I read recently that the S&P 500 earnings are still projected to be up 11% for Q3. There have not been a lot of earnings warnings and the results that have come out so far (Oracle, Anderson) have been good.
Q1 earnings were good and the market did go up. We had excellent earnings in Q2 as well, but they were overwhelmed by the back macro news and the market fell off a cliff as the good earnings new ended.
I'm hopeful Q3 earnings will drive market activity for the next month, but who really know with the way the market has been going.
I would honestly be shocked if we break down here. Why? Several reasons:
(1) Econ reports as not negative enough...improving jobless claims, recent decent housing reports figures, China mfg (reading of over 51 this weekend) still showing growth (2) Earnings are still strong and not showing any real signs of crashing (note that there really haven't been any profit warnings...there have been a few but there are just as many if not more beats/raises) (3) Excessive pessimism (evidenced by extremely high put call ratios and just general cautiousness/bearishness)
I think the odds are we test the 1,100-1,120 area one more time, perhaps break it momentarily, and then get a rally to 1,250. I think should we finally break down, it will probably be when not as many people expect it to happen. So I still see another rally before the possibility of a breakdown happens.
We shall see, but I think this period is similar to the late 1973/1974 period. Not saying it will end like it did back then but just that the trading range between 1,100 and 1,250 will take longer and need to fake out more people. There's too many people leaning on one side of the boat.
Made a chart comparing world Indexes. Hope it works. S+P is only down 8% YTD. All this end of the world stuff for 8%? Question is will we catch up with the DAX and hang seng. (-25% ytd.) or will they catch up with us? I find it interesting how resilient Japan has been considering the real world catastrophes they have endured. Our devastating debt downgrade and congressional deadlock is pretty laughable on the continuum of problems.
And regarding housing I was referring to this: Existing Home Sales for Aug 2011 Highlights In a rare and very welcome sign of strength in the housing sector, existing home sales surged a monthly 7.7 percent in August to an annual rate of 5.03 million, well above Econoday's 4.75 million consensus. All regions show gains with strength centered in the key single-family component where sales surged 8.5 percent. In year-on-year terms, sales are up an impressive 18.6 percent but do show slightly less strength than July's year-on-year rate of 21.0 percent.
The sales surge drew supply on the market down by 3.0 percent to 3.577 million units. In terms of months at the current sales rate, supply fell sharply, to 8.5 months for the best reading since March and vs 9.5 months in the prior month.
On the negative side, price readings fell to suggest that at least some of the sales strength is tied to price reductions. The median price fell 1.7 percent to $168,300 with the average price down 1.6 percent to $216,800. Year-on-year price contraction is slowly deepening, at minus 5.1 percent for the median and minus 4.0 percent for the average.
The National Association of Realtors, which compiles the report, calls August's strength impressive especially given disruptions tied to Hurricane Irene which swept some of the South and much of the Northeast at month end. Note that sales in the Northeast showed the least strength of any region, a factor that points to possible pent-up demand in the region for this month. Still, the association warns that cancellations are high and that credit remains tight. But if extended in the months ahead, the improvement in today's report could mark a pivot higher for the housing sector which has been the hardest hit of all areas of the economy. But financial markets, focused on today's FOMC announcement, are showing no significant reaction to today's report. Data on new home sales, which have been the weakest part of the housing sector, will be posted Monday.
Had an early dinner last night at Left Bank in Menlo Park.
http://www.leftbank.com/home_menlopark
Last time I was here was in the late nineties, when the bar would be packed three deep on Friday nights with guys who probably worked for any of dozens of high-flying dot.com or high tech firms. Whereas last night it was mainly families with young kids.
We strolled Santa Cruz Avenue for awhile, which took me back to the late sixties, when I would walk/bike past very different kinds of storefronts.
Ten years from now, I'll revisit Left Bank, and the bar will be packed three deep with guys who work for any of dozens of high-flying Peninsula companies. And I'll order a bottle of champagne to celebrate new high-water levels on my portfolio.
Making dinner for myself tonight. Skipping same with wife + kids at her sister's in favor of watching 'Anthony Zimmer' on NFLX.
1.25 lbs of pan-fried lamb shoulder blades + cherry tomatoes from the back garden blackened in same pan, rice seasoned with Campbell's Cream of Mushroom soup.
Based on the opening minutes of Zimmer (the American version of the story was released several years later as 'The Tourist' with Depp and Jolie- haven't seen it yet), it should be an awesome pic...
I love Indian food also, but I have not had it in awhile. I went to an arranged Indian wedding (is there any other kind?) where bride and groom literally met days before the wedding. Anyways I had a whole menu full of food. The whole kaleidoscope of colors, aromas and flavors. Really had a great time until i awoke at about 2 in the morning with a 104 degree fever and went forth and regurgitated my meal which became very shocking in its sharpness and variety of technicolor. Yes i plan to get back on that horse, but very slowly. My wife tells me it was 4 years ago and the couple is very happily married. Maybe something with curry will be on the menu tomorrow.
Any Masala Dosa that I have had priced over $3 has been mediocre to bad.
Any Masala Dosa I've had priced $0.60 or less has been spectacular. The best I've had was in Panang, Malaysia. Little India in Singapore is great as well. Unfortunately, I didn't see any dosa's in N. India.
I am transferring my music between computers. I have 66 GB and 12,984 songs. What do you guys have? Jesse living the life.I have found the mom and pop informal food vendors beat the typical sit down restaurant in nearly every country I have been. Jesse do you travel backpack hippie style or your own personal jet?
The talk of Indian food is making my mouth watering. What a great way to get your veggies. Regrettably, here in Peoria the Taj closed recently. After two + years. Nothing in sight.
The restaurant biz is very tough around here and often changing.
I found an Indian/Malaysian place in-town that offers Masala Dosa for $2.25 which is above my .60 level, but below the $3 mediocre threshold.
I'll test my theory tomorrow....
I'm currently in Luang Prabang. Turns out, they got their first road in the 1990's. Unesco World Heritage city. Avg. income $1,000. The place is exploding similar to Ubud, Bali over the past 10 years. The rent at the restaurant next door has increased 1500% over the past 2 years.
The thing about Laos is that you see very few older people. I found out today (as logic would dictate) that if you get sick here, you die. As simple as that.
The nearest crappy hospital is 14 hours away. The nearest decent hospital is about 24 hours away in Bangkok. That's for a tourist. If you're from Laos, you have to find a way to cross the border to get to that medical care.
....and a decade ago, there literally was no road to get there. As it stands, the current state of the road is by far the worst road that I have ever been on (that includes the 12 hour dirt boulder ride from Thailand to Angkor Wat in Cambodia.)
'The thing about Laos is that you see very few older people. I found out today (as logic would dictate) that if you get sick here, you die. As simple as that.'
"– The European banking system, already the most damaged in the developed world, could prove to be in far worse shape than is already believed. A careless word from a government official, a misplaced austerity cut or an investor scare could trigger a cascade of bank collapses.
Even if Europe is able to avoid these pitfalls, the eurozone’s structural, financial and organisational problems remain. This plan merely patches up the current crisis for a couple of years."
This story being recycled once again, as if our cowardly Congress has the nads to do something, how so very DC! Nothing comes of this finger pointing but further confusion, anger, and embarrassment. Congress approved the hundreds of debt raise-ups themselves, opening the door for China, et-al, while incentivizing export of employment. Who's really to blame? Look no further than DC:
Congress addresses Chinese currency manipulation
Jim Abrams, Associated Press, On Sunday October 2, 2011, 1:12 pm EDT WASHINGTON (AP) -- "After years of trying, Congress is taking another stab at retaliating against what many see as Chinese manipulation of its currency to make its exports to the United States cheaper and U.S. goods more expensive in China.
The Senate is expected to take up legislation Monday that would impose higher U.S. duties on Chinese products to offset the perceived advantage that critics say China gets by undervaluing its currency."
GMO - Updates Liberty project status, increases over previous April 2008 NI43-101:
•A 18% increase in contained molybdenum within proven and probable reserves to 722 million pounds; •A 47% increase in contained copper within proven and probable reserves to 894 million pounds; •A 25% increase in proven and probable tonnage to 541.4 million tons; •A 6% decrease in proven and probable grades of moly to 0.067%; •A 14% increase in proven and probable grades of copper to 0.08%; and •A 20% decrease in stripping ratio to 1.2.
we will be at 1250 within a couple of weeks. econ reports better than expected...europeans spreads will contract and most importantly earnings will be better than expected. get long mark
I am back from my Yosemite vacation and I see that I already got a margin call in ETrade, which now holds the bulk of my AUMN. In order to cover the call from Friday, I just sold at $7 the 2 DB puts I purchased last week at $5.50.
On Friday, TBT hit my buy limit order at $19.50 for 100 shares, reloading the shares I sold earlier in the week at $20.83. But today TBT is at $18.50 already... I would have bought more, but I am out of my margin buying power...
Also, on Friday, my sell to open limit order for 20 November $2.50 ONP puts was hit at $0.40. So now I have a decent exposure to ONP as well as to CADC, CAAS, WATG and SORL. I think I should stop with buying crappy companies right now and focus on managing my margin debt. It looks like the only way for me to do it is to borrow 1/2 of my 401K again, which I wisely kept in a bond fond (so as to make sure that it will not crash during a market crash) and which has grown by more than 50% since 2008 (due to my contributions and company matching). It may sound like an extreme measure, but heck, why not? 401K is dead money for me, so why not periodically put it to work in the stock market when equity valuations become totally unreasonable?
I did have time last night to read Hussman's commentary, and he strongly suggested that everyone watches the 10-minute interview with the ECRI chief that was done on Friday:
http://www.businesscycle.com/
Here is a transcript of a part of that video, thanks to Hussman:
"This is a done deal. We are going into a recession. We've been very objective about getting to this point, but last week we announced to our clients that we're slipping into a recession. This is the first time I'm saying it publicly. A broad range - this is not based on any one indicator - this is based on dozens of indicators for the United States - there is a contagion among those forward looking indicators that we only see at the onset of a business cycle recession."
"A recession is a process, and I think a lot of people don't understand that; they're looking for two negative quarters of GDP. But it is a process where sales disappoint, so production falls, employment falls, income falls, and then sales fall. That vicious circle has started. You're looking at the forward drivers of that, which are different indicators - there's not one - everything's imperfect. The Weekly Leading Index .. that is saying unequivocally, this is recession. Long Leading Index, which has a longer lead, is saying recession. Service sector indicators, non-financial services where 5 out of 8 Americans work, plunging. Manufacturing, going into contraction. Exports, collapsing. This is a deadly combination, we are not going to escape this, and it is a new recession."
In order not to lose completely the money I currently have in my remaining 3 November $37.50 puts on DB (which I purchased at $6.87), and at the same time in order to allow for large gains in case the hell breaks loose now, I decided to change the sell limit order for these puts into a trailing sell stop order, which I currently set at $5.
Mark - I think this is what's going to happen with CSTR and the whole streaming/DVD debate:
(1) People will come to the realization that streaming isn't growing nearly as quickly as they thought...the bulk of the streaming "subscribers" were originally NFLX DVD by mail subs that were given the streaming option for free. As soon as NFLX raised the prices to $16/month for both from $10 it was enough to rub people the wrong way. But when they ultimately split off the two businesses people said the hell with the streaming thing. I also think this split had an impact on the DVD mail subs who finally used that as an excuse to look at the alternative (redbox).
(2) Hulu....they have 40 million subscribers. Holy shit that's a lot right? Well, yeah, but get this: they only have 1 million paid subs. 1 Million! And they're a leading option for streaming video. And the topper: Hulu is looking for a buyer. If the streaming business was booming then why would they be looking to sell?
(3) Ok, if we're going into a nasty recession, then what will people do? Look to cut expenses right? What's the cheapest option for getting movies: (a) $1 per movie with CSTR (b) $8 per month thru Netflix for DVD by mail (c) $5 per movie with on demand (d) $8 per month thru Netflix for streaming (e) $12+ per movie at theaters
I think when people understand that (1) above is correct, then they see blowout earnings for CSTR for this quarter and next, then you will get a higher multiple than 8 times trailing FCF for CSTR. I think we will see triple digits for CSTR in 2012.
Copper - "LONDON, Oct 3 (Reuters) - Freeport McMoRan Copper & Gold Inc (FCX:$30.87,00$0.4200,1.38%) said the sharp fall in copper prices does not reflect the market's fundamentals, as it continues to see good demand for the metal.
"The drop in the copper price doesn't reflect the fundamental situation... We still maintain a positive view of copper markets," the company's Chief Executive Richard Adkerson told Reuters in an interview on Monday."
Cp - Yep, it's interesting to see such a dichotomy between the two things. I'm pretty convinced that this "break" of the lows will prove in the short/intermediate term to be a false breakdown. If only I had a care in the world to put my short term trading ideas to work...
Check out how the markets bottomed out in 1990...I think the same scenario could very well happen. It's also very similar in terms of the calendar of when the downturn occurred.
At this point most bulls only see a bounce as a chance to sell. That should set the stage for rally that does indeed get sold enough to confirm for the bulls that they were right, but it should only get sold down to a higher low, which will set the stage for a rally to new highs. No one expects it, which tells me that the odds of it happening are just as good as any at this point.
The confirmation to me that this is the most likely scenario is when I turn on the TV and see that the perma bulls like Cramer and Kudlow keep stating the market is screwed.
Check out how the markets bottomed out in 1990...I think the same scenario could very well happen. It's also very similar in terms of the calendar of when the downturn occurred.
At this point most bulls only see a bounce as a chance to sell. That should set the stage for rally that does indeed get sold enough to confirm for the bulls that they were right, but it should only get sold down to a higher low, which will set the stage for a rally to new highs. No one expects it, which tells me that the odds of it happening are just as good as any at this point.
Seemed to be some definite panic in the selling today as some of the more risky stuff was just being dumped.
Another thing I noticed - may be just a coincidence, but several of the major holdings of a hedge fund I looked into earlier this year were all getting trashed. Could still be a sign of redemptions going on.
Tim Seymour made a comment back during the August sell-off: "Those professionals who were burned in 2008 (and who were lucky enough to keep their jobs) are not going to take huge losses like that again. They are saying 'This is NOT going to happen to me again' and they're selling."
I think a version of that is going to play out in Q4: Those professionals who are positive YTD are not going to risk losing it all based on some Greece BS blowing up over-night or the morons in the debt committee putting on a circus show over Halloween and Thanksgiving like what we saw last time.
Kyle - the flip side to that thinking is that they already sold. Hence the selling on good news. I think within 4 months they will have it wrong again...this time being too cautious.
What we're seeing is the information / price divergence that Vad mentions quite often. Positive data reports are met w/ even stronger selling. Price is truth right. The market is anticipating further bad news (probably Europe and year-long grid-lock before the election).
I read recently that the S&P 500 earnings are still projected to be up 11% for Q3. There have not been a lot of earnings warnings and the results that have come out so far (Oracle, Anderson) have been good.
ReplyDeleteQ1 earnings were good and the market did go up. We had excellent earnings in Q2 as well, but they were overwhelmed by the back macro news and the market fell off a cliff as the good earnings new ended.
I'm hopeful Q3 earnings will drive market activity for the next month, but who really know with the way the market has been going.
US distillate imports report:
ReplyDeletehttp://www.bloomberg.com/news/2011-09-29/u-s-distillate-imports-by-company-for-july-table-.html?cmpid=yhoo
PAL - Well, how much cheaper can this thing get, for cryin' out loud?
ReplyDeleteI would honestly be shocked if we break down here. Why? Several reasons:
ReplyDelete(1) Econ reports as not negative enough...improving jobless claims, recent decent housing reports figures, China mfg (reading of over 51 this weekend) still showing growth
(2) Earnings are still strong and not showing any real signs of crashing (note that there really haven't been any profit warnings...there have been a few but there are just as many if not more beats/raises)
(3) Excessive pessimism (evidenced by extremely high put call ratios and just general cautiousness/bearishness)
I think the odds are we test the 1,100-1,120 area one more time, perhaps break it momentarily, and then get a rally to 1,250. I think should we finally break down, it will probably be when not as many people expect it to happen. So I still see another rally before the possibility of a breakdown happens.
We shall see, but I think this period is similar to the late 1973/1974 period. Not saying it will end like it did back then but just that the trading range between 1,100 and 1,250 will take longer and need to fake out more people. There's too many people leaning on one side of the boat.
Here's a chart for the optimists:
ReplyDeletehttp://online.wsj.com/mdc/public/page/2_3063-economicCalendar.html?mod=mdc_h_cmgrel
And another:
ReplyDeletehttp://online.wsj.com/mdc/public/page/2_3063-economicCalendar.html?mod=mdc_h_cmgrel
Made a chart comparing world Indexes. Hope it works. S+P is only down 8% YTD. All this end of the world stuff for 8%? Question is will we catch up with the DAX and hang seng. (-25% ytd.) or will they catch up with us? I find it interesting how resilient Japan has been considering the real world catastrophes they have endured. Our devastating debt downgrade and congressional deadlock is pretty laughable on the continuum of problems.
ReplyDeletehttp://finance.yahoo.com/charts?s=%5EHSI#symbol=^hsi;range=ytd;compare=^gspc+^n225+^ftse+^gdaxi;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=;
RB - it's funny how the 3 countries that have fared the worst are
ReplyDelete(a) the most debt laden
(b) the ones with access to a printing press.
oops...mean fared the best
ReplyDeletemeant...grr
ReplyDeleteTeam I assume you meant fared best. Didn't think about the currency printing aspect, but you are right, has to be something to that!
ReplyDeletethese are the optimistic charts i was referring to:
ReplyDeletehttp://wsj-us.econoday.com/showimage.asp?imageid=21318
http://wsj-us.econoday.com/showimage.asp?imageid=21310
And regarding housing I was referring to this:
Existing Home Sales for Aug 2011
Highlights
In a rare and very welcome sign of strength in the housing sector, existing home sales surged a monthly 7.7 percent in August to an annual rate of 5.03 million, well above Econoday's 4.75 million consensus. All regions show gains with strength centered in the key single-family component where sales surged 8.5 percent. In year-on-year terms, sales are up an impressive 18.6 percent but do show slightly less strength than July's year-on-year rate of 21.0 percent.
The sales surge drew supply on the market down by 3.0 percent to 3.577 million units. In terms of months at the current sales rate, supply fell sharply, to 8.5 months for the best reading since March and vs 9.5 months in the prior month.
On the negative side, price readings fell to suggest that at least some of the sales strength is tied to price reductions. The median price fell 1.7 percent to $168,300 with the average price down 1.6 percent to $216,800. Year-on-year price contraction is slowly deepening, at minus 5.1 percent for the median and minus 4.0 percent for the average.
The National Association of Realtors, which compiles the report, calls August's strength impressive especially given disruptions tied to Hurricane Irene which swept some of the South and much of the Northeast at month end. Note that sales in the Northeast showed the least strength of any region, a factor that points to possible pent-up demand in the region for this month. Still, the association warns that cancellations are high and that credit remains tight. But if extended in the months ahead, the improvement in today's report could mark a pivot higher for the housing sector which has been the hardest hit of all areas of the economy. But financial markets, focused on today's FOMC announcement, are showing no significant reaction to today's report. Data on new home sales, which have been the weakest part of the housing sector, will be posted Monday.
http://www.calculatedriskblog.com/2011/10/summary-for-week-ending-sept-30th.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29
ReplyDeleteStarting to sound like a broken record. Lost the game, but the little guy scored the only goal for his team.
ReplyDeleteStoli + grapefruit juice.
Had an early dinner last night at Left Bank in Menlo Park.
ReplyDeletehttp://www.leftbank.com/home_menlopark
Last time I was here was in the late nineties, when the bar would be packed three deep on Friday nights with guys who probably worked for any of dozens of high-flying dot.com or high tech firms. Whereas last night it was mainly families with young kids.
We strolled Santa Cruz Avenue for awhile, which took me back to the late sixties, when I would walk/bike past very different kinds of storefronts.
Ten years from now, I'll revisit Left Bank, and the bar will be packed three deep with guys who work for any of dozens of high-flying Peninsula companies. And I'll order a bottle of champagne to celebrate new high-water levels on my portfolio.
ReplyDeleteI think I have been to that restaurant. Is it by shoreline amphitheater?
ReplyDeleteMaking dinner for myself tonight. Skipping same with wife + kids at her sister's in favor of watching 'Anthony Zimmer' on NFLX.
ReplyDelete1.25 lbs of pan-fried lamb shoulder blades + cherry tomatoes from the back garden blackened in same pan, rice seasoned with Campbell's Cream of Mushroom soup.
rb- No, Mountain View is a few exits south of Menlo Park, but I'm sure they have comparable restaurants.
ReplyDeleteIn fact, I love Indian cuisine and wish I lived closer to Mountain View.
ReplyDeleteBased on the opening minutes of Zimmer (the American version of the story was released several years later as 'The Tourist' with Depp and Jolie- haven't seen it yet), it should be an awesome pic...
ReplyDeleteI love Indian food also, but I have not had it in awhile. I went to an arranged Indian wedding (is there any other kind?) where bride and groom literally met days before the wedding. Anyways I had a whole menu full of food. The whole kaleidoscope of colors, aromas and flavors. Really had a great time until i awoke at about 2 in the morning with a 104 degree fever and went forth and regurgitated my meal which became very shocking in its sharpness and variety of technicolor. Yes i plan to get back on that horse, but very slowly.
ReplyDeleteMy wife tells me it was 4 years ago and the couple is very happily married. Maybe something with curry will be on the menu tomorrow.
What a feeling! We just experienced the biggest weekly gain in 14 months! Really?
ReplyDeletehttp://www.bloomberg.com/news/2011-09-30/european-stocks-post-biggest-weekly-gain-in-14-months-allianz-axa-jump.html
Nothing beats Southern Indian.
ReplyDeleteMasala Dosa (Dosai).
Any Masala Dosa that I have had priced over $3 has been mediocre to bad.
Any Masala Dosa I've had priced $0.60 or less has been spectacular. The best I've had was in Panang, Malaysia. Little India in Singapore is great as well. Unfortunately, I didn't see any dosa's in N. India.
jesse- In hindsight, last week will be regarded as the best week of the bull. It will be the week that die-hard market-timing bulls died hard.
ReplyDeleteI am transferring my music between computers. I have 66 GB and 12,984 songs. What do you guys have? Jesse living the life.I have found the mom and pop informal food vendors beat the typical sit down restaurant in nearly every country I have been. Jesse do you travel backpack hippie style or your own personal jet?
ReplyDelete"I love Indian cuisine and wish I lived closer to Mountain View."
ReplyDeleteMe three! Also, I like Armenian, there was a little restaurant across from the Western Whitehouse (AMD) in Sunnyvale that was quite good.
Ask for the John Michele special.
8. JOHN MICHEL SPECIAL
A trio of shish kebab, sautéed beef, and lulleh kebab; served with rice pilaf and broiled tomato 17.00
http://thearmeniangourmet.com/
Speaking of mom and pop informal food vendors, I can show you a nice little B&B restaurant outside of Brussels guaranteed to knock your socks off.
ReplyDeleteCustom dining, where you order your dish a day in advance. I highly recommend the roast duck.
The talk of Indian food is making my mouth watering. What a great way to get your veggies. Regrettably, here in Peoria the Taj closed recently. After two + years. Nothing in sight.
ReplyDeleteThe restaurant biz is very tough around here and often changing.
I found an Indian/Malaysian place in-town that offers Masala Dosa for $2.25 which is above my .60 level, but below the $3 mediocre threshold.
ReplyDeleteI'll test my theory tomorrow....
I'm currently in Luang Prabang. Turns out, they got their first road in the 1990's. Unesco World Heritage city. Avg. income $1,000. The place is exploding similar to Ubud, Bali over the past 10 years. The rent at the restaurant next door has increased 1500% over the past 2 years.
The thing about Laos is that you see very few older people. I found out today (as logic would dictate) that if you get sick here, you die. As simple as that.
ReplyDeleteThe nearest crappy hospital is 14 hours away. The nearest decent hospital is about 24 hours away in Bangkok. That's for a tourist. If you're from Laos, you have to find a way to cross the border to get to that medical care.
....and a decade ago, there literally was no road to get there. As it stands, the current state of the road is by far the worst road that I have ever been on (that includes the 12 hour dirt boulder ride from Thailand to Angkor Wat in Cambodia.)
'The thing about Laos is that you see very few older people. I found out today (as logic would dictate) that if you get sick here, you die. As simple as that.'
ReplyDeleteWell, then they need Medicare part B.
The tension between Israel and Palestine appears to be worsening by the day.
ReplyDeleteHow bad off is Europe, really?
ReplyDeleteStratfor's assessment:
"– The European banking system, already the most damaged in the developed world, could prove to be in far worse shape than is already believed. A careless word from a government official, a misplaced austerity cut or an investor scare could trigger a cascade of bank collapses.
Even if Europe is able to avoid these pitfalls, the eurozone’s structural, financial and organisational problems remain. This plan merely patches up the current crisis for a couple of years."
http://www.businessspectator.com.au/bs.nsf/Article/Germany-Greece-EFSF-bailout-eurozone-debt-crisis-v-pd20110929-M66RY?opendocument&src=rss
Wow, so much for those eurobank stress tests, huh?
ReplyDeleteThis story being recycled once again, as if our cowardly Congress has the nads to do something, how so very DC! Nothing comes of this finger pointing but further confusion, anger, and embarrassment. Congress approved the hundreds of debt raise-ups themselves, opening the door for China, et-al, while incentivizing export of employment. Who's really to blame? Look no further than DC:
ReplyDeleteCongress addresses Chinese currency manipulation
Jim Abrams, Associated Press, On Sunday October 2, 2011, 1:12 pm EDT
WASHINGTON (AP) -- "After years of trying, Congress is taking another stab at retaliating against what many see as Chinese manipulation of its currency to make its exports to the United States cheaper and U.S. goods more expensive in China.
The Senate is expected to take up legislation Monday that would impose higher U.S. duties on Chinese products to offset the perceived advantage that critics say China gets by undervaluing its currency."
http://finance.yahoo.com/news/Congress-addresses-Chinese-apf-1977309255.html?x=0&sec=topStories&pos=7&asset=&ccode=
If the economy was crashing wouldnt auto sales be crashing annd unemployment claims be soaring?
ReplyDeletetof- I don't know, man. But times like these are when investors pay their dues. Anyone can be an 'investor' when markets behave.
ReplyDeleteEK - Up 45%
ReplyDeleteHey, if autosales were crashing, wouldn't palladium be too?
ReplyDeletePAL is going for $2.46 this morning...
sorry but selloff is over. construction spending much better than expected and ism better...weve had several reports just like this recently
ReplyDeleteDon't know...Still don't like the way energy is getting sold off.
ReplyDeleteMark- You've been trading well. Pretty much 100% cash, no? If you're a ST trader, right now cash is king.
ReplyDeleteGMO - Updates Liberty project status, increases over previous April 2008 NI43-101:
ReplyDelete•A 18% increase in contained molybdenum within proven and probable reserves to 722 million pounds;
•A 47% increase in contained copper within proven and probable reserves to 894 million pounds;
•A 25% increase in proven and probable tonnage to 541.4 million tons;
•A 6% decrease in proven and probable grades of moly to 0.067%;
•A 14% increase in proven and probable grades of copper to 0.08%; and
•A 20% decrease in stripping ratio to 1.2.
2nd- Yep, all cash.
ReplyDeleteSee you guys in a few.
S&P - I guess we linger here the remainder of the day and tomorrow they take it under 1100?
ReplyDeleteOr, maybe not...
Germany seemed surprisingly eager to approve the euro bailout, and what happens to their economy if they exit the eurozone?
Don't leave your records in the sun, or they'll warp and they won't be good for anyone.
we might breakk the lows and go 2-3% lower but it aint gonna stick. the selloff has reached its limits
ReplyDeleteSeems like traders bid up those 30yr bonds in order to flip them onto the FED.
ReplyDeletePrices just fell a bit more, did something happen?
ReplyDeleteGM says U.S. sales rise 20 percent in September
ReplyDeleteHmm, sounds positive...
Semis holding up. Looking to buy.
ReplyDeletewe will be at 1250 within a couple of weeks. econ reports better than expected...europeans spreads will contract and most importantly earnings will be better than expected. get long mark
ReplyDeleteEBS - Receives huge government order for anthrax solution.
ReplyDeleteDXY VXX TVIX showing fear going pretty far into the future.
ReplyDeleteMTL 9.69, EWG 17.88, TEX 10.38
ReplyDeleteStops at the day's lows. In time, we go much lower, just think we're in for a bounce here soon....
ReplyDeleteNLY is at the low end of it's trading range of the last several months. $16.51. Y 14% +.
ReplyDeleteShows how negative things have gotten:
ReplyDeleteSince last Monday, 17 out of 21 economic reports have been better than expected. S&P 500 is down 3.5% over this time period. (from Bespoke)
I am back from my Yosemite vacation and I see that I already got a margin call in ETrade, which now holds the bulk of my AUMN. In order to cover the call from Friday, I just sold at $7 the 2 DB puts I purchased last week at $5.50.
ReplyDeleteOn Friday, TBT hit my buy limit order at $19.50 for 100 shares, reloading the shares I sold earlier in the week at $20.83. But today TBT is at $18.50 already... I would have bought more, but I am out of my margin buying power...
Also, on Friday, my sell to open limit order for 20 November $2.50 ONP puts was hit at $0.40. So now I have a decent exposure to ONP as well as to CADC, CAAS, WATG and SORL. I think I should stop with buying crappy companies right now and focus on managing my margin debt. It looks like the only way for me to do it is to borrow 1/2 of my 401K again, which I wisely kept in a bond fond (so as to make sure that it will not crash during a market crash) and which has grown by more than 50% since 2008 (due to my contributions and company matching). It may sound like an extreme measure, but heck, why not? 401K is dead money for me, so why not periodically put it to work in the stock market when equity valuations become totally unreasonable?
I did have time last night to read Hussman's commentary, and he strongly suggested that everyone watches the 10-minute interview with the ECRI chief that was done on Friday:
ReplyDeletehttp://www.businesscycle.com/
Here is a transcript of a part of that video, thanks to Hussman:
"This is a done deal. We are going into a recession. We've been very objective about getting to this point, but last week we announced to our clients that we're slipping into a recession. This is the first time I'm saying it publicly. A broad range - this is not based on any one indicator - this is based on dozens of indicators for the United States - there is a contagion among those forward looking indicators that we only see at the onset of a business cycle recession."
"A recession is a process, and I think a lot of people don't understand that; they're looking for two negative quarters of GDP. But it is a process where sales disappoint, so production falls, employment falls, income falls, and then sales fall. That vicious circle has started. You're looking at the forward drivers of that, which are different indicators - there's not one - everything's imperfect. The Weekly Leading Index .. that is saying unequivocally, this is recession. Long Leading Index, which has a longer lead, is saying recession. Service sector indicators, non-financial services where 5 out of 8 Americans work, plunging. Manufacturing, going into contraction. Exports, collapsing. This is a deadly combination, we are not going to escape this, and it is a new recession."
Ouch, that was a rough one...
ReplyDeleteAgilent, out of the box and into the blue and they are over the place.
ReplyDeletehttp://www.youtube.com/watch?v=E4mBPwnBSug&noredirect=1
Copper down a little over 1%, but the small copper miners I follow (and mostly own) are down around 10%.
ReplyDeleteNot sure what is going on.
Copper - The world wants free copper, apparently, while mines are rapidly reaching clapped-out levels.
ReplyDeleteBB, ill-liquidity plain and simple.
ReplyDelete'Agilent, out of the box and into the blue and they are over the place.'
ReplyDeleteHun?
Man, all I see are bear flags forming at lower levels now.
ReplyDeleteI am surprised to see WTI hanging in there. Worth noting.
mark theyre trying to break cstr lower than support to no avail. also worth noting.
ReplyDeletei fully expect this to be nothing more than a short term bear trap. im siding with uncle warren. there aint no recession
TOF- I saw CSTR and didn't want to jinx you!!
ReplyDeleteI'll jump if we get a 2-3% break below the Aug. low.
Dang...SD back to 5 bucks.
ReplyDeleteKyle- If you measure the pole for SPY you get a downside target of 100.
ReplyDeleteJust opened my Ameritrade Streamer and looked at my streamer watch list for the first time in ages. I have a dozen or so stocks in there. Back to bed.
ReplyDeleteToday:
VHC -18%
REDF -18%
NBG -16%
GMXR -14%
ZQK -14%
PANL -13%
LMLP -12%
SD -10%
USG -9%
RAS -7%
Hang in there, bulls. Buy-and-hold gets tested like any other strategy.
ReplyDeleteMark - That'll put it around the 101.xx lows from May, Jun & Aug of 2010.
ReplyDeleteOn SPX, Katie Stockton was talking 935. Also, Fib(23.6%, 1576.09, 768.63) = 959.19.
I started working on an SPX levels spread-sheet over the weekend.
In order not to lose completely the money I currently have in my remaining 3 November $37.50 puts on DB (which I purchased at $6.87), and at the same time in order to allow for large gains in case the hell breaks loose now, I decided to change the sell limit order for these puts into a trailing sell stop order, which I currently set at $5.
ReplyDelete5 month UGA (gasoline) head and shoulders pattern about to bust. We may finally get some relief at the pump. Its been holding up really well.
ReplyDelete16 month well formed cup and handle for VIX. Breakout at 48.
ReplyDeleteNow to bed. 33 hour bus journey into China at 6am:(
ReplyDeleteAnother positive anecdote on a tough day:
ReplyDelete4th time S&P lost >-2% to end a month AND begin a new one. The other 3 returned +19.6%, +11.4% and +13.9% during the month
Hurray for the dollar, a big winner again today!
ReplyDeleteJobs? We don't need no stinkin' jobs as long as we hang onto our cash and big bad Ben can't print!
Who cares if we can't service our debt, just kick it further out into the curve. Some folks say we'll never have to pay.
This time, however, gold was up together with $USD today -- the end of gold sell-off?
ReplyDeleteSnow on Skyline Drive...
ReplyDeletehttp://en.wikipedia.org/wiki/Skyline_Drive
Coal miners were crushed again as well. Shut 'em all down, we don't need no stinkin' electricity in the brave new world.
ReplyDelete1099 - Now that number should ring a bell...
ReplyDeleteNLY - Flat curve = no divy, right?
ReplyDeleteSHOCK and AWE - What are the chances this is the shock and awe we were promised?
ReplyDeleteMark - I think this is what's going to happen with CSTR and the whole streaming/DVD debate:
ReplyDelete(1) People will come to the realization that streaming isn't growing nearly as quickly as they thought...the bulk of the streaming "subscribers" were originally NFLX DVD by mail subs that were given the streaming option for free. As soon as NFLX raised the prices to $16/month for both from $10 it was enough to rub people the wrong way. But when they ultimately split off the two businesses people said the hell with the streaming thing. I also think this split had an impact on the DVD mail subs who finally used that as an excuse to look at the alternative (redbox).
(2) Hulu....they have 40 million subscribers. Holy shit that's a lot right? Well, yeah, but get this: they only have 1 million paid subs. 1 Million! And they're a leading option for streaming video. And the topper: Hulu is looking for a buyer. If the streaming business was booming then why would they be looking to sell?
(3) Ok, if we're going into a nasty recession, then what will people do? Look to cut expenses right? What's the cheapest option for getting movies:
(a) $1 per movie with CSTR
(b) $8 per month thru Netflix for DVD by mail
(c) $5 per movie with on demand
(d) $8 per month thru Netflix for streaming
(e) $12+ per movie at theaters
I think when people understand that (1) above is correct, then they see blowout earnings for CSTR for this quarter and next, then you will get a higher multiple than 8 times trailing FCF for CSTR. I think we will see triple digits for CSTR in 2012.
80.30 is my USD target now.
ReplyDeleteCopper - "LONDON, Oct 3 (Reuters) - Freeport McMoRan Copper & Gold Inc (FCX:$30.87,00$0.4200,1.38%) said the sharp fall in copper prices does not reflect the market's fundamentals, as it continues to see good demand for the metal.
"The drop in the copper price doesn't reflect the fundamental situation... We still maintain a positive view of copper markets," the company's Chief Executive Richard Adkerson told Reuters in an interview on Monday."
Cp - Yep, it's interesting to see such a dichotomy between the two things. I'm pretty convinced that this "break" of the lows will prove in the short/intermediate term to be a false breakdown. If only I had a care in the world to put my short term trading ideas to work...
ReplyDeleteCheck out how the markets bottomed out in 1990...I think the same scenario could very well happen. It's also very similar in terms of the calendar of when the downturn occurred.
ReplyDeleteAt this point most bulls only see a bounce as a chance to sell. That should set the stage for rally that does indeed get sold enough to confirm for the bulls that they were right, but it should only get sold down to a higher low, which will set the stage for a rally to new highs. No one expects it, which tells me that the odds of it happening are just as good as any at this point.
The confirmation to me that this is the most likely scenario is when I turn on the TV and see that the perma bulls like Cramer and Kudlow keep stating the market is screwed.
ReplyDeleteCheck out how the markets bottomed out in 1990...I think the same scenario could very well happen. It's also very similar in terms of the calendar of when the downturn occurred.
ReplyDeleteAt this point most bulls only see a bounce as a chance to sell. That should set the stage for rally that does indeed get sold enough to confirm for the bulls that they were right, but it should only get sold down to a higher low, which will set the stage for a rally to new highs. No one expects it, which tells me that the odds of it happening are just as good as any at this point.
Seemed to be some definite panic in the selling today as some of the more risky stuff was just being dumped.
ReplyDeleteAnother thing I noticed - may be just a coincidence, but several of the major holdings of a hedge fund I looked into earlier this year were all getting trashed. Could still be a sign of redemptions going on.
Tim Seymour made a comment back during the August sell-off: "Those professionals who were burned in 2008 (and who were lucky enough to keep their jobs) are not going to take huge losses like that again. They are saying 'This is NOT going to happen to me again' and they're selling."
ReplyDeleteI think a version of that is going to play out in Q4: Those professionals who are positive YTD are not going to risk losing it all based on some Greece BS blowing up over-night or the morons in the debt committee putting on a circus show over Halloween and Thanksgiving like what we saw last time.
Kyle - the flip side to that thinking is that they already sold. Hence the selling on good news. I think within 4 months they will have it wrong again...this time being too cautious.
ReplyDeleteWhat we're seeing is the information / price divergence that Vad mentions quite often. Positive data reports are met w/ even stronger selling. Price is truth right. The market is anticipating further bad news (probably Europe and year-long grid-lock before the election).
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