Market Gamblers Aren't Getting It

[mikec]

I wish I was a paid poster.....
If some one wants to pay me to do this I will post anything they want me to say.....

[vl]

"I want to sign up."

The registry is on a table in GITMO. You have to fill it in personally. If there's no one around, the recommendation is-- strip to your shorts, put the handcuffs on, then lie on the floor and wait. The government will attend to you shortly.

[sangria]

Sheesh. That's kind of a creepy thought, government internet posters.

[itstippy]

Greetings fellow Market Gamblers!

Is anyone else a bit "uncertain" about the recent market gains? Let's recap what's happening on the news front:
* The Middle East is as volatile as a dynamite shack in a forest fire
* Japanese firefighters trek across a wasteland of ooze to spray streams of water into an exposed pit containing highly radioactive nuclear fuel rods
* Portugal is ready to go belly-up
* The Kardesian sisters are squabbling on Tweeter
* The States are competing to see who can cut the most out of the economy
* QE2 is about over
* Housing is worse than ever
* We STILL have no Federal budget
All of this leads to "uncertainty," which is supposed to be bad news for the markets. But what's happening? Stocks are up, up up! Also commodities, oil, precious metals, Treasury bonds, municipal bonds, junk bonds, and Barry Bonds baseball cards. It's almost as if a spigot 'o dough's been opened somewhere. Or, as far as stocks go, it's as if the big market-movers are confident that nothing bad will happen to equities no matter what. No uncertainty on their part.

[usaone]

Consumer spending up 11% year over year!! Its called economic expansion.

Even in the best economies there is plenty of bad news.

[itstippy]

I wasn't aware of that. 11% is huge! When did the expansion kick in?

I Googled "Consumer Spending 2011" and the results look dismal:
www.foxbusiness.com/industries/2011/02/28/consumer-spending-slows-start-2011/#
www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=147032

[sangria]

"Yarr, them Kardesian sisters vex me greatly!"

[texasredneck]

Most of any increase in consumer spending is higher prices for oil, gas & groceries.

[itstippy]

I haven't seen anything about increased consumer spending. I thought it was holding stagnant, and the extra money spent on gas & groceries meant less spending on other stuff. If consumer spending is indeed up 11% Y/Y then that changes my outlook.

USA1, do you have a link to the data?

[usaone]

Year over year. The data you linked was from Jan to Feb.

Most of that is not inflation.

[itstippy]

I have a He## of a time getting reliable data on anything. The US Census and the BLS routinely revise their stats +-25%-50% as a matter of course. I don't trust the preliminary numbers at all. They tend to release inflated numbers that look great in comparison to past numbers, and get everyone excited about growth. Cramer and company get all excited and flail their arms around. Then the next month they revise the previous numbers down, release new (inflated) numbers for the most recent month, and get the bally-hoo going all over again. According to those clowns we expand at a phenomenal rate each month, but at the end of the year when they finalize the numbers and we see 2.2% annual growth. It's ridiculous.

That said, I still can't find anything that indicates 11% Y/Y growth in consumer spending. I did find this piece from MSNBC that had a strong headline, but when you get into the pith of the article you find the most encouraging figure they have is a 7.4% increase in December 2010 compared to December 2008. That was before it got revised down (sigh).
www.msnbc.msn.com/id/41826145/ns/business-eye_on_the_economy/

Everything I've seen indicates a moribund consumer situation so far this year; a depressing slowing of growth. Original high estimates for Q1 2011 consumer spending have been revised sharply lower. There's nothing doing in the consumer economy that would encourage the market to shrug off the Japan disaster, Middle East fiasco, Euro crisis, and oil spike.

I suspect that the major market-movers have determined that no one will be forced to liquidate assets of any kind to pay for these costly developments. The Central Banks will "provide necessary liquidity" (print money) and the asset pool will remain intact - no forced selling. Hence the very low market trading volume the past few days, the easing on the VIX, and the calming of the currency markets.

If that is the case, then all asset classes are attractive. Cash would suck, because as "liquidity" floods in the asset classes will go up and cash value goes down. The money has to go somewhere. That's what we've seen the past 3-4 days. My take, anyway.

[mikec]

VL how long were you at GITMO???

[Deleted]

Mar 23, 2011 7:29:45 GMT -5 @vl said:

AT&T no longer employs enough skilled personnel to resolve conflicts- should they arise. Can you PROVE anything you've written? The personnel numbers have been steadily falling without rehires. You can get those "stats" in the financials. What "value" is anything you invested in this discussion, Frankq? YOU spend ALL your time on these threads and ALL your responses are cranky. Are you a PAID POSTER?

Horse and buggy. Now you're on to something! The horse was a wonderful option because it didn't waste fuel. In fact, it produced bio-gradeable waste. That waste used to be shoveled up and sent to farms as fertilizer. Often on hot days, when what was in the hold decayed, the ship blew up from the generated gas. After that, they stored it in crates on the decks to mitigate the gas. On the sides of those crates was stamped: Ship High In Transit, which became abbreviated to S.H.I.T. and then the periods were removed.
Early cars resembled buggies without horses. A form of them used today for urban and suburban travel would literally resolve every possible economy-suppressing issue we face. Restructuring our infrastructure to self-sufficiency is a nation mandate. It will be the SOLE PLATFORM for politics as we approach the coming elections. We don't need oil and we certainly don't need Corvettes. I suppose you own one to compensate for the shortfalls in the rest of your life or physical deficiencies because its certainly not a useful or common sense.

Western style economies and lifestyles are made possible by the easy portability of large amounts of energy made possible by the use of oil and oil products. Until there is a replacement for it, which at our current technology level we are no where even remotely close, its use will continue.

[usaone]

GDP revised UPWARD to 3.1%

Someone tell Virgil!

[itstippy]

CNN Breaking News (4:15ET 3/25/2011) Stocks rally for third day, with all three indexes ending the week up over 2.5%. Dow adds 50 points, its best week since July, 2010.

It's....weird. For a while everything was about oil. Then we had a big earthquake and ensuing tsunami in Japan, making for global economic disruption. Now oil is at $105 bbl. and stock markets are up, up, up all over the World. The turning point seems to be the emergency G7 meeting on how to handle the Japan quake, held March 18, where coordinated intervention was approved.
www.reuters.com/article/2011/03/25/japan-economy-g-idUSLHE7EF01M20110325

[texasredneck]

itstippy Makes me wonder how many trillions they pledged in direct intervention to support equities in US and Japan.

[domeasingold]

This message has been deleted.

[usaone]

Mar 25, 2011 15:24:18 GMT -5 @itstippy said:

CNN Breaking News (4:15ET 3/25/2011) Stocks rally for third day, with all three indexes ending the week up over 2.5%. Dow adds 50 points, its best week since July, 2010.

It's....weird. For a while everything was about oil. Then we had a big earthquake and ensuing tsunami in Japan, making for global economic disruption. Now oil is at $105 bbl. and stock markets are up, up, up all over the World. The turning point seems to be the emergency G7 meeting on how to handle the Japan quake, held March 18, where coordinated intervention was approved.
www.reuters.com/article/2011/03/25/japan-economy-g-idUSLHE7EF01M20110325

We have done that before in the 1990's with Asia.

[sangria]

Run, Barbie, run!

[kman]

The repose of snow is 75 degrees........Ken ...quick...Save her!!!!

[itstippy]

Fellow Market Gamblers,

If we were betting on a sporting event we would call this sudden reversal of market direction a "change of momentum". Something caused it. Bear in mind that market direction is the result of how the Big Players place their bets.

The reference to "the DOW's best week since July, 2010" is interesting. July 2010 was when the Fed became very nervous about the economy, particularly the Euro threat. Global markets were in a decided funk. The US Fed ditched its planned "exit strategy" of starting to unload its balance sheet and instead embarked on a second Quantitative Easing path (QE2) of $600 billion stimulus. It was a 180 degree change of Fed policy. The European Central Bank certainly was informed in advance, as were the Big Players. When the Big Players realized that no one would be unloading assets onto an already stressed World market, but instead would be pouring in fresh cash, market direction turned 180 degrees. All asset classes started to climb, especially equities.
www.trirachmat.com/fed-policy-the-path-to-qe2.html

When the Earthquake hit Japan the World markets were already under stress from turmoil in the Middle East, a recurring Euro crisis, and rising oil prices. As soon as the earthquake hit we saw a huge move out of equities and into cash, particularly into Yen. On March 18th the dollar hit its lowest point vs the Yen since the 1940's. The Big Players were betting that Japan would need to sell assets and buy Yen, since all earthquake-related claims would need to be paid in Yen. The play was to assets ahead of the Bank Of Japan, and front-run the inevitable demand for Yen.
articles.philly.com/2011-03-18/business/29142082_1_yen-concerted-intervention-currency-markets

The same day the dollar hit its historic low vs. the Yen, March 18, the G7 met in an emergency session to discuss the Japan situation. They gave a highly-unusual "thumbs up" to Japan to intervene in its currency. Basically, I'm guessing, they told Japan it was OK to print Yen to pay for the quake crises. This is a far better solution than having Bank Of Japan start unloading piles of assets onto an already-stressed global marketplace.

At this juncture the markets "changed momentum" dramatically. See my conclusion in reply #80. I'm not a conspiracy nut - I'm just trying to figure out what turned the markets' direction.

[kman]

Nothing changed the direction...as cold as that may sound. the events of late may only enhance. It's the back side of this that can make one loose some sleep.

[itstippy]

Bernanke has an absolute phobia of "deflation". He has vowed that the Fed will use everything in its arsenal to combat deflation. The only weapon the Fed has left is its money-printing bazooka. That's it - they can't drop interest rates any further than zero. If Bernanke perceives a threat of deflation, he WILL print money. The Big Players understand this. Go short and get creamed, regardless of economic fundamentals. Do not fight the Fed. The Fed's money-printing is now the sole economic fundamental that matters to the market-makers who trade huge baskets of assets. Any adverse developments anywhere that give a hint of deflation will trigger additional money-printing, so the Bernanke Put is "in".

Bernanke does not view "inflation" and "deflation" as opposite ends of the same measure. Not at all. Here are his working definitions of the terms:

Inflation: A rise in prices at the consumer level (finished products sold retail).
Deflation: A drop in asset values. Particularly US Treasury bonds and US Equities.

Threaten the notional values of Treasuries or Stocks and the Fed's printing presses hit high gear.

[itstippy]

kman -

You are a very successful small business owner. Be truthful - if you wanted to expand your facilities and hire more workers, and you drew up a solid business plan to do this, could you get financing at an attractive rate?

Of course you could. There is no lack of money available for good loans. The argument that Quantitative Easing is necessary to "free up credit so businesses can expand and provide jobs" is pure bunk.

Quantitative Easing is necessary to keep asset values from deflating.

[kman]

itstippy, I love what you bring to the board. Truthfully....We are refinancing the money already borrowed for a more attractive rate. Most debt will be retired this year. Warren Buffet has divested himself from Home Depot and Lowes....so the future would appear to be flat for most...However we have a custom product. The product has expanded and will continue to do so. Will I borrow more to expand my market? Most likely ...NO. I will however expand the intellectual property of the business. We have a strong brand. QE has no bearing on custom made products....It's whatever the market will bare.

[domeasingold]

Did you say "bear"?

[itstippy]

Fellow Market Gamblers - Very encouraging news today for equities.

Housing and Consumer Confidence numbers were piss poor, indicating that the US economic recovery remains "fragile" and "nascent". This relieves pressure on the Fed to end Quantitative Easing early, and spooks the Tea Party Congressional members who have been advocating drastic budget cuts and a slowdown of the Washington money spigot.

Overseas developments are encouraging. Turmoil continues in the Middle East, virtually guaranteeing a continued "wartime economy" mindset. Military hardware is the most profitable manufacturing sector we've got; we make the best in the World. No one will seriously propose cuts in the defense budget at this time. Anything big, tech, and defense looks good.

Japan continues to be preoccupied with earthquake and tsunami damage. They are in no position to challenge the US in autos or other heavy manufacturing, and won't be for some time. Rebuilding will be very expensive and contracts will be lucrative. They are a civilized country, a longtime trade partner, and have access to plenty of cash. This won't be a repeat of the "rebuilding Iraq" fiasco - this will be the real deal.

Hopefully Friday's job numbers will be tepid. Things are looking up, up, UP!

[kman]

Up is good. Bet they don't buy any Chinese drywall.