Someone please come in here and wake me up when the bubbleheads are done babbling.
Talk about "sell" indicators:
Cramer claimed today that the market will never retest its 666 lows. My God! If that's not a "sell" indicator I don't know what is! Cramer is the most profitable fade I have ever seen!
Banking analyst Richard Bove said the banks have never been better capitalized then they are today. HA! Your kidding me right? Let us all not forget who this clown is. This is the same asshat that said the banks were a "generational buy" right before the whole banking system almost collapsed last Fall.
Then we got this news at the end of the day which rallied the financials heading into the close:
*GOLDMAN, JPMORGAN, MORGAN STANLEY SAID TO APPLY FOR TARP EXIT*BANKS SAID TO APPLY TO REPAY COMBINED $45 BILLION TARP FUNDS
Ok, how many times are they going to recycle this story? Its old news banksters!! Find some new material!
Seriously, I am so sick and tired of the same bullshit. If Lehman was alive today it would also be "well capitalized" if they had been able access to the Fed's window and didn't have to mark to market any of their toxic assets. Folks, the government is basically propping up the financial system with a blank check. Of course they are all well capitalized when the Fed's got your back! Keep in mind all of these banks are insolvent and couldn't survive for even a day on their own.
You need to ask yourself this question going forward:
What happens when the Fed has to pull the "blank check" in order to keep inflation in check(more on this later). Answer: Its not gonna be pretty.
For now, the fraud and sham that we like to call the stock market rolls on folks. All of the financials are just shell companies that are being propped up by the government. The banks are basically nothing but a bunch of Enron's that could blow at any moment if Congress cuts them off.
There will most assuredly be a time where the government runs out of money as thousands of states, pension funds, munie's, and corporations all beg for bailouts. The 10-year was up sharply again today as our Ponzi spending continues:
We are once again testing the recent highs on the 10 year in terms of yields post QE. What's interesting here is yields soared despite the fact that the Treasury bought bonds today as part of their QE policy. The Fed wants to keep the 10 year at around 3%. As you can see above this is starting to become a struggle despite their QE policy.
I am sure the following unemployment prediction from Standard and Poors didn't help things in the bond market today:
"*S&P SAYS U.S. UNEMPLOYMENT VIEW 11.7% FOR `PESSIMISTIC' VIEW*S&P SAYS U.S. UNEMPLOYMENT VIEW 9.7% FOR CURRENT BASELINE VIEW*S&P SAYS U.S. UNEMPLOYMENT NEXT 12-18 MOS MAY REACH 9.7%-11.7%
"Based on our current baseline and pessimistic economic forecasts, webelieve unemployment for the next 12-18 months could reach 9.7% and 11.7%,respectively. Our loss forecast for U.S. bank credit card receivables is10.5%-12.5% for the same period. We believe that credit card losses,delinquencies, and delinquency roll rates will likely continue to rise, and payment rates will likely decline, as unemployment rates and personal bankruptcies continue to increase," noted credit analyst Ildiko Szilank.
Ratings information can also befound on Standard & Poor's public Web site at www.standardandpoors.com; underRatings in the left navigation bar, select Find a Rating. Members of the mediamay request copies of these reports by contacting the media representative provided."
11.7%!..Ouch! That's gonna leave a mark. I thought the banking stress test said the worst case scenario was 10.3% for unemployment. Ooops!
Maybe its time for a new stress test with 12% unemployment. I bet those banks will look even better capitalized then!(scarcasm off)
You can't help but ask yourself this question after seeing violent moves higher in treasury yields:
Is the bond market getting nervous? Stocks were up sharply so a rise in yields should be expected, so I am not going to read too much into this today. However, this will become a huge story if we clearly break the recent highs seen in the last few weeks following the Fed's QE purchases.
There will eventually be a "battle royal" between the bond market and the Fed over treasury yields. Its going to be quite a war. I can't wait to watch.
So How Ugly Can Lending Rates Get? Pretty Ugly When Inflation Becomes a Threat:
Lets go back in time and take a look at the Fed's interest rate policies:
As you can see, rates can get flat out ugly when inflation rears its ugly head. Yields peaked in the 1980's at over 16% as Volcker was forced to battle raging inflation.
As you can see today, rates are at historical lows not seen since the Great Depression because the imminent threat is deflation. There is no demand for money as the economy collapses at a record pace.
However, down the road, what in the hell do you think is going to happen to inflation as a result of the Fed's $10 trillion dollar spending binge? Let me answer that Alex: Crushing inflation that will decimate the consumer's buying power.
The Fed will then be forced to respond as they did in the 1980's by raising interest rates back up into double digits. If they don't, the people of this country will starve because the cost to simply survive would become unaffordable to most.
What are those McMansions going to be worth if rates get back up to 17%? I don't even want to answer this one. Put it this way, anyone with $100,000k in cash will be able to pay cash for just about any house that they want(within reason).
The stock market can keep drinking the koolaid for now. They better enjoy it now because there will be a large price to pay for this asinine "bailout nation" response to the worst financial crisis since The Great Depression.