If this doesn't bring a tear to your eye then I don't know what will. This is the side of America that your rarely ever hear about thanks to our pathetic media. Our trillion dollar bailouts have come at a price, and our future generations have been scarred for life because of them.
I hope everyone on Wall St sees this as they gorge on their 2010 billion dollar bonus checks that they received a couple of months ago. Perhaps it will put a few things in perspective for them.
Recovery? I think not.
Sunday, March 6, 2011
Friday, March 4, 2011
The Only Chart that Matters
For the near term anyway:
My Take:
I hate to keep putting this up but the market is obsessed with oil. We broke $105 briefly today before pulling back to $104 and change at the close.
We saw a sharp rally off the lows at the end of the day. I say no reason for optimism near the close other than oil pulling back a tad. I will chalk this move up as a robo rally and nothing more.
I thought we would end the days at the lows because it was a Friday, and I figured traders wouldn't want to be stuck in positions over the weekend due to fears of what might happen in the Gulf region.
One thing is for sure at this point: Volatility is back! I expect more of the same moving forward as the market worries about the ending of QE and oil prices.
The way I see it: Stocks are doused in gasoline, and all it will take is one spark to turn this thing into a towering inferno.
What could trigger the blaze?
Let me count the ways:
$140 oil.
Saudi Arabian revolution(Keep a close eye on the scheduled March 11th protests).
PIIGS default/Euro debt collapse.
European interest rate hike(which was hinted at this week by the ECB).
Sharp sell off in the US dollar(look at the chart of the dollar folks, it's ugly).
Sharp rise in interest rates on treasuries.
Buyer beware:
If any one or a combination of these things strike we are in deep trouble.
The Bottom Line
The jobs number of +193K was decent but it's not enough to allow us to grow out of our problems. We need at least +200k new jobs a month in order to start lowering the unemployment rate to any large degree. Given our devestating job losses since 2008 the number needs to be even higher than this for now so I think the market was a tad disappointed at the number.
Remember, we have about 100,000 people entering the job market every month so you need to peel this number off when you look at the jobs number when it coems to putting people back to work.
Stay focused on oil for now, and let's all pray that the Middle East settles down before things get out of hand.
The Fed's QE will be the next crisis. Worries about the ending of QE are already hitting the market after today's tough talk from the Fed:
"Federal Reserve policy makers are signaling they favor an abrupt end to $600 billion in Treasury purchases in June, jettisoning their prior strategy of gradually pulling back on intervention in bond markets.
“I don’t see a lot of gain to reverting to a tapering approach,” Atlanta Fed President Dennis Lockhart told reporters yesterday. “I don’t think that is necessary,” Philadelphia Fed President Charles Plosser said last month."
Bottom Line Continued:
Translation? Umm...Things are really getting out of hand and we better settle down before oil hits $200 a barrel.
I have said it over and over again: Bernanke has painted himself into a seriously bad corner. I think the global chaos is forcing the Fed to rethink things. The problem is if Ben ends QE than interest rates are going to soar. This in turn will then KO the housing market and the banking system.
Nice choice for the Fed eh? $200 oil and raging inflation or a deflationary spiral/banking collapse with double digit interest rates on treasuries.
Being Fed Chairmen at this point just has to plain stink. It didn't have to be this way if we had taken our medicine in 2008. Talk about a no win situation.
My Take:
I hate to keep putting this up but the market is obsessed with oil. We broke $105 briefly today before pulling back to $104 and change at the close.
We saw a sharp rally off the lows at the end of the day. I say no reason for optimism near the close other than oil pulling back a tad. I will chalk this move up as a robo rally and nothing more.
I thought we would end the days at the lows because it was a Friday, and I figured traders wouldn't want to be stuck in positions over the weekend due to fears of what might happen in the Gulf region.
One thing is for sure at this point: Volatility is back! I expect more of the same moving forward as the market worries about the ending of QE and oil prices.
The way I see it: Stocks are doused in gasoline, and all it will take is one spark to turn this thing into a towering inferno.
What could trigger the blaze?
Let me count the ways:
$140 oil.
Saudi Arabian revolution(Keep a close eye on the scheduled March 11th protests).
PIIGS default/Euro debt collapse.
European interest rate hike(which was hinted at this week by the ECB).
Sharp sell off in the US dollar(look at the chart of the dollar folks, it's ugly).
Sharp rise in interest rates on treasuries.
Buyer beware:
If any one or a combination of these things strike we are in deep trouble.
The Bottom Line
The jobs number of +193K was decent but it's not enough to allow us to grow out of our problems. We need at least +200k new jobs a month in order to start lowering the unemployment rate to any large degree. Given our devestating job losses since 2008 the number needs to be even higher than this for now so I think the market was a tad disappointed at the number.
Remember, we have about 100,000 people entering the job market every month so you need to peel this number off when you look at the jobs number when it coems to putting people back to work.
Stay focused on oil for now, and let's all pray that the Middle East settles down before things get out of hand.
The Fed's QE will be the next crisis. Worries about the ending of QE are already hitting the market after today's tough talk from the Fed:
"Federal Reserve policy makers are signaling they favor an abrupt end to $600 billion in Treasury purchases in June, jettisoning their prior strategy of gradually pulling back on intervention in bond markets.
“I don’t see a lot of gain to reverting to a tapering approach,” Atlanta Fed President Dennis Lockhart told reporters yesterday. “I don’t think that is necessary,” Philadelphia Fed President Charles Plosser said last month."
Bottom Line Continued:
Translation? Umm...Things are really getting out of hand and we better settle down before oil hits $200 a barrel.
I have said it over and over again: Bernanke has painted himself into a seriously bad corner. I think the global chaos is forcing the Fed to rethink things. The problem is if Ben ends QE than interest rates are going to soar. This in turn will then KO the housing market and the banking system.
Nice choice for the Fed eh? $200 oil and raging inflation or a deflationary spiral/banking collapse with double digit interest rates on treasuries.
Being Fed Chairmen at this point just has to plain stink. It didn't have to be this way if we had taken our medicine in 2008. Talk about a no win situation.
Thursday, March 3, 2011
Bill Gross Walks Away
Sorry for the silence. It's been a busy week!
I have thought a lot about how the markets trades these days. The new Wall St is now dominated by billion dollar backed trading robots that buy or sell stocks in milliseconds when any news hits the wires.
At this point around 70% of the trades on Wall St are done by these amazing machines. I can't help but wonder how intimidating this must be for the average investor.
Cash on the sidelines remains high and I can see why. Everyone has to be asking themselves the same question at this point when it comes to investing in today's markets:
HOW CAN I COMPETE AGAINST THESE HIGH SPEED TERMINATORS????
The answer: You can't. If you are trading the markets I suggest you that you use one of these bots or read an investment newsletter that has one.
These machines all look for similiar trends, and if you are caught on the other side of their trades you risk being taken out to the woodshed and shot. I see more and more individual names that are being shot dead or pumped alive by these algos for no apparent reason. Be careful if you are stock picking and be aware that what you own could become a target.
The police love to say "speed kills". I believe the same saying can now be used when it comes to investing on Wall St. The problem with these machines is it's turned the markets into a casino. Investors are being rewarded on the long side for being the flavor of the day instead of P/E ratios. Just look at stocks like Netflix and Salesforce.com. I haven't seen such idiocy since the tech bubble.
There problem the market now has is there is no fundamental method to the algos madness. Like predators, they scan the markets everyday looking for the next kill long or short. They are in and out of their trades in seconds which means the fundamentals are irrelevant.
The next question we must ask ourselves moving forward is can a market run efficiently without fundamentals?
The answer is of course not, and over time it's going to hurt the markets because I think you are going to see more and more "investors" walk away from the game as long as the robot insanity is allowed to continue.
I mean think about it: When the fundementals no longer matter how can you logically remain in stocks if you invest based on fundamentals?
A "fish" at the poker table eventually learns this after repeatedly getting his teeth caved in day after day. I can't help but think that many investors will eventually come to the same realization.
Case in point:
Bill Gross. The world's most famous bond investor basically announced this week that he is walking away from treasuries because he thinks the government is now a Ponzi scheme.
Here is his conclusion in his most recent letter to his investors:
"Investors should view June 30th, 2011 not as political historians view November 11th, 1918 (Armistice Day – a day of reconciliation and healing) but more like June 6th, 1944 (D-Day – a day fraught with hope for victory, but fueled with immediate uncertainty and fear as to what would happen in the short term). Bond yields and stock prices are resting on an artificial foundation of QE II credit that may or may not lead to a successful private market handoff and stability in currency and financial markets. 15% gratuities may lie ahead, but more than likely there is a negative two-bit or even eight-bit tip lying on the investment table. Like I did 45 years ago, PIMCO’s not sticking around to see the waitress’s reaction"
Take Continued
He is putting his money where his mouth is. His largest fund(PTTRX) has dropped it's treasury holdings down to 12%. I have seen PTTRX hold quadruple this in the past.
Can you blame him? How can anyone after looking at the chart above conclude that this is sustainable?
The Bottom Line
How much more "gamesmenship" will it take before we all pull a "Bill Gross" and walk away from the game?
Let's all just face it: The market now trades on day to day news. You could actually say it now trades second to second at this point!! If bad news from the Middle East hits the wires then stocks plummet. If we get a decent jobs report like today's claims number then the market soars.
It's gotten totally ridiculous!
Watching today's stock market reminds me of watching a young boy that has ADD. The stock market and it's zero attention span spends each day bouncing around like a pinball as the robots react to the various news items of the day.
It's time to give the market a gigantic dose of "Ritalin" in order to slow this train down before it runs itself right off the tracks. This could easily be done by simply increasing the costs of each transaction.
Don't hold your breath waiting for this to happen. The gamblers are all addicted, and the Fed is fueling their "animal spirits" by dumping billions of QE dollars into the markets via helicopters.
I have thought a lot about how the markets trades these days. The new Wall St is now dominated by billion dollar backed trading robots that buy or sell stocks in milliseconds when any news hits the wires.
At this point around 70% of the trades on Wall St are done by these amazing machines. I can't help but wonder how intimidating this must be for the average investor.
Cash on the sidelines remains high and I can see why. Everyone has to be asking themselves the same question at this point when it comes to investing in today's markets:
HOW CAN I COMPETE AGAINST THESE HIGH SPEED TERMINATORS????
The answer: You can't. If you are trading the markets I suggest you that you use one of these bots or read an investment newsletter that has one.
These machines all look for similiar trends, and if you are caught on the other side of their trades you risk being taken out to the woodshed and shot. I see more and more individual names that are being shot dead or pumped alive by these algos for no apparent reason. Be careful if you are stock picking and be aware that what you own could become a target.
The police love to say "speed kills". I believe the same saying can now be used when it comes to investing on Wall St. The problem with these machines is it's turned the markets into a casino. Investors are being rewarded on the long side for being the flavor of the day instead of P/E ratios. Just look at stocks like Netflix and Salesforce.com. I haven't seen such idiocy since the tech bubble.
There problem the market now has is there is no fundamental method to the algos madness. Like predators, they scan the markets everyday looking for the next kill long or short. They are in and out of their trades in seconds which means the fundamentals are irrelevant.
The next question we must ask ourselves moving forward is can a market run efficiently without fundamentals?
The answer is of course not, and over time it's going to hurt the markets because I think you are going to see more and more "investors" walk away from the game as long as the robot insanity is allowed to continue.
I mean think about it: When the fundementals no longer matter how can you logically remain in stocks if you invest based on fundamentals?
A "fish" at the poker table eventually learns this after repeatedly getting his teeth caved in day after day. I can't help but think that many investors will eventually come to the same realization.
Case in point:
Bill Gross. The world's most famous bond investor basically announced this week that he is walking away from treasuries because he thinks the government is now a Ponzi scheme.
Here is his conclusion in his most recent letter to his investors:
"Investors should view June 30th, 2011 not as political historians view November 11th, 1918 (Armistice Day – a day of reconciliation and healing) but more like June 6th, 1944 (D-Day – a day fraught with hope for victory, but fueled with immediate uncertainty and fear as to what would happen in the short term). Bond yields and stock prices are resting on an artificial foundation of QE II credit that may or may not lead to a successful private market handoff and stability in currency and financial markets. 15% gratuities may lie ahead, but more than likely there is a negative two-bit or even eight-bit tip lying on the investment table. Like I did 45 years ago, PIMCO’s not sticking around to see the waitress’s reaction"
Take Continued
He is putting his money where his mouth is. His largest fund(PTTRX) has dropped it's treasury holdings down to 12%. I have seen PTTRX hold quadruple this in the past.
Can you blame him? How can anyone after looking at the chart above conclude that this is sustainable?
The Bottom Line
How much more "gamesmenship" will it take before we all pull a "Bill Gross" and walk away from the game?
Let's all just face it: The market now trades on day to day news. You could actually say it now trades second to second at this point!! If bad news from the Middle East hits the wires then stocks plummet. If we get a decent jobs report like today's claims number then the market soars.
It's gotten totally ridiculous!
Watching today's stock market reminds me of watching a young boy that has ADD. The stock market and it's zero attention span spends each day bouncing around like a pinball as the robots react to the various news items of the day.
It's time to give the market a gigantic dose of "Ritalin" in order to slow this train down before it runs itself right off the tracks. This could easily be done by simply increasing the costs of each transaction.
Don't hold your breath waiting for this to happen. The gamblers are all addicted, and the Fed is fueling their "animal spirits" by dumping billions of QE dollars into the markets via helicopters.
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