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How Many Times Will You Fall for the Same Thing?
Testy Tuesday – How Many Times Will You Fall for the Same Thing?
Isn't this exciting!
The pre-markets are up 1% after a long weekend. That hasn't happened since - two weeks ago! Of course last Tuesday, we were jammed up as well and the Tuesday after Christmas, we were jammed up as well but THIS TIME - we're REALLY feeling it, right?
The funniest thing is the way they have dozens of idiots saying all sorts of ridiculous things on CNBC and not one of them mentions even the vaguest hint of deja vu in what has been the most consistent pattern of late 2011, early 2012.
On this Dollar chart from Scott Pluschau, you can see the dives that are occasionally taken to goose the markets and we have another one this morning with the Dollar down 1%, making the 1% pop in the futures slightly less impressive when taken in context.
This time may be different because, according to Friday's Legacy Commitments of Traders Report released by the CTFC, Commercial Traders are now net short on the Dollar to the tune of 59,023 to just 6,061 longs - about a 10:1 ratio that is EXTREME to say the least. Non-Reportable, Non-Commercial Traders (i.e. Speculators), on the other hand, are almost 10:1 the other way with 9,765 long contracts and just 1,390 shorts. Reportable Non-Commercial Traders (Hedge Funds) fill out the rest of the longs with 52,644 long contracts against just 8,057 shorts.
That's an odd sort of positions for the speculating class to be taking (super-long on the Dollar) considering the possibility of a highly dilutive quantitative event (QE3) in the very near future. This is why we can't be entirely bearish - tempting though it may be. And this is why every little rumor of Europe being "fixed" sends the Dollar flying down - there are no buyers - only nervous long Dollar holders.
As you can see from the chart above, it's not unreasonable to look at the Global situation and assume the Dollar can get much stronger as it can still gain 50% and not be back to 2002 highs. Of course, as we know, the 20% run in the Dollar from early 2000 to 2002 is the reason "partying like it's 1999" has a negative connotation for stock traders and, at 81, a 20% run in the Dollar only gets us back to 97.20 - not "strong" by any measure.
The commodity pushers want the Dollar as low as possible (so they get more of them) and our stocks are also priced in Dollars so our Corporate Masters also like a weak Dollar. It pumps up their balance sheets and makes them look clever as they make more money for selling the same or even less stuff, as our own Federal Reserve takes inflation denial to new heights with each glowing report on our economy.
Yet people fall for it EVERY TIME - it's amazing really. If investors were rats, they would be shipped back from the behavioral laboratory to the rat farm as "defective" - unable to learn even the simplest of mazes as they head down the wrong path over and over and over again. It's not your fault though - this is a pattern that's been going on for over 100 years as America's "dirty little secret" has always been currency debasement as a secret tax on it's working citizens (ie. the bottom 99%):
At what point on this chart would it have made sense to lend the United States money for 30 years at 3% interest? THAT's why we had a very bad bond auction last Thursday as Global Lenders have their own problems and, without a strengthening Dollar, they have no reason to risk their relatively sound currencies to fund our continuing deficits. If not for Europe LOOKING even worse than we do at the moment - the Dollar would be at new all-time lows. Just take a look at the damage that's been done to the economy in the Great Recession (click on image to enlarge):
Here we are with many stocks and commodities right back at 2007 levels - as if we haven't skipped a beat. Does something seem wrong with this picture? If so, you are what they used to call "rational" but are now called a "nattering nabob of negatavism" - a term first used by Spiro Agnew (written for him by the great William Safire) to dismiss the various crimes and economic catastrophe of the Nixon Administration and recently brought back by Phil Gramm, who's economic strategy for John McCain was to tell the American people to "suck it up" and "stop whining" about the Bush economy.
It's always good to label your enemies with alliteration - it makes you seem smart and gives them a label that sticks in people's minds and, as we know from the Smashing Pumpkins:
The world is a vampire, sent to drain
Secret destroyers, hold you up to the flames
And what do I get, for my pain?
Betrayed desires, and a piece of the gameDespite all my rage I am still just a rat in a cage
At PSW, we don't have to run through the maze 5 times before we know what lever to push! Like last Tuesday and the Tuesday before that and the Tuesday before that, we took the opportunity in early morning Member Chat to short the BS Futures rally and already (8:50), our Egg McMuffins are paid for as we got a nice little selloff. We'll be happy to go bullish - truly we will - when there is ACTUAL EVIDENCE that indicates we should.
So far, we are NOT feeling it this morning with MTB missing by .49 (out of $1.53 expected) and C missing by .10 (out of .48 expected). CHKP beat by a bit, EDU had a slight miss, AMTD had a slight beat in earnings but missed revenues by a smidge, WFC was in-line, FRC small beat, MMR big beat and FRX had a small beat. Unfortunately, misses by two big banks trumps so-so results by the rest, and should not support $14 on XLF today.
We have plenty more "real" evidence this week to gather with PNFP tonight, SCHW and GS tomorrow morning, FFIV and KMP Wednesday night, BAC, FCS, PGR and UNH Thursday morning followed by ED, PBCT and SWKS that night and Friday we hear from Poppa GE along with SLB adn STI and THAT will give us a pretty good picture of what really went on in Q4.
Unfortunately, that means we continue to play it close to the vest, using our cash to poke at a few opportunities and picking up some good deals (like RCL this morning on the dip) but generally for quick trades until we get a clearer picture of where things stand.
The FT pointed out this weekend that the ongoing Iran crisis is masking internal signs of Brent weakness - something we're also picking up in the above-mentioned Commitment Report. Backwardation is changing to contango in the oil contracts and that's often the sign of a correction coming (we are long SCO already) and, if Iran doesn't "come through" for the oil bulls and do something very crazy very soon - the serious lack of Global demand for crude combined with the record supplies that are now on-line are capable of leading to a very sharp correction (see "The Oil Hawks are Living in Cloud Cuckoo Land" - also from the FT this weekend).
Our position on oil has been very clear - over $100 we short it. At $101, we short it. At $102 (which we had early this morning), we short it. At $103.50 - we back up the truck and short it. Why? BECAUSE OIL IS NOT WORTH $100 A BARREL. I'm sorry, it's just not. Gold is also not worth $1,500 an ounce but that doesn't mean there aren't going to be idiots lining up to buy it.
Thank goodness for those idiots - they pay for all our Egg McMuffins!
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Currency cartoon by Elaine Supkis, Culture of Life News.
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'08's $67 oil is today's $100 oil, thanks to USD losing 1/3 of its value last 3 yrs.
Oil isn't getting more valuable.
USD is losing value, so it takes more USDs to buy a barrel of oil.
This will kill your $102 shorts eventually.
Gotta get used to devaluing currency.
Lost me with the music clip and quote.
http://www.youtube.com/watch?v=6wKCgCayCEw&feature=related
PHIL'S ARTICLE IS JUST NOT WORTH MY TIME. I'm sorry, it's just not.
I do not understand anything you just wrote. Can you try to be less smuggish and more readable?
as I watch the greedy trained little monkeys dance.. “to be long or to short.. this is the dance of the trained monkey”
I realize that there is no hope for change and that any faith placed in my fellow sheepeople / trained monkeys and / or any other sub class of idiocy is well beyond a lost cause!
we deserve what we are going to get! because the majority are greedy, bottom feeders!
Ilene great job!! keep it up. and never mind the poor fighting the poor on the thread!
...to dismiss the various crimes and economic catastrophe of the Carter Administration and recently brought back by Paul Krugman, who's economic strategy for Obama was to tell the American people to "suck it up" and "stop whining" about the Obama economy.
"It's always good to label your enemies with alliteration - it makes you seem smart and gives them a label that sticks in people's minds..."
Well, theres a shiny penny ;-)
This article is completely schizophrenic. How do you reconcile the "falling for" the sleight-of-hand of the debasement in the front end with the "clarity" of shorting oil and gold on the back end?
You're right that gold isn't worth $1,500/oz. Maybe never be "worth" that again. Right now it's worth about 1/7th the Dow...compared to 1/40th just five years ago. Go figure.
So much wasted time on discussing the "true value" of things. Know the speculation out there, know the central banks, and trade accordingly.
Everything's value depends upon what price a buyer will pay. If speculators think oil should be $105 a bbl then it will be $105bbl till something else makes the buyers or sellers scarce. Hence, everything is valued at a purchasers price. I believe they call this thinkning a free market.
Wow.
Massive tragic failure on your Oil and Gold calls IMHO.
Oil = Food
Gold = Default World Currency
Get your head out of the stock screens for a week or two.
You have no idea what anything is worth until you need it and can't get it.
Excellent....I hope you'll allow me to re-use this (with attribution) :)
This article is nonsense. There is no wisdom or experience exhibited.
Here is the fact. Debt based fiat money is not asset backed money. Debt backed fiat money loses value in inflation or deflation, in a bad economy or a good one. Asset backed money only loses value in inflation. That is the critical misunderstanding that modern day wannabe shorts suffer from. They act like the money we use is the same as the money from the 30's. Debt backed money collapses when the debts that back it are defaulted upon in a bad economy because that money, created by taking out the debt, no longer has demand on it to pay back the debts. It also collapses when too many debts are taken out due to inflation. The quickest path to hyperinflation is to create a lot of money through debt and then default on it.
There are a number of things in this article that illustrate how uninformed the writer is. Take this advice and you will be murdered by the printing presses. None of this ends until we have sound money that forces the rest of the system to adapt to it.
Gold is not even a trade until it is over $3500. It is just a buy and ride.
I don’t like oil at $100 +/bbl any more than the next person. But, I take the oil, gold, silver, or wheat that I get for $100 over $1000 worth of Wall Street sell-side financial advice any day.
Go on then Phil, tell us what a barrel of oil is worth then. I''m afraid you don't have the fucking faintest idea of what a barrel of oil is actually worth. Ditto gold.
I'll take a shot. Somewhere around $35-$50/bbl. You know why? Put a floor under the price like that, make sure the Saudis don't flood the market short-term and you've got a profitable level to produce coal liquids. And who has a butt-load of coal? The USA (and China - just no good metallurgical coal). And even low grade coals can be liquified or gasified. But without that price floor, no one puts up $500million for a plant. And Exxon, Total SA, Shell aren't about to have that. Neither will the environmentalists whose cause benefits from the $4/gallon gasoline freakouts. And US foreign policy seems to continue with the idea that we'll drain the easy oil from the world, then switch to our reserves - coal liquids, fracking, oil sands and Canada. Then ANWR? Who knows? The US may have a better strategy than you realize.
Fischer-Tropsch process, baby! Worked for the germans in WWII, works for Sasol (SSL) today in S. Africa. Syntroleum (SYNM) can license their process in China. Rentech (RTK) has a process, too.
http://en.wikipedia.org/wiki/Fischer%E2%80%93Tropsch_process
(You'll have to wait until after the Wednesday Wikipedia SOPA blackout protest)
Also recently made it to a book - Physics for Future Presidents - pick it up at the MIT Museum or online. http://muller.lbl.gov/teaching/physics10/pffp.html
http://www.amazon.com/Physics-Future-Presidents-Headlines-ebook/dp/B00421BN4A
Do you know what a barrel of orange juice is worth? It's a tad more than $50. As long as the sun shines (latest estimate about 4 billion years) we will have OJ. We will not however have oil, gas or coal for 4 bil years and when it's gone..it's gone for good. Do you realize how dependent we are on hydrocarbon based products? We're not just talking gasoline or diesel here- look around the supermarket. How much stuff is packaged in plastics, what's in the cushions, carpets, drapes in your house? How about medical products? $50/barrel? Don't make me laugh. This is a non-renewable resource and as far as I am concerned is practically invaluable. But hey why don't we just piss away this irreplacable resource for $50 a barrel to keep a mob who will all be dead in 50 years happy for now.
I am a chemical engineer in the refining industry and I know all too well about GTL, FT, etc. The fact the gas and coal are not inexhaustible resources either renders the let's not worry about oil line as absurd.
No, I actually had no idea at all how dependent we are on hydrocarbons. I live in a cave.
But for the right price in TODAY'S dollars, I'll trade you my oil for your OJ. And at the right price in tomorrows dollars, I'll trade that OJ for something of greater value AT THAT TIME.
Are oil, gas, coal inexhaustible? By no means - but don't pretend that I ever claimed that.
But are you going to live long enough to see them run out and be worth an INFINITE amount of a medium of exchange? Doubtful. I'll wager on profiting in my lifetime and setting up the wealth and preparedness that will care for my descendents. Good luck with yours.
And who has a butt-load of coal?
Who has a butt-load of coal that can be freely accessed without the flat-earthers restricting such things in the name of environmental stewardship?
The land mass currently under the flag of the U.S.A. will go down as the richest base of restricted fuel in human history.
Edit: BTW, if your boning up on supply & demand as drivers of price, I suggest focusing on the supply & demand of the fiat currency, not the commodity. The former will shape prices a lot more in the next five years.
I'll be sure to bone-up on money supply, since I'm clearly clueless about inflation. The value of a barrel of oil today was the topic - what do you want me to measure it in - Big Mac's?
But I'll trade in dollars today, I'll do short-term contracts in them today, and be happy to take out low interest loans in dollars today.
I'll preserve wealth in other ways, but it's hard to walk around with all that $5/oz. silver.......maybe that will start another thread for that one!
Phil is absolutely right, gold is not worth $1500.00 an ounce; I would say for starters, it perhaps should be worth at least $3,000.00. And that's being conservative....
Magic formula to compute gold price:
M2/Gold Outstanding = ?
Magic formula to compute price of any asset = What the next sucker will pay for it
if it is worth $3000 to you, i will sell you all i can buy at $1600 and sell it to you for $3000...deal?
The fascist NWO types have some favorite memes; notably peak oil and AGW. Better for wealth re-distribution from the 99% to the 1%. Surprisingly or not, Phil is on the same page. Hmmmm.
Apb...
And your view is 130 million barrels of liquids per day in 2030 and 550 ppm CO2 and no consequences?
It's not that oil is "not worth that much" - it clearly is. It's that it CAN'T be worth that much in this current economic system if it's going to continue to work as advertised.
Immovable object, meet unstoppable force.
"it's just ow worth that much. I'm sorry, it's just not."
You will be sorry. Don't short any assets priced in US dollar. Very few people understand currency debasement. People go to dollars and love their nominal returns when things get ugly. You just wait until people wise up. Your shorts will be killing you.
He's kinda right, though. A $100 just isn't worth that much, either. Sorry, it's just not.
Whoever thought $100 was worth $100?
I pity the fool.
It only cost's .60 cents to print a "C" note, and it cost the same .60 cents to print a 1 dollar bill.
Phil's qualitative analysis is spot on ... The quant stuff could use a little more work. At this point in the ponzi cycle, gold is cheap, and oil, like real estate, is in ever greater demand with little new supply coming on line.
So the currency debasing continues, but oil and gold are not "worth" their current price? Sorry, either the Fed is debasing and gold is undervalued or the opposite is true. Sorry Phil, can't have it both ways, but thanks for making me feel better about moving more towards cash lately.
phils stock world = garbage dump.
Agreed! From the "article":
Those idiots include Central Banks, Bozo. Yeah, they ain't the smartest guys in the world, but I think they might have this call right. You know, the blind hog and acorn thing. ...and the line is a long one.
I feel debased again. Oh, what is that sucking sound? Is it Ma and Pa Kettle taking it in the shorts and blowing it on the longs? Whipsawed by Central Banking jujitsu! .Serve up another round in the court, bailiff! No need to be clear headed here.
the vampire squid is embedded deep in the world economies
The squid owns entire governments.
Thanks for sharing Phil!
does phils stock world pay ZH to post these...just wondering....?
Paying has to be the criteria.
I can't imagine any other reason Tylers would allow such crap articles on the biggest fully independent financial blog on the internet.
"OIL IS NOT WORTH $100 A BARREL. I'm sorry, it's just not." -- Ilene
"How much ‘work’ is embodied in a gallon of gasoline, our most favorite substance of them all? Well, if you put a single gallon in a car, drove it until it ran out, and then turned around and pushed the car home, you’d find out. It turns out that a gallon of gas has the equivalent energy of 500 hours of hard human labor, or 12-1/2 forty-hour work weeks.
So how much is a gallon of gas worth? $4? $10? If you wanted to pay this poor man $15 an hour to push your car home, then we might value a gallon of gas at $7,500." -- Chris Martenson
Who is right, Zero Hedge?
PR,
Good point. And, Phil, provide a link about those record inventories.
Call a tow truck.
Your comment and logic is complete garbage.
Make speculators take delivery and $30-50 of fag-work "disappears" off each barrel.
Push your own damn car full of logic to nowhere.
Widowmaker,
OK, so let's have $60 oil. You want a 900 S & P and $1100 gold with that?
I remember people stealing gas using a garden hose to siphon it out of someone else's car/truck back in the 70's.
Choking on it to get it going but filling up 5-15 gallons into cans then splitting.
"Oil isn't worth $100 a barrel."
Sure Phil (Ilene), China and the U.S. and the rest of the world are going to go back to growing food and transporting food with oxen and draft horses.
Shall we start talking about just-in-time delivery of food and everything else via diesel rail and trucks?
LOL! No speculators back in the 70's, now how did that work out for us again?
that 'logic' is really stupid....