Dec

12

A key to today's action was Senator Reid's comment, "I hate to think of what's going to happen to Wall Street tomorrow" (Friday) overnight at S&P 830.

Jim Sogi comments:

Yen and Bonds shot to new highs, concurrent with the drop in equities, temporarily in the night market when everyone's defenses were down. Yen this morning, with no jiggles or pauses, mechanically marched down from 1.11 to 1.10, the proscribed PC number. It had the signs of a heavy hand. All seemed geared in lockstep in the various directions, like a clock. The equities are barely spare change compared to these markets. Imagine the economic effects of the marginal trades on a currency or on the the bond holdings. It made the equity moves almost seem… sedate? As for the comment, what a hubristic and ultimately wrong thing for a politician to say, almost like the mayor of a windy town. And now these are the people controlling the markets?

Thomas Miller writes: 

He has a bright future on Wall Street after the political thing is over.

Alex Castaldo goes over the facts and figures:

S&P March futures closed at 885.40 on December 12, up 10.90 on day.

From Bloomberg December 11:

“I dread looking at Wall Street tomorrow,” Majority Leader Harry Reid said before the vote in Washington. “It’s not going to be a pleasant sight.”

Asian stocks and U.S. index futures immediately began falling after Reid’s comments. The MSCI Asia Pacific Index slumped 2.2 percent to 86.13 as of 12:33 p.m. Tokyo time, while March futures on the Standard & Poor’s 500 Index slipped 3.4 percent [i.e 844.75 at 22:33 EST, although they fell further to 830.0 in the next 10 minutes].
 


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25 Comments so far

  1. Steve Leslie on December 13, 2008 9:51 am

    I was around in 1980 when Lee Iacocca former head of Ford took over Chrysler along with some very impressive executives. Mr Greenwald was another. They took a company that had a lousy product, a terrible reputation a horrible service record and turned it around ahead of schedule and payed back all the money they owed the goverment early. It is a worthy book to consider reaqding. I remember distinctly how he described the very painful measures he and the employees had to take to first survive and ultimately prosper. Of course, this was at a time when pride mattered and a job worth doing was worth doing well.

    I worked in a factory in Akron for General Tire and remember the concessions that the autos asked their suppliers to help in the healing process. Those were some very bleak years for everyone. Read your history books.

    Now I watch intently as Big 3 executives come to Congress begging for money with no real plan of change. They arrive arrogantly in their elegant suits stepping off their private planes and have no plan of all at change. I listen to the head of the UAW say that the workers are entitled to the wages and benefits that they receive which are larger than non-union employees in the South. I hear him defend the benefits that retired auto workers receive although there is not enough money to pay for them. I hear him drone how the Auto industry is the backbone of America and that it is unthinkable to even assume that this country can survive without a vibrant auto industry.

    Then the politics begin. Harry Reid and Democrats say that 3 million jobs will be lost and thousands of dealerships across the country will shutter their doors. They use such phrases that no industry in the world is more important to the economy than the auto industry. That this will cause a great depression. That Chapter 11 will only lead to Chapter 7. They twist and turn every phrase and comment to an armageddon scenario. I look at Nancy Pelosi trying to explain the complicated downline of the auto suppliers and stumble over her notes. This is a politician who does not even know what a Boeing 747 but that Dennis Hastert had one and she should have one too especially since she has to travel from California to the east a much farther distance than Michigan to D.C.

    I read about a guy who set up a fool's hedge fund with monthly guaranteed returns. He never lost money. I hear about the allegations that the SEC has been aware of his shenanigans for years yet did nothing. That there were complaint letters stretching back years. All of this behind the largest Ponzi scheme in the history of money management.

    I read about dismal retail sales for the holiday season the worst in 30 years, and unemployment that is on the way to double digits. I read about foreclosure rates on homes at all time highs.

    I can't find an optimistic economist anywhere predicting any type of economic recovery until late 2009

    And I watch the major indexes basically shrug off all of this horrible inexorable news and make a stand in the low 8000's on the Dow, the 850-900 range in the SPX and the 1100-1200 in the NASDAQ. I see t-bills offering zero percent yield and gasoline at the pump at $1.60

    And I wonder what are the markets telling me. What they might be suggesting here. What are they whispering that I should be hearing.

    sl.

  2. George Parkanyi on December 13, 2008 1:56 pm

    I wonder if the guys who sold GM at $2.61 yesterday morning will vote for Senator Reid next time around? or … Don’t stops just suck sometimes? :)

    Didn’t they used to say “As goes GM, so goes the United States”? (Although I think it fell out of use when “now it was different” during the dot.com era). Just sayin’ …

    Cheers,
    George

  3. lon evans on December 13, 2008 7:45 pm

    Hello Vic, Anatoly, All,

    I continue to question the analytical approach evident in a majority of posts and comments offered on this site. I’ve my own approach; it has proven beneficial over the previous couple of years. It is much different.

    Everyone sitting, or otherwise sufficiently supported? Good. I’m long the Dow, long oil, and have taken a fairly large position in a company specializing in bioplastics.

    Why? Well, because of Harry Reid, because of Bernard Madoff, but more importantly, because of human nature, that which makes the world go round.

    Dow somewhere in the high 9000’s
    Oil near $70.

    Best to all.

  4. Daniel Snider on December 14, 2008 10:38 am

    Yeah, we all have the internet, and read the standard news and commentary about the GM execs taking private planes, and the wikipedia pages about Chrysler.

    A few points:

    Sure the Chrysler bailout was paid back earlier than expected, but that was perhaps just a matter of expectations. That being said, the fact that the money was paid back does not mean the bailout was worthwhile. The question is, where is capital most productively employed? If the answer was, “In Chrysler” then you would not have needed the government to take it from the taxpayers and employ it there. In fact, since Chrysler is right back where it started, you could argue that in fact the Chrysler bailout has been a massive drain on the economy, sucking tens of billions into its venture over the last thirty years.. money that would have been better employed elsewhere.

    What are the markets whispering? I think that its time to be long. The situation with the financial stocks is so complex, that perhaps they might be avoided, but the fact that the markets didn’t get destroyed over the Madoff news is very bullish, imho.

    Lon,

    I hope for your sake you are right about $70 oil, but I think you are incorrect. The run up in oil was in fact just a bubble, and prices will return to their long term state.. which is going to be in the 20’s. Prices might even overcorrect. When oil was $11 analysts said that they would be there forever. When oil was above 50 analysts said they would be there forever. Neither is true. They will go very low again, at which point you should go long.

  5. Anatoly Veltman on December 14, 2008 8:25 pm

    Did I miss explanations of both speculators: one calling Crude up $25; the other down $25?

  6. lon evans on December 14, 2008 9:37 pm

    Daniel,

    I appreciate your advice, though I’m obviously comfortable with my position. My approach is generally one contrary to popular wisdom. Many (including the Chair) have disparaged my calls over the past year. The record now clearly reflects the wisdom of my analysis, while my critics are understandably silent as to previously defended positions.

    Anatoly,

    An explanation of my methods is difficult given the constraints of the comments sections. As well, my approach is difficult to winnow down to a sound bite. It includes study of human behavior, animal behavior (take note of an amusing op-ed in the NY Times this past Saturday highlighting a particular reaction from dogs relative to unfair treatment), economic philosophies, culinary arts, trading indoctrinations, chart study, offhand remarks, etc., etc., etc.

    The only constant in my approach is that I read tremendous amounts of material. As previously mentioned my experience with autism is of benefit in allowing me to retain large quantities of the information I hoover up. On occasion, through a process both inductive and deductive, I’m rewarded with an intuitive sense of definiteness, or as Descartes so beautifully defined: an idea clear and distinct.

    From this vantage point, I’m left only to pick entry and exit points. With Oil and the Dow I’ve done so. Understand that these are short term positions (3 months?). I’m still very pessimistic on the longer term. I believe Dow 5000 is a distinct possibility.

    Thanks for asking.

    jonathan

  7. Anatoly Veltman on December 14, 2008 9:57 pm

    thanks, that’s a lot to swallow. Still, how is Crude 50% underpriced? A how does the other guy sees it 50% overpriced? Everyone must be out of their mind transacting Jan Crude at $47

  8. Steve on December 14, 2008 10:11 pm

    first of all the Government did not bail out Chrysler they forced the company to reorganize and cbange dramatically and in return they guaranteed the loans. you missed the entire message. You are rewriting history with a poison pen. While Iacocca was at Chrysler from 1979 to 1992 he did some profound moves. The point is that if it was done before, it could be done again. But it must be done differently. Painful measures and innovations must be advanced. Iacocca developed and sold the wildly successful mini-vans. He bought Jeep and made it into a wonderful division. He developed the energy efficient K cars and they were huge hits. Ford had rejected both of those ideas.

    How can that be a waste of time. You truly have no knowledge of the greatness of Iacocca or his incredible accomplishments at Chrysler. To characterize his reign as a waste of time is preposterous. end of discussion. I have a suggestion in the future write about something that you have a knowledge in or do better research. Chrysler is where they are 18 years after Iacocca left.

  9. lon evans on December 15, 2008 1:36 am

    Anatoly,

    I was out of my mind when at its then price of 1500 I called for SnP at 1200 with the possibility of even greater depths. I don't understand what you refer to as "over" or "under" priced. Things are priced at what they are. It has always befuddled me when such talk is embraced. A thing is only worth what someone is willing to pay for or sell for.

    The trick is in understanding what 'someone' will do. No market jargon that I hear bandied about come close to even posing such questions. So I look elsewhere and, on occasion, stumble upon a productive idea.

    I believe that Oil will see a pop, and soon. Time will tell. If you want a more detailed account of my reasoning it will have to be off line. Request from the moderator my email address. In this instance I'm comfortable with it being supplied.

    Sincerely,

    jonathan

  10. Daniel Snider on December 15, 2008 8:25 am

    Steve

    First you state that the government didn’t bail out Chrysler. Then you state that the government guaranteed Chrysler’s loans.

    We obviously have a different definition of bailout. I am working under the definition of “the government stepping in to help out a private business”. You are apparently operating under “nothing that would make Lee Iacoca, the man I worship, from looking bad”.

    FWIW, Iacoca’s book is one of the all time worst books ever written. PJ O’Rourke did a good take down of it in one of his books. I believe it was in “Give War A Chance”.

    In any event, I am not very fond of your “You can only post on subjects I have an opinion on if you agree with me” approach. It seems very much counter to the mission and theme of this website.

  11. Anatoly Veltman on December 15, 2008 9:37 am

    You "believe that Oil will see a pop, and soon."

    Time doesn't need to "tell". You can tell now. By the time "time will tell" — your idea will be worthless; no matter whether it has made or lost money.

  12. Russell Sears on December 15, 2008 10:56 am

    Lon,

    I missed your name in the 2008 1500 m master’s championship finals.

    You claimed a new age group record was yours for the taking, if your competitors didn’t beat you.

    The winner was only 4:27 about a 4:46 mile, Far cry from the low 4:00’s needed.

    Perhaps you got injured, but anyone over 45 and training that hard, knews this is a likely outcomes 6 to 8 months before an event.

    And let’s not forget that when you were calling for the crash, you said you had bought put options at the beginning of the year. Which implied it was emminent.

    I suspect you’ve done better than me, this year, but we seen how you like to over state your case.

    Russ

  13. Steve Leslie on December 15, 2008 11:14 am

    I take exception with revisionist history. I don't agree with your definition of bailout. It is poorly stated and constructed. Nobody bailed out Chrysler in 1980. Nobody gave them a blank check to squander. They facilitated a workout package and it was up to Chrysler to make it happen. Iacocca could have taken the money, failed, took a powder and went on to an ignominous retirement. But he and his corp did not.

    My point is that he,Greenwald and all the Chrysler rank and file worked their asses off to build and sell cars and trucks under stringent guidelines and extreme pressure. And they succeeded. and prospered for a decade under his leadership. If it has been done before it can be done again.

    Whether his book is one of the all time worst, I cannot comment on, I have not read every book ever written. Perhaps you have. In that case, I submit to your greater knowledge.

    Point 2: Todays group of characters, management and union, don't want to change anything. They want billions to last them for a few months, go back to an accommodative congress and ask for more free money. Sen Dirkson said a billion here a billion there and before you know it you are talking about real money.

    Point 3: Iacocca was appointed by President Reagan in the early 80's to refurbish the Statue of Liberty. He did it all with private financing. And once again it was a huge success. I am against government involvement on most levels except things such as parks, recreation, they seem to do a good job there.

    Point 4: I do not worship Lee Iacocca I do not know him. I respect his accomplishments and try to learn from him. I try to learn from everyone. I will try to learn from you. As other well accomplished people do continuously. Perhaps none better than my idol Dr. Niederhoffer.

    Point 5: Prove my statements wrong or inaccurate and I will bow to your greater buddha wisdom. And humbly acknowledge my frail humanity.

    Point 6: As in the words of Justice Scalia, "others are entitled to their opinions, mine just happen to be right."

    Cheer up. Christmas is coming, hannukah on its way and pitchers and catchers report to spring training in 60 days.

  14. Daniel Snider on December 15, 2008 12:43 pm

    Steve,

    It’s a pretty straightforward issue: Is the government necessary for a private company to succeed, and if so, what does it say about the value that private company is adding to the economy?

    Whether or not the Iacoca knee-pad crowd thinks he did a good job running the company is totally irrelevant.

    The loan subsidies were also NOT the only part of the bailout. Import quotas were also placed on the Japanese. So Iacoca got subsidized loans, and got the government to squash much of the competition. Woo-hoo.

    And what lesson was learned? Apparently none, and the Big 3 are right back in the same mess.

  15. lon evans on December 15, 2008 3:31 pm

    Anatoly,

    “By the time “time will tell” — your idea will be worthless; no matter whether it has made or lost money.”

    I thought the whole point was to make money. My idea could only be worthless if I waited for it to play out before I risked capital. Obviously, I have put capital at risk. All that remains is in allowing time to do her thing. Please note that I mentioned the final aspect of my approach to be in determining an entry and exit strategy.

    Your argument is a bit circular, which is, of course, the most obtuse form of logic.

    jonathan

  16. lon evans on December 15, 2008 3:35 pm

    Russ,

    My record is preserved in the archives of this site. You might want to do a little research.

    jonathan

  17. anatoly veltman on December 15, 2008 5:04 pm

    Lon, no one can possibly buy because you said so. Your contribution can only be clear logic as to “why”; which someone, hopefully, incorporates into their decision-making. For your contribution to be valuable today - Crude doesn’t need to indeed ever rise in the end. If your logic makes sense to someone, that someone will be taking full responsibility for outcome

  18. lon evans on December 15, 2008 8:26 pm

    Oh,

    You want the why? The list is long, but among other things:

    *An Unusually Cold and Long Winter
    *Israel/Iran
    *OPEC
    *Container Ship Leases
    *Russian Hubris
    *The Obama Effect
    *Madoff’s Plutocratic Wake-Up Call
    *Helicopter Ben-Paul
    *Hyperthyroidic Printing Presses

    And the list goes on. Don’t bother attempting to put it all together. The neuro-typical is rarely capable of grasping an Aspie’s thought process.

    Cheers

    jonathan

  19. Jeff Watson on December 15, 2008 11:15 pm

    Lon,

    I've noticed that you end your most recent posts signed, "jonathan." Is Lon Evans just a nom de plume, and is Jonathan your real name? Since the discussions here have a sense of gravitas, could you clear this up and give the group your real name? If it is indeed Lon Evans, my apologies. The reason I asked is that there is some resistance to people discussing things with anonymous posters, especially with profiles.

    Regards,

    Jeff

  20. lon evans on December 16, 2008 1:05 am

    Dear Jeff,

    My name is Jonathan. Do I have a profile? I know that you and I have had our differences in the past. I trust that is behind us. Having once suffered what was a devastating loss of a loved one, I hope that you’ve come to bear the loss of your wife even a bit more easily.

    Be well.

    jonathan

  21. Steve Leslie on December 16, 2008 4:15 am

    Look at the title of this post. Keys to Today's Action.

    Now look at how supercilious and derailed it becomes. senseless parsing of words, taking sentences out of context, verbal jousting, unaudited claims of accomplishments, personal attacking. Sophistry. Cavalier and flippant predictions, discounting of reputable testimony, Fake names etc..

    Ballyhoo Deflation? Decorum? Meals for a lifetime? Dinner conversation? HAH!

    Looks to me More like a room full of pimple-faced testosterone filled high school punks trying to impress the cheerleaders practicing across the gym. For G_d's sake stay on topic. Use real names, verifiable results backed by statistics and facts or order tickets for Jerry Springer show coming to a city near you.

  22. Daniel Snider on December 16, 2008 11:24 am

    SL,

    I agree, many of these posts are way off topic.. starting with the first one that goes on and on about Chrysler and Akron before even remotely mentioning the issue at hand.

    Let’s stick to the issues.

    Large US corporations have lots of cash, and they are the best able to weather changing economic and trade conditions. Why anyone would buy t-bills as zero yield over stocks is beyond me. Do I know whats going to happen today, tomorrow, next week, next month? No, I don’t. But these are once in a lifetime prices to buy stocks at. Well, maybe twice in a lifetime, depending on your age and life expectancy.

  23. sl on December 17, 2008 12:46 pm

    I am disappointed that my introductory paragraph bored you Snider. My writing instructor, James Michener always encouraged them but perhaps I should compress things to a more technical writing style, less flowing and more content driven. Yet once in a while it is nice to smell the roses along the way. Don’t you think.

    Yet I notice, that I could not find any original postings on your part with original thought and design.

    Perhaps you prefer to be the Gore Vidal of Daily Speculations and I could be Norman Mailer. Then I could punch you in the nose. But that would violate decorum of a dinner party would’nt it. And cause an unfortunate stain on the carpet.

    Relax, Pitchers and Catchers report to spring training in 60 days.

  24. lon evans on December 20, 2008 5:49 am

    Oh heck, Steve,

    It bored everyone!

    jonathan

  25. Steve Leslie on December 21, 2008 3:58 pm

    Hey Jonathan, forget commenting on my posts because I consider you a very disturbed individual who has been suspended from this website time and time again. When will you get the message that I value nothing you write about. So don't bother commenting on any of my subjects. I consider you completely boorish and a non-event. Move on to someone else.  […]

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