FB5000

How Is China's Export Driven Economy Booming?

Enough nonsense.

China has the fastest growing consumer market on the planet. It is a myth that the Chinese do not consume. The fact is that consumption as a % of national income has declined but this is mostly due to the explosion in profits and a relative decline in incomes as a %. They are booming becasue they have massive productivity growth and ample savings to drive investment - which is also booming - they have banks who are able to lend.

the thin they should od/must do is let the yuan appreciate - otherwise they will import inflation as they defacto run the Fed's monetary policy in a less flaxible and open economy.

Folks - get some facts. At least d yourselves a favour and read the flipping Economist. Most of this stuff is in there.

That's all.

The Market Bubble Is About to Pop

Which?

M0, M1, M2, M3?

M1 is up big year on year I think over 12%
M2 is up around 6%
M3 is up around 4%

But all of these metrics are trending down in terms of rate of change

M1 multiplier is down big.
Velocity is still down big

What this means is that banks are stockpiling cash. Until very recently they were mostly turning around and sticking the cash back into the Fed.

For inflation to be a problem you need to see the M1 Mutliplier get rise and velocity to go up.

You don't need to beleive me - hell what do I know I am so on the outside I actually look at SA :) Check out Shadow Government Stats and Daily Markets.com

The other issue is that the Euro and most other currencies are experiencing similar. Therefore in terms of US dollar relative to others is complicated.





On Aug 13 12:08 AM gordo39 wrote:

> You fail to consider the potential effects of inflation/weak dollar
> on commodity prices. Inflation isnt solely caused by demand...what
> about a weak dollar? Do you know how much the money supply has grown
> since September 2008??

If Asset Prices Are Dropping, Why Are Bank Stocks Rising?

Wow Pain. What insight. Well I'm convinced. Let's load up the truck with guns, ammo and spam and let's you and me head to Idaho. We'll wait out Armageddon and come back for the pickings. You bring the banjo and I'll bring some assorted ball gags.

Whatever dude.

Leave the political ideology out of it. I don't give a rats about the left or right spin that some of you are so focused on. Alpha is about making money. If you don't want to listen, figure it out for yourself champ.


On Aug 23 01:19 AM PainfullyAware wrote:

> FB5000 and shrike,
>
> Might want to look into my last comment - It has nothing to do with
> "Pretend" and everything to do with "Reality Of The PPIP".
>
> A "Conspiracy" Is 2 Or More Working Toward A Goal Or Purpose. "Staying
> On To Of The Pile" Drives Much.
>
> The More You Know The Less Certain You Will Be.
>
> Humanity In Regards To Money And Power Does Not Change; To Assume
> Benevolence Is Foolish.

If Asset Prices Are Dropping, Why Are Bank Stocks Rising?

I would have expected more from Goldman. the dude has a pedigree. Compared to some of the wackos who write for SA he actually seems to have some cred.

Most of the blooger are worth reading for amusement value only. The survivialists and exreme right and religious freaks are scary. Wish I could filter.


On Aug 22 03:01 PM shrike wrote:

> "The yield curve. Very cheap money. There is lending going on. Not
> as much as there used to be but it is happening and to better credits.
> Less competition. The economy is coming out of recession. "
>
> You're too logical for the other conspiracy filled posters here,
> FB.
>
> The rate spreads are enormous - banks will do very well going forward
> with their new emphasis on risk analysis (finally).

If Asset Prices Are Dropping, Why Are Bank Stocks Rising?

It is hard to tell how much true impairment there is - last September in the wak eof Lehman and record Libor spreads everything was impareied and noting was worth anything. Now it is pretty different. 6 months on it will be better.

Free money and enormous point spread heals a lot of bad stuff.

Yes more banks will fail but not as many as in 1989. June 1970 was also pretty bad. Look up Penn Central. We all survived. I wonder what the S&P was in June 1970? Some folks made fortunes buying bank stock in 1989. ok. I know. This time it's different. We are all going to be living in cardboard boxes....

Yes there will be more defaults but we are at th etail end of the mortgage deal and commercialproperty may not be as bad as people think Look at Reits.

That's all.


On Aug 22 01:30 PM Dialectical Materialist wrote:

> Tack,
>
> I agree with some of what you're saying, but I'm going to throw out
> a few counter arguments, mostly because I'm curious what you think
> about them
>
> 1) You can have positive cash flow and still be insolvent. General
> Growth Properties has cash flow but is mired in debt. Bernie Madoff
> had cash flow (!) These aren't banks of course, but the point is
> the same. Don't you think that BOTH cash flow and value of assets
> are important? I agree that valuing performing loans should not be
> at fire-sale prices. But we do need to account for how some of these
> loans may not perform so well into the future. This has been a huge
> recession after all. It's not a stretch to think past performance
> does not guarantee future returns.
>
> 2) Some of the lending has been curtailed by reduced demand. But
> it is undeniable that banks have tightened their lending standards.
> At least that is what they say they are doing with mortgages and
> car loans (and it is about time frankly). It is also undeniable that
> many credit limits are being scaled back by the banks and this is
> a way of curtailing lending. Both the supply and demand sides of
> this equation are in play, it's not all simply that there is less
> demand for financing.
>
> The bottom line is that some banks are going to get through this
> fine and they will play a role in the recovery. But that doesn't
> convince me that many of these banks are ready for what happens if
> a new wave of defaults hits their books (as may be coming if the
> recovery proves slower and more uneven than some folks assume).<br/>

If Asset Prices Are Dropping, Why Are Bank Stocks Rising?

Agree.

Folks. This dude understands the banking business. Read and learn.


On Aug 22 11:16 AM Tack wrote:

> As long as the focus remains on distorted mark-to-market asset values,
> rather than the actual cash flows thrown off by loan portfolios,
> the wrong conclusions will be reached, again and again.
>
> Even after the recent rally, virtually any rated class of bank (and
> other financials) debt assets are still being priced in the market
> at values that bear little resemblance to the actual performance
> of those assets, based on cash flows and valuations based on discounting
> those cash flows. That's why no banks, rightfully, are in any hurry
> to disgorge these loans at suicidal prices to lurking predators,
> who would happily lap them up at giveaway prices.
>
> The foregoing is why one needs to focus on cashflows, not the paper-solvency
> debate. And, if one spends any time examining bank cashflows, they'll
> discover that the banks, due to their portfolios and the large interest-rate
> spreads, have been enjoying ever-expanding cashflows, resulting in
> record liquidty, as of now. This is a far better indicator of bank
> health than the endless debate over "paper" values, all of which
> are whimsical and will prove transient over time.
>
> Also, contrary to popular belief, lending is not crippled because
> of some refusal to lend, as the media would have everyone believe
> with its parade of "rejected" borrowers. Lending is curtailed because
> consumers and businesses have been paying down debt, reducing demand,
> not increasing it. It's simply mathematically impossible for the
> banks to expand lending ratios in a declining-demand envronment.
>
>
> The good news is that as the economy stabilizes, and consumers and
> businesses regain some confidence, demand will increase, and the
> banks are well positioned wit their current liquidity to service
> that demand.

If Asset Prices Are Dropping, Why Are Bank Stocks Rising?

The yield curve. Very cheap money. There is lending going on. Not as much as there used to be but it is happening and to better credits. Less competition. The economy is coming out of recession.

Yes there are failures, defaluts etc. but all less than was expected.

You cannot ignore the signs Canute like just because you want the market to head a particular way. That is stupid on the way down and it is equally stupid on the way up. A lot of you are anchored in a perspective. I feel sorry for you.

We will go higher. Expect financials to lead the way.

That's all.

Financial Sector ETF Is Beating the Market in 2009

You reiterated some stuff that is old news, you ignore some pertinent facts and you don't talk about what might change

First off this stuff is all known and has been for 12 months
(1) Commercial real estate could be the next “shoe”
(2) Banks are lending less than they ever have, and…
(3) They’re still holding toxic assets

This stuff is also known - more recently. You ignore it,
1. Yield curve and that fact that money is very cheap for banks
2. Reduced competiton in most areas of financial sector
3. 3 month LIBOR spread is back to normal. that tells you something about known or understood asset toxicity.

This stuff is happening and implicatons matter
1. Recovery is here - anemic, slow but here
2. Housing picking up

Financial Sector ETF Is Beating the Market in 2009

You reiterated some stuff that is old news, you ignore some pertinent facts and you don't talk about what might change

First off this stuff is all known and has been for 12 months
(1) Commercial real estate could be the next “shoe”
(2) Banks are lending less than they ever have, and…
(3) They’re still holding toxic assets

This stuff is also known - more recently. You ignore it,
1. Yield curve and that fact that money is very cheap for banks
2. Reduced competiton in most areas of financial sector
3. 3 month LIBOR spread is back to normal. that tells you something about known or understood asset toxicity.

This stuff is happening and implicatons matter
1. Recovery is here - anemic, slow but here
2. Housing picking up

Financial Sector ETF Is Beating the Market in 2009

You reiterated some stuff that is old news, you ignore some pertinent facts and you don't talk about what might change

First off this stuff is all known and has been for 12 months
(1) Commercial real estate could be the next “shoe”
(2) Banks are lending less than they ever have, and…
(3) They’re still holding toxic assets

This stuff is also known - more recently. You ignore it,
1. Yield curve and that fact that money is very cheap for banks
2. Reduced competiton in most areas of financial sector
3. 3 month LIBOR spread is back to normal. that tells you something about known or understood asset toxicity.

This stuff is happening and implicatons matter
1. Recovery is here - anemic, slow but here
2. Housing picking up

How to Tell a Real Economic Recovery

Its a fallacy that everything has to move in lock step. I have no idea how the author determines a "real" vs. any other type of recovery.

InitiaI claims and housing starts look good. Leading home price index is up for last 5 months.

Retail sales are stabilized and inventory channels are clear - meaning that any shift in demand will translate directly into activity. Back to school will proaby surprise to the upside.

Manufacturing activity is increasing

Prices are not moving. Low inflation is a good thing.

Lending is slow - that's bad but understandable given the banking sector. The yield curve and chep money will help them heal. It's happening now. Libor spread is low and back to "normal" this is important.

ECRI leading indexes are rising. Look it up. It has a 70% chance it points to recovery - 6 months out. It turned up - well you can look at it. The latest figure is 123.

Here is the data

09-Jan-09 109.02
16-Jan-09 108.05
23-Jan-09 107.79
30-Jan-09 107.23
06-Feb-09 106.69
13-Feb-09 107.48
20-Feb-09 105.94
27-Feb-09 105.39
06-Mar-09 105.04
13-Mar-09 105.55
20-Mar-09 105.96
27-Mar-09 106.33
03-Apr-09 107.47
10-Apr-09 107.33
17-Apr-09 107.47
24-Apr-09 108.09
01-May-09 109.8
08-May-09 111.3
15-May-09 111.51
22-May-09 112.57
29-May-09 114.33
05-Jun-09 116.32
12-Jun-09 117.27
19-Jun-09 117.93
26-Jun-09 117.95
03-Jul-09 119.02
10-Jul-09 118.09
17-Jul-09 118.29
24-Jul-09 119.55
31-Jul-09 121.77

All of this screams recovery is here. You can ignore the data. That is your right.

That's all.

Understanding the 'Q' Recovery

The Q recovery. Now I have heard everything.

Emergency room physicians talk of the "O" sign. It is significant in a patient - not a good sign - with their mouths is open and not very responsive - this is bad. The next step from the "O" sign is the "Q" sign. This is worse as the tail of the "Q" is a the patient's tongue hanging out. This is far worse then the "O" sign. "Q" is a bad development.

Actually - the combination the "V" and the "L" recovery should more properly be called "TV Antenna" recovery. Or maybe the "Inverted Clown hat on a Step" recovery. I crack myself up.

Ok. Read the signs. Last week consumer confidence was down - anyone who makes investment decisions on that data should not be allowed out in public without a guardian. The real way to figuer out waht is going on is to pay attention to Back to School. Everyone expects it to be lousy. If it is just slightly below average the market will blow out the doors. So far retailers are making encouraging noises. That plus initial claims and housong are the key right now.

That's all.

Preview from Europe: Is the Summer Rally Over?

Sure it is Mole. You should get above ground more often. Fall is coming. Summer rally is over and Fall rally will take its place.

Economic Collapse Is Accelerating

Dude. Chill. It's about making money. Who cares if the clowns are out in force. Let them. It's a good thing. Who cares if they disagree. Their opinion is gold. I love it that they follow the tool who wrote the piece of garbage. It's all good.


On Aug 15 10:21 PM OptimisticPessimist wrote:

> Of course, all trading strategies fail, you assume that I"m merely
> going to stick to one game plan and hope it will lead me to financial
> success (whatever the fuck that is?) You completely discount that
> I have other means of income besides playing the market... What do
> you know about my strategies? What do you know about my options and
> puts? What do you know about my long term bonds? The money I have
> in the bank? Your suggestion, that I will "end up a street person,
> albeit one with violent tendencies" is such a baseless assumption
> that it eradicates whatever credibility you supposedly bring to the
> table based on your long experience in the industry. I mean then
> again, as I've stated many times before in this thread, this kind
> of specious logic is exactly what i expect from you on the lunatic
> fringe..
> If you think I'm wrong. Take a step back from this comments section
> for a moment. Just think about this, none of you on this board know
> me. You simply read what I write, and because I have the capacity
> to control the tone of my writing; I can make you believe whatever
> I want about what to think of me. I mean half of the nit-wits on
> this very message board had the audacity to suggest evil incarnate/anti-christ/...
> simply because I sarcastically wrote a series of "shocking" posts.
>
>
> All I can say is... you guys are the fringe. And there is nothing
> you can do to argue that at this point, its the same with all of
> you Peter Schiff "doom loving" idiots. I predicted the crash I predicted
> the crash, you would think people would listen to me more. Do you
> ever wonder why they don't? Because perception is everything, I'm
> simply arguing we have evolved into post-modern economics. Credit
> is now digitized, it can manipulated, erased, changed... its not
> the same as printing money and distributing it throughout the country.
> It is much easier to flub and cover up your tracks, and that is why
> until their is a true full out revolution of some sort, things will
> eventually lead back to the status quo.
>

Coming Soon: Banking Crisis of Historic Proportions

OMG!!!!!!!!!!!!!!!!!!!...
Lending is down
More failures to come
Default rates will increase

Why didn't anyone tell me?

Everything you state is well known already in the market. Only news drives the market. None of this is news.

Below is monthly S&P during 1998 to 1992. It coincides with your chart of failures. Do you notice anything?

290188 257.10
290288 267.80
310388 258.90
290488 261.30
310588 262.10
300688 273.50
290788 272.00
310888 261.50
300988 271.90
311088 279.00
301188 273.70
301288 277.70
310189 297.50
280289 288.90
310389 294.90
280489 309.60
310589 320.50
300689 318.00
310789 346.10
310889 351.50
290989 349.10
311089 340.40
301189 346.00
291289 353.40
310190 329.10
280290 331.90
300390 339.90
300490 330.80
310590 361.20
290690 358.00
310790 356.10
310890 322.60
280990 306.00
311090 304.00
301190 322.20
311290 330.20
310191 343.90
280291 367.10
280391 375.20
300491 375.30
310591 389.80
280691 371.20
310791 387.80
300891 395.40
300991 387.90
311091 392.50
291191 375.20
311291 417.10