Thursday, July 9, 2009

So What's Next?

That's what the market appears to be asking itself right now.

The bulls seem too be backing off of the idea that we are through the worst of it. How can't they after the data we've seen recently?

We got more consumer data today that was awful. Folks, when the bulls are pumping Family Dollar stores you know the consumer(and the market overall) is toast! Consumers are shopping at these dumps because they don't have the access to credit that they have had in the past.

The economy is once again hitting the wall. When I asked a friend of mine that owns a big name restaurant how business was he explained that sales have fallen off a cliff again in June. How can they not as unemployment soars? People cannot spend when they aren't working!

Here is some more interesting anecdotal information from a friend that just spent two weeks in Spain. I asked him how the trip was and all he could talk about was the economic collapse that they are currently suffering through. He said unemployment there has surged to 17.2%. Need I say anything more?

Apparently, jobs are so scarce in Spain that the government may actually offer to pay illegals who agree to move back to their own countries. My friend also said that he saw soup lines all over the place. His friends who live over there told him that they have attempted multiple stimuli and none of them have worked or stuck. The whole experience was very sobering.

We are heading straight towards the same dark place that Spain currently finds itself. Unlike previous recessions, government stimulus cannot "fix" this recession. There is no magic bullet here or anywhere that will bring back the happy days of prosperity.

The market has been betting that the government could spend themselves right out of this recession like they always do. The bulls are about to realize they were DEAD wrong. This will take years if not decades to work through.

Once this reality hits Wall St "look out below".

Today was a quiet one. Not much news. We had a 30 year bond auction that was pretty ugly. Bid to cover was around 2.3 if I am not mistaken. Yields have dropped recently due to deflation fears, but I still continue to believe that the longer term trend will be higher not lower.

I say this because I fail to see how the government can continue to sell all of this debt as the whole world sinks into an economic depression.

Let me end today with a little humor. When the world gets so ridiculous, all you can do is laugh:


CT-Hilltopper said...


I had heard that there was a problem of a sort during the 30 year bond sell today. Not that the bonds didn't sell, just that things didn't go as smoothly as the 10 year. Thanks for going into what that was all about.

I took a day off from work today, I have another couple next week. Nothing horrible, just a few vacation days that I had to use or lose. Anyway, no one else is around tonight for dinner, and I decided I didn't want to cook (those days are RARE). I went to our favorite family steakhouse to get something to take home. I think the last time I had been near this place was about a year and a half ago, the restaurant has over 200 tables and at that time, about 2007, it was packed every night.

I couldn't believe it when I walked in the door, Jeff. There were maybe ten occupied tables. I placed my order and was in and out of there in less than five minutes.
That's the state of business here in Connecticut.

I have to tell you this. Your blog has become my "go to" blog. As much as I like to read Mish, or Karl, or Zero Hedge, the night just isn't complete unless I come here and see what you have to say about things.

What never ceases to amaze me is that there are so many people out there that won't look at reality. I told someone today that California was our future. He told me that he didn't believe that, and that there was something wrong with me for always preparing for the worst. Oh well. I should just keep my mouth shut. maybe someday I will learn.

Keep up the good work Jeff. We need many more like you.

Jeff said...


Thanks a lot. Glad you are enjoying it over here.

I think you should keep spreading the word. I have decided not to keep my mouth shut. Someone needs to wake your friends up. It might as well be you!

What I am learning is many are starting to catch onto this whole nightmare as they and their friends lose their jobs.

BTW, Santelli gave today's auction a C+:)

theART said...

Big banks to stop cashing California IOUs

Jeff said...


Link isn't working.

Sounds like a nice catch.

Cali needs a budget and fast!

Jeff said...

2nd failed chinese bond auction this weeks.