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I'd rather have the nurses play with me (than the surgeons). Good luck, Fox. Two
Yes...an evil sense of humor. Two
I want to see if the NDX takes out last Thursday's high (1632 at 10:35 EST). Two
POKERSAM, I agree with your analysis and would like to add a couple of thoughts. First, Lindy may be correct re. the current rally extending for several more months. We'll have pullbacks, for sure, but there's so much liquidity being injected into the market and the economy that it's floating everything higher right now. (That said, I think we'll have a brief pullback very shortly.) Second, the very bad economic problems you cite will probably hit full force early next year...and that, perhaps, is when the market will pull back dramatically and retest the March lows. This may happen sooner than next year, of course, but Lindy's monthly chart makes a strong point. JMHO. Two
I think you're right re. the Volt. But it's not going to be inexpensive and I'm certain the Japanese, Korean and European car makers will have their versions in the market before GM does. As I talk with folks about the clunker program, many tell me it's cheaper and easier for them to hold on to their big, gas-guzzling SUVs than to apply for the government money and buy a new vehicle. Some even say that they can buy a "clunker" inexpensively and, because gas prices aren't too high now, get by quite well without all the hassle of buying a new vehicle. All the clunker program represents is more bailout money for GM. It's a quick fix that will backfire next year when there's no more government clunker money and folks decide not to buy new cars. Two
smartone, GM and Exxon screwed you, as well. GM developed an electric car in the 1990s, then promptly destroyed all those cars for some "mysterious reason." Exxon, as you know, is the middleman in the oil supply chain and as such controls the refining process. Bottom line: GM could have provided you with an electric car 15 years ago, and Exxon manipulated the price of oil vis-a-vis not investing in new refinery infrastructure for nearly 40 years (not to mention, by manipulating gasoline prices at the pump). And then there's our government, which has allowed the State Dept. and CIA to create turmoil in the Arab world for decades, further exacerbating the oil "problem"; as well as putting in place programs in 2003 that encouraged the automakers to build large, gas-guzzling vehicles for Americans who got tax breaks when they bought them. There's a lot of blame to go around. Two
john, our laws also currently allow them to trade the market using insider information. Can you imagine being in a position to buy GS at $60 before anyone else knew the company would receive $billions in bailout money, for example? Two
Did you see AutoNation CEO Jackson on CNBS this a.m.? He was pumping the clunkers program, of course. He didn't mention that it takes hours (up to a day, I read) for clerks at dealerships to fill out and process all the government eligibility forms. Also, the government's website is down most of the time, so it's hard/impossible to download forms or process clients' data. As is so typical of most programs put forth by our government, this one is poorly designed and managed by dolts. Two
Not to worry, Foot. The clunkers program is just fine. Mish Shedlock explains.... Two
=======================
Free Money Runs Out, Congress Authorizes More
With $1 billion already wasted Lawmakers Vote on $2 Billion More to Replenish ‘Clunkers’ Program.
The U.S. House opened debate on an emergency measure to add as much as $2 billion to the “cash for clunkers” program after a burst of demand exhausted most of the initial $1 billion.
The initiative to encourage new-car sales is still in operation, White House press secretary Robert Gibbs told reporters today. Members of Congress had said late yesterday that the clunkers offer was being suspended.
“If you were planning on going to buy a car this weekend, using this program, this program continues to run,” Gibbs said. “If you meet the requirements of the program, the certificates will be honored.”
Named the Car Allowance Rebate System, the program provides credits of as much as $4,500 for the purchase of a new car when turning in an older vehicle to be scrapped. Lawmakers had expected the program to generate about 250,000 vehicle sales and to have enough money to last until about Nov. 1.
The funding was offered as an amendment to legislation by Representative Barney Frank, the Massachusetts Democrat who heads the House Financial Services Committee, which would ban incentive pay for Wall Street executives.
'Cash for Clunkers' Runs Out of Gas
Inquiring minds have found some interesting quotes in the Wall Street Journal article 'Cash for Clunkers' Runs Out of Gas.
Michael J. Jackson, chief executive of AutoNation Inc. said "It was an absolute success. There's a very compelling case the government should put more money into it. It's a great stimulus to the economy."
Actually a very compelling case can be made that the CEO of AutoNation is an economic illiterate. All the program does is shift demand forward. Those clunkers were going to die at some point. Now sales are up this year which will cut into next year's demand, at the expense of everyone not getting free money.
Why anyone should be surprised at the "success" in generating demand for free money is beyond me. There is always demand for free money. Yet, interestingly, everyone seems surprised by the "unexpected success".
If the government wants more "success", it can give everyone $4,500 for a car. Short-term demand will soar. But long-term demand for cars would crash for the next few years, taxpayers would be stuck with the bills, and valuable resources would be wasted on cars rather than productive assets.
Thus, the "absolute success" touted by AutoNation is in reality a tragedy. Handing out free money always is. Indeed, the more free money handed out, the bigger the ultimate tragedy. The housing crash is poof enough.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
OT: (Unless you're heavily invested in real estate stocks, REITS, etc.)--Ty Durden at ZeroHedge talks about Mort Zuckerman filing to sell a million shares of BXP to "diversify his assets." He may also build a bridge between New Mexico and Arizona, said Durden. LOL. Two
========================
In other news, the Commercial Real Estate market is doing very well... Oh, my mistake, was just reading the latest Cohen & Steers market update. For a more realistic observation, one may want to consider that Boston Properties Mort Zuckerman just filed to sell 1 million shares of BXP for a value of $51 million. From Bloomberg:
Zuckerman is exercising stock options and making the sale to diversify his assets, said Arista Joyner, a Boston Properties spokeswoman. He remains the largest individual shareholder in the Boston-based company he founded. Chief Executive Officer Edward Linde filed to sell 300,000 shares, filings show. Boston Properties hit a seven-month high this week and the stock is up 68 percent since March 5, when it traded at $31.49. The company, owner of New York’s General Motors Building and Citigroup Center, raised $842 million in a secondary stock offering last month, joining REITs in selling equity and debt to pay existing loans.
But wait, lest you think there might be an ulterior motive here:
Zuckerman is “not calling another high” in the stock, said Arista Joyner, a BXP spokesman. “That is not his reason at all” for selling.
In other news, Joyner will likely soon anounce that BXP has commenced the construction of a bridge between New Mexico and Arizona and is actively soliciting investor interest.
So readers, please, PLEASE, keep buying those REITs and other gangrenous, toxic, nuclear fallout - how else will the CEOs of the companies who realize that the bottom of the market is about to fall off any minute, be able to sell their shares.
The "intermediate top" (on the NDX) that I detected occurred around 10:40 EST yesterday. There could be yet another high? But I tend to think we'll go down for a bit now. Of course, there's Monday to contend with. Lots of fund managers wondering whether to pile in (or withdraw). Two
Amazing strategy, Fox! I was challenged to conceptualize it all, but it makes sense after careful review. Thanks for sharing. (It appears you studied TA with the help of an instructor who was a maestro?) Two
POKERSAM, please clarify and/or explain yourself in more precise terms. When is a top a top? Or more particularly, is a top a top when it's a top? LOL. Thanks for your charts and market thoughts. Two
Good suggestion, Fox. So, you have some media training in your background? Not many folks understand the concept of "bridging." Unfortunately, this "gentleman" was once an Eagle Boy Scout and is considered a strong "family man." Doubt they're any closet boyfriends in his background. But it is his morals, values and religious beliefs that I'll attack. If nothing else, I can always shame him. (But if he's amoral, as I suspect, even this won't work.) Two
Good question. Any suggestions? Guess all I can do is point out, to his face, that there's actually someone who knows what he's all about. Eventually, at election time, I may write a letter to the editor that points out his campaign contributors and other facts. Two
OT: It's amazing what a little research will uncover. Please recall that I recently asked for help collecting unemployment data for an upcoming one-on-one meeting with my local U.S. House of Representatives member. My wife and I are still very upset that, despite repeated personal requests, he voted for the bank bailout and all subsequent give-aways.
Well, my research revealed that he ranks number two among the top 20 House recipients of campaign donations from the finance/credit industries (he got a lot more money than even Barney Frank). Among his benefactors were Morgan Stanley (which, by the way, just gave its executives more in bonuses than its profits), the American Financial Services Assn. (which represents the big banks), and a bunch of pay-day loan sharks such as Cash America, Advance America Cash, Atlas Credit, etc. Also giving him big money was GE (which owns CNBS) and American Express.
So...this bastard is supported by the very companies that have put the average American into enormous debt. Companies that he made sure got $billions in bailout money. Unfortunately, he's not alone among his peers. Two
What CNBS didn't really focus on this morning re. the GDP numbers (from another site). Two
====================
Real personal consumption expenditures decreased 1.2 percent in the second quarter, in contrast
to an increase of 0.6 percent in the first. Durable goods decreased 7.1 percent, in contrast to an increase
of 3.9 percent. Nondurable goods decreased 2.5 percent, in contrast to an increase of 1.9 percent.
Services increased 0.1 percent, in contrast to a decrease of 0.3 percent.
Real nonresidential fixed investment decreased 8.9 percent in the second quarter, compared with
a decrease of 39.2 percent in the first. Nonresidential structures decreased 8.9 percent, compared with a
decrease of 43.6 percent. Equipment and software decreased 9.0 percent, compared with a decrease of
36.4 percent. Real residential fixed investment decreased 29.3 percent, compared with a decrease of
38.2 percent.
Real exports of goods and services decreased 7.0 percent in the second quarter, compared with a
decrease of 29.9 percent in the first. Real imports of goods and services decreased 15.1 percent,
compared with a decrease of 36.4 percent.
Real federal government consumption expenditures and gross investment increased 10.9 percent
in the second quarter, in contrast to a decrease of 4.3 percent in the first. National defense increased
13.3 percent, in contrast to a decrease of 5.1 percent. Nondefense increased 6.0 percent, in contrast to a
decrease of 2.5 percent. Real state and local government consumption expenditures and gross
investment increased 2.4 percent, in contrast to a decrease of 1.5 percent.
The change in real private inventories subtracted 0.83 percentage point from the second-quarter
change in real GDP after subtracting 2.36 percentage points from the first-quarter change. Private
businesses decreased inventories $141.1 billion in the second quarter, following decreases of $113.9
billion in the first quarter and of $37.4 billion in the fourth.
Real final sales of domestic product -- GDP less change in private inventories -- decreased 0.2
percent in the second quarter, compared with a decrease of 4.1 percent in the first.
Gosh, gloe, how could the government's calculations for '08 be wrong? LOL. Two
I'm short from the 10:30 close (NDX: 1627.58) in my Rydex account. It's always a gamble, no matter what your charts tell you, right? If the GDP looks "golden," we're likely to get a pop in the morning. If not, then what? Any other bears out there? Or am I the only one? Two
You're welcome, Fox. I email material such as this video to key business editors/writers at daily metro newspapers and business magazines, but seldom--if ever--get a response. However, sometimes they pass it on to their writers and it shows up later (much later). An example was the story about the $134 billion in U.S. Treasuries that Italian police discovered on the two Japanese "tourists." Eventually, the Bloomberg editor, after much harassment from me, had one of her writers do an editorial. The business/financial media, for the most part, are so damn lazy and ineffective. Wish I was young again and could become an investigative reporter for one of the blogs that tells the truth. Where are the Woodwards and Bernsteins of this generation? Two
The "Ticker Guy" explains the trin data dislocation that spiked the market this morning, as well as how high-frequency trading is screwing everyone. A very worthwhile view, if you've got a few minutes. Two
http://market-ticker.denninger.net/
My guess is that the indexes drop a little into tomorrow's open, then bottom and do a slow grind up into Friday's close. Seen it happen before. Two
OT: Foot, I think Geithner needs a better realtor! How very ironic, wouldn't you agree? Two
http://www.ritholtz.com/blog/2009/07/home-crisis-investigation/
Thanks, spdpro. Got out with 24 cents/share. Two
Got in well under 26. Did you mean the "floor" or the "ceiling"? Two
I bought a very small QID position at 10:40. Will bail if required. Two
Looks like the kind of day where most of the ramp is during the first hour, then they level it off for the remainder of the day. Tomorrow could be flat with a slight bullish bias, especially since it's EOM. Two
Hi, euterpe1. Another important component of my Rydex trading strategy is to "balance" my positions when I feel it is necessary. For example, before last night's cut-off time, I bought an NDX long position equal to my NDX short position. This allows me to not lose money on the short position and to reestablish another short position at a better level later if it's required (which it probably will be at today's close). The daily gains at this stage in the rally are comparatively small, so I'm not bothered if I don't make a little money on the long side today. The important thing is to be positioned correctly when the slide begins. Hope this helps? Two
Michael, you're absolutely correct. Before retiring, I was in the PR business and helped executives and politicians learn how to sidestep difficult questions. For this reason, he won't have an easy time dealing with me (lol). Thanks. Two
Excellent, smilinghiker, thanks! Two (And thanks to you, as well, beerworld. I'll grill him over hot coals.)
A request: I have an opportunity next week to grill my local rep to the U.S. House of Representatives one-on-one and I plan to hit him hard re. several issues, especially his support for the bailout and Wall Street. Can anyone lead me to an unbiased, no-BS summary of our nation's unemployment problem and related job statistics? Your help would be greatly appreciated. TIA. Two
My "Apocalyptic Seismic Indicator" agrees, Fox. Two
Well, duh..."You're starting to see customers pull back from the (Treasuries) market." Two
============
Treasuries Fall After Record Sale of $39 Billion of Notes
July 29 (Bloomberg) -- Treasuries fell for a second day after the government’s record $39 billion auction of five-year notes drew a higher-than-forecast yield, renewing concern the deluge of U.S. debt being sold will overwhelm investor demand.
The notes drew a yield of 2.689 percent, compared with a forecast of 2.635 percent in a Bloomberg News survey of eight of the Federal Reserve’s primary dealers. Indirect bidders, a class of investors that includes foreign central banks bought 36.7 percent of the notes, down from 62.8 percent of the securities at the June sale, the highest since December 2004.
“You’re starting to see customers pull back from the market,” said Thomas L. di Galoma, head of U.S. rates trading at Guggenheim Capital Markets LLC, a New-York based brokerage for institutional investors. “It’s been a fundamental shift in central bank buying.”
Thanks, Fox. That chart is so vivid and colorful that I had to put on my sunglasses to view it (lol). Two
What do you think, Dan? I picked up a buy signal on the NDX around 1:35 Eastern. See anything comparable on the SPX? TIA. Two
OT (sort of): It's no wonder we're in trouble financially as a nation. With Fed governors like Janet Yellen, who believes "deficits don't matter," there's no fiscal responsibility at the Fed or elsewhere in government. My buddy Jessel (Cafe Americain) had this to say about her. This woman ought to be muzzled (then tarred and feathered). Two
==================
28 July 2009
Janet Yellen Channels Ronald Reagan: "Deficit's Don't Matter"
"You know, Paul, Reagan proved deficits don't matter."Dick Cheney to Paul O'Neill."
The mainstream media is reporting that Fed governor Janet Yellen, a noted dove on inflation as Fed governors go, just told a gathering of bankers in Idaho that "deficits do not cause inflation" and summarily dismissed any concerns in that regard.
So, consulting the source material which is included just below, I am struggling to understand what she is saying, and to believe that she said it with a straight face, and was not just jawboning.
What Janet Yellen seems to be saying is:
First, that deficits do not matter unless they are 'structural' and not temporary. It does not matter how much, for example, we give to the banks. When the crisis is over, the deficits will remain, but will not grow larger, and will be offset by higher taxes, that will come from the improved economy.
Secondly, that developing countries have independent central banks that know how to and are willing to fight inflation, as opposed to the central banks of undeveloped countries where the government impedes their ability to fight inflation and to monetize the debt.
Thirdly, monetary inflation only occurs where excess demand for goods and services is generated. Until that point, unless there is this demand, increased money supply does not generate inflation. We might call this the reverse Laffer, in that it is a Demand side view of inflation that tends to discount the supply side completely.
One would not think that the US had recently seen the collapse of an enormous housing bubble, following the collapse of a large but less enormous stock bubble. Janet brushes this off faster than a stock strategist on CNBC.
Although she received her Ph.D. from Yale in 1971, she surely must have subsequently studied the stagflation of the 1970's in the US, where demand remained relatively stable but a supply shock on the oil side, together with the egregious monetary policy of a pliable Fed that had been accommodating Richard Nixon, finally triggered a rather nasty stagflation that the hairy-knuckled resolve of tall Paul Volcker was finally able to overcome.
Janet Yellen is greatly mistaken, but almost emblematic of the thinking in some circles that can see only the demand side of the equation, which is most common in a layperson relating to their common domestic experience. What is frightening in a way is that she is not some blogger out on the net, or a talking head for the extended infomercial that is financial reporting in the US, but is a Fed governor.
And she is no outlier. Her thinking underpins the basis for Bernanke's strategy of packing the banks with liquidity, monetizing their assets, but maintaining control of that added liquidity by having the ability to attract bank reserves into the Fed where they can be managed through the ability to pay interest on those reserves.
Can the Sorcerer's apprentices keep a steady hand on this latest monster from their laboratory? Every time they try this, something unexpected happen, and we go to the brink, to be rescued by another patch, another new experiment, designed to save us from the last one gone wrong.
Her arrogance toward 'developing countries' is absolutely appalling, and sure to come back to haunt her at some later date. If one looks at the performance of the dollar and its long term purchasing power under the Fed, it appears that Janet is a proud member of the subjective idealist school of behavioural economics. What we do not admit to be real cannot exist, and will not hurt us.
So, we can inflate our way to prosperity, provided that we control the perception of the results of our actions. Jigger the CPI so its no longer valid, suppress long term interest rates by buying the curve selectively and suppressing gold (See Gibson's Paradox by Larry Summers), and coerce the world's central banks through various means to support our monetary inflation step for step. After all, everything is relative. Until it is not.
OMG. Our entire financial system is based on the sufferance and good will of potential adversaries to do what is in our best interests because the fragility of our currency frightens them. And well they might be fearful, when they read this from Ms. Yellen, and see how many true believers in the omnipotence of the Fed take it seriously.
Not to worry, our government will secretly buy whatever the Chinese/Japanese don't buy at the auction (lol). Two
It's always easy for the "House" to win, especially since they control the cards. Two
I understand, believe me! Lots of fakeout sell signals last week. But there was only one NDX sell signal, on 7/23, that got my attention. That said, Da Boyz always--and I mean, always--set up a second, and sometimes a third, higher-high, so to speak. And the second higher-high came yesterday. My guess is that we may see perhaps one more higher-high (Friday?). We'll see.... Two
Preferably, Nice. Two