The Great Global Macro Experiment, BoomBust Cycles, and the Refusal to See the Truth: Bubble Economics in the Mainstream MediaSubmitted by Reggie Middleton on 09/01/2010 10:19 -0500
Those who feel that CRE is a good buy now due to cap rate spreads over treasury yields are ignoring a) that treasuries are most likely in a bubble and b) this thesis if applied last year when spreads were even higher would have lost you a lot of money. Just because something costs less than it did when it was very expensive doesn't mean it is cheap. Being less broke then extremely broke still means that your broke, doesn't it???
So, Mr. Private Equity Fund Man says, "Give me $10 in order for me to lose you $8, and I'll give you $2 dollars back for your inconvenience." Am I in the wrong business or what?
Paul Farrell knocks it out of the ballpark today: "Yes, it's going to get worse, a whole lot worse ... Bill Gross warns this is the "New Normal. Forget 10% returns. Think 5%". ... Economist Larry Kotlikoff, author of The Coming Generational Storm, warns: "Let's get real. The U.S. is bankrupt. Neither spending nor taxing will help the country pay its bills" ... Economist Peter Morici warns: "Unemployment is stuck near 10%. Deflation coming. Stock market threatens collapse. The Federal Reserve and Barack Obama are out of bullets. Near zero federal funds rates, central bank purchases, a $1.6 trillion deficit have failed to revive the economy." ... Simon Johnson, co-author of 13 Bankers, warns: "We came close to another Great Depression, next time we may not be so lucky." Why? Because Wall Street's already well into the next bubble/bust cycle -- the "doom cycle."
We are getting a sense why traditionally optimistic and hopeful Americans tend to broadly despise realists...
It appears that the Monster Energy chugging traders on Wall St. had their "Animal Spirits" re-invigorated when they were watching Closing Bell yesterday where Amanda was showing off her cleavage in black. No doubt to prime the pump for today's announcement of QE2 by the FOMC.
From 70% To 35% To 75% Net Long In Under A Month: Ultra High Frequency Day Trader Extraordinaire Barton Biggs Flip Flops... Again... And AgainSubmitted by Tyler Durden on 07/26/2010 13:45 -0500
The only thing worse than HFT algos that buy and sell the same stock 1 million times a day, are highly overrated "hedge fund managers" who pretend to have a long-term view on the market, yet flip their mind 180 degrees not once, not twice, but three times in the span of less than 30 days. At least HFTs are merely programs: their stupidity is endowed in their decision making process by their 19 year old math Ph.D. creators, who incidentally have long proven that correlation is in fact causation (until the market plunges by 90%... at that point it is always time to reevaluate one's stupidity for about 2 minutes, and then jump on the latest Fed reflation attempt with no changes). The question is: what excuse can Barton Biggs use?
The Conundrum of Commercial Real Estate Stocks: In a CRE “Near Depression”, Why Are REIT Shares Still So High and Which Ones to Short?Submitted by Reggie Middleton on 07/01/2010 05:32 -0500
Many people have asked me how SRS and REITs share prices can defy gravity the way they have given the abysmal state of commercial real estate (CRE). Well my opinion is that the equity and the debt markets have allowed agent and principal manipulation to the extent that it materially distorts and interferes with the market pricing mechanism.
It may take a while, but the fictitious valuations of CRE REITs will eventually come to reflect what is actually going on in the actual physical real estate world. It may be like matter meets anti-matter, investment banking secondary offering meets bricks and mortar reality. After all, the antics in Germany and greater Europe are not doing anything to actually help the debt markets.
I think I feel another "I told'ja so" coming on...
You heard my warnings about the "best of breed", "incomparable on the Street" (and all of the other groupie talk, worshiping phrases thrown at this company) Goldman pillaging clients and of their excessive overvaluation for over two years in BoomBustBlog, yet now the mainstream media is starting to catch on as Goldman's stock plummets (down over $5 yesterday and over 20% for the month, with more to go). I wonder when they will get around to the other investment banks and FIRE sector companies that I warned about. Let's reminisce...
The sovereign debt bear raids continue unabated, yet investors fear nothing, and continue buying U.S. Dollars, lap up new U.S. Treasury offerings, ramp up various consumer stocks and REITs. Another stampede towards the infalliable U.S. economy while the rest of the world crumbles.
Yesterday, the Fed disclosed that liquidity swaps have remained at 0 for the eleventh week in a row. This is not unexpected, as it is in line with the Fed's statement of eliminating emergency liquidity facilities (and the CB liquidity swap lines are among these). Of course, there is no way to truly verify whether or not the Fed is syphoning off US money to once again bail out foreign central banks as the Fed is shrouded in secrecy, and while we have to figure out just what exchange Bernie Sanders concluded with Chris Dodd, on the surface we are disappointed that the socialist is not sticking with his initial much stronger language for Fed transparency. Furthermore, we know all too well that the Fed would never lie to the US population, right - just look at the chart below, which discloses the Fed-determined values of Maiden Lane I-III. Somehow, the combined value of these three Bear/AIG rescue facilities have surged to one year highs in the last week. This is somewhat stunning as we reported a week ago that the Fed is about to be crammed down on its Red Roof portfolio holdings due to initiatied foreclosure proceedings. We have no figured out why REITs have been defying gravity for the past year - according to the Fed and the FASB, foreclosures are now a valuation enhancing process. How could we be so blind not to realize this.
How many times can they run the same play over and over? The Eurozone dive bombs, and investors immediately start buying REITs, retailers, and other assorted garbage. Maniacal trading has overtaken the stock exchanges as the 20-yr. old motion chasers are getting frantically horsewhipped by the FemBot portfolio managers to "buy whatever is going up, regardless of fundamentals".
Just connecting the dots. You tell me.
Once again, the algospasms have turned many funds into dust as those attempting to short brokerage stocks, REITs, etc. in front of the European implosion are getting killed. Clearly, investors are voting that U.S. commercial real estate is the last bastion of safety, and the primary growth industry in 2011 will be stock trading.
The pressure is on the 19-year old motion-chasing "portfolio managers" at TIAA-CREF, CalPers, Harvard Endowment, Gates Foundation, et al to buy whatever is going up and sell losers immediately, and continue looking in the garbage bins for more "alpha" to goose returns.
Total Spread Blowout on PIIGS, Algospasms Trigger Forced Short Covering in Consumer Stocks and REITsSubmitted by RobotTrader on 04/22/2010 14:24 -0500
Today is proof that the Algo/Igor/Robo computer trading programs have run amok. While Wall St. engages in bear raids against foreign countries, panicked algos are triggering wild squeezes everywhere, causing lots of head scratching among the pundits trying to explain these insane moves. Proof that the worse the Greece situation gets, the retail stocks simply go up faster.