Open Thread
If its Saturday nite, then its time for an Open Thread.
The questions before you: Is this the end of the Fed cycle -- or is it a pause before the next raise?
Oil? Energy?
I said about 6 months ago its an election year, so we can expect more terror warnings and thwarted attacks -- but this one looked real -- was it?
Has the market gotten used to terror -- like it was used to MAD/threat of global nuclear destruction?
Lastly, does anyone still believe there still a Summer rally out there to be had?
What say ye?
Saturday, August 12, 2006 | 06:40 PM | Permalink
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I believe this is policy pause rather then policy shift, whatever, this bears market looks like just at the starting point.
Posted by: FatCash | Aug 12, 2006 7:48:03 PM
Not related in anyway, but figured some would enjoy this LATimes story (http://www.latimes.com/sports/la-sp-aba31jul31,0,917243.story):
Roughly once a month, the NBA cuts 31 checks to NBA teams as revenue from its multibillion-dollar national television contract.There are only 30 NBA franchises, so who gets the extra check?
The money goes to brothers Ozzie and Dan Silna, co-owners of the long-forgotten ABA team, the Spirits of St. Louis.
Thirty years ago, Ozzie Silna, with attorney Donald Schupak, negotiated a deal that cleared the way for the ABA to merge with the NBA. It ranks as one of the best sports deals in modern times, one that has paid the Silnas about $168 million and continues to pay off.
Posted by: j d ess | Aug 12, 2006 7:57:52 PM
also, wrt the summer rally. it starts monday on the cease fire and partial re-opening of pipeline news. lasts through, oh, maybe 1:30 - 2:00.
Posted by: j d ess | Aug 12, 2006 8:02:24 PM
Barry, you said on the last thread: "Big uptick in plastic this week --- no Housing ATM anymore, so they hit the credit cards!"
Do you have a link to the source of this data? I'm interested in reading more about this.
Posted by: Michael C. | Aug 12, 2006 8:09:26 PM
Cease Fire? Who cares, nobody has been paying attention to that fiasco for days. The Neo-cons were hoping Israel could drive the Hezzies out of Lebanon, it didn't work. So now they are stopping it, simple as that.
Posted by: Cherry | Aug 12, 2006 8:52:02 PM
yeah, surprised by Barry's trolling for terrorism conspiracy or hyping for election concerns.
I hope that this wasn't just a provactive statement to drive comments. I held this blog in higher esteem.
(yet, I'd be remiss if I didn't note: Funny how partisans on one stripe claim that terrorism is hyped to bolster fear and thus, the repubican party - yet, what party is it that runs around creating fear about Global Warming for their own gain?).
Posted by: criticalthought | Aug 12, 2006 9:06:18 PM
Fear about Global Warming? The fact is that it is the EARTH itself propping up this warming with man just giving it a nice push should be worrisome enough, especially if it causes a re-balance into another little ice age like the Middle ages warmth caused between 1400-1800.
Posted by: Cherry | Aug 12, 2006 9:16:40 PM
What are your views on the discussion of the yield curve inversion contained in the Burton Malkiel article in this week's Barrons? Why is he right/wrong?
Posted by: GRL | Aug 12, 2006 9:30:24 PM
look out cherry's off her meds again
Posted by: phil | Aug 12, 2006 9:53:31 PM
As I see it, Barry lives in New York. According to a Zogby Poll over 80% of New Yorkers have doubts about the official story on 9/11.
So I am not that surprised that Barry being intelligent, has some doubts about official news stories.
Both the london bombings and Toronto Arrests seem to have a large number of unanswered questions.
I think it is safe to say that we are going to see a large number of terror warnings, and possibly one will be "allowed" to happen a. al 9/11. It is an election year after all.
Cheers
Posted by: Anon | Aug 12, 2006 10:06:37 PM
and I thought the london terror incident was
to get the price of gasoline down so that
bush's approval ratings would go up ......
anyways, cheap gasoline, atleast this weekend.
Posted by: rick | Aug 12, 2006 11:09:01 PM
Anon,
One doesn't have to be a conspiracy thoery nut to believe that the Bush administration (Karl Rove) would exagerate a foiled terror plot in order for political gain. I think it is pretty obvious that the plot to blow up Sears tower was a total joke, for instance. However, I agree with Mr. Ritholtz and think that this one was legit. Obviously having British Intelligence involved gave it a little more credibility.
Back to my point, which is that it is another thing completely to suggest that reasonable people would believe that the same, incompotent, politics-before-policy jack-asses in the White House would allow the killing of Americans in order to retain power for the Republicans.
I truely hope that you were not being serious in your suggestion and that you just had your tongue pressed firmly up against your cheek. If not, I pity you and your bleak, cynical outlook on the world.
Also, I'm not sure I believe the Zogby poll results you quoted.
Posted by: Paul | Aug 12, 2006 11:29:48 PM
Are you planning on a mid-term election year stock market rally? It seems like a good story, but going into a recession, high oil prices, lower earnings, how can the market rally? Perhaps a September Fed rate cut will do it? But can the market really rally for a year or two, as it historically does in mid-term years?
Posted by: powayseller | Aug 12, 2006 11:34:38 PM
Slog lower until October. Resistance 124 on the SPY. Good trading market. Don't own anything, short term rent until October. No meltdown in view yet.
Posted by: slam | Aug 12, 2006 11:46:31 PM
rick- I don't know where you live, but I just paid $3.08 for medium grade gas and that ain't cheap in my book for around here.
Barry- I really don't understand why you would bait the Winger Werewolves unless you are amused by the mutterings of sad and confused people? They are pretty much the heirs of the Nixon Majority! which didn't capitulate until we got out the Cluebat, then they all gave up at one time (which was kind of spectacular).
Anyway, regarding your question about whether the markets have started to shrug off terrorism as they did MAD, I'd say that you've got your history wrong. The markets and everybody else was periodically scared as hell during the 60-70's and acted accordingly. The one episode that I remember was when the public found out that Dick had called a Defcon III (global nuclear) alert during October, 1973, about a week after he had already stood everybody down. Even the Cold Warriors were trying to figure that one out and it probably accounted for him being forced out of office as much as anything.
Basically, the second biggest collection of cowards in the entire country is on Wall Street as 9/11 proved, while the biggest collection is in DC, as 9/11 proved. They are feckless cousins, but at least the latter have the ability to do something about OBL. But he is their cousin as well, so they don't and find him quite useful.
Where is Tailgunner Joe when you need him to clean out all of the treason? :}
Posted by: whipsaw | Aug 12, 2006 11:51:45 PM
"Back to my point, which is that it is another thing completely to suggest that reasonable people would believe that the same, incompotent, politics-before-policy jack-asses in the White House would allow the killing of Americans in order to retain power for the Republicans"
How far fetched does it need to be in light of lying to get American troops into a shooting war and killing thousands of Iraqis and a few thousand of our own, not ot mention the thousands of wounded who will never be the same. Then we have the known "the sky is falling", "WOLF" false alarms.
NO, people of such high moral standards would never stoop to anything so low to stay in power, would they?
They would only kill Muslims and our kids.
To imagine wouldn't really require tongue placement anywhere special, would it? I'm honestly not sure to what length these ass clowns would go to to stay in power, but something tells me we are about to find out. In light of that, I think Barry's question is well placed as is citizens doubts of the trustworthiness of their government.
Posted by: Craig | Aug 13, 2006 12:13:59 AM
per slam:
"Slog lower until October. Resistance 124 on the SPY."
Resistance there but that will be broken as will 122. I look for a Pause! at 120 before it heads on down to 114 and the helicopters come flying overhead.
Barry will eventually get his 80-90 prediction, but only after a lot of very ugly and obvious machination that fails. Might take up to a year, but we'll get there sooner or later.
Posted by: whipsaw | Aug 13, 2006 12:15:33 AM
Barry, how am I supposed to take you seriously when you insinuate that the foiled terrorist attacks were all plotted by those in power/govt? This is very tacky commentary, you should be ashamed of yourself.
Posted by: Mike | Aug 13, 2006 12:28:49 AM
per Mike:
"Barry, how am I supposed to take you seriously when you insinuate that the foiled terrorist attacks were all plotted by those in power/govt? This is very tacky commentary, you should be ashamed of yourself."
Barry can speak for himself, but Terror Alerts! are generally just an election tool that gets the sheep to look up from their grazing and move a little closer together. And they are seasonal, have a look at this abomination. So they were going to blow up the Mackinac bridge because it is in a strategic hunting/fishing location? And use prepaid cellphones that cost $100 a piece? Is there anyone here who couldn't do that at $8 per from radio shack assuming the explosives were available to begin with?
Posted by: whipsaw | Aug 13, 2006 12:45:11 AM
(Is it any wonder why Decline to State is the fastest growing politcal non-party?)
I think the Fed pauses for now, and that we're just in a normal correction within a bull market.
Posted by: muckdog | Aug 13, 2006 12:50:07 AM
I specifically said this one looked real -- but I have my doubts about all the terror alerts in 2004 -- an election year.
Somehow, the terror alerts stopped after the election.
I do believe the Brits thwarted some bad guys -- but I can almost guarantee you that we will see some politically motivated nonsense this year . . .
Posted by: Barry Ritholtz | Aug 13, 2006 12:56:12 AM
per muckdog:
"I think the Fed pauses for now, and that we're just in a normal correction within a bull market."
Excellent, then pump some money into this bull market so that I can take your ears for my collection. heheheh.
Posted by: whipsaw | Aug 13, 2006 12:58:41 AM
Question for the esteemed panel here:
Rather than being a sign of strength, is the relatively high level of consumer spending indicative of consumer weakness?
Wages have been stagnant and declining in real terms, and this would not normally be a condition for increased consumer activity. Almost all durable goods are leased - what else do you call a 40-year-old with a 30-year mortgage? It would be interesting - probably impossible to figure - to figure out what the present LTV of durable goods is. As we go forward, it would be interesting to know how much non-durable goods purchases are being funded through credit. The negative savings rate would seem to indicate that this is occuring. This would strike me as the last step before the consumer collapses. Analogous to this would be a decline in durable goods purchases. Auto and home sales seem to indicate a slowing here.
Posted by: M.Z. Forrest | Aug 13, 2006 1:41:24 AM
I think this terror case was for real.
Some good old fashioned detective work, with key parts done for us by Muslims (in Pakistan and presumably the police who infiltrated the group in the UK).
All the previous alerts I can remember felt ficticious or exaggerated.
I am not sure that any shenanigans the current regime in Washington might try would work. A lot of people seem to have responded this time not by saying "Thank God we have a strong president to protect us from terrorists", but rather "you people knew about the dangers of liquid explosives since when and did nothing about it?"
The piece of the puzzle that is always hardest for me to figure is what the Fed will do if (when) forced to chose between severe recession even depression or inflation. I don't think any chart can predict such an essentially political choice.
I don't see how the Fed can stop the housing bust. They can drop money from helicopters and lower the Fed funds rate to 0 if they want, but that will drive up inflation and mortgage interest rates with it.
Is there a politically possible way for them around this? In theory, the government could just start writing everyone 30-year mortgages at 2% and create another housing bubble for a while, but politically that is out of the question. Or the government could issue credit cards with interest rates at the Fed Funds rate and let everyone transfer their balances. That would rescue many consumers. And will happen when pigs can fly.
BTW, I think that China handing out its huge foreign currency reserves to its own consumers so they can buy the goods our consumers won't be able to buy would also work and is equally politically impossible.
There is no replacement for the US consumer unless and until the pain becomes so severe that what is politically impossible now becomes the only choice (as in 1929 and 1932).
Posted by: Kevin | Aug 13, 2006 2:33:22 AM
per Kevin:
"A lot of people seem to have responded this time not by saying "Thank God we have a strong president to protect us from terrorists", but rather "you people knew about the dangers of liquid explosives since when and did nothing about it?"
And that isn't a fair question? I remember that a few months after 9/11, the DoD bozos asked hollywood writers to furnish any and every imagininary terrorist plot they could for evaluation. I don't know what became of that effort, but would guess that it was purely for show.
What is clear is that Homeland Security is run by assholes and that the TSA has adopted the Microsoft approach of presenting inconvenience as security. In the interim, you can float a nuke into New York Harbor and set it off with no problem at all. Stay the course!
Posted by: whipsaw | Aug 13, 2006 3:12:10 AM
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