Saturday, May 30, 2009

Delaying The Inevitable

Ok, so now some of the green shoot believers are starting to claim that things are improving and will be just peachy for years to come. I'm not going to waste any blog space on the ones that insist on ignoring the truth and pump BS up the collective asses of the general public. Not here, not ever. Folks, I will continue to stand on my soap box and preach of the immenent doom to come, because it is coming.

Could I be wrong? Well sure, I could be wrong, but I'm not. The cause of all of the green shoots are mostly false signals of a recovery that will fail IMO. Will everything totally collapse? Probably not. Can things get worse? For sure and they will. Take a gander at these article exerpts that point the compass S, not for South but for Suck.

I found THE ABSOLUTE RETURN LETTER From Absolute Return Partners at the Pragmatic Capitalist. This is a fantastic piece that emphasises the problems in the housing sector and quantifies (very well) the impending collapse of the sector and the American consumer.

In a piece from Phil's Stock World titled Friday - The Good, the Bad and the GDP (via a guest post at Zero Hedge) is a wonderful article that all my readres will appreciate. A documented case for crude oil and commodity rally fabrication and their impending bust. "We’ll find out shortly to what extent the GDP supports any of the 88% rise in oil prices since Q4. I don’t suppose we’ll have an 88% rise in GDP - in fact, they are expecting a 5.5% decline but that would be a 0.6% improvement from the preliminary reading of -6.1% so the global markets are partying in anticipation of this blessed event. Oh here it is: Down 5.7%!"

Is a commercial real estate bust inevitable? is a little article that discusses the potential impending commercial real estate crash and how they might be able to derail it for a year.

And for good measure how about a couple of items on market manipulation. Manipulation: How Markets Really Work does a wonderful job of explaining the PPT and other interventions that are used to screw all of us. Goldman Sachs Principal Transactions Update: Collapse In Agency Program Trading Volume by Tyler at Zero Hedge discusses how GS and others manipulate the market and explains the volume spike Friday (and at the end of every day for that matter). MARGINAL MATTERS…. from Pragmatic Capitalist you get a link to a wonderful Barrons article that explains how future earnings will be tough to come by. "With commodities and raw materials skyrocketing combined with a weak economy it’s likely that corporate margins will continue to be squeezed which means lower profits and a stock market that will have trouble moving substantially higher."

After being away for a week, nothing has changed. There are so many articles to post that I was not sure where to start. Since this post was so long I'll spare you the rant tonight, sorry for those of you that look forward to it.


  1. Shanky, I do hope your vacation was relaxing! This post NAILS the exact issues my fellow traders and I in our little group have been discussing for the past 3-4 weeks. The huge bearish divergence between Equity and Commodity prices and the overall economy is stunning. Pkus throw in a little TARP BANK market manipulation so they can do their stock offerings....priceless! Folks seem to believe that the MARKET is going to pull us out of a recession when I would argue it is the ECONOMY that does so and the market going up is a lagging indicator NOT a leading one. And since the economy is still collapsing it is a huge indicator that this rally is premature and simply a large bear rally that is about to retrace downward hard past our march lows. This coming week will be interesting to see if the green shooters can justify how the economy will recover with the incredible unemployment rate, jobs loss numbers, freeze in the mortgage market with higher interest rates and other "green shoots" coming out this week. I guarantee that you will hear phrases such as X Company had such an such and such earnings that were dramatically less than previously BUT were better than analyst expectations so it is good or my personal favorite....consumer sentiment is AWESOME but yet...they are not spending money. How will the economy recover if consumers who make up a vast part of the economy aren't spending? The fact that companies only got profits by firing people, closing doors, and such is considered great for the company. Unfortunately I just don't see it GOOD for the overall economy. However,CNBC (Communist News Broadcasting Committee) will put their incredible spin they put on anything to make it sound "green shootish" is laughably obvious. I would argue Shanky that folks need to look off to the horizon instead of between their legs at the "green shoots growing out of BS as then...they may see they are still sliding downhill and it is getting faster. Until folks start doing that, this market may go higher until the huge fall. Nice thing though is all indices look like they tagged the 200 MA in After hours and bounced good. Monday ought to be quite interesting and very red. As always, I look forward to your post on Monday.


  2. Thanks Michael. We should get a pullback of some significance, but as long as the shorts keep getting forced to cover, GS and its cronies keep manipulating the trade, Congress allowes fraud and analysts in cahoots keep cooking the books SPX will eventually set a higher high before a lower low IMO. It is only a matter of time before it all comes crumbling down.



  3. 200 month MA on the $INDU is being backtested at 8642. Key reversal coming finally.

    These Mondays are always fascinating. Gap and crap.

  4. Schweizer/Shanky,

    Did you all see the huge buy of e-mini's that started at exactly 0230am? Looks like the big guiding hand decided that we need to OPEN above the 200 MA. Not sure how well that will trigger buyers as I will promptly exit at open as I expect a huge selloff. I think the days news will focus on the GOOD about how Chrysler is now cleared to sell to Fiat (it will be appealed by COB today I have no doubt) and GM going into BK. I wonder if folks will consider how many hundreds of thousands of jobs are now gone...



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