This monthly S&P chart was interesting to me for several reasons:
One, graphically it shows how far we have come in more than 25 years.
Two, we are fast approaching a potential triple top in the S&P 500 if the market doesn't break it's monthly trend line. Many people thought that S&P would more likely break the March 2009 lows of 666 than rally back to the 2007 highs.
Three, this chart puts into perspective the crash of 1987 and the 1998 LTCM debacle.
The VIX has stubbornly refused (so far) to confirm the new recovery highs in the market. This has happened five times in recent memory
February 2007
July 2007
October 2007
January 2010
April 2010
February 2010 - on going
Only one of these was a major top, October 2007, and the April 2010 was followed by the Flash Crash and a decline of 15.63%. The divergence in the VIX is something that I am watching carefully.
Meanwhile in Union Busting News, we are all Cheeseheads:
Wisconsin Protests-State Police Pursue Democratic Law Makers Boycotting Vote
"Wisconsin Democrats on Thursday fled the statehouse in an effort to prevent legislators from reaching a quorum and passing a bill put forth by Gov. Scott Walker (R), which would cripple the collective bargaining rights of public unions."
NRLB Amendment Beaten by GOP Dem Coalition
"WASHINGTON - Sixty House Republicans joined with every Democrat to beat back an anti-union amendment on Thursday that would have defunded the National Labor Relations Board, a New Deal-era independent agency that arbitrates labor disputes. The sixty defections come as the Midwest GOP governors in Wisconsin and Ohio are launching direct assaults on public employee unions."
Boehner has lost control of House Republicans, first the vote on the jet and now this. Gawd, how embarrassing. Obama's White House must be thrilled by the Speaker's incredibly amateur bungling.
Wisconsin Rep. Paul Ryan - "Like Cairo protests have moved to Madison"
Rep. Paul Ryan (R-Unionbuster), chairman of the House Budget Committee, compared on Thursday the large, ongoing protests in his home state to those that took place in Egypt against former President Hosni Mubarak earlier this month, claiming that they're "like Cairo has moved to Madison these days."
The Republicans are admitting to trying to bust the unions, not because of budgetary issues, but to break up a key Democratic voting bloc.
Imagine, the middle class is finally deciding to fight back.
Denise - Great post! The Boehner missteps are not good for the GOP. I think Boehner will gamble and force a shut down of the government. If he does, I think the public reaction will be much like the last government shutdown in the 90's.
ReplyDeleteIf Obama can goose another two years out of this "recovery" he's probably a shoe in for re-election. What are the chances of another leg down within the next two years? With the stock market nearing it's previous peak, oil prices going through the roof, revolutions brought on in part by higher food prices, doesn't this seem an awful lot like 2008? Who will pay the political price if we collapse?
@Mutt:
ReplyDeleteI too used to keep water, but it was such a pain to cycle it when somebody told me that I have a waterheater full of potable water.
Cycling is automatic.
Once every 6 months, drain the bottom for a few minutes.
@Dss
ReplyDeleteIf you search for inflation adjusted charts, you can find a pretty good argument that we did not hit a double top, and that we are in a downtrend.
See
http://www.simplestockinvesting.com/SP500-historical-real-total-returns.htm
as one of many examples. It looks like if you plot the channel, we are very near the top of the downtrend range. Unless there's some impetus for a breakout, I suspect we'll follow the range at or near the top downward for awhile. I don't think we'll see the fall like before because there's too much sovereign wealth artifically holding it up.
Anyway, that's my $0.02.
@Dastro and WolfStreet:
ReplyDeleteCatching up on my reading for Wednesday. Yes, I look to volume to confirm the price action. Increasing volume means the price action is justified by the buyers and sellers, but decreasing volume means the price action is uncertain and is less likely to hold.
So the new meme on the Right is that Bush and his policies are now largely responsible for the uprisings in the Middle East. I knew that was coming, by the way. We sure do love to tell ourselves nice, little fairy tales to make ourselves feel better.
ReplyDeleteGreat post, Denise.
ReplyDeleteMeet the new boss, same as the old boss...
ReplyDeletehttp://www.nytimes.com/2011/02/18/world/middleeast/18military.html?_r=1&hp
@Dss
ReplyDeleteSorry, I forgot. Great post.
I think if we reduce Labor's power, I think long term history will show it was a bad thing.
Short term it may have advantages.
@DSS,
ReplyDeleteThank you and all other posters for keeping this "place open".
"Canada bucks trend, inflation dips". www.theglobeandmail.com
Even in India food prices are coming down. Onion prices dipped from Rs. 100/kg to Rs. 2 recently. Unless, something happens between now and April, bunper wheat crop is coming up. Sugar has no reason to be up unless it is pure speculation -DGDF story.
May be this inflation story is over? Subsiding?
ICan
If you can get Bloomberg, my favorite person Craig Barrett is scheduled to be on with Marg Brennan. Last time he was on, he justified sending US jobs overseas.
ReplyDeleteLet's see what he tries to justify this time.
He is my favorite "I'm afraid to do the right thing" guy.
Long term charts are great...
ReplyDeleteNice post!
SLV still on the march.......
ReplyDeleteBloomberg had a pic of the billionaire dinner, and Steve Jobs was caught at about a 135 degree angle. He looks incredibly thin.
ReplyDeleteHe dodged media on the way in to the dinner.
Morning all - Rock, have you seen that new smartphone ETF?
ReplyDeletehttp://www.marketwatch.com/story/smartphone-fund-is-latest-etf-gimmick-2011-02-18
What the hell is going on in Wisconsin? I can see severely curtailing the rights of public unions, but getting rid of them completely?
ReplyDeleteMish must be beside himself on this one.
I'm sure that all of our problems will be instantly solved by getting rid of all unions.
ReplyDeleteLet the free markets rein.
ReplyDeleteManny - well it looks like we're about to find out exactly that in Wisconsin.
ReplyDeleteGood morning all.
ReplyDeleteRock,
I have a new name for this market - the Escalator Trade. Yesterday continuing on to today we have been on the escalator up.
Yesterday was a perfect trend day up, after the morning gap down.
The issue in Wisconsin is pretty incredible. There is no budget crisis there, they had a surplus until the new Governor gave the surplus away in the form of tax breaks for business. They are not in crisis, like Illinois.
ReplyDeleteAnd the unions in Wisconsin wish to sit down at the bargaining table and negotiate with the state, but the governor is trying to eliminate their ability to do that in Wisconsin.
ICan,
ReplyDeleteThanks. We all do our part here.
@Thor
ReplyDeleteThanks for the link.
I have no thought on a smartphone ETF, because the companies that make them have at most 1/3 of their sales in smartphones. I mean, GOOG is the leader for the OS that smartphones use, and I'll bet their revenue for the Android OS is close to $0.0.
I have my doubts they will be able to fund it, but I guess it depends on which marketing organization they hire to put lipstick on that pig.
@Denise: I think this post pretty much sums up the plight of "liberals". They continually bring a knife to a gun fight thinking that the other side is actually going to bargain in good faith with them. That's their biggest and most fatal mistake.
ReplyDeletehttp://www.nakedcapitalism.com/2011/02/why-liberals-are-lame.html
Rock,
ReplyDeleteGreat point about the inflation adjusted charts.
Also these long term charts inflation adjusted or not, do not take into account the many stocks that have been replaced in the original index. If the dogs were left in instead of replaced with stronger candidates then the S&P and other charts would look much weaker.
So due to those two things, none of the indexes are true representations of the market.
I believe no matter what set of checks and balances are in place any entity which is in place for a long period of time will eventually out live it's usefulness.
ReplyDeleteMeaning at some point in time the pendulum will swing too far in one direction and not be able to be corrected.
If we do not have unions, we will all eventually end up working for the company store, however if the union becomes too strong, the work force will demand too much.
But it seems like we have unions that are too strong, being met head on by governments (City, state) that can no longer support the demands of the unions and on top of that we have a Federal Government that has set policies that will raise the tax rate of the middle and lower classes to a point where the middle and lower class will no longer be able to pay.
Since many (City, State) union members salaries are paid by the tax payer, there will eventually be a backlash from the public at the same time if the unions do not stand up for their members, we (tax payers) will end up with a whole new set of unexpected consequences.
It appears we have come to a point in time where entities have run their course beyond the prescribed set of checks and balances and are willing to hold on to their power no matter what gets destroyed.
I guess it will come down to how much the tax payer can and will take, unfortunately there is no easy answer.
Mutt
@Rock,
ReplyDeleteLabor has no power, obviously. This whole attempt to bust the unions is because they want to take the money away from the Democrats that the unions supply.
This is all about the funding of political campaigns, not collective bargaining. They want to bust the unions to take away a gigantic Democratic voting bloc.
Gov. Walker wants to take away the collective bargaining rights of the state employees' unions, with the exception of the three that supported him in the last election. He says it's because there's a budget crisis going on, but as we reported on the show last night, the "repair" he's calling for would fix the giant dent he made himself. From the Madison Cap Times:
ReplyDeleteTo the extent that there is an imbalance -- Walker claims there is a $137 million deficit -- it is not because of a drop in revenues or increases in the cost of state employee contracts, benefits or pensions. It is because Walker and his allies pushed through $140 million in new spending for special-interest groups in January. If the Legislature were simply to rescind Walker’s new spending schemes -- or delay their implementation until they are offset by fresh revenues -- the “crisis” would not exist.
Walker was supported by the fire, police, and highway patrol union. These unions will be exempt and will be allowed to keep their collective bargaining rights.
ReplyDelete@Dss
ReplyDeleteI like it. We could abbreviate it ET. It gives so many possibilities: Escalators, riding bicycles in the air, out of this world.....just off the top of my head.
@Denise: And politically Walker knows that in order to keep from chaos reigning, he had to play nice with those three unions. Can't lose the police and firemen and keep the social fabric from completely coming apart.
ReplyDeleteWithout unions, all of the big money spent in political campaigns would be right wing money, and now the Supreme Court has guaranteed the right of corporations to spend unlimited amounts to buy their candidates.
ReplyDeleteThanks, Rock. I like it too, very descriptive. When the market does start to crack we will not know how to act.
ReplyDeleteManny,
ReplyDeleteNo, it was political payback for the fire, police and highway patrol as they supported him (gave him money for his election campaign, worked to elect him) while the other unions did not.
The correction's officer's union did not back Walker and they are not exempt, their rights will be forfeited as well, so it is not just about the public safety.
Except for 10 cents near the open, the market didn't even bother to sell off today.
ReplyDeleteDenise – If our government has spent billions of dollars on bailing out some of biggest and most powerful corporations, then those same corporations can turn around and give an unlimited supply of money to the candidate of their choosing – Isn’t that fascism in a nutshell?
ReplyDeleteMutt
What I am watching with the VIX is to see if it is going to follow the pattern of 2007, rising while the market was rising.
ReplyDeleteSLV = 32.
ReplyDelete@Mutt:
ReplyDeleteNot to butt in, but isn't Fascism the subjugation of the individual for the benefit of the race/country/"all"?
Actually, I have no idea what subjugation means.
Mutt,
ReplyDeleteYes. There is a revolving door between our largest financial corporations, (GS,etc.) government, and the lobbyists who lobby for them. This includes lawyers and regulators who shuffle between all three.
This was the point that Taibbi was making when he asked why weren't there more Wall Street prosecutions.
Those at the top will not prosecute the very firms that will hand them a golden ticket for the rest of their lives as when their government service ends, they go into the private sector, the very same people who hand out campaign contributions to politicians.
Many of our politicians become employees of top law, financial, and lobbying firms.
The same revolving door exists in the defense industry, which is populated by former military, and politicians, who then dole out money to their favorite politicians who grant them government contracts.
It is for the most part legalized corruption.
ReplyDeleteYeah, 14 tix is the most YM has gone backwards since I've been watching this morning...
ReplyDeleteThe Fourteen Characteristics of Fascism
ReplyDeleteIt is pretty scary how many of those points are present in our country today.
# Controlled Mass Media
ReplyDeleteSometimes to media is directly controlled by the government, but in other cases, the media is indirectly controlled by government regulation, or sympathetic media spokespeople and executives. Censorship, especially in war time, is very common.
# Obsession with National Security
Fear is used as a motivational tool by the government over the masses.
# Religion and Government are Intertwined
Governments in fascist nations tend to use the most common religion in the nation as a tool to manipulate public opinion. Religious rhetoric and terminology is common from government leaders, even when the major tenets of the religion are diametrically opposed to the government's policies or actions.
# Corporate Power is Protected
The industrial and business aristocracy of a fascist nation often are the ones who put the government leaders into power, creating a mutually beneficial business/government relationship and power elite.
# Labor Power is Suppressed
Because the organizing power of labor is the only real threat to a fascist government, labor unions are either eliminated entirely, or are severely suppressed .
Ezra Klein has a great post on the Madison protests:
ReplyDeleteUnions Aren't To Blame for Wisconsin's Budget
"Let's be clear: Whatever fiscal problems Wisconsin is -- or is not -- facing at the moment, they're not caused by labor unions. That's also true for New Jersey, for Ohio and for the other states. There was no sharp rise in collective bargaining in 2006 and 2007, no major reforms of the country's labor laws, no dramatic change in how unions organize. And yet, state budgets collapsed. Revenues plummeted. Taxes had to go up, and spending had to go down, all across the country.
Blame the banks. Blame global capital flows. Blame lax regulation of Wall Street. Blame home buyers, or home sellers. But don't blame the unions. Not for this recession."
If all Walker was doing was reforming public employee benefits, I'd have little problem with it. There's too much deferred compensation in public employee packages, and though the blame for that structure lies partially with the government officials and state residents who wanted to pay later for services now, it's true that situations change and unsustainable commitments require reforms. But that's not what Walker is doing. He's attacking the right to bargain collectively -- which is to say, he's attacking the very foundation of labor unions, and of worker power -- and using an economic crisis unions didn't cause, and a budget reversal that Walker himself helped create, to justify it.
Well, true-to-form, Craig Barrett recommended absurdity on Bloomberg. He wants to give corporations a free ride, eliminate the corporate income tax. He says that will make jobs in the US.
ReplyDeleteAbsurd.
He's crazy.
What needs to be done is to make corporations pay an expat tax for every dollar of profit it exports overseas, like 150%, then give a dollar-for-dollar revenue credit for investment in R&D.
Too bad there's no money to fund regulators to police that.
@Dss
ReplyDeleteI think I would disagree that most of the items you mention are significantly present in the US, or more present in the US than "average" in most other countries. Matter of fact, I think there are many other countries that exhibit the characteristics you point out far far more than those are exhibited in the US.
Not to say that "two wrongs make a right", but I think that the US is far more liberal in the list of items you've given above.
IMHO.
BTW, if you ever saw what our "enemies" do to individuals, you would certainly be thankful we have the military to keep those locusts from your door.
@greg:
ReplyDeleteIf you're around, do you think investors are beginning to price in Steve's removal from AAPL's future?
Quite a list, Denise. Many points in it look very familiar.
ReplyDeleteSomeone should send that article to Lou Mish, Denise.
ReplyDeleteFair point on RELATIVE terms, Rock, but let's not strive for the standards of other nations on these fronts. I would also say that we're at least creeping (and in some cases, marching) towards many of these definitions right now.
ReplyDelete@Manny,
ReplyDeleteLou Mish is loving this, I am sure. People like him will never change their mind, even if you smack them in the face with the truth.
Craig Barrett did say one thing that made sense. He pointed out that over half the graduate students in our universities are foreign nationals, and we immediately boot them out of the US upon graduation.
ReplyDeleteNow, that makes sense to me. Get rid of the people with brains that we've educated. God knows if we asked them to stay what they'd do!
@Rock: They'd probably work at Starbucks or Home Depot.
ReplyDeleteRock,
ReplyDeleteYou are comparing apples to oranges. This list applies to the US and I see varying degrees of each of these elements in the US.
By dismissing the creeping fascism in the US because other countries are so much worse is missing the point.
Who said I was anti-military?
And please do not assume that I am some naive teenager who doesn't know what atrocities have been committed since the beginning of time.
Things are heating up in Libya.
ReplyDeletehttp://www.zerohedge.com/article/libyan-protesters-hang-two-policemen-al-baida-sermons-urge-locals-ignore-imperialist-zionist
Bob Cesca nails it....
ReplyDeletehttp://www.huffingtonpost.com/bob-cesca/most-americans-are-big-go_b_824906.html
The numbers in that article truly reveal the sad cogintive dissonance and sheer irrationality that's our there. Just mind-numbing ignorance, stupidity, and sheer lack of any thought whatsoever.
ReplyDeleteVXX has made a new short term high.
ReplyDeletePresident's Day is Monday. Off to start a long weekend. Everyone have a great weekend!
ReplyDeleteIs VIX the canary in the coal mine? Or one of them?
ReplyDelete@MAnnwich
ReplyDeleteYour 1:47 nails it. Probably we'll never find out. And probably we won't know their contributions back in their home country.
But not probably they will be sent back.
@Dss
ReplyDeleteI know you're out of the building, but I feel the need to make sure about this, because trading is based on probabilities, not what is and what isn't.
"I see varying degrees of each of these elements in the US."
My son often looks away from me when I talk to him. The fact that he exhibits this symptom does not mean he has Autism.
When I used to drive, I would never speed. I just kept up with traffic.
IMHO, when "varying degrees of each of these elements" is exhibited, then it is up to the observer to determine whether the degree of exhibition means the element is present or is not present.
Normally, I use the company I keep to determine whether I'm guilty of a behavior anomaly. In the case of the 14 items, frankly, I would have to use the company the US keeps to determine whether it's guilty of one of the 14, or not.
Super busy day :-(
ReplyDelete@MAnnwich
ReplyDeleteJust want to weigh in on your article reference from the 2:07 comment.
I read these and because of the absolutes presented, it's just so hard to strike a balance.
For example, I favor cutting the education budget. OK, in my town, they cut the library and librarian and closed the doors. But the speech teacher still is on payroll. So to help 3 out of 400 students, they affected negatively the 400.
That's what's wrong here. I'm sorry, but the "No child left behind" philosophy is contrary to the survival of the fittest which is what other nations are supporting.
Keep the library. Cut speech therapy. Benefits to the most, not to the few.
@Rock: I hear you. Some of this stuff is too complicated to brush with a broad stroke. For instance, to prove that we liberals don't like all taxes, here in MN I honestly think the schools seem pretty well funded to me (and most of them seem to run quite well from what I've heard, and the ones that don't it's probably due to other things besides funding), so a couple of years ago, I voted against a property tax increase that would have sent more funds to the schools. Despite that, it passed anyway and now our property tax increases are going through the roof every year. On other items (to keep the parks system and water clean, for instance), I'm happy for my taxes to go up if a rational case can be made for it.
ReplyDelete@Rock..your 1:33pm. My opinion is that Apple investors are doing what they always do. Some are probably taking profits, many are panicking, some are manipulating the stock, and some are getting it wrong, again. I'm not sure anyone can determine what the pricing should be given the Steve Jobs factor, and I think this is the problem. Take away this factor and Apple should be trading now at $400-$450. Until there is some clarification we will continue to see these swings back and forth, the litany of articles for and against the value, and of course the endless rumours.
ReplyDeleteAll you can really do is buckle up and enjoy the ride, it's never boring.
ICAN! - Have you seen this????
ReplyDeleteIran's Revolutionary Guard pledges to hold fire
Senior officers in Iran's Revolutionary Guards have written a letter to their commanding officer demanding assurances that they will not be required to open fire on anti-government demonstrators.
Game changer? Or just hot air?
http://www.telegraph.co.uk/news/worldnews/middleeast/iran/8331625/Irans-Revolutionary-Guard-pledges-to-hold-fire.html