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Boring: More of the Same
Sorry, market is like a broken record, same play calls are made over and over. The Fed sells down stocks, interest rates collapse, new debt is raised 300% oversubscribed, increasing deficits financed with ease as fearful investors pile into the U.S. Dollar.
Here's the playbook:
Step 1: Crash stocks to push bond yields lower
Step 2: Unleash billions in new Treasury Debt at 0% - 2%
Step 3: Low interest rates refreshes "Animal Spirits"
Step 4: Ultra-cheap borrowing fuels even higher stock prices
Step 5: Short squeeze in the dollar keeps currency crash at bay
Wash, Rinse, Repeat
If and when stocks are under pressure, find some $8/hr. waitresses to dryhump.
Today, it was newspaper companies within a hairsbreadth of bankruptcy:
And if you do not have the stomach to handle these cheapies, then just park and hide your money in REIT's, where it will be safe and sound.
Or how about some mattress company which is going to issue new shares and dilute existing stockholders?
Now we get to listen to the TXN update, to see if the girls are going to get another casting call or if they are going to be sent back into rehab.
Which way will she go??
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Boring is right. They will buy this dip and markets will head higher. Only difference is that you'll see both stocks and USD rally in tandem.
I'd like to hear more of your thinking on this one.
As fundamentals improve, so will the earnings outlook. As for the USD, improving fundamentals means interest rates will rise faster there than in other regions. Currency traders will reduce their short USD positions and institutions and banks will go long greenback at these levels. Stocks and USD will rise as recovery becomes more entrenched.
I disagree. It's in the interest of U.S. policy makers to keep the USD low. It's the only way to solve the Triffin Dilemma, and correct the huge U.S/China trade imbalance, which permitted the accumulation of massive debt in the first place. With a very low USD, America's manufacturing sector can grow, subsume the former (Finance, INsurance, Real Estate) service sector. Thus, America, and the world won't be dependent on the American consumer to fuel global growth.
The USD will remain low, and eventually lose its status as the reserve currency, and be replaced by IMF special drawing rights.
The dollar will neither rise nor fall. It will remain at about where it is now, between 76 and 74 DXY. Call it 75.\
That way traders can make fortunes on relatively small moves because the biggies like Goldman Sucks will manipulate it wordwide, "fix" it, as it were.
That's as valid a prognostication as the 'either ors' above.
"They" better buy faster, the leaders ( metals, retailers, financials ) are fading fast.
thanks for h&s insight re: xlf.
BKX is way off its top.
thanks Andy!
That looks like a rare Tasmanian H&S pattern. Is it just me or does that pattern have two heads?
It's not H&S until it breaks the neckline. I got kicked in the balls back in June/July already with that one.
Where's the STO at?
Check out the two headed monster H/S on IWM. Its crappy charts and Fundementals VS the Engineers, the momentum is turning south for the man behind the curtain.
http://stockcharts.com/h-sc/ui?s=iwm&p=D&yr=1&mn=0&dy=0&id=p96303992063
Andy,
Sincere thanks man. Your call on the OTM GLD shorts worked PERFECTLY my friend. Made mucho $$$ on that one.
You are my hero.
GRACIAS!!
"find some $8/hr. waitresses to dryhump."
LOL, Tiger, is that you?
You laid out the playbook nicely though RobotTrader. Just rerun your post next go'round and save yourself some time.
Gold in euro might become a double-top; in yen a triple-top.
http://stockcharts.com/h-sc/ui?s=gld:$XEu&p=D&yr=1&mn=0&dy=0&id=p96303992063
http://stockcharts.com/h-sc/ui?s=gld:$xjy&p=D&yr=2&mn=0&dy=0&id=p96303992063
To add a bit different flavour to the pics:
http://www.spiegel.de/fotostrecke/fotostrecke-48767-7.html
Hey that's not a samsung monitor. That one works.
MTN fell off a Colorado cliff today. The 5 year chart looks like a snowboarders dream. Who would invest in that? Oh, and that MNI chart Robo. I keep asking myself why didn't I short that bitch a few years ago when it was $60? Straight down. It was so obvious, oh well.
http://imagecache5.art.com/p/LRG/26/2674/RB2UD00Z/kurt-olesek-airborne-snowboarder-in-half-pipe-position.jpg
While it seems like the same thing over and over, some pretty important stocks have dropped below mid-level SMAs, most notabley GS, as has been pointed out, here.
This hasn't happened since March.
Reuters reports that hedge fund manager John Paulson still sees compelling long-term returns in equities even after their sharp run-up this year, while holding no short positions in the credit markets:
Bottom line: Keep buying them dips, stocks are heading much higher.
"The Standard & Poor's 500 stock index .SPX is up roughly 63 percent from its March nadir, but still down 30 percent from its October 2007 all-time high."
And the NASDAQ is still down 57.7 percent from its March 10, 2000 all-time high. You keep buying those dips, Kolivakis.
It would appear that you still see no major events on the horizon Leo. Is this still your position?
No, I do not see any major event on the horizon. The big surprise in the first half of 2010 is that growth comes in much stronger than anticipated and the Fed starts preparing the market for rate hikes sooner than most expect. But even if the Fed hikes rates, stay long stocks. It usually takes three or four rate hikes before stocks start feeling the pinch and in the bubble sectors, more than that. Stay tuned, 2010 is shaping out to be an interesting year, but the liquidity rally has yet to run its course. The hedgies know this, which is why they are working hard spreading rumors and buying every dip. Paulson isn't the only one with a hefty net long exposure.
Leo,
What was your ROI for 2008?
Marginally down since I was mostly in cash and dealing with personal issues.
No, I do not see any major event on the horizon. The big surprise in the first half of 2010 is that growth comes in much stronger than anticipated and the Fed starts preparing the market for rate hikes sooner than most expect. But even if the Fed hikes rates, stay long stocks. It usually takes three or four rate hikes before stocks start feeling the pinch and in the bubble sectors, more than that. Stay tuned, 2010 is shaping out to be an interesting year, but the liquidity rally has yet to run its course. The hedgies know this, which is why they are working hard spreading rumors and buying every dip. Paulson isn't the only one with a hefty net long exposure.
US economy stronger in 2010, stocks to be up strongly, bonds surely would be supported by Heli Bermonkey. Bottom line - pension funds would do just fine, what is your latest take on them pension funds and university endowments? Maybe you should choose a new topic to write on?
No, I do not see any major event on the horizon
That is what you said several weeks ago and I appreciate you responding.
I won't repeat my comment at the time but will continue to disagree about "major events".
talking about "growth" makes me want to puke on your avatar
Leo, you sure seem to know everything ...
In the real world, however, the economy still sucks.
As for John Paulson, he's like everyone else; talking his book; and probably trying to dump positions on folks like you.
GL...
No shit? Thought never crossed my mind. You can find the latest quarterly filings from Paulson & Co. Inc. and those of other top hedge funds in a previous post of mine:
Why is Small Beautiful?
I know the economy sucks for millions of unemployed or under-employed, but the worst does look behind us for the foreseeable future. People tend to extrapolate from what happened in 2008 to what will happen in the future. It doesn't work that way.
what about 1930 in the u.s.?
don't bother answering, it's just rhetorical.
Since Leo knows everything, can he tells us who is buying all of this US debt at zero yield?
China but they are increasingly allocating to hedge funds and private equity funds to help juice their returns over Treasuries. By doing this, they are also ensuring this liquidity rally will go on longer as hedge funds drive the market higher. China still needs the US consumer so they will do everything they can to support the US economy, but very reluctantly. In the meantime, they are gaining a head start over the US in renewable energy. The Chinese are better prepared for the future.
"The Chinese are better prepared for the future."
Leo, I completely disagree with you. The Chinese are like fifty teenagers who pooled their money together to rent a Ferrari for a couple of days. China has, essentially, one billion people still living in near-poverty.
Leo:
Thank you for your bold and insightful comments. I am a humble investor caught shorting the tech bubble in early 2000. Lost my shirt then. I was scared into cash and gold last year by Denninger/Mish and saved from another decimation. I became wise to the trick that the USG was instituting in april 09, namely if (accounting)rules are an issue-change it. If ther is no money to cover all the bets in the market-print it. My return this year is close to 85 pct.I was dreaming of 400 pct (ha ha)
These politburo blood suckers are the same in all parts of the world ( some more obvious than the other). I find the discussion of Italy breaking away and collapse of euro/collapse of dollar juvenile. These thugs know that if it were to happen, they would be burned at stake. Printing presses are at full tilt all over the world. All govts will default stealthly. These thugs will slowly and surely loot the citizenery to save their hide.
This economy is totally in the shitter. I hung up my investor hat and started investing in myself with a couple of small businesses--at least I have a marginal amount of control.
Look for 2010 to be the beginning of a tank like no other--that's the word in the world of small business.
I agree, there's Wall Street and then there's the rest, the rest is bigger, and the rest is still in very serious trouble. That's what I see.
Bravo!
This is how we do it.
robo you back on the bike, dont miss the pala gp its gonna be a blast
Paulson isn't long the US, he knows the banks have a sweetheart deal with the USG. Their profits are internalized and they have an official arbitrator in the FED and treasury to dump bad assets on the public. That's just a no risk investment. If the nanny state is going to bail banks out everytime they fall off a cliff, then that's a gimme investment. What's the downside?
Anyone see Paulson investing in CISCO, Boeing, gE? Fuck no!
He also has huge gold holdings- so buying banks and insisting on bailouts for them makes his real money holdings nominally more valuable. He's talking the bank book to help the gold book. A systemic collapse in a huge deflationary credit scare is too scary to wish for- even as a gold holder
It's all bullshit all the time
the world has lost. GFS has won
the O-team and Team Turbodouche Benzimbwe are one
might as well up and die
Are we seeing the begining phase of the much predicted US dollar short squeeze? If so, in the short term it should go hand in hand with a "head fake" decline in oil/gold prices followed by a blindside 180 reversal in gold (possibly oil and other commodities) within a few months leading to a train wreck decouple on US dollar vs gold and other stronger currencies within a year. "Nothing matters until it matters but when it matters it really matters"
Dubai is the sovereign Countrywide.
Greece will be Bear Stearns.
Japan/UK will be Lehman.
Then you will see a run to dollars that will make your head swim.
Wanna bet that gold and the buck go parabolic together on that one?
wow - that is the post of the day.
The TARP repayments are pure BS. So a bank takes the taxpayer money for 364 days, then on the 365th pays it back and gets the go-ahead to pay ultra-bonuses for the entire year? Oh, and in February, after an "unforeseeable event" like a CRE collapse, go back on TARP until Christmas 2010.
Sounds about right cd13; the most prescient comment this. And why wouldn't we lend it to them again (and again and again) they're good for it, right!?!
c wave down soon.
Just another guy who doesn't realize that oil controls everything, and with 127 Iraqi killings today, IEA's utterly desperate need for production from there just isn't going to happen. Fields will continue to die (empty) and there's no new supply coming.
How do you solve that? Easily. Reduce consumption by the only way possible: reduce economic activity. And THAT is why suprising growth can't happen. Oil will choke it off whenever it appears.
There is no cure for this. Ever. Get used to it.
I for one continue to be interested in Leo's prognostication of better times to come and in the not-too-distant future. He did call for a better employment report. But, I don't see any evidence of it in my particular corner of the world, the best I see is stabilization of a sort. In talking with all of our vendors and suppliers (in homebuilding and commercial real estate) I see a lot of desperate folks who have no orders. Simple as that. (Guy dropped by the office yesterday to personally ask for business, and by happenstance I spoke to him for him for a minute. We are far out of his normal market area, and I noticed he seemed nervous and stressed as he asked for work. I told him we'd be in touch as soon as we were bidding for a new job, and wised him luck.) And maybe that's a good thing for the economy for now, and the activity is elsewhere where I do not see it, but I see no evidence of a turn-around. We have no plans for rehiring whatsoever.
I don't see how the dollar and stocks can ascend together but I would not rule it out - we have seen a lot of weirdness this past 2 years.
CRE is still out there, and is not going away. Survivable? Probably, but will be a terrible drag on 2010. Add to that the tightening FHA credit (=return to responsible lending) and umemployment leading to more foreclosures and I see many regional banks just imploding under the weight of it all. You can't print your way of out massive debt collapse. Sorry. As near as I can tell, the printing has, by design and its implementation, only benefited the elite financial "leaders" who got us in this mess to begin with. And let's face it, the financial crisis was first and foremost ONLY about the threat to their wealth and position, and had ZERO to do with its adverse impact on the American demos.
Leo, read Sheldon Wolin's "Democracy Inc." and see who we are.
The bear market rally shows signs of weakness and the USD rally I have been expecting is getting closer.
My indicators can identify trend changes before they occur.
They warned me of an impending market crash back in early *2007*
http://www.zerohedge.com/forum/market-outlook-0
You suck.
Watch the action trying to keep WFC closing above 26
http://stockcharts.com/h-sc/ui?s=WFC&p=D&b=5&g=0&id=p53416914894