2s30s Spread (weekly info)WEEKLY REVERSAL new high 3.91
trend=no
direction=up (1 bar)
rev= 3.64; mid= 3.78
Thought taking a look at this spread was needed since it has been gaining attention. The weekly chart upper shadows seem to indicate fear of 4.00. The 14.6% retrace at 3.84 appears to be the line in the sand (for now). There seems to be a break of the first trend line so support comes in at the next trend line (3.70). Probably needs a solid break of SMA(21) before that happens.
AAPL (weekly info)new high 348.48
trend=up
high= 348.48
rev= 320.61; mid= 334.55
Fear after the announcement about Jobs' health followed by the JBTFD crowd and then followed by an earnings beat. Can it continue to push higher. Probably (think about the Verizon subs coming soon). Will the next iPad crush the other tablet competitors? Again probably. Does any of this matter in the grand scheme of things? No.
And just for kicks…
163 comments:
http://www.bloomberg.com/news/2011-01-18/brown-burdens-mayors-businesses-by-unloading-california-deficit-on-cities.html
Brown Burdens Mayors, Businesses by Unloading California Deficit on Cities
...MSM has figured it out too...look for more of this, probably coming from local governments in California...
http://www.zerohedge.com/article/forget-food-riots-africa-simon-black-says-canary-inflationary-coal-mine-southeast-asia
I just can't wait for the new iphone:
http://comedy.video.yahoo.com/?l=3774749&v=8708734
ben22
How could she not see that huge fountain?
Good morning all! Feeling somewhat better about having parted ways with MOS...I guess that 88 print after hours didn't stick overnight. Great...I can buy the dip.
As we approach SPX 1300 I find myself reflecting upon the last time we were here...my trading was so much better then! I can distinctly remember heaving a sleeping child off of my laugh to race upstairs and get a short trade placed -- I was so confident that 1300 could not possibly hold. Now...who knows. Corey at Afraid to Trade made a compelling argument that if 1300 doesn't repel then 1450 could be in the cards. Sigh. Can theta burn keep you warm in the winter?
laugh there was supposed to be lap...fingers had a mind of their own.
so . . .our man CV nowhere to be found?
b22- that fountain post is funny- reminds me of a time I was walking out of a store at Skyline Mall and walked into a plate glass window thinking it was the exit-
gotta keep your wits about you at all times to avoid those embarrassing moments . . .
I can remember a time when my college roommate (she was one of the 12 juniors selected early to Phi Beta Kappa) felt that she had aced an on campus interview with some management consultant company. She stood up, shook hands with the interviewers, turned around, and walked straight into the partition wall next to the doorway, with such force that she knocked the wall down. Oops.
Ra, Ahab,
glad you enjoyed, that video had me cracking up this morning. Only thing I've done close to that is walked through a screen door at night. Wish I could have seen ahab walk into the plate glass on video, had to have been funny.
re: 1450
I don't really agree with the sentiment that the next target is 150 S&P points away, but I do 1,300 will get broken. I could blah blah as to why, but lets just see how it plays out, people seem to be getting way too far ahead of themselves on the equity side as they aren't watching fixed income.
jennifer-
so I guess the interviewer crossed "grace" off his notes?
No -- she got the job anyway. I think they kindly chalked it up to nervous enthusiasm. It was a good gig too, I think they paid for her to go back and get an MBA later.
http://www.forexlive.com/160526/all/dxy-breaks-down-objective-76-30
Both from Seeking Alpha... Good reads though...
S&P 500 Is Expensive Using Normalized Earnings
Stocks Appear Attractive Over Next 6-12 Months
I think they paid for her to go back and get an MBA later
and finishing school?
hey b22- what of the thought of the S&P and Nasdaq climbing to their previous all time highs with no interruptions- "the new stock market"-
maybe unemployment and no jobs are irrelevant? Maybe they never were relevent . . .
morning! just checked aapl and gs.. thanks, AR..
i still can't buy the dip : (
what is wrong with me !!
and all this talk of China being our banker- not sure if we need them more than they need us-
let's assume China stops buying notes/bonds- so the the primary dealers won't step in and ensure a successful auction?
isn't that's the game
Dang. Even though futures are down ES is only $2 below fair value. Not down enough IMO so the JBTFD crowd is gearing up.
http://www.forexlive.com/160538/all/oil-euro-correlation-coming-back-into-vogue
It looks to me as if since the turn of the year the correlation between crude oil prices and the euro has strengthened.
The present environment is reminding me more and more of the spring and summer of 2008 when commodities exploded and the dollar traded to record lows.
The 2008 move proved to be a bubble, pricked by the global banking crisis that consumed Lehman Brothers. Perhaps Europe sovereign debt will be the catalyst this time, but that issue has been pushed to the back-burner, for the time being…
@Anon,
color me a skeptic on Chris Ciovacco's models which had him pounding the table hard right through most of 2008 that "all signs" point to inflation, just before the biggest deflationary collapse since the depression. Seems to be a big trend/momentum guy, which isn't all bad, I just find that a lot of people that build models based on fundamental analysis aren't really doing much more than trend extrapolation of the most recent events. Thanks for the read.
Ahab,
you know what I told myself this year, no more of that shit where I try to say the S&P is going all the way to new highs or not, trying to look out years in advance, I'm just trying to take it one day at a time. Times are strange, people are even stranger. I don't think technically or fundamentally there is anything that implies that should happen but it doesn't matter what I think. I liked this 1,300+ target, now we'll see what starts to develop from there, but I'm not ready to start saying 1450's.
ahab
The Fed owns more USTs than China. That spread will continue to increase as long as POMO is around.
Ra @ 9:17- I wouldn't call anything we've seen in the last four months a dip-
more like a pause
b22- fair enough- I was perusing TK last night- trying to get some other views- there are those that see this a new bull . . .whatever-
someone brought up using Htrade- what is that?
http://www.zerohedge.com/article/tom-demark-11-drop-market-imminent
Are things really going that well in the EU? As the EURUSD busts through 1.35 trying to indicate that all is well.
who in the heck is gonna believe the market will drop ?! LOL
any can anyone tell me the deal w/ priceline- what the hell is so magical about that company to drive its stock up as it has-
I don't get it
sorry, but no way that ibm candle is gonna stick..
gm and aig.. trading in tandem as always..
"ben22 said...
color me a skeptic on Chris Ciovacco's models..."
Agree
Personally, I rode some of the uptrend just after MAR09 but pulled the plug to early. 1st day of this year, I went 70% in, (20% bonds/10% money market) split between Big/Mid/Small Cap and Global. Until this trend ends (who really knows), I'll decrease the amount occasionally until I'm back to 100% money market funds/bond funds.
b22-
in my best BR- What Say Ye?
There Are No Pros in Financial Planning
ben22
PC ratio still in bears camp but decreasing rapidly. At what level of the PC ratio would indicate a squeeze is coming? Or is there a way to spot a squeeze using the PC raio?
ben, are you still loving the dollar? JBTFD : )
AR -- Mole at evil speculator has written a lot in the past on the PC ratio and when we get a squeeze -- I'll try to find it when I'm back from my preschool run.
"...one day at a time. Times are strange, people are even stranger. I don't think technically or fundamentally there is anything that implies that should happen..."
I think that's helpful/useful 'position', to be taking, in these 'Markets'...
AAIP
in 'whatever' news.. Greece Unable To Repay Debt In Full, Claims Lars Feld, Designated German Government Adviser http://is.gd/9R9T6p
the euro doesn't seem to care either way..
there it goes.. took awhile for the news to settle in..
New blog post: Euro sliding on Greek restructuring comments http://www.forexlive.com/160554/all/euro-sliding-on-greek-restructuring-comments
Business Insider
Two More Investors Come Out And Slam Meredith Whitney's "Outlandish And Outrageous" Predictions http://read.bi/eteLw8
who likes
http://finance.yahoo.com/q/op?s=EPD&m=2011-02
for some Buy/Writes fading, both, the 43 p & 43 c ?
ibid.
gotta hop, I'll try to catch up later~
AAIP
a quick read: http://www.zerohedge.com/article/guest-post-biggest-bank-robbery-history
The Fed has been literally stealing money from the savers of this country for the past two years with their zero interest rate policy and now quantitative easing strategy. But unlike a traditional bank robbery where the bank is the victim, this time the banks have been the recipient of the stolen money.
The plan was for that big fat spread to add up to big fat bank revenues (witness Citigroup 4Q net interest revenue of over $12 billion). But just like most bank robberies, the plan usually goes wrong and the robbers are caught by the cops. This time the cops are the bond market.
ibm isn't even on the most actives list of dow movers today..
Ra,
I don't know if we can use PC ratio like that because as we've discussed people could be putting options spreads on that are bullish or bearish but you can't tell just from PC ratio, you can tell just by glancing at the longer term p/c chart that it's not a super tight correlation with trend changes in markets I just think it's important though how low it should be considered/noted based on other technical factors in the market such as the excessive bullish sentiment, weakening breadth, etc, etc. It's a bull run until it isn't, but lots of things are starting to move over to the bearish side of the ledger.
Karen,
oh you know how it is, love the dollar when it's going up, hate it when it's getting rocked. I put some pretty tight stops on my positions and even still I'm not sure they'll be hit, but that chart has broken down a bunch so we'll see, this might be some opex magic going on, maybe it's more ominous.
Ahab,
from a wave perspective it's not a new bull market, that's the most definitive statement I can give you and that I'm 100% confident in, but I don't know when the rally stops though, but these are not impulsive wave patterns from the March 2009 lows.
As for that advisor article, as soon as we go down again I'd look for tons of those and more regulation on my end. that's the same debate That's been raging since I got into this business, you see less of it when markets are up. It's like any other job in the world though is it not? Some people are good, some aren't. Some operate and do what's best for customers, some don't. I know CFP's that are smart, I know some where I wonder how they get their pants on in the morning without instructions.
All I can control is what I'm doing for clients, they'll tell me whether or not they agree by doing more business with me, or moving their money to someone else.
Also, this idea that this job is glamorous, lol, only from the outside. I had people positioned correctly in 2008 and I was having anxiety attacks almost every day because of how fragile our system was, when the primary reserve broke the buck I think I didn't sleep for three days straight, I have a lot of sleepless nights because of this job, I work 12 hours total almost every day and now I'm spending my weekend studying for exams which I did by choice. Trying to gain an advantage in this industry is tough work. I don't know about you but I don't call this some red carpet party, I feel pressure every single day, this blog helps me release a little bit with some like minded peeps.
have you guys heard about the computer IBM built that can play jeopardy? That's pretty amazing stuff right there. There are videos on YouTube about it.
VXX up 3.3+% $vix up 1.07%
real quick,
"...I'm spending my weekend studying for exams which I did by choice..."
MackieFear,
you going ROP and/or B-D?
ibid.
DIA on 5 min chart.. volume sputtering out..
Anon,
9:35
you and me both, not sure how long you've been reading this blog or the old one's but I was really long at the lows and then I dumped everyting at SP 1k and have only traded small ball on the long side here and there ever since, talk about leaving a lot on the table, at this point 300 points roughly, a mountain worth, so I still caught more of the rally than I've missed, but it doesn't "feel" like that, not at this point.
ibid,
not sure exactly where it will lead me, just trying to get through the exams at this point, which will take at least 18 months.
Lots of job openings in India for wave analysts!
Random question for the group:
do any of you ride bikes? I mean as in pedal bikes, not motorcycles. I don't have one but I'm thinking about getting one this spring, want to get outside a lot more this year.
any thoughts on what kinds/types are good? I'd like to ride on trails mainly rather than the road but I haven't been into bikes since I was a kid making dirt piles to jump the bmx so I imagine bikes are a lot different now.
Any thoughts?
Ben, a real price performer is the cannondale caad9..
Bikes are so amazing now..
christopher whalen
Is the Treasury/Fed really making money on AIG? Is AIG on the way out of trouble? Or is this company window dressing solvency issues?
"color me a skeptic on Chris Ciovacco's models...
just before the biggest deflationary collapse since the depression..."
-Rough Figures-
Wheat (2000) - 250-300 [275]*mean
Wheat (2008) - 620-900 [760]
Wheat (2010) - 450-750 [600]
Sugar (2000) - 7-11 [9]*mean
Sugar (2008) - 10-14 [12]
Sugar (2010) - 15-33 [24]
Corn (2000) - 190-260 [225]*mean
Corn (2008) - 350-700 [525] ETHANOL
Corn (2010) - 370-600 [485]
Cocoa (2000) - 700-910 [805]*mean
Cocoa (2008) - 2000-3200 [2600]
Cocoa (2010) - 2600-3400 [3000]
Coffee (2000) - 70-120 [95]*mean
Coffee (2008) - 110-150 [130]
Coffee (2010) - 120-210 [165]
OJ (2000) - 70-90 [80]*mean
OJ (2008) - 90-130 [110]
OJ (2010) - 110-160 [135]
----------------
SPX (approx. median - just eyeballing it)
2000 - [1450]
2008 - [1200]
2010 - [1150]
------"REPORTED" CPI for DECADE------
http://www.inflationdata.com/Inflation/Inflation/DecadeInflation.asp
------
Color me broke (if I'm someone with stagnant wages and/or pensions or social security tied to the reported CPI).
Color me MORE broke if, instead of buying a warehouse full of food (in 2000), bought the S&P, held on for a decade while all this "deflation" occurred, and was cashing out today (my stocks), to go ahead and purchase that warehouse full of food.
So much for a pullback moving money into munis. Just watching for now.
TraderMark's take: http://www.fundmymutualfund.com/2011/01/tom-demark-stocks-near-significant-top.html
The bikes in our house have disney characters and streamers on them. Feeling much better about the premature MOS sale now. Ponytail looking good too.
all good and well anon, but the argument wasn't about buying stocks in 2000 versus buying commodities in 2000, he was recommending buying commodities, like oil, in the summer of 2008 (how do you underline summer of 2008) at the top in prices for many commodities, so far as I could tell from quick glance at past articles, ag stocks, oil etc.
In which case, you are still way underwater on most of the positions if that's when you bought.
and please, spare me one more debate on the CPI and inflation/deflation, two different conversations are always going on when this comes up. One person talks about prices, the other talks bout outstanding credit and the money supply, and sure, there was no deflationary collapse in 2008, twas all but a dream. As you clearly identify here commodities have been going up for a decade, a fact which I certainly don't deny. Of course, as I mentioned this morning lots of people love to do trend extrapolation so unless you have something more than "the CPI isn't accurate, people's costs have been rising" it's not very compelling argument as to why it will continue, nor does it tell anyone much about how long it'll take them to breakeven on those 2008 oil trades ;-)
Now if you have some charts or some other reasons why they'll keep going up beyond, the wizard is printing dollars, then I'm all ears.
"SPX (approx. median - just eyeballing it)
2000 - [1450]
2008 - [1200]
2010 - [1150]"
real SPX returns with dividends
2000-2010 (buy Jan 2000/ end Dec2010) = .31% so it doesn't so look so doom and gloom.
just saying...
b22 10:10-
no doubt- thought you might find article interesting-
re bikes- trail wise- get a good quality bike with a good quality front suspension- if you want to get into it more aggressively w/ serious downhill- look into rear suspension as well-
there are many small frame builders that you can customize but many of the larger bike makers make decent frames as well- look at the components- most off road bikes use Sram for brakes,derallieurs,cranksets, etc. Fox makes good suspensions but there are others-
go to your library and get back issues of some bicycling magazines to get an idea what's out there
christopher whalen
I hear that Tim Geithner's Treasury flaks have been pressuring the New York Times to write positive stories about AIG... the success of AIG
(whalen is no liar.)
I suppose one could argue to sell on weakness here, adapting your trading style towards tops....
AT, how you trading man?
I'm fairly certain futures touched 1299 AH yesterday, wouldn't that be hilarious.....
AR.. look at GS candle from yesterday in comparison to today! crazy stuff.. weekly chart looks like a bearish engulfing.. but it IS only wednesday..
what happens when dia volume hits zero ? oh, i guess that is impossible.. one fed hand can just sell to the other fed hand..
"Now if you have some charts or some other reasons why they'll keep going up beyond, the wizard is printing dollars, then I'm all ears."
Charts aren't required for the ultimate trend analysis.
Stocks could go to zero (theoretically). Bonds could be defaulted on and be 'wurthless' (theoretically).
Food will never go to zero. And you might as well toss building materials and energy into that mix.
As long as that dynamic is a reality (and it will be as long as humans hope to survive), basic goods will have more value than financial assets in aggregate.
There can be periods of false prosperity (such as 1980-present), where financial assets outperform, but that is until the music stops in financial assets.
The scramble, now, is on to parlay whatever form of financial asset appreciation one was lucky enough to accrue and more importantly, hold on to over the past 30 years before its purchasing power disappears.
Big money is now going to want to control the distribution of raw goods. Sure, there will be wild price spikes & crashes (as in 2008). But the financial asset bubble world ended in 2000. It got a brief reprieve by handing off to a housing bubble, then most recently by a QE & "change the accounting rules" bubble.
As long as QE is going on, these "softs" & energy are going to outperform the broader averages. Take that away, and the beta will shift back (like in 2008), but over the next decade, I'd expect it to look more similar to the 2000-2010 numbers above.
Unless a couple of billion people die.
Minyanville Media
Fed was offered $39 bln by dealers. Only bought $7.7 bln.A lot of supply out there. When will QE 3 be announced? Send comments to @terrywoo
IQI getting hit harder than MUB.
------------
I see 1296ish as the high in AH for ES.
"Charts aren't required for the ultimate trend analysis."
Ok, thanks for that, tells me much.
probably unlikely you are CV as well.
Ben
On bikes, trek sounds like a good staring point. Bargaining is always a good idea (cash discount?), the markup on bikes (and skiis) is in the neighborhood of 100%. Also look around craigslist and compare prices online.
karen
GS below 166.23 would indicate weakness (to me). Until then JBTFD :-)
Loonie (CAD) not in sync with the USD aversion.
Bob,
yeah, I'm not going crazy here so I don't want to spend too much money, I had a cousin that used to ride a nice cannondale like karen mentioned and then I've def. heard Trek made some good bikes. I didn't think to look on craigslist
maybe I can find someone that needs to unload a bike to pay for their orange juice and bread.
Ben
Santa cruz is also another good name.
sick as a dog but have to roll into the office to take care of some things-
b22- also- steel frames- heavier but flexible, aluminum frames- stiff but lighter, carbon frames- expensive but light and flexible-
if I were you- do a bit of research than search on Craig's list- you'll probably find one barely used at less than 1/2 price (bikes unlike stocks such as priceline and apple- don't hold their value very well)
later all. . .
thanks guys, I didn't think to buy used but that would make a lot of sense, I don't need anything too fancy just want to truck around in the mud, maybe take it off some sweet jumps like Mr. Dynamite.
also- most decent frames from all companies (unless custom)- are made in a few factories in Taiwan-
so look for a Taiwan label- NOT China- Cannondale frames are aluminum (American made) but are stiff- I know- I have one-
off to work:(
Ben
If you do buy used find out, or have a shop check out the suspension system, that is where a lot of the cost is these days. Everything else is out in the open on bikes.
Just looking around and saw this, seems like a good deal.
http://villagecycle.com/product/08-trek-3900-37422-1.htm
Quick market perspective
By Peter Boockvar - January 19th, 2011, 11:44AM
To put this decline in stocks into perspective and to highlight how relentless and extended the rally has been of late, a .7%+ closing decline in the S&P 500 today would be the biggest one day fall since late Nov
TLT calls showing some life...
The SPX has tested and held its daily 3LB mid. I wouldn't get too excited as a bear just yet. I need to see a daily 3LB reversal and/or close below the weekly 3LB mid.
@Anon (10:51)
"returns with dividends"..."2000-2010 (buy Jan 2000/ end Dec2010) = .31% so it doesn't so look so doom and gloom"
---
Taxes paid on those dividends? (so you're right - "it doesn't look so doom and gloom" [only gloom])
And still - It looks better to me if I'd have owned a warehouse full of Hershey Bars [805-3000]. Now - I can only buy less than 1/3rd of a Hershey Bar with the stocks I was holding "for the long run" (like WB likes to say).
The IRS isn't coming by to look at expiration dates on your Hershey Bars.
God forbid if we really get some deflation!
Result? Government freezes your 401k, promises to pay you an annuity (calculated at less than the going rate for "their" inflation calculations).
Maybe the cost of the Hershey bar comes down 50% (which is still double the (2000) price on it.
Result?
Hershey goes out of business because there are no more middleman profit margins.
Result (vs. 2000)
Half your money - no Hershey bars
Minyanville Media
Jeff Cooper looks at how market tops and bottoms are formed http://j.mp/ehnDH5
http://www.mlive.com/news/muskegon/index.ssf/2011/01/woman_from_fruitport_allegedly.html
Fish story...
http://247wallst.com/2011/01/19/uncle-sams-aig-sale-lessons-learned-from-petrobras-and-gm-aig-jpm-gs-bac-db-pbr-gm/
could one store hershey bars for a decade?
or, could one store, say, $400-$500k worth of hershey bars and then how do you sell that much of them?
Remember! if the spx should hit the 10ema.. JBTFD! no not look a gift horse in the mouth!
read "no" as "do" pls.
Karen
Another failure to close below will energize the bulls even more. I want them on a skewer. But that also means this move gets overextended some more and should lead to a stronger correction.
Amen Ra -- you were asking about PC ratio earlier. In the past, according to evil speculator, a closing ISEE of 300 or higher has indicated a short term top. Alphahorn notes this morning that a moving average (time period hidden on chart) for the $ONE:$CPC has reached an extreme.
FTR the SPX better not find a way to close almost even or worse yet positive. The mass exodus will then continue as there is no truth in the market.
"...so look for a Taiwan label- NOT China- Cannondale frames are aluminum (American made) but are stiff- I know- I have one-..."
"...If you do buy used find out, or have a shop check out the suspension system, that is where a lot of the cost is these days. Everything else is out in the open on bikes..."
sounds like the Answer(s)..
also, back-issues of 'Cycling' Magazines, +there's a lot on the "web", is a good rec.
and, once you start finding a decent 'Bike Shop'/Mechanic shouldn't be too difficult..
AAIP
What's bugging me is that we haven't taken out -1000 on the TRIN...yet.
I think we may need to revisit VWAP before anything more exciting happens.
I have a thing about apostrophe usage. I just received an email from my son's preschool. It states "we still have availability during the month's of January, February, and March." Come on people...it really shouldn't be that hard.
All the smaller time charts are the same now...the moving averages are converging, interesting to see if price can break above or not...if mosaic is an early indicator, things are going down.
i can hardly contain my cynicism for this market.. it is laughable..
McB,
you're in Luck~!
"...Sweeping bodegas and trailer parks nationwide, foodstuffs of all shapes and sizes are being sold in a can -- chock full of enough preservatives to render you sterile. And while this may not outrank a canned chicken -- and really, what could? -- a Panama-based company is testing out whisky in a can.
That's right. A full 12 ounces of whisky in one easy pop-top container. Like dad always wanted.
Scottish Spirits -- which gets by on a technicality with an office in Glasgow -- is experimenting with the canned whisky in its Caribbean and South American markets. Although it's not authentic Scotch whisky, the company expects the product to be popular with the outdoor drinker.
Chief executive Manish Panshal told the Daily Mail, "We are really thrilled with the idea -– it's going to be a part of every lifestyle and occasion. The can is the perfect size to be shared between three people who can mix it with other things like cola. It's lightweight and portable and entirely recyclable, which is good news. It will be one of the hot picks for any outdoor activities."
As fun as sharing a can of whisky on the Caribbean sand sounds, the Scotch Whisky Association isn't ready for the boozy sun and fun quite yet. In fact, the outfit's trying to ban the product for breaching international labelling rules.
A spokesman said, "We are concerned that consumers may be confused whether or not the product is real Scotch and we will be investigating the matter further."
This isn't the first time Scottish Spirits ran afoul of a watchdog outfit. Last September, the Advertising Standards Agency censured the liquor makers for its misleading ads which suggested the company was creating homegrown Scotch.
Nevertheless, connoisseurs are intrigued by the concept of whisky in a can. Jim Murray -– author of The Whisky Bible –- told the Daily Mail, "Obviously, this is not the traditional way to sell a dram but I've seen it on draught in Chicago and out of plastic sachets in Uganda, so it might catch on somewhere. It will certainly be cheaper than buying a big bottle and Scotch spends some of its life in metal containers during the distillation process anyway."
Mentioning that the product isn't actual Scotch, Murray also added, "But you probably wouldn't want it in aluminium cans for too long, because it would affect the taste."
Killjoy..."
http://www.minyanville.com/dailyfeed/are-you-ready-for-whisky/?camp=syndication&medium=portals&from=yahoo
You couldn't store Hershey bars at my house for a decade. Usually not a week...
I just booked a Caribbean cruise earlier this morning...I'll be on the lookout for whiskey in a can while I'm away. Maybe Yukon Jack could consider this!
Suspicious package at Penn Station.
K, do you want to examine my package?
Sell em, BITCHEZ...
Lloyd,
The suction and collection device is working perfectly, as soon as we announced Squid earnings, the lifeblood of investors began to drip into the receptacle.
"could one store hershey bars for a decade?"
---
Hershey Bars = cocoa + sugar + milk
Answer: dry cocoa powder (yes - will store and preserve for a decade); granulated sugar (yes - under proper storage conditions).
So as long as the dairy cow population was still around, one could manufacture a Hershey bar. Or, if you expected the global population of dairy cows to go belly up, you could use powdered milk as a substitute.
It would work.
Note: My point is not to buy a warehouse full of Hershey bars. My point is that your average wage earner and/or middle class American is losing purchasing power. (stock portfolio balance liquidated to purchase various baskets of soft commodities).
If you didn't own any financial assets (let's just talk stocks and houses for now), you are able to affore 1/2 to 1/3rd of the chocolate bars, breakfast cereal, or bread that you could buy a decade ago (unless your 'wage' magically doubled, or tripled). Some wages did keep pace, most didn't. And even in the case of professions where there were large salary increases, the 'cost' to get an education to obtain those positions probably took care of the difference. Nevertheless, these people (and positions are in the minority). Unless you want to talk about "government" jobs (and I think we all can imagine what effect continued wage increases and benefits there will produce going forward).
Take it back further?
Sugar (1990) range 9-16 [12.5]*mean
Sugar (1980) range 22-44 [33]*mean
Sugar (1971) range 4-8 [6 mean]*mean
Cocoa (1990) range 1050-1500 [1275]*mean
Cocoa (1980) range 2000-2800 [2400]*mean
Cocoa (1971) range 460-600 [530]*mean
So - One like yourself could argue that 1970 sugar and cocoa prices have increased 5-6x since then. Then, look at the DOW and see that it was 800 back then (while near 12,000 today - a fifteen fold increase).
I would counter that argument with the same ideas presented previously. That "financial assets" were in a bubble (mostly from 1980 - 2000 - with a "post 2000 echo" brought on by monetizing a bubble in home prices after the 2000 stock collapse).
Notice the "jump" in commodity prices between 1970 - 1980. It's not hard to make the determination that the main culprit for that drastic rise was the end of Bretton Woods.
By 1980 - the main thrust of that initial move had played out, and much "de-regulation" came along, along with the first big bout of defecit spending, and the original onslaught of creative financial products (like "mutual funds"). Then came the leverage on top of that. & to top it all off, the internet VC craze (with even more deregulation).
Since there were "losers" tied to all of that, when it all came crashing down, there was not enough money to pay all the inflated debts.
So liquidity has been provided in an attempt to salvage the process of "making the monthly nut" in hopes of maintaining asset price stability (as both Bernanke & Greenspan admit to).
The trouble is, prices of basic goods (food & energy) have actually remain depressed versus the value of financial assets over a 40 year period [when priced in the same dollars].
They've risen in price (to the person holding cash under the mattress), but they've stayed below the value of their stock holdings (assuming they had some in the first place).
- If you had a well paying stable job for the past 40 years, you see no inflation.
- If you're on welfare, and/or food stamps, you see a lot of inflation
- If you were middle class, most of you are falling into that lower category as we speak.
But now, without organic growth, and with a mountain of debt, the only way 'financial asset prices' stay lofty (or continue to rise just to get back to where they were a decade ago) will be if this flood of liquidity continues to gush from central banks. As that happens, I'm guessing that since cocoa & sugar prices have only increased 6 fold (since 1970), while the DOW has increased 16 fold, that more of an equilibrium will ensue.
IOW - Cocoa & Sugar could probably double, then rise 25% again before it came into line with 1970 ratios. (if you wanted to look at it that way). Or, you could take the chance and just HEDGE all your food inflation for the next decade on AAPL & BIDU stock... It could work, I wouldn't recommend it personally.
That would cause a lot of hurt for a lot of people. What's worse though, is that if market gamblers see prices rising in these areas, the "hot money" is likely to chase that momentum (probably leading to an overshoot in food prices).
So either way, it would appear to me that the prices of what you need to eat, heat, drive, and entertain yourself with are going up (versus what you're taking home and/or making in the stock market).
Unless, of course, the "liquidity" faucet gets turned off. Unfortunately, it's not "yours truly" that has his hand on that liquidity faucet.
Cocoa and sugar prices would be fine if we Tased the BEN BERNANK.
this: "...My point is that your average wage earner and/or middle class American is losing purchasing power. (stock portfolio balance liquidated to purchase various baskets of soft commodities)..."
cannot be argued..
peep are being Boiled, alive, in Fiat..
AAIP
oh no.. claims tomorrow.. and existing home sales.. leading indicators, crude inventories.. the phili fed..
oh wow, whiskey in a can! that sounds so gross but also awesome in various ways, it could be everything I dreamed about and more.
Jennifer,
no comment on the "month's" not from me anyway
but as for that cruise, that is one of those places you gotta do frou frou's, imo, of course....lots of frozen frou frous on the lido deck, maybe even more frou frous with all the romanian dealers in the boats casino (pretty sure all dealers on cruise ships are romanian), if you're lucky you'll have several frou frou's down before they do the hairiest man on the boat contest at the big pool. Also, if your husband ends up missing for dinner one night even though he told you he was on his way it might be frou frou related if those are coupled with a Star Wars game where you wave a fake light saber in the arcade room that just happens to be on the way to dinner and making a lot of cool noises, sort of calling his name, so don't get too mad at him. Best of all, frou frous "in da club" on the boat, with the Japanese cover band doing rolling stones. Worst of all, don't drink frou frou's before stopping off at any private beaches that have no lifeguards if your spouse isn't a great swimmer, not a good idea at all.
Not that I ever did stuff like this on a cruise....this guy I know.....
K,
Return of the MACRO tomorrow. For one day only. LOL.
We call it Existing Home Sale. Philly Fed, hmm...
Drip, drip, drip.
You are a genius, Lloyd.
That is your bonus there, in that jar, Giles.
This is how we roll at the Squid.
Wonder if we will have last hour acceleration instead of the PPT?
Last hour acceleration was so 2008. JBTFD is so 2010.
I don't think anyone ever argued folks weren't losing purchasing power, it's been happing every year since 1913
still doesn't change the fact that if you buy anything at the wrong time, stocks, hershey bars, tulips....whatever
you stand to lose a significant sum of money
$rut and $wlsh.. bearish engulfing candles just wiped out several days of gains..
this is a little old now, wonder if people saw it:
http://www.dailymail.co.uk/news/article-1344525/Millions-using-credit-cards-pay-mortgages.html
karen,
is this part of the elevator down?
this:
"...still doesn't change the fact that if you buy anything at the wrong time, stocks, hershey bars, tulips....whatever
you stand to lose a significant sum of money..."
cannot be argued, merely, quibbled with..
"...sum of money..."
these daze, there is no Money, in circulation..our 'Fiduciary Media' is lent, at Interest(allegedly), into existence (Lucky~ Us!)
ibid.
The intraday chart pattern has an ominous look for sure. It looks like an "impulsive" move down....
We are in a funny place here. Tomorrow's claims number, if strong, might almost be bad for the market, like AAPL's earnings. A strong number would lead to higher rates, for example, and a stronger dollar would lead to a commodity sell-off and another sector would be sold off.
Markets form Tops on good news.
Since there are hardly any shorts, there will not be anyone to stop a waterfall if one gets started this week....
Ben -- lol re lightsabers -- that could totally happen. For my second daughter's 3rd birthday, my husband got us all lightsabers to go with the neighbor kid's lightsabers. He fought a huge battle -- he alone against our two (then) toddlers plus about 6 neighbor kids. They were shouting so loudly that when one mom called the kids in for dinner or baths or something, no one could hear her and she got pissed off at her kids. I had to go over and apologize later.
http://www.fundmymutualfund.com/2011/01/video-cnbc-jeff-gundlach-of-doubleline.html
Pointing out the obvious-
OPex week
Vix expiration today.
We agree with the Gundlach philosophy of derisking here. He makes a good point about CA budget cuts being deflationary although he doesn't use the D word.
Slide gradually out of HY into Ts and IG and keep your eyes open for opportunities in munis and mortgages.
We like MBS but play them through equities (CIM, NLY).
If anyone wants to do the math on hedging Hershey bar costs versus their stock holdings in AAPL, here might be something to consider.
In 1990, AAPL stock was $8.50 a share and it recently hit near $350 (41x increase).
1990, Cocoa was 1200 and had an average in 2010 of around 3000 (2.5x increase).
Now really what I'm saying is that if you mixed all foods together in a basket (corn, wheat, sugar, etc.), they all come out to about 2.5x increase).
So that means you can "extrapolate forward" and say that you can buy 20x the number of Hershey bars now as you could in 1990 by just holding on to your AAPL stock.
Pretty good.
Forward it out another 20 years and you'd be sitting pretty with 40 Hershey bars (or food equivalent). Right? Right?
Think that trend will continue? Think there will be more "need" for iMacs, iPhones, & iPads 20 years from now than there will be a need to eat?
What about the electrical power needs it would take to bring about that many iPad sales (and keep them all fully charged with 185 million Chevy Volts on the road). And/or, is everyone going to keep buying a new one [AAPL device] every two years at the cost of "x" per device?
What about energy costs of transportation (getting fertilizer on to land to grow crops, packaging and bring food to market, diesel fuel for farm equipment, water)?
What's going to happen when the market spots that potential disequilibrium? (41x rise in AAPL shares versus 2.5 rise in food).
And since AAPL is 20% of the NASDAQ, what's going to happen to the level of that index?
Well, we basically discovered what would happen to the market back in 2008. We also discovered what the "response" to a crisis like that would be (open up the liquidity faucet).
Forget about the 'depth' of the declines. Look when things turned.
The S&P turned in March 2009
Potash (fertilizer) turned in 12/08
Crude oil turned in 1/2/09
Gold turned in 10/08
Silver turned in 10/08
Cocoa 10/08
*basically you can look through most of the softs and see that they traded closer to normal supply demand cyclicality (plus or minus the "fluff").
The point is that as long as there is artificial liquidity being provided to the markets in the hopes of maintining asset prices (because of the wonderful "wealth effect" of Mr. Greenspan), then more of that is likely to start chasing raw goods.
A person can "escape" inflation by NOT buying an iPhone, going to the movies, or even having a cell phone.
You can't escape inflation when your food bill doubles. Or, you aggressively start trading down to lower quality food.
The comp news has me crying into my Dom Perignon...
http://www.bloomberg.com/news/2011-01-19/goldman-sachs-cuts-its-compensation-pool-by-14-to-430-700-per-employee.html
AT,
I thought I could see a five this afternoon, but you know, then I just though
eh....probably another triangle in the works
triangles
ibid,
I only buy hershey bars with american eagles and maple leafs....better?
you are, too correct though, there IS NO money, it's all debt
"In a nice break from news about the Euro, China, or pensions, Mike "In Toyko" Rogers sent me an interesting email the other day regarding huge mistakes Groupon made in Japan.
Take a look at the New Year's Eve dinner Groupon advertised, vs. what was delivered.
..."
http://globaleconomicanalysis.blogspot.com/2011/01/groupons-marketing-disaster-in-japan.html
Now, I guess, we know what kind of Moron walks on a U$D 6 Bn offer from GOOG...
AAIP
NLY could make sense as long as rates stay low, given where unemployment, the Feds inflation data, and 90 day tbills are, which the fed will follow to determine fed funds rate, it's unlikely a near term risk, so NLY borrows low and then buys some MBS at 4-5%, dividend continues to get paid.
disclosure: not long NLY, don't plan on buying it, just saying, I see how it makes sense.
so NLY borrows low and then buys some MBS at 4-5%, dividend continues to get paid.
Exactly - it is essentially a very high yield bond. If you subscribe to a Gary Shilling/Rosenberg/Edwards view of a modified Japanese-style outcome, then yields can go lower and this becomes a very good bet.
A person can "escape" inflation by NOT buying an iPhone, going to the movies, or even having a cell phone.
True, you control your bill by setting a maximum that you will pay.
You can't escape inflation when your food bill doubles. Or, you aggressively start trading down to lower quality food.
If you shop in less affluent US neighborhoods, the prices mysteriously come down for basic items. The trifurcation effect again.
yeah, if yields go lower their cash flow could improve even, lets also remember there's that wicked reset schedule still in the pipeline that I'm sure the Fed is keeping an eye on as well
have you guys ever looked at other stocks in that space:
CIM, CMO, ANH
I don't know anything about them, just know they are out there
We own CIM. It is NLY on "speed".
The reset schedule means no escape from low rates. Also think of debt rollovers in the muni and corpy space and you begin to see why the liquidity trap is so powerful.
Are we turning Japanese?
Hai, hai, hai !!!
On Wednesday 19th January 2011, @mrtopstep said:
$ES_F #futures the key to this has been the premium levels--when they go up they nearly get to buy program levels, then they start to come down and they blow right into sell programs... 1274.50 is the 50% of the year in SPH and our next support area; #Russell 2000 futures breaking the daily trend line of 786.00...
The next big investment theme in equities will be a MASSIVE ROTATION out of TRASH stocks, commodity stocks, small miners and bullshit biotech and retail plays into dividend-payers that are (relatively) unloved and in some cases severely undervalued. Some of the REITs, big pharma, utilities and telecoms are the obvious suspects.
This isn't a massively bearish development, but it could occur via a 20-25% grind down and P/E contraction of the sort that Ritzy has discussed from time to time on his blog. HT, the WSWB.
A similar rotation play will also likely occur in fixed income, out of HY and into things like the better munis, mbs, Treasuries and IG.
It's a stock picker's market.
If we wake up to a stronger dollar tomorrow it will be Widowmaker time. Might be some peeps wanting to unload some of their yellow metal and emerging markups, especially if Hu says anything at all about a stronger Renminbi.
Of course if he mounts Tiny Tim and uses him as a small horse at the presser, then that trade is off...
A clavadista may be at hand....
It's all about Hu this week
And he's coming to Chicago!
How on earth can the DOW be down 12 points? It feels like down 200.
We added a side of widowmaker to go with the EM and small cap shorts. Nothing about today's action to indicate a screaming rally is imminent, but we are stopped pretty tight. Seems like this may not have run its course today, if we had a big volume 3% down day, probably a different story.
DOW down 12 mainly b/c "I'm an IBMer".
I'm not. I am a permabull.
I'm just full of bull.
I'm usually full of Brian...
I resent comparisons between me and a small horse that is ridden by foreign dignitaries while I incant "strong dollar policy"....
IBM helped the DOW a lot today
Look in the receptacle, Giles. That is pure profit....
Another day, another dollar.
Hysterical. That's why I come here. Off to dust off the light sabers.
There are Three Americas.
One, Manhattan and Between the Hedges. Prosperity and Recovery.
Two, Middle America. Recession/Depression. Austerity Bites.
Three, Poor America. This is always with us, unchanging.
http://www.zerohedge.com/article/austerity-america-22-signs-it-already-here-and-it-going-be-very-painful
"no one could hear her and she got pissed off at her kids"
my mom, who I'll note is not named Bruce Dickinson, she got a cowbell for this purpose, just nailed that thing a few times to signal to me it was time to come in to eat, like she was herding some wild animal, when I ignored it was when I had to sit on my bed until dad got home
sweaty palms from there :-), it's never good when you are told "wait til your father gets home" then you know you've done it
ok, speaking of IBM's big day today, take a look at what Cobra had put on his blog yesterday, we should be aware of this trend:
http://lh6.ggpht.com/_APmrYvpA45s/TTY5A-Q8GwI/AAAAAAAAJsg/SVBGwHA4DVk/s1600-h/IBMER%5B2%5D.png
Ben..I know the sweaty palms feeling too...Lefty's mom made him wear a cowbell so she could tell when he was straying too far...
Didn't seem to work in his adult life..
Those with sharp eyes will have noted we have had major correlation breakdowns of late, with the ever-reliable EURJPY diverging from equities for almost a week now. Look and you can see the pair was up massively at one point today, and then ended flat. But from the first you could see equities completely failing to follow through on the big EUR squeeze.
The breakdown of long established FX-equity correlations often signals a change in the works for carry trades, and we know how important that can be for market direction.
One trade being touted here in FX that I like a lot is long CAD (oil) short ZAR (gold) and AUD (copper), because it is sort of dollar independent.
When she could no longer hear the cowbell, she bolted the door.
B in T
Check out the Gundlach interview, some good stuff on bonds.
There is a great trade coming up in munis but we need more carnage.
Once there is real panic this is a great buy before the backstop.
Tailor made for you and me, Mr AMT-paying guy !!
The military haircut arrives in the muni bond market:
http://www.zerohedge.com/article/harbinger-muni-bloodbath-valejo-offers-unsecured-creditors-5-20-cent-recovery
This will have an impact. Don't be rushing in here big unless you are very patient and have very deep pockets.
you guys are brave with the muni's I admire it, I bet a lot of money could be made there, it's the fear of contagion for me though. That's how the MW thesis comes to pass we could get all mathy about it but that's how her stuff plays out imo, some weaker borrowers default, yields start to raise, slow at first, more borrowers get into default as a result, yields go up even more and so on.
You can see what states will do first because we are already seeing it, first they cut services (Camden cops), then like IL, they increase taxes, if that's not enough then you take away liabilities like pensions or retiree health care (see all over the place discussion on this) and then default. What they prefer over another seems largely based on the politcal base they are trying to get votes from, so what Chris Christie does in NJ is different than what may go down in Michigan, IL, or CA.
Stepping in front of trains like this during overdone selling is likely how some serious money will be made in this space, just not sure I have it in me to do this trade. I'm thinking about this daily though.
+1....
The Bond Report 1.19.11
The big market yawned today for the most part while the yappy little market was taking a downward excursion for the first time since the Dickensian era. (We know the ladies like Dickens).
Moves of note today were a modest flattener from yesterday's record 401 bps 2s30s spread in the YC and a move into safety in the muni market with MUB up and IQI down. Think of the muni spread widening and I think you can identify a trend. The MUB/IQI ratio is like the LQD/HYG ratio.
Corpies: LQD -0.07%; AGG 0.02%; JNK -0.15%; HYG -0.31%
Govies: TLT 0.72%; IEI 0.12%; TIP 0.04%
Munis: IQI -1.24%; MUB 0.16%
Mortgages: MBB 0.22%
Hedgies: TBT -1.38%
We did nothing in fixed income but were jolly amused by our equity hedging performance, and added a small widowmaker for fun.
Carry on, chaps.
http://finviz.com/quote.ashx?t=AZO
AZO down ~10% from the top..
AAIP
Muni selling will repeat the history of mortage backed selling. Once the press coverage reaches a crescendo and granny lines up to sell....
As always, keep an eye and ear open for the activities of Bill and Mohamed and watch for the op ed pieces in the WSJ.....
We will keep you up to date on our toes. None are as yet immersed.
CHICAGO ─ Although food companies and restaurant operators are trying to keep from increasing prices due to rising commodity and transportation costs, wary US consumers are bracing to pay more for their food in 2011.
Historically consumers have never let food costs rise faster than their incomes and have managed their food spending accordingly, whether choosing to eat at home or away from home, according to food market research by The NPD Group.
“With food inflation accelerating in the last months of 2010 and government forecasts show it continuing into at least the first half of 2011, Americans will be making well-thought out choices this year on how they will feed themselves,” said Harry Balzer, chief industry analyst at NPD and author of Eating Patterns in America. “It amounts to ‘relative food inflation.’ They have so much to spend on food and they will carefully pick-and-choose how they spend it. Looking for more coupons and discounts, buying more private label foods, eating more leftovers, and generally getting the most bang for their buck.”
Seventy-two percent of meals are prepared in homes, 18% are obtained from foodservice outlets, 8% are skipped and 2% are from unknown sources, according to NPD’s in-home research, National Eating Trends, and foodservice market research, CREST. During the past two years, US consumers pulled back on their use of restaurants, and the industry lost 2.4 billion visits from year ending November 2008 thru November 2010, from 61.5 billion visits to 59.1 billion visits.
During this period, food deflation gave supermarkets the edge in terms of consumer food spending. As the economy has begun to improve, Americans have started adding more restaurant visits back into their routines, but high unemployment continues to hamper the industry’s growth.
“Food prices so far are up less than 2% from the depressed year-ago levels, when they were dropping by 2%. Supermarket prices are still below the levels of 2008,” Balzer said. “This is really a story about the upheaval created by the 2008 food price increases. We have yet to see how it will play out this time.”
http://www.meatpoultry.com/News/News%20Home/Business/2011/1/US%20consumers%20brace%20for%20higher%20food%20gas%20costs.aspx?NewsLetter=true
FYI,
We are now:
HYG 16% TIP 6% LQD 3% TLT 2% AGG 5% (37%) LONG bonds
14% long equities (single names).
23% short equities.
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