Monday, October 5, 2009

Kyle Bass Hayman Capital October Letter to Investors

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Kyle Bass of Hayman Capital was one of the winners in the subprime debacle (identifying, and profiting from it). This is a lengthy read but oh so good - I am only through the first third; many of the same thoughts we post on a daily/weekly/monthly basis on Fund My Mutual Fund. If I communicated with readers once a quarter rather than on a daily basis, this quite possibly could be the exact same latter I'd be writing.

It's quite an amazing battle shaping up between those who live inside the Matrix versus the small band of us on the outside.

p.s. please note page 8 of the letter what Bass posts a cropped photo from the FHA website. I cannot make this up. "Refinance or Purchase FHA Home Loans... NO CREDIT CHECK" And this folks, is how you get a "housing recovery" - that we will all pay for in spades both on the front end and back end (read into that as you will)

[Make sure to "zoom" up to 100%, otherwise it's a bit difficult to read]

Hay Man

Hat tip to PragCap via ZeroHedge.

S&P 500 Rallies Back to 20 Day Moving Average

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As with all breaks of the 20 day moving average, however brief, the S&P 500 has quickly rebounded now and sits right below it. Every other episode the past half year this level was quickly reclaimed and back to the ever present rally we returned to. As I continue to say, everyone will keep playing the pattern until it fails. Since failure only happens once - the odds are on your side. When that failure comes, that will be a true change in character and one can adjust - no reason to be a hero and "predict" things in advance.

From here, the fragile bears still have a a few chances: (1) no break north of the 20 day moving average (2) stalling at some level below S&P 1080 potentially setting up a head and shoulders formation or (3) stalling right at S&P 1080 potentially setting up a double top formation.

That is a lot of gobbley gook if you don't bother with technical analysis but trust me, HAL9000 and his computers know what it means.

If Larry Summers still has the reigns S&P 1080 will be smashed and we'll be off to the races again. So now we just sit back and observe. If we continue to rally I'll start rehedging at higher levels and then "exit" some of the hedges (mentally "stopping" myself out) if S&P 1080 is smashed and the race to S&P 2500 by 2010 returns.

Unemployed masses of Americans? That is so last week. Remember, the more people out of work - the less expenses for corporate America (better profits) ... green shoots.

p.s. on a halfway related note we've seen a lot of mainstream media attention to the farce that is the birth death model after the 824K (additional job losses) "oopsie" admitted by the Bureau of Labor Statistics last Friday... it is always good when the media figures things about a half decade after a few voices on the internets (sic) [Jan 27, 2008: Monthly Jobs Report & Birth Death Model] Why no one in media was questioning how our government was telling us (just throwing out one example) in any one month during the deepest recession of our lives that 100K jobs were being created by companies "too small to survey" is beyond me. Especially when some of those jobs were in hot sectors such as... uhh, construction. Garbage in, garbage out aka "you can't handle the truth".

hat tip Barry R for cartoon (the 3rd panel seems to be cut off so click on cartoon for the "reveal")

Dilbert.com

NYT: China Set to Pass Japan as World's 2nd Largest Economy

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For those of us in our mid 30s and older it is quite amazing to see what has happened to Japan. About 2 decades ago much of the talk you hear about China (ex demographics) today applied to Japan. Now, after 2 lost decades people are asking if Japan will be the next Switzerland - rich and comfortable, but of little global import. Or is even that too hopeful?

  1. [Sep 21, 2009: NYT - Japan Struggles to Balance Growth and Job Stability]
  2. [Oct 28, 2008: Pooring of Japan Too?]
  3. [Jul 29, 2009: Japan's Herbivore Men - Young American Men's Future?]
  4. [Nov 17, 2008: Poverty, Pension Fears Drive Japan's Elderly Citizens to Crime]
  5. [Feb 26, 2009: NYT - When Consumers Cut Back - An Object Lesson from Japan]
  6. [Feb 8, 2009: NYT - Japan's Big Works Stimulus is a Lesson]

It is interesting to watch our 2 largest creditors jockey - one flailing, one sailing. I'm sure as Americans today say "that could never happen here", Japanese 20 years ago said the same.

via New York Times
  • For years, Japan has been readying itself for the day that it is eclipsed economically by China. But as a result of the global slowdown, Japan’s difficulty in managing its economy and China’s rise — on vivid display Thursday as Beijing celebrated the 60th anniversary of the founding of the People’s Republic — that day may come sooner than anyone predicted.
  • Though recent wild currency swings could delay the reckoning, many economists expect Japan to cede its rank as the world’s second-largest economy sometime next year, as much as five years earlier than previously forecast.
  • At stake are more than regional bragging rights: the reversal of fortune will bring an end to a global economic order that has prevailed for 40 years, with ramifications across arenas from trade and diplomacy to, potentially, military power.
  • China’s rise could accelerate Japan’s economic decline as it captures Japanese export markets, and as Japan’s crushing national debt increases and its aging population grows less and less productive — producing a downward spiral.
  • Not long ago, Japan was “the economic miracle,” an ascendant juggernaut on its way to rivaling the United States, which has the biggest economy. Now, many here ask whether Japan is destined to be the next Switzerland: rich and comfortable, but of little global import, largely ignored by the rest of the world. Yet even this widely held hope among the country’s 127 million people may be slipping from Japan’s grasp.
  • The per-capita gross domestic product of Japan, which surged past that of the United States in the late 1980s, stalled at $34,300 in 2007; it is now a quarter below American levels and 19th in the world. Both income inequality and poverty are on the rise.
  • (Over the last 2 decades) Japan stagnated as huge public works projects aimed at reviving the economy went toward protecting moribund industries instead of fostering new ones, failing to lift Japan out of its doldrums while creating a huge debt burden. (thankfully, we are not at all like Japan...ahem)
  • The richest man in Japan, the retailing entrepreneur Tadashi Yanai, was 76th in the most recent global Forbes list, behind moguls from countries like Mexico, India and the Czech Republic — a far cry from the late 1980s, when Japanese industrialists like the railroad tycoon Yoshiaki Tsutsumi were among those at the top.
  • China has also surpassed Japan in having the biggest trade surplus and foreign currency reserves, as well as the highest steel production. And next year, China could overtake Japan as the largest automobile producer.
So if you believe in the consensus in America, Japan has no chance with what they are attempting now.
  • A new government has vowed to take Japan on a new development path, one that relies less on the exports that have long driven growth and is more focused on increasing domestic demand. The Democratic Party, which recently swept the long-ruling Liberal Democrats out of power, has promised to strengthen social welfare and redistribute wealth more evenly.
As we said in our September piece above, Japan tried to follow some sort of hybrid Japanese/US model (heavy on deregulation, emphasis on nomadic temporary workforce) - found the form of capitalism was not working, and now appears to be moving to a Western European style economy. Obviously I am making a simplistic statement of a very complicated situation with thousands of moving parts - but seeing one party that has been entrenched for so long finally swept out shows the masses finally have had enough and are willing to try something new. Not much different than our 2 party system which is essentially "the same party" now. We'll see how many more decades before we see a similar "enough is enough, we'll try anything different" cry. Ross Perot was probably a few decades too early. ;)

I don't talk about REALLY long term predictions on the website, but I believe as the globe flattens and many more Americans are flattened by global wage arbitrage and reduced lifestyle / stability, you will be seeing some quite historic changes in attitudes domestically as well.
  • Per-capita income in China is still less than a tenth that in Japan. But by other measures, the Chinese economy long ago overtook that of Japan.
  • In terms of overall purchasing power, China surpassed Japan in 1992 and will overtake the United States before 2020. (<---- what? impossible you say!)
  • In some ways, this reflects economic fundamentals: As countries develop, growth tends to slow. Annual growth in Japanese gross domestic product averaged 10.4 percent in the 1960s and 5 percent in the 1970s, but only 4 percent in the 1980s and 1.8 percent in the 1990s, according to Goldman Sachs. In the first decade of this century, growth has been even slower.
  • “Japan is neighbors with a rapidly growing market,” said Nobuo Iizuka, chief economist at the Japan Center for Economic Research. “That is a great advantage, not a threat. The question is, can Japan build on that advantage?”
  • Still, said C. H. Kwan, a senior fellow at the Nomura Institute of Capital Market Research, based in Tokyo, “this is a big psychological shock to Japan.”
  • Based on current growth and currency trends, Mr. Kwan forecasts that the Chinese economy could surpass that of the United States in 2039. And that date could move up to 2026 if China lets its currency appreciate by a mere 2 percent a year.
As I keep saying, we live in interesting times and I think the next few decades are going to make the last few look like peanuts. The big question for China now is can they secure enough of the world's resources to make a run at the US.
  • “We’re no longer talking about China making lots of shoes,” he said. “China is about to leave everyone behind in a big way.”
Selling China in 2009 would be like selling American in 1909.- Jim Rogers


Portfolio Positions with Yellow Caution Tag Attached

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Last week's sell off has put some of our long positions into a bit more precarious positions on their charts. I am going to list the names who we have to watch closely. Tactically I enjoy buying stocks as they fall back to support, which puts me at odds with 90% of Wall Street (and their machines) which seems to be all about momentum chasing (buy high, sell higher). The issue with my strategy is what is a stock falling back to its support Tuesday is a stock that breaks support Wednesday. And/or a stock that bounces right back over support by Friday. So we get whipsawed a lot around these inflection points which is no big deal (transaction costs are so cheap nowadays), but in terms of writing a blog I might have a few positions it looks like I am reversing my opinion on every 2nd or 3rd day.

Here are the names that fall into 2 categories

(A) Stocks that have fallen back to support (or broken it very briefly) and thus far held; could be poised for more trouble if the market doesn't begin to surge again. Stocks in this category I have typically had limit buy orders which hit late last week.

(B) Stocks that have broken through support but no reason to throw in the towel yet; however we'd like to see them regain their moving average in very short order. Otherwise they actually become more attractive as technical short set ups. Stocks in this category I have typically had stop loss orders to curtail a position, which hit late last week.

Ironically both these stock pre announced positive information on their quarters - the wonders of the market never cease.


Most everything else we own on technical merit has a chart like this which is a "all systems go" chart:


Long all names mentioned in fund; no personal position

Bookkeeping: Adding Back to TriQuint Semiconductor (TQNT) as it Recaptures Support

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We were stopped out of a good amount of our TriQuint Semiconductor (TQNT) late last week as it broke support. But as I said then, this is my favorite sector from a fundamental point of view at this moment, and if the charts improve I am more than willing to get the exposure back. We'll add back about 0.75% of the portfolio here, with the same precepts - stop out if support is broken. Until Triquint gets north of $7.50 it is no sure thing that the stock is in a "all clear" location.

Added back to the position around $7.20; we were stopped around $6.90 Friday so we lost 4% in return for safety.

Long TriQuint Semiconductor in fund; no personal position

Robert Prechter of Elliott Wave Sticking to His Bearish Bets; No Change to Call for New Lows

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Robert Prechter is unbowed by the market's levitation; thus far near term bears of any sort (Kass, Prechter) have been mocked by the market. Last we checked with Prechter was August when he was calling for a quite substantial pullback [Aug 11, 2009: Robert Prechter of Elliott Wave Meets Yahoo Tech Ticker] It is hard to string together bold calls, back to back. [Feb 24, 2009: Robert Prechter of Elliot Wave Fame Advises Closing Shorts]

He still could be right, but just early. We'll know in 6 months.

Via Bloomberg
  • U.S. stocks may suffer a “major decline” after climbing to the highest levels in almost a year two weeks ago, according to Robert Prechter, founder of Elliott Wave International.
  • The Standard & Poor’s 500 Index will probably fall “substantially below” 676.53, the 12-year low reached on March 9, he said. The measure surged as much as 58 percent to 1,071.66 in the ensuing seven months on signs the recession is ending. His projection implies a drop of more than 34 percent from last week’s close. Technical analysis, Prechter’s field since 1975, involves making predictions based on price and volume history.
  • “Stocks are very overvalued,” Prechter, who advised betting against U.S. equities three months before the market peaked in October 2007, said in an Oct. 1 telephone interview. “Stocks peaked in September and are back in a bear market.”
  • Prechter, 60, said he’s basing his prediction for a decline on chart patterns, dividend yields and extreme levels of investor optimism. The combined dividend yield for the 30 stocks in the Dow Jones Industrial Average is too low at 2.94 percent, he said, citing an analysis of the 1929 market peak. “Stocks are still in the most expensive area in history,” he said.
  • Stocks, commodities and real-estate will suffer from a rebound in the U.S. dollar, Prechter said. “I’m very bullish on the dollar,” he said. “There’s extreme pessimism, and that usually marks a bottom.” The Dollar Index, uses to track the currency against those of six major American trading partners, dropped to 76.05 on Sept. 23, the lowest level in more than a year.
Track record
  • Prechter’s forecasts have had mixed results. While the former rock-and-roll drummer achieved fame for predicting a stock market crash two weeks before Black Monday in 1987, his standing suffered in the 1990s because he missed the almost decade-long bull market. In December 2002, he said the Dow Jones Industrial Average would fall below 1,000. It hasn’t dipped below 6,000 since then, climbing 25 percent in 2003 and then another 35 percent through Oct. 9, 2007.
  • Prechter is an advocate of the Elliott Wave Theory developed by accountant Ralph Nelson Elliott during the Great Depression. Elliott concluded that market swings, or waves, follow a predictable, five-stage structure of three steps forward, two steps back.
[May 15, 2009: Robert Prechter of Elliott Wave Theory Still Bearish]

Sunday, October 4, 2009

Bookkeeping: Weekly Changes to Fund Positions Year 3, Week 9

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Year 3, Week 9 Major Position Changes

To see historic weekly fund changes click here OR the label at the bottom of this entry entitled 'fund positions'.

Cash: 73.8% (v 67.4% last week)
24 long bias: 21.1% (v 20.5% last week)
5 short bias: 5.1% (v 12.1% last week)

29 positions (vs 31 last week)

Weekly thoughts
US markets fell on back to back weeks for the first time since July; the S&P 500 dropped 1.8% and the NASDAQ shed 2.1%. It was a very pleasing week, not so much because the market fell but because for the first time in a long time it seemed as if the markets obeyed some old rules, especially of the technical analysis kind. James DePorre ("Rev Shark") over at Realmoney.com said as much Friday afternoon:

Technically, this is troubling action. We have been bailed out many times in the last few months just when it looked like we were ready to fall apart. Those crazy dip-buyers would aggressively chase the market straight back up and frustrate those who were trying to apply some basic concepts of chart reading.

This time it is looking like the old-fashioned rules of TA may actually be kicking in. We had a light-volume bounce on Monday that quickly failed, and then another leg down on Thursday.


While I cannot figure out the rally on Monday on no news, outside of "mark up the quarter to make our books look better than they should be" by institutions, the rest of the week was quite textbook and unlike many months this year, it actually felt like having many years of experience in the behavior of markets actually helped, rather than hindered. Blindly chasing was not rewarded, that's also a change. All in all, it was a flashback to times when automated computer orders who live in the world of momentum trading did not dominate everything and it was nice.

Since a week ago Friday we had outlined a short term strategy of pressing down on the market on any break below S&P 1040 with a target of S&P 1020 - while Monday's rally pushed that to the side, it came to fruition this week. The game plan worked to perfection Thursday and Friday and a large part of this period's profits (every 4 weeks we measure ourselves in a "period") will have come from a swift foray into put options on the S&P 500 as per our game plan.

So now what? Well it depends if last week was a one week wonder where old rules applied, or if there is an actual sea change. Obviously we have no idea. If it is the former, we'd expect some more bouncing action after a retrace to a key moving average happened last week. If volume is pathetic (as it has been for months on end) this bounce should peter out in the weeks ahead and that should provide a heck of a great shorting opportunity. If however, nothing matters other than liquidity being thrown in the market to drive up nominal asset values while continuing to crush the dollar - then this was just a pit stop to further "prosperity". Here are the key charts to consider ... it really has all just come down to the dollar as we've been saying repeatedly.


Last week, the dollar was able to break over one key resistance, obviously getting over $78 would signify more game changing behavior. On the S&P 500 I'd like to add short exposure either on a more significant bounce OR a break down below the 50 day moving average. We've lightened up short exposure significantly at the end of the week as the S&P 500 is down 7 of the last 8 sessions and has given back a quick 5%. This is more of a tactical move as we await to see how the market acts, than any bullish condition. S&P 990 remains a key level for us, as a breakdown below that level would create our first "lower low" in many moons.

Everything above has nothing to do with fundamentals or the economy... because frankly technicals have dominated things for much of the past few months. As we like to say in terms of economic or fundamental news it only matters when it matters. I was struck with the reaction to the economic news this past week - MUCH of it was NO DIFFERENT than the news we've been getting the previous 2-4 months. But in those time frames market participants were willing to get giddy over "less bad" or vague talk of "green shoots". One could apply the same precepts to last week's data set, but this time they were not enough. So once more - the larger question: pitstop to further ignoring of reality and leaning on government to provide the consumption model of the US or change in character as market participants realize green shoots is all about the government ATM replacing the house ATM.

Unlike last week the coming week is light in economic data. ISM services is Monday and really this report should get much more attention, rather than last week's ISM manufacturing since services now swamp manufacturing in America. It is also much harder for a government program to turbocharge the service economy as opposed to handing people $4500 to buy cars. Consumer credit comes Wednesday, and trade figures are Friday - normally the former figure is a non starter to the market but last month we saw an enormous (record breaking) contraction. We also begin earnings season with the traditional miss by Alcoa (AA). Ok, they only miss estimates 80% of the time... but the following weeks bring the heart of earnings. Which leads us to the next question:

Can just beating analysts expectations (again) be enough, regardless of valuation? What we saw last quarter was stock after stock bid up furiously after losing only 18 cents rather than 28 cents. As long as you beat the analysts estimates it doesn't matter if your stock was valued at 50-80x forward estimates, you were bid up. I will assume analysts once again underestimate the golden era for corporations - they cut jobs (or outsource them) which drive down expenses; while government steals from future generations to give to consumers today, which helps maintain revenue at some subdued level. Effectively future generations subsidize the entire economy plus corporations profits. I expect a similar outcome this quarter and with the large banks reporting early, and everyone believing balance sheets no longer matter we can clap like seals when banks tell us how much money they make when the Federal Reserve destroys American savers by driving down rates to nothing; allowing banks to print money as long as they turn on the lights in the morning. All those old loans sitting in the dump on the balance sheet? No problemo; we're just going to keep rates ultra low until banks can earn enough to make all those problems go away. And for the rest of corporate America - see strategy above; slash workforce, beat analyst estimates, receive money from consumer via government - win, win win.


This game will eventually end when analysts, being burned by being too conservative in estimates finally overreach and push expectations to a level companies cannot reach by slashing and burning even more American employees. I don't think that will be this quarter but something to ponder by middle of 2010. Unless we see real private demand return a real conundrum shall hit the market at that time. So again, the question will be are we willing to bid stocks now valued at 60,70,80x forward estimates up again just because they beat a headline estimate by analysts. This is all that seems to matter around earnings season, so I don't know at what point people begin to question paying 40x forward earnings for a retailer or 70x forward earnings for an industrial company. The justification of "they'll grow into those earnings" becomes harder to justify the farther into the stratosphere valuations go.
  • The stock market's strong rally is facing its next test as companies gear up to announce third-quarter earnings that, while still weak, will very possibly be better than investors expect.
  • Earnings in the first two quarters of the year that beat expectations helped propel the market's recovery, and the prospect of a repeat has even some bears wondering if they have been too pessimistic.
  • One big reason for the market's continued strength is that expectations were so low for the economy and corporate earnings that the market was able to rise even on modestly good news.
  • "If you are expecting to lose a dime and you lost a nickel, you are a winner," says senior analyst Howard Silverblatt at Standard & Poor's.
  • The parade of better-than-expected news began in this year's first quarter when S&P 500 profits fell 36%. Analysts had expected worse, so 65% of companies exceeded forecasts, according to Thomson Reuters.
  • In the second quarter, although profits fell by almost a third, 73% of companies produced results that were less bad than expected. That tied the first quarter of 2004 for the highest percentage of companies beating estimates since Thomson Reuters started tracking such numbers 15 years ago, and it helped propel stocks still higher.
  • Expectations remain low. Analysts forecast a 25% decline in third-quarter profits for companies in the S&P 500 compared with a year ago, not counting charges and special items, according to Thomson Reuters. When the quarter began, analysts had been forecasting a drop of 21%.
  • For makers of industrial materials, analysts now forecast a 68% third-quarter profit drop. The expected profit decline for energy companies is 64%, for industrial companies, 45%, and for technology companies, 15%, Thomson Reuters says.
So in the first quarter earnings fell by 36%, and in the second quarter by almost 33%, yet we bid up stocks on "beat the analysts estimate at least!" We'll see how many more quarters this can continue - due to the continued elevated status of weekly jobless claims it is probable the slashing of jobs will lead to more "surprises" this quarter to the positive for profits. I expect a litany of bad revenue numbers as was the case last quarter, but as a weaker currency helps exports some multinationals should also benefit from that situation.

As always the importance will not necessarily be the news, but the reaction to the news - that is what I'll be studying in the next 4-5 weeks as we swig Kool Aid and tickle ourselves with green shoots.

Updated Position Sheet

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Cash: 73.8% (v 67.4% last week)
Long: 21.1% (v 20.5%)
Short: 5.1% (v 12.1%)

This data is updated weekly and can be found on 'Performance/Portfolio' menu tab on the website. As always the total gain/loss (both dollars and percentages) only apply to the open portion of the position; it is does not apply to portions of the position sold earlier.

*** Please note, I've added an options category for things I am holding longer than intraday.

(click to enlarge)

LONG (2 photo files)

SHORT


Saturday, October 3, 2009

Steve Leuthold of Leuthold Core Investment (LCORX) Mutual Fund Remains a Roaring Bull - S&P to 1200 in 2009, 1350 in 2010

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Steve Leuthold correctly turned bullish at an opportune time and sees no reason to change tune at least through mid 2010. His Leuthold Core Investment Fund (LCORX) is having a good year at +20% year to date, and unlike many mutual funds nowadays he actually has positive 3 year (+4%) and 5 year (+7%) returns.

Again, one of the few in the mutual fund world who does not see cash as trash, and instead as a viable investment vehicle - Leuthold is another of the "go anywhere" types that does not fit into a Morningstar box. In his top 10 positions are exposure to Brazil, China, high yield junk bonds, and gold. I love his core philosophy...

The Leuthold Core Investment Fund differs from most other mutual funds by investing in stocks, bonds, money market instruments and certain foreign securities. When appropriate, as disciplines dictate, the Core Fund may also hedge its market exposure. We adjust the proportion of each asset class to reflect our view of the potential opportunity and value offered within that sector, as well as the potential risk. Although there are no guarantees, it is our belief that successful investing demands skill both in making money and attempting to preserve any gains.

The investment guidelines of the Leuthold Core Investment Fund follow a 30%-70% Equity Exposure and 30% - 70% Fixed Income Exposure. Under extreme market conditions, there may be a departure from the basic core guidelines.


Via Bloomberg
  • Steve Leuthold, whose Leuthold Core Investment Fund has beaten 95 percent of its rivals in the past five years, said the Standard & Poor’s 500 Index will jump to 1,350 next year as the economy recovers from the worst contraction since the Great Depression.
  • The 71-year-old investor, who turned bullish after his Grizzly Short Fund returned 74 percent because of the equity market rout in 2008, predicts that the stock index will end 2009 at 1,200.
  • “There’s pretty good momentum, and the market psychology is right,” Leuthold, who manages $4 billion, said in a telephone interview from Minneapolis yesterday. “The markets turned up before the economy did. Now, the economy is improving. It might be a little better than most think. It ain’t wonderful, but it’s a lot better than it was.”
  • “I’m really not too concerned about a minor move (correction) like this,” said Leuthold, who has 72 percent of his fund in stocks. “It’s premature to take any defensive action.”
  • Leuthold said that 25 percent of his equity fund is in technology stocks, while 12 percent is in small- and mid-sized biotechnology companies.
  • “We think there’s going to be a lot more activity in terms of acquisitions,” he said. “The large tech companies are loaded with cash and willing to diversify in other areas.” (I agree with that point, the Fed has made money nearly free again - why not use it to scoop up anything you want)
  • Leuthold has 8 percent of his portfolio in foreign banks, and he’s evaluating financial institutions in Europe and Asia. “Not one of them is an American bank,” he said. “We don’t have American regional banks because our concern is that they seem to be maybe overexposed to commercial real estate, where you maybe have a second shoe to fall.”
What after summer 2010?
  • Leuthold isn’t convinced stocks will keep rallying in the second half of 2010. “Valuations would be getting richer at that point,” he said. “We’re not going to make a new high above 1,550 or anything like that. There’s got to be more work done. And the U.S. is a lagging global economy now.”
  • He says it may take as long as five years before the S&P 500 exceeds its October 2007 record of 1,565.15, and 30 percent of his equity portfolio is allocated to non-U.S. companies on a bet that economic growth rates will be higher abroad.

Friday, October 2, 2009

Paolo Pellegrini, Formerly of John Paulson's Hedge Fund on Bloomberg

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I admit I had not heard of this fellow until I saw this interview on Zerohedge, but apparently this is the key brain behind the massive bet against subprime mortgages that made John Paulson both famous and one of the wealthiest men on the planet.

The man who "made billions of dollars for John Paulson shorting real estate," Paolo Pellegrini of PSQR LLC, discusses his economic outlook and investment strategies.

Pellegrini, born in Milan, worked for investment bank Lazard Ltd. from 1986 to 1995, according to Paulson & Co. marketing materials. Like Paulson, he has a master’s degree in business administration from Harvard University.

Now he has moved out into his own fund; not only is it a good interview but I am struck we have reached a point that a hedge fund manager has to go on Bloomberg to argue for a fair economy for the masses. Ummmm.... are there words for what has happened to the U.S system? I never thought in the argument of the elite versus the masses, that hedge fund managers would be joining the cause of the masses AGAINST our so called "representatives" and their top donors.

All I can say is (a) it is surreal and (b) I am glad to hear some prominent and bright minds agreeing with what we have been preaching for a few years. I used to sit alone (or only with a few others) on this park bench, in the trenchcoat, with this brown bag in hand - talking crazy. Now I see guys in $6000 suits talking crazy like me too - welcome to the park bench fellas.

If you don't give a hoot about social issues or the bankrupting of our country by a small band of thieves, he also has some investing tips. 8 minutes worth your time:



[Jan 31, 2009: Dealbook - John Paulson's Year End Review]

Brazil Rallies Upon Winning 2016 Olympics

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What a great score for Brazil; they now have the 2014 World Cup and 2016 Summer Olympics back to back. If I have any Brazilian readers, I'd like to visit summer 2014 ;)

Stocks are rallying in kind, up 1.5% - certainly there will be some long term benefits to the country's infrastructure from these huge events. This is the first time the Olympics will be held in a South American country. All this with a "socialist" at the head of the country ;) Apparently Chicago (and Tokyo) were ousted in round 1. Madrid and Rio de Janeiro were the finalists.

You can almost feel the global sands shifting below our toes.
Via Bloomberg:
  • Brazil’s Bovespa stock index rallied, the only major equity measure in the world to rise today, and the currency gained after Rio de Janeiro was awarded the 2016 Summer Games, luring investment to the country.
  • The Bovespa climbed 1.5 percent to 61,332.97 at 12:52 p.m. New York time; the real, the best-performing emerging-market currency against the dollar this year, gained 0.4 percent to 1.7795.
  • “The combination of the Olympics Games and the World Soccer Cup will be a very powerful force,” said Bill Rudman, who helps manage $1.5 billion in emerging-market stocks at Blackfriars Asset Management, in a telephone interview from London.
  • The games would help sustain Brazil’s economic growth by injecting $51.1 billion into Latin America’s largest economy through 2027 and add 120,000 jobs annually through 2016, according to studies by a Sao Paulo business school for the Ministry of Sports. (who knows how accurate that is, but of course it is a plus)
  • Brazil plans $11 billion of investments as host, more than any other of the bidding cities.
  • The infrastructure will be gigantic,” Kang said in a phone interview from New York. “Luckily for Brazil they have all the commodities to deal with massive infrastructure projects.”
Via Reuters
  • Rio de Janeiro's successful bid to host the Olympics in 2016 culminates Brazil's remarkable rise over the past decade from a near basket case to an economic and diplomatic heavyweight.
  • Just as the Beijing Olympics of 2008 marked China's revival as a world power, Rio 2016 may be seen as a stamp of approval on the South American giant's coming of age. (I agree - the timing will be perfect)
  • After decades of underachievement, Latin America's largest country in recent years has finally made good on the immense promise of its abundant natural resources, vibrant democracy and vast consumer market of 190 million people.
  • Rio's Olympics victory may be the most spectacular sign of Brazil's surging profile under President Luiz Inacio Lula da Silva, the country's first working-class leader who nurtured an economic boom that has lifted millions of people out of poverty and made him one of the world's most popular leaders.
  • Brazil's revival has translated into a path out of poverty for about 20 million people, many of whom have benefited from Lula's generous welfare programs.
  • A run of luck also has worked in Brazil's favor, from the commodities price boom that boosted its exports of raw materials such as iron ore and soybeans to one of the world's largest recent oil finds off Rio's coast in 2007. (very true - being so commodity rich is just the luck of the draw)
  • Lula's appeal for South America's first Olympics followed a similar line -- that rich countries have enjoyed more than their fair share of the Games' spectacle and prestige.
  • .... Brazil still has plenty of challenges to tackle before it joins the elite club of developed nations. The education system suffers from chronic underinvestment and Brazil has no world-class universities, leaving business leaders worried about a lack of qualified labor. Its creaking infrastructure also threatens to cramp its growth.
Now if someone could go into Argentina and fix that basket case you'd have a great 1-2 combo in South America.

David Rosenberg Makes the Case for Canada as a Low Beta Emerging Market Play

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Preface: for those not familiar with David Rosenberg, he is a very well known economist (some claim a relative perma bear) who made the move over from Merrill Lynch to a Canadian firm Gluskin Sheff, earlier this year. While having mostly missed this rally, much of what he says deals more with the long term structural issues we bring up - rather than any tactical short to mid term trading concepts.

Reader 'SKS' pointed us to this article from the Toronto Globe & Mail in which he makes the case for Canada as a "low beta way to play the emerging markets via commodity exposure". You will also notice the side by side "sector" weighting in the major indexes of the S&P 500 versus TSX.


Please note, from my general understanding the Canadian banking system is dominated by 5 major banks (an argument against "too big to fail") but they are highly regulated (an argument for regulation).
  • Banking in Canada is widely considered the most efficient and safest banking system in the world,[1] ranking as the world's soundest banking system according to a 2008 World Economic Forum report.
But as the globe expands and modernizes the real juice will be in Canada's commodity exposure, very similar to the situation in Australia.
  • I stand accused of having missed the turn and that accusation comes from the throngs who believe that the only way to generate a positive return is through the equity market. You see, for so many pundits, you are labelled a “bull” or a “bear” based on how you feel about the equity market. You turn on the various business shows on bubble-vision and it's all about equities; one would think that there is no other market on the planet.
  • Equities continue to grab the imagination of the investment public even though they are now barely halfway through a secular bear market – a long-term, flat-to-down cycle – that is likely to last 18 years. This does not mean that cyclical bull markets cannot occur in the meantime – they did even in the 1930s and in Japan in the 1990s. The S&P 500 has even managed to reach two historical price peaks (September, 2000, and October, 2007) during the current secular bear market phase.
  • My contention is that the commodity market entered a secular bull market right around the same time that the equity market entered its secular bear market – a tad later actually, in November, 2001.
  • Not surprisingly, the last secular bear market in equities, from the mid-1960s to the early 1980s, also took hold alongside a secular bull market in commodities; we are seeing something very similar take hold this time around but for very different reasons.
  • What really caught my eye this time was that during the vicious selloff in commodities last year, the price of virtually every commodity bottomed at a higher price than during any other recession in the past.
  • I always cringe when I hear the words “it's different this time,” but in fact, in the case of the resource sector, this indeed seems to be the case. Why? It's all about the shifts in the supply and demand curve.
  • On the supply side, we have a much more concentrated sector, with fewer players than in past cycles following the wave of global consolidation over the past decade, in particular. Moreover, the executives of these resource companies are business people, not geologists, and as such have been much more disciplined from a production standpoint.
  • On the demand side, an emerging Asia climbed out of its depression just over a decade ago with restructured economies, vastly improved balance sheets and changed political landscapes.
  • What we refer to as emerging markets once commanded more than half of global GDP before the industrial revolution, and are on track to regain that lost share in coming decades; likely sooner rather than later.
Canada v US
  • This is where Canadian strength relative to the United States comes into play – nearly 45 per cent of the TSX composite index is in resources; almost triple the share in the United States.
  • Almost 60 per cent of Canada's exports are linked to the commodity sector, roughly double the U.S. exposure.
  • Canada is basically a low-beta way to play the emerging markets via commodity exposure.
  • Moreover, considering that the Canadian dollar enjoys a 65-per-cent correlation with the CRB index, the added boost from the appreciation in the loonie means that an American investor putting money in Canada would have garnered a 28-per-cent gain on a currency-adjusted basis (versus a 4.0-per-cent gain from the S&P 500).
  • If the history of long cycles is any indication, this period in which the Canadian market outperforms its southern peers is barely halfway done.
No position

True September Unemployment in America Reaches Towards 14%; Our System is Broken

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I actually hate doing any form of analysis on the monthly unemployment figures because it is "junk in, junk out". Analyzing junk leads to useless conclusions... here are some of the basic facts
  • worst than expected job losses - I won't reprint the number because (a) it's a lie and (b) it will be revised down in the future
  • hours worked at all time lows
  • wage growth at a measly 0.1%
First, the whole notion that a $14 trillion economy can be measured on any level 3-4-5 days after a month end is preposterous. Anyone who has worked for a public corporation who has to report the SEC knows how hard that is for even 1 single company - not to mention an entire economy. Second, as we've outlined for over 2 years many of our economic reports have been "juiced" to the sunny side because apparently the people cannot handle the truth - the monthly labor report is among the worst with the "revisions" over the years. If you are newer to the website please spend some time this weekend revealing to yourself what is behind the curtain. It is too annoying to go over each time but I've summarized the countless ways these figures have been cajoled in this piece [Apr 3, 2009: Real March Unemployment Rate Reaches 12.5%] - one only wishes the mainstream media would do the same homework.

Know this, if the government still reported unemployment as it did pre early 1990s when politicians started deciding the old ways no longer are palpable to the public, our unemployment rate would be about 4% higher than "as reported". That goes for the "good times" in the middle of this decade as well - i.e. when we were told unemployment was 5%, it was really closer to 9%. So each time you hear the economy is only "as bad as early 1980s", realize it is far worse - the "adjusted" numbers of 2009 are as bad as the early 1980s... but the unadjusted numbers i.e. an apple to apple comparison (as close as I can get it) shows us somewhere near 14%. All the 'explaining away' of reality provides a 4% variance so whatever you hear on the national nightly news... add 4%. *That* figure can be compared to the late 70s/early 80s or whatever period of time people wish. We are in the worse labor slump since the Great Depression - by a long shot.

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Here is another reason these figures are absurd and wasting time analyzing them is useless... and it shows how even more absurd it is the lemmings of Wall Street react to these figures as if they are truth.
  • The Labor Department today also published its preliminary estimate for the annual benchmark revisions to payrolls that will be issued in February. They showed the economy may have lost an additional 824,000 jobs in the 12 months ended March 2009.
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Let's sit back and think about that for a moment; with the caveat that the data is somehow close to being accurate. Remember all those "better than expected" employment figures we rallied on? Remember all that market capitalization we added to the stock market as economists forecast job losses of 400K in month ABC, and it came in at 375K instead? Do you see what a farce it all is? Now as we sit here in October 2009, WAY after the fact, the government comes in and says "oopsie" we were off by 824K jobs in aggregate on all that data we gave you. Divide that by 12 months and you get about a 70,000 jobs a month UNDER statement. And you want me to buy or sell stocks based on this sort of accuracy? Well that's what Wall Street does each month.

So all those months we "beat" an estimate by 30, 40, 50K jobs and cried "recovery" and drove stocks up... you see in retrospect how it's all just a game. I assume many of these jobs they are now taking back are the fake jobs the government statisticans have been adding each month via the birth / death model (this is a complete guess by government as to how many small business jobs the US is spawning each month) Read about that hoax here ---> [Jan 27, 2008: Monthly Jobs Report & Birth Death Model]

The only surprise to me today was that people are surprised! Sure in a few months we'll have -100K job losses as reported by government (which in reality, ex government distortion, will be -250K months), and then after that in 2010 we'll have some months of positive growth (which probably will mean no growth in reality). But at this point, 1/3rd of our entire work force is in government or pseudo government sectors (education, healthcare) so there are only so many jobs left to lose in the private sector without emptying out every Starbucks bistro. We'll clap like seals next year, and say everything is fine. That's what ostriches do when they see a hole in the sand.

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Here is the reality - this is not something that just happened the past few years. We've hollowed out our economy as we transform into a SHAM WOW service economy. Manufacturing has dropped from mid 30% of the economy a few decades ago to 12%. Replacement for those jobs? (good question - I guess new bars and restaurants) The main job growth the past decade in the private sector has been "building homes" (blue collar) and "financing homes" (white collar). Millions upon millions of jobs have been dependent on a Federal Reserve driven bubble. Until Ben Bernanke can replicate the magic of Alan Greenspan and reinflate housing, those jobs are not coming back. So we need new bubbles. Be patient, Ben is working each month on making that happen.

What America has become is basically parallel to any old school technology company which is losing its edge. As it stagnates, it still wants to please Wall Street and post "good numbers". So what does it do? It cuts expense - generally they take a huge ax to Research & Development. What does that allow it to do? To provide a pretense of "stability" and by not investing in its future it allows said company to "beat the number" today. That can go on for a while... but it is a mirage. You are cutting off your nose to spite your face. Then one day you wake upand there is little left to cut and the company is exposed for what it truly is. That is what has happened to the US economy, but over a longer period of time. And with the caveat that unlike the company, the government can print money to hide reality for a much longer period. It is now being exposed, SLOWLY but SURELY.

We have not invested - we have not educated properly - we have done smoke and mirrors for a decade now, going through stock market bubbles and real estate bubbles to compensate for lack of job growth & wage growth in the middle class. And now the bill is coming due. But only the first installment of the bill. And we are STILL IN DENIAL. We have not created 1 (net) private sector job in a decade. [Aug 14, 2009: No New Normal Say Economists; Prosperity Without Jobs?] What have we created instead? More and more unfunded liabilities for the future generations to deal with - job growth is surging in federal government and healthcare - effectively we are transferring our jobs from the private sector the public. Why can this happen? Because in the private sector you have to pay your bills now. You cannot create jobs unless you can pay for them. (unless you are bailed out by government!) In the public sector, on the other hand, you can create jobs today and not worry about paying for them for decades... that is what our federal government and healthcare systems are. Many state and local government jobs are attempting to do the same thing. I read in the past two weeks that in Michigan there are 18 job seekers for every 1 job. Nationally, that figure is 6 job seekers for each job. In Washington D.C.? 1 job seeker for every 1 job. Do I need to say anything more about what is happening? Our dynamic globally competitive system is creating a plethora of opportunity... in Washington D.C.



Industry Change, May 1999-2009

(thousands of jobs)*


Private healthcare 2898
Food and drinking places 1567
Gov educ 1390
Professional and business services 885
Gov except health and ed 843
Social assistance 796
Private education 772
Arts, entertainment, and recreation 188
Gov health 148
Mining 133
Financial activities 130
Utilities -40
Transportation and warehousing -43
Retail -91
Accomodations -119
Wholesale -166
Construction -238
Information -525
Manufacturing -5372


*Gov health and gov educ based on April 2009 estimates
Data: BLS


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But as a stock market speculator I have to put that all aside - I cannot care about Main Street because Wall Street could care less. This country is about Wall Street - the Federal Reserve has let us know that with its actions the past 2 years. I could make a case this is a golden era for the multinational corporation. Why? Because "capitalists" do not need you anymore. [Sep 22, 2009: BusinessInsider - The Real Problem is the Economy Does Not Need you Anymore] The Fed is happy to provide cheap capital at any cost, and throw the savers of the nation under the bus. Devaluing their money is now a national past time. And it gets better from there.

Here is the game we are playing and why the stock market could still do fine (for a time) as the economy continues to stink (for a long time). America dominates the world in multinationals. Those multinationals do not need American workers - much of the work (except in the corporate suite of course) could be done anywhere. So even with flat lining revenue, costs can shrink big time. Method 1: wage stagnation - that's been happening for a decade. As less jobs are out there in the private sector, and more workers compete for them - wages can stagnate. Or even drop. [Sep 4, 2009: Job Seekers Across America Willing to Take Substantial Pay Cuts] Method 2: move the jobs offshore for the real savings.

But you argue ... companies will just shoot themselves in the foot! Without us (us = the great American consumer machine) being able to buy things how can these companies thrive? Well we're not in 1920 Henry Ford time anymore where the thought was people on the line needed to be able to afford what they make. Again, if you drop your costs 30-40-50% as a corporation, your revenue can stagnate or even drop and you can do well. (you saw the last earnings report season right?) Asians can pick up some of the slack in revenue growth - that helps. But here is the biggest kicker: the US government will "fix things".

There is a big hole in revenue for these corporations as Americans cannot spend like they used to, since they are losing their jobs (14% real unemployment, and closer to 20% underemployed + unemployed) and the house ATM is no longer here. So who fills that hole? The government ATM [Jun 5, 2009: 1 in 6 Dollars of Income Now Via Government; Highest Since 1929] [Jul 30, 2009: Cash for Clunkers a Bit Hit, Government Asks "What Can we Buy You Next?"]

Boo yah! Do you see why it can be a golden age for the corporation? He can move his labor force anywhere on the planet. And politicians desperate to keep their own jobs can just layer more debt onto future generations to hand off monies to the voters of today! (employed and unemployed). That money stolen from the future can then go to boost the top line of corporations over and above where they would be in a real free market. Only 1 person loses in this - the future generation. So we have to separate the stock market from the real economy - I can in fact make a case this might be the best 10 years ever coming for our largest, global companies. Unfortunately the vast amount of jobs in America are created by small companies which are being stomped on. Main Street. Wall Street. 2 worlds - unless Wall Street needs a bailout, then Main Street = Wall Street.

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So what we have here as we've transformed to this "service economy" is nothing more than a subsidized economy... it did not happen overnight. We've been highlighting this for many years [Dec 8, 2007: Do the Bottom 80% of Americans Stand a Chance?] - and in the coming 5-10-15-20 years we'll have our new asset spikes, cyclical peaks and the like. But we have not changed the underpinnings. We continue the course and have covered over reality with paper printing prosperity. [May 19, 2009: Paper Printing Prosperity Defined] It will get worse from here in the next few cycles (next 10-20 years) as politicians get even more desperate to hide reality. That's the only solution we know in America. So until a wholesale change comes at the grass roots I simply do not see any of this changing - expect government to grow and grow - healthcare to bloat even further as that is our only real job growth. And more and more stealing from the future to fund the now. That blame can be placed on the US citizen because he is happy to take take take without asking what the costs are. There is no will in our leadership to see reality and explain it... and no will in the citizens to hear it. In fact I doubt many in leadership see it my way. Because they live in a parallel universe, a cocoon of comfort - and everything "as is" is just fine for them.

It will all end terribly badly - but perhaps we can keep the mirage going for another decade. Unlike Japan, I expect when we truly implode our debt to GDP will be still growing at a 45% angle.


These issues are not about a recession, a recovery, green shoots, or Kool Aid. We have a structurally broken system that no one will acknowledge, that is now being intertwined with an evolution of globalization. So let us enjoy our rollicking stock market and drink Kool Aid. But if you are going be reading this site, you are going to hear the ugly truth of what is happening in the background. At least my version of it.

Bookkeeping: Covering Eaton (ETN) Short

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There is still a gap in Eaton's (ETN) chart in the mid $40s, and frankly this company reported one of the worst earnings reports last quarter of any I follow; but mutual funds are piling in this name as an early cycle recovery stock.

With the stock pulling back to its 50 day moving average, I am going to limit the damage here and exit with a 5% loss. This was a 2% exposure. Much like Caterpillar (CAT) and PPG Industries (PPG) - until managers who follow the "playbook" give up the ghost on recovery - these type of names will be hard to take down. I expect all these stocks levitating on Kool Aid to take a hit at once.

No position


Bookkeeping: Many Limit Orders Hit

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I had a bevy of limit orders hit this morning - these are all mechanical trades that I set out earlier and just happened to hit at once this morning.

First the limit purchases - these are not huge purchases but get us some exposure at far better prices than were to be had the past few weeks. All together about 2.75%

  1. BHP Billiton (BHP) @ $62 (executed at $61.77) - added about 0.75% exposure
  2. Blackstone Group (BX) @ $13.66 (executed at $13.44) - added about 0.75% exposure
  3. E-House Holdings (EJ) @ $20.55 (executed at $20.04) - added about 1.25% exposure
Please note - we just sold EJ out yesterday at $22.70! I said at the time I'd like to rebuy that stake below $21. Talk about volatility - almost got it a full dollar below my target, in under 24 hours. So we added to our core position Tuesday, it rallied 11% - we cut back, and then actually bought it back 11% lower. Fun.

Next, come stop losses - all 3 of these cut back roughly 1% of exposure, or 3% in total

  1. First American (FAF) @ $31.98 (executed at $31.91) - reason: protect profits
  2. Skyworks Solutions (SWKS) @ $12.15 (executed at $11.96) - reason: temporarily broke below 50 day
  3. TriQuint Semiconductor (TQNT) @ 6.90 (executed at $6.89) - reason: temporarily broke below 50 day
I've been taken out of my RF semiconductor exposure in a material way the past 24 hours (we have 3 names, and all 3 have been hit hard taking us into stop losses); so if the market recovers I'll be looking to get back into these names.

All in all, we netted out to no change in long exposure - it just flipped from 3 stocks to another.

Long all names mentioned in fund; no personal positions

Bookkeeping: Covered Index Short Positions

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Sometimes things just work out perfectly - the past 24 hours has been that case. Almost to the dime our short exposure of the S&P 500 index via SPY puts and a levered ETF (shorted TNA) paid off as expected - from S&P 1040 to 1020.

This morning I covered all instruments (sold puts, covered TNA short) into the early morning selloff as my target of the "gap being filled" happened.

I've cut and pasted the options returns below - 70% on just over 6% of the portfolio in 1 day.

[click to enlarge]
If you followed me into this trade please consider donating to the website - one trade like this makes a quarter. ;)

I also cut a good bit of the Bunge (BG) short we put on yesterday as it was up a quick 5% in a day.

From here I will mount a new round of shorting on any break below the 50 day moving average (S&P 1017 and rising by the day) - but I'd expect a "reflex" bounce of some sort first. If this bounce is nothing more than cursory (dead cat) will be interesting.

Frankly the economic data we have seen the past few days is not at all different the type we've been ignoring for months on end; only now it suddenly "matters".

Short Bunge in fund; no personal position

A Very Obvious Support Level

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I am posting the SPY ETF rather than the S&P 500 but to approximate just add one zero. As we've mentioned since late last week, we were looking for a break to about SPY 102 (1020) if S&P level 1040 broke. Once that happened yesterday, the market hung around in the 1037 to 1040 area for a while, and then sold off to end the day.

Now we see a very obvious gap in the SPY chart - the chart is actually a bit off but the levels are
  • Sep 4th high: 102.1
  • Sep 8th low: 102.4
Hence basically a gap between S&P 1021 to 1024. If we sell off this morning this will be an area to assume some buyers will come in and right below that is a much more important support level, the 50 day moving average - that should be around 101.7.

Every computer in the world sees this, so what will be important is how we behave at these levels. Even if this is the beginning of a much more significant move down - you'd expect bounces off these key areas as people go by the technical playbook. If we do indeed see S&P 1020 (SPY 102) today that would be roughly a 5% drop in four sessions. The largest drop we've had since March 6th has been a 7% correction...

Of course based on people covering their eyes and not believing the reality of what they see every day in the country, and instead based on listening to what government tells them with their magic fantasy dust reports a +/- 50,000 jobs difference versus expectation will mean the difference between rallying or not. Which is quite pathetic when you think about it - that's like staring at a tree in a burning forest and saying "no fire here!"

The portfolio had a solid day yesterday, so even if the market bounces off the government's brand of fiction, I won't be too inclined to chase it up ... but overt bearishness cannot be brought to the table until we make a new lower low, which is below SPY 99.

Only then we can begin pondering the gap fill at S&P 906.

Thursday, October 1, 2009

And There Goes the Housing Recovery

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As seasonality fades away, and buyers rush in to lock the last of generational theft via the $8000 1st time homebuyer handout, housing stocks begin to reflect reality. Another 50 day moving average broken - I'm starting to sniff out quite a few of these the past 48 hours.


This despite a trillion+ of taxpayer money used to suppress mortgage rates (now below 5% again on the 30 year). How truly sad. One can only imagine how horrific our situation will be if mortgage rates go back to 6.5% - which eventually they will.

So now we await the next home buyer handout making the rounds of Congress in the sure hands of lobbyists aka "new ring of crime" against future generations. All so we can tell the people everything is fine. (see car sales figures today - ghastly) All it takes is a few trillions thrown into the economy each year, taken from their grandchildren.

Someone remind me to load the heck up on housing related stocks March 2010 so I can fully enjoy the "shock and awe" when housing statistics rise in spring and summer 2010. As they've done each year for a good 50 years.... I too want to yell green shoots next spring and act "surprised" more people buy homes in June then they do in February. Then we can mock the people who use common sense while milking profits via Kool Aid.

Speaking of wasted taxpayer money, 3:30 PM approaches. Someone wake up Larry Summers.

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