• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Market Probing Doug Kass' Bottom Theory

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Tue, 07/06/2010 - 14:07 | 454779 King_of_simpletons
King_of_simpletons's picture

LOL. Even a crazy nincompoop is wit the program these days.

Tue, 07/06/2010 - 14:58 | 454951 ShankyS
ShankyS's picture

Is Kass the inverse of Prechter? One call down five to go!

Tue, 07/06/2010 - 14:08 | 454781 ghostpirate
ghostpirate's picture

seriously, that dumbass Kass sent out that tweet at "top tick" this morning.... LOL!

Tue, 07/06/2010 - 14:11 | 454782 Young
Young's picture

Hope you're right TD. I'm still a bit anxious, the market has a tendency of falling to the broken trendline (hourly chart) then going up like crazy... Just saying :(

Although it also has a tendency to double bottom, break out of the range topside and then go straight back down the bulls kisser :)

Tue, 07/06/2010 - 14:20 | 454835 Young
Young's picture

1st sentence above: Fuck, it seems to be happening...

Tue, 07/06/2010 - 14:29 | 454869 -1Delta
-1Delta's picture

the 10yr called the rallys bluff this am...

Tue, 07/06/2010 - 14:08 | 454785 HelluvaEngineer
HelluvaEngineer's picture

VXX was on sale this morning!

Tue, 07/06/2010 - 14:15 | 454815 firstdivision
firstdivision's picture

So was TZA!

Tue, 07/06/2010 - 14:34 | 454880 TheSettler
TheSettler's picture

DRV was the blue light special!

Tue, 07/06/2010 - 14:10 | 454792 walküre
walküre's picture

message to Doug Kass ... this time is different. LOL.

oh, one more.. stocks are cheap here ...

Tue, 07/06/2010 - 14:10 | 454794 homersimpson
homersimpson's picture

I'm still pissed over how much money we taxpayers are on the hook for in regards to today's ramp-up job via SKYNET.

Tue, 07/06/2010 - 14:13 | 454806 HelluvaEngineer
HelluvaEngineer's picture

It's not real money anyway.

Tue, 07/06/2010 - 14:35 | 454882 Ripped Chunk
Ripped Chunk's picture

It's not real money until you say "fuck it" and stop paying taxes. Then they come and take all your shit (and sometimes even you too)

Oh, sorry, my mistake. I just described getting divorced again didn't I?

 

Tue, 07/06/2010 - 15:05 | 454968 Gordon_Gekko
Gordon_Gekko's picture

What if you don't own anything?

Tue, 07/06/2010 - 15:14 | 455004 crosey
crosey's picture

Nice move.

Tue, 07/06/2010 - 15:41 | 455124 Mr. Anonymous
Mr. Anonymous's picture

Freedom's just another word for nothing left to lose.

Tue, 07/06/2010 - 15:54 | 455182 weinerdog43
weinerdog43's picture

Debtor's prison for you!

Tue, 07/06/2010 - 14:15 | 454816 Young
Young's picture

If pension funds can sue BP for falling share prices, then can't I sue PPT for rising share prices?

Tue, 07/06/2010 - 14:11 | 454799 unionbroker
unionbroker's picture

Too many traders now know the game sell into a short squeeze don't cover 

Tue, 07/06/2010 - 14:12 | 454801 Cognitive Dissonance
Cognitive Dissonance's picture

The pain Tyler and company must endure to bring us the latest. Since I see no "h/t" sign I can only assume you actually follow the tweets of Doug Ass........ops, sorry.......Doug Kass.

I want whatever pain killer you're taking Tyler, though I better start at a half dose.

Tue, 07/06/2010 - 15:23 | 455044 ZeroPower
ZeroPower's picture

Cramer has even more followers than him. Sad.

Tue, 07/06/2010 - 14:12 | 454802 SheepDog-One
SheepDog-One's picture

Oh BOOYYSSS! I think he's back for his noontime feeding!!

Tue, 07/06/2010 - 14:31 | 454874 -1Delta
-1Delta's picture

ya sometimes he eats late but it always happens with about 3mm cars..

Tue, 07/06/2010 - 14:16 | 454817 godfader
godfader's picture

Barton Biggs >> Dough Kass!!!

Soon to come: Barton Biggs >> John Paulson!

Tue, 07/06/2010 - 14:19 | 454822 John McCloy
John McCloy's picture

Altucher & Kass in a Clash of the Titans.

Just another add them to the notch list of permabulls who will hold all the way down to new S&P bottoms. These folks have never seen what a modern day depression looks like but I can assure them it will be equally as bad as the 1st great depression yet more modern in appearance making it more difficult to recognize. After the coming wealth wipeout in the stock market im looking for 500k+ job loss as the norm.

Tue, 07/06/2010 - 14:25 | 454852 Caviar Emptor
Caviar Emptor's picture

+10

We'll be celebrating "bottoms" for quite some time to come! My guess has been that the "bottom calls" will begin to proliferate at a frequency of every 3-5 weeks as we plumb lower. Bottoms up, Doug Kass!

Tue, 07/06/2010 - 15:16 | 455016 RichardP
RichardP's picture

Celebrating fat bottoms??

http://www.youtube.com/watch?v=kEbEMjKitA4

Tue, 07/06/2010 - 14:47 | 454922 Wyndtunnel
Wyndtunnel's picture

Instead of oranges for Christmas it will be five-year-old refurbished iphones..The horror! The horror!

Tue, 07/06/2010 - 14:18 | 454828 Young
Young's picture

http://www.thestreet.com/story/10797335/1/kass-emotional-abuse.html

Jeez, this guy should be put in an insane asylum:

"In other words, Mr. President, what is good for Wall Street (and our stock market) is good for Main Street."

Tue, 07/06/2010 - 14:26 | 454842 Cognitive Dissonance
Cognitive Dissonance's picture

Agreed about the insane asylum. This may have made sense decades ago when Wall Street could have been adding some "value" (however small) to the economic system, but not today. I fixed the quote.

"In other words, Mr. President, what is good for the abuser is good for the abused."

Tue, 07/06/2010 - 15:46 | 455146 Mr. Anonymous
Mr. Anonymous's picture

And this little nugget of idiot savant idiocy:

"Yesterday, in "Something Good Is About to Happen," Jim "El Capitan" Cramer made these prescient points on RealMoney, which I paid attention to but few others did. . ."

Because Cramer is a fucking idiot, you idiot.

Tue, 07/06/2010 - 14:26 | 454830 firstdivision
firstdivision's picture

I see that PPT just powered up for their afternoon pump. 

*EDIT* I see they made Friday's close the resistence for the rest of the afternoon.  "To the moon Alice".

Tue, 07/06/2010 - 14:23 | 454844 maff
maff's picture

I like


Market Probing Doug Kass' Bottom

much better than

Market Probing Doug Kass' Bottom Theory

Tue, 07/06/2010 - 14:26 | 454858 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

Thank God I wasn't the only person who read that headline too fast. And giggled like Beavis & Butthead afterwards. Heh heh, he said 'Probe'.

Tue, 07/06/2010 - 16:13 | 455242 Miss Expectations
Miss Expectations's picture

"I have had a dream, past the wit of man to say what dream it was: man is but an ass, if he go about to expound this dream."

Bottom

A Midsummer Night's Dream

Tue, 07/06/2010 - 14:27 | 454853 techperson
techperson's picture

" These folks have never seen what a modern day depression looks like.."

And the guy with the printing press is going to make sure they see inflation - more inflation - and hyperinflation long before his successor will let anyone see what a modern day depression looks like.

The German stock market went from 70 to 26,000,000 during a similar period.  Best not to get caught on the wrong side of that trade for philosophical reasons.

Tue, 07/06/2010 - 14:29 | 454867 John McCloy
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  Yeah but I think Ben is starting to realize he cannot print enough to cause inflation. The deflationary pressures from so many bubbles on top of bubbles and globalization has made it near impossible to compensate for the deflation.

Tue, 07/06/2010 - 14:37 | 454887 Dr. No
Dr. No's picture

Ben can end this deflation in a weekend if he chooses.  Just charge a fee for bank reserves held by the FED rather than pay interest.  M1 will go through the roof.  Ben has holstered his gun but still has lots of bullets.

Tue, 07/06/2010 - 14:48 | 454923 TooBearish
TooBearish's picture

Yessiree- but Ben has to time it right, much closer to the elections, not waste his bullets during summer doldrums - throw just enuff at the bitch to keep the crash outta play, then after Labor Day - moon....

Tue, 07/06/2010 - 14:50 | 454934 John McCloy
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  Please explain to me in more detail Dr. I like to learn. Sounds like negative interest rate is what you are implying. That ever been done? I would not say possible since we all know the Federal Reserve and wall street have now become more powerful than all 3 branches and are immune from such bothersomes as constitutionality.

Tue, 07/06/2010 - 14:59 | 454954 Dr. No
Dr. No's picture

I can appreciate the the difficulty in comprehending negative interest rates, after all it defies common logic.  However, these are uncommon times and some have called this the new normal.  The FED has the ability to create cash out of thin air and due to the econ theory Ben subscribes to, he will do anything to fight deflation.  He is on record stating he would drop cash from helicopters if need be.  Dropping Benjamin's from a helicopter everyday will create inflation since most will spend this money (unless everyone grabed the cash and immediatly stuffed it in thier mattress and not deposited in a bank, but this is unlikely).  I agree, negative interest rates seem strange and most people think it can't exist, but why not?  Charging a fee on reserves could be Ben's helicopter.

Tue, 07/06/2010 - 15:24 | 455047 firstdivision
firstdivision's picture

There is one Benjamin I'd love to see go out of a helicopter and onto the pavement of Wall Street. 

http://www.theage.com.au/ffximage/2006/10/20/470_statham.jpg

Tue, 07/06/2010 - 15:26 | 455055 Dr. No
Dr. No's picture

I threw that slow pitch out there to see if anyone would take a swing...;-)

Tue, 07/06/2010 - 15:18 | 455023 Bonesetter Brown
Bonesetter Brown's picture

The FED only started paying interest rates on reserves in 2008 or 2009.  It was one of the responses to the crisis.

The FED doesn't need to charge for holding reserves, it can simply stop paying interest in order to prompt a behavior change by the banks.

Tue, 07/06/2010 - 14:58 | 454950 Crummy
Crummy's picture

Yeah, I suppose if we shoot the children they won't starve to death.

Tue, 07/06/2010 - 14:48 | 454928 Chartist
Chartist's picture

can we please stop talking about money printing without including money velocity in the same paragraph?

Tue, 07/06/2010 - 14:55 | 454944 -1Delta
-1Delta's picture

+10000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000

Tue, 07/06/2010 - 15:05 | 454966 Dr. No
Dr. No's picture

I agree, although lots of dollar digits (DD's, or double D's) have been newly minted, they are kept in shiny uncirculated condition due to holding as reserves at the FED.  When I speak about charging a fee, I am talking about the FED kick starting the velocity by shoving all that money back into circulation.

Tue, 07/06/2010 - 15:35 | 455078 hound dog vigilante
hound dog vigilante's picture

"...but I think Ben is starting to realize he cannot print enough to cause inflation. The deflationary pressures from so many bubbles on top of bubbles and globalization has made it near impossible to compensate for the deflation."

 

I agree 100% with this perspective. The HUGE diff. b/t 20's Germany & the US today is globalization and the decline of national sovereignty. In a relatively closed system (like a national economy in the 20's) it is EASY to inflate/hyperinflate. In a relatively open system (today's global economy sans regulation) consumer sentiment is FAR more powerful than the printing press. BB is printing in a black hole.

If an indefinite, utterly ineffective ZIRP policy from the world's de facto CB (the Fed) is not absolute evidence of BB/Fed insignificance, then I don't know what is.

In a global fiat economy, real estate is the canary in the coal mine... if real estate continues to deflate, the other asset classes MUST follow. RE is the ultimate measure of consumer sentiment & solvency.

One caveat... certain "commodities" necessary for life/commerce will run contrary to the broader deflationary trend.

Long story short, equity/capital cannot meaningfully appreciate (beyond the occasional manipulation rally) if RE is still looking for a bottom. It's just that simple. So long as RE continues to fall, all equity/capital rallies should be shorted, IMO.

 

 

 

Tue, 07/06/2010 - 16:13 | 455193 andy55
andy55's picture

Well, you seem to presume that a CB will behave traditionally by only purchasing government securities as the means to stem deflationary expectations (as is the case with Japan and the Fed doing everything wrong the 30s). 

The key is to understand what Ben's helicopter argument actually means in practice (turns out it's not actually dropping bales of cash into city streets from a helicopter, but it's not far off either): the CB simply bids up whatever kinds of asset classes it sees fit to stem deflationary expectations (as they arise).

Read the following (skip the math) and see if you still feel as confident that a traditional debt deflation scenario will play out with the Fed 2.0 behind the wheel:

http://ideas.repec.org/p/imf/imfwpa/03-64.html

Note the various citations to Bernanke in the piece--these guys are all in VERY similar schools of thought.

Once you start to understand their mentality, you realize that they already have most of the tools they need.  What they really lack is the legal authority to place bids any asset class (or do they?), ultimately resulting in asset price floor.

Remember that deflation spirals because of expectations that prices will fall without limit, so if a CB employs practices discussed in the linked piece, then the spiral can be broken.

All the Hugh Hendrys out there are right about the scale of debt deflation in the hopper, but they underestimate the Fed 2.0, completely dismissing its long-term ability to inject trillions (yes, a 't') into the system without it ending up as bank reserves, given enough time.  So with this in mind, one can even argue that rising gold prices actually help the Fed out (in the short/medium term) because it helps stem deflationary expectations.

Faced with national crisis and debt scare, is it too far-fetched to consider a future where the Fed will directly or indirectly give lines of free credit to households?  Oh, and don't forget the part where BofA, JPM, Citi, etc partner with the Fed to distribute this new supply of 'emergency' credit.  Think the sheeple of the US are going to fight that one?  Their alternative is to see the establishment that they feed and skim upon, violently shatter and spark a nasty reboot.  Anyway, this is just an example/demo scenario, but I think it conveys what lengths the parasites will go to in order keep their hosts alive.

---

FD: long gold, long silver (for the above reasoning that the Fed 2.0 will use all means necessary to support asset prices to offset debt deflation in the coming quarters/years)

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