Thursday, July 29, 2010

SSDD - But Worse?

Let's just get right to it shall we...

You really need to go no farther than this Already Bought A 3D LCD In Anticipation Of QE "Instarefi" 1.999? You May Want To Consider A Refund  "Earlier today we noted that the biggest buzz on Wall Street is the recent suggestion by MS and ML's Harley Bassman that the GSEs should provide some form of autorefi program to take borrowers to market rates. As this would impact a vast majority of the 37 million of mortgages outstanding backed by the government, not only would this housing stimulus have a huge impact on consumption appetites, but it would be a political coup as all of a sudden the administration would find tens of millions of giddy homeowners who are paying far less monthly, and quite satisfied with the way Obama has handled things." QEII is coming in one form or another. Just the buzz form this one stopped a mega tumble in it's tracks today.

The ramifications of this? Well, leave that up to Denninger in "Instant Refi"? Watch The Consequences... "
If I'm right about this - and remember - this is speculation - then some of those note-holders are about to get a truly ugly surprise, and we're also about to be treated to whether Treasury's alleged "promise" to back them was worth the breath that Geithner spent to mouth it." Someone's gonna take a bath - oops - wait a minute - no one takes a bath cause the Fed prints the money and the BD's launder it to the Treasury and then WE ALL END UP WITH THE TAB! Just like everything else. Sure Barry, we'll be glad to get the tab for that as well. Whet the hell, did your team of brilliant economists come up with this scam as well? Will it be a wash to you and me? Hell no, just more distribution of wealth furthering this administrations socialist agenda. Better hope this does not go thru before the elections (you know it will).

But if you insist on learning more about reality, please read on.
What the hell, foreclosures, shadow inventory, hoses that are sidelined - no problems in the RE market at all. Housing Bubble will Not be Reblown; Foreclosures Increase in 154 of 206 Metro Areas with Population Over 200,000  or this California Approaches "Fiscal Meltdown"; Schwarzenegger Declares Fiscal Emergency; Fort Worth Texas Ponders Scrapping Defined Benefit Pension Plans Yup, here we go with the IOU's again. I'm positive that more sheeple a re waking up now (see funds flow report below). Question is when and how does all this madness end?

On Bill Gross' recent column you have Mish's take here Bill Gross Ponders "Deep Demographic Doo-Doo" where Mish points out, "Here is the key sentence "The New Normal will not be aided nor abetted by a slower-growing population nor by cyclical policy errors that thrust Keynesian consumption remedies on a declining consumer base."" and Denninger's here See, I Told You So (Again) - Deficits where Karl posts, "Now, after nearly $5 trillion flushed down your economic toilet, after your firm's "customers" profited tremendously from that "shake" while the rest of us got the drips that came from it (and we didn't like the taste), now, when the Keynesian fantasy games are threatening to run into a brick wall and destroy the budgetary capacity of the government - NOW you call for a change in course." LMAO, I love it when Karl gets emotional.

Prag Cap brings a link to a chart in a post that should be titled Fugly and not Ugly from John Hussman. Further investigation brings you this post from Hussman -  Betting on a Bubble, Bracing for a Fall  This post is sensational. "Not every downturn in the index is important. The ECRI emphasizes that when interpreting economic data, there are three requirements that have to be satisfied to confidently indicate an oncoming recession - the downturn must be profound, pervasive, and persistent. Profound means a deep decline, which we're clearly observing here." Further on down you get (referring to another chart), "One reason for highlighting the period of bubble valuations in green is to make a very emphatic point. If you exclude the bubble valuations of 1995-2007 (as depicted in the chart below), the current valuation of the S&P 500 is near the highest level ever observed in history. To expect valuations to expand from here is to rely on the sustained resumption of bubble valuations that have ultimately been devastating to investors." This post is rich baby.

Calculated Risk has Weekly Initial Unemployment Claims: Eight Months of Moving Sideways as usual CR reports just the facts and lacks any sort of humor or insightful commentary. They did offer this, "The 4-week average of initial weekly claims has been at about the same level since December 2009 (eight months) and the 4-week average of 452,500 is high historically, and suggests a weak labor market." which is useful. I appreciate the site and what it brings, but there is a reason I used to bring you info from there a lot more than I do now. It is friggin dullsville. My suggestion, add some spice and report it like this New Weekly Claims At 457K On Expectations Of 460K, EUCs Plunge By 1.5 Million In Past Month "Those looking to find a catalyst for today's market action will probably not find it here. Which likely means ramp time as there will be no volume in the market once again. And good thing Obama extended that job stimulus for the nth time, as EUC claims plunged another 230k in the week ending July 10, a 1.5 million drop in just over a month: on July 10, total EUCs were 3.253 Million, a drop of over 1.3 million since the 4.7 million on June 5. These are all people who no longer used to receive their monthly $1,000 bonus check for not working, taking out tens of billions of dollars in circulation out of the economy." - now I can sink my teeth into that!

This is simply astounding - Stunner: 12th Sequential Domestic Equity Outflow (And $11 Billion In July Alone) Invalidates Volumeless July Stock Surge "The market is now completely disconnected from fund flows, and the only thing potentially keeping it in the stratosphere in addition to deranged binary concoctions are various "self-fulfilling prophecy" high gamma ETFs, which continue to push stocks away from fair value to the tune of several standard deviations. However, just like on May 6, the rubber band will, sooner or later, snap, and make May 6 seem like a dress rehearsal" Calc Risk - you taking notes here? That is a money shot right there. 

That instant refi deal is really gonna screw with the markets I think. Just like all the reported rumors about LBO's and mergers have been allowed to keep speculative bubbles afloat, I am positive that this is just another speculative (re: fraudulent blatant lie) to motivate the markets without having to spend any cash. Sure, it is OK. What do you think, the SEC is gonna actually prosecute anyone for anything these days (unless of course you are a little person)?

GL out there.