Consumer Staples are supposed to be the best play in down markets....hummm.
2/12/09
XLP new .05 from new 52 week lows
Consumer Staples are supposed to be the best play in down markets....hummm.
Stimulus?
We get $13.00 extra a paycheck while Bonus money paid with bailout money is in the billions....Seems fair...not
GAP Down on open - Premarket at 821 on SPX
SPX 804 has to hold....
Umemployment claims 600k plus downward rev of Dec retail sales (but Jan sales were up YOY)
Oil / USO fresh 52 week lows down 2.6% USO 25.40, which has XLE down 1.7%...how long can XLE hold off a plunge with Oil skidding
Umemployment claims 600k plus downward rev of Dec retail sales (but Jan sales were up YOY)
Oil / USO fresh 52 week lows down 2.6% USO 25.40, which has XLE down 1.7%...how long can XLE hold off a plunge with Oil skidding
2/11/09
More Karl
I'll Drink To That ( http://market-ticker.denninger.net/ )
From Marketwatch:
HONG KONG (MarketWatch) -- A Chinese court has sentenced the former chairman of a state-owned holding company overseeing 30 airports, including Beijing International, to death for bribery and embezzlement amounting to more than 100 million yuan ($14.6 million), according to a report late Tuesday by the state-run Xinhua News Agency.
During The Panic of 1873 bankers were literally dragged out of their offices by angry mobs and hung on the spot. In America.
If the law enforcement agencies in this nation do not start prosecuting the fraudsters in our banking and investment industry that caused this economic collapse (and "token prosecutions" like Madoff will not cut it), and our lawmakers (and President) do not stand up darn soon and call for this prosecutorial action in public there is a very real risk that a repeat of those sordid affairs will soon arrive.
Certainly, if we have another 50% selloff in the markets, people's 401ks (now 201ks) are reduced to 101ks, and 20% of the S&P 500 go under (which WILL occur if that selloff happens) the concept of "containing" 20% or more of the population that suddenly finds itself homeless, jobless and hungry, when everyone in this country knows who's to blame for the mess, is laughable.
While I cannot support such summary judgment as we have a right to the presumption of innocence and to be judged by a jury of one's peers prior to imposition of sentence, it is a fact that when the people lose faith in the justice system there is a very high probability of them taking the law into their own hands and grabbing for the nearest coil of rope.
This much is clear to me - high-dollar white-collar crimes, certainly those with an impact greater in aggregate than we currently value a single human life (which various estimates put somewhere between $5 and $50 million each) are deserving of punishment equivalent to murder, meaning either (depending on state law) life imprisonment without possibility of parole or a sentence of death.
We need to put this change into the law as a deterrent against such acts in the future.
From Marketwatch:
HONG KONG (MarketWatch) -- A Chinese court has sentenced the former chairman of a state-owned holding company overseeing 30 airports, including Beijing International, to death for bribery and embezzlement amounting to more than 100 million yuan ($14.6 million), according to a report late Tuesday by the state-run Xinhua News Agency.
During The Panic of 1873 bankers were literally dragged out of their offices by angry mobs and hung on the spot. In America.
If the law enforcement agencies in this nation do not start prosecuting the fraudsters in our banking and investment industry that caused this economic collapse (and "token prosecutions" like Madoff will not cut it), and our lawmakers (and President) do not stand up darn soon and call for this prosecutorial action in public there is a very real risk that a repeat of those sordid affairs will soon arrive.
Certainly, if we have another 50% selloff in the markets, people's 401ks (now 201ks) are reduced to 101ks, and 20% of the S&P 500 go under (which WILL occur if that selloff happens) the concept of "containing" 20% or more of the population that suddenly finds itself homeless, jobless and hungry, when everyone in this country knows who's to blame for the mess, is laughable.
While I cannot support such summary judgment as we have a right to the presumption of innocence and to be judged by a jury of one's peers prior to imposition of sentence, it is a fact that when the people lose faith in the justice system there is a very high probability of them taking the law into their own hands and grabbing for the nearest coil of rope.
This much is clear to me - high-dollar white-collar crimes, certainly those with an impact greater in aggregate than we currently value a single human life (which various estimates put somewhere between $5 and $50 million each) are deserving of punishment equivalent to murder, meaning either (depending on state law) life imprisonment without possibility of parole or a sentence of death.
We need to put this change into the law as a deterrent against such acts in the future.
XLF up 4% hod
Oil may be the weak link later here down 1.3%.
SPX XLF will be over extended soon
DOW up 74 on Banks
SPX XLF will be over extended soon
DOW up 74 on Banks
USO / Oil Testing lows again
Bottom play... XLE must be on pins and needles that it may dive again because XLE has been hanging in there...matter of time before they coorellate again
I Like Karl - I hope he doesn't have a Heart Attack getting this worked up
The Final Countdown
Well, here's what The Market thought of Tim Geithner, Bernanke and Obama Tuesday:
That, however, is not the chart that ought to cause President Obama to loose sleep. This one is:
The Triangle on that chart has a target ~3700 points lower, or if we were to break it tomorrow, approximately DOW 4200.
And that's the most bullish of the primary indices, all of which are sporting similar formations, and all of which closed right on the bottom boundary. Those of you who read The Ticker regularly know what my target is on the downside for the S&P 500 if this triangle breaks.
For the record, December closed at 8776 on the Dow Jones. The target on this technical formation is for a loss of another 50% from there, and as I said, that's the most bullish of the primary indices.
That would be back-to-back roughly 50% losses.
So if you think your 401k has been damaged (e.g. it turned into a 201k) there is a very high probability that it is about to be turned into a 101k.
What's worse is that this will be symptomatic of the broader economy. If you think the jobs lost and economic malaise are bad so far, you've seen nothing yet.
Why?
Because of President Obama and Tim Geithner.
The pair of them along with Obama's economic team have had three full months to figure out what to do about the economic mess.
Then, after priming the market for a big announcement on how they were going to deal with the banks, the gist of the announcement was "we don't know what the hell we're doing."
There were no specifics that mattered.
It gets worse. Bloomberg has article up which says:
"China should seek guarantees that its $682 billion holdings of U.S. government debt won’t be eroded by “reckless policies,” said Yu Yongding, a former adviser to the central bank.
The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt."
Uh huh. You mean we shouldn't try to print our way out of this mess? That Bernanke should not buy the long end of the bond curve, devaluing the currency, or if we do, that we should tell Beijing first so they can be the first ones in line to tender into it?
Geithner's testimony didn't help. Asked specifically if the banks were insolvent, he refused to answer the question. That's a "yes" my friends; a question like that which has a "no" answer (that is, it's all ok) is perfectly safe to answer under oath. The Market was wise enough to properly interpret that answer as "they're all broke" and did so, tanking further.
After weeks of pumping the market with claims of a solution, this sort of reaction to what was clearly a load of hot air should have been expected.
On top of that President Obama has been yelling like a petulant child that Congress "must pass his stimulus bill or the economy will never come out of the slump."
The problem with such pronouncements is that there is no way to win. If the bill passes and it is judged that the bill does little or nothing for the broader economy, then your credibility is destroyed, just as it is when you claim you're going to present a "comprehensive" bank solution and come up empty-handed on the details.
What has been the near $9 trillion in direct stimulus and guarantees pumped into the economy thus far - money we don't have? Are you trying to tell me that after having blasted that sort of fire-hose of debt into the economy, all without salutary effect, another $800 billion of spraying money around - again, money we don't have - will do the job?
Someone either has forgotten or is ignorant of this chart:
The more debt you pump, the less you get for it. Have we reached the point where it goes negative yet? I don't know, but the reaction of the economy and markets is suggesting that we are approaching the event horizon - a point beyond which the choices that must be made are between "bad" and "truly awful", yet like I mentioned in "Monetary Flat Spin" they are also counter-intuitive.
If President Obama thinks that Wall Street sold off hard because it is looking for "simple solutions" then he is truly tone deaf.
Wall Street sold off because investors are tired of being lied to and what Washington has been doing over the last eighteen months is lying, abusing this crisis to benefit their cronies and refusing to go after the people who robbed America blind and lock them up in prison where they belong.
Big banks were down 20-30%, wiping out the gains of the last few sessions. But the selloff wasn't limited to banks - it hit everything, because the market and economy has dealt with 18 months of lies and government obfuscation - propping up the bankrupt - and after rallying hard when such nonsense was put forward in the past only to have hopes dashed, now the market's reaction is to shoot first and ask questions never.
Unfortunately the broader economy is going to go down the precise same road, and if President Obama is not careful he is going to initiate a spiral of job losses that will make what occurred in the last quarter of 2008 look like a Girl Scout picnic.
President Obama's administration cannot get away with the false hope and disaster capitalism game, and neither can the stooges in Congress who float rumors about "Mark to Market" - if you're going to introduce a bill to suspend it Mr. Frank, then just do it.
The constant change of the rules in the middle of the game destroys confidence and that loss of confidence a huge part of why the market and economy totally fell apart last fall. It both can and will happen again if this pattern is not interrupted right now.
President Bush's Administration trashed its reputation and credibility and the result was a loss of fifty percent in the stock indices and fully 50% of the job losses taken in this recession happening in just three months.
Yesterday we came within a few hundred points of those levels on the DOW under Obama's Administration.
This is twice that President Obama has utterly dashed hopes in the market, with the first being his inauguration when the S&P 500 dropped 45 points.
Yesterday it also dropped 45 points, with both losses registering at roughly 5%.
Companies will not invest until the markets stabilize. You cannot expect firms to quit cutting staff and become hopeful for the future until the market stops gyrating widely as a consequence of Washington DC sticking its fingers in every orifice the market has, diddling this knob and jawboning that, leaving investors and executives unable to run their businesses and place trades in the belief that the rules are known and analysis of a firm's future prospects can be undertaken. It is that simple.
Mr. President, hope is not an investment strategy, speechifying doesn't do a thing and there are no Unicorns that crap out pretty colored candies. When you make a promise to the market, you either keep it or you provoke this sort of sell-off. When you provoke this sort of sell-off near a critical support level you risk an all-on crash - a crash that can initiate as soon as the same or next day - which will ripple through to the broader economy.
Days like yesterday in the market are responsible for one to two hundred thousand job losses each due to lost confidence - and lost wealth.
Once "purge-style" selling initiates it does not stop until it has run its course; until all the margin calls have been made and met, the investors wiped out and the last man stops screaming "SELL! SELL! SELL!", keeling over from heart failure. We saw this sort of cascade downward in September and October and all the press conferences in the world simply made it worse, because credibility was just flat-out gone.
From a technical perspective the market is in much worse shape than it was on the 20th of January, after which it bounced strongly. It is coming off overbought levels and as of tonight is sitting right on critical support. Should that support break the expected move is a full fifty percent down from where we are now.
If President Obama is to stop this an actual fully-baked plan must be put in place and all in the administration, including and most especially Geithner must stop lying.
Specifically:
Most of the big banks are insolvent. They know it and so does everyone else. Get it over with. Send in the examiners, mark to market on today's market values and then cram down debt to equity. If a bank cannot be restored to health in this fashion then wipe 'em out, sell off the good assets to regional and local banks, take over the bad assets in the FDIC and either sell 'em or run 'em down. Period. Suspend trading of all of these shares at once for two weeks and have at it. Those that are ok re-open on the exchanges; those that are not reopen too, but with the crammed-down bondholders as the new stockholders; the old stockholders are wiped out and management is removed.
Yes, I know there's a problem with the CDS. Issue an executive order declaring any naked CS to be contrary to public policy as instruments intended to manipulate the market and thus void. Let the Hedgies sue; I wish 'em "bonne chance" suing The Federal Government. Bingo - problem solved while allowing the legitimate protection for actual bonds to be purchased.
Our financial system has come to the brink of implosion as a consequence of the acts of these banksters. This was not the consequence of accidents - it was a consequence of intentional acts going back more than 20 years. We must have clawbacks, investigations and, if federal fraud indictments are indicated, bring 'em. Start now. The people will not accept the current and future pain that we will take without those responsible for intentional acts being held to account. Your mollycoddling of these malfeasors is an outrage after your claim to be "for the common man." Time to put up or shut up Mr. President.
Speaking of banksters, Fannie and Freddie are an abject mess. This problem must be solved, not swept under the rug. The fact of the matter is that the issues surrounding Fannie and Freddie's collapse devolve into inside dealing, cozy revolving door policies between these two firms and Congress along with outrageous pressure tactics and more. The cesspool must be drained.
Glass-Steagall, formal and inescapable reserve requirements (that cannot be "gamed" via sweep accounts and similar) applying to all deposits, an end to off-balance-sheet anything and an absolute ban on regulated financial institutions owning derivative-based "assets" must be put back in place immediately. This mess was caused by excessive leverage, off-balance-sheet game-playing, gaming of reserve requirements and creation of synthetic instruments that are in fact based on nothing but thin air. When the coupon payments stop on these synthetics they are literally worth zero because there is no hard asset (e.g. a house with a mortgage on it) behind them!
All of the existing "23A Exemptions" and other game-playing must be terminated right here and now. This must be done when the examiners show up and future use of these exemptions must be prohibited. If necessary, The Fed must be prohibited from granting such exemptions without explicit authorization of Congress.
Congress must restore the statutory reserve requirement that was removed by the EESA/TARP legislation. This is critical to the safety of the banking system and must be done immediately. The former level required was 8%, although I would argue that 10% is more appropriate and sound.
Leverage must be strictly regulated at no more than 12:1 for all United States institutions. Credit bubbles rely on the ability to obtain and abuse extreme leverage. Stop that, credit bubbles cannot form or be maintained. Period.
The Fed must be forced to consolidate and disclose all Fed District Bank activity on a nightly basis including loans outstanding, to which institution they are outstanding, and the collateral accepted along with the haircut applied in sufficient detail that any person desiring to do so can independently value it in the market on any given day.
Facilities at The Fed that amount to taking an equity position such as the Bear Stearns asset backstop ("Maiden Lane") and any other instance of non-recourse lending must cease immediately. The Fed is only permitted to "discount a note" - that is, make a loan. It does not have the statutory authority, exigent circumstances or no, to take equity positions in any instrument or institution. All such existing facilities must be shut down and disgorged immediately.
We understand that the issues are complex Mr. President. But what we as investors do not understand and refuse to accept are misrepresentations and broken promises.
We are in this mess as a direct and proximate result of that activity by those who allegedly were acting in the public trust and for our benefit in their granting of credit. This is now known not to be the case; they were acting for their benefit and to our detriment, and they gamed the system to keep from being held to account.
The market will not stabilize until trust is restored. Trust will not be restored until we have a trustworthy leader who keeps his promises and speaks the truth.
Period.
President Obama can either take these actions now - immediately - or he is consigned to suffer the consequences should the market and economy decide to discount a new Presidency less than one month in as a continuation of the Bush/Paulson regime - and go straight down the toilet along with the entirety of his political capital.
Your move Mr. President; in the meantime, I hope the market bounces today.
I really do.
But if it does not, I'm prepared to go "all in" short.
If President Obama insists on flushing this economy and market down the toilet all he will leave me with is attempting to make money on the ride into the sewer.
Comments
Discussion takes place at The Tickerforum Comment Zone (registration required to post)
No comments
Well, here's what The Market thought of Tim Geithner, Bernanke and Obama Tuesday:
That, however, is not the chart that ought to cause President Obama to loose sleep. This one is:
The Triangle on that chart has a target ~3700 points lower, or if we were to break it tomorrow, approximately DOW 4200.
And that's the most bullish of the primary indices, all of which are sporting similar formations, and all of which closed right on the bottom boundary. Those of you who read The Ticker regularly know what my target is on the downside for the S&P 500 if this triangle breaks.
For the record, December closed at 8776 on the Dow Jones. The target on this technical formation is for a loss of another 50% from there, and as I said, that's the most bullish of the primary indices.
That would be back-to-back roughly 50% losses.
So if you think your 401k has been damaged (e.g. it turned into a 201k) there is a very high probability that it is about to be turned into a 101k.
What's worse is that this will be symptomatic of the broader economy. If you think the jobs lost and economic malaise are bad so far, you've seen nothing yet.
Why?
Because of President Obama and Tim Geithner.
The pair of them along with Obama's economic team have had three full months to figure out what to do about the economic mess.
Then, after priming the market for a big announcement on how they were going to deal with the banks, the gist of the announcement was "we don't know what the hell we're doing."
There were no specifics that mattered.
It gets worse. Bloomberg has article up which says:
"China should seek guarantees that its $682 billion holdings of U.S. government debt won’t be eroded by “reckless policies,” said Yu Yongding, a former adviser to the central bank.
The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt."
Uh huh. You mean we shouldn't try to print our way out of this mess? That Bernanke should not buy the long end of the bond curve, devaluing the currency, or if we do, that we should tell Beijing first so they can be the first ones in line to tender into it?
Geithner's testimony didn't help. Asked specifically if the banks were insolvent, he refused to answer the question. That's a "yes" my friends; a question like that which has a "no" answer (that is, it's all ok) is perfectly safe to answer under oath. The Market was wise enough to properly interpret that answer as "they're all broke" and did so, tanking further.
After weeks of pumping the market with claims of a solution, this sort of reaction to what was clearly a load of hot air should have been expected.
On top of that President Obama has been yelling like a petulant child that Congress "must pass his stimulus bill or the economy will never come out of the slump."
The problem with such pronouncements is that there is no way to win. If the bill passes and it is judged that the bill does little or nothing for the broader economy, then your credibility is destroyed, just as it is when you claim you're going to present a "comprehensive" bank solution and come up empty-handed on the details.
What has been the near $9 trillion in direct stimulus and guarantees pumped into the economy thus far - money we don't have? Are you trying to tell me that after having blasted that sort of fire-hose of debt into the economy, all without salutary effect, another $800 billion of spraying money around - again, money we don't have - will do the job?
Someone either has forgotten or is ignorant of this chart:
The more debt you pump, the less you get for it. Have we reached the point where it goes negative yet? I don't know, but the reaction of the economy and markets is suggesting that we are approaching the event horizon - a point beyond which the choices that must be made are between "bad" and "truly awful", yet like I mentioned in "Monetary Flat Spin" they are also counter-intuitive.
If President Obama thinks that Wall Street sold off hard because it is looking for "simple solutions" then he is truly tone deaf.
Wall Street sold off because investors are tired of being lied to and what Washington has been doing over the last eighteen months is lying, abusing this crisis to benefit their cronies and refusing to go after the people who robbed America blind and lock them up in prison where they belong.
Big banks were down 20-30%, wiping out the gains of the last few sessions. But the selloff wasn't limited to banks - it hit everything, because the market and economy has dealt with 18 months of lies and government obfuscation - propping up the bankrupt - and after rallying hard when such nonsense was put forward in the past only to have hopes dashed, now the market's reaction is to shoot first and ask questions never.
Unfortunately the broader economy is going to go down the precise same road, and if President Obama is not careful he is going to initiate a spiral of job losses that will make what occurred in the last quarter of 2008 look like a Girl Scout picnic.
President Obama's administration cannot get away with the false hope and disaster capitalism game, and neither can the stooges in Congress who float rumors about "Mark to Market" - if you're going to introduce a bill to suspend it Mr. Frank, then just do it.
The constant change of the rules in the middle of the game destroys confidence and that loss of confidence a huge part of why the market and economy totally fell apart last fall. It both can and will happen again if this pattern is not interrupted right now.
President Bush's Administration trashed its reputation and credibility and the result was a loss of fifty percent in the stock indices and fully 50% of the job losses taken in this recession happening in just three months.
Yesterday we came within a few hundred points of those levels on the DOW under Obama's Administration.
This is twice that President Obama has utterly dashed hopes in the market, with the first being his inauguration when the S&P 500 dropped 45 points.
Yesterday it also dropped 45 points, with both losses registering at roughly 5%.
Companies will not invest until the markets stabilize. You cannot expect firms to quit cutting staff and become hopeful for the future until the market stops gyrating widely as a consequence of Washington DC sticking its fingers in every orifice the market has, diddling this knob and jawboning that, leaving investors and executives unable to run their businesses and place trades in the belief that the rules are known and analysis of a firm's future prospects can be undertaken. It is that simple.
Mr. President, hope is not an investment strategy, speechifying doesn't do a thing and there are no Unicorns that crap out pretty colored candies. When you make a promise to the market, you either keep it or you provoke this sort of sell-off. When you provoke this sort of sell-off near a critical support level you risk an all-on crash - a crash that can initiate as soon as the same or next day - which will ripple through to the broader economy.
Days like yesterday in the market are responsible for one to two hundred thousand job losses each due to lost confidence - and lost wealth.
Once "purge-style" selling initiates it does not stop until it has run its course; until all the margin calls have been made and met, the investors wiped out and the last man stops screaming "SELL! SELL! SELL!", keeling over from heart failure. We saw this sort of cascade downward in September and October and all the press conferences in the world simply made it worse, because credibility was just flat-out gone.
From a technical perspective the market is in much worse shape than it was on the 20th of January, after which it bounced strongly. It is coming off overbought levels and as of tonight is sitting right on critical support. Should that support break the expected move is a full fifty percent down from where we are now.
If President Obama is to stop this an actual fully-baked plan must be put in place and all in the administration, including and most especially Geithner must stop lying.
Specifically:
Most of the big banks are insolvent. They know it and so does everyone else. Get it over with. Send in the examiners, mark to market on today's market values and then cram down debt to equity. If a bank cannot be restored to health in this fashion then wipe 'em out, sell off the good assets to regional and local banks, take over the bad assets in the FDIC and either sell 'em or run 'em down. Period. Suspend trading of all of these shares at once for two weeks and have at it. Those that are ok re-open on the exchanges; those that are not reopen too, but with the crammed-down bondholders as the new stockholders; the old stockholders are wiped out and management is removed.
Yes, I know there's a problem with the CDS. Issue an executive order declaring any naked CS to be contrary to public policy as instruments intended to manipulate the market and thus void. Let the Hedgies sue; I wish 'em "bonne chance" suing The Federal Government. Bingo - problem solved while allowing the legitimate protection for actual bonds to be purchased.
Our financial system has come to the brink of implosion as a consequence of the acts of these banksters. This was not the consequence of accidents - it was a consequence of intentional acts going back more than 20 years. We must have clawbacks, investigations and, if federal fraud indictments are indicated, bring 'em. Start now. The people will not accept the current and future pain that we will take without those responsible for intentional acts being held to account. Your mollycoddling of these malfeasors is an outrage after your claim to be "for the common man." Time to put up or shut up Mr. President.
Speaking of banksters, Fannie and Freddie are an abject mess. This problem must be solved, not swept under the rug. The fact of the matter is that the issues surrounding Fannie and Freddie's collapse devolve into inside dealing, cozy revolving door policies between these two firms and Congress along with outrageous pressure tactics and more. The cesspool must be drained.
Glass-Steagall, formal and inescapable reserve requirements (that cannot be "gamed" via sweep accounts and similar) applying to all deposits, an end to off-balance-sheet anything and an absolute ban on regulated financial institutions owning derivative-based "assets" must be put back in place immediately. This mess was caused by excessive leverage, off-balance-sheet game-playing, gaming of reserve requirements and creation of synthetic instruments that are in fact based on nothing but thin air. When the coupon payments stop on these synthetics they are literally worth zero because there is no hard asset (e.g. a house with a mortgage on it) behind them!
All of the existing "23A Exemptions" and other game-playing must be terminated right here and now. This must be done when the examiners show up and future use of these exemptions must be prohibited. If necessary, The Fed must be prohibited from granting such exemptions without explicit authorization of Congress.
Congress must restore the statutory reserve requirement that was removed by the EESA/TARP legislation. This is critical to the safety of the banking system and must be done immediately. The former level required was 8%, although I would argue that 10% is more appropriate and sound.
Leverage must be strictly regulated at no more than 12:1 for all United States institutions. Credit bubbles rely on the ability to obtain and abuse extreme leverage. Stop that, credit bubbles cannot form or be maintained. Period.
The Fed must be forced to consolidate and disclose all Fed District Bank activity on a nightly basis including loans outstanding, to which institution they are outstanding, and the collateral accepted along with the haircut applied in sufficient detail that any person desiring to do so can independently value it in the market on any given day.
Facilities at The Fed that amount to taking an equity position such as the Bear Stearns asset backstop ("Maiden Lane") and any other instance of non-recourse lending must cease immediately. The Fed is only permitted to "discount a note" - that is, make a loan. It does not have the statutory authority, exigent circumstances or no, to take equity positions in any instrument or institution. All such existing facilities must be shut down and disgorged immediately.
We understand that the issues are complex Mr. President. But what we as investors do not understand and refuse to accept are misrepresentations and broken promises.
We are in this mess as a direct and proximate result of that activity by those who allegedly were acting in the public trust and for our benefit in their granting of credit. This is now known not to be the case; they were acting for their benefit and to our detriment, and they gamed the system to keep from being held to account.
The market will not stabilize until trust is restored. Trust will not be restored until we have a trustworthy leader who keeps his promises and speaks the truth.
Period.
President Obama can either take these actions now - immediately - or he is consigned to suffer the consequences should the market and economy decide to discount a new Presidency less than one month in as a continuation of the Bush/Paulson regime - and go straight down the toilet along with the entirety of his political capital.
Your move Mr. President; in the meantime, I hope the market bounces today.
I really do.
But if it does not, I'm prepared to go "all in" short.
If President Obama insists on flushing this economy and market down the toilet all he will leave me with is attempting to make money on the ride into the sewer.
Comments
Discussion takes place at The Tickerforum Comment Zone (registration required to post)
No comments
XLF bounces up 3.5%
XLE AND XLY leading here behind XLF....lots of people WANT the bottom in financials....
RIMM Update - Pre market under $50 from $60 High
Large correction to under $50 Premarket. Been looking for a top but this would be too easy from 60 (although it should have and was sold with the RSI up where it was. I think this is a total buy down here somewhere (48 to say 43). tight stop to your risk level off the 15 min chart. My main point is that RIMM should exceed the old $60 high and we watch for the RSI to not confirm the new price high. THIS IS A gift for a long trade....but even more if we can short it up around $65 - 70 ish GIVEN the RSI cooperates...if not, it becomes a hold and we ride the MA's till it violates it...
2/10/09
China - Over bought BUT!....
Watch for pull backs. FXP FXI ETF's on this
SSEC here is up 37% off the 1660 lows...KEEEE RIPE!
SPX Ranges for Wednesday
15 min
60 min
SPX Daily
Well, look at it this way...820 is a gift or we test new lows....Thanks Tim, great job preparing for that speech. Feels a little like the High school Gov't to me. One word Costa Rica!
VIX above 50 would be very bad
that and a break of 820 on SPX.... I am sure the PPT is supporting the market right now... -300 on the Dow are the lows so far... Hourly index charts however are not even close to oversold here
Trade the charts not the news
Tim looks like he will do a part deux of Paulson and try to save his banking buds so we may get upside after his announcement, but trade the charts.
Trying to break down on the SPX this morning, NAZ green as well as oil (bottom play +2 - 5%)
2/9/09
The rest of the week should be insane!
SPX XLF ranges for Tuesday.
Good luck to all!
XLF looks like it wants to go higher here....SPX MA look pointed up but the close was still under the trend line and at key MA's
BAC bounce off of 3.77 now up 13% to 6.90...nice trade...and GE bounce off 10.80 to 12.65 today. Could they sell the news?
A Look At 10-Year Market Returns
A Look At 10-Year Market Returns
The New York Times published an article this weekend highlighting that the current 10-year stretch that ended last month was the worst for the S&P 500 in at least the last 82 years. The Times looked at total returns for the S&P 500, and below we provide a similar analysis of the 10-year rolling price change of the Dow Jones Industrial Average going back to 1910. As shown, there have only been four other periods where the 10-year return has been negative, and three of the four periods saw returns float around the negative to flat line for quite some time. While it may have taken "buy-and-holders" a few years to end up making money if they got in early when the 10-year returns went negative, they did end up making money.
When looking at 10-year returns, however, where the market was 10 years ago is just as big of a factor as where it is now. Ten years ago, the market was just about to hit the peak of the Internet bubble, and once it burst, the 10-year return was destined to take a big hit right about now.
Below we highlight a hypothetical 10-year return chart going out to 2012 if the Dow were to stay right at its current level. As shown, the return would continue to get negative and drop all the way to -29.49% in January 2010 before finally starting to head higher. And even if the Dow stayed the same, it would end up turning positive again by late 2011, since the market had fallen so much by late 2001. If the market gets worse in the next couple of years, the 10-year returns are going to get worse. But even if the market heads sharply higher from here, the 10-year returns will still be negative to flat until we get past 2010.
Just Pay off Our Mortgages, Morons..
U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes
By Mark Pittman and Bob Ivry
Feb. 9 (Bloomberg) -- The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.
The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. The Senate is to vote early this week on a stimulus package totaling at least $780 billion that President Barack Obama says is needed to avert a deeper recession. That measure would need to be reconciled with an $819 billion plan the House approved last month.
Only the stimulus package to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates approved in 2008 have been voted on by lawmakers. The remaining $8 trillion in commitments are lending programs and guarantees, almost all under the authority of the Fed and the FDIC. The recipients’ names have not been disclosed.
“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”
Financial Rescue
The pledges, amounting to almost two-thirds of the value of everything produced in the U.S. last year, are intended to rescue the financial system after the credit markets seized up about 18 months ago. The promises are composed of about $1 trillion in stimulus packages, around $3 trillion in lending and spending and $5.7 trillion in agreements to provide aid.
Federal Reserve lending to banks peaked at a record $2.3 trillion in December, dropping to $1.83 trillion by last week. The Fed balance sheet is still more than double the $880 billion it was in the week before Sept. 17 when it agreed to accept lower-quality collateral.
The worst financial crisis in two generations has erased $14.5 trillion, or 33 percent, of the value of the world’s companies since Sept. 15; brought down Bear Stearns Cos. and Lehman Brothers Holdings Inc.; and led to the takeover of Merrill Lynch & Co. by Bank of America Corp.
The $9.7 trillion in pledges would be enough to send a $1,430 check to every man, woman and child alive in the world. It’s 13 times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office data, and is almost enough to pay off every home mortgage loan in the U.S., calculated at $10.5 trillion by the Federal Reserve.
‘All the Stops’
“The Fed, Treasury and FDIC are pulling out all the stops to stop any widespread systemic damage to the economy,” said Dana Johnson, chief economist for Comerica Inc. in Dallas and a former senior economist at the central bank. “The federal government is on the hook for an awful lot of money but I think it’s needed to help the financial system recover.”
Bloomberg News tabulated data from the Fed, Treasury and FDIC and interviewed regulators, economists and academic researchers to gauge the full extent of the government’s rescue effort.
Commitments may expand again soon. Treasury Secretary Timothy Geithner postponed an announcement scheduled for today that was to focus on new guarantees for illiquid assets to insure against losses without taking them off banks’ balance sheets. The Treasury said it would delay the announcement until after the Senate votes on the stimulus package.
Program Delay
The government is already backing $301 billion of Citigroup Inc. securities and another $118 billion from Bank of America. The government hasn’t yet paid out on any of the guarantees.
The Fed said Friday that it is delaying the start a $200 billion program called the Term Asset-Backed Securities Loan Facility, or TALF, to revive the market for securities based on consumer loans such as credit-card, auto and student borrowings.
Most of the spending programs are run out of the Federal Reserve Bank of New York, where Geithner served as president. He was sworn in as Treasury secretary on Jan. 26.
When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and then Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. The Federal Reserve so far is refusing to disclose loan recipients or reveal the collateral they are taking in return. Collateral is an asset pledged by a borrower in the event a loan payment isn’t made.
Fed Sued
Bloomberg requested details of Fed lending under the Freedom of Information Act and filed a federal lawsuit against the central bank Nov. 7 seeking to force disclosure of borrower banks and their collateral. Arguments in the suit may be heard as soon as this month, according to the court docket. Bloomberg asked the Treasury in an FOIA request Jan. 28 for a detailed list of the securities it planned to guarantee for Citigroup and Bank of America. Bloomberg hasn’t received a response to the request.
The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).
For Related News and Information:
To contact the reporters on this story: Mark Pittman in New York at mpittman@bloomberg.net ; Bob Ivry in New York at bivry@bloomberg.net .
Last Updated: February 9, 2009 00:01 EST
By Mark Pittman and Bob Ivry
Feb. 9 (Bloomberg) -- The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.
The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed. The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. The Senate is to vote early this week on a stimulus package totaling at least $780 billion that President Barack Obama says is needed to avert a deeper recession. That measure would need to be reconciled with an $819 billion plan the House approved last month.
Only the stimulus package to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates approved in 2008 have been voted on by lawmakers. The remaining $8 trillion in commitments are lending programs and guarantees, almost all under the authority of the Fed and the FDIC. The recipients’ names have not been disclosed.
“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”
Financial Rescue
The pledges, amounting to almost two-thirds of the value of everything produced in the U.S. last year, are intended to rescue the financial system after the credit markets seized up about 18 months ago. The promises are composed of about $1 trillion in stimulus packages, around $3 trillion in lending and spending and $5.7 trillion in agreements to provide aid.
Federal Reserve lending to banks peaked at a record $2.3 trillion in December, dropping to $1.83 trillion by last week. The Fed balance sheet is still more than double the $880 billion it was in the week before Sept. 17 when it agreed to accept lower-quality collateral.
The worst financial crisis in two generations has erased $14.5 trillion, or 33 percent, of the value of the world’s companies since Sept. 15; brought down Bear Stearns Cos. and Lehman Brothers Holdings Inc.; and led to the takeover of Merrill Lynch & Co. by Bank of America Corp.
The $9.7 trillion in pledges would be enough to send a $1,430 check to every man, woman and child alive in the world. It’s 13 times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office data, and is almost enough to pay off every home mortgage loan in the U.S., calculated at $10.5 trillion by the Federal Reserve.
‘All the Stops’
“The Fed, Treasury and FDIC are pulling out all the stops to stop any widespread systemic damage to the economy,” said Dana Johnson, chief economist for Comerica Inc. in Dallas and a former senior economist at the central bank. “The federal government is on the hook for an awful lot of money but I think it’s needed to help the financial system recover.”
Bloomberg News tabulated data from the Fed, Treasury and FDIC and interviewed regulators, economists and academic researchers to gauge the full extent of the government’s rescue effort.
Commitments may expand again soon. Treasury Secretary Timothy Geithner postponed an announcement scheduled for today that was to focus on new guarantees for illiquid assets to insure against losses without taking them off banks’ balance sheets. The Treasury said it would delay the announcement until after the Senate votes on the stimulus package.
Program Delay
The government is already backing $301 billion of Citigroup Inc. securities and another $118 billion from Bank of America. The government hasn’t yet paid out on any of the guarantees.
The Fed said Friday that it is delaying the start a $200 billion program called the Term Asset-Backed Securities Loan Facility, or TALF, to revive the market for securities based on consumer loans such as credit-card, auto and student borrowings.
Most of the spending programs are run out of the Federal Reserve Bank of New York, where Geithner served as president. He was sworn in as Treasury secretary on Jan. 26.
When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and then Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. The Federal Reserve so far is refusing to disclose loan recipients or reveal the collateral they are taking in return. Collateral is an asset pledged by a borrower in the event a loan payment isn’t made.
Fed Sued
Bloomberg requested details of Fed lending under the Freedom of Information Act and filed a federal lawsuit against the central bank Nov. 7 seeking to force disclosure of borrower banks and their collateral. Arguments in the suit may be heard as soon as this month, according to the court docket. Bloomberg asked the Treasury in an FOIA request Jan. 28 for a detailed list of the securities it planned to guarantee for Citigroup and Bank of America. Bloomberg hasn’t received a response to the request.
The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).
For Related News and Information:
To contact the reporters on this story: Mark Pittman in New York at mpittman@bloomberg.net ; Bob Ivry in New York at bivry@bloomberg.net .
Last Updated: February 9, 2009 00:01 EST
IT'S JUST BASIC MATH!!!
IT'S JUST BASIC MATH!!! It's neither 'gloom-and-doom' hocus pocus, nor decidedly a-factual Nostradamus-esque visions of the future...it's just math. I'm not rubbing a crystal ball. I'm adding and subtracting and multiplying and dividing; which I understand requires too much effort for many people to be so bothered. I'm still stewing over a comment made by one of the School Board folks in my town. His point to me (at me?), was that anyone who is trying to predict the future is being dishonest: no one, he said, can predict the future. Maybe so, but there is a decided difference between crystal-ball-rubbing predictions and predictions based upon the employment of pretty run-of-the-mill arithmetic! It seems that whenever the nay-sayers are presented with the numbers, they de facto dismiss any critical arguments and concerns about the future as being absurd and hyperbolic. But as you will see below, my estimates are, for the most part, quite conservative. Anyway, without further delay, the numbers:
Numbers gleaned from several sources, including Wiki sources & the U.S. Census Bureau. Some sources quoted directly
The United States population is roughly 305,000,000
About 79% of Americans live in cities or suburbs
Over 50% live in cities with populations over 50,000
Over 250 cities in the U.S. have over 100,000 people
9 cities have more than 1 million residents
There are roughly 6000 registered hospitals in the US
10 to 15% of Americans live below the poverty line
In 2007, 37.3 million Americans lived in poverty.
The richest 10% of Americans possess 70% of the wealth
The top 1% possesses 33.4% of net wealth.
Government activity accounts for about 12% of GDP.
The service sector accounts for about 65% of GDP
The leading sector by income is finance and insurance
Agriculture accounts for less than 1% of GDP
About 150 million people “are” employed with earnings
80% are full-time jobs
79% are employed in the service sector
Health care is the leading field of employment
There are roughly 70 million public school students
There are about 25 million businesses in the US
Small businesses are about 50% of the workforce
Roughly 29 million children get free lunch
There are roughly 95,000 public schools in the U.S.
There are roughly 6.8 million teachers
The national average salary for teachers is $45,000
Average 4 year college tuition, about $35,000
About $8,000 per-pupil is spent
26,300 food pantries in the United States
OK, let’s have fun with extrapolation!!
Read More: http://ashizashiz.blogspot.com/2009/02/you-want-numbers-ill-give-you-numbers.html
Numbers gleaned from several sources, including Wiki sources & the U.S. Census Bureau. Some sources quoted directly
The United States population is roughly 305,000,000
About 79% of Americans live in cities or suburbs
Over 50% live in cities with populations over 50,000
Over 250 cities in the U.S. have over 100,000 people
9 cities have more than 1 million residents
There are roughly 6000 registered hospitals in the US
10 to 15% of Americans live below the poverty line
In 2007, 37.3 million Americans lived in poverty.
The richest 10% of Americans possess 70% of the wealth
The top 1% possesses 33.4% of net wealth.
Government activity accounts for about 12% of GDP.
The service sector accounts for about 65% of GDP
The leading sector by income is finance and insurance
Agriculture accounts for less than 1% of GDP
About 150 million people “are” employed with earnings
80% are full-time jobs
79% are employed in the service sector
Health care is the leading field of employment
There are roughly 70 million public school students
There are about 25 million businesses in the US
Small businesses are about 50% of the workforce
Roughly 29 million children get free lunch
There are roughly 95,000 public schools in the U.S.
There are roughly 6.8 million teachers
The national average salary for teachers is $45,000
Average 4 year college tuition, about $35,000
About $8,000 per-pupil is spent
26,300 food pantries in the United States
OK, let’s have fun with extrapolation!!
Read More: http://ashizashiz.blogspot.com/2009/02/you-want-numbers-ill-give-you-numbers.html
Subscribe to:
Posts (Atom)
Posts
