They mis-spoke.
Healthcare is down compared to the S&P by 2% or so. I think maybe the market reporters easily confuse instantaneous performance with where you ought to be putting your money.
Last week, I didn’t see much sector rotation going on. All the reports I've read is that the Beta (individuals tracking the market) is very high. The last herds report show this, that only 2 of the 60 or so herds I follow were over 3% different from the S&P. One standard deviation is quite small, at a little less than 1%.. There are only 5 of my 60 herds which are above two standard deviations for the herds that are better than S&P, and only 3 of my 60 herds which are above two standard deviations for the herds that are worse than S&P..(standard deviation is always positive, so that really means that only 3 of my herds are under the S&P by 2 or more SD’s).
This week is notably different. The SD of advances is 1.7%, and decliners is 1.3%. and there’s lots more herds that fall int the greater than 2 SD’s. Here’s the list; all the caveats are still in place, meaning this is the cumulative 5-day performance compared to the S&P 500
First the top performers:
DIG 6.80% Falling
SLX 5.60% rising
XME 4.80% Flat
$BKX 4.00% rising
$HGX.X 3.90% rising
XES 3.80% Flat
KCE 3.70% rising
XLF 3.70% rising
KOL 3.60% flat
XHB 3.60% Flat
UCC 3.30% rising
KRE 3.10% rising
KBE 3.00% rising
XOP 2.90% Falling
$DJTFVS 2.80% Rising
IAK 2.50% rising
IGV 1.90% rising
Next the worst of the bunch:
VHT -1.90% Falling
SLV -2.00% flat
XLV -2.10% Falling
IBB -2.30% Flat
RTH -2.30% Falling
UTH -2.50% Flat
XLP -2.60% Flat
XLU -2.60% Flat
BBH -2.70% Flat
$DJTFOB -3.10% Falling
USO -4.00% Falling
GLD -4.40% Flat
DBA -5.50% Flat
I’ve been trading long DIG and XME ever since the Internet Monday, (I forget what it’s called exactly) and made some good money only because of the big Tuesday jump. Nothing since then, I made $2 today. Cup o’noodles tonite.
Here's the Stockcharts.com SPXA50. As you can see, it's nearing the top (on the daily chart). Because of the volatility, the weekly chart hasn't turned around yet, but as you can see, we have completed the turnaround. Now we have to see how long we go up up and away!
Oligopoly - that's what Canadian banking sector is.
ReplyDelete"Profit soar for Canada's banks, along with bonuses" -financialpost.com
And Carney keeps rates negative to keep housing boom intact! Savers be damned. ALl summer long he kept on warning int.rates will go up(to scare people into drinkin less debt kool-aid) even when BB said he'll hold until 2013. Can you believe this guy. He came out today and said he(Carney) is holding rates until 2013. The real boss is BB!
Good thing my sister didn't listen to him. She flipped her home(If she had waited to buy the next one, she would've missed on lot of capital gain on her next home).
ICan
Another good article -
ReplyDeletehttp://www.thefiscaltimes.com/Columns/2011/12/02/Obama-Could-Win-if-GOP-Blocks-Payroll-Tax-Cut.aspx#page1
Republicans respond that it would be folly to raise taxes on the “job creators.” But the idea that all rich people are job creators merely by virtue of being rich is complete nonsense. According to the Tax Policy Center, only about 3 percent of people reporting business income are in the top two tax brackets, and according to the Treasury Department, only one fifth of small businesses have any employees at all.
I'm glad, after how many years now? that someone finally decided to push back on the "We can't tax the job creators" meme bullshit.
This is VERY good. I think Thor will be interested...
ReplyDeletehttp://www.huffingtonpost.com/janet-tavakoli/chanos-crash-timing-china_b_1132409.html
From telegraph.co.uk
ReplyDeleteAmbrose Evans Pritchard,"Bank of France debts jump tenfold on capital flight".
Foreign investors pull large sums out of French accounts.
And(this one is old)
"Kepler 22b, the new 'Earth' could have oceans and continents, scientists claim". This is cool.
ICan
@Mannwich:
ReplyDeleteOoohhhhhh......You da Man! You found my locusts!!!
oooh oooh, reading. . . .
ReplyDeleteManny - very good, ominous! I think it'll take a couple years. Plus I've read that many of the wealthy are looking to move abroad. So I guess we'll get a lot of that money back eventually. . .
ReplyDeletelooks like we've fallen out of our uptrend 11/30 (after the pop at open).
ReplyDeleteIt might signal the start of a pullback. Maybe this time the traders watching the summit are assuming it will be the same as always, no good plan/resolution, just more words.
In which case, the financials and sovereign debt in the Eurozone is in trouble. UUP will probably move up as a result, and the market will move lower.
But who knows. "Will see". I was playing the trend up, but now I'll be playing the trend down.
Vista is really unstable. IE won't let me select a profile.
ReplyDeleteBloomberg reported this AM that the ECB has increased dollar-based loans to member banks. I think we predicted this would happen. So where can the ECB get more dollars to loan? Not the IMF. Republicans say "no way". That leaves the swaps with the FED.
That means you and me, ladies and gents. You and me.
Did you see yesterday's bond auction? That slipped by me. The bid to cover was 7. I don't think that's ever been higher. And the yield was 0.
ReplyDeleteWow.
Bonds have spoken. Time to think about shorting a bond bubble? No, not yet. Rock is always too early.
10-year yield down, yet AUD/JPY is green. AUD/USD struggling to be green.
ReplyDeleteCobra's last night thread - double top?
That's right, Rock. Haven't you been saying that the big wealth is moving their money out of China right now? Well, there you go.
ReplyDelete@MAnnwich:
ReplyDeleteLike here, the middle class there will take it on the chin.
They too have built a real-estate bubble. and a lot of the middle class money is caught there.
A website that presents a pretty good overview of China is
http://www.chinatoday.com/rst/a.htm
I totally agree, Rock. The "smart money" (the elites) blow the bubble, set the tone on pumping it up in the media and other sychophant outlets, suck in the rubes, and then pull the plug and go somewhere else to start it all over again. This story gets played over and over throughout history, as the middle class chases the dream of becoming wealthy. Quite sad if you ask me.
ReplyDeleteSome hot gossip:
ReplyDeleteBen Bernanke has stated publicly that the reports of loans from the Fed to Europe are incorrect, and that no loans have taken place.
Bloomberg is pissed They are having a vignette on it so if you can get to a TV, now is a good time to tune in Bloomberg or www.Bloomberg.com/TV
make that www.bloomberg.com/tv
ReplyDeleteBloomberg reamed the Bernank a new one. They pulled out the documentation given to them after they won in the Supreme Court, and quoted banks and amounts and dates of the loans.
ReplyDeleteThe loans included European banks, such as the RBS, as well as international banks such as CITI (who does a lot of business in Europe).
I hope it's on Bloomberg Rewind tonite if you missed it.
BTW, I watch Bloomberg on the web. It was interesting, the second the segment started, the streaming stopped. I got to a TV and turned on and saw only the last piece of the segment.
I find it very interesting that the streaming stopped at exactly that instant. I know quite a bit about the internet, and let me say categorically the stoppage at that instant was not a random error. Somebody stopped it on purpose.
Manny - agree, but that can't go on forever, at least here I don't think. People are getting more and more sophisticated about these things (ok, I realize that might be a stretch). But like with Liberal and Conservative talking points, many of the most extreme ones (Bachman's assertion yesterday that half of Mexico has immigrated here) are very quickly exposed for what they are. . .
ReplyDeleteI'd hope that with more and more people on the internet, knowing where to go for actual financial "news" the average guy might be able to spot these bubbles sooner rather than later.
Of course spotting them, and then refusing to take part in them, are two entirely different things, and although I have faith that people are getting more sophisticated about these sorts of things, I think good, old fashioned, American Greed, is still alive and well. . .
And another piece of good news: Blagojevich sentenced to 14 years for trading the Illinois senate seat in return for money and power.
ReplyDeleteSee, Mannwich? Some of these guys are being "gotten". How long before we take down the Blankfeins? As the Stones said, "Time is on My Side, oh yes it is."
Rock - How long before we take down the Blankenfeins? I think that day is coming, it'll just have to wait until either 1. the economy collapses for good and/or 2. The Sheeple, give the Tea Baggers the boot and replace them with Occupyers, and 3. the D's finally grow a set up balls
ReplyDelete@Thor: I think that most people know by now these are bubbles but don't care because they think they can get out on time with easy profits. People never learn.
ReplyDeleteFair point, Rock. I'm just not a patient Mannwich. Time will tell, I guess.
ReplyDelete14 years is a pretty hefty sentence, but in the grand scheme of things Blago is a minor figure. Go where da money is and that's where you'll find the major figures who likely deserve to go down hard due to the major harm the've inflicted, continue to inflict, on our country, communities and world(read: The Blankfeins of the world).
From DJ Newswire:
ReplyDeleteBy Jenny Paris and William Kemble-Diaz, Dow Jones Newswires;
Our future trading events are listed. I'll put up the next day or two's events the day or two before, so you can decide to exit at night. Or not.
--Friday: EU leaders summit. Televised address by Sarkozy expected before this date. Vienna World Policy conference (through Dec. 11).
--Monday: Italian T-bill auction. ECB's weekly bond-purchase data. Greece starts talks with "troika" of international creditors--the European Union, the International Monetary Fund and the European Central Bank--on new bailout package. Italy's three largest trade unions hold joint 3-hour strike.
@Mannwich:
ReplyDeleteYeah, and there's no statute of limitations on murder.
Since (thanks to your recommended movie) I understand corporations are now persons. Since the banking crisis murdered corporations, the instigators are not protected by any statute of limitations.
We got 'em. As a few more roll over and bear witness against the rest, we'll get 'em.
I don't expect most of these criminals have the integrity of Raj. And he had integrity about ratting on his friends. But he's so rich, he can easily buy protection in prison. We just need to get a few that aren't.
A CLASSIC headline on Huffpo about Blago: "Big Hair to the Big House". LOL.
ReplyDeleteOn DJ Newswired, there's a whole lot of stuff coming over where S&P or Moody's is placing a whole lot on "credit watch with negative implications"
ReplyDeleteLike Paris. Barcelona. City of Rome. Region Lis de France. 5 US states. 30 US cities. Bavaria, More more and more. Sounds like a whistleblower?
One more opinion I have. Ol Rock's full of them today.
ReplyDeleteWe are facing a new paradigm for internet content deployment.
I used to complain about the overhead of rich text format. We've come a long long way from there. Now, with the internet movie and entertainment industry forming, there becomes a huge need for local storage (like blade servers) to house localized copies of the movies. It's extremely costly to stream a movie over an internet backbone, because if you're streaming it like Netflix, that is real time, you have to have lots of agreements in place to make sure you have enough quality of service so the movie doesn't jump around and skip, lie youtube does.
So, companies like RAX are likely to profit. Verizon is going to stream, and we all know AAPL TV is coming.
The next shift is when your cable company realizes you're getting free data for all this entertainment, and no longer buying HBO. So expect a paradigm switch where data is no longer free, like on your cell phone. CMCSA is likely to profit, because they have a huge installed base.
Gloom and doom fest in the blogosphere.
ReplyDeleteMacro-man,"Europe and the Bomb".
financialpost.com,"UBS advices for Euro collapse:Tinned goods, small calibre weapons".
Eurozone collapse = 'end of world' scenerio. We'eve seen this before. May be UBS is heavily leveraged in the EU. Scare some politicians into bailing the banks out.
This is actually bullish for the equities, I think.
ICan
Clinton was in Myanmar(Burma). And I was thinking business for Wall St. So it seems.
ReplyDeleteReuters:"Clinton visit opens Burma Road to investors".
Just hours after Clinton left, Myanmar last week, property prices soared. In an area of delapidated colonial era buildings(in central Ynagun) one property shot up from $1.5 million to $1.8million.
Burmese elite must think they were left behind.
Business = democracy or is it the otherway around.
ICan
FT.com
ReplyDelete"Apple loses iPad trademark case in China".
Are any trademarks protected in China?
Bloomberg video: Mark Faber on outlook for equities, Euro and China.
ReplyDeleteAlso,
"Deutsche Bank's Ackermann targeted with a package police calls 'suspicious'.
CEO targeted with a possible explosive material at the lender's HQ in Frankfurt
Looks like risk is turned-off ahead of that upteenth Euro meeting.
ReplyDeleteSaw the film "Margin Call" this evening. Very good, I thought. Check it out if you can.
ReplyDeleteCorzine now going into the Ag committee room. What do you bet? 5th? "I don't remember." "I don't know." "My people would have that answer."
ReplyDelete5 minute limit. I wonder if the staffers are knowledgable in finance, or in corn and fertilizer....
@Mannwich: I've had that movie for a week or two, but once again, you beat me to the punch.....
@ICan:
ReplyDeleteI didn't know anything in Burma was worth 300K to start with....If you want property, I'd recommend a suburb of KL instead.
UUP grows stronger. Market should pullback, right?
ReplyDeleteBloomberg keeps running a clip of Corzine going into the interrogation room. There's this reporter scrunching down, pointing his microphone at some blond chick's butt.
So typical of reporters. I wish I could capture that one and make it a part of a post here....
Great move, Rock. Lots of great little subtleties that are still hitting me the next day. Very well done. It's done almost in the vein of Glengarry Glenross. Could be great in the theater. Those kinds of dialogue-focused movies are sadly a lost art these days.
ReplyDeletemovie, rather.
ReplyDelete@Rock,
ReplyDeleteYou've been to KL?
ICan
MCD's done well. So far
ReplyDelete"Draghi:ECb hands are tied" -marketwatch.com
EU treaty prohibits 'monetary financing'.
So all eyes are on IMF..er the FED..er the U.S.taxpayer..er Rock!
ICan
@ICan
ReplyDeleteOh, yeah.
Couldn't find a good chinese restaurant there, though. Chinatown has only open market, with Foakleys and Lolex watches.....
And, at my age, I could trot up that staircase to where the monkeys live in the temple, I forget the name. I think there were a lot of Asians kind of shocked that a really old white guy could do that. All thanks to Thor's company, of course.
I have on the 14 minute SPY chart a triple top around 127.10.
ReplyDeleteI read somewhere that a double top means we'll typically go down, bu it looks like we have some resistance around 125.20. I was looking for a pullback to around 122, so maybe after the news comes out about inaction in eurozone, we'll see it then. But after that, look out! I'm thinking the market will be moving up to that 2000 point run in the DOW.
But this morning, I made my cup of noodles on SKF and am out now. When Mannwich said "move" I was quite shocked, because I couldn't figure out how he knew....
I forgot to say that when I read about the double top, they indicated a triple top meant we'd break through to the upside. I have to go to the office now, so I'm setting a stop market buy at 127.40. May be too tight.
ReplyDeleteECB unable to print......Unless they changed the treaty.
ReplyDeleteAnyone's daytrade hinges on the outcome of Euro crisis?
ReplyDeleteDebt Crisis Live:
www.telegraph.co.uk/finance/debt-crisi-live/8942090/debt-crisi-live.html
I got a funny feeling that the shit is about to hit the fan. There, I said it. Means it's not going to happen! Yet. LOL.
ReplyDeleteMorning all!
ReplyDeleteIs it just me or are the markets entirely missing the point of the latest from the EU? This summit isn't going to fix the current problem at all, not even close. If I read this correctly, this latest summit has more to do with preventing this from happening again while at the same time forcing a "greater union" upon the other Euro countries.
ReplyDeleteIt does nothing to help Greece, Italy, Spain, Ireland, etc, overcome the fact that they have far more debt, and far weaker economies, than they are ever going to be able to pay off their debt with. . . .
Exactly Thor. PK over at his blog saying the same thing. It does nothing to help spur their economies, which is the most effective, and probably only, way to get out of the mess.
ReplyDeleteHouse Agriculture Committe Chairman -Frank D. Lucas(Rep.OK).
ReplyDeleteOne of his donors - The American Bankers Association.
HT - ZH
Based on that, the markets should be falling far more than this, IMO. This tells me that "the markets" are either being outright manipulated or "it" believes that somehow TPTB will pull a rabbit out of its hat to keep equities afloat. The Bernank Put has gone global! The Put to End all Puts. This tells me, the move downward, WHEN it happens, is going to be vicious, maybe more vicious than the last time.
ReplyDeleteThese committes in the U.S.
ReplyDeleteSeem like such a waste of taxpayers' money. Anything meaningful comes out of them? Or they just seem to keep the illusion and fakry going a bit longer?
ICan
Manny - I don't think this market has made much sense over the last three years. I think the run up is clear now, why that happened. But why it continues to fail to collapse? Who knows, Europeans and Chinese moving money over? Idiocy? Ignorance of what's really going on? Take your pick. . .
ReplyDeleteAll of the above? Manipulation too? It's in TPTB's interest to keep this puppy afloat at ALL COSTS, so why wouldn't there be manipulation too?
ReplyDeleteah yes, can't forget manipulation and The Machines!
ReplyDeleteLet's see, what did I miss? ooh, looks like we may be getting my expected pullback! For sure, my buy order didn't get executed.
ReplyDeleteThe VXX has hit my 44.00 resistance/support line. and the relative strength line has begun to turn over, indicating a move back up may be coming.
I don't think so. The break of that support/resistance line could easily come overnight when the Eurozone fails to report any success. Looking at the newsfeed, it seems the ECB is saying it's done all it can, and now it's up to the PM's.
Germany seems to be doing all it can to cause the failure of the Eurozone. I don't know why. Merkel says she wants a treaty modification which will take 5 years to negotiate and get through the respective parliaments. She said she won't accept the unified bond (elite bond?) formation and sale.
Euro banks need 153B *now* to recapitalize in order to achieve the 9% core tier 1 capitalization, and it seems Germany is stopping any quick fix.
So I expect no news or bad news tonight, making the break fo the 44 VXX support line transparent to us until the morning.
I'm so sure this will happen that I'm tempted to remain short overnight and violate my rule #2.
Very strong recessionary signs for the US.
ReplyDeletehttp://research.stlouisfed.org/fred2/series/CBI?cid=106
GDI growth is at a standstill (key term for indicating a recession).
http://blogs.wsj.com/economics/2011/11/23/vital-signs-gdi-the-darker-side-of-gdp/
If you want to understand GDI, and it's meaning and import to the economy, you can read the Fed's paper (which I did) or a summary, which is excellent here:
http://www.clearonmoney.com/dw/doku.php?id=investment:commentary:2011:08:24-gdi_is_a_better_indicator_of_the_business_cycle_than_is_gdp
After reviewing this data, I have come to the conclusion that we are in a recession, and have been for awhile.
Now: I cannot reconcile this with the lines I'm seeing at Wal-Mart and Nordstrom Rack, and Target, and how I have had to wait at several restaurants lately.
Just back from a quick trip to Macy's and the mall. Pretty dead in there. I know it's the middle of the week, but not a good sign for the holiday shopping season.
ReplyDeleteWas also out last week at the movies. I know it's winter and Minny and mid-week but it was like a ghost town in there. A small theater, but one worker was there handling tickets and concessions and there were maybe 8 people in the theater I was in watching "Margin Call", and I saw very few others at the early show and none coming in for the late shows.
@Rock: I think people are still going to try to spend on eating and drinking out at restaurants, at least for a while. It's one of those treats that will be the last thing for many to cut, although I know a few who have done that already.
ReplyDeleteCorzine: I do not know where the money is
ReplyDeleteFormer chief of bankrupt MF Global apologizes to clients and tells lawmakers he doesn't know where missing funds are.
Anyone think this guy will end up in prison? I know, I know :P
For retail sales at Malls, don't forget that there are now tons of people who no longer go OUT to shop. Not sure what the total percentage of Christmas shopping that has moved online is, but I'll betcha it's not a small number. I know I don't go anywhere near malls this time of year, I do all my shopping online if I can.
ReplyDelete@Thor: I HIGHLY doubt it. Now if that were you or I or some schmuck off the street, we'd have already been charged by now and sent to Guantanamo. ;-)
ReplyDeleteMy guess is much of the money was never "real" anyway. Went up in levered smoke. Their books, like many on the street, and other publicly traded companies are likely mostly a mirage. Not based in any fact whatsoever. A fairt tale so that people in those companies can loot them.
Now the salaries, bonuses and stock option money, that was most definitely "real". Too bad it was stolen from the last two decades of fairy tales and lies on the street and is still likely being stolen based on fictitious "profits".
ReplyDeleteBut as the head honcho in "Margin Call" said last night, "it's just (digital) pieces of paper". 50% win and 50% lose. That's the game. Chose the lie you want to believe in. And believe hard.
Manny - I agree . . . .
ReplyDeleteWe hit the VXX support point and broke through.
ReplyDeleteI'm staying short.
Here's the headline:
Germany Rejects Measures On Simultaneous Running Of EFSF, ESM -Reuters
@MAnnwich: Your 327 (nice number)
ReplyDeleteFirst half: Agree. Actually, he might get cudos for bringing his predecessor's leverage of 37 down by 19%.
Second half: Disagree. What is possible, is that somebody down in the trenches who was attempting to dump the (leveraged) assets didn't want to be responsible for the loss, and reached out to cover the loss from another account he didn't have to report up. If this is the case, that person(s) will be found, and then we'll find out where the orders came from to do that. You don't move a billion without leaving footprints.
What I think happened, was that MF bought securities (some sovereign debt) that were paying 5% (cheap) by borrowing against owned assets returning 2% (high price). If you can't unload the 5% assets, the folks loaning against the 2% may want their money back. Corzine said that it wasn't the sovereign debt that caused the problem.
It was Corzine's idea to get the sovereign debt. It may be someone who wanted to look good to Corzine and didn't know they were going chapter 11 covered sovereign debt losses using funds from out of bounds. Something like that happened to me once in my career.
Risk currencies are turning green.
ReplyDeleteAUD/JPY
AUD/USD
EUR/JPY
While DXY making it's mind. Maybe another rumor.
Are we all ready for 2012? I have a feeling it's going to be quite the year. Imagine that. Maybe the Mayan's were on to something after all ;-)
ReplyDeleteThe Mayan's might have underestimated the carnage, Thor.
ReplyDeleteLooks like the full EU is out for a master plan in the EU. It's down to the 17 Euro members and whoever else wants to "join in". Sheesh, everything is down to the last second these days.
ReplyDeletePlus we still have to deal with the payroll tax cut, and the 2012 budget . . . . plus aren't we going to be hitting the debt ceiling again soon? Did I miss anything? Of right, the election.
Because we had 2 up days, the fibo retracement from 11/25 38% is 123. We got down to 123.65, so we've had our one fibo retracement. 2 fibos puts us down at 120.34. I said I didn't think we'd get down there, and I still think that. I'm short overnight, but my stops are tight. They weren't hit in the afterhours market.
ReplyDeleteThe Baby Boomers' Christmas. Like Groundhog's Day.
ReplyDeleteSeriously, that's a shocking cultural indicator.
All:
ReplyDeleteHave a look at Peter Brandt's blog (link to the right side, in our list.
There is a *great* article on how this leverage system works.
It is the belief that the practice used by MF Global is widespread. In which case, the ratings agencies have the power to bring down the entire system, because as ratings go down, margin calls are created.
Already, euro PMs have complained about the ratings agencies' power to adjust their borrowing rate.
Also, it raises concerns that it may be my brokerage house, TDAmeritrade, ETrade, and others, are doing it with my funds as well.
This bodes not good things for the future. I thought I was pretty safe. Now, I don't think so, as my funds might evaporate in the wink of an S&P downgrade, and whether I have legal recourse or not, will be meaningless.
I'm not sure how to protect my accounts, now.
And to believe this has not spread to the billions held by companies is like believing in Santa.
And, after reading the article, you can understand clearly why the UK has refused to participate in the latest Eurozone "fix". It would increase their exposure to the rehypothication, making Moody's more powerful that their Parliament.
ReplyDeleteThink about it. If the president of S&P went to their Prime Minister and said "unless we get xxx, we will downgrade (a list of the most re-hypothicated funds).
Now we see who runs these countries, (ours too) and how it is done, and why sometimes to us it looks like nonsense.
Mannwich is right.
Make sure your weapons are oiled, and you have fresh ammo. Ammo goes bad, you know. Needs to be recycled to remain reliable.
Motorola won the patent litigation against AAPL.
ReplyDeleteOf course there will be appeals for a year or two, but since the market is forward-looking, I think this will likely hurt AAPLs stock position. It's back on my watch list to see if I can pick a low point to get back in.
@Emmanuel117
ReplyDeleteGood cartoon. Yeah, I still get a little misty with a couple of those.
But for you guys, I think they left out Santa Baby (madonna)(even though it was done by Norma Jeane), Hey Santa (Beach Boys daughters) and So This is Christmas.
By the way, here's an article on Gold might interest you.
http://peterlbrandt.com/symmetrical-triangle-in-gold-will-be-fake-out/
@Rock,
ReplyDeleteWe will see Sanata Rally?
What could go wrong?
Euro is fexed.
U.S. trade numbers are good
Consumer sentiment is better.
China's inflation is low(if you believe these numbers).
India will also fudge their inflation numbers.
So what esle?
What a drama in the world.
ICan
^fixed.
ReplyDeleteMorning everyone! Are we all clear that THIS time things are fixed in the EU? FOR REALS guys, this is IT! :-P
ReplyDeleteI see the markets seem to have figured out the latest meetings were little more than a farce. Italy 5 year back up to 6.6%
Rock @ 9:14 - reading. Quickly before I do though, you're surprised to find out this is all just a house of cards? ;-)
ReplyDelete@ICan
ReplyDelete^hexed ?
Yes, I think we'll finish the year a little higher, but not so much. The slopes of curves point at an S&P of around 130. As I commented above, I think we saw our pullback from the Central Bank Gap Up, and that's over. And of course, now we have an "agreement" on how to proceed from the Eurozone.
It's almost too late for fund managers to put money to work, either positive or negative. The Europeans delayed to long to "come up with an agreement". And the agreement is pretty anemic, as I understand it. So I anticipate volumes will continue low.
So the move up will be choppy but will take place, I believe.
I had stayed one position short overnight last night, and lost money this AM, because I believed the psychologicals would lead the Eurozone to come up with a non-agreement. Which they did. But our market's up, and the dollar's lower. I should have won that trade, but I lost it. And the banks, who own the most leveraged euro debt, are up on an agreement that is surely too weak to save them.
But with this chop, it's really hard for a trend follower to make money. I've actually lost over the last week.
Rock - Correct me if I'm wrong. But what's happening, is that these guys have been using customer deposits that should have been firewalled as collateral for their risky bets? Is that why Corzine has no idea where that missing billion dollars went to?
ReplyDelete@Thor
ReplyDeleteI will change my moniker to Polyanna. And I'll look for a pic of a raggedy ann doll.
I actually did not understand the extent of the leverage permitted, and I did not understand that in some countries, the leverage that may be applied is infinite. And I did not understand that the agreement which you sign to become a member of a trading community gives license to the brokerage to use your funds as they see fit for their proprietary trades. I assumed that could only take place if I ask them to manage my funds.
Pollyanna, indeed.
Rock - Oooh, yes indeed.
ReplyDeleteCurrent estimates for the shortfall in MF Global customer funds have now reached $1.2 billion as revelations break that the use of client money appears widespread. Up until now the assumption has been that the funds missing had been misappropriated by MF Global as it desperately sought to avoid bankruptcy.
Sadly, the truth is likely to be that MF Global took advantage of an asymmetry in brokerage borrowing rules that allow firms to legally use client money to buy assets in their own name – a legal loophole that may mean that MF Global clients never get their money back.
Yes, that sounds really bad, can't say I'm at all surprised, I think the who thing is a rotten house of cards.
I'm also coming to believe more strongly that if and when things do go off the rails, that it'll come out of nowhere.
@Thor
ReplyDeleteThe problem is that in the MFGlobal agreement that is signed by anyone who opens an account has the words which permit MFG to use the funds in that account for any purpose, including covering MFG shorts.
I think the legality of that portion of the agreement is yet to be determined.
I believe the CFTC has recently-adopted rules that would force the establishment of a firewall, but if it's not a Futures contract but the purchase of say, sovereign debt, that this paragraph would not apply.
However, that probably doesn't matter, because an investor has to agree to this clause:
(from Mr. Brandt's article)
"Global’s Customer Agreement for trading in cash commodities, commodity futures, security futures, options, and forward contracts, securities, foreign futures and options and currencies includes the following clause:
“7. Consent To Loan Or Pledge You hereby grant us the right, in accordance with Applicable Law, to borrow, pledge, repledge, transfer, hypothecate, rehypothecate,loan, or invest any of the Collateral, including, without limitation, utilizing the Collateral to purchase or sell securities pursuant to repurchase agreements [repos] or reverse repurchase agreements with any party, in each case without notice to you,..."
@Thor:
ReplyDeleteThe legal definition of "us" is not defined in this paragraph, and unless in the terminology section "us" is defined to mean MFG only, it could be interpreted to mean "us" is all of us, MFG, and agents of the person opening the account. The mechanism for that is to send a letter to the investor (which he wouldn't understand, of course) to say "in order to maximize your account value, MFG requires your agreement to move in (sovereign debt) markets. If you sign and agree, then they would have the right, under the "us" meaning, to dip into your account.
I don't know whether "us" is defined as MFG only in the agreement.
"Will see".
Rock - that has to only add fuel to the fire that the governments of the world are trying everything they can to save the banks because they know that if and when they come down, they're going to take everything down with them. No one wants The Public to see what's behind the curtain.
ReplyDeleteWhere does something like this end? Total financial destruction? The wiping out of everything? How does a society recover from something like that?
I also must point out the sheer insanity of letting the EXACT same bunch of crooks who brought us to this point also design our way out? Why are we allowing not only the same group of people to do exactly what they did to put us here set all the rules?
This cannot end well for us, the only question at this point is when?
@Thor:
ReplyDeleteYour 12:25
Not only will it come from nowhere, it will come only when the markets are closed to us and open to the after hours traders.
@Thor: Your 12:40
ReplyDeleteKeep in mind the failure of MFG was not because they traded in sovereign debt. Their failure was caused by Moody's or S&P's or Fitch's (I don't know which) downgrade of MFG, which caused margin calls which MFG couldn't cover from their private funds. Before it was over, some of their customers' collateral was used.
The point is: Moody's and S&P have the power. The ratings company's execs are the ones running this show.
Which is what some Euro PM's said: "the ratings companies have too much power".
When S&P tried to do it to the US, the Treasury simply thumbed their nose at S&P. Yields have fallen 15% since the downgrade. The US financial organization is still stronger than the S&P. But you can see the S&P tried, and now they are trying to go through the back door to do it again.
I think the feds should investigate S&P execs. Maybe for insider trading.
My guess is somebody who had connections at the ratings agencies wanted MFG out of the way, so caused the downgrade.
ReplyDeleteCould be at the gentleman's Cigar and Scotch club, there's a napkin with some stuff on it.
Say what you will, Corzine's trade was good, and even a smart one. He was right. Which is why now he's so sad (not because he lost his customer's money). Remember his ego has to be the size of the TransAmerica building.
My son has this kind of ego. The thing that really gets to him is when someone takes him down when he's right.
All we have to keep us going are our delusions.
ReplyDeleteI think I have just witnessed hell on earth. Costco on a Friday a few weeks before Christmas. You'd think they were giving away free crack in there. I looked but couldn't find any.
@Rock: The film "Margin Call" fits nicely with this topic. Go watch it. Today.
ReplyDelete@Mannwich
ReplyDeleteTonight.
Interesting theory, Rock. Remember, Corzine is a Dem who has ties to Obama and '12 is a big election year.
ReplyDelete@Mannwich:
ReplyDeleteBe careful. Free crack can give you herpes or syphilis.....
Great. Let me know what you think.
ReplyDelete@Emmanuel117:
ReplyDeleteI saw a talking head on Bloomberg say that if the eruozone doesn't start printing to increase liquidity, commodities and gold will be sold off, to gain the liquidity. He showed numbers below 1600 as a target (again, unless the eurozone starts printing euros).
The US and Central Banks agreed to take steps to increase liquidity in the Zone. But swaps may not be enough and commodities may fall.
Rock Old Boy When I bend over I show more crack then the Grand Canyon and it is Allllll Free for the viewing.
ReplyDelete(mutt)
Rock - and all of this has to be good for US debt in the short term.
ReplyDeleteIcan - Are speaking Canadian to us, by using words like fexed?
ReplyDeleteNext thing we know you will be calling us all hosers and saying "ehe" all the time.
Mutt
Careful men, crack kills.
ReplyDeleteECRI is calling for another recession? God, how did I miss that one? This is weeks old. . . .
ReplyDeletehttp://seekingalpha.com/article/309178-will-history-repeat-ecri-s-recession-call
hey also - does anyone read Seeking Alpha regularly? Would anyone recommend it? I'm thinking about adding in a few more blogs lately.
ReplyDelete@Thor
ReplyDeleteYeah, I discovered it when I was at my work meeting, and posted here at 2:58.
Can't look everywhere at everything. Just not enough hours in a day.
And I still have to replace my Christmas lites.
@Thor
ReplyDeleteMaybe instead of "Links" we should have a list of "NewsLinks"? Personally, I never use the "links" tags, but I use that other list pretty religiously.
Just one user piping up.
Rock - we can use whatever you think is best :-)
ReplyDeleteSpeaking of "crack"....
ReplyDeletehttp://globaleconomicanalysis.blogspot.com/2011/12/wall-street-is-little-more-than.html
Manny, good link, how is old Mish these days?
ReplyDeleteI can't believe I missed that recession call. Stupid work is getting in the way of my reading! :-(
@Thor: My "crack" is regular exercise. And maybe good cheese. And a little wine. Beer too.....LOL.
ReplyDelete@Thor: That call has been out for a while now.
ReplyDeleteFirst time I've been to Mish's site in a while.
What clueless (or not?) leaders around the world seem to fail to grasp is that each banker bailout one after the other does nada to help the real economy and peoples of these nations. Until they figure that out and act accordingly, this farce will continue and nothing will be fixed the vast majority of people.
ReplyDeleteManny - hah, hey, wasn't it a YEAR ago Mish was shitting all over ECRI because they weren't calling a recession that he just KNEW was already baked in?
ReplyDeleteYeah, well, he still kind of shits on them (AGAIN) for the same thing. It was OVER a year ago, I think.
ReplyDeleteI actually think he may have a point though.
I wonder if he's still hammering unions as the cause of all of the world's problems?
ReplyDeleteWhatever happened to Lou Dobbs? Still hammering on illegals somewhere?
Manny - just finished the post and I would agree, I think Mish has a strong point as well. Have to hand it to the guy, he really knows how to hammer home a point.
ReplyDeleteThis is really good. Fits with my personal mantra:
ReplyDeletehttp://awesome.good.is/transparency/web/1111/the-experiential-economy/flat.html
All about experiences, not things.
I wonder how many of the BUY GOLD NOW companies on Mish's site are under investigation right now :P
ReplyDelete@Mutt:
ReplyDeleteFrom Ritholtz' blog, "10 Friday Am Reads":
"Out-body-experience: Master of illusion(Nature)".
Manny - love that link! Totally agree that money doesn't buy happiness. The more people make, the more they want to make, and the more they start comparing themselves to their neighbors.
ReplyDeleteMy personal belief is similar to yours, experiences, not things. I try to live well below what I make. I never want to be so dependent on a job that I can't afford to lose it at any time. Seems like a prison sentence to me!
Is it time to stick a fork in the First Amendment once and for all? I mean, it's really all but dead at this point, is it not? Well, except if you're a human corporation, that is......
ReplyDeletehttp://www.huffingtonpost.com/2011/12/09/democratic-national-convention-occupy-charlotte_n_1138820.html
Our Founding Fathers have to be rolling in their graves right now.
Exactly Thor. I'm fine with paying for good food, trips, experiences with friends, etc. Other stuff, not so much.
ReplyDeletePK about sums up the EU situation. The markets are delusional, me-thinks. It solves nothing. This is '08 all over again.
ReplyDeletehttp://krugman.blogs.nytimes.com/2011/12/09/the-summit-to-end-all-summits/
Not sure if this had been posted already? If this is true on a wide scale, how soon could we see a meltdown even worse than '08? The financial system is one big scam built on the premise that the global sheeple will never figure it and act out en masse.
ReplyDeletehttp://newsandinsight.thomsonreuters.com/Securities/Insight/2011/12_-_December/MF_Global_and_the_great_Wall_St_re-hypothecation_scandal/
Bloomberg.com
ReplyDeleteIncome debate. "Top income tax rate: How's 83% sounds?".
With no effect on the GDP.
"Pay increases for a wealthy few is 'rent seeking', econo speek fo unshackled greed".
Jeff(2:52)
ReplyDeletePeter Brandt wrote a post on it.
Rock highlighted it above. Ritholtz has it. ZH had it yesterday.
So it's all "legal" then? Of course it is, when done by certain people. This stuff just gets worse worse by the day, and our fearless leaders wonder why real confidence (real TRUST) in the economy hasn't come back yet? We cannot ever recover until this crap ceases to occure and people in high places are put in prison in large numbers for a long time.
ReplyDeleteSo much news, so little time!!
ReplyDeleteManny - that's what I was referring to when I said the whole thing is house of cards
ReplyDeleteGood (negative) write up of the summit in Europe
ReplyDeletehttp://blogs.reuters.com/felix-salmon/2011/12/09/europes-disastrous-summit/
Oh, I'm right with you, Thor, hence my comments the other day about MFG.
ReplyDelete@Mannwich:
ReplyDeleteRE-HYPOTHECATION has nothing to to with "hypothesis" or "hypothetically" (the application of hypothesis).
Hypothecation is a pledge. Re-hypothecation can be thought of as a "re-pledge", that is, let's say, you get a mortgage in return for collateral. You then use that mortgage money as collateral for another mortgage.
Hypothesis is an assumption or interpretation.
Careful how you read this stuff.
@Rock: It all sounds like legalized fraud to me. That's how I read it.
ReplyDeleteThe market's not moving here toward the close. My conclusion is people want to keep their shorts on, and longs are confident in the "agreement".
ReplyDeleteI'm out over this weekend. I think it's anybody's guess, and I don't want to guess wrong. Again.
@MAnnwich:
ReplyDeleteBTW, the UK has no limits on re-hypothecation. That's why (my theory) they don't want to participate in the latest Eurozone agreement: there are limits placed on leverage in that agreement, and the UK can't stand that, their financial system would have to un-leverage to comply, and that would mean a significant compression. There would be new elections and a new PM.
IB (Interactive Brokers) is moving all clients' money to the UK. Wonder why? let's guess...um.....
Re-hypothecation sounds like yet another scheme to steal the global sheeple's funds and then claim they have no idea what happened.
ReplyDeleteI think it might be close to time to dump all risk assets. Or most anyway.
ReplyDelete@MAnnwich:
ReplyDeleteIt's not legalized fraud. It's the method of obtaining leverage and increasing liquidity.
When Clinton was president, re-hypos were limited to T-bills. And it was only like 20%. Since that time, countries like the UK have removed the size limitation, and expanded what you can re-hypo, so the list is long and includes foreign sovereign debt. The list has grown here as well. I think you can re-hypo domestic debt (like munis), AAA bonds, and more.
I don't leverage my positions. But I know people who do.
@Mannwich: your 3:41
ReplyDeleteIt may also be a method to get people to read and understand what they sign.
My re-fi of my houses had paragraphs which I crossed out and signed. Wells Fargo agreed with every modification. I doubt anybody on this list has crossed out a paragraph on the mortgage agreement, or even tried.
I doubt it, Rock. Much of that language is written in a way that only attorneys could understand it. That's by design, don't you think? Do regular peeps have the same access to these kinds of attorneys? I don't think so.
ReplyDeleteDo you really think most people know WTF the term "re-hypothecation" meant, or means, when they read and signed these docs?
Janet Tavakoli weighs in:
ReplyDeletehttp://www.huffingtonpost.com/janet-tavakoli/jon-corzine-dodges-the-fr_b_1138625.html
@Thor
ReplyDeleteRE your 3:17
I agree completely. You add that to the circular nature of money flow in the EU, you realize there is likely an even bigger problem.
The ECB gets money from the IMF. The ECB loans it to member countries. The member countries loan money to the IMF. Who in turn loans it to the ECB. Etc. There is leverage and interest for each round-trip. I doubt if 1/2 the money being recirculated is real.
Here's a really cool article which mentions the debt bubble that's been created:
http://www.rsbullion.com/2011/11/world-drowning-debt/
I have seen numbers that the total debt in the US is around 13T$ with a GDP of around 15T. However, in Europe, the GDP is 13T and the total debt is around 50T.
Can you spell debt bubble? I can.
F-U-X-X-E-D
We R fuxxed.
@Rock & Thor: I think you both nailed it and undoubtedly global leaders know it too, which is we keep lurching from one half measure to another. They have no clue how to fix this thing but merely want to give off the impression they do to buy time.
ReplyDelete@Mannwich:
ReplyDeleteYou're probably right. Some of the language is basically unintelligible. However, the paragraph I quoted above seems pretty clear. The client signed an agreement that said "MF can use your funds at any time for any reason MF wants."
What is not spelled out (to my limited visibility) in that agreement is what happens when those funds used generate a gain, or a loss, to the business.
That for me is a red flag. In fact, the TDAmeritrade has no such agreement, they spin your money back into vehicles which you identify, including and option for TDBank NA, which is FDIC insured. The TDBank probably loans and creates leverage as well, and profits and losses, but your account is your account, and it's insured by you and me. (thank you, BTW).
Now that I understand this better, I have to go into each of my brokerage accounts and find out if I can be in trouble. Or not.
@MAnnwich:
ReplyDeleteYour 4:18.
I agree. However, there was one representative on the Agriculture Committee that did ask an intelligent question about this, and did get a response from Corzine "That's a good question."
But there was one representative on the committe that asked a question about FM Global, and an aid behind him leaned forward and whispered something in his ear, and he got it right after that.
Fuxxed.
just back from lunch, catching up . . . .
ReplyDeleteAgree with you both. Things make a little more sense too, the reason both the EU and US are doing anything they can to keep the banks whole, and why they are refusing to force debtors from taking any haircuts. They know that even a 20% haircut would cause the whole house of cards to collapse.
ReplyDelete@Mannwich:
ReplyDeleteYour 4:07
She's both right and wrong. She's specific to CFTC, and only recently has the CFTC made this rule of segration of accounts. So trading commodities and futures through the CFTC, you're not allowed to comingle investor's funds.
She's wrong about almost every other exchange, including the Fed, the IMF and the ICB. MFGlobal was a primary broker so they could go direct, without any intermediary (and I'm not sure if the CFTC sells foreign bonds or not).
So she's misled you into believing that in all cases, investors funds cannot be used by the firm as they see fit.
How do you suppose primary banks borrow from the Fed? Do you suppose their depositors' funds aren't used? And do you think each depositor has a separate account at the Fed? Nope. I've seen the records. They are by bank, not by investor by bank.
So I think you can see she's primarily wrong because she got you to believe that in all cases, investor's funds must be segregated.
The media should do a better job than that.
@Thor:
ReplyDeleteYour 4:45
That's why the EU PM's have been real clear that the haircut for Greek debtholders is an isolated case, and that investors can feel confident that this is a single event and won't happen again.
Do you believe that? If you do, I've got a really pretty bridge her in San Francisco that I'd love to sell you.
Rock - I got a check for that bridge, you just can not actually cash the check.
ReplyDeleteSo when do I get to take possession of said bridge?
Mutt
Thor - Unless you promise to bring the rest of us back something to eat, there will be no more of this lunch taking for you, during regular blogging hours.
ReplyDeleteMutt
Was browsing the TBP for an update on BR's perspective about the markets, but seems he hasn't published any new technical analysis for quite some time.
ReplyDeleteI guess this market leaves many feeling clueless.
My 2 cents:
ReplyDelete* S&P500 facing down trendline resistance around 1260/1270, as is daily RSI.
* Daily stochastics show overbuying
So my bet is we go lower from here, to revisit the 1200.
Which, as Manny uses to say, probably means it won't happen. :p
@WolfStreet
ReplyDeleteYeah, mee too on that clueless part.
@Mutt:
ReplyDeleteDrive down. I'll sign over the deed today. But you have to bring cash. I need to stash it in Australia.....
@Rock:
ReplyDeleteYour 5:32
You forgot to say that Corzine also believed the Eurozone PMs when they said the greek haircut wouldn't be repeated. Made his trade very sound.
From the comments during his Committee testimony, the panel didn't agree that this would be the only haircut.
I'm on Corzine's side in this issue. I think the Greek will be the only haircut bondholders have to take. I think because the banks hold the paper, us taxpayers will come up with the money to make the bondholders whole.
New Post available....
ReplyDelete