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Would anyone have a good price to buy VTSS?
Buy puts? <VBG>
The question I keep asking is, why should they allow it?
I don't think he is talking about "allowing" it per se, other than when they give up it will allow the market to go lower because there is nothing (I mean nahthing!) that will hold it up.
JMO, Joe
[AOL] AOL UNIT TARGETS '03 AD, COMMERCE REVS DOWN 40-50%
Shat! Watch out, YHOO!
[CVS] CVS SAME-STORE SALES UP 10.2% IN NOVEMBER
CVS] CVS PHARMACY SAME-STORE SALES UP 15.2% IN NOV.
Someone asked about WAG last week. These drug stores continue to show strong revenue growth. I think they are the only retailers that have a decent chance going forward. If I didn't think they would be held back by the rest of retail I could find these guys interesting. Staying away but watching.
Joe
>>>Treasuries should find comfort in the BTM/UBSW data on U.S. chain store sales last week which showed a rise of just 0.3 percent, somewhat in contrast to weekend reports of a very strong start to the holiday shopping season.<<<
That sentence should have been "bolded". That report is very significant IMO.
Joe
>>M.D.C. Holdings Nov. home orders rise 42 percent <<
I quess it would be too much to ask them to report year over year comparisons without the big builders they acquired last summer. <NG>
Joe
would be interested in your argument and support of an IT rebound being a reality within 18 months.
Dan Niles seems to agree with me. What fate worse could befall me than to use my brain to produce thought like an "anal"lyst. <g>
Geez, jdaasoc, I asked you that 3 weeks ago. Did it take that long for you to find someone that would agree? LOL!
The crux of the matter is that everything he needs to do to turn things around at this point produces an unpleasant effect somewhere else that is contrary to his goals. He has waited too long to fight the beast and I believe it will conquer him - unfortunately, we will pay the price for his mistakes.
Bingo! Greenie should go down as the biggest boob in economic books to come. Greenis is now trying to catch his tail as a recovery will stay just beyond his reach. Indeed, we will all pay. But, his manipulating tactics will put most of the burden on J6P as he continues to try to provide thenm with hope as then are continously drawn closer to the cliff.
Joe
Where's the auto sales? Briefing.com says they are due today. Are they wrong?
TIA, Joe
Words about RRI refinancing from RRI IR. From Yahoo RRI board.
Term sheet: final word...for now
by: hwilson41 11/26/02 01:45 pm
Msg: 13377 of 13392
I got a call last night about 6:35pm EST from Dennis Barber of RRI’s IR Dept. The misunderstanding about the existence of a term sheet, or the lack thereof, is my fault, probably because I didn’t ask the right questions. The bottom line is this.
There is no term sheet in final form yet. One or more term sheets do exist, as negotiations continue with the three lead banks (BoA, Deutsche, and Barclay’s), but none is definitive yet. Here are some additional remarks by Dennis, some of which we already knew. He said that the talks with the lead banks have been “very constructive”, that RRI has offered to collateralize the banks (now unsecured) in exchange for a multi-year maturity on the new facilities to allow time for them to get access to the fixed income capital markets again, and that they are confident refi will be done, but probably not before Jan ‘03 at the earliest.
My apologies for misleading the board. I assure you it was not done intentionally. But the facts about RRI remain unchanged in my mind.
1. RRI is head and shoulders above its competitors in the merchant energy sector, and is unique among the IPPs because of their retail business (which Moody’s, in their infinite wisdom, chose to ignore in yesterday’s downgrade). The retail business alone will throw off north of $600mm in cash flow next year, and most of us can name several IPPs that would love to have $600mm in cash flow from anywhere and everywhere next year.
2. NG prices are rising and spark spreads are improving. That can only bode well for RRI’s wholesale business going forward.
3. There are 2,461MW of new plants coming on line in ‘03, all in areas (PJM, SE and West) that are and are likely to remain undersupplied (see slide 14 in the 11/25 8K). These will only enhance cash flow and profit in ‘03.
4. RRI will be cash flow neutral to slightly positive in ‘03 due to $600mm or so of CAPEX. After that, it will become a cash cow in ‘04, throwing off $650mm or more from retail as they move into other areas in Texas plus at least $200mm from strengthening wholesale operation from new plants and the rising spark spreads outside ERCOT.
5. The lead banks on the $2.9B bridge loan are the same banks that loaned RRI $1.4B in late October. It borders on the ricidulous to think that banks would lend $1.4B to someone in October and then force them into Ch 11 the following February.
I’ve read the news releases, pored over the 10Qs, 8Ks and other SEC filings, and if there is any bad news on RRI that is real (as opposed to contrived), I can’t find it. Virtually all the negative press is the result either of stupidity or very slanted coverage interested more in sensationalism than in presenting an accurate picture. This stock to me is a rare opportunity, and I’ve been buying accordingly.
THW
P.S. I complimented Dennis on their efforts at keeping their investors informed and particularly the way they return calls. Among the four or five IR Depts in the IPP sector I’ve contacted or tried to contact, RRI’s is far and away the best.
>>>There is a PPT, but their activities appear to have been curtailed somewhat this year.<<<
I think they were busier than ever this year. They have also been m,ore open about their intervention IMO. Look what they have done just on the discount rate in the open. I'm sure JPM, C and the like had some major "challenges" this year that we will never know anything about because of the PPT's work.
Joe
The Nas NMS tick shows a high 283 at 9:33. Not very strong for the gap we had. Looks to me that we had some good distribution from higher prices. Funny how that works for the big guys.
Joe
>>>I mean, what's the point of the PPT?<<<
The PPT's main goal is to avert panic situations. They don't want the market to crash as it did in 1987. They know the market is high and are trying to let down slowly. Right now I believe they are trying to make the most out of the Christmas selling season. Very important to the US economy.
PPT- Plunge protection team. Protecting us against a sharp plunge that would more than likely go to extremes if not controlled.
JMO, JOe
Holiday weekend sales may not be as good as they look on the surface. Especially electronics. Friday I bought a cheap computer at Best Buy. I also bought a flat panel monitor to go with it and another for myself. I wanted something cheap as all it is going to be is an internet device at my business. I also bought some Writeable CD's and a DVD player as a gift. I spent about $1140.
Here's the kicker. On those four items I have $429 dollars in rebates coming to me or about 38% of the purchase. I'm sure the company shows the full sale in the daily totals but, what happens when all the rebates are paid out. I assume that the manufactures are picking up part of that but all the rebate request were sent to Best Buy. There was not one manufacture rebate. At the prices I paid I can't imagine the vendor taking the full hit on these. Seems to me that I saw more rebate type sales this year than I have in year's past. Also the rebates are very substantial sums giving motivation for them to be sent in. I know most the people that stood in line with me had mostly rebatable items as well.
Just a thought. Joe
Deflation >>>I was especially interested in that he had the first plausable explanation that I have heard for the current deflationary problems that are alongside a rising and close to breakout CRB index, which has been a puzzle for me.<<
I as well. Interesting graph showing the CRB as compared to the 10 year treasury back to 1980. Big divergence. Would hace been nice to see the chart go back further than the beginning of the last economic expansion. Say through the 71's as well.
Thought this comment after the graph was interesting.
"The above chart suggests that either commodity prices and financial prices are possibly seriously "out of whack" at the moment, or the directional relationship between these two is changing. It suggests that the Fed is attempting to fight perceived domestic price weakness while simultaneously the economy is being squeezed on the cost and profitability side of the equation by higher commodity prices. The cold hard fact is that the domestic system has never "cleared" as of yet during this cycle (capacity coming in line with ultimate demand) due to continual reflationary efforts up to this point that leave the question of healing through the price mechanism completely open to question looking ahead. How does this ultimately weigh on households? What was crystal clear in this week's upward GDP revision was that 3Q profits were down quarter over quarter, despite apparent 4% GDP growth. Year to date corporate profits from operations are down close to 7%, again despite quite positive headline GDP. In the endgame it's profits that count at the corporate level and if corporations are not improving them, they will continue to cut costs. And you know the most expedient measure of reducing costs, especially when commodity input costs are not obliging. Just look at the productivity chart above to have a guess at where those cost cuts will come from.
Although this may sound like a very far-fetched comment, the Fed simply cannot reflate the world. The very basic laws of global supply and demand will ultimately outweigh Fed Governor Bernanke's "printing press" over the long run. But in the meantime, the Fed will probably give it all they've got in trying to set a new standard for reflationary attempts in what has been a greater credit expansion cycle that has been going on for decades. Ultimately successful reflation will depend on the willingness and strength of corporations and households to borrow and spend immediately ahead. The exact modus operandi that has already played out in multiple Fed tonic administrations over the last half decade. After all, it takes two to tango. Or in this case, three.
One last and very important note is that attempts to reflate the system ahead will necessarily spill over into the financial markets. Given what at least appears to be the dogged determination of the Fed, we cannot see how it will play out any other way. If the corporate and household sectors cannot "make use" of the monetary accommodation most certainly to flow from the largesse of the Fed ahead, just where do you think it will end up? That's right, in the very place it ended up in late 1998 and late 1999/early 2000. We're not saying this is good or bad, just that it is a strong possibility and needs to be acknowledged in individual decision making moving forward. Call it what you will. The ultimate Greenspan put. The grand finale in moral hazard. It's coming and will undoubtedly influence both the real economy and financial markets ahead. As a last comment, this discussion has been nothing short of a cursory glance at what we perceive to be a significant change in Fed posture. Notice we did not address the dollar, potential characteristics of flows of foreign capital, the bond market, etc. Many important direct consequences and unintended consequences of the Fed's new take on life. More on these later as one of the greatest stories ever told in the land of monetary expansion plays out. "
SAH- Max, Retail automotive dealerships look very risky to me here. I don't know if SAH recent activity doesn't have more to do with being pushed up with the others as I don't think the automotive industry looks that attractive.
http://stockcharts.com/def/servlet/SC.web?c=SAH,uu[l,a]daclyyay[dd][pc20!c50!f][vc60][iLb14!La12,26,...
I think the the chart also shows some resistance (prior support) in this area. I would be careful entering tomorrow as auto sales figures are reported Monday.
JMO, Joe
>>WFR - wow, a triple, now 9 bucks. Good cash flow<<
Also showing negative shareholder equity and a $1.8 bil market cap at 3X sales. Lost over $7 the last 12 months. Has something changed that you think we will see a major change in their performance that the "good" cash flow is nothing more than temporary?
Joe
>>the number of "declines" i'm getting when i process charge sales <<
I own a hardware store. My wife does the books. She was just telling me tonight at dinner how many more return checks we are getting. Said it started picking up about mid October. In addition to that, shoplifting seems to have picked up and we had a break-in last week... and a "quick change artist" attempt. Come to think of it we also had a customer go bankrupt on us this week too. I bet we haven't had one those in two years. Maybe it's just coincidence that we have these things happening all at once. I'm starting to wonder.
Here's an odd story. Yesterday, a cash customer that has shopped us for some 15 years came up to the register with a buggy with about $300 of expensive housewares and giftware. Wanted to open an instore charge account right on the spot. We only do commercial accounts with a credit ap and I turned her down (very politely). She left the stuff. My first thought was why she didn't just use a credit card like she has for so many years. Then I wondered if she was getting ready to go bk and wants to stick us with bill. The whole thing was out of character for her.
Joe
>>>I believe that the reason behind that is primarily due to the very high debt situation for both businesses and for consumers, which prevents further expansion by the normal means of creation of new debt.<<<
Mlsoft, From Doug Noland's weekly commentary:
"The perception is growing that acutely stressed securities markets have now commenced a financial recovery similar to the post-LTCM and post-9/11 experiences. We’re skeptical. Keep in mind that the reliquefied and over-stimulated post-LTCM Credit system hit a U.S. economy poised to fire on all cylinders and a technology/stock market Bubble hankering to go into speculative blow-off. In other words, the expansive NASDAQ Bubble was teed up and the economy momentum-driven on the upside. The reliquefication and over-stimulated post-9/11 Credit system fed perfectly into a financial system and mortgage sector raring to go to unprecedented excess. The expansive mortgage finance Bubble was teed up and the leveraged speculators ready.
We are today at a loss to recognize a new Bubble lying in wait for the latest round of reliquefication. Certainly, there is nothing on the horizon of the dimensions necessary to mollify a receding historic mortgage finance Bubble. It is also our impression that the leveraged speculators are fully loaded. Sure, corporations will line up to borrow and American governments of all shapes and sizes will finance expanding deficits. And in the short-run – while mortgage borrowings remain enormous – combined Credit creation is sufficient to sustain the Great Credit Bubble. Money supply growth is certainly indicative of continued rampant monetary excess and over-liquefied conditions. But looking out past a few months, things are not so clear. Our hunch is that a negative surprise on the consumption side lurks: As goes the mortgage finance Bubble, so goes the consumer spending Bubble. And after years of over-consumption and mal-investment, the consumption/service-sector U.S. economy is addicted to household over-borrowing and over-consuming. The vulnerable U.S. economy could easily prove “out of the woods” for now, but we fully expect unrelenting money and Credit excess to prove only more distorting to the fragile U.S. financial system and hopelessly maladjusted economy.
Whether it is mortgage refinancings, auto sales, retail sales, durable goods orders, business confidence, or GDP growth, we have been witnessing extraordinary economic volatility. The pundits would like us to believe that these unsettled conditions are only evidence of a sound although “uneven” recovery. We tend to see things differently. In our view, the economy has become hostage to an unstable securities and speculation-driven U.S. Credit system. When bullishness flows, easy Credit availability stokes spending and economic “output.” The relative degree of stimulation is determined by whatever is the hot sector (NASDAQ stocks and telecom debt, or agency and mortgage-backs, for example). But when bullishness ebbs and risk aversion holds sway, the Credit spigot can rather abruptly run dry for many sectors (but apparently never in mortgage finance). With the contemporary Credit system absolutely dominated by leveraged speculation, “structured finance,” and sophisticated hedging strategies, weakening Credit market conditions fosters enormous securities selling and a self-reinforcing contraction of Credit availability for many companies and sectors. Faltering Credit conditions incites additional selling (“Delta-Hedging”), with declining bond and asset prices fostering a self-feeding mountain of short-positions. Liquidity then vanishes for most companies and many sectors.
But despite the gross debt overhang and acute financial fragility, market dynamics will necessitate intermittent reversals of these hedging programs. During these periods, the semblance of abundant liquidity will return almost as if by divine intervention. Surging stocks and the return of liquidity to the corporate bond market are reinforcing, especially in over-liquefied financial markets. And most will interpret market action as a confirmation of rapidly improving fundamentals, when in fact rising financial asset prices have almost everything to do with market dynamics. The performance chasing money managers and speculators will jump on board.
We see good reason today to make reference to The U.S. Delta-Hedged Economy. Speculative trading strategies have come to dominate the Credit system, thus assuring a destabilizing roller-coaster ride of speculation, sophisticated hedging-related securities trading, Credit availability, and attendant economic “output.” We have no idea how long this upward ride will last this go around, but we are confident that there is a steep and potentially breathless decline waiting on the other side. We have absolutely no doubt that maintaining Credit, speculation, and spending Bubble excesses are simply not going to rectify the problem. It’s a roller coaster from here on out. Let’s not forget that it takes enormous amounts of unrelenting Credit creation and leveraged speculation to sustain the Great Credit Bubble. And we certainly don’t expect rampant excess to all of the sudden turn stabilizing. In fact, we are expecting a rather wild ride from here on out as a confluence of unprecedented monetary and speculative excess - along with an unstable Bubble-impaired economy - creates an especially unpredictable and volatile mix. Going forward will require that we study the intricacies of the maladjusted U.S. economy very carefully."
http://www.prudentbear.com/creditbubblebulletin.asp
Joe
>>>because they are on the hook to repurchase (soon)<<<
Soon....hmmm. In the digital world a day can be a long time. How long does it take to gap the Q's up early and then distribute your holdings to the sheep? Then, repeat the process for smaller gains throughout the day and return the original stake the next day. Or, if the Fed is "game", repeat the next day. I think it is very possible that the reward would exceed the risk. The "co-conspirator" has prior knowledge. Only real risk I see is a tragic bad headline and getting caught on the wrong side. How often does that risk expose itself? Not very often.
Joe
WAG- I'm in Atlanta. Eckerds was first here of the big chains then CVS. WAG has been a late entry but has come in strong. WAG is the biggest of the bunch and probably the best. All the majors have copied WAG's location strategy. Once you are in one of them you could be in any of them. With CVS and WAG with PE's in the high 20's and growth rates in the teens I think they are fully valued. I don't see any reason for PE expansion so I would rate WAG a hold at best. This from I guy that loved this group 2-3 years ago but sees things differently now.
Joe
>>But I think they aid and abet large market makers like Goldman, although I am not sure of the mechanism (do you have any ideas?)<<
The Fed can not by law buy equities themselves. They can help those that do.
I've posted this before but just in case.
>>>>The staff of the New York Fed's Trading Desk continuously
monitors global financial conditions and the state of banking
reserves each day. After extensive deliberation beginning early
each morning and a conference call with all of the regional feds,
it determines whether or not it will add to, drain from, or leave
unchanged the level of banking reserves. This is carried out on
a daily basis. A plan of action is established for the day, and
the Fed executes it by moving huge amounts of money through its
network of 22 primary dealers, which are banks and securities
brokerages that deal in US government securities. To give you an
idea of the money flows being executed, these 22 dealers averaged
$375B per day in trading volume of US government securities in
March, 2002, according to the New York Fed website.
The most frequent transactions are called "repurchase agreements"
or repos (RP) for short, which are described as short term
transactions whereby the Fed purchases securities from the
dealers, who agree to repurchase them from the Fed by a specified
date at the specified price. When the repos mature, the added
reserves are automatically drained. The Fed pays for the
securities and takes delivery thereof simultaneously. When they
mature, often the next day as we've seen in the Market Monitor
(known as "overnight repos"), the securities are returned and the
funds reimbursed by the dealers to the Fed.
The reverse of a repo is called a matched sale-purchase
transactions (MSP's), whereby securities are sold to the dealers
for cash, and then repurchased from the dealers upon maturity.
Both Repos (RP's) and matched sale-purchase transactions (MSP's)
are temporary open market operations. Sometimes the Fed will
sell securities to or purchase securities from the dealers
outright, which affects the dealers' reserves on a permanent
basis.
If you're all still awake, or haven't yet dashed off to apply for
jobs with the Fed, here's the kicker. The effect of these OMO's
on the 22 dealers' reserves has a direct influence on the level
of liquidity in the markets, just as we saw in Livermore's 1907
example. When the dealers have excess reserves, they are free to
play with those funds until such time as the funds must be
returned. This liquidity finds its way into the markets,
purchasing securities. On days when reserves are drained, the
liquidity finds its way out of the market. During the past
months, there has been a tendency to see market strength on days
when large repos of 5-10B have been announced. When these repos
expire, if they are not replaced with new repos, we often see
market weakness. This year, because we are in the grip of a bear
market, the tendency has been to see repos. I have only seen one
instance of an MSP this year, although I've only been following
the Fed for the past few months.
The trouble for traders is in knowing which markets will be
affected by each Open Market Operation, and within each market,
which securities. Repo money can go into equities or fixed income
securities, currencies, or whatever else the dealers wish on that
day. I have read arguments to the effect that companies such as
MSFT are prime targets for Fed money because they are listed on
multiple indices, and so buying or selling in MSFT gives the
Fed's dealers the greatest bang for their buck. Remember that
the Fed's goal is to encourage the stability of financial
markets. When these markets are in jeopardy, smart traders watch
for the Fed's morning announcement and consider which markets
need it most. When the SPX broke 775 this month, an overnight
repo of $4.5B was announced, which is at the upper end of
modestly sized for repos this year, and equities bounced off
their lows, which then triggered a selloff in the extremely toppy
bond market, more money flowed into equities, and the rest we
know well. During the summer, I watched large orders that would
show up like a battalion at critical support levels on QQQ –
30,000 to 50,000 share bids that would line up 5 deep all at
once, and the subsequent matches would protect the support level
that had been in jeopardy. So what? We'd also see more such
bids that would line up just below key resistance levels after an
extended runup and the orders would power the index above them.
I'd always thought that the goal of traders seeking a profit is
to buy low and sell high, though perhaps buying high to sell a
little higher works as well. In any event, none of us would
think of using our own money to put on bullish positions just
below key resistance levels after significant runups. This is
the action of participants manipulating the markets using OPM
(other people's money) in the interest of protecting those
markets from what are deemed to be critical breakdowns.
Tracking the Fed's Open Market Operations gives the trader a
window on how much money will be available to the markets that
day relative to past days. Experience will permit you to assess
the impact of different sums- is a $1B drain substantial? Might
the markets tank or just drift? Generally, all that one can know
is how the Fed's daily activity will bias the markets, and so it
is far from a magic indicator. Many traders I know and respect
will not put on bearish positions on a day in which the Fed has
announced a repo for more than a few billion dollars. Follow us
in the Market Monitor each day and start to get a feel for the
impact of the Fed's Open Market Operations. Like most other
indicators, it will eventually help to fill in your overall
market picture in its own particular way.
I have been posting the Fed's daily Open Market Operations in the
Market Monitor and will continue to do so. To follow along
yourself, bookmark the following link:
http://app.ny.frb.org/dmm/mkt.cfm
>>>>Indy Flation...Although it seems a bit lost in today's popular financial media arena, the strict academician's definition of deflation is a contraction in the overall supply of money, leading to a sharp or sometimes sudden rise in its value, and a drop in the general level of prices. In fact, you don't have to dig through dusty economics tomes found in the bowels of university libraries to find this description. You'll find it in reference sources as generic as the Webster's dictionary. In like manner, inflation is defined as a rise in the supply of money and credit leading to a rise in price levels. Interesting in that what we have had happen in the real world of the last few years at least is really a mixture of these two phenomenon, again, at least as defined from the academicians point of view. <<<
In Harry Dent's book, "The Great Boom Ahead", he had an interesting definition for inflation that has stayed with me many years that I recall when the discussion comes up. It goes like this.
"I simply define inflation as the economy's means of financing a period of high investment. In other words, inflations occurs in our economy in a period in which there is a high requirment for investment and low productivity or savings and profits to finance it. The economy simply borrows from itself or it's own consumers by raising the prices of goods and services."
Dent wrote that labor force growth correlates with inflation better than any other factor. Since there is little chance of labor force growth for many years I think the Greenspan will be fighting a losing battle against deflation. Sure he may win a battle here and there but the war will be lost as our demographics show us a decrease in the labor force as the boomers retire as we head to "The Great Bust Ahead".
Why does Greenie fear deflation so much? Because we have a tremendous amount of debt to be paid. The debt would be much easier serviced with higher inflationary dollars. Greenie may be seeing now that inflation is our only hope for paying off that debt. That same debt which was a product of his irrational exuberance to add abundant liquidity to the economy starting back in 1997. To add liquidity now means more credit creation. I don't see that coming from the business nor consumer level. Reading words coming from the Fed this last week I truly think they are now in panic mode. Sure they are trying to put on a face that they are in control and have many tools. I'm not so sure that this current intervention isn't an "hail Mary" effort just to try to get us into 2003.
Joe
WAG- I use to follow WAG more closely before the bear market but not as much anymore. The problem I see with WAG, CVS, RAD and Eckerds is that they are all butting heads with each other in the major markets. Not one shows a true margin of difference to capture consumer loyality like HD's advantage that it had for many year's until LOW got smart. I do believe that the industry's prospects are the best for all the different retailers going forward. I think WAG will perform with the market going forward but I also think they are fairly priced at this point with some upside potential as they are currently in the lower part of a channel. I see "boring" performance for a buy and hold. A position or swing trade in the channel would be more interesting to me but I don't see the risk/reward to do it myself.
http://biz.yahoo.com/rb/021125/retail_walgreen_1.html
Joe
Mlsoft, >>You are just a doom and gloomer, like Alan Greenspan.<<<
Thanks....now the whole world knows,...turkey!
Joe
>>>I think the PPT is going into high gear here.<<<
If you read recent statements from Greenspan and Bernanke, they tell us as much.
Joe
"Last April we drew attention to a Financial Times piece which discussed Federal Reserve officials’ worries of short term interest rates being so low that monetary policy would be rendered ineffective. The report went on to say that further “unconventional” policy measures might be used to offset this impending difficulty. At the time, we made educated guesses as to what these measures might entail and suggested that they would initially “remain covert providing that a sufficiently large critical mass of fund managers understood that there were support mechanisms at work in the market. The references to “unconventional measures” in the FT article help to create this “understanding.”
Such an implicit understanding on the part of these managers would facilitate their ability to trade on the back of periodic covert interventions, thereby supporting government objectives. In these circumstances, policy makers would likely do nothing to disavow such a belief (and might in fact quietly encourage it), since the herding dynamics of these portfolio managers would enhance the authorities’ objective of supporting the market. Only after this option has proved wanting would the authorities move to explicit intervention.
Why explicit? The public does not react to inferences and hidden coded messages by America’s leading policy makers in the way in which a professional fund manager well attuned to the vagaries of the market would. The vast majority of private investors react adaptively to historic price trends. If returns for the equity market continue to disappoint (as they generally have over the past 2 years), the adaptive expectations of the public in regard to their expected returns for equities will diminish, creating widespread redemptions and ongoing selling pressure. The belief in the efficacy of the Greenspan put will accordingly begin to dissipate. Mr. Greenspan has told us since his Jackson Hole speech in 1999 that if the incipient dynamics of panic and crash reoccur (and thereby further threaten equity wealth and, by extension, consumption) the Fed will respond, and this time with a more explicit and transparent rationale.”
Recent statements by the Chairman of the Federal Reserve, Alan Greenspan, and a prominent Federal Reserve governor, Ben S. Bernanke, suggest that we are at last in the final stages of this process.
Remainder of articles here:
http://www.prudentbear.com/internationalperspective.asp
>>VIX up sharply despite big rise in stocks. Normally the opposite occurs. <<
Looks like hedging "big time" to me. What else do you do when you buy stocks that you really don't think are worth as much as you are paying but don't want to miss out on the mania-pulation.
Joe
Even better, 9000 DOW! eom
1500 in the nas would look real pretty in the big paper tomorrow. Good fodder for Thanksgiving dinner conversation.
Go Fed!
Joe
Nas is up 42 points. Since 10:30 we have traded in a 11 point range. That to me smacks of manipulation. Since 1:00 we have been a 6 point trading range. Looks to me that we are not seeing much accumilation. JMO
Joe
Volume is dropping off. Should be easy for them to ramp it up.
Joe
>>Why short a break-out?<<
I don't know...to get to the other side??
What I meant was our wealth is represented by the movement of the stock market. If it goes up, folks feel good. The fed wants the population to feel positive about the future going into the holidays.
Joe
Added to my GM short. Think we see weakness in the numbers coming in Monday. Won't be around to trade it Friday. Position trade. No current stop.
Joe
Biggest Dow gain ever for the day before Thanksgiving from what I hear.
Joe
Will be interesting to see if the nas 1486 holds here.
Joe
>>>Why is the vix going up with the market up so much? Are they looking at resistance and a big roll over? With low vol. on Friday could they push it down again, like Wednesday? <<<
Carl
Some people are afraid it will fall again and they are protecting their profits with puts. Others are expecting it to fall and are buying puts to profit from it. Either way the increased put activity is increasing the VIX
It should be obvious that the PPT will not take the markets straight up. The strategy needs to have some profit taking in it for it to work. The feds goal is to support the economy. By supporting the US economy you support the world economy that has become so dependent on it. Artificial support can only go so far. It is apparent to me that the Fed must do what it can to insure a healthy Christmas shopping season if they want any momentum to continue into 2003. Our wealth has become our stock market. Everyone looks to it for the economic health of our nation. Never more than it does now. Stocks go up and folks feel wealthy and spend. We saw the work of the PPT last year and we are seeing it now. Unfortunately the Fed has limitations and I would imagine that when they back off we will see the sell-off. I don't see that many signs of institutional buying to keep it going. JMO.
Joe
Paul, I would agree with you but looking at the tape action I see too much support at just the right critical momoments. These are not dip buyers that are stepping up to the plate for the most part. Dip buyers would wait for more of a dip. What I see is a "planned effort" to move the markets higher is how I read the intraday price action. Of course this action draws retail in from the sidelines and helps build the momentum. The buying, when it comes in, is just too strong for it to be real buyers in my opinion.
Joe