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After Nearly Two Years Of Searching, TrimTabs Still Can't Figure Out Who Is Buying Stocks
A year after Charles Biderman's provocative post first appeared on Zero Hedge, in which he asked just who is doing all the buying of stocks as the money was obviously not coming from retail investors (and came up with one very notable suggestion), today Maria Bartiromo invited the TrimTabs head once again (conveniently in CNBC's lowest rated show, during Christmas Eve eve, at a time when perhaps 5 people would be watching) in an interview which disclosed that after more than a year of searching, Biderman still has no idea who actually buying. In response to Bartiromo's question if the retail investor, who left after the flash crash (thank you SEC), Biderman responds what every Zero Hedger has known for 33 weeks: "Retail investors are not coming back to the US. Those investors that are investing are buying global equities and are buying commodities. We are seeing lots money going into commodity ETF funds: gold, silver..." and the even more unpleasant summation: "individuals have been selling, companies are net selling, insider selling and new offerings are swamping any buyback and any cash M&A activity since QE 2 was announced. Pension funds and hedge funds don't really have that much cash to invest. So what nobody's asking is what happens when QE 2 stops: if the only buyer is the Fed, and the Fed stops buying, I don't know what is going to happen...When I was on your show a year ago I was saying the same thing: we can't figure out who is doing the buying it has to be the government, and people said I was nuts. Now the government is admitting it is rigging the market." Cue Bartiromo jaw dropping.
As for the simple math of where the money is actually going:
"Money flows come out of income, take home pay of everybody plus money that came from real estate is down about $1 trillion a year. It peaked in the 3rd quarter of 2008, at $7 trillion, that's take home pay for everybody who pays taxes plus the money that came from real estate. It has now bottomed at $5.9 trillion. We are still down $1.1 trillion in money that people have to spend each year, that 16%. And some of the money that is leaving equity markets we think is going to pay bills."
Much more CNBC non-grata truthiness in the full clip, in which Biderman suggest what Zero Hedge readers realized over a month ago, that in June QE3 will likely have at least a partial municipal bond focus.
Update: Charles has just sent in the following addendum to his CNBC appearance:
Due to time constraints, what I didn’t get to address on CNBC today is what will happen after the Fed is either successful or not successful with QE2. The Fed is rigging the market by digitally creating money that is used to buy financial institutions assets — currently Treasuries, last year all kinds of toxic waste. What will happen when the Fed stops buying assets?
What the Fed is hoping is that QE2 actually works and the economy starts growing at 3+%. If that happens, unlikely as it is, then the Fed will end its QE activities. But for the stock market, if the only source of buying power, the Fed, withdraws its support, the market is likely to plunge to well below fair value. At that point perhaps some new source of money , i.e., China, et al will be able to buy US assets on the cheap.
The Fed is legally mandated to manage the economy, not the stock market. If the Fed’s QE is successful and the trickle down impact of higher equities creates a sustainable recovery, the Fed will gladly sacrifice the stock market to its legal mandate to manage the economy.
A more likely outcome is that while stocks will be higher by the end of QE2, economic growth will not be sustainable without government aid. That would then require additional QE. Stock prices could then keep rising for a while. At some unknowable now moment in time, unless the economy starts to grow again, no amount of QE can work forever in keeping the current stock market bubble from bursting.
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http://www.cnbc.com/id/40791768
small town pension fund runs dry? hmmm, just a example of what is coming perhaps?
"Prichard retirees haven't seen checks since the fall of 2009."
http://www.wkrg.com/alabama/article/prichard-pension-could-set-example-f...
And if the Fed did not artifically inflate stock prices then someone other than their commrades might acquire control of "their companies"
I just put 25% of my net worth into Junk Silver (Kennedys and Franklins) bought one oz of gold...
I really hope you guys don't let me down!
you didn't spend any money, you bought money
NICE one delacroix!
Biderman is sooo Newtonian ( not surprising given his graduate education). he still thinks in terms of money flowing like water from cistern to cistern. probably has so kind of "conservation" of money priciple in the back of his mind.
Hogwash.
Money is not like water flowing in pipes, driven by pumps from bucket to bucket. I tought people would have topped this tired old 1950s analogy long time ago.
Money "appears". When investors get excited money grows without bound. When investors lose confidence - money goes away - poof. The Fed tries to fine tune all this - good luck.
Your example does not make a good job at supporting your assertion.
Makes the investors look like a cistern and excitment a pump.
I betcha Biderman also thinks that banks lend out existing deposits. I mean if they dont have any deposits they cant make loans - right?
Wrong.
Banks create 2 entries when you get a loan. On the Asset side they write " Loan to John Doe". On the liability side they write "deposit Of John Doe". Then you sign a paper that says "Loan document". And you get a choice of different colors of check-books. Done.
All the banks need to manage are 2 essential ratios " Reserves/Deposits" and "Risk weighted Aseets/Equity". Tey are clearly NOT constrained by the first ratio ( which is why all ths talk of banks loaning out their reserves is all muddled thinking). The second ratio is an issue - this is where Santa Fed tries its best to help out.
/duplicate post removed
Time to let the cat out of the bag. Biderman, It's me; I'm buying all the stox
Idiots, this isn't all about the economy, its about destroying China as a competitor. The BRICKs are inflating ++ and having trouble dealing with it. The US is doing an Argentina on the Chinese. A Chinese downturn will strengthen the US treasury market, lower bond yields and allow for growth. If the inflation continues the US debt to foreigners is reduced.
it actually seems so farfetched.. it MAY actually be TRUE!
hehe
see.. for MORE TRUTH!
http://www.youtube.com/amgineco
Point me to the section of the Constitution which authorizes the Fed to "manage the economy". Heck, point me to the place where the Constitution authorizes the Fed.
Trimtabs?!? Isn't that some kind of diet pill company?!? In any event, just buy their stock on the fucking dips!
Retail investors were buying with both fists in 1999. It's not like retail buying is a "good thing" in itself. The more retail investor money flows out the more bullish I get.
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Who the fuck cares whos buying stocks. Its all good
Why does Maria sound like a man?
because it's really tony danza in drag.
The Ben Bernank
http://www.youtube.com/user/BrotherJohnF?feature=mhum
The Stank Bernank! The JP Morg! Great clip!
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I think she had the flu.
Also, she doesn't sound like she's even paying attention.
Perhaps the Fed is the ultimate sacrificial bank ("bad bank") where toxic/worthless trash & gambling losses are dumped so dumpers can head back to the casino (i.e. markets) with ink-barely-dry cash in their pockets.
Fed's new mandate appears to be (a) cover gambling losses, (b) keep markets juiced, and (c) keep the federal government operating.
How long? Till the dollar is worthless.
Exactly.
Mr. Practical over at Minyanville, did a story about a year ago, how he believed the Fed. was manipulating the market higher. He explained these very odd surges of buying at the end of each trading session, and traced it back to what he called an "invisible hand" at work. It was hard to believe at the time... but seeing this Trim Tabs interview makes you belive..............
Check out the CAFRs
http://www.youtube.com/watch?v=BaqnOFwwzk0
"What will happen when the Fed stops buying assets?"
Through the convoluted weighted voting system, the USA controls the IMF completely. If/When the Fed stops buying, the IMF will take over - I reckon that will be Plan B and partially explains all the recent changes to hike up the contributions by member countries and to the voting system. OR, it'll all go tits-up, much to "everyone's surprise".
Merry Christmas
I understand that when Maria was a student at Fort Hamilton High in Bay Ridge Brooklyn, she was known to frequent the boy's room for "friends with benefits" activities.
Just heard him on Bloomberg. Things are crazy.
Munis are outside the Fed's purview. But so were MBS ... stay tuned.
P.S. Munis are within the Fed's scope, but only 6 mos. or less maturity.
Munis are next in the grand plan for the Fed to own it all. State run capitalism.
Consider why the Feds are buying up the market.
Scenario A: The Feds stay away from the market. Underfunded pension funds start drawing down their stock portfolios to pay pensions. The market falls and the pension funds lose capital faster than they can pull it out of the stock market. Final result, Dow Jones at 450 and 20 million pensioners having to be bailed out by the Feds causing a collapse of the government..
Scenario B: The Feds keep pushing cash into the market. Pension funds do not collapse but continue to draw money from the market. End result: The Feds own everything, pensioners are paid off, funds continue, everyone is happy.
If you ran the Fed which scenario would you opt for?
End result: The Feds own everything, pensioners are paid off, funds continue, everyone is happy.
In all my years in the mafia, that's the line we always feed to our 'customers'. As long as we kill competition, , new entrants, rewarding merit, and market forces we can all be happy. I guarantee it.
Holy crap! I couldn't watch more than a few seconds of this! Maybe I'm just not indoctrinated to her, but I felt this revulsion to Maria. The thing that kept coming to mind was "lipstick on a pig" (on both the intellectual and physical fronts). NOTE: I don't normally stoop to character attacks, but this one really calls out for it...
i cannot recall if we typically agree or not, Seer, but this time we do.
[Public—No. 43—63d Congress.]
[H. R. 7837.]
Upon the filing of such certificate with the Comptroller of the Currency as aforesaid, the said Federal reserve bank shall become a body corporate and as such, and in the name designated in such organization certificate, shall have power—
First. To adopt and use a corporate seal.
Second. To have succession for a period of twenty years from its
Third. To make contracts.
Fourth. To sue and be sued, complain and defend, in any court of
Fifth. To appoint by its board of directors, such officers and em
ployees as are not otherwise provided for in this Act, to define their duties, require bonds of them and fix the penalty thereof, and to dismiss at pleasure such officers or employees.
[Pub. 43.] 5
Sixth. To prescribe by its board of directors, by-laws not inconsistent with law, regulating the manner in which its general business may be conducted, andthe privileges granted to it by law may be exercised and enjoyed.
Seventh. To exercise by its board of directors, or duly authorized
Eighth. Upon deposit with the Treasurer or the United States of
But no Federal reserve bank shall transact any business except such as is incidental and necessarily preliminary to its organization until it has been authorized by the Comptroller of the Currency to commence business under the provisions of this Act. Every Federal reserve bank shall be conducted under the supervision and control of a board of directors. The board of directors shall perform the duties usually appertaining to the office of directors of banking associations and all such duties as are prescribed by law.
Said board shall administer the affairs of said bank fairly and impar
Such board of directors shall be selected as hereinafter specified and shall consist of nine members, holding office for three years, and divided into three classes, designated as classes A. B, and C.
http://www.llsdc.org/attachments/files/105/FRA-LH-PL63-43.pdf
Continue reading.
I think boddiwomo is sitting on one of her balls in this segment.
Did you notice how everytime he moved into the govt. buying debt and buying securities she wouldn't even ask a follow up on what he was saying and essentially try to pull him into another direction. I mean he said that the fed is helping to manipulate the market with printed money and instead of saying why do you say that or questioning it she would gloss over it like it wasn't nothing. You see it's just her and him in this interview, if she would ahve questioned him it would be hard for her to interrupt him while he's trying to answer her question. When it is a gaggle of anchors like earlier in the day, they tend to drown out the statements of the guests which sound to close to the truth.
I see the stock market going down to 4,000 and this is a conservative point. I think the black swan that will start the meltdown will be the bankruptcy of the states and municipalities. And the reason this will happen on top of it naturaly going to happen anyway, is that the republicans want the states and the local govt. to be able to renegotiate their union contracts in regard to pensions and such. This way it weakens the unions for the dems. But by allowing this for their short term need, it will enable the black swan event to happen. Even if the fed decide to bail the states out for trillions, it will only delay the inevitable.
You >do< realize that there's a whole industry specializing in anonymizing orders just for this reason, so that annoying pricks can't figure out what you're doing, if you're executing a large order, it's worth it.
is she doing lines between segments? her eyes keep randomly shooting around...