Sunday Evening Post

Good Evening Capitalists,

The S&P 500 broke to a new high to start the week and managed to build on those gains to close out the week. It was an important development that helped eliminate our most bearish wave count, though the preferred count suggests a major peak approaching. First and second levels of resistance for the week ahead are 1247 and 1261. Those were derived through Wave -5- targets (see attached document).

Bulls have clearly enjoyed a good end to the year; however, given the importance of the wave pattern being completed, it's more necessary than ever to adhere to some disciplined "stop losses" for length. 1219 looks to be an important support level. A break below 1219 will force me to initiate new short positions in the S&P 500.

Good Luck to everyone in the week ahead.
~~~~~~~~~~~~~

In case you haven't seen the Metrodome footage yet, take a gander. This is what happens when man attempts to build bubbles in the middle of winter:



Market Discussion 12 Dec 10



Randomness Clip:

Just because CV allows this space/time to me to do what I will, I'll go ahead and occasionally post things that were of interest to me. I know Chet's a "fitness person," so he might find this fellow intesting.

The gentleman's name is Art DeVany. He's an interesting character who wrote the book on Hollywood Economics. Using statistical analysis, he's developed a diet and exercise model--his book, The New Evolution Diet, was just published this month.

Check out this 73 year old freak.

228 comments:

«Oldest   ‹Older   1 – 200 of 228   Newer›   Newest»
cv said...

Just to fill out the card (for today)...

I'll go with the EAGLES for (1 unit)...

wunsacon said...

N. Y. E. T. -- NYET! NYET! NYET!

Bastard on the sideline with the knee...

wunsacon said...

http://en.wikipedia.org/wiki/Arthur_De_Vany

Essayist Nassim Nicholas Taleb writes of De Vany's book:

"If you want an applied exposition of the "wild" type of uncertainty, this is the book. I know of no better text to understand kurtosis, the contribution of the very small to the very large, and the dynamics of rare events."[4]

Anonymous said...

I look forward to CV's views on Art De Vany and the paleo diet etc. Btw CV, any particular reasons that you don't write in on Fitness etc given you expertise in that area? Please do.

Prashant

CV said...

@prashant

In principle... I agree with a lot of what De Vany says...

But one has to take time to be specific in understanding the things he's actually saying...

For example... His points on regulating insulin levels was key... He proposed a way to do that (his diet and food choices)...

There are other ways as well (such as the times of day you actually eat, the time of day you actually work out, the type of energy metabolizes during workout or regular activity, the portion "sizes" of what you eat, and so forth)...

IOW - It's not as simple as "OK, you need to go on the CAVEMAN diet to look like me"... (which - to be fair - I don't think he was saying - But that's how these things are generally interpreted by the ignorant public)... I know - I'm the one who has face to face conversations with them, and watch as their eyes glaze over...

People want the DANCING WITH THE STARS version of things...

I also liked what he said about stressing Type IIa,b,c muscle fibers (which some may not have caught, but it was his "reference" when he was explaining jogging)... Muscles get innervated on an "all or nothing" principle... Meaning - until the stress loads reach a certain level (usually over 85% of a 1RM "one rep max"), certain bundles remain inactive...

Over time, these muscles will catabolize (because they're not stressed)... And these are things that lead to changes in body composition (because body composition is simply a "ratio"... Therefore, if you lose muscle mass, but maintain the same overall weight, you're basically fatter...

The average human will lose about 200 grams of lean muscle fibre per year after the age of 25 if heavy weight training is not done... And these crappy P90 videos and other crap (videos & dvd's) that companies sell you to do at home don't cut it - they're basically a waste of time...To be fair - most are good enough to help a person who is de-trained, gain back a pound or 3 of lean mass, but in a best case scenario, it drops you off there...

I could go on and on...

The last point that I'm going to make is with regards to "psychology"... it takes incredible mental & physical discipline to eat and have time to do the things that DeVany does...

Fortunately, for him, he's made a profitable business out of it... I would see the same phenomenon when I trained various Hollywood types for a role... It's INCREDIBLE what changes you can make to a persons body just following basically what DeVany was saying...

But the thing is... Those Hollywood types are getting paid millions of dollars for what amounts to basically 6-8 weeks of sacrifice...

You usually don't see John or Jane Doe, coming home from a hard day at the salt mine, and having to trolley kids all over town to soccer practice have the time for such things...

Further - their kids would probably run away from home if you fed them celery sticks and nuts all day...

So I'm talking "reality" here... The BEST SUCCESS, in practice, that I've learned is in discovering what types of sacrifices people are willing to make, what substitutions might be handy, then go from there...

Anonymous said...

"...Using the motion picture industry's film budget and box office data provided by third-party information services such as Rentrak and Variety magazine, De Vany found that the historical relationship between a motion picture's cost and revenue converge to a group of stable distributions he describes as the Paretian distribution. Simply stated, the relationship between a motion picture's cost and revenue was wildly unpredictable compared to other investments. This insight has profound impact on financial analysis of motion pictures as an investment, because large parts of modern financial theory, including modern portfolio theory and the capital asset pricing model, have as a basic assumption that returns are normally distributed. This cannot be assumed for motion pictures..."
http://en.wikipedia.org/wiki/Arthur_De_Vany

I wonder how many more years it will be before the NYT does its 'expose`' on "Modern Portfolio Theory" ?

AAIP

Bruce in Tennessee said...

http://www.cnbc.com/id/40637467

10-Year Yield Jumps; Futures Imply 2012 Rate Hike

...Ah, yes. Dieting. I too have been on the hickory nut and celery diet for the last 20 years. No pina coladas. No bread puddings with rum sauce. My mitochondria refuse to even speak with my DNA any longer...ah, but for a ham and cheese sandwich....

CV said...

@Prashant

A summary of what I was saying could be described this way...

From a "psychological" standpoint... EVERYONE is basically a liberal... Their minds "noodle" over concepts like...

- perfect body composition
- world peace
- no environmental damage
- assistance & safety nets
- hope & change

Every once in awhile, all these "emo" things well up and you end up voting an Obama (or Jimmy Carter) into office...

But even these liberal hypocrites don't have the IF to do anything meaningful...

First... Show me someone who can...

- Turn off a light
- Turn down the heat
- Put down their cellphone for 10 minutes
- plant a seed
- ride their bike to work

or a number of other things...

I can almost guarantee you that people who can't do any of the above, aren't about to embark on a caveman diet...

CV said...

Once again... it's all "theory" to them...

They ought to go work for THE BERNANK...

alex said...

Every once in awhile, all these "emo" things well up and you end up voting an Obama (or Jimmy Carter) into office...

funny- and probably true

call me ahab said...

post above = ahab

(damn kids)

JA said...

A trip down memory lane:

http://finance.yahoo.com/tech-ticker/article/51235/You-Cant-Go-Wrong:-Stocks-Still-Cheap,-James-Altucher-Says

Jennifer said...

The DeVany link was interesting. I'm very carbohydrate aware -- I had gestational diabetes with my first pregnancy. First, I failed the 1 hour test (disgusting glucose drink followed by blood test.) Then, after the doctor told me that hardly anyone who fails the first test fails the second, longer, more disgusting test, I failed that too. So, off to the endocrinologist/dietician I went. The endocrinologist says follow this diet for 10 days, come back for more tests...hardly anyone fails this test. Guess what...I flunked that one too...soo...off to he hospital for a two day stint on insulin injection training. What fun! After living the diabetic life for 3 months, my temporary condition resolved after my baby was born (at 9 lbs 1 ounce...gee, that diet plus insulin combo did a fantastic job regulating my blood sugar levels, huh?) So...

Jennifer said...

In the long cold winter that I spend housebound with nursing infant, I pondered this whole situation. It had seemed to me that the more insulin they gave me, the more food I needed, and the whole thing was totally ridiculous, plus now I had all this extra weight I needed to lose. By the time I was preggers again a 12 months later, I had read all the Atkins/Carbohydrate Addict/sugar busters etc books I could get my hands on, and was pretty sure that the dietician my endocrinologist worked with had to be the worlds' worst. Since I had a history, I skipped all the nasty glucose drinks and went straight back to endocrinology. The doctor was absolutely convinced that I would be on insulin again. I had to go for fasting and post-breakfast blood work every week -- extra fun since he was downtown and I was now out in the burbs, and I'm dragging the 1 year old with me each week. Every week, the blood sugar was at the high end of normal. It was like he wanted me to fail. "Next week you'll be on insulin for sure." Well, I just kept counting the darn carbs and keeping the blood sugar down and he was getting more and more pissed off...so I stopped going and everything was fine. I mean, I can check my own blood sugar at home 5 times a day, what did I need this guy for? Anyway, my larger point is that I don't think diet is one size fits all. We aren't machines and we don't all work the same way. I dont know why I seem to have this genetic pre-disposition, but I'm thin, as reasonably active as someone whose job description could be chauffeur of 3 busy kids and be, and I'm conscious of the fact that diabetes runs in my family. I wound up running the gestational diabetes support group at my local hospital during my 3rd pregnancy.

Jennifer said...

And, as an aside, you get a lot of strange looks when you are in the ladies room at a nice restaurant, and after washing your hands, you pull out a syringe, load it up, and start to inject yourself. Reason enough to do anything possible to avoid insulin -- everyone thinks you're doing drugs -- even better when you're obviously 7 months pregnant.

Jennifer said...

I was totally positioned for a Chinese rate hike. This sucks.

Bruce in Tennessee said...

Well, there is good and bad to where I live now. I got up this morning, and the snow was up to my knees leaving the Ponderosa to get to the salt mine. Since I was the only one who had been on the road this morning, the bumper kept shoveling the high snow up onto the windshield and the wipers, once they were unfrozen, couldn't keep the white out clean. But didn't see any accidents on the way in.

...I suspect it will be a very light day here in the salt mine.....

Anonymous said...

Something bearish this way comes:

http://www.bloomberg.com/news/2010-12-12/recession-lasting-until-2018-worth-exploring-commentary-by-william-pesek.html

China will have to hike soon....

Anonymous said...

Jennifer,

this: "...Anyway, my larger point is that I don't think diet is one size fits all..."

is huge, and, really, True.

also, if you'd like to read more about Nutrition/Diet..see:

http://www.orthomolecular.org/
&
http://www.westonaprice.org/

I find both of those sites to worthwhile..

AAIP

karen said...

I'm glad to see someone else is wondering about this discrepancy:

Minyanville

Interest rates, copper prices, and crude oil is suggestive of stronger economic strength than is currently envisioned. http://bit.ly/goU3RH

morning all !

Anonymous said...

oil and copper prices weren't really very bullish signs for the economy in 2008, of course, people will still wonder, but they never are

were high oil prices in the 70's a sign of economic health? How about low oil prices in the 90's?

A fixed income analyst to be named later said...

Relief is probably on the way for oil prices. We know there is a lot of storage, now they are talking about pumping more:

http://www.bloomberg.com/news/2010-12-13/opec-cheating-most-since-2004-as-options-signal-oil-hitting-100-next-year.html

One more day of selling for Treasuries tomorrow, when we get the PPI, and then we will see some stabilization in the bond markets.

Anonymous said...

$gaso is already proving a drag on the economy for all but the ├╝ber-rich. China is really getting concerned about their domestic inflation. High prices are about to cut into demand.

Bruce in Tennessee said...

A fixed income analyst to be named later said...


...Look, Leftback, be careful here. In Engloan, even the rulers are so dumb they drive into riots. I imagine we are about to see some doozies of heating bills for December too...

karen said...

JJC big jump today.. rolling my eyes.. my 91 octane was 3.30 at costco yesterday..

karen said...

if you could time agq right, you could make a killing point wise..

A fixed income analyst to be named later said...

Undoubtedly. But that's all been priced in at this point, Brucie. The whole commodity complex is highly leveraged and susceptible to a sharp reversal, with China policy being the trigger.

Did you catch my SELL call on Treasuries a month ago or so? I exited on the way up, left some money on the table, but avoided carnage.

I didn't expect to see such a dramatic shift, but was not surprised to see a move up in yields. Leveraged players (HFs) had entered the Tsy market during the QE2 run-up and then exited, along with the banks who moved out into riskier assets such as HY and MBS. Most of the move is complete now. You have to figure that people look at a 3.5% 10y and see value - that is starting to look good to the banks at least. The yield on the 5y is now higher than it is on SPY.

TIP and HYG should start to show signs of life very soon, TLT will take a little bit longer to attract buyers.

ben22 said...

Karen,

how do you get away with putting 91 in the Porsche? No 93?

A fixed income analyst to be named later said...

I sound like ben22 here;

Remember that we are in an age of deleveraging, and the deflationary forces remain extremely strong. Don't confuse asset prices with demand for goods and services, it's like taking your temperature by putting the thermometer in your cup of coffee.

My best guess is BB looked down the road, saw a massive European debt crisis in the New Year, not to mention further weakness in US housing and banking, and decided to print and devalue Bucky as much as possible to prime the pump with some producer price inflation before another round of deleveraging hits. Think of it as a pre-emptive strike of reflation before the deflationary forces arise again.

It may be a couple of months before people get this.....

karen said...

125 tagged on SPY.. if that holds.. it is a clear breakout going back to 2008.. similarly 115 needs to be cleared on hold on the DIA..

this is, imo, wild and unthinkable, but after seeing all the new cars on the road yesterday.. I will have to trade my zombie bear outfit for the FULL BULL one.

karen said...

Ben, we don't have 93 anywhere that i can find..

A fixed income analyst to be named later said...

I am just watching commodities here. Stocks are a sideshow, especially at this end of the year. Will probably celebrate SPX 1250 by cleaning out a few more small chunks of index positions today.

PPI tomorrow might be a shocker after these months of rising commodities and energy, if it is hot, yields will rise further and stocks may fall on inflation fears. If it is cold, we might see money move out of stocks into Treasuries. Repeat the following day for CPI. My guess, PPI hot, CPI cool.

ben22 said...

couldn't have said it better myself.

we'll all likely be talking about QE3 before the end of 2011.

we aren't even close to monetizing all the debt, and remember, even if they monetize all of it, it will result in zero net "inflation" as there will not be any new money in the system, so highly unlikely to have the effect Bernanke desires.

These charts here help show how we mask it in the meantime, and why people get fooled b/c it takes a looong time for it all to play out:

http://macromon.files.wordpress.com/2010/12/fedgovcreditborrowing1.jpg

http://macromon.files.wordpress.com/2010/12/creditmarketgrowth.jpg

And no, the new lines on the charts don't represent the actions of "our heros", they represent the panicked actions of those that were the primary enablers in driving us right into this.....calling them heros is nothing more than after the fact rationalization. Simply put, it's ignorant to the extreme, though I think we all understand why money managers are so fond of saying this.

karen said...

I could opt to find a station with some 100 and mix but I'm not a race car driver.. Once in a while I put my car in sport mode, but seriously, i do not want a ticket!!

karen said...

isn't TBT screaming inflation? or, at least whimpering?

karen said...

Bank Of America To Sell $1B In Toxic Paper -Report
7:28 AM ET 12/13/10 | Dow Jones

Bank of America Corp. (BAC) is putting at least $1 billion of past due home loans on the block, The New York Post reported Monday citing people with knowledge of the matter. The block of mortgage assets includes loans and mortage-servicing rights. Bids are due by the end of December, the people said, noting that the loans have already been written off, so the sale isn't expected to affect the share price. Bank of America declined to comment.

Full story at http://www.nypost.com/p/news/business/bank_of_america_to_sell_in_toxic_FYFnXNncpp9NNjQSaBa9uM

ben22 said...

I think I'll spend my entire life wondering how the masses confused a ponzi scheme for inflation and then somehow credited the "improving economy" for it.

as has been illustrated many times, the economy, in the united states, has been getting WEAKER now for about 40 years....

karen said...

Yikes, Bruce!! BreakingNews, Weather havoc on I-40 west of Nashville shuts down road after accident, traffic is back up for about two miles -
http://bit.ly/fNnUmn

call me ahab said...

the economy, in the united states, has been getting WEAKER now for about 40 years....

no doubt

A fixed income analyst to be named later said...

Riding this reflationary wave has been quite profitable but the easy money has been made. Things are about to get a lot tougher as we head into the teeth of the winter.

Holidays is all being paid for on "debit" and cash/store cards, a lot less cc use this year, and if that's the case, there isn't going to be a lot of "liquidity" from Jane Q Public around in Jan and Feb to keep retail booming. Expect some empty malls.

Anonymous said...

http://finviz.com/quote.ashx?t=LULU

nice chart, looks 'sustainable'..

AAIP

P/E 51.65

Bruce in Tennessee said...

Karen,

Yes, it really, really snowed overnight here.

I will try to take more pictures of the Ponderosa this afternoon, but it is supposed to be 7 degrees tonight...so I may have to move sprightly...!

An salt truck turned over on the very same I-40 late last night..

ben22 said...

If you think we can even have inflation as a result of Bernanke's great experiment, which he has told you will happen (even though it didnt' the first time) I'd just glance at all these charts in order to visualize what he's up against:

http://www.chrismartenson.com/blog/crisis-explained-one-chart-debt-gdp/11570

http://www.ritholtz.com/blog/wp-content/uploads/2010/12/revolve-and-nonrevolve.png

http://macromon.files.wordpress.com/2010/12/fedgovcreditborrowing1.jpg

http://macromon.files.wordpress.com/2010/12/creditmarketgrowth.jpg

karen said...

ben.. i personally shouldn't be using the word "inflation." I should just say higher stock prices.. because that is what i am talking about.. higher prices in commodities, gold, and equities.. spx 1590 on the P&F.. maybe BB thinks that'll trickle down to real estate or a least allow people/entities to service their debt.

karen said...

$vix, sub 17 now.. still needs to take out this year's low of 15.23.. should be easy in this total conviction environment.

karen said...

ben, that revolving/non revolving chart was something else!!

and from the chris martenson link:

Bond Market Rebels
For enrolled members only. Enroll now to gain full access to all Martenson Insiders.
Friday, December 10, 2010, 10:35 am, by cmartenson
The news is full of stories about how the bond market seems to be defying the Fed. While it is not yet clear what the drivers of the recent sell-off in bonds truly are, the action bears watching.

As I mentioned previously, there are both innocent and sinister explanations for why bonds might be selling off. The innocent explanation involves a return to economic health that is being discounted in the bond market. The idea here is that a return to economic health will include both the cessation of Fed bond buying activity (QE II) and higher interest rates. Under this scenario, which is supported by recent economic data, one does not want to be holding bonds, which will only lose value over time. Best to beat the rush and sell them now.

The sinister explanation involves the idea that the Fed is losing control of the market and is not as powerful as some might have thought. This is the angle that the WSJ is playing up today:

ben22 said...

Karen,

If the Fed read their own data they could never ever conclude that an S&P at new all-time highs would help enough people service their debt.

The top 20% own 93% of the market, the top 1% own roughly 42% of the markets, the top 5% about 70% of the markets.

I would argue though, that if the S&P does go that high, then the perception will be everywhere that debts aren't a problem....and nobody will care about whether or not they can service their liabilities.

but.... I'm not aware of the exact same bubble repeating itself like that in less than 5 years throughout any of our recorded market history.

Bruce in Tennessee said...

I will tell you another anecdote of east Tennessee. We went out Thursday to my favorite Italian cafe. Once again, excellent meal. But I usually talk with the older woman who owns it with her sister. They had to cut payroll by 5% the preceeding two weeks and were struggling about whether to repair a very old compressor on a freezer or buy a new one. There really wasn't money for either choice.

Interesting that the international companies are seemingly doing well, but a very good restaurant like this, one location, in business a very long time, continues to struggle.

karen said...

based on the price of LULU, they must be factoring in a BRIC expansion. (well, Russia, not so much : )

karen said...

the dollar pulled a fast one thanks to china, i guess. so today is either buying op or last dumping ground.

ben22 said...

some people that hold safe bonds hold them BECAUSE they don't think the Fed has any power against credit deflation.

alright, gotta go for the day,

gtla

karen said...

a little MSM for y'all..

http://finance.yahoo.com/news/Stocks-rise-bonds-fall-ahead-apf-3594708458.html?x=0

karen said...

where's CV ? i want him here when goog takes out 600 again.

Bruce in Tennessee said...

http://finance.yahoo.com/tech-ticker/fund-manager-john-hussman-warns-this-is-an-awful-time-to-invest-535709.html?tickers=%5Edji,%5Egspc,%5Eixic,qqqq,spy,dia

Fund Manager John Hussman Warns This Is An Awful Time To Invest

...Ah, the Hussman. Morningstar still has him at 5 stars....

karen said...

gld:uup broke its H&S pattern..

A fixed income analyst to be named later said...

Martenson knows nothing about bonds, he is another reflationary shill, and we are seeing the same kind of Death of Treasuries calls now that we were hearing last January. That usually signals a top in yields is close.

The bond sell-off was purely and simply two things:

1) Reversal of a HF-driven mini-bubble that was blown pre-QE2
2) Seasonal weakness, we have had bond sell-offs in many Decembers.

What do you want to be holding when the EUR crisis resumes? GGBs, pets.com or Treasuries?

Starting to like, but not buy, long end Treasuries, IG corporates. Already buying HY corporates and TIPS. At 35% fixed income here (HYG plus TIP) and planning to get out to as far as 70% if yields rise far enough.

A fixed income analyst to be named later said...

Hussman is right. Play defense. EVERYONE knows the market is going up, and we are seeing signs of bear capitulation.

A 10-12% downward spike seems like a not unlikely scenario, with DXY and JPY being safe havens, along with USTs and JGBs. I would be a buyer of equities on a strong correction, as soon as DXY and JPY strength have exhausted themselves.

CV said...

I just got in...

I'm gone for most of the mornings (on Mondays) these days...

Teaching a "pool" class...

I'm not surprised you can't find 93...

That's basically one of the "tradeoffs" for low emission standards...

It's those "eco friendly" Californian's... You know... the ones that divert water from the Colorado River & Sierra's thousands of miles across the desert so they can run their HD TV's and Malibu lighting for their 10,000 sq. foot homes in Hollywood Hills, and hace little patches of green grass at their homes in Palm Springs...

Real eco nuts... I'm so glad we have them!

CV said...

But they'll be glad to tell YOU what you're doing wrong...

A fixed income analyst to be named later said...

The thing is, and Hussman knows this, people tend to throw capital into the markets at the start of quarters, and Q1 is the biggest one. Once that money is deployed (it will go into stocks obviously b/c of "the inflation" and the "Ben Bernank"), Blankfiend reverses the switch and the machine is set to "suck", with GS short equities and long Treasuries.

After a few weeks, JOHN E begins the year with a nice -10% on his P/L, and then the HFs and IBs come in and bottom feed at the bargain prices, while advisors lure JOHN E into muni bonds again to avoid "the volatility"....

AmenRa said...

Bears USED to be a cold weather team.

China will hike when they feel like it. Probably a spur of the moment type of move.

Gold retaking 1400. If silver breaks 30 again expect Blythe to psychically project herself into the market.

Fed must have begged the PD's to buy USTs after POMO. Can't have 10&30 at 4&5.

A fixed income analyst to be named later said...

Can't have 10&30 at 4&5.

Yes, please. That would be a great big neon buy sign, and quite nasty for equities. Actually I think you can plug in 3.5&4.5 this time. ZIRP/QE and all that... if we follow the Japanese pattern, then the yield highs and lows will actually be progressively lower. Which will absolutely slaughter another group of bond bears if it happens.

Mish actually thinks this will happen, and there are others in this camp, including Gary Shilling, Rosie and some of the Soc Gen bears. Reserving judgment here until we see the size of everyone's bazookas...

Think about it, every time the 30y mortgage exceeds 5%, Harry and Harriet Homeowner are going to experience another drop in the price of their overpriced, overleveraged castle. Unless bond yields turn around in the New Year, the Spring home sales season is already DOA.

China is sending all kinds of messages that it is not happy. All they have to do is sell some gold and buy some Ts, and the leveraged dollar bear commodity specs are toast.

karen said...

the 30 year yield is hardly looking week here.. that is still a very bullish chart.

(LOL! Richard Branson has requested to follow my tweets! it must be something automatic.. he seems to have the same number of followers as followees..)

Anonymous said...

Something excellent from Barry's blog today, especially about the assets being created out of thin air, and trading things in circles not preventing a Depression...

rootless Says:
December 13th, 2010 at 11:21 am
@cognos:

Debt = Savings. They balance.

This is wrong and misleading. It wrongly suggests that the debt in the system is based on savings, on wealth that has been created before and then lent out.

Debt = Assets. Most of the credit is created out of thin air by the banks. And so are the assets of the banks at the same time of debt creation. Of course, they balance. It’s an accounting identity. And with the debt, which can’t be serviced, going bad the assets go bad too. But this would be even true, if debt was based on real savings. It’s still is a loss for the creditor, if the debtor can’t pay it back.

We can easily force a “great depression” if we want the price level of everything to go lower (commodities / housing still down 30% from 2008). But why?

Why is it down so much from 2008? Because real estate property was overpriced relative to income and rent? Because it wasn’t real wealth, it was fictitious wealth created just by increasing the book value of houses, what is never sustainable over the longer-term? You got it upside-down. The price of real estate wasn’t “forced” down by anyone. It has adjusted to reality and the adjustment process is still ongoing.

Like it is with the stock market, currently. Fictitious wealth based on overpriced assets, detached from the real value of the companies, or the cash flow an investor can expect to get from an investment in the assets over the longer term. It’s a matter of time that the adjustment will happen here too.

You seem to belong to those people who have succumbed to the delusion that the wealth of a society can be created just by trading things in circles and writing a higher number on the price tag during each transaction. But this won’t prevent any “Great Depression”.

karen said...

US CIRCUIT COURT REPORTEDLY RULES OBAMA HEALTH CARE LAW IS UNCONSTITUTIONAL

Richard Branson said...

You are hot, Karen. Have you ever flown me?

Matthew said...

I am beginning to look to overwrite some positions at these levels of equity (fully mindful that a bullshit rally could come on passage of tax legislation). I overwrote a position I have in a very liquid oil E&P co this morning and will look to overwrite/liquidate other position as we step higher.

I think that the easy money has been made in this queasing trade and now you start to look for income until a sell-off triggers the risk-on ignition again.

I raised position sizes in a couple of my favorite dividend payers last week. In fixed incomes, IGs are looking like a buy here, but I feel like gambling and seeing if rates creep higher first (usually a recipe that leaves me missing the move)

Bruce in Tennessee said...

Hey Lefty...

who is buying bonds today? is it Ben?

karen said...

charles hugh smith:

http://www.businessinsider.com/8-ingredients-ingredients-the-new-punchbowl-2010-12

karen said...

This Could Be A Big Deal
By Jamie Coleman || December 13, 2010 at 17:05 GMT
A key provision of the US health care overhaul engineered by President Obama has been ruled unconstitutional by a US district court judge.
The law required that individuals be compelled to purchase health insurance or face fines.
The entire law has not been invalidated, just this key provision…It will no doubt be appealed and will eventually work its way to the Supreme Court.
The ruling could slow the implementation of the law and perhaps slow the growth of the federal deficit…
US yields are falling further, down to 3.27% at the moment.

Matthew said...

"The ruling could slow the implementation of the law and perhaps slow the growth of the federal deficit…"

Pfft. I'm not sure how overruling that part is going to do anything for the budget. The main part that will cost the feds money, if I understand it correctly, is subsidy for low income people needing health insurance. This just makes it so young people of middle income, who don't get subsidies, aren't forced to purchase the insurance.

AmenRa said...

Karen

The law required that individuals be compelled to purchase health insurance or face fines.

Damn right that's unconstitutional. "Compelled to purchase"? That sounds like the McCarthy era were friends and family were compelled to tell on each other.

A fixed income analyst to be named later said...

Matthew,

I am staying in dividend stocks, have trimmed all equity index ETFs down to almost nothing, agree that IG and TIPS are looking more compelling here, have been adding in HY.

Not quite ready for IG and TLT, want to see the PPI number first. Actually have a few modest short positions in equities.

The ruling doesn't surprise me - stipulating that you have to buy health insurance always seemed unconstitutional, and punishing the weakest.

Banks are buying bonds. China maybe? Japan? It's yield.

Anonymous said...

I think it's safe to say there was a squeeze in silver. I have the burn marks to prove it.

karen said...

this is not news to anyone here: http://247wallst.com/2010/12/13/homeowner-equity-improves-a-mirage/

CV said...

@anon

"Like it is with the stock market, currently. Fictitious wealth based on overpriced assets, detached from the real value of the companies, or the cash flow an investor can expect to get from an investment in the assets over the longer term. It’s a matter of time that the adjustment will happen here too"

---

and so... too... will go the fame and fortune of TWSWB...

The guy who basically thought that the Housing Bubble was something perpetrated by "thieves" and the GWB was "the devil"...

But now... magically that Obama has come into office, and let it happen that the banks get unlimited ways to speculate...

And with that new round of speculation, he (TWSWB) happens to be able to take a cut... And who cares about those silly MAIN STREET people...

Well... now it all seems OK...

CV said...

@karen

Homeowner "equity" means NOTHING until a home is sold and the proceeds are monetized...

Until then, it's just something dangling out there to entice someone to go into deeper debt...

And as for "monetization"... Monetization means nothing in the face of fiat currencies...

I'd rather own lumber, cement, and food... Get 'em while you still can...

CV said...

@Amen (12:14)

Of course, when "Sharia Law" gains foothold in the USSA, the Muslims will be exempted...

Insurance, to them, is considered a form of gambling, and is forbidden in Sharia Law...

Anonymous said...

"McCarthy-Era?"

like: "...Washington, DC—There were the infamous Gestapo, Stazi and Red Guard. They all sought and maintained civilian armies of snitches to help their rogue governments maintain absolute power. These government thugs wanted any information they could use against the victims they selectively targeted.

Today we have the Department of Homeland Security that is quickly stepping into this role in the United States. They are massively expanding their authority, reach and budget to smash dissent, and any resistance to government repression and violation of our Civil Rights.

If you have not noticed, our government has suspended the Fourth Amendment in the name of anti-terrorism. If you haven’t noticed, It’s our own government that has become the terrorist.

Now Homeland Security is beginning a massive recruitment drive to get people to snitch on their neighbors. When this happens they suggest they want information about crime or terrorism but this always degenerates into what these criminal regimes really want, a hideous form of Thought Police. What they truly want is information about Americans resisting the Police State..."
http://www.crimefilenews.com/2010/12/homeland-security-recruiting.html

AAIP

CV said...

@AAIP

It sure "feels" like that...

pretty soon they'll be telling me what football teams to root for, and which "Dancing with the Stars" couples to vote for...

CV said...

Pretty soon... CV might to have to start "telling" everyone what they can blog about, and what type of "tone" they must apply to their arguments...

Oh no wait... That's not me... Sorry, I'm getting mixed up...

Anonymous said...

this: "...WE SELL SILVER Gift "Certificates", available here AT FACE here at Gillies. Always usable here, AND at many other stores NATIONWIDE.
Available in $50, $20, $10 or $5 denominations. (they often sell on ebay for far over face)

They NEVER expire, more impressive than paper/plastic cards, have back up value of the silver content and you never have to worry about one store going out of business.

IF you own a business ask Dave Gillie how to join the list of selling and accepting Merchants for these Liberty Dollar, Universal, Value Backed, Gift Certiificates..."
http://gilliesconeyisland.com/

is becoming more popular..

monetizing Copper @ U$D 1 for an Eisenhowe-sized Coin..

AAIP

CV,

if 'they''re smart, they'll, just, be happy that the NFL & DWTS is on your "Things to do:"-List..

karen said...

Talk About Leverage! (My fav subject!!)
By Jamie Coleman || December 13, 2010 at 18:03 GMT

Remember all those lectures from central banks on over-leveraged banking institutions?
Turns out the ECB is levered more than even the riskiest hedge fund.
It has only EUR 5.8 bln in capital and is apparently seeking to double that amount, according to a Reuters headline.
Any capital hike would be phased in over time.
The ECB’s balance sheet is EUR 1.924 trillion.
Since they pretty much create money out of the clear blue sky, you don’t spend much time thinking about how thinly capitalized central banks are. Considering they are buying ever-longer dated securities, perhaps its time we give it some thought….
With a EUR 72 bln bond book, the ECB must be getting a bit concerned it could be whipped out if the poop hits the fan again…
I wonder how much capital the Fed has?
UPDATE: The Fed has $56.8 bln, according to Wikipedia…

CV said...

@AAIP

The NFL will do a "lockout" on March 4th, 2011 when the collective bargaining agreement expires...

Let's see how popular Washington becomes without the bread and circuses next fall...

CV said...

@AAIP (1:05)

Nickles bitchez! :-)

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call me ahab said...

A key provision of the US health care overhaul engineered by President Obama has been ruled unconstitutional . .. The law required that individuals be compelled to purchase health insurance or face fines.


Karen- that's beautiful-

everyone should have an issue when a government tells you- you "have" to do something-

same reaction should occur when there is advocating for compulsory voting- that it should be a law-

those that think they know best-

and want to make others do the same (like the 55 mph speed limits- only thing that did was make everyone criminals)

Anonymous said...

TIP up 0.56% today.

At least one knife has stopped falling.

karen said...

that euro leap was something else.. no way it reverses its downtrend in less it recaptures 134 on the FXE..

karen said...

New Video: Global Equities Continue to Rally on Mutual Fund Monday http://mrtopstep.com/?p=1621

AmenRa said...

ahab

Wasn't the 55mph brought about because of the gas shortage? They assumed it was a way to save on gas. But since cars get somewhat better mileage shouldn't the speed limit adjust accordingly?

call me ahab said...

Ra-

exactly- government at its finest-

the double nickel speed limits turned everyone into lawbreakers-

no-one was driving 55- (thus the popularity of CB's)

karen said...

http://www.businessinsider.com/consumer-discretionary-vs-consumer-staples-2010-12

CV said...

@Amen (1:27)

Ostensibly... correct (because of energy crisis in 70's)...

These days... CV is beginning to become convince that they just toss these things out willy-nilly to see just how much "control" they can have without people taking to torches & pitchforks...

A sort of "lets see what the cat licks up" approach... Ironically - it seems that they are succeeding rather well...

People seem to LIKE to be told what to do, and what they're not allowed to say...

F A I R said...

We should just do a flat tax and be done with this mess! Freak'n tax laws cost this country billions.

karen said...

yup, the xly is something to behold.. nearly back to 2007 levels.. well, over 2005 and 2006 shop till you drop on free money and home equity levels..

CV said...

@ahab (1:32)

I'm guessing Sammy Hagar didn't get the memo...

http://www.youtube.com/watch?v=RvV3nn_de2k

karen said...

http://www.businessinsider.com/the-brookings-institution-theres-way-more-deleveraging-to-come-2010-12#-1

call me ahab said...

Ra/CV-

and of course the "safety" issue (55 being a lower and therefore "safer" speed)

safety is a word the government keeps trotting out over and over and uses to deprive people of almost anything-

thus homeland security, patriot act, health laws, seat belt laws, helmet laws, gun laws, etc, etc, etc

its a cause that has a never ending capacity- a cause that can never be fulfilled- because there are always more laws that can be trotted to make you even "safer"

A fixed income analyst to be named later said...

that euro leap was something else..

Almost certainly a squeeze of EURUSD shorts who got it wrong on China, for the time being.

More deleveraging? Oh yes.

karen said...

http://247wallst.com/2010/12/13/junk-bond-funds-losing-face-on-treasury-yields-hio-mhy-phk-hyg-jnk/

call me ahab said...

Revis to copywrite "Revis Island"-

http://www.cnbc.com/id/40607075

CV said...

@ahab

"safety"... don't make me barf...

I'm guessing we'd have never made it to the moon in 1969 if we'd been concerned about safety...

Now... it's just leverage to justify a lawsuit...

Because, dog knows, there aren't enough lawyers and bankers in the world...

CV said...

@ahab

Looks like "Revis Island" is well fortified...

http://abclocal.go.com/wabc/story?section=news/sports/pro/football&id=7840560

The VIDEO is out too... I'm sure it'll be the WINNER of C'MON MAN! tonight...

karen said...

ritholtz, Goldman Sachs Upgrade on Apple should not mean much to smart investors. http://screenr.com/hmq

A fixed income analyst to be named later said...

Relax, bond investors, if this presentation is true, we are close to the edge of the envelope again for yields, as we turn Japanese:

http://www.businessinsider.com/is-the-us-experiencing-deflation-2010-12

call me ahab said...

how about this one- registered by Terrel Owens-

“I Love Me Some Me,”

wow- that's catchy

karen said...

CV, Barry mentions catfood in the above talk..

This was very fun: http://www.ritholtz.com/blog/2010/12/brain-oddities-irrelevant-spelling/

Oh, CV.. I was in a Salvatore Ferragamo outlet store last Friday.. took a foto of a tiiapa heel! need to download it for you..

karen said...

tilapia.. but you know what i meant : )

A fixed income analyst to be named later said...

Really strong move by TIP today, up by 0.7%, as segments of the fixed income market show they are not dead yet.

The 5y has moved from a 2.05% this morning, to a 1.88% at 2pm !!

Wonder what the bond guys know that everyone else doesn't? I mean, we all know about the POMO.

call me ahab said...

and Alosi says (Jets conditioning coach)- regarding tripping (on purpose)Miami cornerback Nolan Carroll-

"I made a mistake that showed a total lapse in judgment . . .My conduct was inexcusable and unsportsmanlike and does not reflect what this organization stands for."

too funny

CV said...

@karen

I'm sure BR reads CV (which is where he gets the "catfood" - although his has a dollop of Grey Poupon on the side)...

He's just waiting for the right moment to "flip-flop"... You know... Because it's more important to MAKE MONEY than BE RIGHT or DO THE RIGHT THING...

karen said...

WeeklyTA, the J-Hook pattern in the $SPY 1-min: http://i539.photobucket.com/albums/ff358/WeeklyTA/spy111.png

CV said...

TWSWB's "hero" is THE BERNANK...

Who says (in his best Col. Nathan Jessup)

---

"You want overbought? You can't handle overbought!

Son, we live in a world with
support levels that must be guarded.

Who's gonna do it? You?

I have more responsibility
than you can possibly fathom.

You weep for short-sellers
and curse The Fed.

You don't know what I know.
The Middle Class's death, while tragic, saved lives.

And my existence,
while grotesque to you, saves lives!

But deep down, in places
you don't like to talk about at parties, -

- you want me on that printing press, you need me on that printing press.

We use words like
"rate cuts", "quantitative easing", "permanent open market operations".

We use these words as the backbone of our existence.
You use them as a punchline!

I haven't the time nor inclination
to explain myself -

- to a man who needs my protection -

- but questions the way in which i provide it.
I'd rather you just thank me.

either that, or pick up some cotton and green ink and start printing!

Either way, I don't give a damn
what you think you are entitled to!"

ht - chopper

karen said...

this day went surprisingly fast for going nowhere..

CV said...

@karen

Let me know when the "get the hook" pattern emerges...

CV said...

@karen

"Nowhere Fast"!... That was one of CV's "competition routine" songs back in the day...

Won a silver in mixed pairs at nationals...

http://www.youtube.com/watch?v=osgGzghUOmY&feature=related

Anonymous said...

Nice shoes.

karen said...

zerohedge, Easter Egg Out Of The BIS: US Banks Are On The Hook To The PIIGS By Over $350 Billion
http://is.gd/iGEsT

Giles Straightarrow said...

"Lord, shall I pull the switch and collect the effluent of the masses?"

"Not yet, Giles. There are seventeen cents of mutual fund money still on the sidelines...."

"Of course, Lord. The Squid is patient. The Squid never sleeps."

"Exactly. Now finish my pedicure..."

A fixed income analyst to be named later said...

I think the clavadista de fixed income is almost at an end. LQD, AGG and TIP all extremely strong today, after multiple whippings.

Perhaps the PPI isn't going to be hot after all....

karen said...

darn CV.. i wanted to see a video of YOUR performance..

karen said...

http://ftalphaville.ft.com/blog/2010/12/10/434051/another-milestone-for-junk-debt/

karen said...

AGG is three peaks and a domed house.. i wouldn't on your theory LB @ 2:26.. at least just yet.

CV said...

@karen

I'm not sure even if I have that performance recorded anymore...

It was the national OPEN in Minneapolis ('91)... We'd previously "missed" by doing a routine to this song...

http://www.youtube.com/watch?v=lU_YSrQxLLY

Which, frankly, CV liked better...

Judges are W-E-I-R-D

karen said...

from my article above: The period of low interest rates has helped struggling companies (or the private equity funds that own them) buy time by making it easier for them to refinance. That’s better than if companies were mostly using cheap debt to simply juice returns. It’s also true that default rates have remained extremely low.

But either way it can’t last forever, and with signs that it’s no longer cheap, buyers of this debt should obviously be worried about what happens when rates go up.

As well as, of course, watching out for the debt of “zombie” companies for whom the day of reckoning has merely been postponed.

karen said...

yes, CV.. i like that one better too.. tho i like "Dance to the Music" best of all..

http://www.youtube.com/watch?v=DkP5roFukKY

karen said...

thankfully ben isn't around to see this one.. only because he doesn't care for this guy.. i told him i just like the pictures:

http://www.businessinsider.com/remember-those-big-bond-sales-that-everyone-thought-marked-the-top-of-the-bubble-2010-12

Fuckme Muchly said...

nice outfits

A fixed income analyst to be named later said...

Yeah, it was the Goldman 50y and the Mexican 100y that tipped me off, and the Zimbabwe 250y Mugabe Bonds.

Anonymous said...

this cat is sharp..

"...Right now the stock is U$11.72 up 37.9% from the original call (and made a new 52 week high today), though because The IKN Weekly didn't take its position until after the report on November 7th, our own position is 28.9% up. But no matter, because according to our target price (which you can see in the report below) there's still plenty more in the tank. So if you're interested in what your humble scribe thinks MFN can still do for you (even though the best prices have gone, there's plenty upside left to our 12 month target) you can read, free gratis and for nothing, the IKN Weekly fundamental report published on November 7th that subscribers read at the time by clicking here and downloading it.


DYODD, dude..."
http://incakolanews.blogspot.com/2010/12/ikn-is-long-minefinders-mfn-mflto-read.html

AAIP

CV said...

"“zombie” companies for whom the day of reckoning has merely been postponed."

---

That's pretty much the point... All ANY of this is doing is kicking the can down the road...

There's going to be no resolution of anything until the last of the debt has been written off...

Any "hiccup" in the process, will expose all these companies that are simply re-financing debt while the can is being kicked...

Sho me a company with CASH (and no debt), plus a marginally positive cash flow, even in the face of consumer belt tightening, and I'll tell you who the real survivors are going to be...

Can you name one?

karen said...

aapl??

CV said...

@karen

GOOG

MUST... HOLD... SIX... HUNDRED...

-lol

karen said...

HYG bounce may be over.. about to take out 20 ema again..

CV said...

@karen

I frankly think that aapl won't make it in the end...

Well... they WILL... But the competition will catch up...

During the next downturn, people will opt for the 'cheaper' substitutes... It didn't hit aapl so much during the last one because they were still towards the beginning of an innovative device cycle...

I-Phone like devices are a dime a dozen... I-Pads will be soon...

They'd better get to the drawing board... QUICK!

karen said...

of these 3 charts: TBT, $TYX, and GLD.. GLD looks the weakest and that actually makes sense in light of the other two..

but heaven forbid this market ever make sense..

CV said...

AAPL is no different than the way SONY had the world by the balls back in the 80's...

karen said...

whatever! zerohedge, Only 177 Times More Insider Selling Than Buying In Last Week http://is.gd/iGLsP

karen said...

CV.. an interesting and perhaps apt comparison.. Android is gonna hurt the iphone.. i hate my iphone to tell you the truth.. it is heavy, bulky, hardly ever works with AT&T.. not to mention that dopey landscape mode.. I'm not an effing gamer!! (tho, someone once wrongly accused me of being a player! lol)

CV said...

During '08... Sony (SNE) basically hit it's 1987 stock price...

Anonymous said...

sort of fits with:

"...It is precisely because of all this massive and expensive preparation that the note by the Chairman, whose main points are summarized above, may well reflect what is finally decided and announced here in a couple of days' time. The Chairman is not simply guessing: this Note reflects what the Secretariat now confidently expects to get away with.
However, following the Copenhagen disaster, our grim future New Masters are taking no chances. They persuaded their friends in the mainstream news media, who cannot now easily back out of their original declarations of blind faith in the Church of "Global Warming" and are as anxious not to lose face as the Secretariat is, to put it about that at Cancun this year and even at Durban next year very little of substance will occur..."
http://rense.com/general92/repp.htm

ibid.

CV said...

@karen

Agreed... Android is going to put a "mega-hurt" in iPhone... IMO

What's really worse is that once you lose that base, you've started on a path to lose generations...

IPhone is on it's 4th generation... These companies count on "upgrade" cycles to make profits (between new product launches)...

After a person has bought the same device (with only a few upgrades) 3-4 times, they start saying "WTF"?...

I used to change computers about every year back in the 90's... Right now, it's about once every 3-4 years...

You "make do"... Unless you're Ritholtz...

karen said...

wallstwes, We have big meteor shower this week called Geminid, best seen in NYC between midnight and 6 am tonight & the lunar eclipse next Monday

CV said...

@AAIP

As far as I'm concerned... They can take all the rich tourists out the pyramids...

AND SEAL THEM THE F*** IN!

CV said...

out "to" the pyramids

A fixed income analyst to be named later said...

Effing Euro looks like it is running into resistance. The strength in that beast makes no sense whatever.

TYX might make it up to 4.50%, if we have a hot PPI. Bonds are not going to go into outer space or Timmeh will get a call from Beijing that will make his kidney stone seem like a delightful experience.

karen said...

i'm watching Richard Epstein for some sanity into the close..

CV said...

Dow green... SPX green... NAZ red...

GOOG under $600

Steve Jobs said...

The problem with the I-Phone is AT&T....

karen said...

http://brucekrasting.blogspot.com/2010/12/odds-and-ends.html

"The market sees the deflationary forces mixed with the inflationary signs and trades it to a draw. The market is shooting bonds because it is afraid and confused about the distortions that QE is causing. "

Excellent commentary, imo.

A fixed income analyst to be named later said...

RUT struggling today (we are short) even with all the little miners in that index up big today. Bet the small retailers are bleeding...

karen said...

another one of interest:

http://brucekrasting.blogspot.com/2010/12/cbo-recommendation-to-munis-default.html

CV said...

BTW...

Before I forget to say it...

If Brett Favre STARTS tonight (just to keep the streak alive), but then they pull him after one series...

Then that's TOTALLY BOGUS!

A fixed income analyst to be named later said...

The bond sell-off is mainly the unwind of a leveraged hedge fund orgy in Treasuries that preceded the QE2 announcement. Not a lot more going on.

A fixed income analyst to be named later said...

Munis default? That's as likely as Greece restructuring, surely?
Surely more bailouts in Bailout Nation?

Anonymous said...

cv-

I hear ya, though, sounds like another way to drive a Wedge between the bureacrats/water carriers (job 'incentive' bonuses) and the TaxSerfs that support their 'Station'..

AAIP

Random Weblog Speeling Officer said...

"bureaucrats"

karen said...

AlephBlog

Get out of Muni Bond Funds Now http://bit.ly/g80qqJ "best guess is that two states go down — IL & CA — & lots of Democratic city machines."

A fixed income analyst to be named later said...

EURUSD under 1,34

JPY strong all day. Keep an eye on that as Asia's safety trade.

India is just refusing to bid up its overpriced markets.
Food inflation is really biting hard in India, worse than China.
You know in Asia, when one goes all the EMs go down together.

CV said...

@Amen

RA... As a "personal favor" to CV...

Can you please include this video in "the corner" tonight... (honor of CV's RAVENS vs. Andy T's TEXANS)... Monday Night Football...

http://www.youtube.com/watch?v=xw9R4Dk3fPw

A fixed income analyst to be named later said...

Munis have a long way to fall. Not a knife that we are in any way interested in catching. The lowest reward/risk ratio in the entire fixed income universe.

Anonymous said...

speaking of 'munis', anyone see this?

http://globaleconomicanalysis.blogspot.com/2010/12/detroit-mayor-plans-to-halt-garbage.html

AAIP

A fixed income analyst to be named later said...

This is one ugly chart:

http://finance.yahoo.com/echarts?s=MUB+Interactive#chart3:symbol=mub;range=1y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Anonymous said...

or, seen anything on this?

"...The troubles that have hit Australia's banking system in recent weeks reflect the deepening crisis in the global banking system, especially the eurozone, which prompted Lyndon LaRouche to warn on 8th December that the banks may not make it to Christmas.


The National Australia Bank's so-called "technical glitches", which threw Australia's financial payments system into disarray, coincided with revelations that NAB, along with Westpac, joined the rush of panicked banks in 2008 that borrowed desperately-needed emergency funds from the U.S. Federal Reserve.


It also coincided with the shockwaves in European bond markets set off by the Irish crisis—Australia's banks were estimated back in May to have a $56 billion exposure to the eurozone, and NAB was until recently directly involved in two Irish banks and also had a sizeable exposure to the steadily collapsing Italian government bonds. (To top it off, NAB's exposure to the toxic derivatives bubble skyrocketed in the last year to $3.476 trillion, up $457 billion in just the last year!—by far the most exposure of any Australian bank.)
London's 8th December Financial Times foreshadowed that the eurozone bond markets face a pre-Christmas explosion: "Eurozone bond markets face a testing run-up to Christmas amid fears the regional crisis could blow up again because of thin trading volumes that may send borrowing costs of the most vulnerable countries to new highs. Bankers say December is traditionally a time when most dealing rooms close their trading books and sit on the sidelines as they wait for the new year before strategically investing money in the financial markets. But the extreme nervousness surrounding the eurozone has prompted warnings that markets could see a vicious downward spiral as small sell transactions trigger dramatic falls in thin trading."..."
http://abundanthope.net/pages/True_US_History_108/Banking-system-may-not-make-it-to-Christmas.shtml

ibid.

CV said...

@AAIP

Maybe as a "thank you" for hosting the Giants-Vikings game...

...the Detroit mayor can send all the garbage to Minneapolis to help hold that roof up...

CV said...

BTW...

Does anyone remember? The PONTIAC SILVERDOME (home of Lions and site of the 1982 Superbowl)...

Was "sold" in 2008 for $450,000...

(that's right... that's only 4 zeros there)

karen said...

there goes hyg.. 88 will be here quickly..

Anonymous said...

re:

http://finance.yahoo.com/echarts?s=MUB+Interactive#chart3:symbol=mub;range=1y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

can you imagine all the "_________" that were herded into that Trap, with the soothing: "Safe as Helicopters"-assurances..

http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Huxley+Safe+as+Helicopters

AAIP

karen said...

tomorrow will be something else:

8:30 AM Core PPI
8:30 AM Retail Sales
8:30 AM Retail Sales ex-auto
10:00 AM Business Inventories
2:15 PM FOMC Rate Decision

A fixed income analyst to be named later said...

Aussie banks probably have a nightmare cocktail of exposure to the following:

1) Aussie housing bubble
2) Chinese commercial RE bubble
3) Over-leveraged Aussie mining companies
4) Asian EM bonds and currencies

Add a 5% stronger dollar and a China slowdown and this lot is going up in smoke, it's not a big country and without an emergency intervention this will be toast. Long CAD Short AUD is a great pairs trade if you don't want to use the USD directly.

Abby Joseph Cohen said...

My prediction for 2011 is SPX 1750

Anonymous said...

cv-

re: Silverdome, was it .45 MM or .25 MM?

also, who was the buyer, would you know?

AAIP

karen said...

someone is letting the air out of the nflx balloon..

Jennifer said...

Karen -- yes! I take a couple of days off to go play Santa and NFLX swan dives without me!

karen said...

HousingWire

Dallas Fed: 37% of restructured residential loans are delinquent http://goo.gl/fb/ARgZa

CV said...

@AAIP

.45MM (to my knowledge)

The buyers were a group of Canadians (I believe) who wanted to play soccer matches and do other things like conventions...

I'm going on "memory" here, I just remember the story...

karen said...

i'm rooting for the bond gods..

karen said...

GovMo is either gonna finish red or with its second black candle in a row..

karen said...

that TBT chart is looking STRONGER every day.. JBTFD : )

CV said...

@karen

8:30 AM Core PPI - (how much it costs to make catfood)
8:30 AM Retail Sales - the change back from catfood you buy using discount store coupons plus the "cash for clunkers" deal you got to lug the stuff home to your basement
8:30 AM Retail Sales ex-auto - same - without the clunker factor
10:00 AM Business Inventories - how much catfood is sitting in warehouses
2:15 PM FOMC Rate Decision the advance warning that your catfood will triple in cost by next year

Anonymous said...

cv-

found this:

The Detroit News reports that the long-shuttered Pontiac Silverdome has been sold for a mere $583,000 as the home for a soccer league. However, with a cost over $55 million to construct:

"This was a giveaway," said David J. Leitch, a broker with an Auburn Hills based realty firm.

"The property alone, at $10,000 an acre, should have gone for more than that. And you have the Silverdome, its contents, and the infrastructure already in place. I had estimated it would probably go for between $1.2 million and $3 million. I can't believe it."

Such sentiments weren't uncommon Monday, after city officials unsealed bids showing the property that was home to the Detroit Lions was sold at auction to an unnamed Canadian company that plans to bring a soccer league to the stadium. The company's name will be released when the sale is finalized within 45 days, said Fred Leeb, the city's emergency financial manager. Leeb acknowledged the sale "is not a windfall," but said the Silverdome's $1.5 million upkeep drained the beleaguered city's finances.
http://www.absolutemichigan.com/dig/michigan/pontiac-silverdome-sold/

"unnamed" Co., niice..

AAIP

CV said...

@AAIP

Well it seems if they'd held out, they could just have piled up all the trash inside the dump & killed two birds with one stone...

CV said...

12 minutes to go...

I wonder if we close RED today... lol

karen said...

http://www.pimco.com/Pages/AssetAllocationDoesMacroMatterDecember2010.aspx

"In the current environment, it is more important than ever to “get macro right.” Our analysis also speaks to the importance of being tactical in asset allocation and anticipating market migrations."

A fixed income analyst to be named later said...

i'm rooting for the bond gods..

You called???

We just dumped another block of EEM. Smaller this time, our last block. Still holding 2% portfolio in SPY in case we are wrong.

Does anyone else think we just saw a top? Low volume, small caps lagging, sentiment universally bullish......

JBTFD said...

JBTFD

A fixed income analyst to be named later said...

Our analysis also speaks to the importance of being tactical in asset allocation and anticipating market migrations."

PIMCO Total Return is simply too big for them to effectively shift asset allocation quickly enough to anticipate market migrations, without causing the bloody things.

Anonymous said...

"...(AP:CHICAGO) In Illinois, a pharmacist closes his business because of late Medicaid payments. In Arizona, a young father's liver transplant is canceled because Medicaid suddenly won't pay for it. In California, dentists pull teeth that could be saved because Medicaid doesn't pay for root canals.

Across the country, state lawmakers have taken harsh actions to try to rein in the budget-busting costs of the health care program that serves 58 million poor and disabled Americans. Some states have cut payments to doctors, paid bills late and trimmed benefits such as insulin pumps, obesity surgery and hospice care.

Lawmakers are bracing for more work when they reconvene in January. Some states face multibillion-dollar deficits. Federal stimulus money for Medicaid is soon to evaporate. And Medicaid enrollment has never been higher because of job losses.

In the view of some lawmakers, Medicaid has become a monster, and it's eating the budget. In Illinois, Medicaid sucks up more money than elementary, secondary and higher education combined.

"Medicaid is such a large, complicated part of our budget problem, that to get our hands around it is very difficult. It's that big. It's that bad," said Illinois Sen. Dale Righter, a Republican and co-chairman of a bipartisan panel to reform Medicaid in Illinois, where nearly 30 percent of total spending goes to the program.

Medicaid costs are shared by the federal and state governments. It's not just the poor and disabled who benefit. Wealthier people do, too, such as when middle-class families with elderly parents in nursing homes are relieved of financial pressure after Medicaid starts picking up the bills.

Contrary to stereotype, it's the elderly and disabled who cost nearly 70 cents of every Medicaid dollar, not the single mother and her children..."
http://news.ino.com/headlines/?newsid=689753866500

'backdoor'"Austerity" coming Stateside?

AAIP

A fixed income analyst to be named later said...

http://www.newyorkfed.org/markets/tot_operation_schedule.html

Today and Wednesday are POMOs in 5-7y. B/Ds are back to trading around the operations of Mr Brian Sack. So, yes, JBTFD.

PPI will be fascinating. Especially if it is massaged so much as to be completely unbelievable. I mean, think of the increases in input costs since October.... if they make a +0.3% out of that it would be...

WTF.

Leftback said...

NAZ red on Momo Monday? Treasuries catching a bid?

Things that make you go... hmmm....

Anonymous said...

YOUKU sold off??!? YGBFKM!

f.i. analyst,

I hear ya on the AUD, waay Risk.

and, yes, these equity 'Markets' do not look 'constructive'..

and, Puts are cheap..for those so inclined

AAIP

karen said...

i gotta tell you all something.. very few, almost none, of the pricey designer goods are selling on ebay.. i've been doing a lot of searching..

and an example.. the dress I have offered for $100 after lowering the price twice.. is also listed at $680 and $775.. yes, the same dress. if any sell, it will be mine..

i was searching those alexander mcqueen sild skull scarves for my sister-in-law.. saks has one for $260.. 113 of them on ebay.. bids on only a few.. you might get one for 20-50 dollars..

CV said...

@karen

Looks like you'll be enjoying catfood by candle light pretty soon...

California Plans Charging Network for 1 Million Electric Cars

http://www.bloomberg.com/news/2010-12-13/california-plans-charging-network-for-1-million-electric-powered-vehicles.html

karen said...

LB.. rolling my eyes.. not even!

CV said...

@karen

I don't see how anyone could verify that things weren't a "knock off" thru an e-Bay purchase...

Matthew said...

"PIMCO Total Return is simply too big for them to effectively shift asset allocation"

Yeah, and the industry even invented a term to describe such shifts to make it seem like they are more nimble than logic implies.

Instead of tactical asset allocation, the dinosaur sized funds call their strategies GDAA (global dynamic asset allocation), which is a euphemism for "We're to big and slow to do tactical asset allocation, but we do change things up a bit here and there."

A fixed income analyst to be named later said...

17% long equities, 22% long HY bonds, 13% long TIP.
17% short equities/metals, 30% cash,
No IG, no Treasuries.

Hard to see bonds having a good day tomorrow with PPI on tap.
Unless someone decides to crash the market.

Probably will start to accumulate bonds again this week.
AGG and LQD are beginning to beckon. TLT, not yet.

CV said...

I gotta go folks... check in later...

Go Ravens! (though I won't be laying the points)... Ravens "might" be in a TRAP situation here...

I'm also ROOTING for the Vikings (over the Giants)... Not that I like the Vikings or anything... Just that a result like that would play well for a few "scanarios" CV has going...

CV said...

scenarios

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