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Guest Post: Ridiculous Productivity

Tyler Durden's picture





 

Submitted by Chris Martenson of Chris Martenson's Blog


Market Recap - Ridiculous Productivity

After digging around and sifting through the things both said and not said, I have come to the conclusion that what we are seeing are the likely effects of a rescue operation.

By this I mean a large injection of stabilizing cash to one or more parties, possibly related to the recent large bankruptcies. Two of my friends who have been actively trading for more than 20 years between them threw in the towel this week as their patterns and methods are no longer working.

Their conclusion is the same as mine; this market is not trading like it used to. It is trading chaotically, counter intuitively, and as if there's some sort of distorting influence involved.

First we might just wonder if this isn't the impact of a rogue firm with entirely too much power moving the market for its own benefit.

When we examine the results of Goldman's latest quarterly trading results, obviously we have a strong suspect.

Goldman Benefits from Trading Bonanza

Traders at Goldman Sachs recorded only one daily loss in the third quarter, highlighting the trading bonanza sweeping Wall Street as central banks continue to pump billions of dollars into the financial system.

The performance – revealed on Wednesday in a regulatory filing – compares with two losing trading days in the previous quarter and confirms that the authorities’ drive to revive markets after the crisis is yielding huge windfalls for some banks.

Before the crisis, banks regularly recorded trading losses on several days in a quarter.

Goldman made more than $100m in profits on 36 of the 65 days in the three months to September and recorded more than $50m in profit on more than eight out of 10 trading days, the filing shows.

Only one day with trading losses out of the entire quarter? A 98.5% win-rate? Sorry folks, this is so far beyond the realm of statistically possible that we must search for other reasons. There can be no doubt that Goldman is enjoying an advantage not shared by the rest of the market.

Goldman is a company largely housed in a single glass building in Manhattan vacuuming up $100 million in profits on 36 out of 65 trading days. $100 million is a lot of money. It is equivalent to the total earnings of a very successful mid-sized company for an entire year. One that might employ thousands of people.

But somehow we have a system where a few folks in a glass building are able to skim that amount day after day after day without anybody from any regulatory body even blinking.

Remember, in trading one person's gain is another person's losses. It really strains every fiber in my being to imagine that Goldman's services to this country are either that good, that fortuitous, or worth it.

Moving on to the markets, here's what the market has done for the past week as traced by the S&P 500 futures (which I like because it tells you what's happening 24 hours a day, not just when the cash market is open):

 
 
We see the volatility as the market first surged on the GDP report and then slumped the day after. Then there was a spike on the ISM (mfg) data that also gave up the gains shortly thereafter. Then we had the FOMC follies where the market looked like an EKG of a heart attack victim for a while before finally slumping away all the day's gains.

Today's 200 point Dow spree was said to be due to favorable unemployment data and excellent productivity gains but if you were watching the overnight futures you noticed that the lift-off actually began at 3:00 a.m. As a trader, I am quite familiar with this pattern. When large futures gains are recorded beginning at 3:00 you can nearly always count on those gains holding through the day.

Inquiring minds would like to know how the future traders seemingly know about the excellent economic news that has not yet been released. Hello SEC? I have a job for you.

Regarding the excellent economic news today, I might note that the market never sells off on an unexpected rise in initial claims nor should it. The data is noisy and not worth much week to week. Further we might note that while the number was less than expected it was still over 500,000; a lousy result by any normal measure.

U.S. Economy: Worker Productivity Surges, Costs Drop (Update1)

Nov. 5 (Bloomberg) -- Worker productivity surged at the fastest pace in six years, labor costs fell and unemployment claims were lower than forecast, signaling companies may be preparing to start hiring again after cutting costs to the bone.

When looking through this data we might note a powerful contradiction in the logic. Why should companies that have just secured a gigantic gain in productivity seek to hire anybody? I mean if they're any good a company that has managed to become more efficient and lean is not about to go out and hire anybody just because.

I should point out that the productivity measure is the worst of the worst in terms of usefulness or reliability. I hate how it is constructed. Some of my disdain is probably a holdover from all the years I had to listen to Alan Greenspan trumpet it to rationalize his reckless loose money policies. I thought it was bunk then and I do now.

If you want any further proof that this measure is junk, look at what was reported:

Productivity, a measure of employee output per hour, jumped at a 9.5 percent annual rate in the third quarter, exceeding the highest economist forecast, according to Labor Department figures released today in Washington

That's just ridiculous. At that rate we'd need half the workers to accomplish just as much in only ~7 years. It's silly and instead of spending any time wondering at it we should instead immediately suspect that it is flawed.

Next, labor costs going down is a bad thing if you are depending on consumers coming back to the shopping malls. Lower labor costs means less money going to workers. That's not a good sign at this point.

So at this point I really have no solid explanation for what I am seeing in the market besides noting that a lot of liquidity is hitting the tape. Gold remains over $1090 and the dollar is languishing about at ~76, bonds went nowhere today despite a powerful stock market rally.
All in all this adds up to liquidity and lots of it.

This is one reason that I am not a deflationist yet. While I have complete intellectual sympathy for the deflation argument as that is what should be happening, I am not yet seeing it in the financial markets.

Instead I am seeing what I presume to be behind-the-scenes injections of liquidity into the markets.

I have read numerous statements of fact from deflationists that are actually beliefs that really need to be carefully examined. One is "the markets are larger than the central banks." I used to believe this too, but now I am less certain.

Thinking back, I recall that the Soviet machine was bigger than the market because it was the market. It turned out not to be larger than reality, but that's a different story. The Soviets simply dictated everything from prices to false production figures until the system collapsed.

The tools of persuasion and market interference at the employ of modern central banks are far more sophisticated than anything the Soviets ever dreamt of.  Are the markets larger than the banks?  I'd like to think so, but I am growing more and more confident that the answer is "no" and that the distorting effects of untold trillions of fiat money can elevate prices for long enough to change people's minds.

I happen to think that reality is larger than our central banks but that too is a story for another day. You can review that thesis by re-reading the paired reports on oil that came out in April 2009.

Again, I just want to caution you to be ready for any outcome. I am open to the possibility of an immediate return of crushing deflation and I am also open to the possibility that the gigantic wall of fiat money will over-ride the deflationary impulses and whisk us into a fast date with high inflation.  Right now the data says that the money masters are winning the battle against deflation.

And not without help from the media - I am simply stunned that Capmark and CIT went belly up and I couldn't find a single article about either today in a major news outlet. It is as if they never happened at all. Sometimes what is not said is just as important as what is said.

This is, without a doubt, one of the most perplexing moments for those interested in wealth preservation.

Take care.

 


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Fri, 11/06/2009 - 12:58 | Link to Comment omi
omi's picture

We are so god damn productive that we don't need jobs.

Fri, 11/06/2009 - 13:30 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:02 | Link to Comment Takingbets
Takingbets's picture

This whole better than expected crap rally is a mind fuck. TPTB are trying to rewire the sheeps thoughts that bad is the new good. And I truly believe IB's are behind gunning these markets before the bad news, oops I mean good news get reported.

11:00 am : Financials continue to be a drag; the sector is now down 1.1%. AIG (AIG 35.48, -3.80) is a primary laggard in the sector. Shares of the insurer have been shunned for the entire session, despite better-than-expected earnings for its latest quarter. AIG's weakness has spread to its peers and dragged multiline insurers, as a group, to a 2.8% loss.

http://finance.yahoo.com/marketupdate/update

Fri, 11/06/2009 - 13:39 | Link to Comment What_Me_Worry
What_Me_Worry's picture

It really gets weird once you figure out that AIG may have actually missed on their earning estimates.  We keep hearing this $2 number, however they actually reported net income to common shares in the 0.60's.  Let alone, ON TOP OF THAT, they don't even report out net profit to common shares after accounting for the fact that there are warrants for 4x what the current outstanding is.  Their real earnings for common shares might be closer to 0.15ish.

They actually reported their net income before paying out their expenses.  I may be reading their report wrong.  I cannot believe you are allowed to report out your net income before paying out your expenses for your loans now?!?

Basically, financial institutions can truly pick whatever number they want their net income to be and then work backwards from that figure to make the rest of the numbers fit.

Fri, 11/06/2009 - 14:14 | Link to Comment omi
omi's picture

Oh the enthusiassm over a range trade

Fri, 11/06/2009 - 17:58 | Link to Comment Tripps
Tripps's picture

exactly right....they are trying to use positivity and the law of attraction to distract and to suck in even the bears to go long

 

the most stupid way to solve a great recession I have ever seen

 

they won't fix the monetary system , wont fix the debt, wont fix the tax structure, won't create jobs, etc...but they will throw trillions at stocks even though equity outflows increase

 

do they think we are stupid????????  

Sat, 11/07/2009 - 05:16 | Link to Comment Bear
Bear's picture

Yes

Fri, 11/06/2009 - 13:14 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

In a similar vein, I have decided that waiting to short the equities market is a losing game where QE is the reigning paradigm.  What has happened is that the S&P 500 at 1050 or 1070 today is the pre-QE S&P 500 at 650, or worse. Reinflation has successfully occurred in risk assets.  As long as QE is inevitable (either by reason of a Fed objective of holding down interest rates, so as to hold down the cost of borrowing AND maintain interest-rate-sensitive asset valuations, OR by reason of impossible to borrow U.S. federal deficits) then reflation works in terms of altering appearances of aset values.  In such an atmosphere, commodities will rise and gold should act as the measurement of the value of debased (i.e., printed rather than earned) fiat currencies.  I know there is alot of talk that the dollar is about to turn, everyone is ganging up on the dollar, and that somehow this thing wil lturn around, but all I see is that gold will keep rising (as an objective "price check" on the relativism of currencies), but as long as the Fed prints, isn't this the inevitable result? And even that behavior will last only until the outer rings of tolerance for such behavior are breached, and then currency collapse becomes a real possibility - does anyone know the trigger point? I doubt it, but it's out here somewhere in the darkness and we are hurtling towards it in a 1987 Oldsmobile with blackout glass and a mad driver sputtering nonsensicals at the wheel.  At least, I think that's where we are.  

And you are right about the manipulation - I think the scary part is that it is working, but the consequences of what is occurring are mind-boggling, as appearances become the substitute for reality.  The final victory.

Fri, 11/06/2009 - 13:47 | Link to Comment -273
-273's picture

But if reality for a growing number of people is that of unemployment, foreclosure and bankruptcy, then faced with the appearance (and fairly evident reality) of a few people gaming the system while they sink, it seems like a recipe for battle more than any ultimate victory. Lot of peeps are down, but not out. Game on. Next level.

Fri, 11/06/2009 - 18:11 | Link to Comment ZerOhead
ZerOhead's picture

The 87 Olds shitmobile is now rocketing down the road...  QE pedal to the metal with full ZIRP Nitrous Oxide (NOX) boosters... can't turn left... can't turn right... and no possibility of applying brakes evidentally...

Won't turn out well I'm afraid... kinda like what happens to a speedboat when it catches too much air...

Sat, 11/07/2009 - 14:49 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:08 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:31 | Link to Comment Anonymous
Fri, 11/06/2009 - 15:51 | Link to Comment Pat Hand
Pat Hand's picture

May 2007 was good.  My early warning systems started up in late June and began screaming "red alert" July 25.  That day I was dining with a couple of hedge fund allocators and their trophy wives (only one trophy wife per allocator) at Del Frisco's.  Wednesday night, the place was packed.  They had a $120 lobster special and a $56 steak special.  Three deep at the bar, pre-Mad Men martinis flowing.  Plenty of high-end champagne (our table ordered Roederer at $150).  I turned to one of the allocators and said "this has got to be the hedge fund market top".

Went to cash.

Short 50% in December.

pissed it all away over the past six months (well, not all of it).

Right now it's all a dollar trade, I think.  

TIPS are the trade - no expectation of much return but protection in case of either inflation or deflation.

5% in lottery tickets

Still long 9mm futures

Fri, 11/06/2009 - 18:11 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:12 | Link to Comment msscheiner77777
msscheiner77777's picture

How do labor costs fall (productivity figures)when wages are up in this latest employment (and I use the term lightly) report?

Which business in their right mind increase wages at a 17.5% (true) unemployment rate?

And how are government jobs flat when all I see are firings by cities and states?

 

Really good post, thanks.

Fri, 11/06/2009 - 13:12 | Link to Comment Prophet of Wise
Prophet of Wise's picture

Productivity increases as measured by output-per-worker [total output/total workers] should come as "no surprise" when we reduce the denominator by 7,000,000

Fri, 11/06/2009 - 13:13 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:13 | Link to Comment vreporter
vreporter's picture

I believe that some serious restructuring (capital requirements, management change, etc) of the "questionable banks" has been underway for a few weeks. They have been sinking while the Dow has been hiding that damage at new highs. Rotation is a wonderful tool as long as there is a chair to sit on before the music stops. Today's major Dow hero is GE! Watch the banks because something is afoot in the REAL market.

 

After all, it's a market of stocks, not a stock market.

Fri, 11/06/2009 - 13:15 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:17 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:18 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:43 | Link to Comment Anonymous
Fri, 11/06/2009 - 14:15 | Link to Comment Anonymous
Fri, 11/06/2009 - 16:18 | Link to Comment Sisyphus
Sisyphus's picture

LOL

Fri, 11/06/2009 - 16:01 | Link to Comment Anonymous
Fri, 11/06/2009 - 18:18 | Link to Comment Anonymous
Sat, 11/07/2009 - 01:08 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:19 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:19 | Link to Comment mule65
mule65's picture

Two of my friends who have been actively trading for more than 20 years between them threw in the towel this week as their patterns and methods are no longer working.

Good.  Maybe they can find a real job and do something productive.

Fri, 11/06/2009 - 13:35 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:46 | Link to Comment Internet Tough Guy
Internet Tough Guy's picture

Only a fool plays a rigged game. What will the squid eat when it runs out of fish and new fish won't play?

Fri, 11/06/2009 - 13:58 | Link to Comment Greyzone
Greyzone's picture

The squid will task its minions (Obama and Congress) to force you to play. They are going to raise 401K limits, require some minimum 401K deposits from everyone, and remove any ability to get the 401K money until you retire at 95 or some such crap, which in turn funnels money into funds that can then be screwed by the squid.

Just watch. Time to renew your passports, people, if you've not already done so. Like many in 1930s Germany, some folks may decide it's time to look for the exit.

Fri, 11/06/2009 - 15:48 | Link to Comment Mazarin
Mazarin's picture

re: "Screwed by the squid" - It isn't pretty:


Male giant squid have been found to have a long, muscular penis...

Scientists believe that the male squid literally injects his sperm into the female's skin during mating.

"The two of them mount beak to beak, so you've got arms and tentacles flying everywhere," Dr O'Shea said.

"The male is co-ordinating this enormous penis, and he's implanting spermadaphores into the female's arms.

Giant squid caught in Scotland Some giant squid have occasionally been caught by fishermen "He uses the penis like a plunger or a huge hypodermic needle, and he's physically stabbing the female's arms."

http://penis.blogcarnival.com/archives/2005/03/the_squid_penis.html

Fri, 11/06/2009 - 16:12 | Link to Comment Pat Hand
Pat Hand's picture

Predators aren't really interested in attacking big and strong things.  We're cowards & want to eat weak sheep.  If the sheep are all gone and it's wolf on wolf, well, that's life, but it's a very different way of living

Fri, 11/06/2009 - 13:22 | Link to Comment chancee
chancee's picture

If you want to see your future tax dollars at work, just pull up SPY on your time and sales screen and watch your children's inheritance scroll by.

Fri, 11/06/2009 - 13:22 | Link to Comment Anonymous
Sat, 11/07/2009 - 18:30 | Link to Comment Problem Is
Problem Is's picture

That is Timmay G.'s Aunt Lloyd you are talking about...

Fri, 11/06/2009 - 13:25 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:52 | Link to Comment Anonymous
Fri, 11/06/2009 - 14:04 | Link to Comment Gunther
Gunther's picture

As long as everybody stays in the paper universe continued manipulation might work.

Shortages in commodities have the power to stop the paper; after all energy and food can neither be printed nor electronically created.

Another way to stop the paper is to buy and take delivery (!!) of precious metals.

I do not have US numbers, but I Germany are some 3 Trln Euros in savings. 1% of that is 30 billion Eu that would buy give or take 1000 metric tons of gold. Take few other saving nations too and that is enough money to buy all the gold of few central banks.

 

Sat, 11/07/2009 - 18:40 | Link to Comment Problem Is
Problem Is's picture

Wow... an "anonymous" that does not sound like Timmay, Aunt Lloyd or Uncle Jamie's sock puppet...

I shall have to categorize you as "Anonymous A." Please place an A at the beginning of your posts so I can figure out which anonymous I am reading...

It is like trying to figure out which Tyler I am reading...

I like the really sarcastic, caustic Tyler...

Fri, 11/06/2009 - 13:27 | Link to Comment Rainman
Rainman's picture

A consumer-driven revival requires that the gubmint try to push the stubborn sheeple out of their deleveraging foxholes.....with little or no easy credit in sight. And the long awaited inventory ramp up on slowing credit is another mirage.

So the GS/Uncle Slam conspiracy to artificially pump on equities must continue or the house of cards slowly crumbles. A crushed dollar isn't even on the radar screen of hazards.....for now. 

Fri, 11/06/2009 - 13:33 | Link to Comment Racer
Racer's picture

"Two of my friends who have been actively trading for more than 20 years between them threw in the towel this week as their patterns and methods are no longer working."

 I have been trading successfully for many years, but now... I give up..

I think the best option is to max out the credit cards and not pay them, sorry got no money left...that's what you did to me by your idiotic market manipulations

After all, the banks don't pay any interest to savers and prudent people do they?

Be reckless and get away with it I say.. well that is what they are showing me by their example

Fri, 11/06/2009 - 13:48 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:29 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:31 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:32 | Link to Comment miker
miker's picture

Excellent article and make no mistake, the Fed is behind this market 100%. GS is the front man. Why do you think the Audit the Fed bill got gutted?  Because the Fed is pumping billions into the stock market.  THE MARKET IS  HOW THE FED IS INFLATING THE MONEY SUPPLY!!!!  The banks sure as hell aren't doing it with their reserves because there is little loan demand.  The first phase of the market rally was really quite easy and inexpensive.  Basically, they made sure no nasty surprises occurred on the downside (e.g., managed the news) and threw enough buy side support to key stocks while manipulating the sell side.  No one was selling much so up she went.  Now, it's getting dicier.  But still billions are being spent to hold her up.  Look at GE Today.  Up a frigging $1/share over what?  A well timed buy recommendation.  This on the day that GE announces closing their solar plant due to lack of pricing.  Goldman is making a ton of SURE money trading because they are the key maker of this market.  There attitude is "we're good" so pay us.  The Feds have little choice. 

One final note.  I've said this before and I still firmly believe that our government in conjunction with Saudis' is attempting to hold the price of oil "up".  If oil spirals down, all bets are off on preventing a deflationary spiral......because everything is pegged to it in cost.  Ask yourself why has natural gas dropped 2/3 in price but oil has held firm?  China and US have been buying to fill strategic reserves and using other techniques to hold the price up......for now. 

Also, don't expect Gold to move much over 1100/ounce.  When that happens, you will see the results of Ben selling some of the vast U.S. reserves into the market and scaring some of the weaker longs.  They will NOT let gold advance substantially from here.

This economy is is serious, serious straits.  I think worse than the 1930's.  Ben and Tim are pulling out all the stops; including a Treasury meeting with top financial bloggers to "show their human side".  Unprecedented. 

Fri, 11/06/2009 - 13:38 | Link to Comment Racer
Racer's picture

The Nikkei was over 1000 points higher than the Dow, now it is 200 points lower.

Beggar the rest of the world, the US is going to fiddle all the way to line the banksters pockets at the expense of the poor peasants at the bottom of the heap

Fri, 11/06/2009 - 13:48 | Link to Comment Burnbright
Burnbright's picture

If the FED sells Gold or Silver people like me will be buying hand over fist in the dip. Just FYI.

Fri, 11/06/2009 - 13:49 | Link to Comment Rainman
Rainman's picture

A Treasury meeting with top financial bloggers...??

Will Tyler be invited ?? Marla ??

I like your assumption on oil. There must be a manufactured demand and it would be good to see the strategic oil reserves report. The IMF gold sale didn't seem to spook the gold move, though, and it was announced the day after the spike to 1045. Fed might be reluctant to release its gold into the market. It would distract foreign investors from the forest of paper that needs to be sold. 

Fri, 11/06/2009 - 13:59 | Link to Comment SDRII
SDRII's picture

lots of commentary on the "sale" leave it for the goldbugs, but interesting nonetheless

Fri, 11/06/2009 - 13:42 | Link to Comment alexdg
alexdg's picture

Today seems like one of those days. Unemployment is supposedly at 10.2% and the market (SPX) has bounced off 1060, up 0.27%. 

The market has been going sideways for the last 3 months from an Euros perspective, bouncing off a support for 3 times already. http://tinypic.com/r/2jc5w00/4

Banks are hoarding cash as if waiting for something to happen. Buffett spent his 34B on a cyclical company, is it safer there than in a bank?

Fri, 11/06/2009 - 13:57 | Link to Comment SDRII
SDRII's picture

again someone has to buy the treasuries at the auctions

Fri, 11/06/2009 - 13:42 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:47 | Link to Comment Gunther
Gunther's picture

"this market is not trading like it used to. It is trading chaotically, counter intuitively, and as if there's some sort of distorting influence involved."
Every time I see the chart of gold from 2008 I get the same feeling; I have never seen a similar pattern before.

Even in the direct comparison Dow industrials and transports look more chaotic during the last panic then the same group of stocks in 1929.

Fri, 11/06/2009 - 13:52 | Link to Comment chet
chet's picture

Posts of the last few days are starting to come together.  As Martenson said, it seems increasingly clear that large institution(s) are controlling the market. 

Either the government is directly involved somehow, or understands the dynamic and has let it occur for 8 months now.  Whatever it is has the government's tacit approval.

At the same time, we (the taxpayers) are effectively taking over the real estate market.  Fannie is going to own and rent out homes. Fannie is no longer a "government sponsored" entity (if it ever was) - it is now effectively a federal department.

Then you have AIG, and the auto industry as well.  Subsidizing of state government and pensions.

In effect, the federal government and central bank are now driving the whole cadillac.  The problem is the car is going 110 miles an hour, and the chances of losing control are growing, and then no one will be driving at all.

I'm not one who believes that the political left is really a conspiracy to put the government in charge of everything, but I do see that they've ended up in exactly that position.

Fri, 11/06/2009 - 14:15 | Link to Comment Rainman
Rainman's picture

Fabian socialism is a doctrine of governance. Capitalism and monetarism are critical tools. It is a movement in small steps that eventually grow larger and larger through non-revolutionary means. Political liberalism is much too simplistic to describe what is going on today in the USA and Britain. All we are seeing presently is discreet acceleration ....... right out of the 130 year old Fabian playbook.

Fri, 11/06/2009 - 14:26 | Link to Comment Anonymous
Fri, 11/06/2009 - 13:56 | Link to Comment SDRII
SDRII's picture

Unemployment report:

1.B/D services added something like 49K jobs

2. Overall professional services added 18K jobs

3. Hours and wages for professional services declined m/m

Something or somone is wrong here.

Fri, 11/06/2009 - 14:00 | Link to Comment Sherman McCoy
Sherman McCoy's picture

The market is in what's called a "trend", and your short covering is fueling it higher. Don't think too much, you might blow a chip. I've been long since the 50x200 crossed 75 days ago. You intellectuals will make money again someday, but not anytime soon.

Fri, 11/06/2009 - 14:02 | Link to Comment bkrolik
bkrolik's picture

Interesting report.
"Right now the data says that the money masters are winning the battle against deflation."  - could you kindly be more specific about this data set.

Fri, 11/06/2009 - 14:06 | Link to Comment Anonymous
Fri, 11/06/2009 - 14:08 | Link to Comment pooplagrande
pooplagrande's picture

Too big to jail...

Goldman has their dick jammed so far up Uncle Sam's ass that it makes the SEC or any other lame duck dept powerless.

The US Government is the GIMP and we are all getting fucked and there ain't nothing you can do about it.

(queue the deep sinister laughter from Goldman Sachs).

Fri, 11/06/2009 - 14:11 | Link to Comment Anonymous
Fri, 11/06/2009 - 14:12 | Link to Comment chancee
chancee's picture

I concur.  They simply WILL NOT let this market go down.  Anything that remotely threatens a major break in the trend is met with either a ramp up in futures before open, well-timed 'good' news from the government, or a bizarre upgrades on big cap stocks - or a combination of all three.  It's not conspiracy, it's fact.  Every single incident when the market should have sold off... and was selling off overnight (overseas markets falling) has been met with the above responses.  IMO the administration's goal is to not let this market break lower before the new year.  They're determined to do whatever it takes - including spend all our future tax dollars - to not let the market crash through the holidays.  This will all end badly.

Fri, 11/06/2009 - 17:32 | Link to Comment Tripps
Tripps's picture

agree with you somewhat but there is PLENTY of bad news

 

1. FANNIE mae needs 15 billion and will own like 25% of all mortgaged homes in the future in a public housing socialism

 

2. health care is back on

 

3. cap and trade is back

 

4.  gold is soaring implying armegeddon or very very stupid money chasing it

 

5. they want to tax traders 

 

the news is there...these money managers who are not selling are playing with fire. if they don't lock in their gains in orderly fashion this market will COLLAPSE thru the floor evenventually and i do mean that....because its setting up like 2008 again when herd mentality of selling crushed the market for 1.5 years straight

Fri, 11/06/2009 - 14:24 | Link to Comment Anonymous
Fri, 11/06/2009 - 14:42 | Link to Comment Mark Beck
Mark Beck's picture

Productive investment should have steamed the tide of unemployment by now. The report released today shows the Administration and FEDs failure in its greatest light. The lagging indicator unemployment excuse is at an end.

Essentially, the US is now a noneconomy, it cannot support the government blood sucking parasite attached to it. The small tax revenue paying host, has a monstrous Gov-leach sucking harder with each misguided measure. 

The economy has been slowly gutted over time by ineffective national trade and manufacturing policies. I do not like protectionism, but we need to realize that without effective national policies, the states undermine each other in attracting foreign firms, and in doing so, needlessly destroy domestic industry. But, so much for history.

The only direction, consistently enforced and invested, was in fostering the financial, insurance and banking industries in the US. We need only look at AIG's profitable quarter, and marvel at the manipulation and malinvestment needed to pull off this minor miracle. My Federal Reserve Note fiat money should read, in AIG we trust. Just imagine if we used this investment to improve farming, or build a huge saltwater desalination plant in California for growing food, or to fund education. No, my fellow Americans, we spent our money on a failed and failing insurance company. Is this the direction of a great nation?

Fri, 11/06/2009 - 14:42 | Link to Comment AR
AR's picture

Very good thesis and points by all above. A colleague of ours recently told his investors that "they are having a progressively more difficult time analyzing the markets with any high probability of accuracy." Translated: Why manage your money if our traditional models of analysis are useless in this environment due to the unnatural intervention of government. This echoes some of the comments above. In-house, we too are exceedingly frustrated. Yesterday we were told that Goldman “is the vessel” the government is using (along with the other large dealers and European counterparts through the AIG bailout) to prop up the markets to achieve their goal of "buying time until all gets better" and to "change market psychology." This will only work in the short term, not long term, since the economic imbalances are to great. We were told also that Goldman been using the repo window to dollar exchange these buy orders back to the Fed (Tyler, you are correctly reading the increase of non-defined increase of assets on the Fed's balance sheet seen over the last 6 months). Anyway, these just aren't difficult, frustrating times – but rather, historical times. Never have we seen such overt manipulation of markets (Russia maybe). Thus, when in doubt, stay out. Unless, you have a lot of money to gamble with, or are trading on inside information of policy directives through firms like Goldman Sachs. Even the smartest guys we've known over the last 30 years are being turned upside down in this environment. Be patient. This will pass.

Fri, 11/06/2009 - 17:37 | Link to Comment Tripps
Tripps's picture

AR, by doing this they are setting up a huge crash ala bilderburg style

 

by not allowing a free market and more rational trading and REAL pullback trends they are providing more ammo that indeed this is all manipulation

 

no one is going to want to play. hell. i feel like pulling the plug now after this week, taking my chips off and never coming back until a few years

 

like you said not worth it. if this is indeed what is going on, fake propping up of equity markets by the FED and Treasury, we need people to expose it ASAP

 

this is criminal and unconstitutional 

Fri, 11/06/2009 - 14:42 | Link to Comment Joe Sixpack
Joe Sixpack's picture

The financial system has collapsed. It is terminal. The $trillions in stimulus are analogous to morphine for a dying man. It makes him feel a little better for a while, but even then it stops working and he dies.

www.DerivativesCollapse.com

www.RevokeTheFed.com

www.JoeSixpack.me/orig_letter.html

www.FinancialBlackmail.com

 

Fri, 11/06/2009 - 14:56 | Link to Comment Anonymous
Fri, 11/06/2009 - 15:12 | Link to Comment Anonymous
Fri, 11/06/2009 - 18:25 | Link to Comment Mark Beck
Mark Beck's picture

I like Chris, some may disagree with his approach, but he is concise and consistent.

Just a few comments if I may. Lets look at rigged Financials stability,

The FED and Treasury are selectively trimming its "financials" Christmas list. CIT was hung out to dry, even after 2.33B in bailout money. CIT main stream news coverage went to zip in record time, a political land mine. I can here the question now, So who's decision was it to invest in CIT Chairman Bernanke? How do we know your other investments will not end in the same dismal fashion?

Many financial "banks" are failing every week. The financial sector as a whole is taking a beating. Only a select few big banks are really turning a profit. Although the bailout exposure, even for Goldman, has not been completely reconciled, they are shoring up the balance sheet to cover future losses, and the accounting games skew the results.

Bailing out Fannie again with an additional 15 Billion is also very unpopular. I think the politicians believed that bailout measures would produce positive results, that would avoid bankruptcy.

In short, what I am saying is that the "Financials" time is running out. The government infusion of cash has not been able to adequately deleverage debt, or improve real estate prices enough to substantially correct losses.  

Lets talk about opportunity, not to challenge the implied straight line of the reverse square root by Mr. Soros. 

We are entering a period where the FED and Treasury will have to let some too big to fail, die. Especially, if TARP is not extended beyond the end of the year (another political land mine). If you read between the lines of Ben's last statement he talks about risk. What he is saying is, "I cannot continually save everybody". 

Technically, this has already occurred with CIT. You can see the Oh Crap look on Ben's face. At what point do we let firms fail? If we continually save these institutions, what motivation will they have to look after themselves? All it will take is a few more bail out sweet hearts to go under, and the financial sector is toast.

If a couple small fry fail like two of the following; Wells Fargo, Sun Trust, or Regions Financial Corp. This could be enough to crater the financial sector.

If Citi or BofA ask for more aid, are refused, and enter Chapter 11, KaBoom.

I guess I am not completely convinced that the fireworks are over, especially in financials.

 

Fri, 11/06/2009 - 14:57 | Link to Comment Margin Call
Margin Call's picture

 

As if it wasn't already bad enough, check out this gem:

http://tinyurl.com/y92gk5v

Of particular note is the following passage:

This year, a subcommittee of the House Financial Services Committee held a hearing at which legislators sought no facts but instead threatened dire action if the chairman of the financial accounting board did not promptly make it easier for banks to ignore market values of the toxic securities they owned. The board caved in, which may be one reason why banks are reporting fewer losses these days.

 

But the board's retreat was not enough to satisfy the banks. The American Bankers Association is now pushing Congress to give a new systemic risk regulator -- either the Federal Reserve or some panel of regulators -- the power to override accounting standards. The view of the bankers is that the financial crisis did not stem from the fact that the banks made lots of bad loans and invested in dubious securities; it was caused by accounting rules that required disclosure when the losses began to mount.

Ladies and gentlemen, get ready for "held until eternity".

Fri, 11/06/2009 - 18:32 | Link to Comment Rainman
Rainman's picture

MC, these are two paragraphs of incredible bizaareness.

Why not just scrap all those old accounting rules....??  Let's just shitcan all financial reporting now that we've come this far.

I always knew the beancounters were spineless bagmen. I think there's more than enough for a RICO case. Institutionalized fraud in every sector.......including the CongressCritters. 

Fri, 11/06/2009 - 15:08 | Link to Comment Anonymous
Fri, 11/06/2009 - 15:18 | Link to Comment Anonymous
Fri, 11/06/2009 - 15:46 | Link to Comment Anonymous
Fri, 11/06/2009 - 17:46 | Link to Comment Tripps
Tripps's picture

I started buying heavily in Jan thru March dude

 

i wasn't hear bitching....in feb i felt like a fool for buying a little early but i saw banks and some ag names bottoming

 

bottom line is like 80% of the stocks out there are very overvalued to me for the economy we have and will have. In March I couldnt say that nor did I.

Fri, 11/06/2009 - 15:53 | Link to Comment Hephasteus
Hephasteus's picture

Imaginary carrots of wealth. Real sticks of debt punishment.

Fri, 11/06/2009 - 17:57 | Link to Comment Anonymous
Fri, 11/06/2009 - 18:57 | Link to Comment MinnesotaNice
MinnesotaNice's picture

Yep... the Today Show did an entire piece on it and made Goldman look like sh%t... and it doesn't take much these days to put them in the sh%t category.  The people who really need that vaccine right now are pregnant, under 5, or have significant underlying health conditions... and I am quite sure with the 200 doses Goldman received that the majority of those receiving it were healthy males. 

Sat, 11/07/2009 - 02:16 | Link to Comment Anonymous
Sat, 11/07/2009 - 09:49 | Link to Comment HayeksConscience
HayeksConscience's picture

We get more and more productive which should mean that everybody is living better on less work.  However, the benefits only seem to accumulate to a few people at the top of the hierarchy ?  What's going on here.  As we automate more and more, it will take fewer and fewer humans to make the necessary things to sustain society.  What will we do with all the unemployed.  Seems like we all need to start thinking of how to solve Minsky's dilemna.

http://www.boston.com/bostonglobe/ideas/articles/2009/09/13/why_capitalism_fails/

If you extend that thinking out even further, you come to Bill Joy's thoughts - The Future doesn't need us anymore.

http://www.wired.com/wired/archive/8.04/joy.html?pg=1&topic=&topic_set=

These are solveable problems but we need a lot more scientests and thinkers of all sorts in government and a lot fewer lawyers and financial types.

Let's hope we start thinking soon and stop fighting the last war.  (We already lost it)

Sat, 11/07/2009 - 18:40 | Link to Comment Anonymous
Sat, 11/07/2009 - 19:21 | Link to Comment Anonymous
Sat, 11/07/2009 - 22:14 | Link to Comment HayeksConscience
HayeksConscience's picture

I think this is known as the Bobby McFerrin Strategy.  Simple but brilliant - Fully endorsed by both Congress, the Fed, and the Giant Squid.

Who needs Empirical Decision making when there's faith (A Priori).

http://www.youtube.com/watch?v=d-diB65scQU

 

 

 

Sun, 11/08/2009 - 05:50 | Link to Comment Anabase
Anabase's picture

As (Anonymous) said on Friday about mid-life Crisis.

 

Being obscenely well paid in a Russian subsidary of a French bank (i've been prohibited to do anything), i suffer the same.

I'm back to 100% cash, increasing, since Q3 2007, when we start suffering the Liquidity crisis. From then, all forms of investments diverted from the fundamentals.

What are the fundamentals ? Peoples, their needs, their wish to progress, to evolve, to improve their quality of life.

Even peoples with an IQ lower than their body temperature rush to cash today, some others rushing to gold,confusing it for cash, pretending it wealthier.

Credit is dead, and monetary ratios from M6 to M1 will collapse to core M1 in the next 3 years, whatever FI will imagine to prevent it. 2008 was bad, 2009 was worst, but lets imagine what 2010 forward will be.

Half of earth population if flying out of american debt though pretending not to be, pushing up internal market, pretending still to respect OMC agreement, cutting on expenses, but mandatory ones, down the Maslow pyramid. Surely, most of peoples dont understand what CDS,CDO,RMBS,CMBS,IRS means, but what they know is that their neighbour lost his job, that the house nearby is for sale, that taxes will raise.

I think Securitization has a great future. We started Securitizing poverty and misery, and the job is not over yet.

Thu, 07/01/2010 - 10:57 | Link to Comment mbtshoe
mbtshoe's picture

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