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A Couple Of Questions To Start The Day
From Peter Tchir of TF Market Advisors
A Couple Of Questions To Start The Day...
On Sunday we had Occupy MetLife Stadium where the 99% happily watched the 1% on the field and in the stands. Last night we had a decent college football championship and are sure to see several of the players play on Sunday, which leads to the first question.
What is higher, the percentage of NFL starting quarterbacks that attended college, or the percentage of Goldman Sachs partners that attended college?
What are the odds that almost every player in one of the most demanding physical jobs on the planet was smart enough to go to college? This doesn’t have anything really to do with the markets, other than maybe showing a willingness of the people to perpetuate a myth (that college football isn’t professional) when it suits them.
How many times last year were stocks higher in the morning while Italian bonds were weaker?
Judging by the number of rants I sent last year on the subject, the answer is quite a few. It was not uncommon for stocks to diverge from the “problem” asset of the moment. The more important question is how many times were stocks still higher 2 days later? That, is a far smaller number.
Money continues to come into the market based on “decoupling” and the “muddle through” scenario. I do not believe that “muddle through” is an option. The entire system in Europe has become so interconnected that “muddling through” doesn’t seem realistic. The situation in Italy remains bleak (bond yields are higher again in spite of massive amounts of central bank support). The situation in Greece is reaching a peak. A voluntary resolution seems less likely by the day, but that leaves open the ECB’s positions, and also opens up the question of what to do with all the Greek Government Guaranteed Bank Bonds (affectionately known as ponzi bonds) that the ECB is financing to keep Greek banks alive? The ECB will have to change their rules yet again to let formerly guaranteed debt still be pledged as collateral? I think that issue is just as important as the CDS settlements and changes in collateral requirements that are likely to result from a Greek default.
So far the liquid hedges are performing well on the back of overnight strength. It remains to be seen how well it translates into actual corporate bond demand, but with Spanish and Italian 10 year bonds lower on the day, this is likely just another chance to fade the remnants of the start of year rally.
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'The situation in Greece is reaching a peak.'
Crying from laughing. Not.Even.Close.
"Money continues to come into the market."
Short-covering isn't new money.
Bulls are blind and deaf , so what do You want ?
Does anyone have a link to the ECB monetary base?
Does the ECB have the equivalent of FRED?
http://www.ecb.int/press/pr/wfs/2012/html/fs120104.en.html
http://www.ecb.int/pub/pdf/annrep/ar2010en.pdf
Thank you.
Bulls no longer exist, their new name is lemmings.
Bulle Ming in China
ora
Bul le Mings in France
"Bulls no longer exist, their new name is lemmings"
The way it's looking though, is the central banks are are dumping so much counterfeit paper over the cliff that the lemmings have a ramp to the bottom.
maybe they will do it next time better. I am sure that they will. timeline profile covers
http://growabrain.typepad.com/photos/uncategorized/2008/05/25/lemmings_clock.gif
I think the CDS Settlements is the next big Fail....the bankers can´t let this happen....so how they stop it from happening is what to watch..
At the end of this week (more than likely Thurs. morn) today's irrational exuberance will be heretofore known as the "Alcoa Rally"
But Alcoa lost money. I don't get it.
Losing money is the "new profitable". Get with the times!
AA missed, China is underperforming and Europe's future looks even more bleak = US market soars. What's not to understand silly investor. Just BTFD's and stop asking questions. <much sarc>
I read an article here on Sunday guessing the market would be flat Monday and then to expect the feds to create an event that would crowd investors into treasuries beginning Tuesday ahead of the afternoon bill auction. What's that saying about the market staying irrational longer than we can stay solvent?
Wow, look at the 10Y fly up. Good times are here again. All is well with the world.
*edit* Welp the good times lasted all of 15 min. 10Y back under 2
Love my morning Peter Tchir fix.
Why am I beggining to feel like a hamster on a treadmill chasing a carrot, held just out of reach. And written on the carrot?: "When the SHTF"
Peter,
If you want a frank assessment of our chances of muddling through, read IMF Chief Economist Olivier Blanchard's short and troubling speech:
http://blog-imfdirect.imf.org/2011/12/21/2011-in-review-four-hard-truths/
He basically says:
1. If government debt gets too big, the difference between the rates you have to give and the rates that will break you gets smaller and smaller until you collapse.
2. Unfortunately, the bond vigilantes are a bunch of scardy cats, and once they know you are in trouble, the perception makes the reality. Worse, any fiscal discipline is bound to lead to lower growth, making them LESS willing to lend.
3. If we don't substantially lower our spending and debt, we will implode. (but see #2)
4. To avoid imploding we have to employ our liquidity provision.
5. Don't worry, even though debt, the very central problem I have identified in this speech is INCREASING, we promise we won't devalue, we'll just grow our way out of this over the next 20 years. LOL!!!!
Read the speech. Even the Chief Economist for the IMF doesn't believe we can muddle through. (I added the part about devaluation. It's not the party line. Uttering the D word is a major taboo for these guys.)
This "growth religion" is really pretty sick. Infinite "growth" is impossible because it requires infinite energy. How much "growth" the world experiences is purely based on energy availability vs. energy consumption. I am so tired of "growth" being treated by the media as a foregone conclusion -- the standard by which human happiness is measured. I hear the vapid MSM proudly report that "GDP numbers say the economy grew last quarter," as if that mere fact, which relies on fake statistics anyway, somehow should make everyone sleep better at night. The sooner we as a race become happy with what we have and stop magical thinking by wishing for the impossible, the sooner our human experience really gets better.
Advocating a spiritual solution for this problem will get you nowhere, young man!
Like fluffing morale on a slave ship by discussing how much weight the people with oars have lost since we left port.
VisualCSharp,
Moreover, the media assume that GDP is a good measure of wealth. More accurately, GDP = f (debt).
Did you not see the headline on CNBC's website all yesterday? It said poor or weak earnings were now bullish for stocks. Check out the futures they are up substantially based on nothing but mediocre to bad news. This is very weird, I keep expecting the market to tank like in August but it just never comes. The next CNBS headline "China launches nukes, Dow gains on reconstruction hopes." Liesman will then explain how a little radiation is good for you.
The news in my neck of the woods is that everyone just sat on their cash, (or bought PM's), and waited for the Big CRASH...and waited... and waited... the EuroZone teeters and windmills its arms on the egde, but doesn't fall over. The dollar seems... well, ok, if not great. The stock market putters along, not crashing, not climbing. PM's performance has been vastly unspaectacular. Now everyone wants back in. Disaster has stalled long enough to outstrip our attention span.
True. When major systems failure has technicians patching and mending on a continuous basis noone knows where the next incident will occur. Everyone focuses on known faults and recent repairs but has no real idea how far the repairs have transferred strains to other parts of the system. Bit like hydraulics - no idea where the next rupture will come in the piping. Our societies are really bad at facing up to systems failure whether it be a nuclear accident or a financial crisis or simply decades of neglect as in Katrina........the idea that you can spend decades taking societies in exactly the wrong direction is more amenable to Westerners when considering the Soviet Union than wheh reflecting on the USA, UK or EU
Everything is dollar correlated now. The dollar is not a real safe haven it is a place to park short term fear money. When the dollar goes down the money goes elsewhere. It can not be more simple. The market, economy and government are broken.
as hank stram usta shout at his offense as it took to the gridiron:
"ok, boys! let's get out there and matriculate that ball down the field"
now, regarding the 2nd Q: hmmm...does peterT have rants in his pants?
Decoupling - remember this?
"Merrill's O'Neal Sees No `Contagion' From Subprime Mortgages"
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aPpr9cvl8nok&refer=realestate