Friday, May 1, 2009
CNBC was virtually unwatchable today. In fact, to be honest, CNBC has pretty much been unwatchable since Dylan Rattigan left.
I find myself gravitating more and more towards Bloomberg TV. The constant pumping on CNBC is absolutely disgusting. They really should be ashamed of themselves. Anyone that thinks this is actually financial news is kidding themselves. CNBC followers will also find themselves with an empty 401k if they continue to follow their advice.
Rattigan at least gave the network some credibility when he started to question the fraud that went on earlier this decade. I find the it interesting that Dylan was let go right around the same time he started to explain the CDS sham. This story became his cattle call pretty much daily the last few weeks he was there before being let go.
Coincidence? Hmmm.... I know about the fight that he had with his key producer and blah blah blah. I don't buy it personally. You don't fire your superstar no matter how much of a pain in the behind he is. Stars get special treatment. Dylan was far and above the biggest stud on CNBC. Ask CBS how easy Letterman is to work with.
My guess here is Dylan was told to muzzle the fraud talk. Tensions probably then began to build and climaxed when Dylan blew his top during a commercial break. We will never know the truth because Dylan is too much of a class act to say anything so I guess its a mute point. Perhaps Dylan had a moral issue with lying to the public on a daily basis? I would imagine it would be difficult to lie all day for a living to the American people.
This to me is just another sign that this whole sham is about to come crashing down. The Fannie/Freddie CFO sucide was another good example of this. It must be depressing running the financial housing numbers everyday and realizing that there is no way the economy can recover from what the pigmen did on Wall St.
Anyway, getting back to my point, I just don't understand how CNBC can ignore the moves in the credit markets. All they do all day is roll out fund manager after fund manger and ask them their opinions on the recent bounce.
Gee what a shocker....Just about all of them say the market is buy. WTF do you expect them to say? They are invested in the markets!! They have to be on any bounce because they cannot afford to have lackluster performance versus their peers. If the market moves 25% and you do not participate you lose as a fund because you know your peers all did.
This is especially the case in this market. People are moving their money at the drop of a hat because they all saw a ghost when the market collapsed last year. No one trusts their broker anymore.
Since everyone is "all in", the PUMPJOB only gets louder as the market moves higher.
The market has now moved almost 30% in 8 weeks and yet these smucks continue to say its a buy. What do you think these assclowns would be saying if the market had sold off 30%? Let me answer that for them: NOW IS THE TIME TO BUY! WE ARE WAY OVERSOLD HERE! VALUATIONS ARE CHEAP!
Ummm guys? Perhaps we are overbought here after a 30% move?
I don't put much credence into the move up today. Europe was off and the volume was ridiculously light. We saw a manipulated buying binge at the close to get the S&P over 875. Now the bulls can claim that they broke resistance as we sit here at the close at 877.
That's hardly a confirmed break in my view. We have the delayed stress test results next Thursday. How can these results be anything but bad since they were delayed? You know if they were good the news would have leaked by now. The financials were flat to down most of the day.
Bonds continued to sell off. This is the real story of the markets this week folks! If I was the producer for CNBC and I wanted to run a legitimate financial news network I would spend 4 hours or so a day in the credit markets right now. I would put a studio in Chicago with a cute talking head like Erin Burnett and have her sit right beside Rick Santelli. You could set it up Sqauwk Box style and let it rip.
Obama continues to think he can spend at will. The bond market is firmly beginning to tell him to slow the hell down. If he doesn't stop he is going to be spanked like a naughty kid by the credit markets. Bill Clinton leared his lesson the hard way. 5% yields are right around the corner if this Ponzi spending continues.
Folks, let me repeat: There is no f'cking way that we will sell $2.5 trillion in treasuries this year without major pain. There is ZERO chance folks. The fund managers and other cheerleaders are ignoring this gigantic red flag and CNBC is letting them get away with it.
I am off this weekend so I won't be around until Sunday. Its my favorite day of the year: DERBY DAY! Most exciting two minutes in sports.
Have a great weekend and here's a taste of what I mean:
Thursday, April 30, 2009
We have gotten pretty choppy in the markets here as of late. 875 on the S&P is becoming an area of serious resistance for the bulls. We have seen several failures at this level. Stocks closed pretty flat today as investor's digested the Chrysler BK news. The S&P ended the day at 872.
Treasuries continue to sell off as the bond market continues to pressure the Fed. Yields were up slightly. Futures are down pretty sharply after hours. Tonight should be interesting to watch.
It was a pretty quiet day so I will keep it pretty short.
I wanted to share a couple pieces of news that could be potentially significant. Mortgage insurer MBIA sued Merrill Lynch over subprime debt protection:
"April 30 (Bloomberg) -- MBIA Inc., the largest bond insurer, said that two of its units sued two Merrill Lynch & Co. businesses now owned by Bank of America Corp. over protection sold against mortgage-debt defaults.
The suit, filed in New York State Supreme Court, seeks to unwind $5.7 billion of credit-default swaps and related insurance sold against collateralized debt obligations, as well as recover damages, Armonk, New York-based MBIA said today in a statement.
Merrill Lynch misrepresented the nature of the debt being protected as part of a “deliberate strategy to offload” billions of dollars of “deteriorating” subprime mortgages, the insurer said in the statement."
It appears the tan man is one step closer from being forced into court in Florida according to the WSJ:
"The Florida Attorney General's office moved one step closer in its effort toput the former Countrywide Financial Corp. chief executive on trial.On Thursday, a U.S. District Court judge remanded a lawsuit filed by the stateof Florida against Angelo Mozilo back to Broward County Civil Court.
The action came in a case filed by Florida Attorney General Bill McCollum,alleging that Mozilo and Countrywide, violated the state's deceptive tradepractices act by placing consumers in loans they could not afford or with ratesthat were false or misleading.After the complaint was filed, Mozilo and Countrywide sought to have the caseremoved to federal court. Bank of America Corp. (BAC), which acquiredCountrywide last year, settled the Florida case without admitting or denyingguilt."
Let the lawsuits begin!
Its time to start the blame game now that the financial system has lost trillions of dollars.
The above lawsuits are significant because they could potentially expose the blatant fraud that occurred during the housing bubble. Its about damn time!
The Merrill story could potentially have huge ramifications. The leeches on Wall St are in deep trouble if the lawyers can prove that Merrill knowingly securitized loan products that they knew would not perform. Everyone played the same game so expect a flood of new lawsuits to hit every major bank if Merrill is found guilty of selling giant piles of dog doo.
Lets see if the judge has the guts to make the right call and expose the crooks. A win by MBIA could be the trigger that takes down the banks and forces them to become nationalized. The flood of lawsuits that would follow such a victory would be too costly for any of the banks to handle.
This lawsuit has the potential to expose the housing boom for what it was: a multi trillion dollar Ponzi scheme.
Lets hope that the "rule of law" swoops over Wall St and starts prosecuting the banksters that blew up the whole financial system.
This is the only way that confidence and trust can be restored on Wall St. The bankers must be removed and jailed. Period!
These are the "green shoots" that I have been looking for. Its time to life up the curtian and expose the thieves that created this mess.
Wednesday, April 29, 2009
Whoa!! Watch out Ben!:
Oooops! I hope everyone that planned on refinancing into a 4+% mortgage did so last week. Ahhhh...I had to chuckle watching this all play out today:
First we get an awful GDP# of -6.1% versus the consensus estimate of -4.7%. Futures then jumped after the traders dug into the report and saw that consumer spending had increased by over 2%.
Hmmm.....How can consumer spending be up after digging into the report?:
"Current-dollar personal income decreased $59.9 billion (2.0 percent) in the first quarter, compared with a decrease of $42.9 billion (1.4 percent) in the fourth.
Personal current taxes decreased $193.5 billion in the first quarter, in contrast to an increase of$19.7 billion in the fourth.
Disposable personal income increased $133.6 billion (5.1 percent) in the first quarter, in contrastto a decrease of $62.6 billion (2.3 percent) in the fourth. Real disposable personal income increased 6.2percent, compared with an increase of 2.7 percent."
A little question here: How does disposable income soar while at the same time personal incomes dropped versus the 4th quarter? Anyone smell something fishy? Yeah me too. I call bullshit on this report.
Could it be that disposable income increased as millions started to stop paying their mortgage? That's what some of the bears are thinking. You can put me in this camp as well.
Well, today certainly didn't disappoint when it came to the bond market. I warned yesterday that Ben better announce a treasury buying spree if he wants to continue to keep yields and mortgage rates low.
For a change Ben showed some discipline and just announced that the Fed will continue with their treasury purchases as needed. The bond traders then predictably shoved it right up Ben's ass by taking yields higher.
You better be ready to back up your words in the bond market. These are the best traders in the world and they will most certainly call your bluff if you fail to back up what you say. As you can see in the graph above, yields soared as traders ramped up the pressure on Ben and the Fed once they learned that no new treasury purchases were announced in the Fed's statement.
As I said yesterday, the Fed is increasingly running out of options. Bill Gross said today that he doesn't believe the world has the finances to buy the $2.1 trillion in treasuries that will be brought to market this year. IMO, we have a better chance of seeing god before we sell all of this crap sold to the rest of the world!
The only way I can see it happening is if the DOW crashes to 4000 or so. This would force trillions of spooked investor dollars into treasuries. Consider this to be a warning. This type of collapse can be easily orchestrated by the Fed: All they need to do is pull their liquidity and this market is toast.
Let me explain it another way: The financial system and most its players today are all a bunch of bailout addicts. The only drug dealer with the bailouts is the government. If the government pulls their bailouts from the addict, the economic system will be exposed for what it is: A BLOATED BANKRUPT INSOLVENT DISASTER.
Investing Will Never be the Same
I'll end with this point today. The stock market moving forward may never be the investment tool it has been in the past. Its been gamed, defrauded, and stripped naked and put in a closet.
I have often discussed a lot of trading ideas on here in the past. You will see less and less of this moving forward because I can no longer make sense of such a system that has become so corrupted and filled with fraud.
The desperation and panic that's filled the market in the past year has killed the Bulls(Sept-Nov.) and the Bears(March-today).
The only advice I can give at this point is to hoard cash and other assets of value. Going long this market is total suicide. There have been times that I have seen nice long plays out there.
However, I can't advise anyone to go long anything while the market is still filled with the criminals that almost and eventually will destroy our financial system. The bottom on this could fall out at any moment folks and going long at this point is extremely dangerous because there are no fundementals to support the market. Please keep your trades small on both the long and short side. Keep your hard earned 401k money in cash.
Could the market move up to 10,000 on this insanity? Yes, but I could just as easily see it plummeting to 4000 if reality is allowed to kick in.
The larger this move gets, the more fearful I become that average investors will all pile in here thinking everything is safe once again. Folks, this market is about as safe as walking into a Mexican hospital without a face mask thats filled with swine flu patients.
The only thing that's propping up this market at this point is hope, fraudulent spin, and the governments balance sheet.
Don't allow yourself to get sucked in by all the hype around this bounce.
Before you do anything around stocks: Turn off bubblevision, look around where you live, and ask yourself: Do things look any better?
Tuesday, April 28, 2009
Sorry I am a little late tonight. I had a lot of business to attend too.
Hmmmm........Tomorrow is going to be VERY interesting. We have the Fed statement tomorrow and the bond market officially turned up the heat on Bennie today.
Check out the 10-year:
Whoa! I wouldn't want to be in Ben's shoes tomorrow. As you can see above, the traders in the bond market sent a message today to the Fed by taking yields above 3% intraday before closing at 3% which is where we were when the QE began.
The question now becomes this: What do Ben and the Fed announce tomorrow in response to the 10 year moving back up to 3% despite the Fed's treasury purchasing via QE? Do they announce another spending binge on treasuries? If they don't do yields then start to fly higher? Chicago wants to know and I do too.
This is a huge game of chicken ladies and gentleman. In case you missed this last night check out the Fed's spending plans for the 2nd quarter:
"WASHINGTON, April 27 (Reuters) - The U.S. Treasury Department said on Monday it expects to borrow $361 billion of marketable debt in the April-June quarter, up $196 billion from earlier estimates, as government spending soars in the deepest and longest recession in decades.
The amount is a record for the quarter, in which borrowing usually diminishes because most Americans' annual income taxes are filed by April 15.
Borrowing needs include $200 billion to support Federal Reserve liquidity programs aimed at reviving lending after the housing market crash and surge in credit defaults.
The previous record borrowing for the April-June quarter is $60 billion in 2003.The Treasury cited weak revenues and greater spending to support economic recovery programs as among reasons for greater borrowing needs.
The Treasury said it expects to borrow $515 billion of marketable debt in the July-September quarter. In the January quarter it borrowed $481 billion, slightly less than earlier estimates."
Gee, do you think a six fold increase in spending versus the previous record in the second quarter by the Fed has gotten the traders in the bond market a little nervous?
The Ponzi spending game can't last forever folks and the bond market will put a stop to it when they believe enough is enough. Ben has been given a little slack as a result of the bad economy, but there is a point at which this game ends.
So here we are the eve before the Fed speaks. This sets up for a seriously dramatic day tomorrow. What does Ben do? My guess is he announces another debt purchase via QE. My thought here is if he doesn't the bond market is going to shove it up his behind by pushing yields through the roof.
Ben can't afford to allow this because the housing game blows up if lending rates get out of control. He also realizes his resources are limited so he might be hesitant to go on a Treasury spending binge. He knows he can't continue these antics without printing and creating serious inflation.
Either way the way I see it now he is pretty much screwed. I mean look at how out of control the spending has gotten!:
THE TREASURY PLANS ON SPENDING $361 BILLION DOLLARS THIS QUARTER. THE PREVIOUS RECORD WAS $60 BILLION IN 2003!
Houston I think we have a problem!
This is simply asinine. Who do you think has to pay for this? Look at your children and you will see the answer. We are destroying the futures of our younger generation by attempting to bailout a bunch of greedy bankers in an attempt to reflate a debt bubble that is impossible to blow back up.
The Fed is very crafty when it comes to creating an image of having unlimited power and resources. This image of invincibility is what will become their downfall.
At this point, they have pretty much put a guarantee beneath our whole financial system. The reality here is the Fed is as mortal as we are. They can only spend what they can finance via treasury purchases. Anything else beyond this is pure printing.
Always keep this in mind, the actual spending by the Fed has been dwarfed by what they have guaranteed. Remember: Guaranteeing something is easy. Any fool can guarantee anything. How many late night guarantees do you see on infomercials each night? Its easy and its also free!
Having the resources to back it up is another matter. If the Fed had to actually back up everything they have promised they would be toast.. Argentina anyone?
Lets see what Ben does tomorrow. The market has been quiet the last few days but I believe things could really heat up tomorrow. Chicago officially called out the Fed today by taking yields on the 10 year to 3.02%.
The Fed is rapidly being put in between a rock and a hard place. They are spending record amounts of money at a time in which tax receipts are plummeting. The math doesn't work here folks. The problem Ben has is the math always wins because its never wrong.
This debt bubble will collapse. Its only a matter of when not if at this point.
Check out this great piece on housing below. Is high end housing the new subprime? This appears to be the next leg down in housing.
Lets see what Bennie does tomorrow.
Monday, April 27, 2009
I hope everyone had a great Monday. Stocks dropped mildy today after an extremely violent overnight session in the futures.
The GM reorg news this morning helped pull the market out of its overnight futures funk. In my opinion GM is still heading straight to BK. The bondholders get shafted in this deal and its probably safe to say that they will take their chances in BK court. The same thing goes for the Chrysler deal.
Basically, the government was once again successfully able to kick the can down the road when it comes to facing an economic nightmare. Today it was the autos. Whats it gonna be tomorrow? Commercial real estate?
Anyone else sick and tired of the can kicking that seems to be happening in almost every sector of the economy? God forbid we face the music and attempt to fix these problems.
KICK KICK KICK...This seems to be the governments only response to the economic time bombs that we now see throughout our economy. I guess its a lot easier for Ben and Tim to stay in denial and tell us they see signs of recovery then it is to actually work on solutions.
I think Manchester United needs to sign one of these guys up to be their striker. I mean Christ: Pele never kicked as much as these clowns have in the past couple years.
Is anyone else getting totally annoyed with this saying? Kudlow from CNBC needs to be gagged and thrown into a closet. God that man annoys the piss out of me!
There are no "green shoots" in the economy folks. All I see is a giant dustbowl!
Deflation continues to rule the day as unemployment soars:
Anyone seeing any green shoots above? Yeah me either. I see nothing but a giant collapse that continues to build. CPI actually fell into negative territory at -.4. This was the first time in history that this has ever occurred.
Should we be surprised? When you have no job you cannot consume. When there is no demand for products prices collapse. This is completely devastating to an economy. Ask someone from Japan how it all worked out for them. They are still reeling from a 25 year collapse as a result of deflation.
The "green shooters" have it wrong here folks. Let me explain why:
There are signs that areas of the economy are stabilizing. The problem is the "green shooters" are reading this as a recovery indicator. This is NOT the case.
What we saw late last year was a complete collapse in demand for products. In response to this collapse in demand manufacturers collapsed production and thus supply. Steel producers today running at 40% capacity is a good example of this. They were running over 90% a year ago.
The signs of stabilization that we are seeing are not signs of increased demand. Its a result of dwindling inventories due to pullbacks in production. Consumer demand is still extremely soft, but the difference now is they are not buying off of excess inventories.
Since inventories are now depleted in some areas, manufacturers must now slightly increase production in order to fill new orders. This shows up in the numbers as positive growth but this statistic is deceivingly wrong.
Demand is still dead as a doornail! However, inventories now reflect this. I expect the economic production numbers going forward to be flat to negative after this blip up here in the 1st quarter because inventories now are on par with demand.
The "green shoots" will soon be weeds. Futures are in the red after hours and the bounce looks to be losing steam. Lets keep a close eye on the swine flu and treasuries over the next week.
Let me preface this by saying that I pray that the swine flu disappears. I have no desire to see a pandemic.
However, I find it so ironic that a pig virus is developing into a serious threat to our economy. It was the pigs on Wall St that brought us down this road to economic hell.
How fitting would it be if a pig virus turned out to be the "Black Swan" that triggered a stock market collapse?
Sunday, April 26, 2009
The ES is trading down around 19 handles. The swine flu is rapidly becoming a major story. Here is a swine flu update. There are now 1384 confirmed cases:
"Key developments Sunday on swine flu outbreaks:
-- Deaths: 86, all in Mexico. 22 confirmed as swine flu, 64 suspected.
-- Sickened: 1,384 in Mexico, suspected or confirmed; 20 confirmed in U.S.; 6 confirmed in Canada; 13 suspected in New Zealand; 7 suspected in Spain; 1 suspected in France; 1 suspected in Israel; 1 suspected in Brazil.
-- Locations in Mexico: 17 states, including Mexico City, Mexico State, Veracruz, Oaxaca, Baja California and San Luis Potosi. Some, including Oaxaca, Mexico City and Baja California, have tourist areas, but authorities have not said where in these states the outbreaks occurred.
-- Locations in U.S.: 8 in New York, 7 in California, 2 in Kansas, 2 in Texas and 1 in Ohio."
Whats very strange here is there seems to be no major catalyst for a large drop tomorrow other than the swine story. There was a small World Bank semi violent demonstration in NYC. A few banks were vandalized but it was nothing major.
One theory that I have about tonight is we have over $100 billion in treasury auctions this week. The Fed in the past has been known to pull liquidity in order to force a selloff which then scares investors into treasuries. This would be a convenient way to easily sell the massive inventory of treasuries this week.
The Asian markets got this whole thing started. All of the major averages over there are down sharply other than the Aussies.
Could all of this be a headfake? Anything is possible and we have seen stocks reverse higher many times throughout this bounce after being down sharply at the open.
Tomorrow is going to be a real test for the bulls and their bounce.
You gotta think that a lot of longs that caught this move will be tempted to run for the hills and take profits tomorrow after a 25% bounce if this selling pressure continues.
All of the major players know that this rally is based on nothing. My main thought all along during this March bounce has been this: Once this rally runs out of fumes the reversal is going to be violent because their are no fundamentals to support stock prices.
Tomorrow is going to be very very interesting.
Check this out. This is the best rant I have seen in a long time. Max Keiser is dead on here. The "financial terrorists" must be stopped. There are a few pauses in between his quotes so make sure you watch the whole 8 minutes.
I found this great Bloomberg interview of Bill Black who is a former banking and fraud regulator.
Bill calls the stress tests a sham because they don't test for asset quality and banking losses. He also estimates the banks are sitting on about $2 trillion in losses and calls Geithner a complete failure.
This is s great video. Please take a look:
Keep an eye on this story folks. The last thing we need right now is a flu pandemic! The swine flu seems to be a serious threat. There are now 20 confirmed cases in the US and the flu is responsible for a suspected 81 deaths in Mexico.