8 Alpha-Zulu

Has the Market Become Immune to Bad News?

Technology is part the culprit: the internet, cable TV, PDA's, cell phone updates etc... have deluged us with information 24/7/365; we gobble up stats, information and rumor as though we are drinking it through a firehose and the spiggot is being turned up daily. The market is based on the flow of information from one party to another and this info now whirls around us tornadically. We consume this information so rapidly that we have become nearly totally desensitized to it. Good News, Bad News, Any News is better than no news.... right? Wrong. Too much information and a complete void of cogitation and thoughfulness is as bad as not enough. Action for the sake of making a move is the day's m.o. and it is virtually impossible to regulate lightning speed market movement until we are too far down the river to prevent disaster. Do you think that Dick Fuld, "under the world's spotlight" would have been able to go unnoticed as he bonused out management at Lehman 2 days before filing BK if we all weren't moving so fast that we overlooked it? There are thousands of daily examples like this where the quick pace of Wall Street, the authorities inability to regulate same at this pace and the shear velocity of our day-to-day trading lives promote greed and the ability to successfully exculpate ones self from punishment or negative ramifications because its too late by the time the wrongful action is discovered.

I contend that action without thoughtful educated consideration for the sake of "moving quickly" is why the .VIX stands where it does, why Wall Street has no able overseer (which has allowed it to succumb to pure premeditated greed) and generally, is one of the main reasons that we are dealing with the great recession today.

How's the Consumer Doing?

The US hasn't actually produced anything but false financial profits, CDS's and debt in over 30 years. We allowed the labor unions to effectively break the back of true manufacturing/producti... industries, pilfered the retirement accounts of those who built those industries through M&A activities and basically set ourselves on a course to be dependent on the world for our sustenance. We are Great Britain 75 years ago.

Quick Thoughts on Black Friday Retail

As ususal Markham, you're dead on. Its one thing to get folks into the stores and completely another to actually profit from it. The heavy pre-season mark-downs and early liquidations indicate (to me) that the positively correlated decrease in margins to the retailer will be very taxing this season; but we'll have to wait to see. The buyers for many of the big guys were super stingey earlier this fall when placing orders to stock for holiday.

interestingly, I think that the cash strapped, scared to death average consumer is bored to tears with little excess pocket change to go to dinner, travel, entertain themselves, etc... and he/"she" was in the mall over the holiday to have something to do in an animated venue purportedly for free. The presence of all these credit cards milling around Taubman, Simon & General Growth's malls translated into higher than expected traffic and a moderate increase in yoy topline for many. It would be interesting to see yoy credit card v. cash transaction runs for the retailers.
We'll see. regrettably, my model(s) tell me that the recent yoy increases are an anomaly and we're going to have a very very blue January & February as the rooster comes home to roost.

-8Alpha

Number of U.S. Homes With Negative Equity Is Stunning

it is too late for many; we should establish a treasury backed 40 year fixed interest amortization guaranty pool (or seed it with a similar pool of govt. funds) as a "work-out platform" to re-fi all of those that are about to enter the foreclosure arena. this would help the banks balance sheets immediately and would actually provide them with more aggregate interest over the longer mortgage term, it would substantially decrease the monthly cash flow payments that the borrower needs to cough up every month and could actually create an augmentary (perhaps temporary) longer term segment of the bond market wherein government backed mortgage paper was the credit support mechanism.

as it relates to moving forward, "there must be required fiduciary relationships" between lender, appraiser and mortgage originator to clean up the way loans are "stretched" to close same. The current standard operating procedure amongst them now provides each with a shield of exculpation that is nearly criminal and the risk to bond holders of this paper gets passed along buried under the rubber stamps of the Country-Wides of the world; thusly, the owners of those bonds have been duped. This complete vacuum of culpability between the aforementioned parties is why we are here today.
-8Alpha

How Will Shrinking Boomer Spending Affect the Economy?

What a well written piece Markham. I track and pay very close attention to this phenomenon as it is exceedingly important to business model. I think you hit things right on the proverbial nail head. What concerns me about many of the younger end of this distribution (group) that are many forthcoming John Galts (see Atlas Shrugged) embedded therein. If we try to tax our way out of this, I can see many of this psychographic/demograp... throwing up their hands and just checking out. This, plus the culture of the ones that follow directly behind them, i.e. the Generation X'ers could have the real ability to destroy rather than re-build from here given their significant overtones of cynicism against things held dear to the previous generations. In fact, I believe that most Gen-Xers are all John Galts in training. G-d help us.
-8-Alpha-Zulu

Market Performance During Past Recessions

Freedoms', you are right about Pelosi, the woman is an absolute idiot; actually, a village idiot typically has more sense than she has ever shown the American public. She has, to my knowledge, done nothing constructive with her position of power and has engendered ill will with all of those that stand on the other side of the isle from her.
However, Mr. Egan is correct about ol'Dubya, i'm afraid. Bush and his administration resembles that totally ignorant (street-smarts) parent that filters information in a completely and totally self serving manner to avoid anything that might retard or hinder their position of authority (ridiculously and arrogantly perceived in Bush's case). I was duped by the guy (was a "Very Large" supporter of him and the GOP through him once) and believe him to have turned out very much like Ms. Pelosi when it comes to brain power, transparency ability to get things accomplished and just plain street smart. Definitely one of my biggest mistakes in life; supporting him and the GOP. Kinda reminds me of the Nixon era; only Nixon wasn't a ding-dong like his predecessor in interest.

Lehman's CDS Mess: Who's on the Hook?

Very interesting presentation of the facts Mr. Peng. I keep wondering why the markets continue to whip-saw back and forth irrationally and with a complete lack of regard for logic while we still haven't flushed out the "real" issue...the CDS obligations and the calls thereof/thereon at some point in the near future; your article has helped me put some of this into proper perspective.Sure seems like a lot of cabbage to haave to cough up (for anyone/entity); So what are we looking at on October 22nd? Chance to fathom?
Love the pic also... heeeeyah!

In the Great Global Macro Experiment, the Next Bubble to Burst Is...

Reggie, I like how you think. Being a bubblesniffer is a lot more fun when you share brah... Let us hear more about what we have in store for us in terms of "the next bubble", willya?
Peace be with you.

Naked Shorting Rule Means Time To Buy Stocks

On the battlefield (Wall Street qualifies as one; by the way), the medic does what he/she might to stabilize the wounded until med-evac (a chopper) shows up to transport the him/her to the care of real surgeons. This naked short rule change is merely a tourniquet instigated in the field of battle. yes, it will slow the hemorrhage, but those legs are gonna have to come off in back in triage, i'm afraid.... and i cant even hear the choppers yet. we must re-Institute the uptick rule now.

A Spurious Solution to the Housing Crisis

sorry for the 3 posts of the same thing (operator error)

A Spurious Solution to the Housing Crisis

You're right Markham, the "programme" would merely be borrowing from Peter to pay Paul (unless the debt sponsor/the government were to forgive the obligation or commit to forgiving same at some time in the future). Ridiculous actually.
What we may need to do (or at least think about) is create a Government Sponsored 40 Year Amortization Guaranty so that GSE's and Lenders on the mortgaging side could manage their way through this valuation issue by re-casting/re-financin... the existing o/s balance of any loan on these under-water mortgages into a 40yr amortization schedule that is guaranteed by the GSE (backed by the govt). This would, overnight, decrease the monthly payments for the homeowners, keep them in their homes and give the markets time to heal. As these mortgages are paid off in due time and/or are refinanced when the markets are more liquid it just be a faded blip on the screen of history.

A Spurious Solution to the Housing Crisis

You're right Markham, the "programme" would merely be borrowing from Peter to pay Paul (unless the debt sponsor/the government were to forgive the obligation or commit to forgiving same at some time in the future). Ridiculous actually.
What we may need to do (or at least think about) is create a Government Sponsored 40 Year Amortization Guaranty so that GSE's and Lenders on the mortgaging side could manage their way through this valuation issue by re-casting/re-financin... the existing o/s balance of any loan on these under-water mortgages into a 40yr amortization schedule that is guaranteed by the GSE (backed by the govt). This would, overnight, decrease the monthly payments for the homeowners, keep them in their homes and give the markets time to heal. As these mortgages are paid off in due time and/or are refinanced when the markets are more liquid it just be a faded blip on the screen of history.

A Spurious Solution to the Housing Crisis

You're right Markham, the "programme" would merely be borrowing from Peter to pay Paul (unless the debt sponsor/the government were to forgive the obligation or commit to forgiving same at some time in the future). Ridiculous actually.
What we may need to do (or at least think about) is create a Government Sponsored 40 Year Amortization Guaranty so that GSE's and Lenders on the mortgaging side could manage their way through this valuation issue by re-casting/re-financin... the existing o/s balance of any loan on these under-water mortgages into a 40yr amortization schedule that is guaranteed by the GSE (backed by the govt). This would, overnight, decrease the monthly payments for the homeowners, keep them in their homes and give the markets time to heal. As these mortgages are paid off in due time and/or are refinanced when the markets are more liquid it just be a faded blip on the screen of history.