Market Cheat Sheet: Responding to new data
This is circulating via email around trading desks:
>
Cheat sheet: reacting to data and market releases
weak data = Fed ease, stocks rally
consensus data = lower volatility, stocks rally
strong data = economy strengthening, stocks rally
bank loses $4bln = bad news out of the way, stocks rally
oil spikes = great for energy companies, stocks rally
oil drops = great for the consumer, stocks rally
dollar plunges = great for multinationals, stocks rally
dollar spikes = lowers inflation, stocks rally
inflation spikes = will inflate all assets, stocks rally
inflation drops = improves earnings quality, stocks rally
>
very funny!
(Thanks Peter!)
Friday, October 12, 2007 | 11:23 AM | Permalink
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The majority of the big money is buying as shown by the commitment of traders report = stocks rally. That's all you need to know really. When the big boys start selling then it will be time to cash in the chips. No selling yet. The report comes out today. I'll post if anything changes over at the SMT.
Posted by: Gary | Oct 12, 2007 11:37:19 AM
Bergsten (me) not in market = stocks rally.
Keep on gloating, and I'll re-enter the market, and THEN YOU'LL SEE!!
Posted by: Jim Bergsten | Oct 12, 2007 11:42:08 AM
Barry, I think your previous post said it all: Stocks fall = Fed shovels out more liquidity, stocks rally.
Posted by: Jim M | Oct 12, 2007 12:05:57 PM
And we're seeing the "everything points up" phenomenon today.
Retail numbers say the consumer is spending more. Equities up!
A closer look at the number indicates of the change was consumers spending more money to get the same amount of food and gasoline. Sounds like inflation. But food and gasoline don't count as inflation. Equities up!
Posted by: CBam | Oct 12, 2007 12:15:47 PM
The Big Boys must have there heads up their ?????, if their buying. Or perhaps they know something I don't? Tech has been a joke, who the hell is feeding that monster? And is there a possibility of collusion amongst the media outlets as to there timing of economic releases and their slantings? Everything just seems so orchestrated
Posted by: Justin | Oct 12, 2007 12:16:51 PM
Justin, don't over-analyze. Its just a bull market.
CBam, the last employment situation showed wages rising. So the food and gasoline may be more expensive, but as long as wages are rising, there is not such a grand disconnect.
Posted by: Woodshedder | Oct 12, 2007 12:23:06 PM
Healthy bull markets have a healthy amount of skepticism, are an up 3 days, down 2 days a week proposition, and don't track higher when quarterly earnings turn negative. None of the above applies right now. Right now the marginal buyer is a price insensitive second tier central bank or monetary authority diversifying into equities, joined by record corporate buyback cash sitting on the bid. Earnings or economy driven - LOL. It may be turn out to be the ultimate stupid money trade, but it has a lot of firepower.
Posted by: Turbo | Oct 12, 2007 12:53:18 PM
Governor Randall S. Kroszner
At the Federal Reserve Bank of San Francisco, Conference on the Asian Financial Crisis Revisited, San Francisco, California
(via videoconference)
September 6, 2007
Would this comment from Mr Krosner (Fed board member) fit the Big picture
"As a final introductory thought, I want to note that my remarks today on banking crises relate to research conducted on a range of countries, many of them emerging-market countries, and are not a commentary on current financial conditions or on the health of the U.S. banking system, which, as I noted above, is quite good"
Posted by: Philippe | Oct 12, 2007 1:02:55 PM
"just a bull market"
Over inflated and needing yet another fix of cheap money so that it can continue to allow the brokers to pull in those 2/20 fee's
Yes it's "just a normal bull market"
Needed a good laugh.......
There is nothing "normal" about it at all..
Ciao
MS
Posted by: michael schumacher | Oct 12, 2007 1:03:30 PM
Ummm, why is this funny? It looks like it's true.
Posted by: s0mebody | Oct 12, 2007 1:09:40 PM
I'm somewhat amazed that since the core PPI was tame, all was good, even though the headline rate was very hot and remains consistently above the core rate.
The rational thought would be to say:
1) if producers can push through the PPI headline increase to prices, the core rate will also be under pressure in the future forcing a more hawkish tone from the Fed, or
2) producers eat most/all of the cost of the PPI increase, resulting in lower future corporate profits.
Either way, you would think that valuations should be adjusted lower, not higher.
Posted by: W.Edwards | Oct 12, 2007 1:22:19 PM
MS, so if it isn't really a bull market, what sort of news, data, will it take to trump it?
Woodshedder, thanks for the admonition; I agree but it is frustrating for us free-thinkers...wish I was more of a follow-the-leader type. (no I don't)
Posted by: Justin | Oct 12, 2007 1:24:13 PM
I smell fizzle going into the close. I don't think a lot of people want to stay waaaay long going into next week. It looks like the internals are already weakening.
Posted by: Global Savings Slut | Oct 12, 2007 1:25:47 PM
You know as well as I do why the market is up here. It is'nt fundamental, technical or any other "accepted" explanation.
You recall there was a story floating around about the Chinese now having about $200 billion to "invest".
Low and behold we are two weeks out from that "story" and it does'nt garner a mention anywhere now. Put that into context of "record highs" on crap volume (daily) and narrow breadth.
In the immortal words of Fred G. SanFord ( and the G stands for Goldman Sachs )
"I'll give you five of these across the chops"
What he did'nt know was that those "five across the chops" was spelling out C-H-I-N-A.
Ciao
MS
Posted by: michael schumacher | Oct 12, 2007 1:44:57 PM
Ya'all have a good one...I'm off to have a few "Miller High Life's," put this stupid week behind me...cheers! lol I'm buying!
Posted by: Justin | Oct 12, 2007 1:52:58 PM
Bergsten:
Me too. I got out end of July. Seemed like a great idea by mid-August. I have stayed out thinking, "just irrational behavior - when the data gets analyzed equities will fall". Now I've missed a great two-months and can't figure out WTF is going on.
tucker
Posted by: tucker | Oct 12, 2007 2:21:07 PM
Justin, Michael, et. al
My comment about it being just a bull market is appropriate. I did not say that it was rational, fundamental, or whatever. The fact of the matter is that it is a bull market. Accepting that fact means that one will typically behave in a certain way during such a market. Again, that doesn't mean the behavior will be rational, or based on any fundamental basis.
Again, there is a disconnect here between traders and economists. Traders know not to fight the tape. Economists say the tape is wrong. Both are correct, but it is a lot easier to make money when not fighting the tape.
Does it matter if it is the Chinese who are buying? I've said before and I'll say it again, if people are so sure they have it all figured out (the chinese are buying, the fed is massaging numbers, etc) then go all in, because as BR's post shows, the market will keep going up forever.
Posted by: Woodshedder | Oct 12, 2007 2:23:01 PM
Think the $1 billion writeoff at CTX was impressive? How about a company that reports NEGATIVE net new orders?
A negative book to bill is equally as impressive as a $1 billion writeoff, no?
Net new orders at CHCI were negative 54 for the September quarter. (See the last table)
http://biz.yahoo.com/iw/071012/0313270.html
Posted by: Groty | Oct 12, 2007 2:23:25 PM
if the big boys are doing the buying who's doing the selling?
for that matter who was doing the selling yesterday afternoon?
do the big boys do something else on thursday afternoon's in NY?
which big boy posts the big futures contracts
each morning?
do the big boys have a substitution situation like the s&p?
if a big boy makes the cover of business week is it then all over?
rgds pcm
Posted by: peter from oz | Oct 12, 2007 2:29:23 PM
Woody-
I can accept that it is a bull market.....for no other reason than it IS.
That, however, does'nt mean I am supposed to suspend any disbelief and stop asking questions when the market continues to celebrate higher (overall) costs in just about everything we consume. Oh and those retail numbers today??? I suppose paying more for less is the way to go if you are the seller...however not many of us are on that side of the deal.
China is fucking us and we can't or won't acknowledge it. They own us.......
but as long as our precious corporations can continue to post some profit (because by the looks of it earnings will continue to suck)and announce share buybacks in order to soften the blow of poor organic growth then we are all led to believe that it's all ok.
Ok for whom????
We no longer have a free market when cycles are not allowed to occur. That is what has gone on over the last two years. heavily assisted (via the Fed and Treasurey) brokerages who can count on the Fed playing market maker for them if there is so much of a hint that the bonus' are in jeopardy is what our market has become. And who do we thank for providing the capital for that grandiose exercise??....China.
We have now crossed into the United States of Goldman Sachs......go look at where they have almost HALF of there assets stored....
And we, as a people, just continue to allow this to happen.....
Ciao
MS
Posted by: michael schumacher | Oct 12, 2007 2:44:33 PM
BTW which big boy has a wife who's fat and has a great singing voice?
rgds pcm
Posted by: peter from oz | Oct 12, 2007 2:45:51 PM
finally on the big boys
to misquote hemingway on fitzgerald
the big boys are just like you and I (they don't know either) they just have more money (for now)
rgds pcm
Posted by: peter from oz | Oct 12, 2007 3:22:36 PM
How about:
US still a great country = stocks go up
Posted by: Eddie | Oct 12, 2007 3:24:03 PM
MS- I think the cycles will happen. Its just going to be worse than it would have been otherwise.
Posted by: Woodshedder | Oct 12, 2007 3:31:09 PM
Woody-
The markets have not had anything resembling a normal cycle, ala a meaningful pullback, in how long???? Says enough just with that..
and I too realize that it eventually will have it because the market is bigger than any one thing or entity that attempts to control it........however never has it had as much assistance and overt mis-information (thank you commerce dept.!!) thrown at it. And yet it still goes up....funny thing though.....IF that SPX bid EVER gets removed (it never does) we might get a pullback, but I would'nt count on that bid being removed until about the end of next summer.....nudge,nudge,wink,wink.....LOL
Add that the Fed is now acting just like another hedge fund and that it's trying to "forestall" a recession.....forestall it to when?? November 8th, 2008?---LOL
I hate to say this but if the dots are ever connected to this administration (with all the overt conflicts of interest that are allowed to continue)it would make Watergate look like a church picnic. How long did Cheney get to keep his stock before he was told to "sell" it??? If it was Clinton he would have been shot and made an example of-just like Martha.
Ciao
MS
That was for You RT!!!!
Posted by: michael schumacher | Oct 12, 2007 5:19:00 PM
