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Hey Nick: we're sitting at major support on the Dow. Do you have some thoughts about that?
Russian Proverb
You dwink too much wodka, you womit.
Boris & Natasha
Okay... I fell off my chair AND I'm choking! LOL!
In Fried Green Tomatoes, Kathy Bates used seran wrap. Tin foil is for guys?
In that case, quondo omni flunkus mortati.
(When all else fails, play dead)
LIfe is complex only because we pile misunderstanding upon misunderstanding and hold the garbage pile up as truth.
E.Rowland, Great Guy
Fairy tales can come true,
it could happen to you...
Frank Sinatra
Gulp! I definitely do NOT want to gaze upon that one!
This was, IMHO, a good day to pull the short term 'long' trigger.
And (yes), this has ME written all over it: "... also recall that the study showed you can expect further downside a few weeks out...in otherwords, a market that manages to make lower lows in oversold conditions has convicted sellers behind it that re-emerge after a relief bounce."
Opened JAG @ 6.22 & AA @ 6.02
On BAC...
There's a multitude of comments I might make, but I will stick to what irks me the most.
We no longer see commercials about how BAC was started by women, ran by women, & have evolved into "the bank it is today".
All hail the failures of men, but never mention that an initial female venture ultimately sought failure.
That's not my cup of fairness tea.
On Citi... I wonder what steps (if any) the Prince has taken to mitigate his losses...
And, those loan agreements for 10%+ interest payments?
Whewwwwwww...
What was the headfake?
You may have been a week early (a couple of weeks ago targeting Valentine's day), but you certainly called this one!
Bravo !
Hey, Emmett, this is my reponse to Eric's post. He's the guy with the research, backtesting, and history of monitoring the WLI (Weekly Leading Indicator).
He showed a good leading indicator (WLI) that is posted almost in real time that tells you the way things are going LONG BEFORE REPORTS do. It would allow you to make a move to be bullish long before the crowd; or bearish long before the crowd. GDP does not always mirror the market, but large moves (up or down) that stay that way for extended periods of time, will eventually move again...
You can thank HIM for that great news!
Actually, put him in a bowl of cheerio's, stir it up, and feed it to the pets.
But, then again, Obama just told the truth (and that is good but it certainly shocked me)
The Fed's are very focused at ballooning their role as the (sic) nation's guidance counselors; if they can waive a wand & pull money from our youngest generation to stave off the perceived hardships of all other generations, they will do it.
On Obama: What do you think the consequence of "in fact, the party is over" means?? It's obviously on borrowings & to reverse that, interest rates must move up to make it more attractive. If they seek to keep long term low for recovery of the housing industry, then wouldn't the short term rate be the focus?
Now then, let's rewind to 2000 if we may...
You laid out great reasons to focus on gold. If I remember correctly, $267/oz was the gold cost of the day. You were prudent, but I was knee deep in reading the Gold Bug boards (I think there were 3) and just when I thought an author had his ducks in a row, he would post some conspiracy w/banks & Africa politics. I was waaaaaay out of line asking you that & I more than apologize. I would have apologized THEN, and I certainly apologize now.
Alas, there was an overwhelming obvious agreement at hand... that I hope did not go unnoticed... and (thank god): It's not what people say, it's what they do....
I bought gold and was excited to tell you. Do you remember that I bought gold bars? Do you remember the story about my Dad attending a wholesale auction of coins and gold from a drug dealer confiscation & that we got them for $275/oz? And that he waited to bid when the dealers stopped bidding in order to get the lowest retail price? And, at the same time, I sold the beegeebies out of my stock holdings? That's a pretty big admission of common agreement... but I was always unsure of the silver investment because I just didn't understand silver or how to get it other than overpriced coins (thus my drilling you on it). I still have a tough time with silver understanding, but some day I'll "get it".
This is to say that though I made a silly, hurtful, & uncalled for question, my actions (then) should have been louder than words. And yes, my friend, I know you know this; but I'm older now & life is just too short not to make closure for unintended consequences.
I certainly hope you accept my apology.
On an earlier post, you brought up idle manufacturers. I almost commented but it's better to comment on this post of yours.
There is a severe (maybe 50% or so) reduction in output currently for manufacturers in our area. These are not idle plants... these are the guys left standing.
The scrap output for prime grades of aluminum, copper, steel, and brass are cut in half. Since scrap is a bi-product of production (and all manufacturers have -- over several years and even when times were good -- tweaked to cut scrap to the bare minimum), production scrap of 50% is a huge, huge decline.
Gaaaads... I am salivating too! But that aluminum demand... it's still going down... we must wait just a tad longer...
I read this statement from your post slowly & really, really digested it:
"This is one of the big reasons I'm sure the government will favor inflation and as soon as possible. It makes the collapse of the economy easier to take if the vehicle in which it's valued is losing value as fast as the economy is going down. "
One of the MOST important admissions I have EVER heard from a politician, much less a President, was this statement from Obama in his Feb 9th Press Conference... taken from the transcript... and NO ONE seems to be talking about it..
From his answer to a question from Chuck Todd:
"Answer to: Chuck Todd
Now, you are making a legitimate point, Chuck, about the fact that our savings rate has declined and this economy has been driven by consumer spending for a very long time -- and that's not going to be sustainable. You know, if all we're doing is spending and we're not making things, then over time other countries are going to get tired of lending us money and eventually the party is going to be over. Well, in fact, the party now is over. "
This is huge.... HUGE.
I read this two ways: That the great experiment to put full faith & energy into a consumption society HAS failed...
and...
He's telling us... Americans who currently need 4 billion a day in borrwoings... that no one wants to lend us money... "tired of lending us money and eventually the party is going to be over. Well, in fact, the party now is over. "
Would he, should he be stating fact, not want some sort of inflation immediately?? What do you think of this answer of his?
Eric? Anyone?
LOL! Let's you & I meet them face to claw! LOL!
This makes me sick! I just want to claw his eyes out! He has the gall to sit in front of Congress & tell them NOT to regulate derivatives... that derivatives were good... that banks did not need the regulation.
Then, he states in your post "”It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring,” he said. “I understand that once in a hundred years this is what you do.”
Yeah, Bud, because YOU caused the 100 year trigger event!!
Dannnnnng, I just can not STAND this man! He sold out our country. He should pay dearly instead of getting a government pension.
I'll even buy fake fingernails if someone will just put him in front of me to test their clawing ability... I just am UNDONE...
So, our lengthy discussion of this subject last weekend was dead right! Since we have, for 5 yrs, hovered above the norm of 15 (see this chart again - http://www.bullandbearwise.com/SPEarningsChart.asp ), then isn't it possible that we will (once again) hover above the norm?
On a full blown run for the exits, we would overshoot the 15 & move to 10-14, no?
Isn't the market environment, with the downfall of the big brokers, going to act differently? The big players are different...
Boy, do you ever have this one right!!
Since Oct, 2007, I have been in ST Treasuries, MM, Gold, & kept residual stock via trading. On Jan 2 of this year (as I posted), I exited those few stock trades. So, I'm sitting with ST Treas, MM & Gold.
I have only made one short term trade since Jan 2 & it was marginally profitable.
The March 15-April 15 time period is historically when Corp's & individuals deposit their Profit Sharing/Pension and IRA funding respectively. As I have posted before, and it still is proving true, this time period (Mar-Apr) brings in more money than all other 11 months combined. The rallies usually move around that time period due to investment mandates.
So... some money is coming... but have folks changed their investment elections from stocks/bonds to MM's & such? Will the market behave differently this time around? Will corp's choose zero optional funding for Profit Sharing? Will corp's remedy (or partially remedy) their underfunding on defined benefit plans?
I couldn't tell you!!! This is the biggest "what if" I have ever faced!
I just think this is the opportunity of our lifetime to hold our bullets until they can do the most damage.. meaning... getting the best of the situation at the low.
JMHO
Eric gave notice that he exited the Yen. This was before the news...
That was a great move on his part.
I thought Alcoa was a bargain in Oct/Nov @ forward P/E of 4. It's 52 week low was 6.80.
Alcoa then reported & gave sad guidance. And now (today) the forward P/E is 8.54 and it closed at 6.49. Will we see $5?
It will get progressively worse because I can't see the aluminum demand yet.
Bottom line? This is a very, very tricky market to analyze because the velocity of stats changing means you have to stay on top of it.
Do I have what you are saying here right?
The peak in the WLI was 143.9
We have been falling for 20 months.
We are now at 106.1 & have been there for four months.
The decline is 26%, no?
If the change in the WLI mirrors the change in GDP by a mean of 6.5%, (But you didn't say which way), then GDP can be either:
19.5% down (26.0% less 6.5%) or
26.0% down (no difference between the two) or
32.5% down (26.0% + 6.5%)
Am I understanding this right?
I haven't read any posts since my last post (& will catch up tomorrow night) due to finalizing year end... it's a killer.
On the markets: more when I'm caught up.
On the stimulus... just my short answer...
We need to throw some tea in the Boston Harbor. It's not the tea, it's what the 'act of throwing it' tells the world.
I don't quite "get" how they calculate projected earnings into 2010 with nothing in the past year being anything like they projected previously. In Jan, 2007, the projected earnings for year end 2008 were massively wrong. Even the projected earnings in Jan, 2008 were massively wrong for that current year. Here they go trying to make us buy into more pencil pushing that, given the enormous unknowns, couldn't possibly be right.
I do want to ask you something. If the P/E is now 28 and the norm is 15 (obviously 54% lower) than would you take the current S&P 500 (826.84) & hit it with a 54% decline to get S&P level of 443? Am I doing that right?
Actually, I just got a call & must head out. I'll check back.
This was an interview which was a pleasure to read.
The fox is watching the henhouse & no one has the right gun to shoot the fox. And, should they shoot him, the replacement would be (yet another) fox.
The solution would be to bring in the FDIC (a 'non-fox') and shew the fox away permanently. Keeping all foxes at bay, the FDIC would then sell the hens, maybe a leg at a time, to rooster's who have sharp talons, will clean house, and are salivating to get the opportunity.
Sounds like a great plan. The real problem of the same people, moving in the same circles, resurrecting the same power is a cycle the the Rooster must, absolutely must, break.
That's my take. And I agree.
The Inflation Adjusted Earnings for S&P (chart #1) is not current. I would certainly like to see the current chart. Also, the 3rd chart (when updated) would be nice to see. The paragraph prior to the "666" quoted paragraph states:
"Last week I said that 2009 as-reported earnings estimates for the S&P 500 would be dropping. 2008 earnings had dropped to $29.57 as I wrote the letter. They are now down to $28.60. One of my favorite analysts is David Rosenberg of Merrill Lynch. His forecast for reported earnings for 2009 is now down to $28. That puts the P/E for the S&P 500 at 30.
He also projects "operating" earnings to be $55 for 2010. "
My comment: P/E ratio of 28 has a long way to go before it gets to historical levels & will overshoot that level when it does. That will be in 2009? That's a screaming scenario to avoid the downfall or to profit from the downfall. This reference is as of '08 YE and needs to be updated to show the decline to $28.60 http://www.bullandbearwise.com/SPEarningsChart.asp
Mauldin's lastest letter has a reference from David Rosenberg of Merrill Lynch that puts the evil low of the S&P at 666 . Can you imagine us NOT remembering that prediction?? Shudder... wince... terror... Of course I'll remember it!
From David Rosenberg of Merrill Lynch in the Mauldin letter:
"...For those looking for a silver lining, at least we are going to have a deeper bottom to bounce off. Applying a classic recession-trough multiple of 12x against a forward EPS estimate of $55 would imply an ultimate low of 666 on the S&P 500, likely by October if our estimate of the timing for the end of the official downturn is accurate."
http://www.frontlinethoughts.com/article.asp?id=mwo021309
Oh, and bye the bye...
With a stated resume' goal such as mine, you would n-e-v-e-r see me in Washington with a tin cup & a sign that said "Have Spent, Will Beg".
Government welfare drip! LOL!!
I have great confidence in the free market. Since 1974, my resume' has, as my objective, "To promote and participate in free enterprise to the best of my ability". Amen. I've never ever had a reason to change that goal.
But alas, all bad assets will be sold. It could be quite a menu of pickings. You are interested in MBS, not CDO's, SIV's, or other alphabet soup? Also, distressed real estate?
I understand distressed real estate far better than any of their derivatives. The distressed real estate would, IMHO, bring a better, more manageable, return.
You posted this on Friday (#45955); I'm still mulling it over. In fact, I might mull it over for a week.
At a glance, his Step 1 suggests that all banks, at one time, be categorized as solvent or insolvent. Then, cautions that this must be done all-at-once in order that it doesn't bring down one big bank and start an immediate run on the equity and long-term debt of the others. That there would be no leak of that information is inconceivable.
His Step 2 suggests immediate nationalization of all of the involvent banks in one fell swoop. "The equity holders will be wiped out, and long-term debt holders will have claims only after the depositors and other short-term creditors are paid off". This might violate the intenational agreement not to allow a bank with systemic fallout to go under.
His Step 3: I just don't see why they think there is a private sector market so hot and ready to pounce on those bad assets that they'll fall over each other to buy them. Good assets? They are marketable. What if the bad assets are not marketable? He makes no allowance for that occurance.
The eventual outcome of any resolution SHOULD BE a good, healthy banking system. No one will disagree with him on that point. I just think that it will not be as easy as he outlines.
I am going to "Double Gong" the 1st paragraph of this post.
Gong~~~~~
Gong~~~~~
This is an exact opposite of reality.
Were you okay when you wrote this??? This is a dead-wrong assessment!