Wednesday, October 20, 2010

Jim Rogers Hammers CNBC

I think I will start with asking a question in Canadian:  What a wacky couple days in the market eh?

Whoa!  Volatility is back!

None of this helps from a confidence standpoint of course.  The dollar trade the past few days was absolutely ridiculous:

Crazy isn't it?

Folks, moves like this on the dollar just are not supposed to happen.  Stocks and other commodities caught fire once the dollar started collapsing this morning.

We sold off later in the day to close up around 1%.

What was interesting today was watching the bond market.  Take a look at the t10 year:

As you can see, bonds actually moved higher despite the sharp rally in stocks.  We should have seen bonds move int he other diection as the market soared higher.

This pretty much tells you that there wasn't much conviction behind the rally.  Most investors remain scared and prefer to sit in bonds.

The move higher was all about the falling dollar today.

Why this is a good thing for stocks is beyond me.  I also think that all of the money the Fed is creating one of the reasons why we are seeing both stocks and bonds rising at the same time.

We had another POMO from the Fed today like we saw on Monday so today's move makes a little more sense from a "funny money" standpoint.

Fundamentally of course none of this makes any sense, but we all know those have gone out the window for the time being. 

Just keep one thing in the back of your mind:  The fundamentals always matter.  Just ask anyone that leveraged themselves into the tech bubble.

Let me finish up with a great video from Jim Rogers that was done on CNBC Asia last night. 

Jim hits the cover off the ball as he slams CNBC, and rips into the artificial book values of the banks that the analysts feed the bulltards on Bubblevision. 



getyourselfconnected said...

hey jeff!

I wanted to say the last 3 posts have been great and I really liked the Trader Coversation item. Crazy stuff going on indeed.

I am off to the Bahamas for Friday-Monday so i wll have down time to think things over and try and makes sense of it all.

Jeff said...


Thanks a lot bud.

Great to hear from you!

Enjoy your time away from this crazy market. You need it sometimes.

I always feel refreshed when I get a chance to recharge.

Travel safe and have fun.

flip said...

Guys, something is brewing. I meant to post about it earlier in the week but I've been busy.

I'd mentioned before my bank, who is quite conservative, allowed me (and anyone with a mortgage through them) to update their loan rate to the current prevailing rate for a small fee. My 30 yr fixed went from 5.875% to 4% with no hassle.

From the period where I said 'hell yeah, change my loan' to when the paperwork got processed, the rates for a 30 year dropped below 4% to 3.75%. I called to have them float the rate down (which they said I should do provided they hadn't processed it, they would for no cost).

The answer really freaked me out. They said no. They said they had ended the program suddenly and immediately. They said their underwriters had deemed all, get this all, 30 year fixed rate mortgages to be a credit risk to their solvency.

All loans, once modified, are being sold off to FNM/FRE. All new loans are being sold off within 24 hours of closing to FNM/FRE. They are evaluating ways to scale back or leave the mortgage business altogether.

This is unprecedented. Something's up.

Jeff said...

"They said their underwriters had deemed all, get this all, 30 year fixed rate mortgages to be a credit risk to their solvency."

WOW Flip that statement is huge!

They are right because I don't think the majority of these loans will ever be paid back.

Still, to hear them admit it is astonishing.

Thanks for the scoop.

flipdippy said...

Jeff, I don't think they were supposed to volunteer the information I was provided. The person I spoke with was clearly not a front lines support person, and was also clearly irritated to be speaking with me. I think he gave me TMI.

JMO, we are going to find out the exact degree to which the bots control the markets shortly after the election. We may see a brief post election pop, but if we don't start a major correction by the end of next week, then it's clear who is running the casino.

And if that's the case, I'm prepared to pack up all trading and non-safe haven investments, start preparations for whenever reality sets in between mid 2011-2013, and never watch CNBC or read zero hedge again.

Jeff said...


I cant blame you

I am preparing right now.

Nasty reversal today. They are trying to pump this sucker but to no avail.

Volatility is back. Everyone is expecting that holiday pop. I think we already saw it.