iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
20,803 Blog Posts

The Fed Can’t Help

If you think the credit crisis is bad now, wait and see how it looks when unemployment is at 5.5%.

I know many of you, stubbornly, believe the Fed will somehow waive its magic money stick and everything will be alright.

Rubbish.

It is natural for the economy to go into recession, following years of uninterrupted growth. Using band aid solutions to keep the party going will only exacerbate problems in the future.

While it’s true, I believe the Fed should cut rates aggressively, down to 3% or lower; it won’t help the economy or the stock market until 2009.

Plus, by then, we will have a newly elected President, who may have an interest in fucking Wall Streeters.

Look you, the signs are everywhere. Just look at RUTH. Even fat fuckers are staying home, opting not to clog their arteries in public.

The Fed can’t help the fat guy, who will be paying $4 a gallon for gasoline by April, pay for $200 dinners at RUTH or even $20 snacks at WEN.

What to do now?

Position for recession. However, understand, along the way, there will be many false rallies—particularly when the Fed cuts rates.

Fade those spikes.

Right now, [[FXP]] is cheap, mainly due to a gap up in the shares of PTR. Should PTR weaken throughout the day, FXP will print $82, for shizzle.

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29 comments

  1. kmorph

    SOLF never goes down.

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  2. Woodshedder

    Good advice Fly.

    We will have one of those snapback rallies soon.

    But you are absolutely right. On the rally, get short.

    I am amazed to see how oversold many issues are right now, yet, they continue to tank. If that is not enough of a sign of the Bear strength, then nothing is.

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  3. The Fly

    There is still a whole lot of excess. I do not think stocks are near oversold levels.
    The Ag sector is vulnerable next.

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  4. CubsRock

    Best post of the new year. Hopefully we can hit DOW 12,800 today so we can rally into cut 😛

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  5. Danny

    fwiw, ruth is a known tier-2 chophouse

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  6. Green Writer

    Well said….I don’t think the fat guy with a better than average income will spend $200 at RUTH….During recession or times of uncertainty America always shrinks back on spending and tries his hardest to save money. It is only when outlooks and business is good that he spends his savings account to zero and goes into debt.

    Plus with a slowdown in place the banks will certainly shrink credit for the consumer.

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  7. Juice

    When AG & Solar get the anal hammer of homo delight (not that theres anything wrong with that), then we will be ready for the bull spike of delight

    not until then

    that will be your cue to play for a spike by covering some shorts & going long strong shit like Ag, gold, oil, etc

    my guess is sometime late next week .. wed or thurs

    and it wouldn’t hurt to get a spike in the VIX VXO QQV

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  8. Juju bear

    “Rubbish”?

    Is the Fly going the way of Mister Rogers?

    Developing……..

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  9. kd

    Fly,
    Did you hear anything on issues about supply chain? You don’t think our partners will be able to put up?
    Are you going to completly sell out or just lighten up a bit.
    kd

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  10. The Fly

    KD:

    I will sell some of my position.

    Since you sound worried, you should do the same too.

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  11. mdawsz

    Fuckin great call with FXP, saved my bacon.

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  12. Sir Douchebag

    I think I wrote the same post 2 months ago.

    I thought you were permabull.

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  13. chivasontherocks
    chivasontherocks

    the only time in history when it took longer than average for rate cuts to take effect was 2001. there we had the .com bubble burst 9/11 and of course historical over valuations in equities. today we have historical under valuations in equities according to fed model coorporate balance sheets loaded with cash, also histiorical highs, inventories completely in line, not bloated. this is more like 1994-1995 than 2000-2001. in addition unlike 2000 sentiment numbers where completely reverse than from today. if this turns out to be a bear mkt and recession, it would the most expected of both in history. as a matter of fact that has never happened in history. yeah, i am of those fucks that the fly hates, old, old, old. yes we can go to 12500 or 12000, but it would only set a buying opportunity not unlike 1994-1995 or 2002-2003. when you combine undervaluation, fed easing, and negative sentiment, it has always without exceptions lead to higher stk prices 3-6 months ahead. a lot higher. the danger here much like 2002 is deflation not inflation, and i trust that helicopter knows that. global growth is still intact. sorry for the rant guys.

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  14. jawa

    Check out this MVIS new coverage:

    http://www.king5.com/video/featured-index.html?nvid=205525

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  15. TraderCaddy

    Time to buy for a long trade if you are getting ready to thorw up. It’s my vomit indicator.

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  16. The Fly

    This is more like 90-91.

    Plain and simple, we should lose 15% this year. Not death and mayhem. Just an old fashion bear market.

    However, the recovery may be difficult, due to a surge in populism, that can lead to higher tax rates.

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  17. Pudfucker

    Clearly, stocks are for asshats.

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  18. Woodshedder

    Damn Fly, you sound so much like me now, I think that your time machine has lodged in my head. I have to get bullish. Its no fun to be on the same side of things.

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  19. PleaseKillMe

    The Fed should not cut rates. A depression will be good for Americans. They will learn to save once again. The latest generation thinks there’s an endless cash supply that never needs to be paid back. They believe that money can be created out of air. I’m calling them Generation Credit.

    Wealth is coming home, to their rightful owners.

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  20. CashIsKing

    Fly has turned the corner. I am regaining confidence in his time machine and his swagger is back. On that not, I went to cash yesterday afternoon when when the market couldn’t hold its gains but went long SEED this morning.

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  21. gappingandyapping
    gappingandyapping

    I am fucking loving this shit!!!! Thanks to the greasy bear that is Fly I got 75% short and blew out of all of my bullshit stocks on December 28th. Just coining money today other than MVIS.

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  22. counterpoint

    chivas,
    US never felt the full effects of the .com bust because they ran the presses.
    That led to the real estate / credit bust which they are trying to postpone now. While this mortgage nonsense was going on, corporate financings were similar. We haven’t seen the results of this yet because they can hide this in the books longer than the guy who is underwater on his mortgage. We will see this soon enough (Level 3 assets)
    The market is bigger than the Fed and they only have 1 or 2 bullets left.
    Inflation, not deflation.
    There isn’t necessarily any correlation between being old and being smart.
    Re: “always without exceptions” – except this time
    It’s not the end of the world, but it may be more severe and of longer duration than currently expected.

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  23. mrkcbill

    DevilDog is God!

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  24. Pudfucker

    Too much pessimism. Homebuilders, autos, financials, retailers, casual dining, semis, apparel, consumer discretionary are already down 20%-50% or more. All we need is for investors to pull their head out of their ass and realize the “decoupling theory” is a bullshit wall street scam. They need to take 20%-30% off the ag, fertilizer, infrastructure, oil, oil services, mining, and all those annointed “global growth” names. All the other shit has already been marked down to recession levels.

    I’m with Chivas. We’re 4 months into an easing cycle and about two years into the housing disaster. Inventories are lean and CapEx investment has been restrained. If the FED gets to 3% by June, and assuming the “annointed global growth” names get taken down 20%-30% by June, then the market will be set for a monster second half rally like we saw at the March ’03 bottom.

    Just take a nap until June.

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  25. Juju bear

    “A depression will be good for Americans.”

    That is the most fucktarded thing I have seen written on this blog. Surely you cannot be serious.

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  26. chivasontherocks
    chivasontherocks

    counterpoint,

    the referance to old is becuase of the comments that fly makes about old guys and because i am old. lol. the referance to balance sheets cash was about non-finacial companies. they are at record levels. if we manage to get inflation, i think thats bullish, i mean not runaway inflation. the phrase except this time is like saying this time is differant, kind scary. btw 15% from top is dow 12000. also since the elimination of the shadow banking system, the central banks of the world have become even more powerful. i think they have a lot of bullets left, not only when it comes to monetary, and credit creation policy but also influencing fiscal policy.

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  27. Juju bear

    chivas,
    Your old school thinking is characteristic of the bulls.

    I appreciate people like you that buy the stocks I sell short. Keep up the good work.

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  28. chivasontherocks
    chivasontherocks

    juju bear,

    your welcome.

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  29. Juju bear

    The Fly has accused me in the past of not providing ideas, so here are the positions I have been in since mid-December. I am adding to these today, viz. ideas.

    FXP
    SCC
    SSG
    SRS
    SKF
    QID

    Short positions (holding, may cover)
    BWLD
    SBUX
    CSCO
    DELL

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