Thus far, the market is 300+ points lower (and counting), since Cramer’s recent bottom call. Marvelous! I just wanted to put that on the table, just in case you were unaware—God forbid.
Gloriously, the bank stocks are shitting the sock drawer, partly thanks to rotten numbers out of [[HBC]] . Mainly, bank stocks are trading lower because they went up so much, over the past two weeks.
Much to my chagrin, ag stocks are being mauled. As you know, erroneously, I am long Agrium Inc. (USA) [[AGU]] . Let’s just say, my individual equity ideas are being a bit stubborn this morning. Full disclosure, I sold some Clean Energy Fuels Corp. [[CLNE]] on the opening tick, following Cramer’s pump. Did I really have a choice?
Thankfully, I am loaded to the gills in [[FXP]] , [[SKF]] and [[SRS]] .
On the matter of important hurricanes sweeping away entire sections of the U.S.:
It appears we will have to wait. Eduardo is a pussy. As a result, oil and natty stocks are trading off with fury. Go figure.
The whole commodity complex is being busted out, from gold to corn. VeraSun Energy Corporation [[VSE]] should be a buy soon.
With commodities coming down, the U.S. economy should benefit. However, keep in mind, prices are still very high. In order to get me bullish, crude needs to drop below $80 and natty below $5.
FYI: natty is a scam and never deserved to trade north of $10. They were just fleecing you.
Finally, with the FOMC ahead of us, I expect stocks to trade lower. There is nothing Bernanke can do but try to talk the dollar up. He will not raise or lower rates. At the present, he is a sitting jackass, with both thumbs up his ass. Into any strength, I want to take advantage of the smoggy skies of Beijing and get long more FXP.
NOTE: I am still chuckling, not laughing, over Cramer’s bullish bank article, written this morning— citing (of all people) Rich Pzena’s (founder of Pzena Investment Management, Inc. [[PZN]] ) bullish stance on the banks. Perhaps an ideal time to short TheStreet.com, Inc. [[TSCM]] and PZN, providing stock is available? Remember, Pzena is the same guy who is knee capping his own firm, via large bets on banks.
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You’re early on the ag group. I like ’em all down here. MOS is my favorite. Fast money rotating out of biotech, and buying up ag.
FXP should provide happy ending
Kid:
Not really, since I bought so little.
MOS paying me coin, but I will flee my short if it cannot break through this $115 resistance area.
I do not think commodities are dead, just resting during daylight hours, like Vlad Dracul.
Hmmm… I wonder if CHK will see $45 this week?
___
Check out syna
Fuck you poser. I hate SYNA.
Robert Marcin
Larry and Whitney
8/4/2008 9:38 AM EDT
Larry Lindsey and Meredith Whitney did an excellent job describing the risks to the financial system/stocks this morn on CNBC. Run, don’t walk to the video archives if you missed the interviews.
In 1990-91 commercial real estate bust, the banks bottomed at .85 tangible book. Today, they trade for about 1.6x’s tangible book. I expect much more write downs, dividend cuts, and capital raises. I also expect hundreds of bank failures in the next few years.
I continue to avoid the financials.
Position: no stocks mentioned
Ags are all at pretty significant levels .. they should do some battle around here.
TRA seems in the best shape. Under 50 looks good.
The banks are going lower because that’s where they belong. Short covering drove the rally. Commodities are getting hit because they (hedge funds) got ahead of themselves on that play as well. Ag, well, live by the sickle, die by the sickle.
Dudes;
Can any of you explain where I am wrong here?
C the largest of the sickest banks had ongoing earnings before write downs of around $6.5 billion. If the write downs slow down or even stop why is this such a bad result? Why would you expect this stock to trade much lower?
Not suggesting you buy it here, but I think you’re all talking yourselves into a short when the upside is potentially more explosive.
Despite all the shit the economy has taken last quarter GDP was 1.9%- in other words the US isn’t in a technical recession. Banks stocks trade in correlation to GDP in terms of direction as bank stocks are basically a macro play of sorts on the economy… give or take.
The Fly needs to settle down here and take stock… no pun intended- as he’s talking you all into a risky short. be careful out there.
I know it is not as exciting as trading the momo stocks but fairly easy $$ are being made this AM buying SMH on dips and selling about .10 (about .35%) higher and doing it again and again like Pavlov’s dog. If the market in general turns around hang on for some good daytrade gains.
“ongoing earnings before write downs” ????????????????????
Do you even listen to yourself before you write?
Dude — I made $500 at Vegas last week playing craps — if you ignore the $3000 in losses playing Blackjack and slots.
Are you still willing to bankroll me? I made a profit after all.
You sir, get a Douchebag Award for that fine post.
j, what the fuck are you talking about?
What is 470 billion out of >1.5 Trillion?
Answer: You’re wrong
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aTa4LjxVseWI
http://www.creditwritedowns.com/2008/07/16-trillion-new-esimate-on-writedowns.html
Methinks the banks are going to continue to have their balls pushed in for a while…
everything that banks did to drive their earnings growth is done. now what are they left with – deposit earnings?
in other news: oil just broke the fuck down for the day.
Douchebag.
I’ve been a trader for 28 years and made money all those years, so yes I do know what the fuck I’m talking about whereas you don’t and neither does fly if he’s pushing a short strategy from here on in the banking sector. I don’t know if you should go long here as I’m not advocating that, but i certainly wouldn’t go fucking short on this sector as it’s far too risky.
Let me ask you this.. pick the worst fucking performer in the investment banking side other than Lehman. Would you short Merrills here, yes or no? I wouldn’t as they have just cleaned up their balance sheet of the worst shit around selling it at 22 cents. You think the guys buying that stuff at that rate are fucking idiots reading a couple of bloomberg posts or some idiot citing bridgewater. Bridgewater have been bearish stocks since the 87 crash. I can’t recall one bullish report they idiots have ever made.
Then there are clowns like meredith whitney. The stupid bitch was out by 50% in some of her predictions and she’s treated like some sort of godness when all she should be doing is changing professions and becoming a baby factory after some of the crap she’s spouting.
look, i’m looking to going buy bank stocks in 1/3s. I bought a 1/3 here , and look to set myself either higher or lower with a stop.
‘
I think banks stocks will double or even treble from around these levels. there isn’t one professional investor other than that idiot Cramer who’s bullish and even a broken clock like that douchebag can be right sometimes.
And yes ongoing earnings are important.
Treble from around these levels? I think you’re way off bass.
j–
with you on those sentiments. Don’t know on the double/triple predictions given no time frame, but bank sector is improving nonetheless.
j, the banks will push all their crap off on FNM, FRE, FHA, GNMA, and then start originating again. Will it help? I hope the f@ck not. Die mudder fargers!
J, you had me until you started quoting government figures.
http://www.minyanville.com/articles/markets-Bernanke-jpm-Fed-Credit-banks/index/a/18331
The Sun Will Come Out… In 2010, Part 1
Bennet Sedacca Aug 04, 2008 9:25 am
The sun will come out, tomorrow
Bet your bottom dollar
That tomorrow, there’ll be sun!
Just thinkin’ about, tomorrow
Clears away the cobwebs and the sorrow
‘Til there’s none!
-Annie
Let me be blunt: The world is mired in a secular bear market in stocks.
1. The credit crisis we’ve been expecting is here.
2. Inflation on the things we need is on the rise.
3. Unemployment is increasing.
4. We’re at war on many fronts.
5. Social acrimony is beginning to build.
6. Federal authorities — from the Treasury to the Federal Reserve to the European Central Bank to the Securities and Exchange Commission — intervene in our markets daily, making our lives as professional money managers more difficult than they should be in a truly “free” market.
7. Real estate prices are plummeting.
8. Credit is available for only a few very healthy companies – and for those that the Fed feels are important enough to bail out. The rest of us have to pay for our mistakes.
So, are you ready to walk off the nearest ledge yet?
The economy and the credit/equity markets are anything but a walk in the park these days. But hey, this isn’t a game for amateurs, and this cycle will most certainly show us who a) understands the big picture, b) knows how to measure risk and c) knows how to preserve capital. Why? Because the sun will come out tomorrow.
Tomorrow may be a bit far off, but it’s out there. The goal now is to make it there with your capital intact, and even with some gains along the way.
The difference between realists and “perma-bears” is this: “Perma-bears” wake up praying for rain and don’t like to plan for tomorrow. Realists, on the other hand, look to get through the rainy days, and then pounce when the sun’s about to peek out again.
I consider myself a realist.
How Far Away Is “Tomorrow”?
Ah yes, the $64 billion question. Over the last few years, I’ve written a few different versions of the roadmap I expect financial markets to follow. No matter what methodology I use, I keep coming up with a “tomorrow” of mid- to late 2010 for equities.
This doesn’t mean, of course, that money can’t be made between now and “tomorrow.”It just means that high-quality fixed income securities, low-beta investing and a hedged technique are the order of the day.
Folks are starting to figure out that traditional long-only investing means that you have to be invested for a long time. I have no problem with that philosophy, provided your time horizon is 100 years and you don’t mind 15- to 17-year periods where you don’t make any money (like the one we’re in now).
Frankly, I have yet to meet an investor with a 100-year time horizon and the patience to sit through a secular bear market in stocks – and the volatility that goes with it.
Why Is 2010 “Tomorrow”?
I’m a big believer in cycles. The greatest cycle of them all, and the one that I believe most influences markets, is the presidential cycle. For those not familiar with it, it goes like this:
1. What every first-term President wants is a second-term.
2. What every second-term President wants is:
a) a great legacy.
b) their party to remain in office.
The numbers speak for themselves: Stock prices and presidential approval ratings are almost 100% correlated. Since folks making money are much happier than those watching their portfolio values dwindle daily, this makes sense.
According to a Pepperdine University study, if you invested $1,000 in the Dow Jones Industrial Average on January 1 of the first year of every Presidential term and sold on October 15th of the second year for every year since 1950, your $1,000 would today be worth approximately $650, without adjusting for inflation.
On the other hand, had you invested $1,000 on October 15th of the second year of every term and sold on December 31st of the last year of every Presidential term since 1950, your $1,000 would now be worth more than $70,000. Can this be a coincidence? I think not.
History shows us that fiscal and/or monetary stimulus appears in the third and fourth year of terms, which, in turn, helps the economy and markets – under normal circumstances. The election comes, folks feel all warm and fuzzy, and then they vote for the incumbent.
At least that’s supposed to be the way it works. But, alas, this time’s truly different.
We’ve seen every kind of stimulus known to man (and I’m sure we’ll see many more before tomorrow comes), yet the real economy and markets haven’t responded. It’s like being a doctor who calls for the crash cart and applies every emergency technique available, but has the patient die anyway. I really don’t like using that analogy, since our family unexpectedly lost our 8-year-old Lab, Luke, last week, but it’s the one I think most apropos.
If I’d told you a year ago that we’d have the Fed backstopping the JPMorgan (JPM)/Bear Stearns deal and creating all sorts of ridiculous term lending facilities, that the money supply would be growing at alarming rates while Fed funds fell from 5 1/2% to 2%, you’d have thought that the economy, credit and equity markets would be roaring, right?
Indeed, they are roaring, but in the wrong direction. So once the election (which should be a delightful mudslinging affair) is over, no matter who’s victorious, the stimuli we’ve witnessed may very well be removed. And if the economy and markets haven’t responded to this latest record round of stimuli, just take a guess at how they’ll do without it. Imagine a cardiac ward without a crash cart, and I think you’ll get the picture.
There are other reasons to expect a 2010 low: Secular bear markets tend to last 16 years or so, which for new folks in the business will feel like an eternity. The preceding secular bull market lasted 18 years, from 1982 to 2000, and it was the giddiest secular bull market of them all. With that incredible run now well behind us, we suggest this current secular bear market will take the biggest toll as we recover from the last party-induced hangover of 1982 to 2000.
It’s okay by me, since I’m positioned in a risk-averse fashion, tight risk controls firmly in place. Along with these long-term secular moves come shorter term cyclical moves lasting 3 to 4 years. Consider that the secular bear started in 2000 (at the height of the dot-com era), followed by a 3-year, gut-wrenching, 50% cyclical bear move into 2003, which in turn led to a 4-year, 100% move back to the 2000 highs by 2007.
It’s funny how arithmetic works. If you’d simply stayed invested the whole time (from 2000 to 2007), you’d have nothing to show for it except a lot of aggravation and massives losses in “emotional capital.” I firmly believe that a vicious cyclical bear (within the context of an ongoing secular bear) began in July 2007 and will last the typical 3 to 4 years, bottoming out in mid- to late 2010, with a mind-numbing S&P 500 target of 700 to 900 or so.
I realize this all sounds terribly bearish. But if you flip it around. you’ll see what we’re really facing is an exciting period of opportunity for those who understand the big picture and are willing to adapt to the world around them.
What if I told you that I thought a 2010 low in the 700 to 900 range would be one of the best buying opportunities you’ll see for quite some time? For those who’ve been “long only” since 2000, it would be just another rally back to my 2000 break-even point. But I fully expect this secular bear to end 15 to 18 years after 2000 at around the same levels of the 2000 S&P 500 high in the 1500 to 1600 range – which would be quite a nice move up from 800, no?
This is why we must admit where we are, not hide from it, work twice as hard as the competition – and be ready for almost everything in between.
Odd where we bounced?
http://img186.imageshack.us/img186/9176/bouncetu5.jpg
Bash charts some more…
j,
I bet you they revise the GDP once, if not twice, and it could easily be negative.
Alpha, j – ok so how do the banks digest the rest of the writedowns? Say the damage only comes out to 1T, how is the system going to deal with $600B in evaporated debt?
I think you need to look at the root of the problem, which is current levels of defaulting debt, the upcoming wave of defaulting corporate debt, and the continued lack of trust within the debt trading community. A bank is essentially a gigantic middleman, collecting payments from debtors, and meeting cash flow obligations. When delinquent/defaulting debtors continue to limit a bank’s inflow, it becomes very difficult to continue to meet their outgoing obligations. First the fed lowered interest rates (You have no idea mr. bernanke, NO IDEA, how hard it is, etc.), and when that wasn’t enough – they just gave them money. To me, the scary thing is that the banks grew a 500 TRILLION dollar system of IOU’s, that our government has no way of backing. The health of this system of leverage depends on the health of the financial institutions. One falls down (BSC), the system is fucked – and the matrix resets itself.
So are we out of danger j or alpha?
Now, inflation is starting to creep up – and the fed can’t raise rates without accelerating bank death.
So how are these banks bottoming, and if so – why did they need to restrict short sales? Why did BAC arm themselves with 3.6B to buy back (pump) their stock? Why did RBS just report the biggest loss in British banking history?
If there is anything I’ve learned in the last 6 months, it’s that we are being lied to by the banks, who are getting away with it, and that the banks will manipulate numbers – on a much larger scale than I had imagined.
The fuckery must be worse than we thought for the GOV to spend BILLIONS of dollars of OUR money to bail out the banks.
What would happen if they didn’t do this, and what would happepn if they no longer had the ability do do this?
P.S. I no longer think this fuckery is dillutive to the USD. Writedowns, bailouts, etc. are simply replacing evaporated asset value – not adding $ to the system.
Crude down another whopping 4 bucks today. I hope you Dino shit lovers are starting to figure this out. Oil can drop much further from today’s levels.
Everything is going down … everything!
DUG 6%
SMN 6%
Thanks Fuckers!
p.s. DUG is going to $40 … The Fly will be validated, once again!
Kiwin
they could revise it down 1% .. a huge downgrade- and it would still be an enormous result.
Why?
because we’ve thrown everything at the economy including the kitchen sink and the wife’s soiled underwear. In other words there isn’t one fucker who isn’t bearish on the US and it’s asset markets to the point where they think it’s the great depression squared. But it ain’t. and the market is far too bearish on US assets at the moment and the banks are the focal point.
I live in Australia unfortunately (don’t ask why as it was the wife’s decision to come back here after 16 years of living in the US) and all you get to hear from the news, the papers the Asian Bloomberg/ CNBC is how the US is going into the rat hole. The market is set up for the downside with everything bad discounted to the extreme. It ain’t a safe spot to be bearish.