How am I doing so far?
UPDATE: Watch out for your brains.
Joined Nov 10, 2007
23,433 Blog Posts
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Good…I’m learning to use the tool.
Fly, Kudlow was thinking of shorting CY…said was going short on Monday on the recommendation of Kneale(see larry’s twitter from Fri. afternoon). LMAO. Of course Larry was joking, but I love how you’re drawing the attention of CNBC talking heads.
http://twitter.com/larrykudlow
P.S. Joking or not, Larry seems to be the type that would view shorting as un-American…..he’d probably throw the president of Proshares in the gulag.
Making the ’70s Look Like the ’90s
The overnight markets were weaker, as were our equity futures, which plunged about 3% on the news that Citigroup was officially being restructured, nationalized — whatever verb you want to use.
The weakness was exacerbated by the fact that GDP was reported to have been worse in the fourth quarter than anticipated. It contracted at an annualized rate of 6.2%, though not that much worse than what people had been expecting for this revision. Nonetheless, the futures’ drop of 3% indicated that the cash market would be making a new low for the move yet again.
In addition, I think market participants are concluding that the Obama administration is not capital/Wall Street friendly. That is not meant as a political statement. (The Bush administration was awful and I detest all politicians.) I’m just here to relate how all of this impacts financial assets. (One example: I believe that the Obama administration will cause multiples to shrink, so wherever earnings are going, the p/e is liable to be lower.)
In any event, given the economic background that we’re dealing with, and the viewpoint of the administration, I feel that the environment we’re heading into will, at best, make the 1970s look like the 1990s — and maybe worse.
View from the Crow’s Nest
I had hoped for more from the administration, though I’m not shocked at what we’re actually getting. As readers know, I had been looking for a rally early in the year as people got excited about all the things that I thought might be coming, from a fiscal/monetary policy standpoint.
Though I discussed the fact that shock and awe turned out to be aw shucks, I was still thinking that there would be “more,” but there wasn’t. (I’ve been a little slower than the market to figure out that nothing which could excite the imagination would actually be forthcoming.) Thus, the market has continued to sink.
At some point we will have a bear market rally. Which will be captivating, causing people to believe the worst is over and will almost certainly be a head fake. But I no longer think that that bear market rally is going to happen in the near term, barring some sort of waterfall decline. I could be wrong about that, but that’s currently how I see it.
View from the Dugout
In terms of my three-baseball-game analogy:
With the government doing the stress test and the nationalization, I believe we are on a path to getting the pure financial crisis behind us — just as we got the liquidity crisis (which was the bulk of the financial ballgame) behind us. Now the economic crisis is front and center — which will feed back into the financial institutions, because the economy is worse that whatever has been built into where assets are marked. And of course the funding crisis will be a problem.
Of course, the single biggest problem for the economic crisis is: How are we going to replace the jobs, since the jobs create in the last economic expansion were so heavily skewed to real estate oriented speculation.
Turning back to the market action, after opening approximately 2% lower, the first 90 minutes witnessed a sawtooth churn higher, which cut the losses by more than half. The upside was powered by technology stocks, because they are what the Jell-O movers apparently want to chase. Away from the tech leaders to the upside, financials were sort of leaders to the downside.
An Immelting Dividend
By midday the indices’ losses had been reduced dramatically to roughly 0.3% (with the Nasdaq positive).
Then the news hit that GE was cutting its dividend by two-thirds. That knocked prices lower again, but they came right back as GE turned positive briefly (before sinking back to close on the lows, losing 6%). The rest of the afternoon saw the market do the same thing. Both the Dow and S&P closed at new bear-market lows. The Nasdaq did not, as technology continued to hold up, but my guess is that it’s on borrowed time. Today was a brutal end to a brutal week.
Away from stocks, oil was 2% lower. Fixed income was higher, except for the smacking of long-bond futures. The dollar was initially quite strong as stock were falling out of bed. (As the day wore on, though, the dollar rally fizzled for the most part.) I’m not exactly sure why folks have decided that the stock market declining means the dollar should go up, but there are any number of nutty trading strategies that can work for short periods of time.
Turning to the metals, initially when stocks were on their lows, gold was higher by about 2%, with silver up around 3% higher. Then, as the stock market rallied, gold sold off and remained extremely volatile all session, before closing flat (with silver closing 1% higher).
Gold stocks were also exceedingly volatile as they mirrored gold, only more violently. While AEM, NEM, AUY and GG all closed higher, ABX and KGC were under serious pressure all session. Needless to say, it’s difficult to make sense out of all this motion.
Positions in stocks mentioned: Long AEM, NEM, AUY, and GG.
Fleck,
Very informative post. But your post is also very demoralizing.
Hopefully we can reduce the debt through good old fashioned Economic expansion.
It just dawned on me that although the public debt is twice that of the gross domestic product, With a little fiscal responsibility this whole country can be in the green within very short order.
The $700 “T” OTC Derivative Beast persists/lingers.
Not to mention the massive Fraud/Corrupt off book Level III which has as of yet to be fully disclosed/revealed.
Oh what to do? Inflate it away and produce Global Weimer?
Or, Default/Forgive and start from scratch?
No way out!!
lmao…Fly calls Kneale’s mother a whore…And Kneale’s response is to short CY “in size…”
CY responds by closing .09 off the HOD…lmao
omfgitsjd Says:
It just dawned on me that although the public debt is twice that of the gross domestic product, With a little fiscal responsibility this whole country can be in the green within very short order.
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Your “dawn” is fuckin’ DARKNESS. The Public Debt is $10.5 trillion – 70% of GDP. Let the Bush Tax Cuts expire, let the BAD banks go down
stop bank / financial bailouts, cut “defense” spending in half – and in ten years the public debt will be ZERO.
Damn Fly your predictions look good so far The Time Machine is for real.
I love the DRR trade that you posted this week. The Euro is doomed
The Fly needs new predictions because 90% have happened.
For the ongoing Shake out 2009:
As Obama moves in slow motion, deflation will terrify people. The Fed will stick with the only 2 answers it knows — “print more money and lower interest rates.”
At the point of climatic discontent where people “craigslist” their life and dump their last GOOG, the market will stabilize. Then we see surges of inflation, bringing stocks along for the ride by 2011.
The definition of irony, part 6,254.
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Universal bearishness is uber-cool.
JakeGint Says:
The definition of irony, part 6,254.
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Who gives a fuck where the rich live. Tax ’em at 110% on all AGI above $250K.
If they don’t like that, they can choose the guillotine. I’ll push the wheelbarrow with the heads.
Awesome shit
Those predictions are great…..that thread is epic LOL.
The national debt is about to hit $11 trillion and then explode up to $15 trillion in a couple of years. The interest will approach $1 trillion per year. The SS payments are beginning to ramp up as the baby boomers retire. The Fed government will consist of four main entities – 1) Interest on the debt 2) SS payments 3) Medicare payments 4) Military spending These will comprise 75-80% of the red ink budget which will borrow about a trillion per year and add it to the debt. OUT OF CONTROL.
I’m gonna pay those guys with; “brains”, and get them to stand in front of my house 24/7
Fuck You.. You’re Dead.. Thanks for Listening..
The Bubble of American Exceptionalism
http://www.youtube.com/watch?v=Nikj7C8B6o0&feature=related
No Bailouts–
Are you kidding or retarded?
If the latter, there’s an IQ restriction on this site, and while it’s 15 points lower for registered Democrats, I’m pretty sure you’re still lagging the bar.
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Texas financier R. Allen Stanford pounded on a table and insisted “the assets are there” at a meeting this month when colleagues questioned a company portfolio called “Tier Three,”
http://www.chron.com/disp/story.mpl/business/6285534.html
what a gong show, this year is going to be filled with frauds.
Credit card charge-offs reached a new high of 7.74% in January, after 7.73% in December, and the increasing number of borrowers falling behind on payments means charge-off rates are almost certain to increase as the economy worsens, according to Moody’s Credit Card Credit Indices.
http://money.cnn.com/news/newsfeeds/articles/djf500/200902271853DOWJONESDJONLINE000978_FORTUNE5.htm
Feb 28
EXCLUSIVE-AIG near deal on new terms of U.S. bailout-source
* AIG, govt close to deal, board meets Sunday -source
* AIG to get additional $30 bln equity commitment
* Preferred terms to be eased, credit line rate lowered
* Fed to take stake in Alico, AIA as debt repayment
* Tax assets, CMBS write-downs behind $60 bln Q4 loss
https://marketdataresearch.credit-suisse.com/cs/mdr/p/d/stm/stockmarket/news-detail.do?storyId=1235871322nN28382362&storyTitle=EXCLUSIVE-AIG+near+deal+on+new+terms+of+U.S.+bailout-source
I love this part:
MASSIVE LOSS
A new deal would come as the insurer (AIG) prepares to post the largest quarterly loss in corporate history — a roughly $60 billion fourth-quarter loss, produced in large part by write-downs on certain tax assets and commercial mortgage backed securities, the source said.
**The loss — which works out to about $460,000 per minute — is mostly non-cash, the source said.
Sierra,
That sounded a leeeetle bit wacky and then I got to about 4:50 when she started noting such “visionaries” as Noam Chomsky and Naomi Klein.
Choose your crackpots more carefully, Sierra, lest you end up in the bunker with Devil Dubious.
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308 — I may be misremembering, but didn’t AOL (Time Warner) take a hit like that back in the end of the dot-com era?
Also “non-cash” — it was a goodwill write down similar to the one we were discussing on Friday, I think…
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I love “non-cash” charge offs. It makes me feel all warm inside.
Is a non-cash charge off like when you are short of cash for your bookie so instead you end up with broken pinkies?
I love “non-cash” charge offs. It makes me feel all warm inside.
Like bourbon.
Guess what I gave up for Lent, btw?
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Non-cash chargeoffs? Cause is certainly wasn’t bourbon!
Jake,
Who’s the crack pot? I can assure you that the last thing I need is a lecture from you. How’s that online Thesaurous working for you? Any new words to dazzle us with? I could eat you and spit you out my friend, Ducati style.
Sierra Water
your bullish positions?
“i could eat you and spit you out my friend” Sierra Water.
Where does all that anger come from Sierra? Experience shows that the anger is a result of a perceived DEFICIENCY. Where does it hurt? What was frustrated? It sounds like your account size is large… or is it?
Sierra, I think the faggot doth protest too much.
Listen, I’ll use small words if it helps with the comprehension — I’m here to help, after all.
“Sierra, Noam Chomsky and Naomi Klein are KNOWN CRACKPOTS” — they are taken seriously by about one tenth of the fringe hard left.”
There, anything in that quote you need defined or did I have it wacked down close enough to “simpleton” for you?
Oh, okay, a “fringe” is like that fuzzy thing around the edge of your blanky.
Back to the rubber room now, Sierra, it’s “pill time.”
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Boom: No, you’d be wrong there. I’ve given up booze — in its full spectrum — for the entirety of Lent.
(Hence my cranky response to Sierra, which I shall not alter)
A couple of times I gave up red wine, but I figured, what the heck.
Stupid, I’m already regretting it, but you know, it’s a “test” and all.
Being a good Catholic, however, I will be taking that Sunday exemption up in a big way.
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Fly, my bullish positions are all in the Precious. Why would I want to give THOSE up?
I’m also bullish on SRS, EEV and DUG as hedges.
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If ever there was an age to put on sobriety, in all its forms, it is now.
What in he world is the Precious? Your IRA?
The case for a bear market rally:
http://www.youtube.com/watch?v=Pa1pIO4_lUY
precious metals
Thx Danny. And thanks for the accounting lesson Friday.
I just tried to order a drink using “non-cash.” I told the bartender he could use it as a writeoff.
He told me to go fuck myself.
Developing…
“Forgotten English” calendar, word-of-the-day quite appropriate for these markets, I think:
coney-catch (verb): To swindle — the coney, or rabbit, being considered a very simple animal.
After spending the better part of two years digging an elaborate set of trench bunkers in his back yard, Sierra Water was embarrassed to find he’d been coney-caught by the deranged ramblings of Noam Chomsky and Noami Klein.
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plow into gold and fuck off.
I’m drunk.
Hey no bailouts,
I recently confessed to being an i-banker on this forum. I work for a joint that received tarp funds. Well, guess what? Looks like I’ll be getting a fat bonus this year after all. Wanna drag me to the guillotine in your little red wagon, Fuckface? You can pick me up at 1060 W. Addison. Or you could just thank me when I pay over 50% in state and federal taxes to support you in your old age.
LOFL @ J-Dad!
Using the Blues Bros. address! Dude, I still use “JakeJoliet” on some of my Giant forum addresses.
Love that fucking movie.
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