I keep hearing people saying "No one I know is Bullish."
Well, y’all know the wrong people. Just look at the market action, and you will see quite a bit of speculative fervor in recent days and weeks.
Over the past few few months, we have seen all manner of evidence that the bullish ardor is alive and well:
– Today’s Dow Industrials opened down at 11,756. The dip buyers have taken it back up to nearly 11,900.
– Several 200 plus down days have seen strong end of day rallies taking markets to flat;
– Punters were buying Bear Stearns (BSC) on Friday, on the (false) assumption a bailout would prove profitible;
– This morning, Lehman (LEH) traded as low as $24.50 this morning, before being driven up to $31;
– Search your favorite websites/commentators/blogs/bobblehead: Quite a few are talking about the Fed rescue, and a "great" buying opportunity;
– It is arguable whether or not the markets may not have fully priced in all of the bad news, to wit: We have yet to trade below January’s lows. Someone is buying.
As we have noted, a short, Fed induced rally is a real possibility — but I look at it as a gift, not the beginning of a new upcycle.
Back to Ralph Waldo Emerson: Look at what they do, not what they say . . .
There is risk everywhere right now.
Unless you have the actual physical asset in your closet(ie land, bars of gold, a barrell of oil) you have counterparty risk and exposure to the banking system.
Can anyone tell me a place to put your money where it is safe from a systemic financial meltdown and liquid?
I feel safer with 1000 shares of MSFT.
Search your favorite websites/commentators/blogs/bobblehead: Quite a few are talking about the Fed rescue, and a “great” buying opportunity;
These would be the same assclowns that said BSC was a buy at $164? It’s probably JPM playing with BSC shareholders money. Ain’t life grand.
Amazes me that while the world mkts tumble, for US its business as usual. Cant understand who is buying. More importantly, cant understand why they are buying. This, in the background where you have fear all around and currencies having a party of their lifetime.
John Borchers, if I may repost a question from the other thread:
>> I’m buying shares with huge spreads going forward.
>> Cash only boys and girls. And don’t buy credit swap stuff! No No to SSO, SDS, TWM, UWM EEV etc etc.
>> You don’t know what bank owes the credit swap.!
>> Posted by: John Borchers | Mar 17, 2008 9:30:43 AM
John, what do you mean by “buying shares with huge spreads”? The only thing I can think of to replace SDS, QID, SRS, etc. is buying puts. Is that any safer? Is that what you’re doing or does “buying shares with huge spreads” mean something else?
Thanks.
I bet a lot of posters who talk a good game couldn’t in real life be able to tell the difference between a short sale and a banana up the ass. Or the one trade they made a killing on is the only they remember. They forget the goofy failures.
This market is going to be a range trader’s paradise.
>> Cant understand who is buying.
Could some of it be the work of the Plunge Protection Team? Can’t believe the Bear bailoiut was the only thing Ben and Hank discussed over the weekend….
Sorry Barry but I have never seen the sentiment as bearish as the present(at least since 1987 & 1990).
“This morning, Lehman (LEH) traded as low as $24.50 this morning, before being driven up to $31;”
Should be:
This morning, Lehman (LEH) was driven down as low as $24.50 this morning, before trading up to $31.
Looks like a successful retest to me. I guess we need a good close. VIX to mid 30’s and a pending rate cut.
I love fauvistic markets. Trader’s paradise.
Greenspan warns of worst crisis since 1945
Just read this. Someone at the FED needs to call Allen and tell him to shut the f##k up. The greatest bubble blower the world has ever known can now not shut up. Couldn’t see the bubbles while heading the FED, but can see all the way to the Sun now. Will someone please call this POS on all his bubbles!!
Barton Biggs is looking for a thousand point upside. At the same time he’s looking for a remote farmstead and some heavy weapons to scare off the brigands. He used to at least have style even though his market calls have never impressed. Sold a little twm this morning and bought (gasp) a little caf, selling at a 20% discount to NAV plus a little panic special thrown in. You cant win if you dont buy a ticket.
“goofy failures”
You should have PLENTY to choose from.
You are so clueless you can’t even realize when you set yourself up.
Ciao
MS
You still don’t believe in the PPT!
JPM up almost $4. LOL! Hey BSC Shareholders, that’s your money they are playing with. How does it feel to be legally robbed?
I monitored the world markets throughout last night. Asia held up very well. Europe survived, though Germany’s markets took some hits. And the U.S. markets are doing pretty good this morning.
So far so good.
Time to follow up on banks’ cash withdrawals and account shakeouts across the USA.
>>>
Ross, cash is king until it settles out, and those with cash raid the easy pickings. I’m in, but what a world of hurt for J6P. How many greeters can Wal-Mart hire? LOL!
Barry, the farther this market has fallen, it seems the more bearish you are getting. I have followed you for a long time and am watching to see if you actually have the ability to see the glass half full at some point. That is when I know you are the real deal and not just another perma-bear who gets it right for 18 months once every 5 years (fleck, Shiff, Roubini, Hussman, etc.). Even Kass has gotten a bit more bullish (maybe a little too earlY) as the market has gotten pounded.
So when a regular person goes to the government for assistance they are forced into all sorts of paperwork and a bunch of actions meant to shame them, like standing in line down at the welfare office to pick up some food stamps, and having to carry around blocks of government cheese that basically have the word “BUM” written on them.
The first step in any bailouts should include tighter regulation of these fantastical financial institutions with shady products and investments, along with ample disclosure of where the money is going. A little shaming, i.e. firing of the bums that got us here might alos go a long way to restoring confidence.
Do you get the feeling that the money gets doled out after a fancy lunch and a handshake?
Re your visit on Kudlow:
I’d like to know from a group of learned souls if it is possible for an unfriendly but extremely rich foreign country to plan out a series of steps that could ultimately crash the world economy. It would obviously take a bit of time and effort.
It would start with easy credit and progress with massive leveraged credit used to buy assets that are overinflated in value. The credit would be withdrawn. Overinflated assets couldn’t be used as security to borrow elsewhere, and values would crash. (Sound familiar so far?)
The failure point would be where the crash is even too big for the Fed to provide lender of last resort liquidity and credit.
Could a sovereign entity do this? Realistically, and not using a Roubini inspired generalized, yet vague, paranoia scenario.
If it is possible to be extremely disruptive, what steps could be taken to provide safety valves that cause the markets to deflate well before crisis points occur?
Don’t forget to add the derivative situation to your list o’goodness to talk about beyond cliches. While everyone is worrying about housing open their eyes to the impending challenges of unwinding unmarkable derivative-based portfolios.
Vermont Trader,
I read “Financial Armageddon” by Michael Panzner this weekend. It was published in 2007, but he was spot-on in his predictions that the massive unwind in leverage was just around the corner. In fact, many of the chapters could have been pulled straight from today’s headlines. It was a bit spooky, truth be told. Panzner is a former bond trader on Wall Street. He even predicted the melt-down in the municipal bond markets, if for different immediate causes than actually happened.
Panzner felt that at first the Fed would be slow to act, thereby yielding a deflationary environment for a while, which would be closely followed by hyperinflation, as the Fed tried to print money to stave off a depression. My take is I think the Fed skipped the first, deflationary episode because it has been nothing if not quick to act, and is headed straight to the hyperinflationary stage.
The hyperinflation would be preceded by a crash in the dollar (sound familiar?) in international markets. His advice? Buy hard currency (gold), land, or foreign exchange. Do anything but hold dollars, but if you do, make sure they are protected as much as possible by holding them in FDIC accounts (even though he predicts the FDIC will eventually collapse along the way to armageddon). But be very careful w/ buying foreign exchange because of the risks that inhere w/ a transaction so heavily dependent on counterparties (brokers), and the financial technologies that allow such a thing (internet, etc).
For me, I’ve been holding most of my assets in cash, but I just bought a 24 acre farm w/ my self-directed SEP as a hedge against basically the whole world.
Considering that my remaining cash is rapidly losing value, even at reasonable CD rates, I’m not sure what I should do w/ it. Perhaps foreign currency. The Euro, so long as its central bankers remain focused on inflation (and Germany still remembers its episode of hyperinflation, according to a recent article in the Economist) might be a good bet.
Also, I think it might be a good bet to buy currency of the oil-producing nations. Bretton-Woods II, which is not really an agreement, but an informal arrangement whereby the oil producers pegged their currencies to the dollar, is soon to be a thing of the past, IMO.
If the dollar goes to $200/barrel in short order, this is gonna get real ugly, real quick, and IMO, the Fed basically threw the switches on the presses to overdrive this weekend. It might have saved some of Bear, but it is quickly destroying the dollar, because the rest of the world knows what we refuse to admit–there is no way the Fed can print its way out of this mess.
Are there bullish consensus numbers for financial blogs? It would be interesting. Problem with just taking our “impression” of sentiment from reading blogs is that it is very subjective: we tend to emphasize what we have most recently read. And in bear markets I think we also tend to remember bearish opinion pieces more since they correspond with the general atmosphere of fear. They make a deeper emotional impression. So our impression of sentiment might tend to portray the landscape as more bearish than it actually is.
Cinefoz,
you have lost all your humor and now you are thinking conspiricies? Wow. Anything to save face I guess. Dow went green this morning, briefly. You never know, you just might get your rally anyday now. Then you can brag about your “boatloads of money” again.
Those are just some great quotes..
Here comes Chucky to tell us how this is a great thing. Liar!!!!!!!!!!
I’m young, so I don’t have any gauge on historical thoughts, but I fail to see how there could be the most bearish mindset in most people’s lives when the market is only down 20% from the peak. Looking at past bear markets, the original 1270 panic low had the sign of being oversold, but now it looks nothing like panics have in the past.
And that’s on top of several serious minds (even Greenspan now) saying that we are going to have a crisis that few outside the Greatest Generation have ever experienced. Barry is right that there is way too much short term complacency. Once we drop another 15%, then I’ll be thinking people are getting ahead of themselves.
B.B.
Which initial stands for banana?
Take off the tin foil cap Cin…
The dictators of foreign governments don’t really want the West (and especially the US) to collapse. Where would they get their champagne? their Mercedes limos? their thousand thread sheets? They want to pick the babes they get from their nation’s loviest. They want to punish their childhood enemies. Be on TV, have statues of themselves in the square etc…
…but they don’t want to really have us come down on them. These sadists spew invective to maintain control over the boneheaded (religious, economic, patriotic etc…) serfs who toil day-in-day out.
Chucky is still talking housing. Stupid POS! No we don’t need more regulation. Naw! Forget about $500 Billion in derivatives because it’s housing. This is why we are screwed people. He blames El Presidente’ even though the assclowns have oversight. They all suck the big one including El’ Presidente’ and Chucky!
Donkei
I already have a farm that has been in my family since the 1820’s. Do you know how to grow things? A farm is pretty useless unless you know how to use it.
By cash I assume you mean money market accounts. Most of the holdings of these funds are short term paper issued by financial institutions like Bear Stearns.
You can put your money in a european bank but they hold the same paper as US banks, and their funding costs are higher because they don’t have the same access to the discount window.
Worst thing for the longs…there is no panic yet on wall street…we are nowhere near a bottom. There are no shorts on QQQQ or any of its major components to squeeze
Donkei,
Congratulations on the farm! I share your view regarding inflation.
I’m throwing in the towel on my beef critters. I’ll keep a few for personal consumption but (and this is truely OMG) the is a protein ETF. I didn’t believe it when I found it.
No one I know is making money in the livestock business. The herds will be thinned the same as in the 70’s. Don’t forget to lay in a side of beef. Whirlpool will be selling a lot of freezers.
“there is way too much short term complacency”
The 3.35% 10 year tells me different.
$500 Billion = $500 TRILLION. Damn! I’m spitting nails!!
I’m struck by how non-quantitative your examples — it’s almost entirely anecdotal material.
The leading quantitative measure of sentiment, the AA Investors Intelligence is off the map bearish in their most recent survey.
Agree, that was A bottom, not THE bottom.
Ops there goes another turbocharged
Ops there goes another turbocharged
ops there goes another turbocharged Porsche.
Anyone know how many exotics per capita at Bear Stearns? Might be some good shopping.
VennData,
Nuts like Islamic radicals who have money, or might come into money at some point in the future, might think such thoughts. The nuttiest would like to see a return to the living standards of the middle ages and before. The logic makes about as much sense as a truck bomb or a vest bomb at a coffee house.
Think a few years down the road when the next bubble starts to inflate, and not tomorrow. Economic history contains a long string of credit bubble bursts. They didn’t just begin today or 10 years ago. In a few years there will be a new one for a brand new reason. This is as certain as gravity.
How likely is it that a future one could have a ‘friendly stranger’ providing the crack?
As a side benefit, maybe research could be done on how to retain speculative risk and limit bubble bursts.
A lot of people, even right here, seem to wearing propeller beanies. The worlds in a terrible state of chasis. What else is new.
VennData
Don’t be so sure that America is much different than those foreign lands…
Our leaders, powerbrokers, etc. spew just as much (actually just better since we’re the creative capital of the world) invective to the serfs of America.
“A lot of people, even right here, seem to wearing propeller beanies. The worlds in a terrible state of chasis. What else is new.”
Posted by: cathompson | Mar 17, 2008 11:12:25 AM
We get cranky when they pull out solutions that haven’t been used since the last great meltdown. A little something called the Great Depression. Stupid us.
SPECTRE of Deflation,
Read some history. There have been many many many bursts since the Depression. Not all are in the US, but several were. In case you haven’t noticed, this is an entwined world economy now.
the trading today is ridiculous. last night was the real thing, ex-Fed. no one can look at $2 for BSC and not think they should be selling everything, not just financials. the Fed-PPT buying to manage/avert the real decline is the story. once again, have all your chips off by Nov 3
kk I actually agree with you on the credit markets. I’m talking about stocks. Like the people on Minyanville say, they have never seen such a disconnect between equities and credit markets as has existed the past 6 months.
One of them has to correct severely, and based on both the fundamentals and looking back at history it looks like equities are going to have to fall a ton to meet up with the credit markets even as they rise.
Incidentally, that’s why I expect a huge selloff in the near term, but then order will be restored to the credit markets and stocks will skyrocket higher than we are today.
They just quoted Bush on CNBC with the spelling Busch. Is the Busch Chairman now running the govt. or does CNBC even know the difference. All the news fit to report.
I’ve been arguing with people for weeks that I thought there was still an incredible amount of complacency out there. In spite of the financial meltdown occurring before our very eyes – it’s kind of neat living in history, huh? – there have been continuing calls for a bottom (perhaps THE bottom), while CNBC has paraded its usual lineup of permabulls on to tell us how cheap stocks are while they tell us that financials are “overdone”.
I’m not suggesting that we won’t rally here, but a true bottom will not be in place when the clowns on BubbleVision are calling a bottom. When Erin Burnett starts calling a bottom, you can bet one isn’t in. She wouldn’t know what a market bottom looked like if it came up and bit her on her bottom.
The bottom will be here when BubbleVision informs us, in one way or another, that we’re all going to hell.
In my opinion, the market’s sentiment does not reflect the true economic realities. I don’t like to say that the market isn’t realizing the underlying realities because that would imply that the market is either right or wrong. The market is neither. It simply is. The market will determine how negative that sentiment is.
For the record, I don’t think this thing is done by any means. On the other hand, I did take a lot of cold medicine this morning.
OK, the 11AM crowd just came in and knocked down the PPT. 10…9….8…7
To be continued.
Mikkel,
Values in credit markets are based on liquidity and the value of the underlying investment. ‘Value of the underlying investment’ has several definitions. Idiots with derivatives have a huge impact.
Equities are based on companies and future earnings. Panic sales are only temporary pricing events. Liquidity is available, thanks to the Fed, so earnings should not be impacted significantly by this problem.
These are two different things. This is why there is a disconnect.
scorpio-
All you need to do is look at cinedouche cooking up conspiracy theories to explain his never ending optimistic slant on “THE RECOVERY”
even if the market finishes up most rationale people will know exactly why. But not cinefoz, as it is ALWAYS someone else’s fault.
Calling anyone out as wearing a tin-foil hat at this point is wholly laughable coming from him.
Ciao
MS
cinefoz, you want me to read history? I will go toe to toe with you on the subject. There has not been anything close to this systemic failure in our lifetimes. 1987 was as close to this as you can get, and it’s like comparing apples to oranges. How exactly does one unwind $500 TRILLION in Derivatives which are supposed to be notional but aren’t. You need a frigging counterparty for it to be notional. We are losing counterparties faster than they can keep up. It’s called capital destruction friend.
Uh cinefoz, you look at the economic stats coming out recently? They aren’t entirely two different things as credit is going to be permanently repriced (probably just not as badly as it is at this second) and that will definitely affect future earnings. Not to mention that a hell of a lot of companies have way too many of their cookies in the credit market jar.
It’s kinda ironic that there is such a huge disconnect between credit and stocks, when companies rely more on available credit now than they normally do (even if you only count the $billions they socked away into those markets).
Scorpio,
What’s the significance of November 3rd?
Mikkel,
Explain the interrelationship between falling real estate in California with industrial production in Ohio? Perhaps you might string a connection using the wealth effect, or less credit is available for weak performers, but that’s about it. One’s a credit based problem. The other involves equities.
Learn to think and not use knotted ball of string logic.
Something is rotten in Stink-ville.
I have my doubts these rallies aren’t manufactured.
“Perhaps you might string a connection using the wealth effect, or less credit is available for weak performers, but that’s about it.”
Well that wasn’t so hard.
mikkel,
Why would you even be interested in the stocks of weak performers when stronger ones are available? Credit is available. I’m still getting junk mail for credit applications, although fewer are coming in. Fallacy of composition and lazy thinking prevails in your analysis.
Vermont Trader,
I’ve not got a lot of experience in farming– just gardening–but I figure learning how might be fun and could be useful, depending.
My wife’s family were farmers from up where I bought the farm (that really doesn’t sound right–this “buying the farm” thing). Like you said Ross–they always had a beef or pork critter around for personal consumption, even though their cash came from row-cropping.
The rest of the cash is in CD’s of varying maturities, at various US banks–keeping things under the limit. The self-directed SEP that I used to buy the farm was in a money market that wasn’t even beating inflation. I just shorted the dollar by purchasing an ETF tied to short dollar interest–not a big bet, just really a hedge.
Isn’t it ironic that all the free market crowd in the admin and Fed(and let’s not forget Helicopter man is a fully paid up Republican free marketeer) are using solutions and agencies to fix this crisis that were last used on this scale during the Depression. Meanwhile their shills and opinionaters are all out there telling how inadequate and just plain wrong FDR and his new deal policies were. I agree with much of what they are doing (not the mindless rate cuts which are not working and are murdering the dollar)but it’s surely clear that Paulson, Bernanke, Bush et al are all willing to throw free market principles, moral hazard etc overboard and embrace all the socialism they can to get out of this mess. You have to laugh.
cinefoz: do you know why small caps outperform over the long term? They have greater growth. What do all small caps rely on to operate? Credit.
Why do small caps go down more in bear markets? The credit goes away and they fail. That’s why the S&P outperforms on a relative basis and the Dow does the best. Those large cap companies have lots of cash. But they can’t grow that quickly and certainly not during a recession.
The banks bet on there being an insane amount of growth in real estate and also in aggregate and are extremely over leveraged on both the business and consumer level. Now they are getting their assess handed to them.
You’re not getting CC applications because they want to extend credit, but that they HAVE to since there is nothing else they can do. That’s the whole reason why the Fed is trying to cut, to make those spreads better for the bank. Only problem is that people are tapped out too much already. Look at the amount of money you get these days for giving banks hard cash in checking accounts. I’ve gotten paid over $400 this year by just two banks for keeping a little over $1k between them. 40% return isn’t bad. They are desperate for cash.
Wages have declined in real terms since 2000. We are maxed out on debt as consumers, and much of the spending growth was just fueled by debt. Look at CalculatedRisk’s posts about how much home equity withdrawal contributed to disposable income.
It goes back to what Greenspan keeps saying. Economic modeling fails because productivity gains allow for expansion without inflation and the debt is grown out of, while debt expansion without massive productivity gains just leads to bubbles and collapse. The last six years we have been driven by debt, not productivity.
spot on mikkel.
BSC opened today ~$3.00 and is trading at $3.65 as of 12:13 edt…why is it up and why isn’t closer to the $2.00 quoted widely in the press?
mikkel,
I guess you’re a cup half empty person, who also assumes there is a hole in the bottom. I don’t deny problems, only that they will not be permanent and that money can be made here without using fantasy based schemes and short sales. You, of course, probably interpreted this as me claiming 15,000 Dow by end of month.
About range trading in a gift market like this one: Assume a top and bottom, making a possible range. Go up a little from the bottom and buy. When it gets close to the anticipated top, sell. Repeat. This is called making money. Easy money. All you need to be is patient. Think fishing. You can even bring along bottle bass.
You don’t need to hit the absolute bottom or the absolute top. With enough volatility, you might exceed 20% this year, a little at a time. Just like that commercial.
I know, you would rather fret about things you can’t do anything about and then hand wring about everything else. I’d rather spot opportunity.
cinefoz writes:
>> I’d like to know from a group of learned
>>souls if it is possible for an unfriendly
>> but extremely rich foreign country to
>> plan out a series of steps that could
>> ultimately crash the world economy. It
>>would obviously take a bit of time and
>> effort.
Three thoughts:
1) In every country but the USA, the USA is a foreign country
2) Never ascribe to malice that which is adequately explained by incompetence
3) We may find out any day now.
Goldman Sachs Says Abby Cohen to Stop Making S&P 500 Forecasts
March 17 (Bloomberg) — Abby Joseph Cohen, the most bullish investment strategist on Wall Street this year, will stop making Standard & Poor’s 500 Index forecasts for Goldman Sachs Group Inc.
She was succeeded in the role by David Kostin, Goldman’s U.S. investment strategist, spokesman Ed Canaday said in a telephone interview. Kostin today predicted the S&P 500 may fall 10 percent to 1,160 before rebounding to 1,380 by year’s end. Cohen, as chief investment strategist, last predicted the benchmark for American equities would end 2008 at 1,675, representing a 32 percent rally from its current level.
The 56-year-old Cohen now has the title “senior investment strategist” and contributor to the portfolio strategy team, according to Canaday. Her prediction for the S&P 500 this year was the highest among 14 Wall Street forecasters followed by Bloomberg.
“She will continue to meet with our clients around the world and provide commentary on financial markets focusing more on longer-term market activity,” Canaday said in an e-mailed statement.
Cinefoz,
You’ve seemed to go from cocky to bitter as the market slides lower. It’s apparent you can’t comprehend any of the good advice you read here.
Boy, are we gonna miss her predictions. Sheesh, I didn’t see this coming. But, then again, she probably lost more money for more people than any female I can think of.
mikkel,
About Greenspan and his credit bubble statement: This may be the first time you’ve heard it, but he’s maybe the 50,000th person to notice it over history. History is loaded with credit bubbles and bursts. For hundreds of years. Big ones. It makes his performance even more appalling.
Innocent Bystander,
“…she’s probably lost more money for more people than any female I can think of.”
Are you including Mr. Spitzer’s, er, girlfriend?
(Nah…she probably made money for the Wall Street crowd.)
You know, I was wondering why the market wasn’t lower today – but then I priced it in Yen (and Euros) and it all made sense.
I don’t believe Spitzer will lose any money, he will just have his gonads in a lockbox for the rest of his life, with Zilda holding the key.
I thought this was funny:
Morningstar’s rating of Bear Stearns is under review.
Cinefoz,
>> Nuts like Islamic radicals who have money,
I normally associate comments like this with radical Limbaugh/Coulter fear-mongering. Listen, the only thing that can bring the US down is its own stupidity. And you’ve seen PLENTY of this the past 7 years. Why in god’s name would you have to look any further than our noses for the scapegoats for “the next bust”, just like we did this one?
Few mortgage brokers are Muslim.
Few realtors are Muslim.
Few bank execs are Muslim.
Few ratings agencies are Muslim.
Few house flippers are Muslim.
The criminal or negligent administration is not Muslim.
The semi-useless press is not Muslim.
The women dancing in the Yahoo mortgage ads were not Muslim.
So, forget the “enemy” Islamic militants and start paying attention to our “friends”. Let’s cajole our friends to “do the right thing” and things should turn out okay.