Monday, April 12, 2010

The Insanity Of It All

As we enter earnings season one should fully expect P/E multiples to advance even farther on penny beats with less than expected revenues as the main driver of the beat will be thru cost savings (re: layoffs) and specific one time non recurring events. At this point even S&P is calling for a possible 10% correction and saying such a move is overdue. Most of us are beyond disbelief at this point at what they have been able to achieve with the markets. The fraud is astounding. Maybe with AA missing estimated by a mile there's a chance reality will set in, and the accounting scams that have created the false sense of "recovery" are finally coming to an end (not by choice - write downs to make earnings look good must have some limit).

Zero Hedge has a nice snippet from SentiemenTrader in Speculative Mania Is Now At May 2000 Bubble Levels where TD sums it up nicely, "The second coming of the Greenspan bubble is now here, is undeniable, and has now reached unprecedented proportions. Next stop for the Dow will either be 36,000 as there is little to stop a ponzi from exploding at this point, or zero. The marginal need for new influx of capital to generate the same returns gets greater and greater, so in the next few months we will likely see either unprecedented meltup or crash. We are now past the point of a stable, smooth market as ROE self-cannibalization is now here." In other words, the banks may have completed their pump and dump, have their shorts in place and are waiting on the last of the dumb money to flush out the market.

The insanity is further exacerbated in Another Equity Outflow In Prior Week As Market Goes Parabolic, $3.6 Billion Taken Out Of Domestic Equities Since February Lows from ZH. "The S&P has gone parabolic with no retail participation, and in fact, with capital withdrawal by investors. We are confident the Federal Reserve has some good explanations for this rotation out of equities and ever more into bonds." Your tax dollars at work making the TBTF's appear to be solvent (and your deposits appear actually worth something).

Mish has "Banking System Still Quietly Insolvent" ; Larry Summers' Imagination Reaches Escape Velocity In it you will find a plethora of links to various articles proving the ever optimistic Larry Summers wrong on many points. My favorite is the link to his post Interactive Map of Public Pension Plans; How Badly Underfunded are the Plans in Your State? You need to realize the depths of the pension funding issues that exist (you see, we can't BORROW an more to attempt to fully fund the plans. Do you realize that there are EIGHT states with pensions funded at 30% or less? The grand total of unfunded liabilities? $3 TRILLION. LMAO, and we're worried about Greece's $80B hole?

Call it what you may, sentiment or guilt, but you know who was going to foot the bill for Greece (and the rest of the PIIGS). Yup, The Fed (or you and me in reality). I guess since our banksters destroyed the global financial industry we're feeling slightly responsible for "our" actions (and since we have the biggest printing press and since we mist keep the bubble inflated) and "we" may be the ones stupid enough to secretly bail out Greece. Did The Fed Just (Surreptitiously) Bail Out Europe? from The Market Ticker answers that question."That nice little vertical line is a gain of $421.8 billion dollars of outstanding loans and leases in one week's time." The charts from the Fed really are astounding. So, where does $421.8B go? I have no clue, but the markets ramp this last few weeks may be one place. Who the hell knows anymore?

Washington's Blog has Is the World's Second Biggest Economy On the Ropes? My regular readers know I like to preach about eventual global default as the final solution to the immense crisis our banks have created. In this post you get some damaging figures concerning some of the world's largest economies. "And if Exeter is right, then the holders of all nations' bonds might get nervous and flee into cash or gold. This would drive many debt-heavy countries into default."

I'll let the gold issues go for now. My thoughts on gold are: 1) We have more on the books than ever mined in the history of the world, so someone is not telling the truth about their reserves. 2) No believable audit will ever amount to anything. 3) If you own paper gold you better not be counting on it in the future. 4) Someday there will be a great valuation issue. It will be an enormous problem. Why, cause no one knows how much is where and what is real (tungsten) or not. Once the valuation issue is over, price will go to infinity.

The markets should be topping. the 30m chart did mark the top today. I could not believe it did not tank after 2:30 when the trend broke. With the AA move this evening maybe something will get cranked up. Warning to the bears, they really crank the markets down quickly then spend a small eternity leaking them back up. If there is a short opportunity, it may not last long.

Nice to be back in the office. I'm a lot more angry than this post would indicate. It really sucks to see your country and everything ripped to shreds cause of a bunch of greedy mofos got out of hand. the raping of the middle class is almost complete.