by ilene - May 10th, 2009 10:25 pm
Courtesy of Henry Blodget at ClusterStock
Jubliation has replaced fear, and the consensus is now that the second-worst bear market in US history ended on March 9th and it’s all champagne and roses from here.
Let’s hope.
In the meantime, let’s review what happened after the two other biggest bear market bottoms of the past century, 1932 and 1974 (see Prof Shiller’s chart above). In both cases, as now, the market had a sharp rally off the lows.
In real terms (after adjusting for inflation), the 1932 market almost doubled in a year. The 1974 market, meanwhile, jumped about 35% over two years.
But it’s what happened after that that matters now.
After doubling off the low, the 1930s bear market pushed another 50% higher over the next three years to 1937 (not bad!). But it then got cut in half again, and it remained below the 1937 peak for 15 years. In 1949, 17 years after the 1932 bear-market low, when the next secular bull market finally began again, the market was 50% below the 1937 rebound peak and about 70% below the 1929 bull-market peak.
In 1974, the market rebounded 35% in a couple of years. In 1982, however, eight years later, when the actual bull market began, it was back below the 1974 low. The 1973 peak, of course, was lower than the 1966 high, so the bear market that ended in 1982 was actually 16 years long.
That’s why they call them "secular" bear markets.
So even if March 9th was the bottom of a Great Bear Market that took stocks down 60%+ in 9 years from the 2000 peak (in real terms), let us not celebrate too much about what is likely coming next. As Jeremy Grantham has said, the great bear markets don’t hurry, and this one probably has a long way to run.
Here’s Merrill strategist David Rosenberg on this topic. Rosenberg, by the way, thinks the bear-market rally has now run its course and we’re going to quickly retest the March lows:
At this time, we believe it is necessary to provide clients with some historical
perspective from the last colossal credit collapse in the 1930s, understanding that
…
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by Zero Hedge - May 10th, 2009 9:47 pm
Courtesy of Tyler Durden
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by Zero Hedge - May 10th, 2009 9:41 pm
Courtesy of Tyler Durden
hat tip a a
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by Zero Hedge - May 10th, 2009 3:31 pm
Courtesy of Tyler Durden at Zero Hedge
When speaking about the banking sector, many people mention a “subprime crisis” or a "financial crisis” as if recent write-downs and losses are caused by external events. Where some see coincidence, I see consequence. At Deutsche Bank, I consider our poor results to be a “management debacle,” a natural outcome of unfettered risk-taking, poor incentive structures and the lack of a system of checks and balances.
In my opinion, we took too much risk, failed to manage this risk and broke too many laws and regulations.
For more than two years, I have been working internally to improve the inadequate governance structures and lax internal controls within Deutsche Bank. I joined the firm in 2006 in one of its foreign subsidiaries, and my due diligence revealed management failures as well as inconsistencies between our internal actions and our external statements.
Beginning in late 2006, my conclusions were disseminated internally on a number of occasions, and while not always eloquently stated, my concerns were honest. Unfortunately, raising concerns internally is like trying to clap with one hand. The firm retaliated, and this raises the question: Is it possible to question management’s performance without being marginalized, even when this marginalization might be a violation of law? Two years later, our mounting losses are gaining attention, and I offer my experiences and my thoughts in the hopes of contributing to the shareholder and public policy debate.
Background
Born and raised in Toledo, Ohio, I was infused with Midwestern values of hard work, individual responsibility, honesty, quiet integrity and fiscal prudence. After careers in New York City and Menlo Park, Calif.,
…
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by ilene - May 10th, 2009 2:16 pm
Courtesy of Zero Hedge
As always, sincerest gratitude for donations from Daniel, Evil, Hui, Jack, James, Jason, Jeffrey, John, Joel, Navid, Peter, Pooyan, Razvan, Roger, Steve, Vincent, and William.
Chartology [click on imag for larger view]:
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by Zero Hedge - May 10th, 2009 2:03 pm
Courtesy of Tyler Durden at Zero Hedge
A little due diligence in this case reveals relevant facts. The 2019 White & Case filing from the Chrysler docket has some critical disclosure:
4. None of the Chrysler Non-TARP Lenders hold any credit default swaps or hedges with respect to their holdings of Senior Debt.
In other words, the original Non-TARP holdouts, who owned $295 million of Senior Debt, did not have one Chrysler Credit Default Swap to their name. Thus, being unhedged they did not stand to benefit at all from a Chrysler bankruptcy and any claims that they implicitly or explicitly pushed the company into bankruptcy are nonsensical (granted the question stays open of whether they had CDS at any point in the past, although that can not be gleaned from the filing).
If there really are CDS holding culprits (and we really are talking LCDS here) they would be in the non-holdout creditor camp. But most likely, CDS holders did not have secured long positions in the first place, and bankruptcy beneficiaries would likely not be found anywhere in the list of secured or unsecured creditors. However, due to the LCDS nature of the holdings, this is a case unlike GM or the recent finance company bankruptcies. Now, in GM things will likely get more interesting, as DTCC reports that the company has roughly $33.6 billion and $2.4 billion in gross and net CDS exposure, respectively.
As for any allegations that AIG was a taxpayer funnel again, this is not the case, as AIG rarely if ever underwrote single-name CDS (and much less LCDS). Thus comparing the AIG gift to banks in early 2009 with fund flows in the Chrysler and, soon to be, GM bankruptcies is in the apples and oranges realm.
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by ilene - May 10th, 2009 12:35 am
Courtesy of Karl Denninger at The Market Ticker
After I posted my Ticker on this subject the Fannie report came out and immediately proved up what I had said – the tests are a sham:
According to The Fed’s "More Adverse" scenario prime delinquencies will reach 3-4%.
Well, how about this?
(Click for a larger image)
Note that the PRESENT serious delinquency rate on Fannie’s credit book for single family homes is at 3.15%, up from 2.42% last quarter.
What’s worse is that a lot of the paper Fannie holds was written before the bubble. If you look at only the "bubble-era" paper (e.g. ALT-A) or even prime paper written in 05, 06 and 07 the numbers are going to be far worse.
We have the largest lender in the United States reporting current "prime" serious delinquencies, almost all of which will end up as foreclosures, equal to the most serious stress tested level right now and twice the so-called "baseline" scenario.
Furthermore, Fannie’s credit-related expenses nearly doubled quarter/over/quarter and was 2/3rds of the full year 2008 expense in one quarter alone!
Folks, there is absolutely nothing to support any claim that these "stress tests" were or are realistic when market performance in the nation’s largest lender and one that allegedly has written all "prime" mortgages states (not "suggests") that their credit book delinquency rate has reached the "more adverse" stress level already.
Nowhere in the "mainstream media" (e.g. CNBC, etc) has this been mentioned but it is literally right in your face while reading the Fannie quarterly report.
Everyone is entitled to be optimistic.
But nobody, especially not anyone in the government, has the right to intentionally mislead the markets and investors as to the validity of what they’re allegedly doing.
Given the Fannie report, which was known to the government (since it is under conservatorship) for a significant amount of time prior to being filed, there is absolutely no excuse whatsoever for The Fed’s "Stress Test" report to be published without a footnote indicating that the "most adverse" metrics had been proved met by the largest prime mortgage lender and guarantor in the United States already.
Investors deserve a government that does not intentionally mislead them.
If you are buying into this rally and the recovery of the
…
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by ilene - May 10th, 2009 12:19 am
Courtesy of Mark Thoma at Economist’s View
Tyler Cowen says congress is letting others take the responsibility – and the potential blame – for decisions it ought to be making:
There’s Work to Be Done, but Congress Opts Out, by Tyler Cowen, Economic View, NY Times: The longer the financial crisis runs, the more policy makers at the Treasury, the White House and the Federal Reserve are working around Congress rather than with it. It’s not that anyone is behaving illegally or unconstitutionally, but rather that Congress seems to want to be circumvented and to delegate more power to the executive branch as well as to the Fed, at least temporarily.
While Congressional leaders are consulted on the major policies, Congress is keeping its distance, perhaps to minimize voter outrage. This way, Congress can claim credit if a recovery comes, but deny responsibility if the price tag ends up higher than advertised or if banks seem to be receiving unfair benefits from the government.
Trillions of dollars of financial commitments have been made without explicit Congressional approval. … The traditional division of labor among policy makers was that the Fed determined the quantity of money in the economy — it set monetary policy — and Congress decided precise government expenditures — it handled fiscal policy. These new programs blur that distinction and, in essence, the Fed is running some fiscal policy. … A full description of important financial policies handled outside of Congress would more than fill this column and would add up to trillions of dollars in potential commitments and guarantees…
Both Democrats and Republicans are at fault for this apparent abdication of responsibility. The Republicans are focused on blaming the Democrats for bailouts, since they know the policies can go through without their support. The Democrats want to enjoy the benefits of making commitments and guarantees without accepting accountability or responsibility for them.
It’s a common theme in American history that crises expand the power of the executive branch of government, and that is part of what is happening here. Even the Federal Reserve, which … is supposed to be quasi-independent, has ceded much of its power to the Treasury. … Just as the Bush administration brought a growth of executive power in foreign policy and
…
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by ilene - May 9th, 2009 11:48 pm
Courtesy of Mish
Inquiring minds are reading Controller John Chiang’s May 2009 California Budget Summary Analysis. Here a are few noteworthy items:
The State’s revenues continued to deteriorate in April. Total General Fund revenues were down $1.89 billion (-16%) from the latest estimates found in the 2009-10 Budget Act.
Personal income taxes were $1.06 billion below the estimate (-12.6%), corporate taxes were below the estimate by $831 million (-35.6%) and sales taxes lagged the estimate by $108 million (-19.9%).
Some of April’s sales tax receipts were pushed into early May, but declining taxable transactions still drove sales tax receipts well below the Budget Act projection. While California’s sales tax rate went up April 1, revenues from the new rate will not be seen until May.
Compared to April 2008, General Fund revenue in April 2009 was down $6.3 billion (-39%). The total for the three largest taxes was below 2008 levels by $6.3 billion (-40.3%). Sales taxes were $452 million lower (-50.9%) than last April, and personal income taxes were down $5.7 billion (-43.6%). Corporate taxes were $142 million below (-8.6%) April of 2008
Sales tax collections year to date are short $327 million (-1.8%) from the 2009-10 Budget Act. Income taxes were $653 million lower (-1.7%) than expected, and corporate taxes were $788 million lower than expected (-9.5%).
The State’s other revenue streams were $299 million below (-6.7%) the estimates. Because the 2009-10 Budget Act contained actual revenue through February 2009, these disparities only occurred in the months of March and April.
Send a Message
Taxation is not the way out of this mess, reduced spending is. Please consider California, Please Send A Message!
The propositions to raise taxes are already short, and borrowing money from the lottery is sheer madness. California citizens have a chance to tell the spendthrifts to go to hell. All it takes is an appropriate NO vote on 5 of 6 California 2009 ballot propositions on May 19.
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May 22nd, 2013 8:56 pm
Chasing Like a ProCourtesy of Joshua M Brown, The Reformed Broker
Put it this way, this is not the sign of a bottom or a young bull market...
From Barron's:
Major hedge funds are reportedly buying, or have bought, massive amounts of Standard & Poor's 500 index calls in the over-the-counter options market. The calls would increase in value if the index, now at about 1,664, rises to 1,725 by year's end. The funds reportedly missed the stock market's rally and are playing a vicious game of catch-up.
Though it is difficult, if not impossible, to penetrate the veil of secrecy that surrounds the OTC markets, evidence in the listed options market suggests investors are clamoring to buy bullish calls.
Desperation ...
May 22nd, 2013 8:55 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
In his new book, Douglas Rushkoff examines the telescoping of time and context wrought by ubiquitous digital technologies.
One of the few observers who is able to articulate a coherent critical account of American culture is Douglas Rushkoff. His new must-read book is Present Shock: When Everything Happens Now (print ...May 22nd, 2013 8:36 pm
Today’s tickers: SKS, USG & PFE
SKS - Saks, Inc. – Timely bullish bets initiated in Saks options just seconds prior to the closing bell on Tuesday are generating sizable gains for at least one trader today, with shares in the high-end retailer up at the highest level since 2008. The stock closed Tuesday up 11% on the day at $13.67 after the company reported first-quarter revenue above average analyst expectations. Within minutes of the close shares in SKS moved sharply to the upside after the New York Post, citing a source familiar with the matter, reported...
more from Caitlin
May 22nd, 2013 5:35 pm
Courtesy of Doug Short.
With yesterday's dovish duo Bullard and Dudley to set expectations, the S&P 500 rallied in anticipation of Chairman Bernanke's congressional testimony and soared to its all-time intraday high, up 1.07% during his prepared remarks. But the Q&A deflated the balloon, and the 2 PM release of the latest Fed Minutes accelerated the decline. It seems that the possibility of tapering QE in the near term is not entirely off the table. The index hit its -1.23% intraday low about 30 minutes before the final bell. It then trimmed its loss to close down 0.83%. The 10-year yield jumped 9 bps to close at 2.03%, just off the 2013 interim high of 2.07% on March 11th and 37 bps off its 2013 low set 14 sessions back.
Here is a 15-minute look at the week so far.
Not surprisingly the volume on today's 2.32% high-low intraday range was 24% above its 50-day movi...
May 22nd, 2013 1:40 pm
Reminder: David is available to chat with Members, comments are found below each post.
Click here for the full report.
May 22nd, 2013 12:13 pm
Submitted by Mark HannaCourtesy of MarketMontage. View original post here.
Doing a lot of data mining as we watch this market go parabolic.
The S&P 500 is 13.4% over the 200 day moving average. 10%+ is considered overbought, and 12% is very rare.
The current Relative Strength Index (RSI) on the S&P 500 is 75. Over 70 is generally overbought (below 30 oversold). To put in perspective in 1999 the S&P touched 70ish a few times but never hit 75. The NASDAQ in 1999 – early 2000 hit mid 70s a few days in July 99 and Mar 00. Then in the parabolic move in November and December 1999 (NASDAQ gained over 1000 pts!) it sat between 70 and mid 80s for most of two months; of course t...
May 22nd, 2013 12:00 am
Courtesy of Benzinga.
Intuit (NASDAQ: INTU) released its fiscal third-quarter earnings after the closing bell on Tuesday.
The company reported revenues which were in-line with expectations and a profit which beat analysts' estimates. In late trade, shares were up a little less than one percent to $58.31.
The company reported net income of $822 million or $2.71 per share, compared to $734 million or $2.42 per share, in the year ago period.
On an adjusted basis, net income rose to $901 million or $2.97 per share, versus $763 million or $2.52 per share, in last year's third-quarter. This came in ahead of Wall S...
May 20th, 2013 7:39 pm
Courtesy of David Brown, Sabrient Systems and Gradient Analytics
So, what did the market want today? Nothing it appears. It traded on weak volume and had very little movement. This morning the market hated commodities especially silver, but by days end, the market liked silver, gold and even oil but not the dollar. Why?
Last week the economic reports were tough, with bad misses on more than one occasion. But the market tended to ignore the bad news, probably because money continues to pour into equities from money market funds, long term fixed income, and many struggling foreign economies. On Thursday, investors finally caved to even more bad news from Initial Jobless Claims and weak Housing Starts. Then on Friday, when Michigan Sentiment and Leading Indicators posted large positive surprises, the money came pouring back to generate qui...
May 19th, 2013 11:38 pm
Reminder: OpTrader is available to chat with Members, comments are found below each post.
This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.
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Optrader
...May 19th, 2013 1:09 am
NEW: Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.
Here's the latest Stock World Weekly! Just sign in with your PSW user name and password, or sign up to try it out.
...May 15th, 2013 7:35 pm
Reminder: Craigzooka is available to chat with Members regarding his virtual portfolio performance, comments are found below each post.
By Craigzooka
I am going to share with you how I manage my IRA and the power of reducing your cost basis. My goal each year is a 20% return in my IRA. Sometimes I make it and sometimes I don't, but I believe that all of my success is due to reducing my cost basis. To illustrate the power of reducing your cost basis here are some trades we did last year. These trades are taken from an educational portfolio we ran in a paper-trading account for a little more than a year.
May 12th, 2013 7:23 am
Courtesy of John Nyaradi.
Stock market posts another record setting week, but the big news came after Friday’s close.Courtesy of NASA
The stock market put on another record setting show with the Dow Jones Industrial Average (NYSEARCA:DIA) closing at a record high 15,118 and the S&P 500 (NYSEARCA:SPY) closing at 1633.70, another all time closing high.
For the week, the Dow Jones Industrial Average (NYSEARCA:DIA) gained 1%, the S&P 500 (NYSEARCA:SPY) climbed 1.2%, the Nasdaq Composite (NYSEARCA:...
January 21st, 2013 8:09 pm
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Well, well, well....it is good to know that there are others in the scientific arena who believed that YMI Bioscience's data (cough - Gilead) is a better drug than Incyte's Jakafi. Now, the definitive data are still unknown, but there was enough evidence from a Phase 2 trial to take a small risk for a huge reward. So, let's forget about Apple (AAPL), and do nothing but biotechs from now until Congress passes universal health care coverage for prescriptions....and drive the prices down so that research and development is no longer feasible to conduct in the US. Even Seattle Genetics (SGEN) has been on a tear as of late...
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Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Philstockworld, LLC (PSW) nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
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