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Supermodels Trip and Fall, Investors Flee to Bonds
An absolutely horrid day for the semiconductors (aka "Supermodels") from Silcon Valley, as the INTC blowout earnings were sold with force. Consequently, investors of very race, stripe, color, and ethnic origin immediately dumped all "risk assets" and immediately piled into bond funds. Setting up yet another opportunity for our foreign debt enablers to swallow another pile of freshly printed Treasuries next week.
As usual, at the slightest hint of any "correction" or "selloff" in equities, investors sell first, as questions later and jam billions of dollars into Treasuries, junk bonds, and corporates.
Even the riskiest of all debt is considered a "safe haven", as the junk bond rally continues unabated.
Of course, the outright collapse in yields across the board will eventually re-energize the speculators, who will continue to scrape the bottom of the barrel for near bankrupt companies, hoping to "make their year" in just a few days.
As evidenced by the Riverboaters over in Japan, who are now gunning JAL with a flurry of unprecedented speculation:
From today's The Wall Street Journal
TOKYO—Shares in cash-strapped Japan Airlines
Corp. have become virtually worthless, but the stock itself has become
the most popular issue in Japanese history, fueled by speculators
seeking quick profits.
More than a billion shares in the carrier changed hands Thursday, a
daily record for a single issue on the Tokyo Stock Exchange. JAL
trading alone accounted for nearly one-third of the 3.2 billion shares
traded on the exchange's First Section.
The JAL volume surpasses records set by Citigroup Inc. on the New
York Stock Exchange last year.
Indeed, JAL's shares—which traded at about 200 yen per share just a
year ago—are so cheap that tiny fluctuations can mean big percentage
gains. The company's stock rose 1 yen Thursday to 8 yen per share, or
roughly 9 U.S. cents, a day after tumbling 81% to a limit-low of 7 yen
Wednesday. Thursday's movement represented a 14% gain.
Many of the investors are gambling on the slim odds that JAL shares may
actually continue to trade, despite widespread expectations they'll
soon be delisted.
It is the same "Wash, Rinse, Repeat" cycle feeding a self-reinforcing, self-perpetuating feedback loop.
Step 1: Crush equities and drive down bond yields
Step 2: Float off billions in new Treasury debt, to spend on myriad new projects, such as "QE II" or "Son of Stimulus", or some other fiatco-backed scheme.
Step 3: New "programs" unleash another flurry of liquidity, which plops new, freshly printed fiat into the hand of speculators.
Step 4: Ultra low interest rates entice speculative funds to use ever increasing leverage at practically zero cost.
Step 5: Re-invigorated "Animal Spirits" cause investors to immediately start chasing low price garbage stocks, and observers watching spectacular daily price gains immediately assume "the worst is over".
Step 6: Stocks resume their rally, until the next engineered equity selloff commences.
"Hey Ben, can you believe we can pull off this "Wash, Rinse, Repeat" cycle over and over again??"
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So do they have pink sheets in Japan? LOL
There is no secret that our government had to wait to pull the plug from JAL until TSE cut over the new trading system, The Bone-Head.
from shorty over at Cap Stool...
Nice chart Mr Goog... "Buy the dips", "this is a cyclical bull market in search" of buyers at the highs.
Oh thank God. It's so good to see that ridiculously overrated stock finally lose some steam. It's like the entire dot-com bubble of 2001 all concentrated in a single stock.
Soon to be outdone by C and its ~23B shares.
The e-mini fiasco earlier in the week makes now makes sense. No one wanted to sell or get out of their long positions. It set them up to get clobbered today.
Slamming stocks at the end of the week. We might have to wait till the next jobs report before we really take off. Links to today's market action:
Most active decliners:
NYSENasdaq
Amex
Most active gainers: NYSENasdaq
Amex This weekend, I will scan what the top funds are buying and come back with a select list of stocks to watch (I added a few funds, if you know of others, let me know).
Better off preparing for a retracement back to SPY 950 or so. The top funds might get bearish by then.
http://www.youtube.com/watch?v=iNa551dR6Rc&feature=related
epic
great vid Robo.
for all you horndogs, there are 2 money shots...one at 1:52 and one at the very end.
you're welcome.
Those poor girls... After an option expiration like today, I know how they must feel.
Still, I couldn't help but laugh out loud at the very end.
hilarious!
Ironically, if you get commodities and miners on the dips and just HOLD them, you are increasingly riding out this cycle. The general, longer-term trend in compnies that actually produce REAL STUFF is still...UP!
+1 And corporate bonds.
What, no antique bags or armpit vaginas?
So severly disappointed!
Was definitively looking forward to a major Viagra ramp up on Friday leading into a whack-a-doodle weekend to blow of wads of steam on all the breasted babes over at CNBC.
And, nothing like heroin sheik models with no muscle mass to take a dive on the runway showing the way for the US markets.
Here's Mr. Snarky signing off until next time.
Please refer all complaints to the I don't give a fucking shit department. Now online at fuck-a-you-self@ratsASS.net
Ooooooooo Kaaaaaaaay.
<backing off slowly, eye on door>
COMMENT OF THE DAY!
Respectfully disagree with the "wash, rinse, repeat" theory this time. Seems to me the yield crash is in anticipation of Brown winning on Tuesday. Would be a game changer.
argh Mrs watanabe or miss nakashima, still punting that last dollar of family saving, 2 years ago the yen carry trade, last year it was gold, and now bankrupt japanese co shares, creative!
Being from Mass. originally and moving away from the taxes and corrupt bullshit, (almost as bad as NJ) I would love to see Brown pull it off. Coakley seems so cocky, she acts as though she already won just because she's from the chosen party. Hopefully the massholes aren't stupid enough to pay attention to the ads paid for by all the health care reform lobbyists.
Couldnt resist passing on this trading tip from the Politico Arena forums ...
"The Democrats should be scared. Very scared. This is starting to look more like a governor's race in Massachusetts than a senate race. In governors' races the voters go against the grain of their Democratic orientation and send the "I'm mad as hell" message to the powers that be. If Brown wins I'm investing in the DC UHaul franchise because it will be all moving vans all the time next November."
Just looking to add a smile or two out there ... carry on!
Cooter
That would be awesome. Yeah, they're all the same, but burn 'em and churn 'em. Maybe if they're constantly moving, we'll have fewer new laws and less interventionism.
Don't need a congress when the executive just makes orders in secret; oh shucks, the media has to be given something to (mis)report.
Neitiher the Executive or CONgress makes laws. They only implement them. Pass them. Or not, depending.
Nearly every one of Our "Laws" are made by men and women, satanic surrogates in disguise, who are 1) Lobbyists, 2)AIPAC, 3)Goldman Sucks, JpMorgan, and few others you will ever, never see.
This country is run by The Men Behind the Curtain, all the rest of what you see is a puppet, marionettes dancing on strings pulled by those invisible faces looking out for a very very few.
great note, Robo. loved it.
A view from McHugh passed on to investors yesterday by Nathan Martin on Economic Edge:
Next I want to quote Dr. Robert McHugh (Main Line Investors, Inc.) from his email update last night (Thursday), I think he has some very interesting things to say. What he is saying in shocking relative to what the masses are being spooned. I respect his work immensely, he bases his findings on fact and sound logic:
I find it astonishing that ten years later, to the day, the Dow Industrials sit precisely 1,000 points under the closing top level from 2000. That closing was 11,722.98. The intraday high today, Thursday, January 14, 2010, and the high for the rally from March 9th, 2009, was 10,723.77. This is astonishing for the obvious reason that they sit an even 1,000 points apart. But, also astonishing is that after ten years, and after the quadrupling of the money supply, the Industrials are down 8.5 percent. Add to that, investment advisor bullish sentiment is currently at an extreme high. Why? Makes no sense. Because a propaganda machine called Wall Street has absolutely snookered the masses, has convinced, maybe even controlled, the Treasury and Fed into policies that the economy is Wall Street, not Main Street.
We believe the third major top of the past decade is imminent. Maybe it happened today. Maybe it comes in two weeks, maybe at our next phi mate turn date in February. The key here is not to pick the exact top. This top will lead to a stock market decline that could be far worse than the past two of the 2000 millenium. The first decline started on January 14, 2000, and bottomed October 9th, 2002, a 38 percent plunge. The second major top started on October 9th, 2007 at 14,164.53 (closing basis) and plunged to the March 9th, 2009 bottom at 6,547.05, a 54 percent plunge. The next plunge should start soon and lead to a decline over the next 2 to 4 years, possibly all the way to zero, in stair step fashion, not all at once. The massive Bearish Head & Shoulders tops forming all over the world suggest this downside target, and relentless decline, will accompany world-wide calamity.
Major tops usually are slow, rounded affairs. Prices move slowly into tops, and roll slowly out of them initially. Then prices start to accelerate lower, bounce back a significant portion of the initial loss, then fall hard.
For the year 2009, Commerce reported that Retail Sales fell 6.2 percent versus 2008. This was the largest annual decline in Revenue since government records were started back in 1992, by a mile. The only other year a decline occurred was 2008, down 0.5 percent. This is not evidence of a recovering economy, but rather a faltering one.
Says Nate:
I would not ignore this man’s work. His technicals underscore what I’ve been saying about debt saturation and how we are running out of places to force more debt into the system. In the beginning, the numbers compound slowly, but as you are nearing the end they compound faster and faster. We are seeing that now rocketing from the billions into the trillions. What should you do? Perhaps consider a little silver, gun blue, and gold? That or just try to run with the pack, LOL… Seriously, it’s time to be careful.
Running with the pack is equivalent to the dudes that run with the bulls in Spain and get gored. :)