inthemoney

Asset Reflation Takes Over the Recovery Trade

Yep, the market doesn't care about anything other than liquidity. as long as the money is flowing, the market will keep going up. Who cares about the real economy? It turns out, FED and the markets can operate completely independently of the real economy. IN fact, the worse the economy, the more FED will print.
How naive of us to try analyzing market moves using fundamental analysis.

Futures tick down on disappointing nonfarm payrolls data indicating double-digit unemployment is here for the first time in 26 years. Some profit-taking is likely in order after yesterday's across-the-board rally. Benchmark S&P futures -0.1% to 1056.

> Now the unemployment rate is a joke. Shouldn't be jumping ..4% on 100K job losses.

Right, it is a jok e because 800K adjustment losses are currently not being included, and will be incliuded in March. What is it going to do to the official unemployement rate, do you think?

Consumer Confidence Is a Lagging Indicator: Expect Post-Recession Gloom Through 2010

Consumer confidence and unemployement only become lagging indicators when they stop declining and stabilize, until then they are leading indicators.

Bemused by GDP Figures

I agree with Golman on their more pessimistic outlook, but really Goldman is just a trading house. All it tells me is that Goldman thinks all the money has been made on the long side and now it is time for a "correction" and for them to get short to make more money.

Buffett Sees 'Enormous' Economic Progress over Last Year

> "We made enormous progress since a year ago... What happened in September and October of 2008 will particularly be remembered for a long, long time,"

Reaqlly, it seems to me it is all but forgotten, considered an anomaly now, it is all back to old tricks in the martket, nothing changed.
What "enourmous progress" Buffett means, other than his profits I have no idea.

Obama lashes out at health insurers in his weekly radio address, calling their efforts 'deceptive and dishonest.' "For decades, whenever we have tried to reform the system, the insurance companies have done everything in their considerable power to stop us," he said.

> Give me a break, public healthcare has not worked any place. I used to run a UK company and here are the facts you so conveniently ignore: We paid higher taxes for public healthcare our employees would not use, we paid for private healthcare for our employees because they would not work for us without it

And this is how it should be .There has to be very cheap basic healthcare accessible to all. And then there should be private healthcare for extras, like faster better service. Denying helathcare to 20% of the population is not an answer.

Housing Is Moving Towards Disaster

> One big problem is largely unnoticed - the whole appraisal reform has grossly damaged something that actually did work.

Are you serious? I am, fo one, very glad of appraisals coming back to reality. I am sick and tired of paying property taxes every year , increase 10% every year (the cap) because of inflated appraisals. I didn't plan for 10% yoy increase when I bought the house.

Extending the tax credit for the poorest segment of borrowers is also a bad idea. These are poeple who are already overextended with prior debts, falling wages, cash for clunckers, and now we are pushing them into home ownership. They probably just foreclosed on a house they bought in boom years. they are not in a position to buy new one, tax credit or not.

Stimulus Lifting All Currency Ships

> ECB governor Trichet called upon the United States today to pursue policies that would strengthen the dollar. He noted that the U.S. authorities understand that a strong dollar is in its interests.

Really. I've seen no sign they understand last 10 years.

Central Banks and Investors Are Building a Tower of Babel

You are looking at CPI, but not at asset prices, insurance price> yeas, consumer prices are deflating because consumers have too much debt and have to reduce spending. On top of it they have various taxes and insurance costs (health, home), education expenses, all of which are not deflating.
At the same time the liquidity from the easy money is driving thew asset bubbles, which will inevitably crash if liquidity is withdrawn.
To me , this is definitely inflationary environment with exception of consumer prices, i.e. CPI.

Does the Market Anticipate the Economy?

Market reflects available liquiditity and investor physicology at a given moment. If there is more liquidity avaialble the market will go up ( like right now) regardless of the economy. Economy usually will also grow with more liquidity, that is why it looks like market predicts the economy while in truth it is the amount of liquidity available that predicts it.
Currently, though liquidity also gets destroyed quickly ( by the write-offs), banks are hoarding it and people ar not putting it into economy (due to high debt load). This is why this time it will be much lower growth given the amount of liquidity in the system. And this is why we see the disconnect between the market and the economy.
This additional liquidity from money printing is like a drag - it gets the market high only to crash when the economy doesn't recoveras expected.

Paulson and Faber: Similar Macro Outlooks

> Devaluation of te dollar is "illegal taxation" WAKEUP!!!!!!!!

We should call it like it is - stealing. Yes, your government is engaged into outright stealing of your hard earned money in order to save the banking system, which will inevitbly blow up again several years down the road due to moral hazard.

The Financial Commentator on the Economy

Market and economy are too different things. Market is driven by immidate available liquidity and perception of the risk ( i.e. physcology). Economy is also driven by liquidity , i.e. availability of finance and perception of the rsik, but with several months lag, but in addition economy has to take into account global situation, taxes, supply/demand.
Economy is much more complex but because it shares some drivers with the market it appears that they are closely related. However, when the drivers most influencing economy are different from the market's like right now , eveonoy and market can diverge significantly.

In another step in its clampdown on speculation, the CFTC considers further closing the "Enron loophole" that exempted many over-the-counter energy trades from regulation. The commission will examine 17 natural gas and power contracts for "significant price discovery function," meaning they should be regulated.

Funny how they are looking at it now trying to prevent the rise in the oil price. Oil price is rising because of the dollar weakness. Stop printing money, if you want to get oil going lower.

Who else can share the blame for the housing bubble? How about urban planners? Differences in growth management may explain why California and Florida bubbled, but Georgia and Texas didn't - and may point the way to preventing the next one.

Texas didn't bubble because of there is lots of land, (illegal)construction labor is cheap and property taxes are high. I pay more in property taxes than my mortgage . Of course, I don't want a big expensive house.

Market Reaction: The RIM Lesson

> There is no way that on the results and forward guidance announced yesterday, the business is worth 10-15% less than it was before the results were announced.

May be you should ask yourself whether it wa sworth whatever it was trading before the earings announcement?