Global Financial Crisis (18 Viewers)
- Thread starter Dostoevsky
- Start date
Since the massive rally began in early March, the markets have soared between thirty and forty percent. Every time analysts, media, or economists question the rally and point to simple overbought stocks or specific sectors, after a small pullback, the market seems to mysteriously rally once again.
There have been many questions about the validity of the rally. Questions about whether or not the Government, Treasury, Federal Reserve or even the PPT (Plunge Protection Team aka Presidents Working Group) have been behind it. Let's examine closer.
The rally seems to have been a two part rally. One with volume and one without. When looking at the chart of the S&P 500 from March 6th, the bottom, to April 2nd, volume was very heavy. Since then, volume has been almost nonexistent. In fact, volume has continued to get lighter over the last couple weeks. Those that live and breathe the market know that light volume can make the markets susceptible to manipulation or propping. This means that those with enough money, can cause spikes in the markets. Once the markets begin to rally, often hedge funds and other money managers will join in the buying. Shorts get squeezed and the snowball effect will grow. In other words, it does not take constant buying to create a rally. All it takes is buying in specific stocks like XOM, GS, JPM, AAPL (market leaders) or the futures at a specific time when light volume allows it.
The second half of the rally, ever since early April seems very suspect. I have talked and written quite a bit about how impressed I have been with President Obama's administration in understanding the market and the Carrot Effect. The Carrot Effect is what I call the ability of the administration to keep the markets always looking for the next bailout, the next announcement or tidbit of news. By doing this, they keep the markets always looking towards the next positive event, keep the buyers long and the shorts fearful or on the sidelines. It has been pure genius. There is always some sort of presidential speech, Treasury announcement or Federal Reserve statement. If Tim Geithner is not speaking, President Obama is speaking. If President Obama is not speaking, then Ben Bernanke is speaking. If none of them are speaking, you better believe a bank CEO is making a positive announcement, an upgrade is coming or a massive suspicious "buy program" is hitting the markets.
These buy programs have been specifically strange to say the least. With minutes left in the market on countless light volume days, a massive buy program on the futures will hit where one-hundred thousand contracts go through or more. When talking about dollar values, we are talking in the ten to twenty billion dollar buy program range. Needless to say, there are not many hedge funds or money managers that can pull that off on a regular basis. If it is not the futures, then Goldman Sachs or Exxon Mobile spike at times that just seem too suspicious not to be a coincidence, lifting the markets. For those of you who are not traders, Goldman Sachs and Exxon are two of the major leading stocks in the market. When those two stocks run, others follow and rallies are created.
Probably the best example of the genius of the Administration and the Federal Reserve were the weeks prior to and including the release of the Stress Test. The Stress Test was a perfect example of the Carrot Effect I speak of. Leading up to the Stress Test results there was a constant "leak" of information. It was so standard, exact and methodical, that there is little doubt in anyone's mind it was being leaked by the Federal Reserve and the Administration on purpose. Each leak kept the markets inching higher. Each leak was testing the waters for the reaction of the markets. The idea of testing the waters was done just weeks ago when Chrysler filed for bankruptcy. This was a simple test to see how the market would react to General Motors, when it files. The market is continually getting prepared for the GM bankruptcy. At this point it is expected to have little impact. Just another example of the genius that is this Administrations understanding of the markets. In any case, leading up to the release of the Stress Test, the leaks of information showed the market was very receptive to the numbers the banks would be required to raise. However, the best kicker and genius of it all was that the numbers leaked to the market were actually more than the actual numbers that were announced. Think about the genius of this. Give the market slightly worse numbers but still positive as compared to what was feared. Leak it every few days to keep the market moving higher. Continue to leak it out, mixed with positive economic data (the validity and truthfulness of which most doubt) and then when the real numbers are announced, make them better. That is as sure fire way to cause a continued non-stop rally.
After the Stress Test results, the market has continued to see positive statements from the Federal Reserve, Treasury and the Government. According to many of these sources, the economy has bottomed. Has the massive government caused re-inflation rally worked? That is what they would have you believe.
Many may be asking what is wrong with the Government, Treasury and Federal Reserve propping the markets up and causing continuous rallies? If the markets moving higher, then why is it a problem? Peoples 401k's are doing better, people feel better about the economy. So what is wrong with this? Simply put, by doing this, the rich will get richer and the poor and middle class will get hurt. Why? Because not only have the bailouts put money back in the pockets of the big players on Wall Street, but giving a false sense of security to the market, will and has started to draw the small money middle class investor back in. Sure enough, these are the folks that buy at the tops just before the drop and sell at the bottom when the pain is too severe. The Federal Reserve, Treasury and Government have not learned their lessons over the last 10 bubbles that were created by fake intervention. Each intervention and fake bottom causes more hurt and problems. While they may be propping the markets up for now, the markets always find their true level. Near term happiness and instant gratification is short lived when the Government and Federal Reserve's hands are messy with manipulation and intervention. Long story short, the governments manipulation, will in the short and long run continue to transfer wealth from the small investor to the large.
InTheMoneyStocks
There have been many questions about the validity of the rally. Questions about whether or not the Government, Treasury, Federal Reserve or even the PPT (Plunge Protection Team aka Presidents Working Group) have been behind it. Let's examine closer.
The rally seems to have been a two part rally. One with volume and one without. When looking at the chart of the S&P 500 from March 6th, the bottom, to April 2nd, volume was very heavy. Since then, volume has been almost nonexistent. In fact, volume has continued to get lighter over the last couple weeks. Those that live and breathe the market know that light volume can make the markets susceptible to manipulation or propping. This means that those with enough money, can cause spikes in the markets. Once the markets begin to rally, often hedge funds and other money managers will join in the buying. Shorts get squeezed and the snowball effect will grow. In other words, it does not take constant buying to create a rally. All it takes is buying in specific stocks like XOM, GS, JPM, AAPL (market leaders) or the futures at a specific time when light volume allows it.
The second half of the rally, ever since early April seems very suspect. I have talked and written quite a bit about how impressed I have been with President Obama's administration in understanding the market and the Carrot Effect. The Carrot Effect is what I call the ability of the administration to keep the markets always looking for the next bailout, the next announcement or tidbit of news. By doing this, they keep the markets always looking towards the next positive event, keep the buyers long and the shorts fearful or on the sidelines. It has been pure genius. There is always some sort of presidential speech, Treasury announcement or Federal Reserve statement. If Tim Geithner is not speaking, President Obama is speaking. If President Obama is not speaking, then Ben Bernanke is speaking. If none of them are speaking, you better believe a bank CEO is making a positive announcement, an upgrade is coming or a massive suspicious "buy program" is hitting the markets.
These buy programs have been specifically strange to say the least. With minutes left in the market on countless light volume days, a massive buy program on the futures will hit where one-hundred thousand contracts go through or more. When talking about dollar values, we are talking in the ten to twenty billion dollar buy program range. Needless to say, there are not many hedge funds or money managers that can pull that off on a regular basis. If it is not the futures, then Goldman Sachs or Exxon Mobile spike at times that just seem too suspicious not to be a coincidence, lifting the markets. For those of you who are not traders, Goldman Sachs and Exxon are two of the major leading stocks in the market. When those two stocks run, others follow and rallies are created.
Probably the best example of the genius of the Administration and the Federal Reserve were the weeks prior to and including the release of the Stress Test. The Stress Test was a perfect example of the Carrot Effect I speak of. Leading up to the Stress Test results there was a constant "leak" of information. It was so standard, exact and methodical, that there is little doubt in anyone's mind it was being leaked by the Federal Reserve and the Administration on purpose. Each leak kept the markets inching higher. Each leak was testing the waters for the reaction of the markets. The idea of testing the waters was done just weeks ago when Chrysler filed for bankruptcy. This was a simple test to see how the market would react to General Motors, when it files. The market is continually getting prepared for the GM bankruptcy. At this point it is expected to have little impact. Just another example of the genius that is this Administrations understanding of the markets. In any case, leading up to the release of the Stress Test, the leaks of information showed the market was very receptive to the numbers the banks would be required to raise. However, the best kicker and genius of it all was that the numbers leaked to the market were actually more than the actual numbers that were announced. Think about the genius of this. Give the market slightly worse numbers but still positive as compared to what was feared. Leak it every few days to keep the market moving higher. Continue to leak it out, mixed with positive economic data (the validity and truthfulness of which most doubt) and then when the real numbers are announced, make them better. That is as sure fire way to cause a continued non-stop rally.
After the Stress Test results, the market has continued to see positive statements from the Federal Reserve, Treasury and the Government. According to many of these sources, the economy has bottomed. Has the massive government caused re-inflation rally worked? That is what they would have you believe.
Many may be asking what is wrong with the Government, Treasury and Federal Reserve propping the markets up and causing continuous rallies? If the markets moving higher, then why is it a problem? Peoples 401k's are doing better, people feel better about the economy. So what is wrong with this? Simply put, by doing this, the rich will get richer and the poor and middle class will get hurt. Why? Because not only have the bailouts put money back in the pockets of the big players on Wall Street, but giving a false sense of security to the market, will and has started to draw the small money middle class investor back in. Sure enough, these are the folks that buy at the tops just before the drop and sell at the bottom when the pain is too severe. The Federal Reserve, Treasury and Government have not learned their lessons over the last 10 bubbles that were created by fake intervention. Each intervention and fake bottom causes more hurt and problems. While they may be propping the markets up for now, the markets always find their true level. Near term happiness and instant gratification is short lived when the Government and Federal Reserve's hands are messy with manipulation and intervention. Long story short, the governments manipulation, will in the short and long run continue to transfer wealth from the small investor to the large.
InTheMoneyStocks
Seems like the Bond market is now showing signs that more trouble is looming, still on the deflationary side.
30y Bond Results: Beware
The auction results make absolutely no sense under "conventional wisdom."
Median yield down, primary dealers took about half and indirect bidders took the other half, basically.
What? 50% take for foreign central banks on 30y debt at a 4.6ish coupon?
That makes no sense given what we're being told is coming: massive inflation, maybe even hyperinflation, commodities ramping to the moon, the stock market going to the moon in a hyper-inflationary printing explosion.
The stock market rocketed on the release. I couldn't make sense out of the initial FX moves, especially in the DX and Yen. Someone was front-running in the financials bigtime as well, with a big ramp for an hour or so prior to the results.
Folks, if you think hyperinflation is coming, or even serious inflation, you're going to get your head cut off on a 4.6% 30y bond. In fact you could easily lose half or more of your investment, should you need to sell, and your coupon will be half or less of what it should be.
So how does this make any sense?
There is only one reason for the FCBs to want this sort of exposure:
They expect a ramp in the dollar and crushing DEFLATION, as this is the only way that bet will pay off.
If you're on the other side of this trade in any way, I hope you are putting on some sort of hedge.
Remember, foreign central banks can FORCE a pull in liquidity and make their desires a self-fulfilling prophecy.
Care to bet against someone who can make their bet pay off?
That's what I thought.....
Oh guess what - the primary dealers would like this outcome too......
PS: If this analysis is correct then we're in for some really NASTY trouble, quite soon. If you're short Ts, short dollars or long equities, your neck is in the guillotine. Better move before the blade falls!
http://market-ticker.denninger.net/archives/1115-30y-Bond-Results-Beware.html
30y Bond Results: Beware
The auction results make absolutely no sense under "conventional wisdom."
Median yield down, primary dealers took about half and indirect bidders took the other half, basically.
What? 50% take for foreign central banks on 30y debt at a 4.6ish coupon?
That makes no sense given what we're being told is coming: massive inflation, maybe even hyperinflation, commodities ramping to the moon, the stock market going to the moon in a hyper-inflationary printing explosion.
The stock market rocketed on the release. I couldn't make sense out of the initial FX moves, especially in the DX and Yen. Someone was front-running in the financials bigtime as well, with a big ramp for an hour or so prior to the results.
Folks, if you think hyperinflation is coming, or even serious inflation, you're going to get your head cut off on a 4.6% 30y bond. In fact you could easily lose half or more of your investment, should you need to sell, and your coupon will be half or less of what it should be.
So how does this make any sense?
There is only one reason for the FCBs to want this sort of exposure:
They expect a ramp in the dollar and crushing DEFLATION, as this is the only way that bet will pay off.
If you're on the other side of this trade in any way, I hope you are putting on some sort of hedge.
Remember, foreign central banks can FORCE a pull in liquidity and make their desires a self-fulfilling prophecy.
Care to bet against someone who can make their bet pay off?
That's what I thought.....
Oh guess what - the primary dealers would like this outcome too......
PS: If this analysis is correct then we're in for some really NASTY trouble, quite soon. If you're short Ts, short dollars or long equities, your neck is in the guillotine. Better move before the blade falls!
http://market-ticker.denninger.net/archives/1115-30y-Bond-Results-Beware.html
There is absolutely no recovery going on right now. If there was, we would be seeing credit expanding and job losses halting, but neither are occurring. The only remedy available for these problems is to rid the system of excess debt, something the market is trying to do.
Consumer credit decreased at an annual rate of 8.5% in November. Credit card debt is also decreasing at a fast pace, at an annualized rate of about 18%. This is what needs to occur, but that's not what the Fed wants to happen, because they know a deflationary collapse would ensue.
Such rates of credit decline are quite historic, basically still falling off a cliff. This means Americans are spending less, which means they are buying less, which means firms are not selling as many products, which means their output will be less, which means they will hire less workers, which also means tax revenue from sales declines, which essentially means more government debt.
There is still too much debt out there for consumers and companies alike, and things will continue to decline until all the debt in the system is cleared up. Firms won't hire more workers until their debt is resolved. But this debt collapse is not being allowed by the government and Fed as that would mean asset prices would contract, which they don't want to see. So essentially they are delaying the inevitable, creating bigger problems for the future, which is what these morons have always done throughout history.
With regard to the employment picture, things may not "appear" as bad as before, but it's still quite frightening as we speak. In December, the "non-real" government unemployment rate remained unchanged at 10%. That's great and all, until you look at these two graphs.
That's right. The "not in the labor force" total rose pretty quickly, meaning that we actually didn't have a major increase in jobs. All that occurred was a bunch of people out of work were declared by the government to be "not in the labor force" anymore. We have not added any people back into the labor force for quite a long time, and job losses continue to mount, albeit at a slower rate. But unemployment figures can increase very rapidly at times, so we might be just hanging on to the edge of a cliff right now.
Retail sales of electronics in December were poor, despite Christmas. Much of retail sale numbers in general appear better because of the rise in gas prices, meaning people had to pay more for it, which is actually a bad thing.
Consumer confidence from this week was a HORRIBLE number. The graph tell the story.
Therefore, nothing has really improved in the economy except for the continuing rise in some asset prices. The employment picture is still quite bleak, the credit picture is disastrous, and consumer confidence is quite poor. All the numbers are interconnected and demonstrate that the economy is not improving, but rather just declining at a slower pace.
And what do we hear from our fearless leaders? All is alright, the economy is improving, and we're doing a good job.
I call BS, George W. Obama.
These guys are choosing policies that are leading to our collapse as a nation.
Consumer credit decreased at an annual rate of 8.5% in November. Credit card debt is also decreasing at a fast pace, at an annualized rate of about 18%. This is what needs to occur, but that's not what the Fed wants to happen, because they know a deflationary collapse would ensue.
Such rates of credit decline are quite historic, basically still falling off a cliff. This means Americans are spending less, which means they are buying less, which means firms are not selling as many products, which means their output will be less, which means they will hire less workers, which also means tax revenue from sales declines, which essentially means more government debt.
There is still too much debt out there for consumers and companies alike, and things will continue to decline until all the debt in the system is cleared up. Firms won't hire more workers until their debt is resolved. But this debt collapse is not being allowed by the government and Fed as that would mean asset prices would contract, which they don't want to see. So essentially they are delaying the inevitable, creating bigger problems for the future, which is what these morons have always done throughout history.
With regard to the employment picture, things may not "appear" as bad as before, but it's still quite frightening as we speak. In December, the "non-real" government unemployment rate remained unchanged at 10%. That's great and all, until you look at these two graphs.
That's right. The "not in the labor force" total rose pretty quickly, meaning that we actually didn't have a major increase in jobs. All that occurred was a bunch of people out of work were declared by the government to be "not in the labor force" anymore. We have not added any people back into the labor force for quite a long time, and job losses continue to mount, albeit at a slower rate. But unemployment figures can increase very rapidly at times, so we might be just hanging on to the edge of a cliff right now.
Retail sales of electronics in December were poor, despite Christmas. Much of retail sale numbers in general appear better because of the rise in gas prices, meaning people had to pay more for it, which is actually a bad thing.
Consumer confidence from this week was a HORRIBLE number. The graph tell the story.
Therefore, nothing has really improved in the economy except for the continuing rise in some asset prices. The employment picture is still quite bleak, the credit picture is disastrous, and consumer confidence is quite poor. All the numbers are interconnected and demonstrate that the economy is not improving, but rather just declining at a slower pace.
And what do we hear from our fearless leaders? All is alright, the economy is improving, and we're doing a good job.
I call BS, George W. Obama.
These guys are choosing policies that are leading to our collapse as a nation.
Weekly chart of SPY, the exchange-traded fund that tracks the movement of the S&P 500 (our general stock market). Uptrend still intact, major resistances broken, and the next resistance levels appear to be where we were in October of 2008, right before the major collapse in stocks.
Just chugging along. People are crazy if they're getting into the market at these levels.
Just chugging along. People are crazy if they're getting into the market at these levels.
OP
http://www.bls.gov/
That's where the labor data comes from. But most of the time I use Bloomberg, CNBC, or for the real numbers I go to Shadow Stats.
That's where the labor data comes from. But most of the time I use Bloomberg, CNBC, or for the real numbers I go to Shadow Stats.
Daily chart of the UGA, the ETF that tracks gasoline futures prices. Uptrend channel still intact, looks like it wants to continue higher. Remember, the more this chart increases, the more consumers have to pay at the gas pump, which will put more strain on their pocket books or increase their credit card debt (bad, bad bad).
The rise in gas prices is a direct consequence of the Fed's cheap money policy.
But folks will most likely blame speculators for their woes at the pump instead of the policy makers.
The rise in gas prices is a direct consequence of the Fed's cheap money policy.
But folks will most likely blame speculators for their woes at the pump instead of the policy makers.
http://www.newstatesman.com/economy/2010/01/ireland-irish-social-dublin
State Expenditure to shrink 25% by 2018 :depressed
State Expenditure to shrink 25% by 2018 :depressed