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What Really Matters? The Money Spigots
What Really Matters? The Money Spigots
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Is this amazing or ridiculous?
Really, I'm asking. It's very hard to tell. On the right is a plot of the EWJ for the past 10 days and we are ALREADY back to where were were before the Earthquake hit on March 11th, about an hour before the markets closed that day.
As you can see we had a pretty big fall - down 14% in the next two days but the EWJ didn't even stay down through two days of trading before it started to bounce back. Now, just 10 days after the quake - the EWI has largely recovered everything it lost during the quake.
So, was the Nikkei tremendously undervalued before the quake or are investors idiots? Perhaps it is choice three, that Government policies have become so interventionist that we are now EXCITED about a disaster as it's really just an excuse for another massive Government money drop on the speculating class and, like good little soldiers - we are off to the races, BUYBUYBUYing those F'ing dips - as we've been well-trained to do.
Don't get me wrong - if investor/speculators are well trained to buy the dips then I am a drill sergeant, not a naysayer. As I mentioned on the weekend post, we made more bullish picks last week than any time since we broke out in early December and I put it on the line on Tuesday when I told Canada to buy the F'ing dip and I don't know if you hear it on the clip but after my segment I remember hearing the chatter in the newsroom and the gist of it was "That's crazy, it's way too soon."
Way too soon? Look how fast you miss it if you are not ready to pounce! We were lucky to be positioned for a dip - we pounced, we feasted but now, with the Nikkei back at 9,608 this morning (up 4.36%) I put out an Alert to Members this morning saying "That's crazy, it's way too soon." The last straw for me was waking up this morning and seeing TEPCO - the energy company that owns what is now the second biggest nuclear disaster of all time - up 16% this morning. REALLY??? 40,000 publicly traded companies in the World and TEPCO seems like the best place to park money???
As noted in David Fry's SPY chart, as usual, the volume collapses and the manipulators take over the market. Internationally, Japan has pushed their current account balance to $515,370,000,000 in the past two weeks - that's as much as 8 months of POMO in 10 trading days! Do you think that's not going to have an effect on the markets? That's 10% of Japan's entire GDP and, of course, their overnight lending rate is back down to 0%. At this point, they would have to pay you to borrow money to make it more attractive!
On top of that, the entire G7 intervened to make the Yen weaker, which means that Japanese Corporations have access to unlimited free money in an artificially suppressed currency that gives them a phenomenal trading advantage against counties - well, like us...
So life is great for Zaibatsu - especially those many, many who were not directly affected by the earthquake but will be directly benefiting from the massive stimulus. So, perhaps, the Japanese recovery is not so crazy as the simple math of the thing says the economic damage is far, far less than the $500Bn that is being thrown at the problem. We are reminded every day what just a few Billion Dollars worth of POMO can do to goose our markets.
Goldman Sachs is now warning their clients of the coming inflation tsunami that is now heading for American shores. They are also predicting this will lead to an upswing in Corporate Defaults as their "macroeconomic view is darkening" saying "Our biggest inflation fear stems from the recognition that fear itself has incrementally added to growth risks - and hence to credit risk."
Nothing rams the point home to investors better than alluding to one of the 10 historical quotes Americans actually know, right? Are inflationary truths self-evident at this point? It does seem clear that retailers will all raise prices together or they most assuredly will all raise prices separately even while 20 Million Americans regret that they had only one job to give to another country...
The Dollar actually bounced off the 75.50 line this morning just about exactly 7.5% down from the 81.50 high in January. The stock market is not up 7.5% - that would be our Breakout 2 Levels and the SOX and the Nasdaq are way below on legitimate concerns over supply issues stemming from the quake. Oil is up 15%, doubling the rate of the dollar decline but we went short on it yesterday as $104 seemed a bit silly. Silver is also silly at $36 and we like that line short in the futures and got another cross early this morning. If the dollar actually does manage a proper bounce (77 would be our 20% retrace of the 7.5% drop to 75.50) then oil will be testing that $97.50 line very quickly:
We'll be watching our levels closely but we took a slightly bearish stance into the close - just in case as we added many, many long-term bullish trades that now have to be protected so we will keep a nervous trigger finger. Our SDS Disaster Hedge is still a great entry and we'll be looking at a few more as we prepare to go LONGER if the Nasdaq can get back over that very critical 2,750 mark.
To get there, we expect a good move from AAPL and that can happen if the company announces a minimal expected effect on supplies from the quake disruption. British inflation is coming in at a red hot 4.4% - that is double the target rate so the Pound is heading higher on expectations the BOE will do it's job and cool inflation down. I don't think there's really anything an individual nation can do - not even China, when the Fed and the BOJ have their money spigots turned on full blast - everyone's going to get soaked and there's nothing they can do about it.
China's Yuan rose to a record 6.5552 against the Dollar, up about 4% since last year as the salary of Chinese workers and American workers moves towards parity which, unfortunately for American workers, means a 50% pay cut - at least. Retail sales are off another 0.1% this week but, of course, they are blaming the weather and not the massive decline in disposable income for the bottom 90%.
Ireland is borrowing 10-year money at 9.79% but we'll pretend that "just doesn't matter" - nor does this morning's 6.3 "aftershock" that rocked Japan. We'll be watching our own fault lines on the Dow - as illustrated by my 5% Rule Chart:
Let's watch those levels and be careful out there!
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Almost nobody thinks stocks can really go down a lot. Everybody is on the BTFD band wagon. The last time I saw such certainty in the market was during the internet bubble. Check the Nasdaq versus that peak even with index changes.
The real difference this time is the bubble is in almost everything. In any case there will come a day when BTFD is very sad for so many people. BTFD has worked so many times now it is by definition a certain train wreck, eventually...
Now, just 10 days after the quake - the Nikkei has fully recovered everything it lost during the quake.
Whine & bitch, whine & bitch. Jeez, you're starting to sound like GW.
Welcome to infinitely-inflated equities ...inflated with infinitely debased currencies.
Get used to it, it's only QE3, lots more QEs to go.
Just buy the fucking dips, make your (nominal) profits, and go on your merry way.
Please do everyone a favor and check the accuracy of that statement.
one month chart of Nikkei:
Thanks, you're right - the EWJ recovered mostly but the Nikkei did not - I'll fix that.
Used House or Used Lexus
http://apeakunderthehood.blogspot.com/
What really matters is used car or used house!
Something I coined a long time ago when I wanted my Corvette.
"You can live in your car, but you can't drive your house".
Maybe I'm a heretic, or I don't unnerstand economic practical theory, or I'm just not in possession of even a global average IQ or all of the, etc.
One day I posed the question: How is the FIRST dollar (subs. fiat of choice, here) created?
IF, as we continue to implore our national business leaders, "WE MUST bring manufacturing back to the United States. WE HAVE to produce something that is made. WE CANNOT just provide services since services are exactly like the bird that eats the bugs on the backs of Rhinos. Without the rhino the birds die.
IS this true?
The world will have to, as it has been, moving ever more to providing services and those services must be paid for. With the 83% of the U.S. economy alone dependent on services, we are all but a service economy now.
Our GDP is 15 Trillion dollars. It has rarely if ever gone down. So that means that Services and manufacturing if divided equally are $7.5 Trillion each. And we already know that Services are far more than $7.5 trillion.
If that is the case then the real problems we face about that bugaboo, INFLATION, are how to best determine whether we are getting a dollar of value for a dollar of services paid for, and not at all relevant is whether or not that dollar spent is derived from manufacturing or services. It mekka no difference where the GDP(S) comes from, n'est ce pas?
The trajectory for nearly 40 years has been ever more towards a service economy. Granted it's not as much fun to calculate the Standard costs of the widgets on a Saturn rocket, than it is to build that mother of a just slightly controlled bomb. Building the Audi R8 has got to be an orgasm compared to the nothing an accounts receivable clerk feels when she sends out the invoice to the dealer. What could be a greater gas than erecting a bridge over the Atlantic Ocean? Certainly not the job of the purchasing manager who buys the rivets for it. As lucrative as it is, the Attorney who demands 5% of an estate simply for filing a few boiler plate papers may earn enough to golf at St. Andrews twice a year, but his work effort is worth a great deal less than he is paid. He really shouldn't get more than it take to play two rounds at his local municipal course, without a cart.
So it seems what inflation is really all about is the amount of money that we pay for services of all types and that inflation comes about because these services are in many cases like 100X derivatives, priced to one day blow up.
Our efforts then should be directed more towards allowing markets to determine the price that an attorney will get for filing a few papers, and NOT some kind of judicial edict or price fixing amongst estate lawyers to take down thousands of dollars for 'title search', or for unions to demand pay that is not commensurate with production. The filing clerk shouldn't be getting what she hasn't earned: a 50,000 salary for doing what a minimum wage would accomplish.
Price discovery is what is missing in the inflation equation. Inflation is occurring because we are not dealing with VALUE and as such deserve the inflation that comes with false pricing, if we are not going to rectify the productive value of any given service.
The dollar has been going down, at last count it takes 1.42 dollars for 1 Euro. Our money is increasingly being shown that it's lost value.
Currency trading? In today's fantasy-land directed by BB? You got balls, man. Big clanky ones.
Leave the casino people, and swap out those FRN chips to something useful before you go.
'even while 20 Million Americans regret that they had only one job to give to another country...'
So sad!
As far as forecasting anything anymore... Unless you work for THE Man, would seem nearly impossible.
The thing to do, I think, is to move to the country, buy a small house ( or park a camper )with and acre, where the climate is friendly, put in a good size garden, get a good dog and some chickens. If there is any left over, hold some gold.
If I couldn't have a Satellite dish to see Sofia Vergara every week, you might as well bury me. Who cares about eating if the consumption didn't provide enough energy to fantasize about her and those bodacious Ta-tas?
http://warmingglow.uproxx.com/2010/11/by-popular-demand#page/2
Ok., ok., Chickens, a dog and satelite Tv.
Wow, nice link; She's really impressive, she goes in two or three different directions at once.
They work better short term than long term.... long term there are all sorts of negative consequences but we're looking specifically at the stock market (not the economy) and not with a very long time frame.
thanks for replying, but with the dollar depc., are you really gaining anything? even shorterm?
I really dont see this thing ending without another major crash, bigger than 08. It's either a depression or massive hyperinflation.
A poster here a while back had a great point, the elites will choose depression, and buy everything on the cheap. with hyperinflation, and maybe a dollar colapse, they will lose more than joe blow.
As far as I"m concerned all this stock market stuff is just the dead cat bounce after; see the chart for the dow jones after the 1929 crash; very impressive move up late into 1930; then the "down" started that didn't have any up. Of course, I may be completely wrong about this; but I don't believe I'm proven wrong at this time; it still looks like a big dead cat bounce.
"What really matters, the money spigots"
Then why is Japan still down 70% from high in 1989?
why are we still down 15-20%?
Money printing only works for so long then the whole thing gives, but you'll time it perfectly, right.
LOL LOL LOL
"The Nikkei has recovered everything it lost after the earthquake"---that's called irrational optimism; watch out stock market peoples. Stock markets can getz all ur cheezburger.