’d say the market is pricing things appropriately based on forecast earnings and inflation.

    While things aren’t always that cut and dry, they do tend to be when the direction of earnings growth is in reversal, which is precisely the case now. That was the meat of my first comment.

    Good trading.

  27. D H commented on Jan 11

    The TIF announcement was very important. Another permabull argument is that the upper-middle and upper classes have somehow disconnected from the rest of the economy and can keep the economy rolling. Although there is a certain uberclass that on some level transcends the economic experiences of the remainder, we cannot forget that each segment of the socio-economic spectrum levered up and, therefore, even the highest end businesses received an artificial boost of action (e.g., the millionaires who started living like deca-millionaires, etc.). Part of US culture is to go bigger and better whenever possible, and we are now closing the window on “possible” for an overwhelming majority of our residents …

  28. PeterR commented on Jan 12

    “She’s Real Fine, My 409”

    First cross of SPY EMA(50) below EMA(150) since the 2000 top (and 1998 before that).

    Action at EMA(409) will be crucial here IMO.

    High Bollinger Band width suggests market bottom?

    See page 7 via link at my name.

  29. no waterfall decline? commented on Jan 12

    Slow changes allow maintenance of control, change at too fast a rate risks social and/or political upheaval. With the collapse of housing collapse of the stock market or the the banking system of payments can not be allowed or the entire system could disintegrate. Nobody is better off exchanging today for the “stone age”. The question is, is the pace of the stock market fall fast enough to allow profits on puts or is just carefully selling short the way?

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