Here Comes the Economic Stimulus!

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  1. George Booth commented on Mar 14

    Uhhh, I don’t get it.

    Just kidding. I do – sort of – but wouldn’t the black lightning bolt representing oil px’s have been better as, say, an arrow set to pierce the balloon? Or how about an arrow representing inflation generally? Oil isn’t the only obstacle we face.

    An okay cartoon, perhaps, but not a great cartoon.

    My $.02.

  2. Market Hysteria commented on Mar 14

    6-12 months from now you will look back at today’s market hysteria and ask: “What was I thinking? It was unreal buying opportunity but I was shorting/selling”

    P.S. Do not delete this post and lets come back to it in 6-12 months

  3. TulsaTime commented on Mar 14

    OMG!!!! Marketpalce has your quote on the front page about the BS building (he said BS, HEHEHE). And coming from someone of your stature. That’s right up there with the remark a couple of years back about the monkeys screaming and throwing feces….

    a great laugh to end the week, tanks a milliones

  4. John Badalian commented on Mar 14

    Barry – I’ve gotta wonder whether nosebleed oil prices are the requirement for the oil producing countries remaining with the dollar standard?? Yes, I know this sounds paranoid, but the dollar has little else going for it nowadays besides its ubiquity.

  5. We’re setting up for a really big rally commented on Mar 14

    Barton Biggs Expects 1,000-Point Gain in Dow as Fear Recedes

    By Brian Sullivan and Michael Patterson

    March 14 (Bloomberg) — The decline in U.S. stocks is “way overdone” and the Dow Jones Industrial Average may rally 1,000 points, investor Barton Biggs said.

    “We’re in a financial panic,” Biggs said during a telephone interview with Bloomberg Television from New York. “We’re setting up for a really big rally. I don’t mean three or four hundred points on the Dow, I mean 1,000 points on the Dow. I don’t know if we’re going to get it next week or the week after. But this thing has gotten crazy and is overdone.”

    Biggs, a former Morgan Stanley strategist who now runs the $1.5 billion hedge fund Traxis Partners LLC, said “this is the time to be buying stocks around the world and not to be selling them.”

    The Dow average has tumbled 16 percent since reaching a record in October.

    “I can’t get wildly bearish,” Biggs said. “This is not the end of the world.”

    ________________________________________________

    It makes sense. Thanks Barton!

  6. pft commented on Mar 14

    High oil prices do 3 things

    As previously indicated, it keeps most of OPEC and Big Oil happy with the dollar.

    Those countries who import oil, while not happy with the dollar, need the dollar to buy oil, so they accumulate them. This is weakened a bit by Russia, Venezuela and Iran selling oil in other currencies.

    Those bankers who make money creating money (M3 is increasing at 16%) are happy, as they can create money for the oil consuming countries like China who need dollars, via consumer debt that allows us to buy their goods. The consumer is hurting though.

    So whats up with the dollar? Might be that folks have lost confidence in the ability of the consumer to keep feeding the machine, and demand for dollars is weakening with more oil being sold off the dollar.

    The fleas (bankers) have killed “Consumer” the dog, and so goes the dollar. May you RIP Consumer, you were loyal to the end, and you will be missed. Maybe if we can catch the fleas like we caught Spitzer there will be justice, but the fleas might have been responsible for Spitzer demise, so don’t count on it.

  7. Marcus Aurelius commented on Mar 14

    “Biggs, a former Morgan Stanley strategist who now runs the $1.5 billion hedge fund Traxis Partners LLC, said “this is the time to be buying stocks around the world and not to be selling them.”

    ________

    Biggs then mentioned that his company was out of cash due to its poor investment strategy, and tried to borrow a 5 spot for a double venti latte.

  8. Jdamon commented on Mar 14

    to Biggs credit, it makes a lot more sense to buy after a 20 – 25% correction in the S&P, Nasdaq then to buy after a 20% run up doesn’t it?

    I mean, let’s face the facts. This won’t go on forever (bear markets NEVER do). However, for now I’m definitely staying defensive with SDS, QID, FXP, EFU and IAU. Hope to just tred water until at least the credit/bank crisis is behind us (probably in the 4th or 5th inning by now).

    Anyone disagree?

  9. larster commented on Mar 14

    Biggs took the wrong side of the oil trade early on and it cost him a ton. If ytou’re looking for a timing gure, he is not it.

  10. Marcus Aurelius commented on Mar 14

    Anyone disagree?

    ______

    Yes. Me and Noriel Roubini.

    Tell me where all of this new, stupid credit is going to come from?

    4th or 5th inning? Hell, we’re not even in the ballpark yet. If we do have a big rally, you’d better get in and get out.

  11. Pat G. commented on Mar 14

    You know what scares me is that this guy don’t get it. As he keeps dumping wads of liquidity into the economy in one form or fashion it only makes the dollar cheaper. This increases the prices of energy and food because they are denominated in dollars. Both of these are consumed by all U.S. consumers who are 70% OF the GDP. Who should we be protecting afterall, corporate America or most Americans?

  12. ben commented on Mar 14

    I follow matters like this with interest not because I care about the world of finance for its own sake (like many of the seeming bulls in this thread), but rather because my profession makes me one of the first dogs kicked when the economy starts to go south.

    Putting aside for the moment that I am in the closing weeks of my worst quarter since the year of my mother’s death (and worse than several of my 2K-’02 quarters)…

    The dollar is taking it in the pants, and my understanding of macroeconomics suggests that the strength of a currency is a primary indicator of the strength of the economy in which it was issued to circulate.

    Long story short, we pay others to make what we consume, and as other states amp up their knowledge economies, the relative value of the U.S. knowledge economy – that is to say, the engine of the entire U.S. economy, apart from ag and natural resources – decreases. The amount of *stuff* we can buy as a result also decreases. Where does this trend take the United States (and for a while at least, the rest of the world with it)? I really don’t like the answer to that question.

    I’m not trying to be Chicken Little here, and much to my chagrin, what I’m about to write makes me sound a great deal more against free trade than is actually the case…

    I can’t help but think that the next three to five years are going to be a terrific argument against the way in which globalization has been implemented. The Train of Unintended Consequences is pulling up to the platform, all aboard.

    And real estate? Symptom, not disease. When you dump a bunch of money into the economy (hello? interest rates?) and need to forestall inflation, where else is it going to go? Yep! It’ll be something with enough intrinsic value that people will be grateful to take possession at any remotely-reasonable price.

    The good news (as such) is that if it goes far enough, the United States will actually be able to afford to fill in the gap that twenty years ago was a robust secondary economy, and do it on terms that will put the developing nations to shame. (Either that, or those productivity advances during the Nineties looked great on paper.)

    Until then, well, the rest of us’ll be standing there, holding our proverbial p*****s in our hands and paying progressively higher prices for pretty much everything. Y’all have fun with that market.

  13. Me and You commented on Mar 14

    Honestly, I think we (bears) were saved by the run on Bear Stearns news today. If it was not for Bear Stearns related panic selling, more bears would be squeezed today (it was setting up as another rally for the bulls before the Bear Stearns announcement).

    I happen to agree with Biggs (sorry BR). I used today’s god given panic selling opportunity to cover all my shorts.

    BSC is only a $4B market cap now trading ½ book value, meaning it will be bought by someone like Buffet. Bernanke will cut by 100 bp (Lets be honest, lower rates will eventually work). There will be a joint dollar intervention. In short, as Biggs said, this is not the end of the world and not time to get wildly bearish.

    What say you BR?

  14. lurker commented on Mar 14

    Keep in mind that Biggs was a strategist not a trader so his timing (even IF he is right!!!) could be off by enough time to put you in the poorhouse. Wonder how his hedge fund is doing??? anyone know the performance numbers??? I am ready to be underwhelmed. He’s a good talker but so what? show me the money from his great calls….IF OIL and Gold correct and the dollar does a dead cat intervention bounce and the fed cuts and and and Barton backs up the truck we could get a little bounce next week. But will it hold? Hell if I or anyone in the world really knows…..will be educational to observe however.

  15. blam commented on Mar 14

    “what I’m about to write makes me sound a great deal more against free trade than is actually the case…”

    I’m not against free trade either…. just haven’t come up with a correct terminology for WTF we have been about these last 7 years.

    Feels like 2001 doesn’t it. March, ah March, dropped 250 K of cash into the S&P at 108.00, seemed like a good buy. Lost my ass.

    There is no there, there. The S&P is 25 pct over valued, fundamentally. Yes, I agree with BBiggs, a bear market erection may happen here. My humble model has the S&P technically overvalued (not fundamentally) by 2 % on it’s way to perhaps 4 %. So what.

    The markets are synthetic. No value, all calculation. Have at it boys and girls. Wealth is created by hard labor, persistence, capitalism, and populism. In the former America ( post great depression), the financial world was a tool to be used, not a business to lead wealth creation.

    Now we have a piece of shit non-government Federal Reserve bailing out second rate grifters. I have not a nickel in the so called market, nor will I until it reaches value at 83 SPY.

  16. blam commented on Mar 14

    Hello… is anyone out there……

    Please tell this underground miner I’m full of shit …

  17. David commented on Mar 15

    Barry
    It’s all about the Dollar;
    The dollar should be the strongest and most stable currency in the world and we need to “hold the line”.

    “Ten thousand dollars to our general use.”
    William Shakespeare

  18. cecil commented on Mar 15

    Hey blam, your stuff is pretty funny, and makes a lot of sense as well. But your money must be somewhere, so where is it?

  19. bdole_says_bdole commented on Mar 15

    Lots of chatter about how ‘undervalued’ Citibank is. Is this legitimate or a Wall Street ploy to get investors to inject capital into a struggling bank? This blog is ridiculous, kinda like the restaurant at the end of the universe….

  20. blam commented on Mar 15

    My money, my money

    My money is like the wind – always and every where.

    My money is at risk of being destroyed by the POS republicans. Unfortunately, I believe in America and have decided to stay with us.

    Did I ever tell you that my wonderful father was shot in the face in WW2. Drove his tank from the front of the armored column of the 7th cavalry stopping to pick up wounded. Two silvers and a bronze. Very American micks.

    There you have it. I have given up on the whole ideal of markets.

  21. craig behnke commented on Mar 15

    Biggs and others say get ready for a rally. okay. tell me what earnings estimates your using on the S&P and what multiple on the earnings to come up with a market price that we’ll rally to. Not saying he’s wrong but give me some analysis instead of just saying it has to rally because the world isn’t ending. okay, so the world isn’t ending, so maybe markets just go sideways for 3, 6, 12, or 24 months until valuation makes sense. ever think of that. yeah we’ll get through it but that doesn’t mean we’re due for a “rally”

  22. blam commented on Mar 15

    Ain’t amazing how blockheads like craig behnke can step on holistic moments and not even know it.

  23. rickrude commented on Mar 15

    Barry
    It’s all about the Dollar;
    The dollar should be the strongest and most stable currency in the world and we need to “hold the line”……….
    Posted by: David | Mar 15, 2008 12:30:26 AM

    WHY ??
    the US has been using the USD to live off
    foreign production, investment, sweat, etc, etc, ain’t going to continue

  24. Graham P. Knopp commented on Mar 15

    There were some mighty weighty questions being asked in that Restaurant at the End of the Universe.

    But,

    I don’t recall this question being asked:

    “How much liability can the Fed manage?”

  25. SubprimeGuy commented on Mar 15

    No one (except maybe JP Morgan) is going to be Bear Sterns ESPECIALLY Warren Buffet. Book values on companies whose asset values change daily and are 40x leveraged mean nothing. Bear Sterns holds some of the worst mortgage paper on the street and it has all plummeted in value in the past 2 months. I would put money on their book value being well below 0 at this point. maybe the fed will force JPM to buy them the same way BofA had to buy countrywide.

  26. Michael Evers commented on Mar 15

    I noted that this morning’s front page NYT article by Landon Thomas concerning the new Bear Sterns welfare program did NOT mention the dreaded “I” word once.

    This, ladies and gentleman, is what passes for “analysis” once snouts begin plunging into the public trough.

  27. ideogenetic commented on Mar 15

    We don’t have free trade, we have petrodollar hegemony. Now the blowback from it is killing us.

  28. Adam commented on Mar 15

    The rise in oil is just an obvious clear symbol to Americans. Our real problem is the falling USD. One of the only reasons oil is up this much is because the USD has fallen 40% since the Iraq war. Just keep printing the money guys and $5.00 a gallon gas will be here by next year.

  29. jay commented on Mar 16

    http://finance.yahoo.com/q/bc?s=DBC&t=3m&l=on&z=m&q=l&c=dba

    As you can see by the chart, commodity prices took off on the day of the announcement of the stimulus package.
    It is having the opposite effect that is desired. Money is flowing from the financial markets to the commodity markets creating further stress on the system.

    Jay Haley, CFP

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