Friday, January 22, 2010

The Moment of Truth

Hi All!

Things have been very busy so I apologize for being so quiet.

I just wanted to hop on and give you my take on what happened in the markets this week.

IMO, this is all about the Mass. Brown election. This is a horrifyingly embarrassing loss for the democrats and President Obama obviously took notice.

Many believe this was a vote against nationalized health care. I say that's a bunch of hogwash! This was a political vote against Wall St and their obscene profits.

The Democrats realize that the public is totally against their bailout of Wall St and their continued Ponzi spending.

Folks, we are BROKE! Trying to fix health care when you are $13 trillion in debt is flat out moronic!

The economists continue to talk about our great "recovery". Meanwhile Rome burns in the process: Unemployment is spiralling out of control, housing prices are crashing, and the serfs are getting angry!

I am not surprised by the elections. How stupid does DC think we are? I have been screaming about this economic fraud for years! It appears that Main St finally took notice.

The Bottom Line:

Expect Main St to trump Wall st for the time being. The people are angry and we have elections this November. Any Democrat voting for a bailout in 2010 is just asking to get his butt kicked by the voters.

This of course is very bearish for the markets. If Bernanke doesn't get re-appointed(which is very possible) the market is going to panic.

Be careful out there and make sure you are diversified. This is an extremely dangerous market.

29 comments:

Art said...

Better than nothing :o) Welcomeback

Art said...

PS: Everything is setup for the double dip, just like planed.

Jeff said...

Hey Art!

Nice to hear from you! Tonight was brief but I hope to have more time soon.

Best

J

Jeff said...

Art

Yep

This might be a mild pullback depending on the politics.

No doubt this is a double dip tho. I expect inflation will be the key trigger for the 2'nd dip as a result of the Fed's spending.

However, if the politics continue to destroy Wall st then we could see the tankage immediatley.

I hope that we will take the pain right now and get it over with but the feds to this point have fought this like cats and dogs.

Either way we are pretty much screwed. We have no money this go around to save the economy.

getyourselfconnected said...

A sighting of the elusive but much rumored to still exist Jeff from the Housing Time Bomb!

How are you? I hope all is well.

I agree 100% that health care was a just tiny bit of the vote here in Massachusetts. It is indeed the bailouts and spending and banking bonuses that were the driver. I talked to so many folks over the past 2 weeks and they all said the same thing: I have had it with the banks and the mortgage bailouts and I am gonna do something about it. Lets hope the one time Mass makes a good play is not ignored!

On a political note; I have never seen open people openly talking about voting republican here in Mass. Usually when a R wins you will not see a sign and no one will admit they voted for the R! This time peoel were standing in the voting room at a school where I vote saying OUT LOUD "I hope Scott can do it!". It was unreal.

All my best!

jeff said...

Get

Great to hear from you!

Hope things are well up in Mass.. Yeah I have risen from the dead..lol

Great insights from your home state. Thanks for sharing. I wondered what people were saying up there.

Kennedy must be rolling over in his grave. The idea that his seat went to a Republican is astonishing.

The SERFS have had enough. Wall st is in trouble!

BTW sorry bout your Pats! I won't even say anything about the Steelers. bad year.

getyourselfconnected said...

jeff,
yes, lets leave the Patsies and the the Steeler to their off season golf games!

Hope all is well and I get to find out soon about some "restructuring" that could be interesting at the workplace. Always something.

jeff said...

Get

Good luck.

Its happening over here as well. I will shoot you an e-mail with something you might find interesting regarding your situation.

Steve said...

Anyone suppose the delay on Bernanke's reconfirmation is a behind-the-scenes power play to get a Fed chair who is dedicated to funding treasury sales? Note the $1.9 trillion addition to the debt ceiling going on simultaneously.

Crazy times.

jeff said...

Steve

Crazy times for sure. I think Geithner is toast. The feds may be afraid to ice BB out of fears it may crash the market.

It's going to be interesting to see how this plays out.

BTW, the futures are getting hammered.

Looks like we will open deep in the red. I am starting to think this whole thing is about to unravel.

Anonymous said...

Jeff said..."I am starting to think this whole thing is about to unravel."

Youve been "thinking" that since late march when it was time for the bear market rally to die. Hows that working out for you?

jeff said...

Been outta my shorts for months.

Where you been? Think this recovery is real? Keep dreaming.

Anonymous said...

jeff said...
Been outta my shorts for months.

Great - too bad you didnt know how to play the game and make some $$ in the interim.

Where you been? Think this recovery is real?

NO.

Still, let me ask you. You still confident that when the big "end all be all" you keep predicting is going to come and go KABOOM!!!! are you still sure we are going to smash thru the lows established last March?

More to the point, if the inevitable double dip comes, and yet, we end up even ONE POINT above the 2009 lows, wanna know what the 2009 lows were called? I will tell you...they were called THE BOTTOM.

Think carefully about this...you have been denying the bottom for nearly each and every day since it smacked you in the face in early march. You are on the clock...you have been in denial for nearly a year now. Yet, you still sit here, while the markets climb higher and higher, and yet you still confidently claim NO BOTTOM YET.

Wake the F up dude!

Practical said...

Yeah, even Denninger recently admitted the next leg down "may not take out the march lows".

Its rather sad to see. The man who laughed and openly mocked others for calling bottom back in march basically laid a huge turd by refusing to allow for even the possibility of bottom. Now, he is having to take a bite out of it.

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flipdippy said...

Jeff-

Remember my comment about the state of the union and it turning markets down?

I guess I was wrong on the timing, but this could be a catalyst for a real sell off over the next few days:

http://www.bloomberg.com/apps/news?pid=20603037&sid=aAJxmSnvsrwk

Jeff said...

"Great - too bad you didnt know how to play the game and make some $$ in the interim."

Dude you don't know what I own. I did very well in my bond funds and the metals.

Run along. Spew your drivel somewhere else.

Jeff said...

Practical

This is a tough market. It's almost impossible to make calls when the market gets so manipulated by Wall St. and Washington.

Everyone thats been long or short has looked like a fool at some point since early 2008.

I don't think anyone knows how this all plays out. The only ones making money are the people on the inside who hear whats coming out of Washington before the market does.

That's partly why I don't write on here as much. There is nothing to analyze when the market is so manipulated. The fundementals mean nothing.

P/E's are totally out of whack. DO we break the lows? Hell if I know. DC seems hell bent on doing everything they can to prevent it. Maybe it works but I doubt it.

It might take years before we all know the answer.

GL

J

Jeff said...

FLip

Wow. More can kicking down the road eh?

Why don't they just let prices collapse back to the mean and be done with it?

I think the next big catalyst down is when the Fed stops buying MBS in March.

I can't help but think this is going to send mortgage rates through the roof which will really weigh on equities and cause another leg down in the housing market.

One of my Wall st contacts said this will be the next big market mover and I couldn't agree more.

If the Fed stops their purchases and the market collapses then I expect them to be back buying.

Crazy times!

Anonymous said...

"Jeff said...Why don't they just let prices collapse back to the mean and be done with it?"

Because nothing would be worse for the long term survival of a republic than to force change on people quicker than they are able to accept it.

Japan's population has had 20 years to get used to deflation. During that time, it has remained a very peaceful nation. Can you imagine the violent uphevals if all that deflation was compressed into a year or two?

Just like when the govt eventually defaults on social security as you and I both know will happen. Which is less likely to incite violence suddenly ripping it away from people who have planned on it all their lives, or gradually over time?

Think about it. Ever notice that green social security form you get once or twice a year saying what you are entitled to? Ever notice that boldface language that says THE TRUST FUND WILL RUN OUT OF MONEY IN 2047 or whatever? Thats the govt telling you, we will default, plan on providing for your own future.

Since you have 30 years to prepare, you are pissed, but you arent necessarily violent. However, if 2047 came around and it all just went poof with no time to adjust, you would see riots within days.

Thats the basic flaw with your "rip the bandaid off" argument. It makes perfect "rational" sense for the long term, but people arent that "rational". Kick the can will be the preferred method each and every time...

Jeff said...

Anon

I agree that kick the can is how we have gotten this far but the markets tend to not be patient.

For every Japan there is an Argentina which saw their currency collapse over 70% in three months.

"Japanese deflation" is not a guarantee if you continue and screw with the markets.

Investors(especially in the bond market) have a tendancy to call the governments bluff when things get real ugly.

How did that US deflation work out in the 30's where the market dropped 90% in 3 years?

This market will price a 20 year deflation and collapse equities within the next couple years if thats what the market sees coming.

Katherine said...

For every Japan there is an Argentina which saw their currency collapse over 70% in three months.

Just FYI - that was because they had a fixed peg to the USD, wheras the "true" market was pricing things in as they went along. The 70% drop was once they dropped the peg and went to a floating rate.

Jeffrey said...

Katherine

Yeah, thanks for sharing.

I am just making the point that these financial collapses usually don't end well and they don't adjust slowly over 20 or 30 years.

They are usually violent and extremely painful. I get concerned when I see so much bullishness and optimism after a 70% move.

In fact, the bullish noise on this board makes the contrarion part of me want to short the piss out of the market:)

I saw similiar comments on here in May of 2008 after the March Bear Stearns bounce.

Anonymous said...

I agree Jeff. I am planning to short big time soon. Bulls everywhere. :)

Best regards
Johan

Anonymous said...

The move since August with those overlapping waves looks anything but bullish by the way. Anything can happen but i am prepared on the downside.

Johan

flipdippy said...

Jeff-

How do you like dem apples?

I am surprised the sell off is this violent before Bernanke's confirmation...I wonder if the market is telling us he will not be confirmed.

If he is not confirmed, markets could have a 2-3% down day today and more tomorrrow.

If he is, this could be the biggest bear trap of this rally yet.

Jeff said...

Johan

Yup

Look at all of these bullish quarterly earnings. Most companies knocked it out of the park and the market continues to pullback.

Meanwhile the economic data continues to worsen. Jobs report came in at -470K which was worse than the 450k that was expected.

Housing continues to sink. This rally is losing steam!

Jeff said...

Flip

Mr. market didn't like Bernanke's confirmation.

The market sold off on the news.

How frickin hilarious. You know the senators were threatened with "financial armegeddon" if he wasn't confirmed.

Perhaps we see financial armegeddon with a confirmation instead..lol

Tomorrow will be interesting.

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