A Decade’s Worth of Returns
by ilene - December 31st, 2009 10:36 pm
A Decade’s Worth of Returns
Courtesy of Jesse’s Café Américain
From 1 January 2000 to 31 December 2009
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DiggThe year in U.S. home prices
by ilene - December 31st, 2009 10:30 pm
The year in U.S. home prices
Courtesy of Tim Iacono at The Mess That Greenspan Made
Someone may have already compiled this chart this week after the release of the latest S&P Case-Shiller data on home prices on Tuesday. If so, it hasn’t crossed my computer screen, so it seemed like a good idea to create one here today in order to see how home prices have fared in the 20 metropolitan regions that the Case-Shiller Index follows.
Note that the October data is released in December and the October figures also include the months of August and September, so this is anything but a real year-end result, but since most people aren’t interested in "year in review" type stuff in March, this will have to do.
Don’t be surprised if, around this time next year, the financial media is talking about the strong real estate rebounds in Las Vegas and Phoenix – prices can’t keep falling forever.
The Transition to Risk
by ilene - December 31st, 2009 9:47 pm
The Transition to Risk
Courtesy of Charles Hugh Smith Of Two Minds
The hidden transition to ever-higher systemic risk was the major story of 2009: nothing’s been fixed, and the risks of systemic failure are rising every day.
On this last day of 2009, I want to address what I call the transition to risk.
One analogy is the way that the risks of suffering a fatal heart attack rise in a completely hidden way. The body doesn’t signal the slow accumulation of fatty deposits in arteries; the process is silent. Nor is there any conscious awareness that arteries are hardening. The accretion of risk is slow, steady, invisible--until it’s too late.
Some transitions to risk are highly visible. If you’re driving on winding mountain roads and suddenly enter a thick fog bank which cuts your visibility to a few feet, the risks posed by continuing at high speed skyrocket.
The prudent person slows down or even pulls well off the road; the imprudent person ends up a statistic.
Then there are situations in which risk is building but someone with an asymmetric stake in the game convinces everyone the risk remains low to serve their own needs.
The boat is leaking, the winds are rising, but the skipper’s profits require completion of the passage. So he reassures the nervous passengers that everything is fine, the weather is actually improving, and the ship’s pumps can easily handle the leaks.
In an economy with a mainstream media controlled by a handful of corporations and a government financial policy in the hands of a few secretive manipulators, this "reassurance" comes in the form of blatant propaganda.
Here is an example from today’s "news": (a.k.a. disinformation)
Jobless claims fall unexpectedly as layoffs ease.
The number of jobless workers continuing to claim benefits, meanwhile, dropped by 57,000 to 4.9 million, also better than the increase that analysts expected. This supports the "headline" propaganda: "Jobless claims fall unexpectedly as layoffs ease."
But the propaganda/disinformation masks the reality that it’s actually 10 million people who are receiving benefits, and that number increased by 200,000:
But the so-called continuing claims do not include millions of people that have used up the regular 26 weeks of benefits typically provided by states, and are receiving extended benefits for up to 73 additional weeks, paid for by the federal government.
…
2009 Year in Review
by Zero Hedge - December 31st, 2009 7:56 pm
Courtesy of Leo Kolivakis
Submitted by Leo Kolivakis, publisher of Pension Pulse.
Aaron Task posted a good review of 2009 on Yahoo tech ticker. If 2008 was a year of fear, 2009 was a year of greed:
Huge fortunes were made in 2009 by investors like Warren Buffett and Appaloosa’s David Tepper, who took the Fed and Treasury at their word when they said they wouldn’t let certain (big) banks fail. Many others won big simply by being long as the unwinding of the "Armageddon trade" of late 2008/early 2009 gave a boost to the vast majority of stocks and sectors.
The year revived a lot of portfolios battered in 2008 and left egg on the face of many skeptics; yes, myself included. My concern earlier this year was banks weren’t forced to write-down their toxic assets, and I’m still concerned there will be a related comeuppance. But I underestimated how much the Fed and Treasury could do to help the banks without addressing the core of the problem, as well as the animal spirits of speculators flush with easy money. I wasn’t alone in this regard<!--EndFragment--> and a day of reckoning for the government’s largess may yet lie ahead; but the market’s momentum shows few signs of abating as 2010 beckons.
Instead of going over 2009 in great detail, I decided to post links to some of my favorite commentaries below. You’ll also notice a pic Pension Pulse’s Men of the Year above, Bernie Madoff and Harry Markopolos. Why Mr. Madoff? Because he represents the essence of what is wrong with our corrupt financial system. He’s a despicable individual who scammed his fellow Jews and lots of other innocent investors as he criminally profitted from one of the largest Ponzi schemes ever.
And Harry Markopolos represents what the system needs, namely, more competent and courageous people who are not afraid to speak up and tell the truth. His warnings were ignored as he vividly recounted in his testimony to the senate. I applaud him for what he stands for and consider him a humble hero.
So let me get to some of my favorite posts over the past year:
January
Outlook 2009: Post Deleveraging Blues?
Pension Pandemic Part I and Part II
February
Radio Zero: 2010?
by Zero Hedge - December 31st, 2009 5:59 pm
Courtesy of Marla Singer
Having managed to survive 2009 (or so we hope- there are still a few hours left to go) we thought we might invite you to join us (virtually) for Studio Zero’s annual end-of-year blow-out this evening. (Actually, Studio Zero was called something else before Zero Hedge came around, but that’s not important right now). We generally get started around 9 eastern and pound out the tunes until well after 5 eastern but who knows?
Expect:
- The return (from parts unknown) of Jana von Alpha
- At least 1.3 (statistically) of the headliner DJ’s we’ve invited to perform cameos
- New music probably so hot off the presses no one else has managed to steal it yet
- The vague, virtual feeling that you’re actually in the studio with 200 of our closest friends (Your results may vary)
- Absolutely zero (0) New Year’s Countdowns of any kind (By popular demand)
Listen here: http://72.13.86.66:8000/listen.pls thanks to the mind-blowing generosity of EGI Hosting.
Chat up the DJ (send your .mp3 files) here: radiozh.
Our new and super-secret server for old sets, random musings and other noise is now online. (GASP!)
Or… join our IRC server at chat.zerohedge.com #radiozh. If you just can’t be bothered with an IRC client, we’ve provided one for you here (opens new window). Otherwise, consider getting mIRC. (Since our chat server has gone beta, you might want to give it a shot).
Will Americans Reclaim Our Nation in 2010 From the Thugs and Con Artists?
by Zero Hedge - December 31st, 2009 5:37 pm
Courtesy of George Washington
The giant banks are treating the American Citizen like we work for them, are holding the economy hostage, and are taking our deposits and using them to speculate in casino style gambling.
They’ve bought and paid for Congress and the White House. See this, this and this.
Will Americans exercise our power, or become serfs to a permanent banking royalty?
An economist says the healthcare bill “is just another bailout of the financial system”, and lawyers say that it is unconstitutional.
Will we defeat this giveaway to the insurance giants, or become permanent slaves to mandatory insurance requirements?
Top scientists, economists and environmentalists all say that cap and trade is a scam which won’t significantly reduce C02 emissions, and will only help in making the financial players who crashed the economy even more wealthy.
Will we defeat this worthless scam, or allow the failed banks like Goldman Sachs, JP Morgan and Citigroup – who have already taken many billions of taxpayer dollars – to make a fortune off of this con game at our expense?
Will Americans reclaim our nation in 2010 from the thugs and con artists, or put our heads down and stay subservient while the little we have left in the way of money, resources and dignity is stolen by the giant banks, insurance companies and carbon trading players?
Trucking Put Options Drop Despite Slip in Shares at YRC Worldwide
by Option Review - December 31st, 2009 4:44 pm
Today’s tickers: YRCW, NOK & MDVN
YRCW – YRC Worldwide – I was a little skeptical yesterday of the extreme pessimism that depicted the predictions from the options market surrounding the fate of trucking giant, YRC Worldwide. Investors stepped up to buy huge amounts of put options at the 50 cent strike price that expire next month. With shares at that time trading at $1.00 the huge premium represents a rather expensive 50% layout on an event far from certain. The event is not necessarily the bankruptcy of the company itself, rather it’s the potential for the investor to make money from the trade. Investors would do well to look back at the actual trading price of stocks that go into bankruptcy. Shares don’t always go to zero and they can stay above 50 cents even upon entering a Chapter 11 filing. While today’s news of a debt-for-equity swap provides a reprieve from a filing now, investors continue to ditch the stock, which is today trading at 82 cents. However, those same put options at the 50 cent strike have fallen heavily to 35 cents offered today because the uncertainty surrounding the outcome is perceived to be lower. In the options world, we call that reading implied volatility. Today it’s fallen massively from 291% to 188% at the 50 cent strike.
NOK – Nokia Corp. ADR – Looks like an investor is either unwinding a implanting a call option spread on Finnish cell phone maker, Nokia, whose shares have traded between $12.85 and $12.97 this morning. It appears that open interest at both of the February $14 and $15 strikes took off yesterday with both reading around 35,000 lots today. Further bullish volume saw investors buy the lower strike calls at 28 cents and sell the higher $15 strike for about 9 cents. The net cost of the spread at 19 cents means that a surge of 15.6% in Nokia’s shares to $15.00 would maximize investors’ gains at 81 cents per contract. Volume today is 18,000 lots at each strike price. Shares have not traded above the $14.19 breakeven point since they slumped on October 14, 2009.
MDVN – Medivation Inc. – Shares of the biopharmaceutical company have risen at a 45 degree angle since October rising from $25 to almost $40 each this week. The company develops drugs for diseases with limited treatments including Alzheimer’s and Huntington’s disease. One…
Fitting End To 2009 Trading: Big Volume Sell Off
by Zero Hedge - December 31st, 2009 4:38 pm
Courtesy of Tyler Durden
It was only fitting that a year marked by irrational and erratic trading, saw a substantial volume selloff in the last 15 minutes of trading after there was absolutely no volume done all day. What sparked it? Only a few momentum chasing quants know, even as the bid seemed dangerously close to getting unglued. Suddenly all the big-cap liquidity provisioning seemed just a tad tenuous. Another way of looking at it: a cheap appetizer of things to come. Is the January 4 rush for the exits entre next?
Goldman’s Ten Questions For 2010
by ilene - December 31st, 2009 3:59 pm
Goldman’s Ten Questions For 2010
Courtesy of Tyler Durden
One of the great paradoxes of life is that the smarter one is, the better one realizes just how little one knows. The same thing is true with forecasts: one can hypothesize and conjecture, but if one is unlucky, one is screwed: no matter how thought out, error-proof or logical the narrative – it is the unpredictable events that ultimately shape events, not the "priced in" obvious factors. The Heisenberg Uncertainty Principle applies in a perverse fashion not only to the wave-particle duality in the quantum realm, but to the very underpinning of economics: by predicting the future we implicitly change it. The futility of forecasts is well known to all those, who with the exception of a several few, whose very existence is an economy of scale "strange attractor" (think Warren Buffett and Goldman Sachs), have tried to repeat a winning performance, be it based on fundamentals, technicals, or kangaroo entrails. It is also sufficiently useless to the point where we will spare you a Zero Hedge set of observations of what to expect: if you have been reading this blog, you know what we believe is relevant as we enter 2010. How it will all pan out, however, is a totally different story. It is therefore not too ironic, and somewhat fitting, that Goldman Sachs’ chief economists do not leave 2009 with a dogmatic set of forecasts, which, just like every other year would have the success rate of a coin toss, but with 10 key questions addressed exactly one year into the future. Here are Goldman’s 10 Questions for December 31, 2010.
*****
Our forecast for 2010 features sluggish GDP growth, employment gains that are too slow to prevent a further modest increase in the unemployment rate, low (and probably falling) core inflation, and a Federal Reserve that “exits” from some unconventional monetary policies but keeps the funds rate at its current near-zero level. For the last US Economics Analyst of the year, we try to answer what we think are the 10 most important questions for 2010.
1. Have house prices bottomed?
Probably not yet, but we are quite uncertain. Although US homes are no longer significantly overvalued, we believe that much of the increase in prices over the past six months has been due to three temporary factors: a) the homebuyer tax…
Goldman’s Ten Questions For 2010
by Zero Hedge - December 31st, 2009 3:59 pm
Courtesy of Tyler Durden
One of the great paradoxes of life is that the smarter one is, the better one realizes just how little one knows. The same thing is true with forecasts: one can hypothesize and conjecture, but if one is unlucky, one is screwed: no matter how thought out, error-proof or logical the narrative – it is the unpredictable events that ultimately shape events, not the “priced in” obvious factors. The Heisenberg Uncertainty Principle applies in a perverse fashion not only to the wave-particle duality in the quantum realm, but to the very underpinning of economics: by predicting the future we implicitly change it. The futility of forecasts is well known to all those, who with the exception of a several few, whose very existence is an economy of scale “strange attractor” (think Warren Buffett and Goldman Sachs), have tried to repeat a winning performance, be it based on fundamentals, technicals, or kangaroo entrails. It is also sufficiently useless to the point where we will spare you a Zero Hedge set of observations of what to expect: if you have been reading this blog, you know what we believe is relevant as we enter 2010. How it will all pan out, however, is a totally different story. It is therefore not too ironic, and somewhat fitting, that Goldman Sachs’ chief economists do not leave 2009 with a dogmatic set of forecasts, which, just like every other year would have the success rate of a coin toss, but with 10 key questions addressed exactly one year into the future. Here are Goldman’s 10 Questions for December 31, 2010.
Our forecast for 2010 features sluggish GDP growth, employment gains that are too slow to prevent a further modest increase in the unemployment rate, low (and probably falling) core inflation, and a Federal Reserve that “exits” from some unconventional monetary policies but keeps the funds rate at its current near-zero level. For the last US Economics Analyst of the year, we try to answer what we think are the 10 most important questions for 2010.
1. Have house prices bottomed?
Probably not yet, but we are quite uncertain. Although US homes are no longer significantly overvalued, we believe that much of the increase in prices over the past six months has been due to three temporary factors: a) the homebuyer tax credit, which has…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(