JMBishop

Top Ten Reasons Why the Yield Curve Will Flatten (Hint: This Is a Different Sort of Recession)

Well, I hope you're right Mr. Goldman because I bet on all of those top ten reasons. Of course, I was somewhat early, and I could'nt articulate my reasons as well as you. Anyway, my feeling was that the current increase in yield (even with Pimco's move) was the beginning of a "grade and fill" operation for the benefit of the banks. To recapitalize the banks will eventually have to realize their gains, and to secure a their reserves, they will place these gains in treasuries, but they need higher rates before they start buying. Hence, the precipitous drop these past two weeks. However as I said before, I was early. I pulled the trigger and bought treasuries when Dubai threatened to default. So again, I sure hope your articulation is right on the money.

Matt Taibbi: Obama's Big Sellout

I agree with Bob. Even though President Obama seems to be Bush Lite so far, I am not going to underestimate this man. People make light of him being a community organizer in Chicago, but I think that was a deliberate choice on his part to learn about how to get people to do the right thing for themselves. He might have to make some personnel changes, Secretary Geithner for instance who although brilliant doesn't have the force of character that his contemporaries on Wall Street will respect. That's also part of Obama's problem. It's time for him to say, look, "I'm the president of the United States at this juncture in it's history, and I was elected to put this country's financial house in order and to get it out of two foreign wars. I can't compromise on those goals." Sooner or later an effective president has to say to his staff, "It's my way or the highway boys and girls."
On Dec 12 06:47 PM bob adamson wrote:
This whole discussion is speculation of course, so let’s speculate.

Junk Bonds Suggest Equities Will Break to the Upside

Stocks wouldn't look so cheap now and there wouldn't be any cheap capital flooding the markets if the free market was really free. This is what makes me suspicious of the metrics that the SA chartists and technicians are following. Even though they are a very smart bunch of investors and traders. I think this is an economic experiment the likes of which we haven't seen since the rebuilding of Europe after WWII, and it depends as much on the integrity of the people involved as on the normal functioning of the financial markets. I try not to be the sour grapes type having felt that this rally was unreal from the very start and stayed out. That said, I remember the CEO of Morgan Stanley, John Mack, saying that investment bankers have no self control, their greed will always trump their caution not to mention their sense of right and wrong, but if it's legal, it's ethical. This economic experiment Bernanke and Geithner are conducting involves cheap capital and capitalists who are desperate to re-capitlize after the big panic sell-off last March, gunpowder and a fuse. The avoidance of the next leg down depends as much on the people involved and how greedy they feel as on the numbers. I've bet on very greedy feelings because that's what got us in this turmoil to begin with. In order to re-capitalize, the capitalists are going to have to realize their gains. How they do that is as important as how Bernanke and Geithner unwind the "quantitative easing." Without confidence in either the capitalists or their handlers, I'm still a bear because it's all going to unwind undercover of the charts and technicals. We'll go to bed one night soon secure that the metrics are indicating a continuation of the bull market, and the next morning they'll light the fuse and...poof! It's all up in smoke. Whose holding the lighter and where the fuse is I don't know. But I do know that there is too much cheap capital and too much greed in the good 'ol US of A right now.

On Dec 11 05:36 PM Wayne A. Corbitt wrote:
> High Yields vs. Governments is one risk metric I analyze daily. Your
> analysis is right on the money. The cheap capital flooding the market
> is chasing yield, plain and simple. Just take a look at the recent
> performance of utility stocks.

Richard Russell: Downturn Will Be 'Vicious'

You're right there Dave. These comments are getting crazier and crazier. Except, I think the commentators are very intelligent people just getting a little nutty.


On Dec 11 08:59 PM David Zanoni wrote:

> You guys are just plain nuts with too much time on your hands.<br/>

Bonds: Maybe Loaning Money at Less than 4% for 30 Years Isn't a Good Idea

To the 30-year bond question. The bond market is for the big boys. That's why most of the Series Seven questions are about bonds. Stocks aren't that complicated if you can read an income statement and a balance sheet, but bonds go to the very core of the financial markets. More to the point: if you're a small investor, you don't usually buy bonds, you buy bond funds. You don't have to hold a 30 year treasury fund for 30 years for a little short term security and a little money. If you think that Dubai, Greece, Spain, etc. may be an indication of the next leg down in the next three months, you might want to be in a 10 or 30 year bond fund. With the current market volatility, when there is a flight to security, yields go down (Treasuries are one place to park your money). Think Dubai 2 weeks ago, but in December yields suddenly started going up especially before and after this week's auction. I think the big boys are hollowing out a nice big financial fox hole to jump into the next time there's a flight from risk and to security. Then there is the whole issue of 0.25% federal funds rates and the inability to raise interest rates to stem inflation so treasury buy backs are being experimented with. More than I can fathom anyway. Bottom line: for the average investor Treasury bond funds may be a short term haven from risk and turmoil...very short term. We'll see.

Equity Bear Market Marches On

I didn't buy at 7000, and I'm not going to buy at 10,500. Normalcy is not achieved in 9 months, and I'm not a trader, but thanks for "the good advice [ I ] just didn't take."


On Dec 10 12:42 PM market_use wrote:
> keep buying all dips
> good articles; financeopinionss.blgos...

No Recovery Until Confidence and Trust Return

At 50 (and with a name like Athena) you should have realized that the more things change, the more things stay the same. There was never a halcyon time when fiduciary responsibility ruled the day. The "back in the day" has always been what it is today. So don't despair. You may have lost your financial virginity, but you have at least 15 years to fix the mess that may have been made of your finances. Remember, "The pessimist never gets in the game."


On Dec 10 10:13 AM athena wrote:

> I am very sad because I am 50 and I do not believe that any of this
> will get better in my lifetime. It is a fact that wall street has
> devolved into a game controlled by a few players with the pols in
> their pocket and the prez wouldn't know a supply demand curve from
> a hockey stick.
> Do you think that you can reverse the crazy tax code, the cap trade
> to come, the budget debt blowup, the govt in your dr. office, etc.?
> They have spent all of our money and 12 trillion more, and seek to
> tax the world further to line the pockets of Gore, Goldman etc.

No Recovery Until Confidence and Trust Return

How to restore confidence? Withdraw all bail out and stimulus funding, and let free market capitalism suffer the risk and enjoy the reward. K.I.S.S.

Expectation Ratio Indicates Markets Should Remain Buoyant

Let's see. So the bulls are really bears, and the prevailing market sentiment is really bearish, and the market will remain buoyant because contrarian sentiment favors the bulls. Did I get that right?

Finding a Bottom for the Volatility Measure

Hello Bill: I'm not good at charts and technicals so this is not a criticism, but I'm always amused at how the chartists and technicians always end their prognosis by confirming conventional wisdom. In other words, a lot that happens in the security markets can be understood without charts or technical data.

"After the first of the year, however, I would expect historical volatility and implied volatility measure such as the VIX to start to track more closely. Whether this means historical volatility will rise to meet the VIX or the VIX will fall toward historical volatility levels remains to be seen."

Equity Bear Market Marches On

Hey Worthen, so...as they say on CNBC...what's the trade?
Squirrel it away in money market funds, intermediate treasurers,...gold?

On Dec 10 10:20 AM ebworthen wrote:
"Though a sucker is born every minute, the average investor is not stupid; 'money on the sidelines' that is put into equities now will be taken off the table by the left hand of the government/bank collusion when the market collapses again. The right hand of the government/banks will then take the money needed to compensate for the failed liquidity and trillions in debt spending measures."

Equity Bear Market Marches On

Well turtle, just an amusing observation. A Yahoo Tech-Ticker interview yesterday dicussed the idea that the bulls in this rally are really bears so market sentiment is really bearish. I'm confused. I feel like a deer caught in the headlights.

On Dec 10 11:17 AM TurtleTrader72 wrote:
"Technically speaking, this is evident in the volitilty of the VIX indicator as this shows how many investors run to purchase put options (protection) at the first sign of a down move. This type of 'nervousness' is usually a good thing for the market and will likely support the current uptrend during any down moves."

Want the Real Measure of Unemployment? Don't Forget Long-Term Discouraged Workers

My guess would be that marijuana, cocaine, methamphetamine, and heroin trafficking, marketing, and sales (These are commodities for organized crime.) would be an employment alternative and maybe prostitution, but the sex trade has largely gone mainstream with cyber pornography. Anyway, we don't need 22% of the people in America so we allow them to be exploited until there is no more blood to be squeezed from their turnip pulped minds, and then let them kill themselves with a drug overdose.


On Dec 09 05:33 AM chris coonan wrote:

> 1994 was the year that truth stopped being told. So, we are at about
> 22% unemployed right now, how in the hell does that work in America.
>
>
> I guess it doesn't.

The Return of the Plutocrats

Very interesting discussion and great comments, but...this topic has been kicked around for years, maybe even 100 years of US history. It ain't going to change any time soon. American capitalism as we know it will have to collapse, and then remake itself without government intervention. On the other hand, do you really want to transfer all of the wealthiest people's financial resources to the government? Think about what that would mean...as in China or Putin's vision of Russian capitalism?

Why I'm (Cautiously) Optimistic About the Future

"A pessimist never gets in the game. A wild-eyed optimist will suffer the slings and arrows of boom and inevitable bust. Cautious optimism is the correct and most rewarding path. And that, I hope, is what you see when you read my weekly thoughts." That about says it all for me. Thanks for this excellent blog John.