Comments for "Market: More Volatility"

OkieLawyer wrote on Thu, 04/09/2009 - 1:10pm.

This looks too much like the last big rally. And the arc is starting to fizzle out.

rickrolled wrote on Thu, 04/09/2009 - 1:10pm.

first?

Elmer Fudd wrote on Thu, 04/09/2009 - 1:10pm.

kermit saves the day

Anonymously wrote on Thu, 04/09/2009 - 1:16pm.

This puts the recent rally into perspective - the S&P is still off about 45% from the 2007 high.

Plot that after CPI adjustment and it's much further off its Dot-Com bubble high...

Anonymousy wrote on Thu, 04/09/2009 - 1:16pm.

Third, fourth, fifth?

Anonymously wrote on Thu, 04/09/2009 - 1:18pm.

I think it might be time to respect the NASDAQ now finally having more 52-week highs than lows, even though both numbers are small.

iceman (member) wrote on Thu, 04/09/2009 - 1:18pm.

All I can say, is that this is absolutely killing shorts. The last two years have, at various points, killed both longs and shorts.

----
"no one is pricing in low, mid teens unemployment in any of their assumptions." - Meredith Whitney

ShortCourage wrote on Thu, 04/09/2009 - 1:18pm.

OkieLawyer,

What exactly tells you that this is the "last big rally", and what makes you think it "is starting to fizzle out"?

I'd like to think so, simply because I own a lot of puts. But just like the previous rallies in 2008, I begin to wonder if monetary and fiscal stimulus might turn this around, a la Greenspan after the tech bubble.

I'm just a big chicken, like my alias implies. Always fearful of giving back my winnings...

linked wrote on Thu, 04/09/2009 - 1:19pm.

The Pentagon runs an economic warfare exercise. Were the Treasury Department the good guys or the bad guys?

http://www.politico.com/news/stories/0409/21053.html

Basel Too (member) wrote on Thu, 04/09/2009 - 1:19pm.

lol. Williams-Sonoma up 20% today.

Anonymously wrote on Thu, 04/09/2009 - 1:19pm.

Volume has been much higher on the up than down days. Doesn't feel like exhaustion setting in... yet.

Chubby Davis wrote on Thu, 04/09/2009 - 1:20pm.

Man o man machovitz.......... buy fucking buy.... honey, where's the credit card !!!

Anonymously wrote on Thu, 04/09/2009 - 1:22pm.

BTW, a good market commenter to read is Kaltbaum. He's been right on since the start of all this. He's cautiously optimistic right now, not based on fundamentals, but based on the market action. The market may be wrong but the market is who you have to trade with. It's bad strategy to try to force the tape to match your analysis...

Anonymously wrote on Thu, 04/09/2009 - 1:22pm.

http://www.tradingmarkets.com/.site/stocks/commentary/gkitermi/Nothing-B...

Pavel Chekov wrote on Thu, 04/09/2009 - 1:23pm.

Eh hem...it's wolatility.

the man from nantucket wrote on Thu, 04/09/2009 - 1:24pm.

markets go up, markets go down, buy low sell high, buy now or be priced out forever, market can stay irrational longer than you can stay solvent, gotta be in it to win it, your mom is a tramp.

you gotta love all the market cliche's.

the man from nantucket wrote on Thu, 04/09/2009 - 1:26pm.

oh, and a apropos one for today. "bear markets end when the last bear is carried out on a stretcher"

Basel Too (member) wrote on Thu, 04/09/2009 - 1:27pm.

heard an interesting rumor. apparently, the last leg down was orchestrated by certain funds/banks (remember Denninger's nuclear bomb post), flaming the fears of bank government nationalization. If that was the plan, when you have Joe6Pack piling in to FAZ at $110, then it definitely worked.

btw, anyone seen joe shmoe lately?

Comrade Kilgore Trout wrote on Thu, 04/09/2009 - 1:31pm.

I, Kilgore Trout, being of mostly sound mind and body, do hereby request that CR take a brief pause in posting market and economic statistics because it is REPETITIVE and does NOT add anything to the conversation. I suggest these market and economic statistcs be posted when there is a change in their direction.

Thanks again for doing a great job.

Yours In Communism,
Kilgore Trout

Darth Paulson wrote on Thu, 04/09/2009 - 1:31pm.

Zee Mortgage Pig....she is almost complete.

TCA (member) wrote on Thu, 04/09/2009 - 1:32pm.

SRS crushed again. Good to see that the CRE bust is over. Time to buy!

Anonymous2 wrote on Thu, 04/09/2009 - 1:32pm.

The message the people will hear from the government and discern from the market is 'hope is around the corner'. As long as people believe their 401k will come back, home prices will come back, their job will become secure, etc., they will not over-turn the system.

For the next several years, this will be the theme. Things will be better in the next six month . . . we've hit the bottom . . .

The name of the this strategy is 'Reality Forbearance'.

OkieLawyer wrote on Thu, 04/09/2009 - 1:33pm.

Although I might be accused of being a "chartist," I definitely see a mathematical "arc" formation in this rally, the previous rally and the one in months 5-9 of this bear market. There are others, as well; but the move today seemed gimmicky. This move on the stock market seems too fast to be a real recovery.

Also, because I don't like to reveal too much of my own personal info on here, I don't reveal everything that I see or experience. But I have grave doubts about the effects of the stimulus due to the job that I am now doing. (I'm no longer practicing law - did primarily bankruptcy when I was last practicing a few years ago.) The bankruptcy business is really starting to make a comeback and the systemic problems that primarily led to personal bankruptcies has not been resolved (medical debt is #1). Until we resolve that issue, there will be no sustained recovery. Just my two cents.

TCA (member) wrote on Thu, 04/09/2009 - 1:34pm.

btw, anyone seen joe shmoe lately?

That was him (along with Gary) carrying the Code Pink banner today!

jo6pac (member) wrote on Thu, 04/09/2009 - 1:36pm.

Sorry, long on rice, beans, and ammo. I not even interested in what going on in the market other than every one who had a 401 is now looking at working a few extra yrs. WS/Govt will finish off the last ones standing shortly. Sad, another uncle milton moument.

jo6pac

Ms L wrote on Thu, 04/09/2009 - 1:36pm.

think of it as a gift ...

Groundhogday wrote on Thu, 04/09/2009 - 1:37pm.

If confidence was the only problem, then a concerted effort to cook the books and pretend the banks are fine would do the trick. If they are fundamentally insolvent, then this is just a big head fake. Given rising unemployment, vacancies, etc... I'm guessing defaults are rising and losses are real.

Ms L wrote on Thu, 04/09/2009 - 1:37pm.

bahhh the gift comment was in response to Basel and Williams Sonoma

Anonymouse wrote on Thu, 04/09/2009 - 1:38pm.

This is NOTHING more than short covering due to Wells Fargo's unexpected announcement. There is nothing in the fundamentals of the economy or the other stocks that went up today to justify this crazy rally. Nothing more than shorts - not only covering, but starting to unload before new rules set in. As I travel around the city (Los Angeles) and speak with many friends and family, all I can say is this is the worst time anyone I know has ever experienced or witnessed in their lives. It's like a ghost town. Stores shutting down. Whole families unemployed. For the stock market to rally shows a disconnect between Wall Street and reality that is hard to explain - for me anyway.

jo6pac (member) wrote on Thu, 04/09/2009 - 1:38pm.

Things will be better in the next six month.

Those time units are call Tom Freidmans, little tommy is famous for it.

jo6pac

TCA (member) wrote on Thu, 04/09/2009 - 1:38pm.

I, Kilgore Trout, being of mostly sound mind and body, do hereby request that CR take a brief pause in posting market and economic statistics because it is REPETITIVE and does NOT add anything to the conversation. I suggest these market and economic statistcs be posted when there is a change in their direction.

CR's just giving us what we want. What else do you think we're going to talk about on a 4% up day when all the data indicates there should be a minus sign in front of that number?

TCA (member) wrote on Thu, 04/09/2009 - 1:41pm.

think of it as a gift ...

Yeah, the gift that keeps on giving (the shorts heartburn).

Haha wrote on Thu, 04/09/2009 - 1:41pm.

What we have here is a lack of Competnce!

http://i310.photobucket.com/albums/kk412/dcp2685/teabag_fail_competence_...

Anonymus wrote on Thu, 04/09/2009 - 1:42pm.

http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html?mod=t...

these numbers for BAC, C, JPM are HUGE (as compared to numbers over the past 2 years)

SPY not so much

to recheck data from after the close

net selling day indeed

anon wrote on Thu, 04/09/2009 - 1:44pm.

���

What are these little boxes with letters?

EvilHenryPaulson (member) wrote on Thu, 04/09/2009 - 1:47pm.

I think we'll have seen the worst of the economic contraction in nominal terms by 09Q3

⡑⡓⡏

rich (member) wrote on Thu, 04/09/2009 - 1:47pm.

If you want to know where markets are going eventually, keep your eye on earnings and valuations. Earnings are a total mess. There is no light whatever, and they will be a mess all this year, at least. Meanwhile, as earnings keep falling, trailing 12-month P/E on Russell 2000 still is near 40.

Of all sectors, tech is most vulnerable. Of all asset classes, emerging markets is most vulnerable. From here.

Also, if you want to know where markets are going eventually, take a look at how the world feels about capitalists and capitalism right now, and the direction that train is going. The Summers video is telling because there's a growing number of people who don't think those Code Pink people are kooks. They will have to start packing Summers' audiences with fat cats or he won't be able to open his mouth. Growing masses of people all over the world who hate capitalists are not positive for stocks.

TBT is starting to feel good. Also FXC and DBB. You don't have to be so long or short in this market. Just be right.

Anonymous2 wrote on Thu, 04/09/2009 - 1:48pm.

This bloomberg piece asks the right questions . . .

http://www.bloomberg.com/apps/news?pid=20601039&sid=aNMQDysdnKRc&refer=home

Why doesn't Obama just clean the decks now, while he can still blame the mess on GWB? It's a complete puzzle.

TCA (member) wrote on Thu, 04/09/2009 - 1:51pm.

This is NOTHING more than short covering due to Wells Fargo's unexpected announcement. There is nothing in the fundamentals of the economy or the other stocks that went up today to justify this crazy rally. Nothing more than shorts - not only covering, but starting to unload before new rules set in.

I don't know 'mouse. Shorts have been punished for the past month. There's almost nothing to cover at this point. Volume is bigger on up days right now. I think people are wading back in a little at a time. Yes, eventually they're going to get punished, but I can see this rally going on for quite a while still.

Regardless, it's all a sideshow to me at this point.

1 currency now -yogi (member) wrote on Thu, 04/09/2009 - 1:50pm.

"Margins are better because of the competitive situation" after many of the "irrational players" were eliminated, Chief Financial Officer Howard Atkins said in a telephone interview. The bank's net interest margin, the spread between what it pays depositors and receives on loans, was about 4.1 percent in the first quarter, compared with about 3.10 percent in the fourth quarter and 4.7 percent in the same period a year earlier. "

Oligopoly profits are evidently now called "the competitive situation" in bankster doublespeak.

It's nice that Mr. Buffett's company is making big profits. He's such a nice man. This is obviously great for Main Street, adding so many jobs

goadam wrote on Thu, 04/09/2009 - 1:50pm.

Just 350% or so return and we are back to 2000 on the nasdaq baby!!!!

goadam wrote on Thu, 04/09/2009 - 1:51pm.

from itulip.com:

Schiff, Mish, Max, et al dislike the iTulip message: the world economy is a financial economy run by banks and governments. We don't like this fact, but ignoring and shorting the System can be dangerous. To wit, note how excited the markets are today that Wells Fargo ascually managed to turn the $25 billion in bailout funds into a $2 billion profit off $140 billion in mortgage refis made possible by hundreds of billions if taxpayer dollars poured by the Treasury and Fed into the mortgage market to push interest rates below 5%.

bobn (member) wrote on Thu, 04/09/2009 - 1:54pm.

Why doesn't Obama just clean the decks now, while he can still blame the mess on GWB?

Because Obama is bought and paid for. Look at his team: Geithner, Summers, Kashkari.........

mmckinl wrote on Thu, 04/09/2009 - 1:55pm.

The Japanese model is now policy ...

Anybody have a chart of the Nikkei ? ... there's your comparison ...

saagua wrote on Thu, 04/09/2009 - 1:56pm.

BIG BEAR TRAP. Lots will be sorry.

1 currency now -yogi (member) wrote on Thu, 04/09/2009 - 1:56pm.

"I, Kilgore Trout, being of mostly sound mind and body, do hereby request that CR take a brief pause in posting market and economic statistics because it is REPETITIVE and does NOT add anything to the conversation. I suggest these market and economic statistcs be posted when there is a change in their direction."

You all should have tipped more. CR is a captive to banner ad scroll. (Ad Block plus, +1)

Cant think of a... (member) wrote on Thu, 04/09/2009 - 1:57pm.

Still not convinced of the turn around, but the numbers from WFC can't be ignored. Maybe, just maybe, the government ran out of bullets just as the bear died.

Anonymus wrote on Thu, 04/09/2009 - 2:00pm.

Volume is bigger on up days right now"

this data (day) is too easy to manipulate, if you want to examine up/down volume you have to look at all the time frames (as in you can't fool all the people all the time Smile especially the short time frames 1, 5 min. as well as 60 min. and the uptick/downticks also when available

both yesterday and today were net NEGATIVE money flowing OUT for SPY (to about the same degree), altghough price was up.

anon wrote on Thu, 04/09/2009 - 2:01pm.

"To wit, note how excited the markets are today that Wells Fargo ascually managed to turn the $25 billion in bailout funds into a $2 billion profit off $140 billion in mortgage refis made possible by hundreds of billions if taxpayer dollars poured by the Treasury and Fed into the mortgage market to push interest rates below 5%."

Why isn't anyone else pointing this out FFS?

TCA (member) wrote on Thu, 04/09/2009 - 2:01pm.

If we have bottomed, I want AllenM to give me his lottery numbers for next week.

Chris Rich wrote on Thu, 04/09/2009 - 2:02pm.

I've lately been wondering if this is the mid arc of a 'W' shaped recession/depression. We have the more common 'v' shape and the dreaded 'L' shape of off a cliff and flat aka Japan. Maybe this is a 'dubya' a ew formation that will drop again as more unease sinks in and finally turn in late 2010 or maybe become a dreaded 'w'-'L' thing. Still 'W' is funny.

Voltaire is rumored to have said something like, 'God is a comedian playing to a house too scared to laugh'.

Anonymus wrote on Thu, 04/09/2009 - 2:03pm.

BIG BEAR TRAP. Lots will be sorry. "

don't worry, we are only trading short term (intraday to a few days) and are rather quick on the exits.... and even fueling your pumps. try yahoo, you may be luckier.

Rufus the doofus (member) wrote on Thu, 04/09/2009 - 2:05pm.

There have been a lot of trial balloons about new restrictions on short-selling. Maybe that has something to do with the rally.

-------
Also Rosebud Junk Co

1 currency now -yogi (member) wrote on Thu, 04/09/2009 - 2:05pm.

Big Uncle Sam running a 2 trillion deficit? Washington can squeeze WFC any time it wants to. Drop FDIC guaranteed cheese back down to 100K, Expand maturity selection on Treasury direct. Poof.

Byzantine_Ruins (member) wrote on Thu, 04/09/2009 - 2:07pm.

Cant think of a... (member) wrote on Thu, 04/09/2009 - 4:57pm.
Still not convinced of the turn around, but the numbers from WFC can't be ignored. Maybe, just maybe, the government ran out of bullets just as the bear died.

I'm afraid it's a little bigger than all that.

OhBoy wrote on Thu, 04/09/2009 - 2:09pm.

April 9 (Bloomberg) -- President Barack Obama said the government is speeding up its purchase of 17,600 new American-made cars for the government fleet by June 1.
-------------------
It's a good thing the US of A makes good cars.

Anonymus wrote on Thu, 04/09/2009 - 2:12pm.

"There have been a lot of trial balloons about new restrictions on short-selling. Maybe that has something to do with the rally. "

actually there was just a post on Bloomberg less than an hour ago about the fact that short selling curbs may take 6 months to implement (for some reason I cannot find it right now anymore). this suggested to me a selling phase may be in the cards since the banks have to make money any way they can ... motive and opportunity

energyecon (member) wrote on Thu, 04/09/2009 - 2:13pm.

Anon,

Those are big numbers indeed, and the GS came in very late in the day...very interesting

http://energyecon.blogspot.com/

swamp otis (member) wrote on Thu, 04/09/2009 - 2:14pm.

the russell 2000 range the last two days was 7.62%

and the vix was down 9.2%.

why doesn't the volatility appear in the vix?

http://finance.yahoo.com/echarts?s=^VIX#symbol=^VIX;range=5d

http://finance.yahoo.com/echarts?s=^RUT#symbol=^RUT;range=5d

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Anonymus wrote on Thu, 04/09/2009 - 2:15pm.

New Short Sale Rules May Take Six Months, NYSE Says

http://www.bloomberg.com/apps/news?pid=20601084&sid=aFM9Gu7lm6W8&refer=s...

Basel Too (member) wrote on Thu, 04/09/2009 - 2:15pm.

more reasons not to be short or long overnight.

Genworth Financial (+18% RH), (-20% AH). government said "nope" to their TARP application

anomalous cowherd wrote on Thu, 04/09/2009 - 2:15pm.

Are we going to bail out the pirates next?

anonymous (member) wrote on Thu, 04/09/2009 - 2:16pm.

"Those are big numbers indeed, and the GS came in very late in the day..."

Block was zero until an hour before the close, IIRC.

OhBoy wrote on Thu, 04/09/2009 - 2:19pm.

Are we going to bail out the pirates next?
----------------------
No need, they can handle their own. Unlike the TBTF crowd.

April 9 (Bloomberg) -- The band of pirates whose members hijacked a U.S.-flagged ship yesterday in the Indian Ocean is sending reinforcements to the kidnappers holding the captain hostage, said a member of the group who spoke from Somalia.

Gavshire Hathaway (member) wrote on Thu, 04/09/2009 - 2:21pm.

Marketwatch headline: Chevron warns of sharply lower quarterly results; shares fall after hours

Hope meet reality. Shit in one hand, wish in the other. See which fills up first.

Yalt (member) wrote on Thu, 04/09/2009 - 2:21pm.

"Margins are better because of the competitive situation" after many of the "irrational players" were eliminated, Chief Financial Officer Howard Atkins said in a telephone interview.

"This will be great for Countrywide at the end of the day because all the irrational competitors will be gone."

--Angelo Mozilo

ShortCourage wrote on Thu, 04/09/2009 - 2:28pm.

Are we currently in the equivilant of April 1930, at the top of a bear market rally, with a long decline awaiting us?

Or are we in a repeat of summer of 2003, where market intervention to prop up asset prices (with sh!tloads of new credit creation) is starting to take effect???

lawyerliz (member) wrote on Thu, 04/09/2009 - 2:28pm.

We already bailed out the big pirates.

Arrrgh, me hearties.

lawyerliz

swamp otis (member) wrote on Thu, 04/09/2009 - 2:29pm.

just had a slice on portland's trendy 23rd. three new boutique store closures in about a week. maybe ten closures in ten blocks in a month or so.

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TCA (member) wrote on Thu, 04/09/2009 - 2:32pm.

Or are we in a repeat of summer of 2003, where market intervention to prop up asset prices (with sh!tloads of new credit creation) is starting to take effect???

Look to jobs. There's your answer.

goadam wrote on Thu, 04/09/2009 - 2:32pm.

Things will be better in the next six month.
Those time units are call Tom Freidmans, little tommy is famous for it.
jo6pac

Didn't we win in Iraq?

energyecon (member) wrote on Thu, 04/09/2009 - 2:33pm.

Boeing Cuts Jet Production as Economy Hurts Airlines (Update1)
By Susanna Ray

April 9 (Bloomberg) -- Boeing Co., the world's second- largest commercial-jet builder, said it will cut production of its largest models next year as the global recession hurts business at airlines and cargo carriers.

Monthly production of the twin-aisle 777 will drop to five from seven beginning in June 2010 and plans to increase output of the new 747-8 jumbo jet and the 767 will be delayed, Chicago- based Boeing said in a statement today. The Chicago-based company is keeping production steady for the single-aisle 737, the world's most widely flown plane.

The production decisions and weaker-than-projected pricing will hurt first-quarter 2009 earnings by about 38 cents a share, Boeing added.

The planemaker had said as recently as last month that it would increase deliveries to 480 to 485 aircraft this year, with production remaining stable through at least mid-2010. The company was studying rates for next year as financing for airlines dried up, leading to dropped and deferred orders. The number of cancellations exceeded new orders in the first quarter.

http://www.bloomberg.com/apps/news?pid=20601110&sid=asbWul96ooSw

http://energyecon.blogspot.com/

OhBoy wrote on Thu, 04/09/2009 - 2:33pm.

We already bailed out the big pirates.
----------------------------
You call that a bailout, ain't seen nothin yet.
Tarpistry is running out. Hogs at the trough soon.

ShortCourage wrote on Thu, 04/09/2009 - 2:36pm.

TCA,

I hear ya, job losses should play a big role, you would think. However, .....

We had a "jobless recovery" from the dot-com bust. That didn't stop stocks from taking off again. If everybody is able to access cheap and easy credit, without regard to their ability to repay, then we could have a long surge (due to a splurge!) until the realization sets in that repayment of loans is not forthcoming, and the money is gone. Again.

goadam wrote on Thu, 04/09/2009 - 2:37pm.

Why doesn't Obama just clean the decks now, while he can still blame the mess on GWB?
Because Obama is bought and paid for. Look at his team: Geithner, Summers, Kashkari.........

Exactly. I supported the guy and look at the Clinton bankster thieves running the show. My guess is Obama has a little agenda along the lines of his community activists roots. He wants some nicer schools and some pie in the sky green stuff. Plus, I think he understands what the real problems are. But he has been told that this is how he can get some of his agenda. I believe the term is "Faustian bargain."

scone wrote on Thu, 04/09/2009 - 2:39pm.

Just looking at the chart makes me queasy. I have no stomach for puts, shorts, longs, etc. Still sitting on cash, and I don't see that changing soon.

goadam wrote on Thu, 04/09/2009 - 2:40pm.

We had a "jobless recovery" from the dot-com bust. That didn't stop stocks from taking off again. If everybody is able to access cheap and easy credit, without regard to their ability to repay, then we could have a long surge (due to a splurge!) until the realization sets in that repayment of loans is not forthcoming, and the money is gone. Again.

They took off and tanked again. Just adjust with a little inflation and factor in your real estate losses and school and health payments that skyrocketed and tell me how we are doing. We'll survive but until people wake up to the thievery and realize we need to organize some kind of productive society we will keep slipping.

ac wrote on Thu, 04/09/2009 - 2:42pm.

Are we currently in the equivilant of April 1930, at the top of a bear market rally, with a long decline awaiting us?

Or are we in a repeat of summer of 2003, where market intervention to prop up asset prices (with sh!tloads of new credit creation) is starting to take effect???

In the Spring and Summer of 2003 we saw a huge and material rebound in housing. Look at the ISM index for that period.

It's hard to imagine something similar this summer.

So far no signs consumers are leveraging their balance sheets to the moon like then, and economically I don't see what could take their place.

lawyerliz (member) wrote on Thu, 04/09/2009 - 2:43pm.

Me too, scone.

lawyerliz

swamp otis (member) wrote on Thu, 04/09/2009 - 3:01pm.

new your times business section in the pizza shop.

1. "stress testers" say everything is OK, except for more bailouts.
2. insurers in deep trouble but good news we can "stress test" them into taking a bailout.
3. berkshire credit rating downgraded.

banks up 15-30%
capital one up 30%

up is down. in is out. WTF?

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ShortCourage wrote on Thu, 04/09/2009 - 2:45pm.

goadam said,
They took off and tanked again. Just adjust with a little inflation and factor in your real estate losses and school and health payments that skyrocketed and tell me how we are doing. We'll survive but until people wake up to the thievery and realize we need to organize some kind of productive society we will keep slipping.

No argument from me. But due to my newfound role as speculator (thanks to the government discouraging me from saving), the timing is important to me. Trying to figure out whether the next crash will occur before my Jan 2010 and Jan 2011 puts expire!

Sad, I know. But there ya go.

ShortCourage wrote on Thu, 04/09/2009 - 2:49pm.

ac said,
"In the Spring and Summer of 2003 we saw a huge and material rebound in housing. Look at the ISM index for that period.

It's hard to imagine something similar this summer.

So far no signs consumers are leveraging their balance sheets to the moon like then, and economically I don't see what could take their place."

That's true, but this time the impetus driving "investors" into stocks could be twofold:

1. a desire to preserve wealth in some kind of investment other than USD, which the government seems hell bent on destroying.
2. the momentum trade re-emerging, as investors chase asset-price appreciation once again, regardless of the underlying fundamentals (just like stocks in dot-com, and housing during the latest bubble).

pavel.chichikov (member) wrote on Thu, 04/09/2009 - 2:50pm.

"As long as people believe their 401k will come back, home prices will come back, their job will become secure, etc., they will not over-turn the system."

They won't. They can't. There is no alternative to the 'system' which is achievable by 'people.'

Only the system itself can overturn the system.

Pavel Chichikov

Fiver (member) wrote on Thu, 04/09/2009 - 2:53pm.

There is $4T that disappeared with the market downturn. No one is in any hurry to MEW their house to buy anything - including stocks. The sideline cash is all in. This is just another bump in the road down.

ac wrote on Thu, 04/09/2009 - 2:54pm.

Pretty good post by Buiter:

The green shoots are weeds growing through the rubble in the ruins of the global economy

lawyerliz (member) wrote on Thu, 04/09/2009 - 2:55pm.

Toodles. Off to Merritt Island.

2 clients, 2 ruthless pieces of advice:

1. Person current; can make payments. 120k underwater (half off); neighborhood deteriorating, don't wanna live there anymore. Can't file bk--person is solvent!! Me: walkaway.

2. Person formerly rich; still knows and has contacts with well off people. New business. huge commission coming in. House in foreclosure, lost everything. Bring mtg current? House ummm, 750k underwater!!! Can file bk, but not without cramdown. Me: Walkaway. Use big commission and buy inexpensive-er house you want to live in cash.

I feel guilty. But nobody else is feeling guilty about walking away anymore. But what else is to be done absent cramdowns? At some point there will be no credit for anybody, given this trend.

Of course, some companies will do ok, since the money will go to buying stuff rather than making mtg payments. For a while, anyway.

the people who call me still have the means to hire an atty. The others are busy becoming invisible.

lawyerliz

Assume Crash Positions! wrote on Thu, 04/09/2009 - 2:55pm.

I don't know 'mouse. Shorts have been punished for the past month. There's almost nothing to cover at this point. Volume is bigger on up days right now. I think people are wading back in a little at a time. Yes, eventually they're going to get punished, but I can see this rally going on for quite a while still.

I'm sure there are as many top-callers ready to get squeezed here as there were bottom callers in September. Or October. Or November. Or January. If you're convinced the economy is in a shambles and the trend is down and your intent is to profit from what's happening, up days aren't reason to flee -- they're reason to load up for the next plunge. And prior to today, the market had that "I'm topping out again" feel to it. I'm still not convinced today is anything more than a "squeeze the shorts/draw in more retail longs so we can offload our crap before the next dive" day.

I give it a week at most. The WFC announcement just seems too calculated, particularly as the first bank out of the gate. Looks like a cynical attempt to run things up so the big boys can get better positioned for when the floor falls out again.

Fiver (member) wrote on Thu, 04/09/2009 - 3:01pm.

Client said she's underwater about $10k, and a house just like hers down the street sells for +$40k less than her mortgage. I told her that some people are buying that second house "to rent out" then after closing, jingle mails the keys to the old, underwater one, taking the FICO hit.

She's out looking for a "rental" this weekend.

ac wrote on Thu, 04/09/2009 - 3:01pm.

That's true, but this time the impetus driving "investors" into stocks could be twofold:

1. a desire to preserve wealth in some kind of investment other than USD, which the government seems hell bent on destroying.
2. the momentum trade re-emerging, as investors chase asset-price appreciation once again, regardless of the underlying fundamentals (just like stocks in dot-com, and housing during the latest bubble).

Well, who knows what will happen next, but the one thing I notice is the upward movements we're seeing in stocks are panicked surges, not the controlled upward march of a bull market.

Maybe that will come, but the kind of rally we've seen so far largely exhibits the characteristics of a bear market rally.

anon wrote on Thu, 04/09/2009 - 3:02pm.

The others are busy becoming invisible.
lawyerliz

Good description.

alybaba (member) wrote on Thu, 04/09/2009 - 3:05pm.

energyecon

I work in the aviation/finance space and we've had to view since last fall that the funding gap for aircraft will force Airbus and Boeing to lower production rates. Credit has dried up for aircraft deliveries - we estimate of all the banks active in space, maybe 4 of the major ones are lending (of course the regional banks are stepping in, but only for their home markets of China and the Middle East at this point). LTV's are down in the 60%-70% for solid credits, and bad credit have no hope getting anything over 50% LTV (which is as good as nothing as all carriers are completely focused conserving cash and can't afford to put all that up in equity). Pricing has exploded - a flag carrier that would have gotten L+50 bps during the boom times is looking at 350-500 bps these days. The major leasing companies don't have the capital to extend beyond their commitments (ILFC and GECAS for instance), and those that do, are too busy buying back their own debt for cents on the dollar for 30+% IRRs. Some are still willing to lease but they often require quid pro quos such as the manufacturer deferring/canceling orders that the leasing cos placed but don't want to take because airlines are dropping capacity all over the place (not to mention the degradation in credit quality across the board).

http://www.anewwayforward.org/demonstrations/

ac wrote on Thu, 04/09/2009 - 3:05pm.

They won't. They can't. There is no alternative to the 'system' which is achievable by 'people.'

Only the system itself can overturn the system.

Pavel Chichikov

No need to assume intent though - the system may simply collapse of it's own weight.

This is historically how systems often meet their fate.

REBear wrote on Thu, 04/09/2009 - 3:06pm.

From looking at Nikkei charts from the 90s, it looks like the best bear rally could go up 40%. 40% over 6.5K is a little over 9K.

ShortCourage wrote on Thu, 04/09/2009 - 3:10pm.

ac,

I hope you're right. I'm buying more 2011 Puts as we approach 875 on the S&P.

My bids are such that, if the stock were to return to its recent lows, or very near there, then my investment would be doubled in value at expiration.

mark wrote on Thu, 04/09/2009 - 3:20pm.

My current situation:

- Independent consultant who may run out of work this summer. It that happens, the employment outlook is pretty bleak.
- Because I'm S-Corp, no unemployment.
- Wasn't a reader of this blog and I'm an idiot, so I bought a condo in 2004.
- Several units for sale in my building but nothing's moving (nobody looks like they are willing to take a loss).
- Because nothing is selling, it's hard to know how far underwater I am.
- Could pay of the condo if I wanted to drain my brokerage account (I would never do that).
- I only put 5% down (went by the rule to put down the least amount possible for the longest term).
- Property taxes have doubled and association fees have shot up (developer low balled the association fees), so I don't think I'd come close to covering with rent.

If I'm out of work, what I don't want to do is spend months paying my mortgage from savings as I try to sell my unit.

Is there any way to determine when to walk away vs selling for a loss (what are the costs of trashing my credit)?

Carneades wrote on Thu, 04/09/2009 - 3:22pm.

Stress Tests: Who Will Take the Fall?

www.TheValueatRisk.blogspot.com

OkieLawyer wrote on Thu, 04/09/2009 - 3:29pm.

@Mark:

Is there any way to determine when to walk away vs selling for a loss (what are the costs of trashing my credit)?

Not every state allows you to just "walk away." You need to speak with an attorney who does real estate/property law in your area.

hong konger wrote on Thu, 04/09/2009 - 3:32pm.

Liz-
Invisible? Is that equivalent to "unbankable" (~25% of the population).

I think I see a modern Ellison on the horizon..."The Invisible American".

Yalt (member) wrote on Thu, 04/09/2009 - 3:39pm.

If everybody is able to access cheap and easy credit, without regard to their ability to repay, then we could have a long surge (due to a splurge!) until the realization sets in that repayment of loans is not forthcoming, and the money is gone.

That's not happening, though. CC companies are cranking up rates (no doubt in advance of the new regs that will make this hard to do in the future) and cutting limits or eliminating lines entirely, and while there's lots of refi activity that's helping people cut monthly payments, there's little to no cash-out activity going on, as appraisals won't support them.

freddyinptown wrote on Thu, 04/09/2009 - 3:48pm.

pavel:

The NPR-affiliated "Marketplace" business program (which is excellent, btw) is seeking business Wall Street poetry. Off with you, and be sure to thank me later!

mathen wrote on Thu, 04/09/2009 - 3:48pm.

Very interesting!!,, doubt the self-dealing pricks at treasury were even a part of it. Too busy effing up whatever of left of our finances. This is the largest money grab happening right in front of our eyes.

Rufus the doofus (member) wrote on Thu, 04/09/2009 - 3:48pm.

what else is to be done absent cramdowns?

Bankruptcy or threat of it seems the key to a lot of what's going on. I'm thinking of GM and AIG, but also what's going on with Madoff: the government is opposing a bankruptcy suit by a bunch of Bernie's victims. I suspect this may be related to the possibility of clawbacks, but, in general, the government seems desperate to avoid BK. If bankruptcies did happen, would it be under control of Bush appointees?

-------
Also Rosebud Junk Co

mathen wrote on Thu, 04/09/2009 - 3:49pm.

talkin about the pentagon exercises mentioned in the politico article above..

hong konger wrote on Thu, 04/09/2009 - 3:52pm.

"(what are the costs of trashing my credit)"

Do you have a choice?

Personal anecdote: I was at a little french bistro having lunch by myself the other day (yep, no one likes me:)) and there was a group of 30 somethings next table reviewing a software deal. (it was some kind of handheld CRM app). Anyway, lead sales guy gets a call...someone has agreed to a short sale on his mcmansion (high fives). He goes on to say his "credit" is now saved (yay).

Would I loan this person money? Sure, at an extremely elevated rate with a high % of liquid collateral. However, his score will indicate he's a good allocator of capital (which is all credit ratings should theoretically indicate). At some point, a person has to ask themselves, "truly, am I good manager of my own balance sheet"?

If not, regardless of the FICO score attached to one's name, they really don't want the credit until they can figure out how to manage their own cash flows. Why? Because, they'll just get into the same predicament again given enough time if they are not.

Note: this is a general statement. It's not directed at mark personally

TennLawyer wrote on Thu, 04/09/2009 - 3:55pm.

Very true, Yalt. I've got a 49K credit limit on a BofA card with no outstanding balance and got a notice this week that my rate is increasing. Must be positioning for something, and that something can't be good.

mathen wrote on Thu, 04/09/2009 - 4:11pm.

Mark.. yes you are a consultant!!

mark wrote on Thu, 04/09/2009 - 4:15pm.

mathen, True, but you missed this: "and I'm an idiot".

Jay D.. wrote on Thu, 04/09/2009 - 4:16pm.

mmckinl wrote on Thu, 04/09/2009 - 1:55pm.
The Japanese model is now policy ...

-------------------------------------------

.......they failed to respond quickly at the early stage of bubble busting ........that's why fed has been radically cut the rate and other measures

.......simple compariosn is just a linear thinking......kindergarten stuff.......

pavel.chichikov (member) wrote on Thu, 04/09/2009 - 4:16pm.

"The NPR-affiliated "Marketplace" business program (which is excellent, btw) is seeking business Wall Street poetry. Off with you, and be sure to thank me later!"

Thanks for the tip, though I'm not sure I have any Wall Street poetry. I will have a book out shortly, called Animal Kingdom. Maybe that's the floor of the Exchange on a hectic day. : )

Pavel Chichikov

Anonymous1 wrote on Thu, 04/09/2009 - 8:28pm.

No, volatility is not increasing. It is decreasing. There have been significantly less "wild swings" in the last six weeks.
This is no sucker rally. It is a 30%+ rally that will continue leaving many in the dust... just like the last 12 post bear rallies have done...
http://bit.ly/1pQdpH

Good luck all. Don't get left behind

swamp otis (member) wrote on Thu, 04/09/2009 - 9:57pm.

thanks to who posted this WSJ link about size of uptick vs. downtick trades which showed money flows out of large stocks. i saved the page.

http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html?mod=t...

top of thursday's list is $300 million in block tick down trades in JPM with an up/down ratio of 10/100.

very telling, GS had $130 million in block sized trades. up/down 0/100. nobody with any big money bought this rally.

JPM up 19.39%
GS up 8.35%

unanimous big money exit on a day when the gov-O-media widely displays the illusion that banks are doing fine and stress test = better bank and not bigger bailout. we should call this WFC day or Bad Thursday...

the length of time that the market remains irrational has been shrinking

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Done