Not Enough Bullish Sentiment?
I keep hearing people saying "No one I know is Bullish."
Well, y'all know the wrong people. Just look at the market action, and you will see quite a bit of speculative fervor in recent days and weeks.
Over the past few few months, we have seen all manner of evidence that the bullish ardor is alive and well:
- Today's Dow Industrials opened down at 11,756. The dip buyers have taken it back up to nearly 11,900.
- Several 200 plus down days have seen strong end of day rallies taking markets to flat;
- Punters were buying Bear Stearns (BSC) on Friday, on the (false) assumption a bailout would prove profitible;
- This morning, Lehman (LEH) traded as low as $24.50 this morning, before being driven up to $31;
- Search your favorite websites/commentators/blogs/bobblehead: Quite a few are talking about the Fed rescue, and a "great" buying opportunity;
- It is arguable whether or not the markets may not have fully priced in all of the bad news, to wit: We have yet to trade below January's lows. Someone is buying.
As we have noted, a short, Fed induced rally is a real possibility -- but I look at it as a gift, not the beginning of a new upcycle.
Back to Ralph Waldo Emerson: Look at what they do, not what they say . . .
Monday, March 17, 2008 | 09:59 AM | Permalink
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There is risk everywhere right now.
Unless you have the actual physical asset in your closet(ie land, bars of gold, a barrell of oil) you have counterparty risk and exposure to the banking system.
Can anyone tell me a place to put your money where it is safe from a systemic financial meltdown and liquid?
I feel safer with 1000 shares of MSFT.
Posted by: Vermont Trader | Mar 17, 2008 10:18:20 AM
Search your favorite websites/commentators/blogs/bobblehead: Quite a few are talking about the Fed rescue, and a "great" buying opportunity;
These would be the same assclowns that said BSC was a buy at $164? It's probably JPM playing with BSC shareholders money. Ain't life grand.
Posted by: SPECTRE of Deflation | Mar 17, 2008 10:20:23 AM
Amazes me that while the world mkts tumble, for US its business as usual. Cant understand who is buying. More importantly, cant understand why they are buying. This, in the background where you have fear all around and currencies having a party of their lifetime.
Posted by: pj | Mar 17, 2008 10:23:31 AM
John Borchers, if I may repost a question from the other thread:
>> I'm buying shares with huge spreads going forward.
>> Cash only boys and girls. And don't buy credit swap stuff! No No to SSO, SDS, TWM, UWM EEV etc etc.
>> You don't know what bank owes the credit swap.!
>> Posted by: John Borchers | Mar 17, 2008 9:30:43 AM
John, what do you mean by "buying shares with huge spreads"? The only thing I can think of to replace SDS, QID, SRS, etc. is buying puts. Is that any safer? Is that what you're doing or does "buying shares with huge spreads" mean something else?
Thanks.
Posted by: wunsacon | Mar 17, 2008 10:25:44 AM
I bet a lot of posters who talk a good game couldn't in real life be able to tell the difference between a short sale and a banana up the ass. Or the one trade they made a killing on is the only they remember. They forget the goofy failures.
This market is going to be a range trader's paradise.
Posted by: cinefoz | Mar 17, 2008 10:27:14 AM
>> Cant understand who is buying.
Could some of it be the work of the Plunge Protection Team? Can't believe the Bear bailoiut was the only thing Ben and Hank discussed over the weekend....
Posted by: MitchN | Mar 17, 2008 10:30:05 AM
Sorry Barry but I have never seen the sentiment as bearish as the present(at least since 1987 & 1990).
"This morning, Lehman (LEH) traded as low as $24.50 this morning, before being driven up to $31;"
Should be:
This morning, Lehman (LEH) was driven down as low as $24.50 this morning, before trading up to $31.
Posted by: kk | Mar 17, 2008 10:32:38 AM
Looks like a successful retest to me. I guess we need a good close. VIX to mid 30's and a pending rate cut.
I love fauvistic markets. Trader's paradise.
Posted by: Ross | Mar 17, 2008 10:33:43 AM
Greenspan warns of worst crisis since 1945
Just read this. Someone at the FED needs to call Allen and tell him to shut the f##k up. The greatest bubble blower the world has ever known can now not shut up. Couldn't see the bubbles while heading the FED, but can see all the way to the Sun now. Will someone please call this POS on all his bubbles!!
Posted by: SPECTRE of Deflation | Mar 17, 2008 10:34:01 AM
Barton Biggs is looking for a thousand point upside. At the same time he's looking for a remote farmstead and some heavy weapons to scare off the brigands. He used to at least have style even though his market calls have never impressed. Sold a little twm this morning and bought (gasp) a little caf, selling at a 20% discount to NAV plus a little panic special thrown in. You cant win if you dont buy a ticket.
Posted by: cathompson | Mar 17, 2008 10:34:38 AM
"goofy failures"
You should have PLENTY to choose from.
You are so clueless you can't even realize when you set yourself up.
Ciao
MS
Posted by: michael schumacher | Mar 17, 2008 10:35:06 AM
You still don't believe in the PPT!
Posted by: John T | Mar 17, 2008 10:38:24 AM
JPM up almost $4. LOL! Hey BSC Shareholders, that's your money they are playing with. How does it feel to be legally robbed?
Posted by: SPECTRE of Deflation | Mar 17, 2008 10:38:52 AM
I monitored the world markets throughout last night. Asia held up very well. Europe survived, though Germany's markets took some hits. And the U.S. markets are doing pretty good this morning.
So far so good.
Time to follow up on banks' cash withdrawals and account shakeouts across the USA.
>>>
Posted by: Movie Guy | Mar 17, 2008 10:40:58 AM
Ross, cash is king until it settles out, and those with cash raid the easy pickings. I'm in, but what a world of hurt for J6P. How many greeters can Wal-Mart hire? LOL!
Posted by: SPECTRE of Deflation | Mar 17, 2008 10:42:18 AM
Barry, the farther this market has fallen, it seems the more bearish you are getting. I have followed you for a long time and am watching to see if you actually have the ability to see the glass half full at some point. That is when I know you are the real deal and not just another perma-bear who gets it right for 18 months once every 5 years (fleck, Shiff, Roubini, Hussman, etc.). Even Kass has gotten a bit more bullish (maybe a little too earlY) as the market has gotten pounded.
Posted by: Jdamon | Mar 17, 2008 10:42:40 AM
So when a regular person goes to the government for assistance they are forced into all sorts of paperwork and a bunch of actions meant to shame them, like standing in line down at the welfare office to pick up some food stamps, and having to carry around blocks of government cheese that basically have the word "BUM" written on them.
The first step in any bailouts should include tighter regulation of these fantastical financial institutions with shady products and investments, along with ample disclosure of where the money is going. A little shaming, i.e. firing of the bums that got us here might alos go a long way to restoring confidence.
Do you get the feeling that the money gets doled out after a fancy lunch and a handshake?
Posted by: flounder | Mar 17, 2008 10:42:47 AM
Re your visit on Kudlow:
I'd like to know from a group of learned souls if it is possible for an unfriendly but extremely rich foreign country to plan out a series of steps that could ultimately crash the world economy. It would obviously take a bit of time and effort.
It would start with easy credit and progress with massive leveraged credit used to buy assets that are overinflated in value. The credit would be withdrawn. Overinflated assets couldn't be used as security to borrow elsewhere, and values would crash. (Sound familiar so far?)
The failure point would be where the crash is even too big for the Fed to provide lender of last resort liquidity and credit.
Could a sovereign entity do this? Realistically, and not using a Roubini inspired generalized, yet vague, paranoia scenario.
If it is possible to be extremely disruptive, what steps could be taken to provide safety valves that cause the markets to deflate well before crisis points occur?
Posted by: cinefoz | Mar 17, 2008 10:45:41 AM
Don't forget to add the derivative situation to your list o'goodness to talk about beyond cliches. While everyone is worrying about housing open their eyes to the impending challenges of unwinding unmarkable derivative-based portfolios.
Posted by: c | Mar 17, 2008 10:50:14 AM
Vermont Trader,
I read "Financial Armageddon" by Michael Panzner this weekend. It was published in 2007, but he was spot-on in his predictions that the massive unwind in leverage was just around the corner. In fact, many of the chapters could have been pulled straight from today's headlines. It was a bit spooky, truth be told. Panzner is a former bond trader on Wall Street. He even predicted the melt-down in the municipal bond markets, if for different immediate causes than actually happened.
Panzner felt that at first the Fed would be slow to act, thereby yielding a deflationary environment for a while, which would be closely followed by hyperinflation, as the Fed tried to print money to stave off a depression. My take is I think the Fed skipped the first, deflationary episode because it has been nothing if not quick to act, and is headed straight to the hyperinflationary stage.
The hyperinflation would be preceded by a crash in the dollar (sound familiar?) in international markets. His advice? Buy hard currency (gold), land, or foreign exchange. Do anything but hold dollars, but if you do, make sure they are protected as much as possible by holding them in FDIC accounts (even though he predicts the FDIC will eventually collapse along the way to armageddon). But be very careful w/ buying foreign exchange because of the risks that inhere w/ a transaction so heavily dependent on counterparties (brokers), and the financial technologies that allow such a thing (internet, etc).
For me, I've been holding most of my assets in cash, but I just bought a 24 acre farm w/ my self-directed SEP as a hedge against basically the whole world.
Considering that my remaining cash is rapidly losing value, even at reasonable CD rates, I'm not sure what I should do w/ it. Perhaps foreign currency. The Euro, so long as its central bankers remain focused on inflation (and Germany still remembers its episode of hyperinflation, according to a recent article in the Economist) might be a good bet.
Also, I think it might be a good bet to buy currency of the oil-producing nations. Bretton-Woods II, which is not really an agreement, but an informal arrangement whereby the oil producers pegged their currencies to the dollar, is soon to be a thing of the past, IMO.
If the dollar goes to $200/barrel in short order, this is gonna get real ugly, real quick, and IMO, the Fed basically threw the switches on the presses to overdrive this weekend. It might have saved some of Bear, but it is quickly destroying the dollar, because the rest of the world knows what we refuse to admit--there is no way the Fed can print its way out of this mess.
Posted by: Donkei | Mar 17, 2008 10:50:56 AM
Are there bullish consensus numbers for financial blogs? It would be interesting. Problem with just taking our "impression" of sentiment from reading blogs is that it is very subjective: we tend to emphasize what we have most recently read. And in bear markets I think we also tend to remember bearish opinion pieces more since they correspond with the general atmosphere of fear. They make a deeper emotional impression. So our impression of sentiment might tend to portray the landscape as more bearish than it actually is.
Posted by: PureGuesswork | Mar 17, 2008 10:54:20 AM
Cinefoz,
you have lost all your humor and now you are thinking conspiricies? Wow. Anything to save face I guess. Dow went green this morning, briefly. You never know, you just might get your rally anyday now. Then you can brag about your "boatloads of money" again.
Those are just some great quotes..
Posted by: B.B. | Mar 17, 2008 10:55:10 AM
Here comes Chucky to tell us how this is a great thing. Liar!!!!!!!!!!
Posted by: SPECTRE of Deflation | Mar 17, 2008 10:56:03 AM
I'm young, so I don't have any gauge on historical thoughts, but I fail to see how there could be the most bearish mindset in most people's lives when the market is only down 20% from the peak. Looking at past bear markets, the original 1270 panic low had the sign of being oversold, but now it looks nothing like panics have in the past.
And that's on top of several serious minds (even Greenspan now) saying that we are going to have a crisis that few outside the Greatest Generation have ever experienced. Barry is right that there is way too much short term complacency. Once we drop another 15%, then I'll be thinking people are getting ahead of themselves.
Posted by: mikkel | Mar 17, 2008 10:56:42 AM
B.B.
Which initial stands for banana?
Posted by: cinefoz | Mar 17, 2008 10:58:03 AM
