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WSJ March 19, 2009 -- 5:02 p.m.
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The House gave strong approval to legislation intended to recoup bonuses paid by American International Group Inc. and other recipients of federal aid, after a sharp-edged debate that dramatized populist outrage over the government's sweeping efforts to prop up the nation's financial system.
The legislation was rushed to the floor by Democratic leaders amid a storm of protest among rank-and-file lawmakers over AIG's decision to pay bonuses to hundreds of current and former employees, while receiving more than $100 billion in taxpayer assistance. Approved on a 328-93 vote, the measure would impose a 90% surtax on the disputed payments, effective for bonuses made after Dec. 31, 2008.
The legislation would apply widely to payments by all institutions that have received at least $5 billion in taxpayer aid. The special levy would be in addition to existing income taxes, and would apply to bonuses received by individuals with at least $250,000 in adjusted gross income.
Hey, Nick....
This Friday is supposed to be "quadruple witching day".
What does that mean??? And does that bring volatility with it?
Thanks for the cheers! Had a minute to at least read a few postings. VERY interested in Eric's chart. More on that later.
On the ""Was the rally about taking cash on the sidelines and taking a long position, or was it about people covering their shorts?""
It's Corporations making their pension deposits/ 401K annual matches/ or Profit Sharing Annual contributions.
And, when that is done, it's done. No more big flows until IRA funding time.
Why do they always scratch their heads & wonder what the rally at this time of year is all about???? The former Big Five were KEENLY aware of what it was all about. It's all about mandated liquidity injections.
I'm one week behind in my reading, but today's the day for corp tax filing... and... drumroll.. I made it under the Limbo stick.
Wanted to let you know that I closed out the following positions moments ago:
AA (+10.67%), GE (48.66%), M-Macys (+29.76%), MO (+9.26%).
I figured that the latest to sell would be tomorrow, but decided that a bird in the hand was better than one in the bush!
Hopefully, I can catch up with the board this week.
Good luck everyone!
Actually, a large Snickers bar is MORE than a share of C.
So, it's Snickers for me... yuckity, yuck, yuck
"Overall, i tend to believe if you pick good stocks for an LT portfolio at these levels...it will eventually pay, even though we could head lower."
I'm glad you said that because I bit off MO today @ 15.55. (pun intended).
This certainly gets my attention. I'll check in this weekend to read your analysis.
The counter rally this spring should happen but I think the point from which it will rise will be horribly low.
I am more interested in Sep/Oct. I am a firm believer that the REAL low might come then...
I am NOT jokin! The first segment is dated Mar 4th. I wrote on March 2: He could have gotten more publicity by taking the 'shout' & rolling forward with it (ie: "I'm mad as hell & I'm not taking it anymore"). The segment opened with that!!!
Both are clever and I about fell out of my chair with the 'tape across the forehead stunt'... toooooo funny!
Gulp! That's a 55.6% drop in median home prices!!!
LOL! That was good!
Hey, what do you & Mike think would happen if the S&P closed @ 666 and the Dow closed @ 6666. ??
This is the only time I think that (though improbable) the numbers are hoovering in that area. Gaaaaaaadsss! It would be the 'infidels' !!!
That's hogwash. They have a 50% price decline? The share price is ALREADY lower than firesale prices on their assets.
Who would believe anything Merrill says (or other analyst/brokerage) because if they were right, their @#$#@%# brokerage units wouldn't in the toilet.
That's my take... they need some tiddy bowl. It appears that they know nothing... or.... they have shorted it already.
Nerves of steel...
LOL! You told me to get them & I got them!
Opened Macy's @ 6.4496, AA @ 5.4782, & GE @ 6.74
And the beat goes on....
Okay, something is wrong here....
I opened my email today to read:
~~~~~~ Merrill paid out $209 million in cash/stock bonuses in 2008 to its top 10 execs. That is $8 million more than they paid them in 2007. HELLO!!!! The year 2007 saw a TOP in the market in Oct & had only two 'down' months. They pay out $201 million. The year 2008 is horrible, breaks records on how horrible that horrible really is, & Merrill pays out MORE. Does anyone care anymore? This is okay for taxpayers to swallow?
And, from WSJ: While Merrill staggered, 11 top executives were paid more than $10 million in cash and stock last year, say people familiar with the situation. An additional 149 received $3 million or more. The stock awards, which accounted for much of the compensation, have fallen sharply in value since they were made last year.
New York Attorney General Andrew Cuomo has subpoenaed information about Merrill's highest-paid employees in connection with his probe into $3.6 billion in bonuses paid by Merrill in the days before it was taken over by Bank of America Corp. Thus far, Bank of America hasn't turned over the names of Merrill's highest-paid executives, claiming it would help rivals woo its top talent.
Oh dear... We must truly protect "wooing"... Taxpayers must understand that they are paying "woo protection".
~~~~~~February saw 697,000 job losses in the private sector according to ADP. We rally because we think the government sector rose? Or, we rally because the government hasn't said it yet? We believe them more?? HELLO! That's nearly 700,000 and folks, that's a loss in one month what the Obama Stimulus Plan will take over 3 years to get back. God forbid that more college graduates will hit the employment market over the next 3 years.
~~~~~~Increased sales of SPAM are triggering Hormel's profits higher (what does THAT say to you?). Guns and ammo are on a tear & prices are going out the roof (what does THAT say to you? The big NRA Obama scare?? It's a portion but not all). Can we guess the political & economic causes of these current massive profits?
~~~~~~ What exactly are the AIG massive losses? Paying guarantees on bonds globally? And, if those insurance committments are met, then whatever the bondholders or banks hold becomes "good"? That (see Elroy's post on Quanta by Li-- a perfume which later causes bubbles around the users) AIG will make good all the bad bets & risk associated with Li's simplistic but unproven approach? And, are we not bailing out banks/investors outside our borders by making SURE that AIG can pay them all? Gaaaaaaaaaads! This hidden global Bailout Agenda makes me sick!!!
~~~~~~ GE falls to 18 year lows... Everyone is nervous about it... Maybe the mutual funds which can't hold stocks below $10 are bailing??? Gasp if the AAA rating on bonds loses a letter! Better yet, everything the Mutual Funds hold as of 3/31 gets published... Maybe the window dressing starts now? A window dressing ploy staged 10 days earlier than normal?
~~~~~~ January home sales were 17% down from one year earlier??? HELLO !! Most of the nation was in a friggin ice storm with NO power in January ! No lights or heat for a real estate closing?? What does the typist or the xerox copy employee use when there is no power???
~~~~~~ Daily Reckoning says "Bailouts, handouts, bribes and giveaways threaten to sink whole industries." What's new on the THIS block ? Hmmmmmmm ... Bailouts. Bribes & giveaways are normal... Bailouts aren't. We should eliminate bailouts & "whole industries will rise, not sink". Is this what they meant to infer?
~~~~~~ And the Fed's Beige book came out today. They are the Master of the Obvious... and where's that Q3 uplifting turnaround? WSJ reports "The contraction in U.S. economic output deepened in the first two months of the year with no turnaround expected anytime soon, according to the Federal Reserve's latest assessment of economic conditions.
Reports from the Fed's 12 regional banks "suggest that national economic conditions deteriorated further" in January through late February, the Fed said in the latest beige book. In a worrying sign, the effects of the downturn appear to have spread beyond manufacturing and financial services. Activity in a "wide range" of nonfinancial services fell noticeably amid "widespread" job cuts, the Fed said."
~~~~~~ Now then... We rally. What a world!!!
Elroy! I have a post that was written earlier than the latest hubbub whereby I said that we need another teaparty.
The real teaparty was taxation without representation. It is a stretch to replicate it now because we DO have representation... but alas... they are NOT listening to us.
It is (the teaparty thing) all a big coincidence IMHO. If not, then they all stole from MY post.
I really doubt it.
Mine too. They sent a bulldozer from work (3 miles away) to shovel me out of my house & get me to work.
There is NO justice.
While we all cower at the escalating "billions" & haggle endlessly about the specifics of TARP 1 and TARP2, Hilary just pledged $800 million to the Palestians to help them rebuild.
Granted, $300 million will go through United Nations & such, but the remainder will go through scrutinized channels to make sure that it doesn't get in the hands of Hamas.
I would really like to know how we intend to scrutinize those funds. The better argument is that we fund Israel who uses that money to fight the Palestians, & then we fund the cleanup. Trust me, I'm not taking a political stance on this, I'm trying to point out that we are the suckers in the middle with the fat wallet of borrowed money.
Who wouldn't be bored by an author in Cyberspace known to the world as Elroy Jetson?
I mean, do you realize what a joke it is to pass on anything you say when we have to identify the source as Elroy Jetson????
You really HAVE to think that one through....
Bye the bye, what are you quoting to the LA Times if you are retired other than an opinion? Can you give a link?
He could have gotten more publicity by taking the 'shout' & rolling forward with it (ie: "I'm mad as hell & I'm not taking it anymore"). Everyone remembers that one & there has never been a time sooooo fitting for the shout.
To say that we should stop feeding the drinkers of water (rather than the carriers of water) doesn't get the idea across quite as good as the SHOUT would.
Regardless, if Rick Santori stooped sooooooooo low as to have choreographed anger, I believe it would hit the front pages.
You did not, however, note that the same Santori clip hit Youtube & other news feeds withing minutes. Is that a conspiracy? It might be that the statement fit the Birch Society criteria & they happily grabbed it.
The moral of this story is to buy bank stocks & ride up the short squeeze?
Okay guys... the brutal story for Jan/Feb ends. Here's the take on Feb:
From Marketwatch:
BULLETIN >>
U.S. stocks finish in the red Friday; Dow posts biggest February point drop on record
March will be better.
Have a good weekend everyone. I just snagged some outrageously LOW prices on some quality furniture and appliances & will be pulling out all the stops when it arrives tomorrow.
Looks like the buck still has some great purchasing power in a deflationary environment! With durable goods moving down a scarey road this year, deals are everywhere. Better yet, the Cash Price is the best I've seen in a decade.
I really hate to say this, but you all need to get out there & shop before the prices reverse trend!
Yes! And ... drumroll.... the buyer gets screwed!
Court... you can STILL be effective if you use the right argument.
Something like "history and voters tend to punish politicians that rely on lies to legislate. GDP @ 3.2 growth (the basis of the proposed budget) is an absolute lie."
Now then... I'm being nice. I'm SURE you can put far more explitives in your work than I could possibly imagine. Give it a shot.
Mitch McConnell (R) KY just heard from me. What's more, I felt GREAT writing it!
Let's go for it!
I'll do it. Your rage is justified. Glad to see it resurrected!
If the 'core' of an argument is bad, all assumptions derived from the core, or because of the core, are bad.
From WSJ today:
Gross domestic product decreased at a seasonally adjusted 6.2% annual rate October through December, the Commerce Department reported in a new, revised estimate of fourth-quarter GDP. In its original estimate, issued a month ago, the government had reported fourth-quarter 2008 GDP fell 3.8%. The sharply lower revision reflected adjustments downward of inventory investment, exports and consumer spending.
The 6.2% decline meant the worst quarterly showing for GDP since a 6.4% decrease in first-quarter 1982 GDP.
Q1 2009 might be as bad as Q1 1982. Now then... maybe ALL of their growth projections are in left field.
You also know the system we've created fostered a great deal of the bubble as well.
We all watched this happen:
When interest rates were high, home prices barely moved. They appreciated at a slow rate. If a fellow could affort $1000/mo mortgage, than the house price had to be within that grab.
When interest rates went down, the fellow thought he could get the same house & pay much less than the $1000/mo mortgage. But, hmmmmm.... the house price rose in porportion to the lower interest rate and viola! He could now buy the house for $135,000 and STILL pay the same $1000 he would have paid before!
Higher commissions for the real estate industry; more money to the seller; and the sucker becomes the buyer.
Things have, since the bubble burst, worked in the other direction. The real estate industry AND the seller are hit hard.
We THOUGHT the stimulus plan for 1st time buyers was good... but .... some things don't change. Builders here are advertising that U.Sam will give them $8,000. What is really happening? The sellers home price goes up $8,000, the commission is raised for the agent, and the 1st time buyer gets screwed.
I remember that event clearly. He was deemed a "rogue trader". The question was (first) that if systems were in place -- and enforced -- then "no trader can become a rogue trader". The system would have stopped it.
Then, news came that he worked other departments & therefore learned how to bypass system controls.
Without really focusing on 'sytemic' problems, the focus (and story) reported led most folks to be compassionate for the firm but harsh on the trader who intentionally learned the system and worked it to his (sic) advantage. To make 'good' those rogue trades good, the firm went down. This seemed the honorable thing to do.
It just appeared as if there was a bad apple that killed the tree. It did not appear as if it were a bad tree which, unknowingly, grew a bad apple.
And Naples?
Well now.. a little flaw in the works...
Rental income must be reported along with all associated expenses. The flaw? The return requires the address of the property that... oooops... has the same address as the property you took the tax credit on and...uhmmmm... which you swore was going to be your personal residence.
But, then again, this is all conjecture, no? LOL! I bet you find another way! Let's hear it when you do!
This is just a scam:
-- dilute shareholders at the banks whim or whenever it needs to raise interest free capital
-- give the banks the whim to declare or to remove dividends at will
-- keep the general public who 'risk' in the markets saddled with the losses should the banks overextend losses elsewhere
-- provide additional capital OVER & BEYOND the TARP and stimulus money (that will undoubtedly be highjacked for banks)
-- put the investor of common (who is lowest on the totum pole) holding the proverbial bag
-- negate the possibility of any SWF from getting controlling interest for pennies on the dollar compared to prior shareprice/shares outstanding
-- the Central Bank, charged with the sole responsibility of keeping our banks & financial systems sound, would sacrifice the welfare of the citizens by proping up the banks at the possible expense of the investor. They will protect the banks first and foremost. That is their sole purpose.
Maybe I'm wrong, but it's not hard to dig into the backdrop of these suggestions & wonder what the real purpose is. Anyone here is welcome to correct me because this is just my first reaction... and probably won't be the last.
Actually, what he wrote in his letter was this:
For Double Inverse EFT's, sell out by yesterdays' close. He was reversing his prior recommendation to go heavy into double inverse INDEX funds. He still recommends the bear funds as they are managed & won't decay for a long-term hold.
Secondly, he is positive that the 5th wave decline is over. A pop higher is the next Elliott wave & he didn't want subscribers to bite that bullet.
Thirdly, he forecasts another decline after this pop higher. It could be weeks or a month... it will be, so he says, from financials. He is adamant that this is a countertrend rally within a broader bear market. He didn't say a "secular bull market within a broader bear market" -- which I think the March 12, 2003 to October, 2007 was -- but rather a rally measured in a much shorter time frame (weeks/months... not years).
It's always good to read contrarian points of view, though I've had great difficulty swallowing the advice when given. Some of you know that. I can say, with absolute certainty, that he stated (waaaay back when) "if gold hits 400, we will change our forecast and take a bullish stance". Gold hit 400 & never looked back. From 400 until this very day, they never changed from bearish to bullish. To that advice, I'm glad I never listened!
One must wonder, then, if Bernanke will take the "high road" today at the Humphrey Hawkins testimony and discuss the "poor effect".
His predecessor hailed the virtues of the 'wealth effect' and all the prosperity it brought our country. The 'poor effect' has the same profound impact (detrimental--in the opposite direction) and may possibly be more widespread in that the negativity and severe reduction of leverage feeds on itself.
The 'wealth effect' of rising investments, pensions, & home prices was all the rage of conversation & economic forecast. With each of those declining at a rapid pace, what Bernanke says (should he be asked) will be interesting.
Charts do, in fact, drive trading patterns. Every successful trader has watched the charts because the charts, indicators, and patterns give the trader confirmation of probable occurance (up/down/sideways). I realize that you endorse the use of short term (possibly intermediate term) charts, and are negating the supposed 'long-term' chart influence on the short or intermediate.
But, would you consider, that the discussions we had in November to try & isolate the strongest support available in charts (the 7200 area) was use of the long-term support line. There is no doubt that the market can overshoot that area & bounce; it can overshoot & keep falling; or it can hover in that area. But the alarms for a traders attention sounded by hitting that 7200 line.
Now then, every trader has just heard the alarm. What will the aggregate of their independent tactics/moves bring in the next week (with lack of a 9/11 or a Citi blowing up or other market shaking news such as war or the like). Given a lack of a gut-wrenching (or... on the upside... a gleefully wonderful event) occuring, it is dangerous to make a long-term committment to the market with the 'Attention Please!' alarm sounding.
That's all it does. And trust me, I doubt that buying long at Dow 7500 (that's where we bought the AA isn't it? It was at the intraday low?) was better than the massively volatile market that brought us Dow 7449 in November. Same area, different type of trading, different volatility.
So.. if we didn't have that 'long term support' line, then calling Dow 7200 last November would have been difficult (if not impossible). This is to say that the long term chart did, if fact, give guidance & helped to pinpoint were we might be 4 months in advance.
And, it is because of the long-term alarm sounding, that trading patterns may kick in if the traders all review the landscape BECAUSE they heard the alarm. So, here's the point... did the chart cause the trading pattern to change? No... the chart caused the human to review the level, the landscape, and to try to ascertain what everyone else will do. Once that occurs, he may possible make a move to mitigate damages or to profit from a bad situation.
I think it's all about the human.
I just got a nudge from BPrice about out November conversations. November 6 seems like a lonnnnnnng way back, but it's only 2 days after the election.
We must have been trying to nail down that support because Bill wrote his target in post# 42817. I remember agreeing. I also think the charts must be hanging around that conversation area as well.
Take a peek at post 42817 & around that area. I am sooooo buried in this work, I don't have time just yet.
Thank you! And thank you Bill! We've missed you!
Memory is not the issue, IMHO.
Trading platforms, computer programs, statistical analysis (all which are affordable to brokers/traders/'big boys') give signals for market propensity for support because, given the statistical odds, there should be a 'turn' at this level.
More often than not, those supports hold. I should think that the 7200 area (even in Elliott terms) should be primary & intermediate support. If not, it could be the 6400-7200 area. On the Cycle wave, it could go down to 600.
Mike, I just hate it when I can't post a chart (not sure how to do it) or that I can't find the one that is blazing in my head.
I did a quick & dirty Google & found that someone else had posted the chart. Pay no attention to the site, but look at the chart. It is the closest thing to the chart that blazes in my head.
It's the second chart on this link:
http://jessescrossroadscafe.blogspot.com/2009/02/long-term-dow-chart.html