Here Comes the Economic Stimulus!
Friday, March 14, 2008 | 04:00 PM | Permalink
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Uhhh, I don't get it.
Just kidding. I do - sort of - but wouldn't the black lightning bolt representing oil px's have been better as, say, an arrow set to pierce the balloon? Or how about an arrow representing inflation generally? Oil isn't the only obstacle we face.
An okay cartoon, perhaps, but not a great cartoon.
My $.02.
Posted by: George Booth | Mar 14, 2008 4:05:44 PM
6-12 months from now you will look back at today's market hysteria and ask: "What was I thinking? It was unreal buying opportunity but I was shorting/selling"
P.S. Do not delete this post and lets come back to it in 6-12 months
Posted by: Market Hysteria | Mar 14, 2008 4:13:47 PM
OMG!!!! Marketpalce has your quote on the front page about the BS building (he said BS, HEHEHE). And coming from someone of your stature. That's right up there with the remark a couple of years back about the monkeys screaming and throwing feces....
a great laugh to end the week, tanks a milliones
Posted by: TulsaTime | Mar 14, 2008 4:13:55 PM
Barry - I've gotta wonder whether nosebleed oil prices are the requirement for the oil producing countries remaining with the dollar standard?? Yes, I know this sounds paranoid, but the dollar has little else going for it nowadays besides its ubiquity.
Posted by: John Badalian | Mar 14, 2008 5:03:47 PM
Barton Biggs Expects 1,000-Point Gain in Dow as Fear Recedes
By Brian Sullivan and Michael Patterson
March 14 (Bloomberg) -- The decline in U.S. stocks is ``way overdone'' and the Dow Jones Industrial Average may rally 1,000 points, investor Barton Biggs said.
``We're in a financial panic,'' Biggs said during a telephone interview with Bloomberg Television from New York. ``We're setting up for a really big rally. I don't mean three or four hundred points on the Dow, I mean 1,000 points on the Dow. I don't know if we're going to get it next week or the week after. But this thing has gotten crazy and is overdone.''
Biggs, a former Morgan Stanley strategist who now runs the $1.5 billion hedge fund Traxis Partners LLC, said ``this is the time to be buying stocks around the world and not to be selling them.''
The Dow average has tumbled 16 percent since reaching a record in October.
``I can't get wildly bearish,'' Biggs said. ``This is not the end of the world.''
________________________________________________
It makes sense. Thanks Barton!
Posted by: We're setting up for a really big rally | Mar 14, 2008 5:44:45 PM
High oil prices do 3 things
As previously indicated, it keeps most of OPEC and Big Oil happy with the dollar.
Those countries who import oil, while not happy with the dollar, need the dollar to buy oil, so they accumulate them. This is weakened a bit by Russia, Venezuela and Iran selling oil in other currencies.
Those bankers who make money creating money (M3 is increasing at 16%) are happy, as they can create money for the oil consuming countries like China who need dollars, via consumer debt that allows us to buy their goods. The consumer is hurting though.
So whats up with the dollar? Might be that folks have lost confidence in the ability of the consumer to keep feeding the machine, and demand for dollars is weakening with more oil being sold off the dollar.
The fleas (bankers) have killed "Consumer" the dog, and so goes the dollar. May you RIP Consumer, you were loyal to the end, and you will be missed. Maybe if we can catch the fleas like we caught Spitzer there will be justice, but the fleas might have been responsible for Spitzer demise, so don't count on it.
Posted by: pft | Mar 14, 2008 5:52:51 PM
"Biggs, a former Morgan Stanley strategist who now runs the $1.5 billion hedge fund Traxis Partners LLC, said ``this is the time to be buying stocks around the world and not to be selling them.''
________
Biggs then mentioned that his company was out of cash due to its poor investment strategy, and tried to borrow a 5 spot for a double venti latte.
Posted by: Marcus Aurelius | Mar 14, 2008 5:56:29 PM
to Biggs credit, it makes a lot more sense to buy after a 20 - 25% correction in the S&P, Nasdaq then to buy after a 20% run up doesn't it?
I mean, let's face the facts. This won't go on forever (bear markets NEVER do). However, for now I'm definitely staying defensive with SDS, QID, FXP, EFU and IAU. Hope to just tred water until at least the credit/bank crisis is behind us (probably in the 4th or 5th inning by now).
Anyone disagree?
Posted by: Jdamon | Mar 14, 2008 6:05:43 PM
Biggs took the wrong side of the oil trade early on and it cost him a ton. If ytou're looking for a timing gure, he is not it.
Posted by: larster | Mar 14, 2008 6:12:28 PM
Anyone disagree?
______
Yes. Me and Noriel Roubini.
Tell me where all of this new, stupid credit is going to come from?
4th or 5th inning? Hell, we're not even in the ballpark yet. If we do have a big rally, you'd better get in and get out.
Posted by: Marcus Aurelius | Mar 14, 2008 6:14:15 PM
You know what scares me is that this guy don't get it. As he keeps dumping wads of liquidity into the economy in one form or fashion it only makes the dollar cheaper. This increases the prices of energy and food because they are denominated in dollars. Both of these are consumed by all U.S. consumers who are 70% OF the GDP. Who should we be protecting afterall, corporate America or most Americans?
Posted by: Pat G. | Mar 14, 2008 6:20:48 PM
I follow matters like this with interest not because I care about the world of finance for its own sake (like many of the seeming bulls in this thread), but rather because my profession makes me one of the first dogs kicked when the economy starts to go south.
Putting aside for the moment that I am in the closing weeks of my worst quarter since the year of my mother's death (and worse than several of my 2K-'02 quarters)...
The dollar is taking it in the pants, and my understanding of macroeconomics suggests that the strength of a currency is a primary indicator of the strength of the economy in which it was issued to circulate.
Long story short, we pay others to make what we consume, and as other states amp up their knowledge economies, the relative value of the U.S. knowledge economy - that is to say, the engine of the entire U.S. economy, apart from ag and natural resources - decreases. The amount of *stuff* we can buy as a result also decreases. Where does this trend take the United States (and for a while at least, the rest of the world with it)? I really don't like the answer to that question.
I'm not trying to be Chicken Little here, and much to my chagrin, what I'm about to write makes me sound a great deal more against free trade than is actually the case...
I can't help but think that the next three to five years are going to be a terrific argument against the way in which globalization has been implemented. The Train of Unintended Consequences is pulling up to the platform, all aboard.
And real estate? Symptom, not disease. When you dump a bunch of money into the economy (hello? interest rates?) and need to forestall inflation, where else is it going to go? Yep! It'll be something with enough intrinsic value that people will be grateful to take possession at any remotely-reasonable price.
The good news (as such) is that if it goes far enough, the United States will actually be able to afford to fill in the gap that twenty years ago was a robust secondary economy, and do it on terms that will put the developing nations to shame. (Either that, or those productivity advances during the Nineties looked great on paper.)
Until then, well, the rest of us'll be standing there, holding our proverbial p*****s in our hands and paying progressively higher prices for pretty much everything. Y'all have fun with that market.
Posted by: ben | Mar 14, 2008 8:02:27 PM
Honestly, I think we (bears) were saved by the run on Bear Stearns news today. If it was not for Bear Stearns related panic selling, more bears would be squeezed today (it was setting up as another rally for the bulls before the Bear Stearns announcement).
I happen to agree with Biggs (sorry BR). I used today’s god given panic selling opportunity to cover all my shorts.
BSC is only a $4B market cap now trading ½ book value, meaning it will be bought by someone like Buffet. Bernanke will cut by 100 bp (Lets be honest, lower rates will eventually work). There will be a joint dollar intervention. In short, as Biggs said, this is not the end of the world and not time to get wildly bearish.
What say you BR?
Posted by: Me and You | Mar 14, 2008 8:43:38 PM
Keep in mind that Biggs was a strategist not a trader so his timing (even IF he is right!!!) could be off by enough time to put you in the poorhouse. Wonder how his hedge fund is doing??? anyone know the performance numbers??? I am ready to be underwhelmed. He's a good talker but so what? show me the money from his great calls....IF OIL and Gold correct and the dollar does a dead cat intervention bounce and the fed cuts and and and Barton backs up the truck we could get a little bounce next week. But will it hold? Hell if I or anyone in the world really knows.....will be educational to observe however.
Posted by: lurker | Mar 14, 2008 9:02:13 PM
Barry
It's all about the Dollar;
The dollar should be the strongest and most stable currency in the world and we need to "hold the line".
"Ten thousand dollars to our general use."
William Shakespeare
Posted by: David | Mar 15, 2008 12:30:26 AM
Hey blam, your stuff is pretty funny, and makes a lot of sense as well. But your money must be somewhere, so where is it?
Posted by: cecil | Mar 15, 2008 12:31:35 AM
Lots of chatter about how 'undervalued' Citibank is. Is this legitimate or a Wall Street ploy to get investors to inject capital into a struggling bank? This blog is ridiculous, kinda like the restaurant at the end of the universe....
Posted by: bdole_says_bdole | Mar 15, 2008 12:36:57 AM
Biggs and others say get ready for a rally. okay. tell me what earnings estimates your using on the S&P and what multiple on the earnings to come up with a market price that we'll rally to. Not saying he's wrong but give me some analysis instead of just saying it has to rally because the world isn't ending. okay, so the world isn't ending, so maybe markets just go sideways for 3, 6, 12, or 24 months until valuation makes sense. ever think of that. yeah we'll get through it but that doesn't mean we're due for a "rally"
Posted by: craig behnke | Mar 15, 2008 1:31:12 AM
Barry
It's all about the Dollar;
The dollar should be the strongest and most stable currency in the world and we need to "hold the line"..........
Posted by: David | Mar 15, 2008 12:30:26 AM
WHY ??
the US has been using the USD to live off
foreign production, investment, sweat, etc, etc, ain't going to continue
Posted by: rickrude | Mar 15, 2008 3:11:39 AM
There were some mighty weighty questions being asked in that Restaurant at the End of the Universe.
But,
I don't recall this question being asked:
"How much liability can the Fed manage?"
Posted by: Graham P. Knopp | Mar 15, 2008 5:44:34 AM
No one (except maybe JP Morgan) is going to be Bear Sterns ESPECIALLY Warren Buffet. Book values on companies whose asset values change daily and are 40x leveraged mean nothing. Bear Sterns holds some of the worst mortgage paper on the street and it has all plummeted in value in the past 2 months. I would put money on their book value being well below 0 at this point. maybe the fed will force JPM to buy them the same way BofA had to buy countrywide.
Posted by: SubprimeGuy | Mar 15, 2008 8:35:52 AM
I noted that this morning's front page NYT article by Landon Thomas concerning the new Bear Sterns welfare program did NOT mention the dreaded "I" word once.
This, ladies and gentleman, is what passes for "analysis" once snouts begin plunging into the public trough.
Posted by: Michael Evers | Mar 15, 2008 11:01:03 AM
We don't have free trade, we have petrodollar hegemony. Now the blowback from it is killing us.
Posted by: ideogenetic | Mar 15, 2008 1:19:34 PM
The rise in oil is just an obvious clear symbol to Americans. Our real problem is the falling USD. One of the only reasons oil is up this much is because the USD has fallen 40% since the Iraq war. Just keep printing the money guys and $5.00 a gallon gas will be here by next year.
Posted by: Adam | Mar 15, 2008 1:53:47 PM
http://finance.yahoo.com/q/bc?s=DBC&t=3m&l=on&z=m&q=l&c=dba
As you can see by the chart, commodity prices took off on the day of the announcement of the stimulus package.
It is having the opposite effect that is desired. Money is flowing from the financial markets to the commodity markets creating further stress on the system.
Jay Haley, CFP
Posted by: jay | Mar 16, 2008 9:46:39 AM
