Oh, So Now There Are No Green Shoots? 89 comments
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By now you know the non-farm payrolls report came out and the job loss for June was worse than expected. Fortunately the weekly jobless claims number stunk too (small humor attempt). And of course the stock market puked down yesterday.
The tenor of the comments on CNBC seemed to be that "oh well, forget about it now," this after the occasional berating of people who were not so bullish before the June data printed. This sort of manic tone that investors are exposed to from various parts of the media has the potential to be dangerous.
I write often about panic selling and panic buying. Letting manic commentary in the media influence your thinking can precipitate panic trading. Think about the last few years from a very big picture. How bad is this really? And how much has changed in the last three months? This has been pretty bad, though not Armageddon, and not much has changed in three months. The stock market rallied a lot and that made some people feel better.
In late December I said I thought there would be a huge rally for no reason at all--it would just happen. I was obviously a couple of months early, but it happened. This was not a prediction where I went out on a limb. After markets scare the hell out of people they have violent snapback rallies - this is just how it works.
For the last few weeks, maybe longer, I have been saying I thought there would be one more run down that would scare the hell out of people. I don't think a scare the hell out them decline would take out the old low, but I don't know. This is not really a prediction where I am going out on the limb either because... say it with me... this is just how it works. The violent snap back rally, which I have also referred to as a "feel good" rally, reassures people that things are ok and then the market tanks one more time bring it to what John Hussman has called the revulsion stage. Maybe it won't happen this time, but the chances are good that it will.
There was no Armageddon or Great Depression 2.0 in the first week of March, we were not completely out of the woods in May, and there will be no Armageddon or Great Depression 2.0 if we go down to SPX 700 this summer. I think this is shaping up to what I said months ago, which was that the way out will be a stumble along the bottom.
Hopefully long time readers, and more importantly our firm's clients, will realize that my view has been steady as opposed to flip-flopping with each data point that comes along. Aside from probably being unhealthy, constant flip-flopping is more likely to be wrong.
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This article has 89 comments:
What you say is true: yes, markets (which, after all, really are just the psychology of people) do this kind of thing. But answer this question:
What will people feel like doing with their stocks (vs., say, buying bonds) when they realize that S&P 500 earnings could be stuck in the $40-$50 range for the next three to five years? My guess is that they'll suddenly be willing to slap no more (and maybe less) than a 10x multiple on that figure. Do the math, Roger.
It already has been dangerous. The financial system was always a big confidence game and that confidence has been undermined. The media has played a big part in it - there have definitely been big fundamental negatives but the media's sole purpose, especially online, has become to generate page hits to support advertising revenue. And you generate page hits via negativity and sensationalism. More and more, I believe that commercial media is not a good source for obtaining information that is closest to the 'truth.' All you can do is factor that in to your investing and be patient and wait for the big contrarian opportunities.
"In late December I said I thought there would be a huge rally for no reason at all--it would just happen"
I believe that a rally cant just happen, this last rally it was falsely fueled by liquidity injections by the Fed. Controlled by trading volumes by a certain few. This is evident if you watch where the trading volumes are coming from.
The trading volumes have been low and concentrated.
The leg downward once the banks are re-capitalized will be caused by the same bunch shorting. You see things dont just happen anymore, they all happen for a well thought out reason.
This must be part of our thought process as no other explanation is possible. Unless you truly believe that the market just does stuff for no reason, and I happen to believe that we all have a higher intelligence as do the people in control of the markets.
It has been damn close to Armageddon if one truly understands that we stood on the precipice last September 18, and again in early October. And many people took monstrous, unnecessary losses by holding onto stocks last year when Cheerleader Central proclaimed there would be no recession, that people were talking themselves into negativity, that the Bush "stimulus" would have the economy roaring out of its temporary weakness by Fall '08.
I still kept the volume on CNBC (most of the time) in those days, it was to me a great contrarianwarning indicator to what I had been seeing develop over the past year in the credit markets, and I remember clearly the Spring '08 comments by shills at CNBC such as Kudlow, Kneal, Bartiromo, Cramer, Burnett and most of their peers who proclaimed that Goldilocks was "alive and well" (She was D.O.A.), that "we are not in recession" (Oh yes we ARE), that "there will be no recession" (Oh yes there WILL), and then looked into the camera and actually scolded their viewers for being negative and bringing on the economic weakness themselves. The Dow was in the upper 12,000's then, rallying off the Bear Sterns weakness, and these cretins were accusing their viewers of being the cause of the problems.
So, many people evidently took a gut check and decided to stick it out after their scolding. And less than 6 months later their equity portfolios were down 50% from the post Bear rally level, and over 60% from the Oct '07 lows. Presently, even with this latest bear market rally, they are still down 41% from the highs and facing rough economic times ahead that could cause further erosion in equity prices.
I keep CNBC on mute 90% of the time now, as Nesto and the rest of the sugarplum fairies rant on about green shoots, and am thankful that my cynicism and open mindedness about what was really happening last year saved my bacon, but many people listened to the pied piper and got their heads handed to them.
And I will go to my grave believing that we were intentionally mislead by a bunch of jerks who knew EXACTLY how bad things were going to get, and sacrificed us to the Street anyway.
The moral of the story, if there is one, is do your own due diligence, be very suspicious and wary of everything the main stream media and particularly the shills at CNBC tell you (as Mike said, they're selling ads, not wisdom), and for God's sake listen to that inner voice when it starts gnawing at you, because on Wall Street if it looks like crap, smells like crap, and tastes like crap, the Street's gonna be having a one day sale on it just for YOU.
On Jul 03 08:56 AM logicalthought wrote:
> >>I have been saying I thought there would be one more run down that
> would scare the hell out of people. I don't think a scare the hell
> out them decline would take out the old low, but I don't know.
> <<
>
> What you say is true: yes, markets (which, after all, really are
> just the psychology of people) do this kind of thing. But answer
> this question:
>
> What will people feel like doing with their stocks (vs., say, buying
> bonds) when they realize that S&P 500 earnings could be stuck
> in the $40-$50 range for the next three to five years? My guess is
> that they'll suddenly be willing to slap no more (and maybe less)
> than a 10x multiple on that figure. Do the math, Roger.
thanks for all the comments
On Jul 03 09:58 AM conceptwizard wrote:
> I liked your article, Thank You. You said:
>
> "In late December I said I thought there would be a huge rally for
> no reason at all--it would just happen"
>
> I believe that a rally cant just happen, this last rally it was
> falsely fueled by liquidity injections by the Fed. Controlled by
> trading volumes by a certain few. This is evident if you watch where
> the trading volumes are coming from.
>
> The trading volumes have been low and concentrated.
>
> The leg downward once the banks are re-capitalized will be caused
> by the same bunch shorting. You see things dont just happen anymore,
> they all happen for a well thought out reason.
> This must be part of our thought process as no other explanation
> is possible. Unless you truly believe that the market just does stuff
> for no reason, and I happen to believe that we all have a higher
> intelligence as do the people in control of the markets.
On Jul 03 10:38 AM Roger Nusbaum wrote:
> I don't know what people will feel like doing but I plan on increasing
> exposure to foreign stocks; countries that are not overly dependent
> on the US. There are countries that do not export a lot to US or
> have modernaization stories on the ground that will carry on regardless
> of the US' plight
Apparently nobody told the Green Shoot brigade that the Trough part of the global business cycle takes a while to get out of, and while the sentiment may be changing the fundamental releases take a long time to make up the lag factor between optimism and reality aligning.
How can ever-increasing weekly jobless numbers, and increasing national unemployment rates hitting 10%, lead to the private sector being expected not to post similar numbers to the previous months bloodbath in job losses (rhetorical).
There is little wonder that the market cannot get global interest to move prices in any market, in any direction, when the future outlook is as blurry as the analyst and forecasters are making it. Fair value is as elusive right now on any given market than it has ever been.
Forget year-end targets and talk of the recession ending in Q3 or Q4 because, the reality is most analysts would stand as much chance of pinning the tail on the donkey as they would getting the Thursday close number on the S&P; let alone calling for the bottom of the most savage of global financial melt-downs that has ever been seen.
This is a traders market right now, one that is built for reactive, contrarian thinkers who are prepared to take a shot at the links that drive forex values actually holding for more than 30 minutes; because in reality that is all that is being offered right now.
Short, sharp bursts of order flows that break up a choppy market, and then reverse as quickly as they hit. Not good to look at, frustrating to look back on, but there for those who are opinion free, and ready to work with what is right in front of them, rather than trying to deal with what they want things to be.
Good read, good thoughts, thank you.
The banking sector in the U.S. does not compare in any way to the ‘safety’ of overseas banks in regard to long term bank deposit and foreign exchange currency ratings, from Standard & Poors, Fitch, and Moody’s. The top 50 globally rated banks from the GFMag yearly 'Safe Bank' survey show some statistics that Stress Test followers, and Green Shooter's, may find surprising.
There are thirteen newcomers to the list; a 20% replacement ratio rate from 12 months ago. The highest ranking bank is Germany’s KFW, Singapore and Finland added major players to the list, with two of Singapore’s entrants matching Deutsche Bank and Bank of Montreal’s credit ratings.
Spain and Canada moved into the top ten with Banco Santander and Bank of Canada. Some casualties to the list include Citi, Bank of America, Barclays, and Royal Bank of Scotland.
The U.S. has no banks in the top 20, and just five banks in the top 50 list.
4 of the top 7 are German
9 of the top 10 are European
14 of the top 20 are European
5 of the top 20 are Australian or New Zealand
2 of the top 20 are Canadian
33 of the top 50 are European
France has as many top 50 banks as the U.S. and a far higher overall ranking with 3 of the top French banks within the top 20, and one, CDC, in at number 2 on the list. European and Australian banks dominate the overall rankings.
The five U.S. banks in the top 50 are Wells Fargo (21), US Bancorp (26), Bank of New York Mellon (34), JP Morgan Chase (45), and tied for 50th with three overseas banks is BB&T.
Hmmmmm, the flight to safety, on a bed of green shoots. Looks as though the flight to safety may have to be re-written in the post-credit crisis environment.
CNBC would brow beat anyone who suggested the situation wasn't rosy. They'd cut them off and not allow them to finish their take on the economy if the news team didn't hear what it wanted to hear.
Then they'd use buzzers to insure everyone made their point in under ten seconds.
You couldn't watch the show if you had anxiety issues.
Put epilectics into a coma. :-)
The reason I'd watch, the nay sayers would point out where weakness lies. Whenever Larry Kudlow cut them off I know it was a good place to initiate a little research.
Quite a few nay sayers with good arguments.
For all this little green shoots talk - the show refuses to discuss how much toxic asset is still on bank balance sheets and how plans to remove these toxic assets are going. Better yet, no one seems to know until they come due, how bad the toxic assets get.
We may not be able to afford the stimulus needed to help the banks. Their fall may be inevitable.
The accounting rule changes from mark to market to some new form where losses get to be reported as gains are going to really bite the ignorant investor on the behind.
The banks don't want to use these changes because declaring a loss, a gain means they have to pay taxes on money that's not their or that wasn't income.
As for transparency, FASB rule changes like this haven't been posted across the front page.
Some other network should bring on the same kind of show only to bring business pundits on to tell the truth. Examine all sides of an issue. As lousy as CNBC is it's the only exposure to news and all pundits are thought provoking.
Between the laziness of summer markets, and the increasingly realistic attitudes about the trading environment, the economy, and the administration, it wouldn't take panic...just simple indifference would suffice.
In another article, someone had suggested 666 as a low test, which has a nice apocalyptic feel, but I don't that is in the cards!
How much oil does Norway export to the US?
How much copper does Chile export to the US?
Ditto Peru?
What is the resource demand in China for the non-manufacturing part of the economy?
There are questions like these that can be asked of many countries ex-Big Western Europe and Japan, this is where I have been investing and continue to look (been writing about Norway and Chile as long as I've been writing).
On Jul 03 10:49 AM logicalthought wrote:
> Roger, which countries would those be? I'm genuinely curious, because
> as far as I can tell, a major part of what the rest of the world
> does is export either commodities or finished products to the U.S.
> and Europe, both of which (as you can see from my earlier post) I
> believe will be in the tank for the next three to five years. Might
> some of those countries "not go down as much" as the Western markets
> do? Sure, but you can't eat (or pay rent with) "relative performance".
>
this actually puts us in the expected time frame of the recession ending and and stocks rising three months before the recession ends!!
I think it has to due with reporting periods so pension funds don't report such huge losses. so down for this reporting period (earnings don't match) up before the next
I watch CNBC for 1 hour of Power Lunch. I gave up on the hosts a long time ago. Michelle Cabrara-Cubruzzo is the only one that makes any sense. The hosts (Griffin & Herrera) are cheerleaders as others have pointed out.
they boys took the profits they wanted and clearly are now short!!!
Oil is a 100% fungible commodity, and when worldwide lack of demand drives the price back down to $40 (or, perhaps, considerably below that), how well will the Norwegian stock market do? If you're such a bull on oil, why buy Norway? Why not just buy the commodity itself, or perhaps the stocks of the producers and drillers? And as for Peruvian and Chilean copper exports, sure a huge chunk of that goes to China, but where do you think the finished products are supposed to go? Thanks to a wasteful "stimulus" package combined with drastically reduced end-user demand for its manufactured products, China is clearly blowing itself a brand new bubble in real estate, equities and (although I think this part is now over) commodities. My biggest issue with China isn't when to get long but, rather, when to get short. (I want to try to time it so that I can remain solvent longer than that market can remain irrational.)
On Jul 03 11:35 AM Roger Nusbaum wrote:
> no country is perfect, don't forget that but
>
> How much oil does Norway export to the US?
>
> How much copper does Chile export to the US?
>
> Ditto Peru?
>
> What is the resource demand in China for the non-manufacturing part
> of the economy?
>
> There are questions like these that can be asked of many countries
> ex-Big Western Europe and Japan, this is where I have been investing
> and continue to look (been writing about Norway and Chile as long
> as I've been writing).
On Jul 03 11:12 AM The LFB wrote:
> Agree 100% on the forign stocks, the XLF is screaming that is struggling
> to hold fair value.
>
> The banking sector in the U.S. does not compare in any way to the
> ‘safety’ of overseas banks in regard to long term bank deposit and
> foreign exchange currency ratings, from Standard & Poors, Fitch,
> and Moody’s. The top 50 globally rated banks from the GFMag yearly
> 'Safe Bank' survey show some statistics that Stress Test followers,
> and Green Shooter's, may find surprising.
>
> There are thirteen newcomers to the list; a 20% replacement ratio
> rate from 12 months ago. The highest ranking bank is Germany’s KFW,
> Singapore and Finland added major players to the list, with two of
> Singapore’s entrants matching Deutsche Bank and Bank of Montreal’s
> credit ratings.
>
> Spain and Canada moved into the top ten with Banco Santander and
> Bank of Canada. Some casualties to the list include Citi, Bank of
> America, Barclays, and Royal Bank of Scotland.
>
> The U.S. has no banks in the top 20, and just five banks in the top
> 50 list.
>
> 4 of the top 7 are German
>
> 9 of the top 10 are European
>
> 14 of the top 20 are European
>
> 5 of the top 20 are Australian or New Zealand
>
> 2 of the top 20 are Canadian
>
> 33 of the top 50 are European
>
> France has as many top 50 banks as the U.S. and a far higher overall
> ranking with 3 of the top French banks within the top 20, and one,
> CDC, in at number 2 on the list. European and Australian banks dominate
> the overall rankings.
>
> The five U.S. banks in the top 50 are Wells Fargo (21), US Bancorp
> (26), Bank of New York Mellon (34), JP Morgan Chase (45), and tied
> for 50th with three overseas banks is BB&T.
>
> Hmmmmm, the flight to safety, on a bed of green shoots. Looks as
> though the flight to safety may have to be re-written in the post-credit
> crisis environment.
The speak and the hype that comes from it can only go so far. Eventually, the substance will have to be there to back up the hype. In its absence, the market will continue it's decline.
When that comes, all the speak will change from 'green shoots' to 'yellow weed'.
All traders and investors need to develop the requisite critical thinking to cut through the hype. As for me, until the market gives me a clear and compelling signal, the bear market continues.
docs.google.com/Presen...
Only fools will trust their wealth to a fiat currency now. Only fools will shun ownership of productive farms and instead invest in massivley overpriced and useless urban properties. There is really a rotten outcome ahead for so many who act and feel rich now but will discover soon the real poverty that their ownership entails.
Yikes. I am scaring myself today!
(All of the above is just comedy of course for general amusement. Don't worry, be happy. It will all work out just fine in the end)
Not.
On Jul 03 09:58 AM conceptwizard wrote:
> I liked your article, Thank You. You said:
>
> "In late December I said I thought there would be a huge rally for
> no reason at all--it would just happen"
>
> I believe that a rally cant just happen, this last rally it was
> falsely fueled by liquidity injections by the Fed. Controlled by
> trading volumes by a certain few. This is evident if you watch where
> the trading volumes are coming from.
>
> The trading volumes have been low and concentrated.
>
> The leg downward once the banks are re-capitalized will be caused
> by the same bunch shorting. You see things dont just happen anymore,
> they all happen for a well thought out reason.
> This must be part of our thought process as no other explanation
> is possible. Unless you truly believe that the market just does stuff
> for no reason, and I happen to believe that we all have a higher
> intelligence as do the people in control of the markets.
A M E N brother.. succinctly put!
the economy is what it is. it is not falling off a cliff. it is bottoming. it may decline slightly for a period of time. but it is big and broad and at some point it will engage. i personally believe it will be some time before that happens but it will happen. i am patient.
just like the perma-bears are bad for the economy, the perma-bulls are equally as bad pumping expectations believing that investor blood would somehow trigger the economy (and the market).
You are on flight 505 idiot
What is interesting is the thing that will continue to force decoupling is not the market itself, but the political interference of this government in terms of tax policy and regulation.
On Jul 03 10:12 AM wpdragon wrote:
> " ...Letting manic commentary in the media influence your thinking
> can precipitate panic trading. Think about the last few years from
> a very big picture. How bad is this really? And how much has changed
> in the last three months? This has been pretty bad, though not Armageddon..."
>
>
> It has been damn close to Armageddon if one truly understands that
> we stood on the precipice last September 18, and again in early October.
> And many people took monstrous, unnecessary losses by holding onto
> stocks last year when Cheerleader Central proclaimed there would
> be no recession, that people were talking themselves into negativity,
> that the Bush "stimulus" would have the economy roaring out of its
> temporary weakness by Fall '08.
>
> I still kept the volume on CNBC (most of the time) in those days,
> it was to me a great contrarianwarning indicator to what I had been
> seeing develop over the past year in the credit markets, and I remember
> clearly the Spring '08 comments by shills at CNBC such as Kudlow,
> Kneal, Bartiromo, Cramer, Burnett and most of their peers who proclaimed
> that Goldilocks was "alive and well" (She was D.O.A.), that "we are
> not in recession" (Oh yes we ARE), that "there will be no recession"
> (Oh yes there WILL), and then looked into the camera and actually
> scolded their viewers for being negative and bringing on the economic
> weakness themselves. The Dow was in the upper 12,000's then, rallying
> off the Bear Sterns weakness, and these cretins were accusing their
> viewers of being the cause of the problems.
>
> So, many people evidently took a gut check and decided to stick it
> out after their scolding. And less than 6 months later their equity
> portfolios were down 50% from the post Bear rally level, and over
> 60% from the Oct '07 lows. Presently, even with this latest bear
> market rally, they are still down 41% from the highs and facing rough
> economic times ahead that could cause further erosion in equity prices.
>
>
> I keep CNBC on mute 90% of the time now, as Nesto and the rest of
> the sugarplum fairies rant on about green shoots, and am thankful
> that my cynicism and open mindedness about what was really happening
> last year saved my bacon, but many people listened to the pied piper
> and got their heads handed to them.
>
> And I will go to my grave believing that we were intentionally mislead
> by a bunch of jerks who knew EXACTLY how bad things were going to
> get, and sacrificed us to the Street anyway.
>
> The moral of the story, if there is one, is do your own due diligence,
> be very suspicious and wary of everything the main stream media and
> particularly the shills at CNBC tell you (as Mike said, they're selling
> ads, not wisdom), and for God's sake listen to that inner voice when
> it starts gnawing at you, because on Wall Street if it looks like
> crap, smells like crap, and tastes like crap, the Street's gonna
> be having a one day sale on it just for YOU.
The biggest wonder if how he has 600+ followers. I need to check my filters.
If we look at te thirties market performance, that is what we see, not once but several times. The market bounces as everyone tries to second guess. Even the big players.
Again and forever, direction ultimately is a function of general trend and now we have a market phenomenon and everyone is treating it as if it were a normal market fluctuation. Wake up folks, the world of finance has just gone nuclear and blew itself up. That on top of a bubble was the perfect brew for a major calamity.
We cannot realistically expect that with so much damage done that the repair is a minor consideration. It will take years and years to fix this mess. The government and the FED are sticking their fingers into whatever they whimsicly decide needs some juice. All at the expense of the taxpayers and never mind the long term negative effects on the dollar.
So, where are we? Broke and busted. The government is bankrupt...totally, the FED is printing money by the bucket and the goons on the hill are passing poorly thought out legislation without even reading it.
Never mind the charting and the usual market palaver, real and sustainable damage has been done to core industries and yet no one seems to notice. Instead are looking for "greenspan shoots".
We've got a long way to go on this dusty trail of broken dreams and broken hearts as the handmaiden of dispair walks all over our dreams and expectations. It is going to get really ugly out there, the worst is yet to come.
All this money, in one way or another, ended up propping state governments that have welfare obligations, and bloated payrolls and benefit costs.
I and others argued that it should have simple gone as relief of the 15.3% in payroll taxes assessed against the first $106,800 of wages. The money would have filtered into the economy without bureaucrats, and the employer side of the relief could have been conditioned on maintaining head count.
Washington really didn't want successful businesses and their employees to get anything, and then they are surprised that jobs get cut?
We are on the way to becoming a Socialist third world country where the illiterate, non working, drug addict will represent the middle class and the remainder will collate accordingly.
You're noy going to beat it, so do what they did in Sweden with 90% confiscatory taxes of the higher paid educated class,----LEAVE!
Also, two-thirds of Indonesia's economy is domestic. I'm comparing IF and IDX before deciding which to buy.
On Jul 03 11:35 AM Roger Nusbaum wrote:
> no country is perfect, don't forget that but
>
> How much oil does Norway export to the US?
>
> How much copper does Chile export to the US?
>
> Ditto Peru?
>
> What is the resource demand in China for the non-manufacturing part
> of the economy?
>
> There are questions like these that can be asked of many countries
> ex-Big Western Europe and Japan, this is where I have been investing
> and continue to look (been writing about Norway and Chile as long
> as I've been writing).
On Jul 03 01:09 PM logicalthought wrote:
> Well, to answer your specific two examples:
>
> Oil is a 100% fungible commodity, and when worldwide lack of demand
> drives the price back down to $40 (or, perhaps, considerably below
> that), how well will the Norwegian stock market do? If you're such
> a bull on oil, why buy Norway? Why not just buy the commodity itself,
> or perhaps the stocks of the producers and drillers? And as for Peruvian
> and Chilean copper exports, sure a huge chunk of that goes to China,
> but where do you think the finished products are supposed to go?
> Thanks to a wasteful "stimulus" package combined with drastically
> reduced end-user demand for its manufactured products, China is clearly
> blowing itself a brand new bubble in real estate, equities and (although
> I think this part is now over) commodities. My biggest issue with
> China isn't when to get long but, rather, when to get short. (I want
> to try to time it so that I can remain solvent longer than that market
> can remain irrational.)
On Jul 04 09:23 AM FDNY RET wrote:
> Sorry don't want to be a partner stockholder in a company with the
> Govt. as the principal, where Social engineering replaces profit
> motive.
> We are on the way to becoming a Socialist third world country where
> the illiterate, non working, drug addict will represent the middle
> class and the remainder will collate accordingly.
>
> You're noy going to beat it, so do what they did in Sweden with
> 90% confiscatory taxes of the higher paid educated class,----LEAVE!
helm.
Unfortunately, news programming falls under the same standards as the commentary programming by Rush, Beck, and that ilk. The truth is not as entertaining as the hyperbole and falsehoods spewed by the hatemongers. There's no profit potential in broadcasting the truth.
On Jul 03 11:22 AM Warm_Paw wrote:
> I agree on the "manic tone" view.
> CNBC would brow beat anyone who suggested the situation wasn't rosy.
> They'd cut them off and not allow them to finish their take on the
> economy if the news team didn't hear what it wanted to hear.
> Then they'd use buzzers to insure everyone made their point in under
> ten seconds.
> You couldn't watch the show if you had anxiety issues.
> Put epilectics into a coma. :-)
> The reason I'd watch, the nay sayers would point out where weakness
> lies. Whenever Larry Kudlow cut them off I know it was a good place
> to initiate a little research.
> Quite a few nay sayers with good arguments.
> For all this little green shoots talk - the show refuses to discuss
> how much toxic asset is still on bank balance sheets and how plans
> to remove these toxic assets are going. Better yet, no one seems
> to know until they come due, how bad the toxic assets get.
> We may not be able to afford the stimulus needed to help the banks.
> Their fall may be inevitable.
> The accounting rule changes from mark to market to some new form
> where losses get to be reported as gains are going to really bite
> the ignorant investor on the behind.
> The banks don't want to use these changes because declaring a loss,
> a gain means they have to pay taxes on money that's not their or
> that wasn't income.
> As for transparency, FASB rule changes like this haven't been posted
> across the front page.
> Some other network should bring on the same kind of show only to
> bring business pundits on to tell the truth. Examine all sides of
> an issue. As lousy as CNBC is it's the only exposure to news and
> all pundits are thought provoking.
On Jul 03 12:10 PM waf76 wrote:
> We will go lower in 3Q due to the seasonality of the market along
> with disappointing bank numbers since Q1 were artificially increased.
> With that being said we're going higher in October, not because of
> fundamentals, just because. By Xmas we will be looking at 2 years
> of recession and there will be some pent up demand just waiting to
> buy buy buy.
If we could chalk it all up to the psychology of the small time investors (me) very many things would be different, some better due to the indefatigable nature of true belief, others worse due to the cynical trust nothing side of us.
The point is of course that none of this happens in a vacuum. The manipulation of this market, especially in the areas of precious metals and energy as well as money supply have been carefully coordinated with media both here and abroad (who are obviously also being manipulated because they clearly dont have the sense to figure it out on their own) -all to the effect of making big ups and downs- which, as we all know are highly profitable to those who can figure it out.
So, what's new with that? Except that its happening at 6 to 8 thousand Dow instead of 11 to 13.
rock steady...
On Jul 03 09:58 AM conceptwizard wrote:
> I liked your article, Thank You. You said:
>
> "In late December I said I thought there would be a huge rally for
> no reason at all--it would just happen"
>
> I believe that a rally cant just happen, this last rally it was
> falsely fueled by liquidity injections by the Fed. Controlled by
> trading volumes by a certain few. This is evident if you watch where
> the trading volumes are coming from.
>
> The trading volumes have been low and concentrated.
>
> The leg downward once the banks are re-capitalized will be caused
> by the same bunch shorting. You see things dont just happen anymore,
> they all happen for a well thought out reason.
> This must be part of our thought process as no other explanation
> is possible. Unless you truly believe that the market just does stuff
> for no reason, and I happen to believe that we all have a higher
> intelligence as do the people in control of the markets.
Just a thought
negativity is bad for one's health, emotionally as well
> as physically. it's also poison for the stock market and all ponzi
> schemes.
It will surprise me if we even get a decent pullback, much less revist the March lows. I live in a hick town in NC where most of the people are blue collar factory workers. I just don't see the gloom and doom out there in my daily travels. Things seem pretty normal to me out here in the real world. Nobody in soup lines, no homeless people on the streets, no unusually high crime. Just normal.
I feel that the market will range trade for a while until people "feel" better about investing. The smart money is already in. The others will need to see more proof before they believe.
All we ever asked of anyone is to FIGURE IT OUT and act on it. Unfortunately, it looks like politicians did the better job of it and therein lies the source of huge disappointment to the truly productive.
I DONT WANT TO TAKE THE MONEY AND RUN but yer painting me into a corner here....
On Jul 04 09:23 AM FDNY RET wrote:
> Sorry don't want to be a partner stockholder in a company with the
> Govt. as the principal, where Social engineering replaces profit
> motive.
> We are on the way to becoming a Socialist third world country where
> the illiterate, non working, drug addict will represent the middle
> class and the remainder will collate accordingly.
>
> You're noy going to beat it, so do what they did in Sweden with
> 90% confiscatory taxes of the higher paid educated class,----LEAVE!
On Jul 04 09:08 AM Alphameister wrote:
> If I can't understand it and didn't expect it, must be a conspiracy
> by "the big boys."
Do we take that as a denial of any manipulation in this market?
Conspiracy theories bore me too... BUT: Billions in bearer bonds are caught being smuggled into Switzerland... a few weeks later (presumably after a delivery made it) CH is dumping gold and shoring up the accountability of foreign money hidden there. Smacks of HUGE manipulation to me. Hell, I dont know, maybe it IS all for our own good...BUT: I know this, we became a great nation waay before all of that stuff started "on our behalf".
Just a thought
when my nose smells a negatively minded zeitgeist like we read here, I go contrarian and have been ever since the last week in June. But I will admit, the author 's comments about overseas investing are dead on.
One poster made the correct observation that, and to paraphrase, " we're do you think all these finished products are intended to ship to? "....implying, of course, the US. Well yes AND no. The USA is at the end of the first part of it's decline---we won't and never will go 3rd world or second tier---more like we're just distributing some of our wealth overseas. It's just the way Empire goes. That said, these products, the uptick in manufactured goods ( that's real data ) is not being used here as much as it's being used more and more overseas. And it ain't EuroLand. For the poster who said India's economy is going to take 10 years to dig itself out. hello? I'd advise you to stop reading that article printed in 1999.
T
On Jul 04 08:55 AM Alphameister wrote:
> Very encouraging to see that this very bearish article, with its
> absurd contention that the rally off the June lows happened "for
> no reason at all," receives the overwhelming support that I've come
> to expect here. Could indicate that a short-term bottom is close.
On Jul 04 08:56 AM lorddarley wrote:
> We're in trouble because the stimulus did not get into the hands
> of real employers, with viable business moels, and the people who
> work for them.
>
> All this money, in one way or another, ended up propping state governments
> that have welfare obligations, and bloated payrolls and benefit costs.
>
>
> I and others argued that it should have simple gone as relief of
> the 15.3% in payroll taxes assessed against the first $106,800 of
> wages. The money would have filtered into the economy without bureaucrats,
> and the employer side of the relief could have been conditioned on
> maintaining head count.
>
> Washington really didn't want successful businesses and their employees
> to get anything, and then they are surprised that jobs get cut?<br/>
Furthermore I sold covered calls to most of my longs in order to have at least some protection. I don't like to go short, but maybe that is a female thing.
Anyway, my question to you all is, do you think this is a good strategy or what else should I do to get through this crisis ?
BTW, I consider myself an investor not trader and I do not plan to need/use the money in the next 5 years.
Any comment is appreciate, thank you.
Petra
On Jul 04 09:55 AM elliot_mllr wrote:
> Approximately two-thirds of China's massive (15% of its GDP) stimulus
> is for infrastructure. That is where the commodities are going, not
> into exports.
The past couple months have probably been driven by China buying up cheap raw materials.
But on June 30th China announced a decision to stop. This could be bad.
www.planbeconomics.com.../
I just keep remembering a sentence I read in a book about the Great Depression: Those who didn't get wiped out in '29, got wiped out in '32.
We've only just begun...
To give... (la, la, la, la)
The imaginary Green Shoots Theory was a concoction of the Media to make the general public feel better about the World’s Goofiest Stimulus Plan. Yeah, that stimulus plan. The Stimulus Plan that was DOA. Yep, the unread, social engineering, gone in 60 seconds Stimulus Plan.
Green Shoots from the Stimulus Plan? Maybe Frank Zappa said it best: Look here brother, don't be jiving me with that cosmic debris!
There will be no Green Shoots until incentives are put in place to accelerate Private Capital Formation leading to Private Sector job creation.
Many articles are being published regarding the 9.5% unemployment rate. That unemployment will worsen. That June unemployment came is at 473,000 more losing their job (+100,000 more than predicted). That many States have unemployment rates of +11% and that pockets of unemployment are approaching 20%.
What about the other unemployment? Unemployment of Capital. This economic phenomena never gets much attention in the mainstream media.
Production is made up of human capital and Physical and Monetary Capital. With absolutely, positively no incentive being offered for Private Capital Formation or activation of existing Capital, the other component of production , human capital, sits idle.
Human Capital will continue to sit idle for the very fact that no stimulus has been sent the way of Private Capital Formation leading to Private Sector jobs. The fact that no incentive exists for Private Capital Formation is compounded by the specter of an Energy Tax via Cap and Trade as well as the expectation of general tax increases by Federal, State, and Local Government Bodies. Furthermore, the specter of over-regulation threatens profits at the margin even if Private Capital Formation is employed.
Romer, Goolsbee, and Jared "The King of Spin" Bernstein (the non-economist Economist) have painted themselves right into a corner.
Recall the un-read-but-we-voted-o... 6000 earmark, Social Engineering Stimulus Goofiness. Try painting from the corners toward the doorway this time around.
On Jul 04 02:01 PM Plan B Economics wrote:
> Commodity stockpiling.
>
> The past couple months have probably been driven by China buying
> up cheap raw materials.
>
> But on June 30th China announced a decision to stop. This could be
> bad.
>
> www.planbeconomics.com.../
On Jul 04 12:32 PM glh wrote:
> I use to watch and listen to CNBC quite a bit, but now I mostly watch
> the ticker but mute the sound. If I'm at home I can get Bloomberg
> on digital cable. Bloomberg is a little boring, but much better
> at reporting the news without all the other b.s. CNBC's evening
> shows are a mess. If I wanted to watch the stuff Kudlow and Kneale
> put out, I'd just tune in Fox News and watch O'Reilly and Hannity.
> I don't see much difference, it's mostly politics.
On Jul 03 09:57 AM AlexS wrote:
> There were some green shoots but Obama and Congress stepped on them
> first with his GHG boot and later with his health care boot and so
> now they are dead.
Surely, Mr Nussbaum, that means the market is set to go straight up. Market sentiment has been a contrary indicator for years..
Wall Street is as good as a "sovereign nation" with the Fed as its Government. It produces nothing tangible but has the arcane ability to suck up your wealth and expect a bailout with no strings attached. Unless you wake up from this masochistic euphoria, happy enjoyment.
Good points. The following are points that John Hussman makes in late June/09, and Hussman usually does top notch analysis to support and explain his fund's investments.
"Presently, the price-to-book ratio on the S&P 500 is about 1.9. If you think about the 1974 and 1982 lows, we observed price/book ratios at about 0.8, while price-to-normalized earnings multiples were at about 7. So the S&P 500 would have to drop by about 60% to match the best valuations that we've seen during the past 40 years. Investors shouldn't kid themselves that stocks are cheap – in the sense of being priced to deliver outstanding long-term returns – just because we've observed a wicked decline. We're not even close".
Thus if would be very surpising if we do not see at least one more significant downleg in this bear market rally, and possibly several more. To even remotely think this may be the start of a new bull market, seems wild fantasy at the best.
On Jul 03 08:56 AM logicalthought wrote:
> >>I have been saying I thought there would be one more run down that
> would scare the hell out of people. I don't think a scare the hell
> out them decline would take out the old low, but I don't know.
> <<
>
> What you say is true: yes, markets (which, after all, really are
> just the psychology of people) do this kind of thing. But answer
> this question:
>
> What will people feel like doing with their stocks (vs., say, buying
> bonds) when they realize that S&P 500 earnings could be stuck
> in the $40-$50 range for the next three to five years? My guess is
> that they'll suddenly be willing to slap no more (and maybe less)
> than a 10x multiple on that figure. Do the math, Roger.
Don't count on that!
For beginner, did China officially announced that it started strategic stockpile buying, when it started the current commodities buying spree? It never told you beforehand, did it?
Digging through the original news source. These are just two Chinese intellectuals expressing their own opinions. These two people are not in any decision making position. At best they can be called members of a think tank. I am not sure how influencial their opinions are. Never heard these two names.
Please understand, for China such a huge country to build its stockpile, a couple months of buying is far from enough. I think we should be talking about a few years to a decade of stockpile building. It's far from over.
Please also understand, China's strategy is to get rid of its US dollar assets and turn them into commodity stockpile. This is an extremely briliant strategy as it fools most peoplein the western world. Read more here:
seekingalpha.com/artic...
On Jul 04 02:01 PM Plan B Economics wrote:
> Commodity stockpiling.
>
> The past couple months have probably been driven by China buying
> up cheap raw materials.
>
> But on June 30th China announced a decision to stop. This could be
> bad.
>
> www.planbeconomics.com.../
This isn't a minor correction, caused by over-optimistic supply exceeding demand. This is a substantial reallignment of the demand curve, itself.
When we begin to emerge from this recession, we will be doing it in a consumer market, easily, 10 percent smaller than what existed, before the collapse.
In fact, the situation could become much, much worse. Unlike previous eras, where gains were the result of rising wages, this economic growth has been entirely fueled by consumer borrowing. Per-capita debt levels have been rising for two decades.
Now they are receding. How far can they drop? Nobody knows.
That's why, when considering which way the markets will go, it pays to be extremely cautious. Until we truly perceive the floor for consumer spending, we should hold of on any bets about when we can expect capital markets to reach the bottom.
This may be the end of the fool's rally, but it's far from the end of the road for the recession cycle. That will continue until supply again can match demand.
Which companies will survive? It's hard to say. Which will suddenly be vulnerable to changing public saving and spending habits. That's even harder to say.
Your strategy is a good one. Energy and commodites should be a safe LT bet. Selling covered calls is also a very good idea. The 2 other strategies you should consider are some great dividend paying stocks (although I would wait for lower prices to buy these), and selling put options. Selling put options allows you to collect the premiums (like covered calls), and only have to buy at the lower put/strike prices if they ever get there. But you probably would buy at the lower prices anyway so might as well sell the puts and collect the premiums. I just sold some GE, $7.50, Jan/10 puts and collected about $450 in premiums. I would buy GE at $7.50 or less anyway, so I personally view it as little risk. You just have to set the put strike price at what you would be willing to buy at anyway. You would lose some if it actually goes lower than that and you still have to buy at the strike price anyway. But in my trade, I would buy GE at $7.50 anyway and I believe the odds of GE getting back to $7.50 are faily low, so I might as well collect the $450 in premiums....actually is better payout than the dividends on GE anyway even if I owned the GE right now. Worth checking out as part of your investing strategy. Works well for me.
On Jul 04 01:37 PM 261133 wrote:
> Interesting article and comments. Maybe someone can help me out here.
> I think the market will pull back in the second half of the year
> and then could go up again early 2010, provided the economy gets
> back on track. Having said that, I already sold my financials,insurances
> and switched to energy and metals and have about 40 % in cash.<br/>Furthe...
> I sold covered calls to most of my longs in order to have at least
> some protection. I don't like to go short, but maybe that is a female
> thing.
> Anyway, my question to you all is, do you think this is a good strategy
> or what else should I do to get through this crisis ?
> BTW, I consider myself an investor not trader and I do not plan to
> need/use the money in the next 5 years.
> Any comment is appreciate, thank you.
> Petra
How are you liking the last 3 overall down weeks now? Mighty strange that there have been almost no late day hugh spikes to support the up-market for these last three weeks either. Maybe Goldman and JPM have dumped most of their cheap tanker oil now that they helped run up oil to $70-75/barrel? Maybe Goldman and JPM now have all the hedges they need in place now? Guess we will all find out over the next 3-12 weeks. But if you don't think so, keep buying all the long positions you want and my guess is Goldman and JPM will be happy to sell you all you want at these levels/prices. Many of the rest of us will wait for much cheaper prices after the next downleg.
On Jul 04 09:08 AM Alphameister wrote:
> If I can't understand it and didn't expect it, must be a conspiracy
> by "the big boys."
Perhaps you won't find it all so humorous if you lose your job and home, and have to worry about if you are going to be able to get enough to eat.
When all is said and done this Market will wash out and our Economy will be in Slow Growth mode to a very long time.
Grab your Ankles and Kiss your ASS Goodbye!
All will loose this time around.
This is just the beginning of a long and hard Depression!
With any luck we'll be able to pay our debts with Inflated Dollars but that doesn't make much sense since the Little Guy just could'nt get a Lucky Break like that.
Perhaps a Devaluation and a Worldwide Currency make more sense.
Party On fellow Suckers!
It takes some stones to pretend that your 'prediction' was right. The S&P is down since yearend. For your rally to materialize, the markets had to drop 30% to position it for your huge rally. All told, I am glad I missed your rally.
So it wasn't a market timing call? Just an observation that market volatility is high. What next are you going to predict that water is wet?
Businesses got richer and richer. But American wealth was paper wealth. In fact, Americans took on more and more debt just to keep treading water.
I'm not sure Americans want anything handed to them. But we bought a Big Lie -- that it was ok to be debt slaves -- and now we have to pay the piper.
Unwinding our debt will take another ten years; and we will suffer like we did in the 1930's as we wind down this debt. We are downsizing, scaling-down, sinking lower and lower in our expectations. The future is not bright any longer. The future is dark and Americans are saving money to get ready.
Entropy? The body is breaking up. Inflation is over; and deflation will be with us for at least another ten years.
On Jul 04 10:11 AM elliot_mllr wrote:
> There is an interesting point made by Jonah Goldberg in his book
> "Liberal Facism" .He says that Americans are no longer interested
> in the pursuit of happiness; rather than pursue happiness, we now
> want it handed to us.
On Jul 03 09:19 AM Mike McCurdy wrote:
>>> "More and more, I believe that commercial media is not a good source for obtaining information that is closest to the 'truth.'"<<<
You made some lousy and stupid investments...and since it couldn't possibly be YOUR fault, you go on-line and rant against CNBC, stock analysts, companies, executives, Roger, (and everyone's favorite) our government!
If you genuinely felt this way, you would not have bought stocks to begin with, and certainly you would never buy again -- and thus would have no interest in reading/responding to Roger's blog for investors.
I have read comments similar to yours in the midst of every recession since I started investing in the 1970s.
Most of you could not recall that during the first Arab Oil Embargo, our 'mainstream' media was full of convincing articles that our children (yes, that's most of you) would never be able to enjoy the standard of living your parents had enjoyed because our economy was based upon the industrial revolution -- which was being reversed by the high price of oil.
What you have really posted is that you have finally learned to be a critical reader.
Perhaps one day soon you will realize investors will always be plagued by liars, thieves, and cheats. You can only be a successful investor when you realize YOU are responsible for your mis-timed investments, and you have learned nothing by blaming others.
On Jul 03 10:12 AM wpdragon wrote:
>>> I keep CNBC on mute 90% of the time now, as Nesto and the rest of the sugarplum fairies rant on about green shoots, and am thankful that my cynicism and open mindedness about what was really happening last year saved my bacon, but many people listened to the pied piper and got their heads handed to them.
And I will go to my grave believing that we were intentionally mislead by a bunch of jerks who knew EXACTLY how bad things were going to get, and sacrificed us to the Street anyway.<<<
On Jul 05 01:37 AM Philip S. Moore wrote:
> Although, overall, I agree with the author's assessment of current
> market cycles, I'm troubled by the lack off realization that this
> recession is fundamentally different.
> This isn't a minor correction, caused by over-optimistic supply exceeding
> demand. This is a substantial reallignment of the demand curve, itself.
>
> When we begin to emerge from this recession, we will be doing it
> in a consumer market, easily, 10 percent smaller than what existed,
> before the collapse.
> In fact, the situation could become much, much worse. Unlike previous
> eras, where gains were the result of rising wages, this economic
> growth has been entirely fueled by consumer borrowing. Per-capita
> debt levels have been rising for two decades.
> Now they are receding. How far can they drop? Nobody knows.
> That's why, when considering which way the markets will go, it pays
> to be extremely cautious. Until we truly perceive the floor for consumer
> spending, we should hold of on any bets about when we can expect
> capital markets to reach the bottom.
> This may be the end of the fool's rally, but it's far from the end
> of the road for the recession cycle. That will continue until supply
> again can match demand.
> Which companies will survive? It's hard to say. Which will suddenly
> be vulnerable to changing public saving and spending habits. That's
> even harder to say.
Anyone confusing the stock market's present "rearranging the deck chairs phase" as evidence that, this is "not Armageddon" will get what they deserve when what becomes EVEN MORE APPARENT is the physical economy's utter incapacity to generate the sort of activity necessary to service the mountain of debt that has been built up.
Trouble is rapidly spreading to affect even state governments! These entities are MINUSCULE in comparison to the private sector. Yet so little of the much need wealth generating capacity exists right now that, even the smallest of liabilities cannot be met. There's simply too little wealth to go around. Thus, the mountain of debt that has been built up over recent months and years strongly suggests "Armageddon" is at the door.
Smart money takes risks, yes. But never stupid ones whose odds of success rest on blind faith. And, truly, you must be blind not to see disaster in the making here. Smart money is NOT being put at risk in the stock market. The volume picture makes this clear.
On Jul 06 10:21 AM spald_fr wrote:
> D*mn fine comments, dragon, particularly:
>
> On Jul 03 10:12 AM wpdragon wrote: