Is There Any Good News?

Trick question, it depends on if you are a bull or a bear. If you want to hear something good go back to watching CNBS or turn on CNN where you'll get some sort of sanitized feed that will keep you in the dark forever. If you want to hear me gloat in the impending doom of our democracy or hear me bash on a politician du jour, please read on.

I was going to try to string these few Zerohedge posts into a clever scentance, but could not pull it off. You 'll get the gist of what I was going to try to get across as Most Recent Insider Selling to Buying Ratio: 82:1 as Consumer Credit Contracts For 9th Straight Month, Non-Revolving Credit Increases, but since Cash is King  there is no need to worry about Fried Calamari? for dinner. Wait a minute - I did make a sentence out of it. Caution, that may become some sort of new game for Shanky to play with himself. I think Marla may appreciate that (the sentence - not the playing thingy).

Mish has a good one from the most corrupt city in the USA. We all know Chcago is a really screwed up place that has produced a litany of characters that leave much to be desired (most recently our president). So what do they do to balance their budget? Chicago Cannibalization: Mayor Daley's Budget Eats 75% of a 75 Year rainy Day fund in One Year You just have to read this one to believe it. Creative financing at it's finest. And some wonder why I am such a perma bear? Cities, states, federal governments are using every available crutch right now without regard to the future consequences to solve a variety of funding issues. You talk about a recipe for disaster. The dig drop, deflation, depression is coming folks. It is just a matter of time.

Since we're dissing local governments (like shooting fish in a barrel these days) why don't we try But Wait, How About The States? from Dennninger. "Things are probably worse than most people believe," state Sen. Mike Doherty told me the other day. "It’s questionable if we’ll even be able to meet payroll in a few weeks." Oh kay, so payroll may be a problem as well as some possible bond default issues (nothing to worry about- really ;-)). Don't say they did not tell you so and don't say I did not tell you so. It is only a matter of time and the ammunition used in reflation project 2009 is empty.

naked capitalism has a must read in Newsweek: Goldman Supplied 9 Pages of Proposed Changes to Derivatives Legislation. This one is a classic, "Newsweek’s “Why is Barney Frank So Effing Mad?” is supposedly about the Congressman from Fidelity but is really about how the banksters are succeeding in neutering financial reform. One Congressional staffer has told me that everyone involved recognizes the measures don’t go far enough, but feel they can’t do much more (Congress can step out only so far ahead of the Executive, and this one clearly is in no mood to take a more aggressive stand)."  You'll laugh and cry your way thru a great article that is filled with suspence (just how much of the recent legislation did GS actually write) and humor regarding the neuterization of everything in Washington. This one might actually make you scream.

The Pragmatic capitalist brings you 10 REASONS THE EQUITY RALLY IS OVER from Rosie. BUT, BUT, BUT - TPC has this to say, "In other words, we remain in a “beat and raise” world.  That is unchanged for now and will ultimately be the reason why David’s 10 reasons are wrong and why the unwavering bear will be wrong again about this market top…." I'll have to go comment on this one later on TPC's site. They do great work and maybe I need some clarification to his statement. I can actually go for a little more manipulated upside, but his "improvement in corporate margins" reasoning has me a bit miffed.

So, where do you stand? Washington's Blog has 79% of Americans Want an Audit of the Fed, Only 21% are in Favor of Confirming Bernanke, and Only 20% Think Geithner is Doing a Good Job. "Trust will not be restored until Bernanke and Geithner are replaced with people whose loyalty is to the American public and small businesses, rather than the Wall Street giants, and whose track record demonstrates that they will put the American people and entire economy as a whole - rather than the big boys - first."  I could not have said it better and the sooner we get these self serving bastards out of their posts the better off we will be. Oh, did you read where Kashkari is going to work? Now the Kashkari Puff Piece Makes Perfect Sense

The Big Picture has a nice post on Who Wins When the US Dollar Falls? that you should read.

That is enough for now. Yet another day without any good news (unless you want to count TPC's statement that I am ignoring). Market is very toppy now and teetering, but that is usually when the PPT/reinflation team is at their best. I am very suspicious of them letting the dollar breathe a little and then using it's powers to assist in halting any major down turns that may be imminent (note the market fell today 15min before the dollar reacted)

GL out there and happy holidays.

Was The Market Down Today?

Not sure if reality is setting in or not, but sure is nice to know that a red number is possible.

Nic Lenoir of ICAP has a guest post on Zero Hedge tonight that is worth a look - How Crazy Can It Get?. Nic covers some interesting points regarding QE and the government backstop of the markets and how the potential for this run up to continue is still a reality. "However as always one must remain cautious because these days capital markets are a mere reflection of government action... as long as government remains unchallenged." We all have a good idea that without QE and stimulus and some creative accounting this market would be toast. With the money in the coffers running out, will the second stimuli come and thus provide the fuel to keep the rally going at which point might just bring in some real sideline money afraid to miss the run? Of course this is the worst thing that could happen LT, but is well worth pointing out to us permabears.

I'll follow that piece up with Mish's Rally in 6th Inning or Top of the 12th? where he expands on Riholtz's comments in Rally May Only Be in 6th or 7th Inning, Ritholtz Says. Read Mish's post as it has many good links and covers both sides. His conclusion, "The key take away from this is that economic fundamentals are very poor, yet no one knows what inning we are really in. The key word in the concept the Rally May Only Be in 6th or 7th Inning, is "May". I spoke with Barry Ritholtz this morning. He also agrees it's also possible this rally is in the top of the 12th, overtime. No one knows for sure. For nimble traders, the difference is moot. For those in buy and hold rather than rental mode, the difference is huge. Please manage your risk accordingly."


Denninger points out a lot of good stuff. One topic I like the best is the false consumption created by the stimulus packages pulling forward purchases thus leaving a black hole in the future. Oops: "Pulled Forward" Demand Really IS False! "All this faux "demand" being generated by the so-called "stimulus" is just doing more damage to the economy - damage that is accruing and will come to the surface with devastating effect."

Naked Capitalism brings us Quelle Surprise! Regulators Starting to Worry Re Bank Commercial Real Estate Exposuresby Yves Smith. "The Fed is poking its nose into the portfolios of some banks, oddly taking great care to say these are NOT stress tests (is that meant to say they are not bogus and actually involve people who might know a tad about the underlying assets?)" Interesting, you mean someone has possibly decided to take the issue seriously? I won't hold my breath.

That is enough for tonight. Why am I presenting the possibilities of further upside? Well, I have bet on the manipulators up till now. Although the charts are nearing the ending patterns all over the place. P/E ratios are ridiculous. Overbought scenarios exist in almost every market. What am I trying to say, well Nic's article in ZH brought me back to reality and reminded me that as long as the government is in control with GS at the helm, they will do whatever the hell they please.

I want to pass along a hearty CONGRATULATIONS to TD and the team at Zero Hedge for their key (IMO) role in SEC Votes Unanimously To Ban Flash Trading, Seek Public Comment. The power of a small group of intelligent people, a few Bloomies and the internet. I guess Tom Brokaw is in total disbelief.

GL trading.

Don't Buy Into The Hype

I'm gonna keep on pounding the table. It WILL get ugly. IMO uglier than any of us are imagining. When Humpty Dumpty falls off of the wall, I'm willing to bet there will be nothing resembling 'ol Humpty when and if it is able to be put back together again.

One of the coolest posts I have seen this year comes from Zero Hedge. A little elbow grease and computer savvy and they produced Thousands Of Rusting Ship Hulls Are A Fitting Tribute To The Speculative Market Bubble. Care to see how many idle ships there are out there? Want to see the rotting carcass of global trade? The further you go into the article the more astounded you will become.

Since were talking shipping, why not take a look at the BDI. PragCap has IS THE SHIPPING INDUSTRY FORESHADOWING GLOBAL ECONOMIC WEAKNESS?. Well, after looking at the ZH article I would suspect "no shit" would be your initial thought. "The recent weakness in the Baltic Dry Index isn’t simply an anomaly. This excellent report out of ICAP details the very serious hurdles that the shipping industry and the global economy face going forward:". For those of you on the DRYS rocket ride, I'd keep an eye on the rear view mirror.

The Big Picture has Bank Lending Continues to Slip. A nice lending summary that shows just how afraid the banks are to let go of anything right now and that they are actually tightening their grasp (ya think they know what's really happening?). "It was just yesterday that Tim Geithner was lying that banks are constantly increasing lending to consumers. Well, yet another lie refuted. Banks, and not just any banks, but those receiving government bail outs and subsidies, continued constricting lending in July, with total average loan balance outstanding declining by $54 billion from $4,295 billion to $4,241 billion, a 1.3% decline, following a 1.1% decline in June." I guess I should not that this was in ZH and Naked Cap as well. Not sure where it originated.

Calculated Risk brings us Jobs, Jobs, Jobs. A nice little summary exposing the brutal employment environment and just how devastating it will continue to be here and abroad. "Unless government programs for the unemployed are refined, there is a danger that high jobless rates will persist beyond 2010 in advanced economies, the Organization for Economic Cooperation and Development warned on Wednesday."

Naked Capitalism has Financial Reform: Not happening but the need is clear. "Steve Keen, an Australian economist whose theories are heavily influenced by Hyman Minsky, has a cogent analysis of the true structural deficits in the current economic model that I think bears repeating here. He warns that we are trying to kick the can down the road and this will lead to an even larger bust." Don;t let Obama blow smoke up your ass about the reform BS he's preaching. We all know he and the rest of Washington A) bow to the big banks like he does to Arab leaders and B) any chance of real reform in this environment is impossible cause any sort of reform would lead to the immediate collapse due to the the accounting fraud and valuation methods used to sustain this mess.

While we are on reform, the shit may be about to hit the fan. Ron Paul (the man who should be president IMO) is kicking some regulatory ass and working towards getting his HR 1207 bill passed. Zero Hedge brings us Senate Support For "Audit The Fed" At 25 Co-Sponsors. "With HR 1207 passage now guaranteed in the House, it is time to focus attention on the Senate. As of last count, there were 25 co-sponsors for Sen. Bernie Sanders' S 604 Bill: "The Federal Reserve Sunshine Act of 2009."Below is the list of the 25 who have so far voiced with two third of the American people. As of now, there are still 75 who are siding on behalf of Wall Street." you have to ask yourself, just who are the senators that do not support this bill? Do they have your best interest at heart or theirs?

I'll end on a Denninger rant - WARNING: Deflationary Collapse Dead Ahead. "The fact of the matter is that you have been lied to for the last decade about our economic state, and if we do not divert from the road we are on our economy, our monetary system and our government WILL COLLAPSE." I can't agree more.

Look for the Morning Post in the am. This C wave is for real and kicking the bear's asses. The top is coming, it is only a matter of time before something (like regulation, China, Israel, Iraq etc..) steals it away from them. They are buying time now with our future, but sadly the results will not matter. Kind of sad they did not just let it bust in '08.

GL trading.

Teetering At The Top? This Is One Heck Of A Balancing Act!

But the top of what? Is the game coming to an end? The end Tom Brokaw says that we're too ignorant to see, and that we can't figure out on our own on the Internet without mother media being the deliverer of such news? The end CNBS refuses to report? The end the government and TBTF banks refuse to allow? The end the Fed may have allowed to happen? The end that was inevitable since this credit bubble was unleashed? The end that was foretold before fractional reserve banking was allowed?

More and more this appears to be a time to socialize, or to further the process of socialization begun many years ago. Everywhere you look this once great nation of nations is becoming one massive government sponsored program after another. Unfortunately they have failed at a high majority of these and hopefully this is just the end of a cycle. A time of purging excess from the system.

Zero Hedge has Excess Liquidity Game Is Coming To An End. I which TD brings us this from David Rosenberg's daily notes, "In his daily notes, Rosie looks at what is sure to cause a few sleepless nights to all trend chasers who believe that the trillions in excess liquidity will be there to forever prop up artificially high stock prices. News flash - it won't, and it has already started to contract aggressively, yet computers seem to have problems with pulling down St. Louis Fed time series in their quest to constantly front-run one another." David, Big Ben is "making it rain" man just like Packman does in Vegas. Don't you ever get out to have any fun? What's so wrong with a little excess funds floating around?

David has been spot on thus far and his exit from Mother Merrill was timely and I would love to know the true reasons as to the timing of his exit. His successor surely is towing the corporate line as ZH brings us Rosenberg Replacement Reaches For The Stratosphere, Sees 1,200 S&P On "Strong Earnings Growth". "The Chief US Equity Strategist and Rosie replacement sees an S&P earnings of approximately $70, or roughly a Div/0 compared to the most recent negative trailing EPS for S&P companies. How Bianco sees earnings growth on limited cost extraction and a persistently declining top line is just slightly beyond our meager calculating skills." Another glowing report from ML! Surprise! Someone care to do the math on a 1200 P/E for the market? Did you hear about the JPM upgrade of GE? This is NUTS!

Then from The Market Ticker Denninger delivers FLASH: Consumer Credit RECORD Contraction. "The inevitable contraction that is necessary to put the financial system back into balance is happening - whether The Fed wants it to or not." What Karl, you mean the reflation trick isn't working anymore?

Mish tells us the great news in Job Creation Down 35%, Consumer Spending Down 33% From Year Ago. "Bear in mind I think unemployment is going to continue rising for another year, then come back down slowly and reluctantly as noted in Structurally High Unemployment For A Decade. Thus a jobless recovery is a given, assuming there even is a recovery worth mentioning." I would love to get Mish geeked up on about five 5hr energy drinks before he does his next post. Nah, that would make him more like me and we don't need another me.

The Big Picture has a great post New Week, New Links where you can glean such delightful tidbits like, 86% of all mortgages are taxpayer backed in some form or another or Study Says World’s Stocks Controlled by Select Few and The Sorry Tale of America’s Out-of-control Spending. This post summarized all sorts of delightful information of our green shootless economy.

Folks, I have not mentioned the dollar, treasury auctions, gold, oil, FNM, RE, CRE, CDS, MBS, China, medicare, social security or pick a war that were funding. That is a huge heap of shit we're dealing with and our president has time to have a twenty minute 9/11 conspiracy interview with Charlie Sheen (not really). The purging of excesses is JUST underway and will continue till some form of sustainable measure is attained. Remember without a gold standard of valuation you can exponentially expand your lending capabilities to exponential proportions and we have done just that. There is more shit off balance sheets than we can count.

Our government has allowed the vastly unregulated banks to run all over us. You were given the keys to the kingdom in exchange for allowing (unintentionally) them to rape you of your financial freedom all for greed, profit and power. The house of cards is teetering and will crumble soon. It is inevitable. Just be ready when it hits. It may be sooner than you can imagine. Tom Brokaw will let you know when.