Economist Justin Wolfers of Penn's Wharton School, tweets, "All told: A reasonably big stimulus, mostly front-loaded, and mostly well-targeted. Hard to see any negative crowding out effects."
The stock market, however, is doing its usual shakeout right after the speech, before probably rallying hard tomorrow. Just like after Bernanke's speech at Jackson Hole...
I don't think Obama's speech will be considered a negative for the market, it was pretty good, I thought. Positive, if anything, might offset some downside pressure.
The agreement we passed in July will cut government spending by about $1 trillion over the next ten years. It also charges this Congress to come up with an additional $1.5 trillion in savings by Christmas. Tonight, I’m asking you to increase that amount so that it covers the full cost of the American Jobs Act. And a week from Monday, I’ll be releasing a more ambitious deficit plan – a plan that will not only cover the cost of this jobs bill, but stabilize our debt in the long run.'
HEY bro, My Arivaca ghani connection is on a long term vacation on the state dime if you know what i mean. Can't you go to a drug store or something and get any flavor you want?
Added more long ARGN at $12.55. Long MMYT at $20.5.
Now about 35% long. My thinking is there is going to be waaaaay too much money thrown at this market and the odds of us seeing the bottoms here are decent now.
Man this market HATES Obama. Just the mention of him speaking on CNBC caused the market to drop 8 S&P points. The S&P is down 18 pts after last night's speech. The day he was sworn in, the market dropped significantly.
More to do with Europe than anything Obama related...
11:30 am : A flurry of selling pressure has undercut stocks, taking them from morning highs to fresh session lows. The effort comes in response to headlines suggesting that Germany is close to establishing plans that will enable the country to help protect banks in the event that Greece defaults on its debt. Just yesterday, European Central Bank President Trichet expressed that Greece should not take for granted its next tranche of financial aid.
I have been following this blog for a while in my life I have never seen a bigger collection of misfits, nerds or freaks. Can anyone articulate an explanation for yourselves? Words really cannot describe the collective psycosis that takes place on this board.
SPY now down 4.7% in September, but still higher highs from the Aug 9th low. Jeff Saut, in his audio comment yesterday, continues to believe this is a replay of the 1978 and 1979 lows and says it is tracking even more in line with these.
If the Northern European banks can be insulated from a Greece default, that would likely be the best solution. Greece is a small economy and it's default, if contained, would allow this to be out behind us and things to move forward.
The Western world's financial system is imploding for goosh sake. Just think how much better we would have been today if we let our banks fail years ago and had this vomit clear.
The move in copper kind of confirms this down move. Outside of a temporary move up in July, Copper has been in a down trending channel since February. You can connect the highs from mid Feb through mid April through the beginning of September...
My first thought is shorts are scared to stay short here because of trend lines....yet they're also scared to add to shorts because of the potential for bailouts etc over the weekend. So that fuel to the upside may be gone...
TOF, yes, you just have to balance whether to take some off or add. It all depends on your timeframe, you will make the right choice for yourself, I know.
t3d - maybe that's it. Good timing for them. Maybe that can catch a riot or two in person while they're there instead of just seeing it on the big screen...:-)
A lot of the reason the market is down so much is because the measuring stick for stocks, the US$ is up so much. UUP up 1.2% and SPY down 2.7% means really the market is down 1.5% in overall value.
TOF, Greece should never have been admitted to the Euro. It lied to get in and needs a debaseable currency to continue it's political system. Italy, Portugal and Spain, I think, have the ability to stay in the Euro and I think they will make the hard decisions as the benefits to being in outweigh the costs of being out. If Greece thinks they have it hard now, wait until they issue Drachmas again and find their salaries dropped by over 50% in Euros.
I don't see Copper in a downtrend, but in a basing pattern since last fall.
Man...check out that chart for the DAX: http://finance.yahoo.com/echarts?s=^GDAXI+Interactive#symbol=^GDAXI;range=1y
Today's close was the lowest since July 2009. What's the deal with Germany being significantly worse than the other markets? Is it just because the consensus is that the Germans will bail out the rest of Europe and it will drag them down?
BB - I agree and think the markets would rally on Greece exiting the EU...but the rollover amounts for Italy and Spain over the next 6 months total almost as much as the entire EFSF bailout fund.
BB - Don't forget TXN's comments last night as well...this adds to the bear thinking that earnings are going down and that current valuations are looking at earnings that peaked...I want to go long at some point, but I'm just worried that this negativity has taken too strong of a hold in the overall economy.
The problem with saying that about TXN is their stock is actually up today, so even though they reduced their forecast, it was better than expectations.
Also, Taiwan Semi this morning talked about demand ramping up in August and I think this would be a broader gauge of overall semi demand
Italy did pass their austerity budget, so hopefully, things will get better there. it is my understanding that their deficit is not a big concern, but their high overall debt. Cutting spending which shows their serious will likely keep their interest costs low, so they can get the debt paid down and this becomes a virtuous cycle with more services able to be delivered in the long run.
Kyle, No not shark. Thought the bad spelling will give it away. Its RB. I just broke through my works fire wall. Other than that I have nothing to add. No trading here. 100% flat.
TOF, not sure if you watch Cramer and what you think about him, but I personally have quite a lot more respect for him than I did a few years ago.
Anyhow, if you watch the start of his show on CNBC from 2 nights ago (Wednesday), he talks about all the CEO's he's been dealing with talking about how business is fine in Europe. Broad range from Liquor to clothes to industrial products.
So, we are back to that same conundrum about good business and bad government and which will end up driving the economy.
BB - But isn't that part of the problem: austerity = less govt spending = less support for corporate earnings? It's the same problem the US ran into in the late 30's.
When you get a chance I'd recommend reading "Freedom From Fear"...it's a beast of a book but the similarities to today's economy are pretty crazy. It gives you a good perspective on history and what's going on now...
FRANKFURT (Dow Jones)--A "quantum leap" is needed in efforts to save the euro zone, European Central Bank Executive Board member Juergen Stark said in an opinion column pre-released Friday by German business daily Handelsblatt.
It is imperative at the European level to strengthen "the institutional framework of the economic and currency union," Stark wrote. Up to now a "quantum leap" is lacking, he said. Furthermore, a "far reaching reform of the mechanism for decisions and sanctions" is necessary in order to secure effective coordination of fiscal and economic policies in the euro zone, he wrote.
"Here it will be indispensable in my view to transfer national budget powers to the higher-ranking European level to a greater extent than previously envisaged," he said.
"We find ourselves in a situation in which massive sustainability risks in public budgets are eroding financial stability," he wrote. He furthermore rejected fiscal stimulus saying it would raise debt levels and thus further increase risks. "The adjustment costs would clearly rise through the deferring of consolidation into the future."
The ECB announced Stark's resignation Friday, citing "personal reasons," though it is widely believed that he left in protest against the bank's decision to continue to purchase government bonds.
Dollar @ 200SMA - Yes, this is most likely due to fear over the future of the euro, or it could be a result of some foreign government propping up dollars. Of course by definition, a stronger dollar makes for lower asset prices and encourages imported goods but doesn't do much good for US exports or employment.
This copper chart doesn't look completely broken to me, although it might be wise to look at it from several other perspectives than just this one:
TOF, good point about government cutbacks potentially cutting into profits, but I see that as secondary to the world economy continuing to grow (4.9% in 2010), 3+% predicted for 2011.
If Western government cutbacks are exceeded by BRIC growth, that still means more worldwide economic wealth to be distributed. For sure there will be losers and I think that is why you see government supplier stocks (eg. CSC) down so much, but there will be winners as well and many of these will be Western businesses and the profits will flow to these companies.
GLD seems to be ripe for near term short. It has been a fear trade for a long time and seems crowded near-term. At some point GLD ETF became larger than SPY. Conquer the fear and short GLD.
"We find ourselves in a situation in which massive sustainability risks in public budgets are eroding financial stability," he wrote.
I think he's saying they need to cut the budget, but isn't Europe's a socialist government philosophy?
I much prefer to see currency devaluations of developed economies as opposed to currency collapse, budgetary controls aren't a light switch to be thrown on and off at the drop of a hat. What was this guy saying ten years ago when the decisions were being made?
Why play with fire? Europe can fall apart any day and GLD can double overnight. Besides, even if Europe stays together, the US Budget deficits ain't going down (with the economy so weak that it requires constant stimuli from the Fed and the Gov't), which means that gold will stay in its very strong uptrend. Shorting something with such a strong uptrend is not the best risk-reward opportunity.
There is a common wisdom among good traders: take long positions only in the direction of the long-term uptrend and short positions only in the direction of the long-term downtrend (this significantly increases the chances of your position working out over the short term). If you want to short something, short DB.
"Ephraim Fields of Echo Lake Capital Urges China Advanced Construction Materials Group to Reject Chairman's Recent Buyout Offer"
- Believes offer is grossly inadequate and not in best interests of shareholders - Notes that opportunistic offer equates to only 63% of tangible book value of $4.22 per share - Notes that company recently announced record backlog - Believes liquidating company would yield significantly more than $2.65 per share - Notes that if CADC were liquidated at only 95% of tangible book value, it would result in proceeds of approximately $4.01 per share or 51% greater than the Offer - Believes that if offer is rejected, stock price will ultimately trade significantly higher than $2.65
*****
So maybe we should all just buy into CADC and wait, instead of trying to time this crazy market? CADC will either get bought out soon at a 50% higher price or will trade a year from now X times higher...
Mark, the investor rep is out this week, but I'll be calling him every day next week so as to find out what assumptions they used when making their production guidance for 2012. Also, I want to find out when they plan to start operating the new 2000 tpd mill (they said it will take 3 years to construct and ramp it up, but it may already start operating in 2 years, which means that the market will have to start reckoning with it even sooner than that). I'll let you guys know what I find out...
“However, given the increased uncertainty in the global economy, TSMC does not expect these short-term rush orders will continue into the fourth quarter,” Ho said.
"GLD short" is a short term trade as I emphasized. No question about long term bullish prospects here. I plan to exit when and if GLD drops to $160 some range. at $181 it was close to resistance and was technicaly overbought. I see a stop loss there at around $185.
Mark - given the tone of the market and the fact that a lot of people are holding out hope for 1,136 ES as being the bottom...chances are we close there.
Here is the Sentimentrader post prior to Yesterday's open.....Summary: Stocks jumped again on Wednesday, following through on some of the bullish short-term setups that had popped up earlier in the week.
Most of our short-term guides are once again back to neutral or even slightly overbought, but there are few extremes just yet.
The last time the S&P 500 rallied more than 5% from the previous day's open through the current day's close was more than two years ago, in April 2009.
There have been 31 such instances in the history of the S&P SPDR (SPY), dating back to 1995. The index's performance going forward was mixed, but modestly weak in the short-term of the next 1-3 days.
I've received quite a few questions about "worst starts to September" over the past couple of days. Indeed, this year had been the 2nd-worst start to the month in the S&P 500's history.
There were 5 other times it lost more than -3% during the first three sessions of September. Every time, it lost an additional -9% at some point during the remainder of the month, and every one of them closed down an additional -5.8% at least.
None of them saw September close in positive territory (above August's close). So if the S&P can close above 1219ish, then this will go against those poor historical precedents.
The indicators and price patterns we looked at earlier this week suggested a bounce, and now that we've seen a large rebound from the depths, we're mostly back to neutral. There doesn't seem to be a large edge here for the short-term.
I honestly don't see how DB doesn't teat that low.
I've heard some talk from my clients really off the cuff that the US banks can weather problems with the EU banks. Who knows what really would have happened if we had just let ours die off like T3D has suggested...I know right now still 'sucks'.
TOF- I bet -8.7% wouldn't feel 'slowly inching' down if your were in it! :))
Man, I can't wait for a beer tonight.
Anyway, got to run. Heading straight to Kendra's game after work then stopping on the way back for dinner. Don't worry, I have my 'first aid' kit packed and chilling :))
Infrastructure investment - Wonder how/if the power grid failure issues were/have been addressed? I recall a few years back when grid failures had been tracked all the way back to a dim bulb in the White House.
2nd - "Cut The BS: Obama Proposes Cutting FICA-SS In Half"
Would that be the contributions, or benefits side of it?
On the benefits side, they can simply return my money they've already spent and we can call it even. Hopefully they don't believe it's acceptable to require payment into something and then renege on providing the benefits, that's called bait and switch, an illegal and dishonest practice.
Mark - "Am I wrong that all of the phones/tabs are flash?"
Flash is everywhere! I guess it's whomever makes the specialized devices (flash + ARM-CPU + graphics goodies all in one or fewest) in those smart phones that are moving mucho product? ;)
Tear that sucker apart and you'll see their logos etched on the various devices.
Standard & Poor's has just announced that it's downgrading the outlook for U.S. debt, and Bob Rodriguez couldn't be cheerier. It's another sign, he says, that at least some people are waking up to the looming debt disaster. As he paces FPA's offices in Santa Monica on a spring day, he sips coffee from a stained green-plastic mug. It's a 20-year-old souvenir from a company called Green Tree Financial; Rodriguez keeps it because it reminds him of one of his worst investing losses.
Since coming back to work on Jan. 1, he has found himself galled once again by what he sees. Fund managers, emboldened by their mammoth gains, clamor for risk. Junk bonds remain wildly popular. Even more stunning, says Rodriguez, is the government's failure to address its debt. "I know one thing from business," he says, his voice quavering as he tries, mostly successfully, not to yell. "Unless you correct the problems that are already occurring, you don't add on new leverage and new, other responsibilities until you correct the old! All you're going to do is capsize the ship!"
Rodriguez argues that the U.S. debt as a percentage of GDP ratio (currently 64%) is massively underreported because it doesn't count off-balance-sheet entitlements such as Medicare, and debt owed by Fannie and Freddie. If you factor in those liabilities, he says, the actual ratio is greater than 500% and growing. The U.S. must reduce that before 2012, Rodriguez says, because it's unlikely to accomplish anything during the election year. If nothing changes, he adds, investors will start to get nervous about the amount of debt on the U.S. balance sheet. As lenders balk at buying Treasuries, rates will spike, causing borrowing costs to skyrocket across the financial system. "The financial system is held together with a very thin filament called confidence," says Rodriguez. "When you clip that, all hell breaks loose."
The situation isn't irreparable; Rodriguez believes the government can keep rates from climbing too high if it starts making cuts of $350 billion to $500 billion per year. But he has little faith in its willingness to do so. If it were up to him, there would be serious tax reform, with all tax deductions (including mortgage interest) on the table. A former Republican, he describes himself as a "fiscal conservative but social moderate" who has grown disgusted with both parties: "I say, 'A pox on both their houses.'"
Economist Justin Wolfers of Penn's Wharton School, tweets, "All told: A reasonably big stimulus, mostly front-loaded, and mostly well-targeted. Hard to see any negative crowding out effects."
ReplyDeleteThe stock market, however, is doing its usual shakeout right after the speech, before probably rallying hard tomorrow. Just like after Bernanke's speech at Jackson Hole...
ReplyDeleteI don't see much response, but I liked the speach. Obama finally said what needed to be said and laid a plan out.
ReplyDeleteI guess we'll have to wait for the response...
speech
ReplyDeleteDamnnn all of san diego county is out of power...what timing! On opening night...
ReplyDeleteOh I heard there was a speech or something as well...
S&P futures are already positive -- shame on those mean bastards who briefly took them down below 1180 during the speech!
ReplyDeleteI don't think Obama's speech will be considered a negative for the market, it was pretty good, I thought. Positive, if anything, might offset some downside pressure.
ReplyDeleteMissed it. So the consensus is net positive?
ReplyDeletePut it this way, it was the best one he's done concerning the economy so far and he didn't have to read it from a teleprompter, either.
ReplyDeleteI'm not sure what kind of resistance it's going to meet with but he kinda shamed(rightfully) the GOP, might be why I liked it so much...
Test version:
http://felixsalmon.tumblr.com/post/9972960346/obamas-speech
Text version
ReplyDeleteThanks CP. I'll read it now.
ReplyDeleteI think we gap up on Friday. No clue what happens afterwards or during the 6 1/2 hours the market is open, but we close at the highs. JMO.
ReplyDeleteOpen House night at the grade school, in case anyone's wondering.
ReplyDeleteI have to hand it to Obama. It's about as good a plan as anyone could have hoped for given the little he has to work with.
ReplyDeleteDoesn't this part bother you guys...
ReplyDelete'
The agreement we passed in July will cut government spending by about $1 trillion over the next ten years. It also charges this Congress to come up with an additional $1.5 trillion in savings by Christmas. Tonight, I’m asking you to increase that amount so that it covers the full cost of the American Jobs Act. And a week from Monday, I’ll be releasing a more ambitious deficit plan – a plan that will not only cover the cost of this jobs bill, but stabilize our debt in the long run.'
God, I can't even believe I posted that...It's not spending cuts, but reducing the RATE of spending...Pass me the bong bro.
ReplyDeleteI really need to go out and get plastered...Job related. Damn, it's been years.
ReplyDeleteRB- I need some healing medicine bro. Illini's stuff is OK, but you got the stank man.
ReplyDeleteHEY bro, My Arivaca ghani connection is on a long term vacation on the state dime if you know what i mean. Can't you go to a drug store or something and get any flavor you want?
ReplyDeleteCan't believe your pinching a bro man. I told you I'm good for it!
ReplyDeleteAm looking forward to seeing Chase play against Cal/Stanford here in a few weeks!!
So much for the gap...I wonder what gap guy says....
ReplyDeleteThey're just sending a message to the House and Senate. Pass the freaking plan.
ReplyDeleteLast night's speech - Apparently the political divide throws a wet blanket on any rally celebration.
ReplyDeleteIf the SPY get's back above S2, I'll cover and call it a week.
ReplyDeleteThat didn't take long. 2000 SDS off @ 24.38.
ReplyDeleteThat's about $1,300 bucks, which is about what I'll need to pull off weekly while unemployed.
Hmmm...TZOO. Interesting. Anyway to play that?
ReplyDeleteLong more CVV at $17.69, long CTCT at $17, long RAS at $3.56...keeping it small
ReplyDeleteLong ARGN at $17.61...again small position.
ReplyDeleteTZOO thing looks like it might be fake.
ReplyDeleteAdded more long ARGN at $12.55. Long MMYT at $20.5.
ReplyDeleteNow about 35% long. My thinking is there is going to be waaaaay too much money thrown at this market and the odds of us seeing the bottoms here are decent now.
Long AIS at $2.32
ReplyDeleteMark - Stay away from TZOO is my gut reaction to the news...
ReplyDeleteLong IBKC at $45.27...I'm done for now...about 45% long.
ReplyDeleteTaking a look at AUMN. MF is ready but not RSI.
ReplyDeleteTXN. Interesting reaction. Problem is I hate the chip/pc sector.
ReplyDeleteExample. I just transfer $'s in my Schwab account on my phone and it was faster/easier than on my computer.
Man this market HATES Obama. Just the mention of him speaking on CNBC caused the market to drop 8 S&P points. The S&P is down 18 pts after last night's speech. The day he was sworn in, the market dropped significantly.
ReplyDeleteBailed out of all of my longs today...i get a very bad feeling about this market.
ReplyDeleteI also flipped the switch on my positions and bought 3,200 shs of BGZ at $33.65 which is already up big
ReplyDeleteMore to do with Europe than anything Obama related...
ReplyDelete11:30 am : A flurry of selling pressure has undercut stocks, taking them from morning highs to fresh session lows. The effort comes in response to headlines suggesting that Germany is close to establishing plans that will enable the country to help protect banks in the event that Greece defaults on its debt. Just yesterday, European Central Bank President Trichet expressed that Greece should not take for granted its next tranche of financial aid.
Kyle - Yep absolutely....Soc Gen, DB, STD, BCS...all tanking. EWI and EWP are at YTD lows. This is not looking good.
ReplyDeleteI have been following this blog for a while in my life I have never seen a bigger collection of misfits, nerds or freaks. Can anyone articulate an explanation for yourselves? Words really cannot describe the collective psycosis that takes place on this board.
ReplyDeleteshootables --- shark is that you??? Missed you man!!!
ReplyDeleteShootables - you're missing an "h" in psychosis.
ReplyDelete(Yep, I'm in the nerd category).
Looks like we're angling to do a round trip back to Tuesday's lows. Unbelievable week (and month) of trading...
ReplyDeleteShootables, this should cover us.
ReplyDeletehttp://www.youtube.com/watch?v=Iy8zu-FPeHg&feature=related
Buy-and-hold saves me from frustration on a day like this.
ReplyDeleteSPY now down 4.7% in September, but still higher highs from the Aug 9th low. Jeff Saut, in his audio comment yesterday, continues to believe this is a replay of the 1978 and 1979 lows and says it is tracking even more in line with these.
ReplyDeleteIf the Northern European banks can be insulated from a Greece default, that would likely be the best solution. Greece is a small economy and it's default, if contained, would allow this to be out behind us and things to move forward.
Or maybe this.
ReplyDeletehttp://www.youtube.com/watch?v=SboRijhWFDU
I do not get frustrated, it just is.
ReplyDeleteBB - It's not about Greece man...it's about Italy and Spain.
ReplyDeleteThe Western world's financial system is imploding for goosh sake. Just think how much better we would have been today if we let our banks fail years ago and had this vomit clear.
ReplyDeletehttp://www.youtube.com/watch?v=Akoukq5DvAE
The move in copper kind of confirms this down move. Outside of a temporary move up in July, Copper has been in a down trending channel since February. You can connect the highs from mid Feb through mid April through the beginning of September...
ReplyDelete2nd - 94% cash so I'm not frustrated either, but I am wondering just how exposed the money-market accts here are to the banks there...
ReplyDeleteWe are a few points above up trendline from SP cash lows. We should get some stabilization here, but it seems to be we will resolve to the downtrend.
ReplyDeletet3d - I'm showing uptrend line from August 9 is around 1147 cash (115.2ish on SPY)
ReplyDeleteweekly Demark S1 = 1142.19 FWIW
ReplyDeleteweekly floor S1 = 1152.78
yeah TOF, that's the area. good place to cover some shorts.
ReplyDeleteT3d - with so many european stocks/markets in free fall, one of these times support ain't gonna hold.
ReplyDeleteMy first thought is shorts are scared to stay short here because of trend lines....yet they're also scared to add to shorts because of the potential for bailouts etc over the weekend. So that fuel to the upside may be gone...
ReplyDeleteTOF, yes, you just have to balance whether to take some off or add. It all depends on your timeframe, you will make the right choice for yourself, I know.
ReplyDeleteTXN - Mark, you still were making use of semiconductor products to conduct your transaction....
ReplyDeletethought it was interesting that Tim Geithner was on a plane to France right after the speech last night...now we know why...
ReplyDeleteMan its hard to stay long anything in the market. I lost $1,000 on my longs this morning but if I stayed long I would be out about $4k.
ReplyDeleteProbably best to just stick to my plan of going long anything when the market is at least 3% above the 200 DMA...keeps you out of trouble.
But floor traders generally cover some at these points which "should" cause lift.
ReplyDeletet3d - yeah....tough call man
ReplyDeleteMisfits, nerds, freaks - I'm confused about where I might fit in, there's no fourth derogatory category...
ReplyDeletehowever transitory.
ReplyDeleteIsn't there a G& meeting in Euroland?
G7 meeting
ReplyDeletet3d - maybe that's it. Good timing for them. Maybe that can catch a riot or two in person while they're there instead of just seeing it on the big screen...:-)
ReplyDeleteA lot of the reason the market is down so much is because the measuring stick for stocks, the US$ is up so much. UUP up 1.2% and SPY down 2.7% means really the market is down 1.5% in overall value.
ReplyDeleteTOF, Greece should never have been admitted to the Euro. It lied to get in and needs a debaseable currency to continue it's political system. Italy, Portugal and Spain, I think, have the ability to stay in the Euro and I think they will make the hard decisions as the benefits to being in outweigh the costs of being out. If Greece thinks they have it hard now, wait until they issue Drachmas again and find their salaries dropped by over 50% in Euros.
I don't see Copper in a downtrend, but in a basing pattern since last fall.
Man...check out that chart for the DAX:
ReplyDeletehttp://finance.yahoo.com/echarts?s=^GDAXI+Interactive#symbol=^GDAXI;range=1y
Today's close was the lowest since July 2009. What's the deal with Germany being significantly worse than the other markets? Is it just because the consensus is that the Germans will bail out the rest of Europe and it will drag them down?
Smartest guy I know has been short copper and added today.
ReplyDeleteBB - I agree and think the markets would rally on Greece exiting the EU...but the rollover amounts for Italy and Spain over the next 6 months total almost as much as the entire EFSF bailout fund.
ReplyDeleteOkay, it must be the first category after careful examination of clues and considering I live way out in No Man's land(an island?):
ReplyDeletehttp://www.youtube.com/watch?v=5SH1j1luFOw
BB - Don't forget TXN's comments last night as well...this adds to the bear thinking that earnings are going down and that current valuations are looking at earnings that peaked...I want to go long at some point, but I'm just worried that this negativity has taken too strong of a hold in the overall economy.
ReplyDeleteFWIW, Dr. J thinks we have seen the lows of the year and that if we dip to 1136 next week he would be a buyer.
ReplyDeleteDone for the day good luck traders, you too see pee.
The problem with saying that about TXN is their stock is actually up today, so even though they reduced their forecast, it was better than expectations.
ReplyDeleteAlso, Taiwan Semi this morning talked about demand ramping up in August and I think this would be a broader gauge of overall semi demand
Italy did pass their austerity budget, so hopefully, things will get better there. it is my understanding that their deficit is not a big concern, but their high overall debt. Cutting spending which shows their serious will likely keep their interest costs low, so they can get the debt paid down and this becomes a virtuous cycle with more services able to be delivered in the long run.
ReplyDeleteKyle,
ReplyDeleteNo not shark. Thought the bad spelling will give it away. Its RB. I just broke through my works fire wall. Other than that I have nothing to add. No trading here. 100% flat.
TOF, not sure if you watch Cramer and what you think about him, but I personally have quite a lot more respect for him than I did a few years ago.
ReplyDeleteAnyhow, if you watch the start of his show on CNBC from 2 nights ago (Wednesday), he talks about all the CEO's he's been dealing with talking about how business is fine in Europe. Broad range from Liquor to clothes to industrial products.
So, we are back to that same conundrum about good business and bad government and which will end up driving the economy.
BB - But isn't that part of the problem: austerity = less govt spending = less support for corporate earnings? It's the same problem the US ran into in the late 30's.
ReplyDeleteWhen you get a chance I'd recommend reading "Freedom From Fear"...it's a beast of a book but the similarities to today's economy are pretty crazy. It gives you a good perspective on history and what's going on now...
Lots of blue chip defensive names are getting hit hard today. MCD, PG, JNJ, MO...
ReplyDeleteShouldv'e guessed it was you, RB!
ReplyDelete"FWIW, Dr. J thinks we have seen the lows of the year and that if we dip to 1136 next week he would be a buyer. "
Bottom guessers are just like the top callers from November through May...just guessers...
FRANKFURT (Dow Jones)--A "quantum leap" is needed in efforts to save the euro zone, European Central Bank Executive Board member Juergen Stark said in an opinion column pre-released Friday by German business daily Handelsblatt.
ReplyDeleteIt is imperative at the European level to strengthen "the institutional framework of the economic and currency union," Stark wrote.
Up to now a "quantum leap" is lacking, he said. Furthermore, a "far reaching reform of the mechanism for decisions and sanctions" is necessary in order to secure effective coordination of fiscal and economic policies in the euro zone, he wrote.
"Here it will be indispensable in my view to transfer national budget powers to the higher-ranking European level to a greater extent than previously envisaged," he said.
"We find ourselves in a situation in which massive sustainability risks in public budgets are eroding financial stability," he wrote.
He furthermore rejected fiscal stimulus saying it would raise debt levels and thus further increase risks. "The adjustment costs would clearly rise through the deferring of consolidation into the future."
The ECB announced Stark's resignation Friday, citing "personal reasons," though it is widely believed that he left in protest against the bank's decision to continue to purchase government bonds.
Dollar @ 200SMA - Yes, this is most likely due to fear over the future of the euro, or it could be a result of some foreign government propping up dollars. Of course by definition, a stronger dollar makes for lower asset prices and encourages imported goods but doesn't do much good for US exports or employment.
ReplyDeleteThis copper chart doesn't look completely broken to me, although it might be wise to look at it from several other perspectives than just this one:
http://stockcharts.com/c-sc/sc?s=$copper&p=D&yr=0&mn=7&dy=0&i=p99295968853&a=217994610&r=7 736
TOF, good point about government cutbacks potentially cutting into profits, but I see that as secondary to the world economy continuing to grow (4.9% in 2010), 3+% predicted for 2011.
ReplyDeleteIf Western government cutbacks are exceeded by BRIC growth, that still means more worldwide economic wealth to be distributed. For sure there will be losers and I think that is why you see government supplier stocks (eg. CSC) down so much, but there will be winners as well and many of these will be Western businesses and the profits will flow to these companies.
Thanks for the book recco. I'll take a look.
GLD seems to be ripe for near term short. It has been a fear trade for a long time and seems crowded near-term. At some point GLD ETF became larger than SPY. Conquer the fear and short GLD.
ReplyDelete"We find ourselves in a situation in which massive sustainability risks in public budgets are eroding financial stability," he wrote.
ReplyDeleteI think he's saying they need to cut the budget, but isn't Europe's a socialist government philosophy?
I much prefer to see currency devaluations of developed economies as opposed to currency collapse, budgetary controls aren't a light switch to be thrown on and off at the drop of a hat. What was this guy saying ten years ago when the decisions were being made?
"Conquer the fear and short GLD."
ReplyDeleteWhy play with fire? Europe can fall apart any day and GLD can double overnight. Besides, even if Europe stays together, the US Budget deficits ain't going down (with the economy so weak that it requires constant stimuli from the Fed and the Gov't), which means that gold will stay in its very strong uptrend. Shorting something with such a strong uptrend is not the best risk-reward opportunity.
There is a common wisdom among good traders: take long positions only in the direction of the long-term uptrend and short positions only in the direction of the long-term downtrend (this significantly increases the chances of your position working out over the short term). If you want to short something, short DB.
"Ephraim Fields of Echo Lake Capital Urges China Advanced Construction Materials Group to Reject Chairman's Recent Buyout Offer"
ReplyDelete- Believes offer is grossly inadequate and not in best interests of shareholders
- Notes that opportunistic offer equates to only 63% of tangible book value of $4.22 per share
- Notes that company recently announced record backlog
- Believes liquidating company would yield significantly more than $2.65 per share
- Notes that if CADC were liquidated at only 95% of tangible book value, it would result in proceeds of approximately $4.01 per share or 51% greater than the Offer
- Believes that if offer is rejected, stock price will ultimately trade significantly higher than $2.65
*****
So maybe we should all just buy into CADC and wait, instead of trying to time this crazy market? CADC will either get bought out soon at a 50% higher price or will trade a year from now X times higher...
A note for the day traders out there: as S&P is nearing its low for the day, TLT is WAY below its high for the day and is not trending up.
ReplyDeletethe connection between day trading and how the 20-year treasury is trending is lost on me. Sorry...
ReplyDelete"Taking a look at AUMN. MF is ready but not RSI."
ReplyDeleteMark, the investor rep is out this week, but I'll be calling him every day next week so as to find out what assumptions they used when making their production guidance for 2012. Also, I want to find out when they plan to start operating the new 2000 tpd mill (they said it will take 3 years to construct and ramp it up, but it may already start operating in 2 years, which means that the market will have to start reckoning with it even sooner than that). I'll let you guys know what I find out...
No stress here.
ReplyDelete“However, given the increased uncertainty in the global economy, TSMC does not expect these short-term rush orders will continue into the fourth quarter,” Ho said.
ReplyDeleteTNA - looks like the double-bottom @ 38.14 put in between 12:10-12:40 isn't holding. Lower low printing now.
ReplyDeleteGood lord you guys have been busy.
ReplyDeleteCP- Your the brainiac!
Here's my take, Greece gets the boot, we micro crash, and I have the nads to go all in long.
If I had to guess we close right at the bottom end of the channel...i.e., SPY $115.2ish
ReplyDeleteKyle. You got some pivots down here? 1141 is obvious.
ReplyDeleteDavid- Thanks.
ReplyDeleteIt amazes me how hard stuff gets whacked on days like this.
ReplyDeleteMark - I've been looking at weekly and monthly pivots more lately.
ReplyDeleteweekly demark s1 = 1142.19
weekly floor s1 = 1152.78
weekly floor s2 = 1131.60
weekly fib s2 = 1154.57
monthly floor s1 = 1111.16
hope I got these right
"GLD short" is a short term trade as I emphasized. No question about long term bullish prospects here. I plan to exit when and if GLD drops to $160 some range. at $181 it was close to resistance and was technicaly overbought. I see a stop loss there at around $185.
ReplyDeleteTOF- My crayon has 114.8ish.
ReplyDeleteNix that, Make it 115.00 on the button!
ReplyDeleteMark - let me know if this link works...
ReplyDeletehttp://www.screencast.com/t/bbHAN7e79pn
Weekly Fib Lvls in the legend upper LHS
Mark - given the tone of the market and the fact that a lot of people are holding out hope for 1,136 ES as being the bottom...chances are we close there.
ReplyDeletetoday's trading is classic bear market action:
ReplyDeletemarket down big
gold down
defensive stocks down
dollar up
weekly pivot levels meant to say...
ReplyDeleteWorks great Kyle. Thanks.
ReplyDeleteCP- Re TNX. Am I wrong that all of the phones/tabs are flash?
ReplyDeleteHere is the Sentimentrader post prior to Yesterday's open.....Summary: Stocks jumped again on Wednesday, following through on some of the bullish short-term setups that had popped up earlier in the week.
ReplyDeleteMost of our short-term guides are once again back to neutral or even slightly overbought, but there are few extremes just yet.
The last time the S&P 500 rallied more than 5% from the previous day's open through the current day's close was more than two years ago, in April 2009.
There have been 31 such instances in the history of the S&P SPDR (SPY), dating back to 1995. The index's performance going forward was mixed, but modestly weak in the short-term of the next 1-3 days.
I've received quite a few questions about "worst starts to September" over the past couple of days. Indeed, this year had been the 2nd-worst start to the month in the S&P 500's history.
There were 5 other times it lost more than -3% during the first three sessions of September. Every time, it lost an additional -9% at some point during the remainder of the month, and every one of them closed down an additional -5.8% at least.
Here are the years:
Year....1st 3 days....Rest of month
1931.......-3.7%.............-27.3%
1937.......-3.6%.............- 11.0%
1946.......-3.9%...............-6.4%
2002.......-4.0%............... -7.3%
2008.......-3.6%...............-5.8%
None of them saw September close in positive territory (above August's close). So if the S&P can close above 1219ish, then this will go against those poor historical precedents.
The indicators and price patterns we looked at earlier this week suggested a bounce, and now that we've seen a large rebound from the depths, we're mostly back to neutral. There doesn't seem to be a large edge here for the short-term.
No, not flash memory, but those cmda or what ever type of chip. Aren't they also in tablets?...No power up time etc??
ReplyDeleteSPX - looks like it's going out near the weekly floor s1 (1152.78) & fib s2 (1154.57) lvls.
ReplyDeleteMark - Very nice SDS gap-fill trade BTW. Ur instincts r good man...
Wow, thanks Kyle!
ReplyDeleteDB is slowly inching toward 2009 lows...down 8.7% today to $31, it's only $10 off it's lowest lows from 2009.
ReplyDeleteI honestly don't see how DB doesn't teat that low.
ReplyDeleteI've heard some talk from my clients really off the cuff that the US banks can weather problems with the EU banks. Who knows what really would have happened if we had just let ours die off like T3D has suggested...I know right now still 'sucks'.
TOF- I bet -8.7% wouldn't feel 'slowly inching' down if your were in it! :))
ReplyDeleteMan, I can't wait for a beer tonight.
Anyway, got to run. Heading straight to Kendra's game after work then stopping on the way back for dinner. Don't worry, I have my 'first aid' kit packed and chilling :))
Ciao!!
Infrastructure investment - Wonder how/if the power grid failure issues were/have been addressed? I recall a few years back when grid failures had been tracked all the way back to a dim bulb in the White House.
ReplyDelete2nd - "Cut The BS: Obama Proposes Cutting FICA-SS In Half"
ReplyDeleteWould that be the contributions, or benefits side of it?
On the benefits side, they can simply return my money they've already spent and we can call it even. Hopefully they don't believe it's acceptable to require payment into something and then renege on providing the benefits, that's called bait and switch, an illegal and dishonest practice.
OT:
ReplyDeletehttp://www.surfnewsnetwork.com/index.php?content_id=37&photo_id=25291&photo_typeid=10
http://www.surfnewsnetwork.com/index.php?content_id=37&photo_id=25892&photo_typeid=10
best
ReplyDeletehttp://www.surfnewsnetwork.com/index.php?content_id=37&photo_id=5130&photo_typeid=10
Mark - "Am I wrong that all of the phones/tabs are flash?"
ReplyDeleteFlash is everywhere! I guess it's whomever makes the specialized devices (flash + ARM-CPU + graphics goodies all in one or fewest) in those smart phones that are moving mucho product? ;)
Tear that sucker apart and you'll see their logos etched on the various devices.
TOF, one final thought.
ReplyDeleteTXN going up on bad news, on a horrible day, to me, signals a market which is getting sold out.
ISSI, a fabless semi company that makes products for a bunch of industries(I own it), was also up today and SMH was down 0.6% (not bad).
If you believe "semi's lead the market", today's action leads me to believe the market downturn is getting close to the end.
Great pics t3. Waimea Bay is supposed to have some awesome surf
ReplyDeletehttp://finance.fortune.cnn.com/2011/06/06/bob-rodriguez-the-man-who-sees-disaster/
Standard & Poor's has just announced that it's downgrading the outlook for U.S. debt, and Bob Rodriguez couldn't be cheerier. It's another sign, he says, that at least some people are waking up to the looming debt disaster. As he paces FPA's offices in Santa Monica on a spring day, he sips coffee from a stained green-plastic mug. It's a 20-year-old souvenir from a company called Green Tree Financial; Rodriguez keeps it because it reminds him of one of his worst investing losses.
Since coming back to work on Jan. 1, he has found himself galled once again by what he sees. Fund managers, emboldened by their mammoth gains, clamor for risk. Junk bonds remain wildly popular. Even more stunning, says Rodriguez, is the government's failure to address its debt. "I know one thing from business," he says, his voice quavering as he tries, mostly successfully, not to yell. "Unless you correct the problems that are already occurring, you don't add on new leverage and new, other responsibilities until you correct the old! All you're going to do is capsize the ship!"
Rodriguez argues that the U.S. debt as a percentage of GDP ratio (currently 64%) is massively underreported because it doesn't count off-balance-sheet entitlements such as Medicare, and debt owed by Fannie and Freddie. If you factor in those liabilities, he says, the actual ratio is greater than 500% and growing. The U.S. must reduce that before 2012, Rodriguez says, because it's unlikely to accomplish anything during the election year. If nothing changes, he adds, investors will start to get nervous about the amount of debt on the U.S. balance sheet. As lenders balk at buying Treasuries, rates will spike, causing borrowing costs to skyrocket across the financial system. "The financial system is held together with a very thin filament called confidence," says Rodriguez. "When you clip that, all hell breaks loose."
The situation isn't irreparable; Rodriguez believes the government can keep rates from climbing too high if it starts making cuts of $350 billion to $500 billion per year. But he has little faith in its willingness to do so. If it were up to him, there would be serious tax reform, with all tax deductions (including mortgage interest) on the table. A former Republican, he describes himself as a "fiscal conservative but social moderate" who has grown disgusted with both parties: "I say, 'A pox on both their houses.'"
BB - SMH actually made a lower low this week, for what its worth...same with TXN.
ReplyDeletenew post
ReplyDelete