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Genesis Posts: 71432 Incept: 2007-06-26 
KD^2 
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http://market-ticker.org/archives/1623-T....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-11-15 00:03:59
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Capeman Posts: 2169 Incept: 2007-07-12 
San Diego
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All true, but it seems to me that this time the machinations of the coming crash won't be as apparent as those leading up to the 2008 crash. Few non-sheeple will see the unwind coming and will likely not be in a position to get out of the way.
---------- "I believe all God's creatures have a soul... except bears, bears are Godless killing machines!" - Steven Colbert
2009-11-15 00:13:56
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Gamma Posts: 1760 Incept: 2008-01-20 
Northern CA
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I of course see all this happening, but I also bring the following counter-arguments, with the advance proviso that I can't argue my case with the facts and figures that Gen does. IMO, the rise in the stock market, even though it represents essentially a negative delta 100 "put" on the USD, could easily just go to being, say, a negative 60 delta put on the USD. I am saying that the effect on the market is waaaaay out of proportion to the the implied de-valuation of the dollar. We have been at these levels before on the USD. It is true, we have gotten to these USD levels fairly linearly and monotonically. But the market does not "need" to absolutely reject a rise in the USD. Sure, it will have that tendency, as the two items are at present reacting perfectly against each other, literally tick for tick in the past week or so. Here we have any stock you can name at all double off SP 666. Indeed, a mere doubling of any given stock off SP666 is a serious underperformance. I (and anyone else) can cite you quadruples and quints and octuples without any kind of mental stretch. And as such, this market could give back 15-25-25% and *still* show record gains in *some* issues....not the indices, of course...but in plenty of big cap stocks. There is no question if this thing starts to dump, there will be plenty of late comers looking for the door. At the same time, I believe there are very few who caught the bottom and rode it all the way to where we are. There are plenty who took the whole ride down and the whole ride up...but they are not showing a profit. Coming off these highs and judging by the utterly relentless behavior of the thing over the past 6+ months there will be buying at every click down. Yeah, in 2001 that destroyed everyone. It *should* do the same thing here. But *should" isn't operative. We *should* have retraced or gone sideways from say SP 900. IMO, we don't even deserve to be at or above SP 900. So, what I am saying, to boil it down, is that this MF'er will destroy you if you are early shorting it, because, barring the black swan evert, it will take ridiculously longer than anyone expects to come off these levels and such, a bet on the unwinding of the USD carry is roughly equivalent to betting on TEOTWAWKI. I don't think you can safely short this on a positional basis until it decisively breaks maybe SP 1K. ---------- It's better to donate a Ford to the Kidney Foundation than a Kidney to the Ford Foundation.
2009-11-15 00:47:15
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Robert17 Posts: 70 Incept: 2009-03-15 Judsonia, Arkansas
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Good questions Karl.
2009-11-15 00:47:18
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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Gamma, The Ticker is not a trading perspective. This sort of market behavior, however, is a warning - and one that INVESTORS (not traders necessarily) would do well to heed. The Yen trade was going to never unwind, remember? And in fact Japan did not raise rates. Didn't matter. Once the trade started to unwind the margin calls begat more margin calls. The problem is the leverage - once the carry goes against you, you're ****ed and fast, and everyone goes for the door at once. Exactly what triggers it is impossible to know in advance. But what is axiomatic is that which cannot go on forever won't. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-11-15 00:51:06
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Noelgallagher Posts: 105 Incept: 2009-10-23 Banned
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Just like the in the 30's the government and financial media will continue to say "recovery is just around the corner" every time the facts show more downside. I expect that to happen, but the real question is: When will the average person get fed up? When will we see Obamas poll numbers tank? When will we start to see panic in the streets?
2009-11-15 01:02:45
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Gamma Posts: 1760 Incept: 2008-01-20
Northern CA
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I absolutely agree, though, in case it isn't clear, that the moment the dollar carry is discerned as a fiction, *some* kind of dislocation will occur. Will the market immediately revert to a reflection of "normalized" PEs, where, under current conditions, it ought to lose 80% of its value? Possible, but I really doubt it. Lose 25%-35%-50%? Oh sure. And that's a catastrophe to any investor, let there be no doubt.
---------- It's better to donate a Ford to the Kidney Foundation than a Kidney to the Ford Foundation.
2009-11-15 01:04:20
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Snowman Posts: 1040 Incept: 2009-03-09
avoiding yellow snow
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Actually we don't even need the carry to unwind by the Fed raising rates. All we need is to have some idiotic big hedge fund leveraged to the gills in, let's say Brazilian timber stocks, to have it's margin called by rumours of a Fed rate hike, or, that the bubble they invested in bursts (e.g., local government places capital controls, investors realise the asset bubble has no fundamental value). Think LTCM multiplied. Probably a good dozen out there who can bring the house down.
2009-11-15 01:33:25
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Luvs_footie Posts: 1839 Incept: 2007-11-26 Australia
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KD........ I keep trying to guess where the $US will be in 2 years. It is my belief there will be ups and downs but if the $US does what I think it will do .........it will lead to  for the US.It seems to me........your Banksters will stuff you guys no matter what. Am I right? ---------- Much of what we labeled Tin just two years ago is now known to have been truth. While today, what most think to be truth is Pure F**king Tin. The times....they are a changing
2009-11-15 01:34:36
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5755hsa Posts: 53 Incept: 2008-09-07
North of 40
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Agree with Noelgallagher The boiling point is well overdue. I love America, I have many relatives living in Florida and California, and dozens of friends scattered all in between. I can't hardly believe that the citizenery has held it together this long. Most Americans I know do not put up with a whole lot of ****. They are vocal and proactive people. I suspect there will be a breaking point soon and as much as I don't want to see it..some major civil unrest. Somethings got to give. ---------- Ignorance can be fixed....stupidity is forever ----self---
2009-11-15 01:54:52
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Maxpowers Posts: 909 Incept: 2008-02-21
Orange County, CA
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Luvs, Actually, when the USD index gets to 60 (sometimes in mid to late 2010) I think we are gonna be in for a huge surprise. I will be totally bearish on all commodities and related currencies (AUD, NZD, and CAD) as well as BRICs. For the meantime, we just have to deal with what the market is throwing at us. Incidentally I would be somewhat disturb by the recent trends of Oz selling off much of her natural resources to fund the budget. Look at Russia as an example of a nation once thought to be vastly rich from her natural resources who is now in a secular decline. I think that is the fates of all nations the must continually stripped out non renewal resources to fund the national budgets. These are longer term pictures of course but in the meantime one should enjoy the cyclical bull markets.
2009-11-15 02:26:15
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Yazooflesh Posts: 2428 Incept: 2007-08-02
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Bears repeating...We (the U.S.) don't rely on silly indexes and mathematical certainties. We have this...
2009-11-15 02:34:41
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Highrev Posts: 3124 Incept: 2009-02-21
ES
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Quote:why do we need any of these programs if in fact the economy is growing againNo better way to unmask a lie than to point out the obvious and undeniable contradictions inherent in the same. Careful though, they usually start going after the messenger who shows how the facts on the ground don't support the pie in the sky. ---------- You may fool all the people some of the time; you can even fool some of the people all the time; but you can't fool all of the people all the time. - Abraham Lincoln
2009-11-15 05:40:09
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Killersdad Posts: 351 Incept: 2008-03-27
upstate NY Online
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Thanks for a ticker with great clarity. I used many of your arguments ay my local budgett meeting for our county. One of the insane lines that ****ed me off in the budgett overview, and I quote " 0% increases not fiscally responsible, our history shows that no increases for four years eventually resulted in 15% to 38% increases several years later" I went ballistic on them and used an info based rebuttal [ with most info gained from TF ]. My comments made the local paper but better than that my comments got others off the fence to start asking questions about the bedgett. Thanks Karl for the inspiration. ---------- They just traded all of America to save a few greedy bastards on Wall Street. Coolhandluke It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Andrew Jackson
2009-11-15 05:52:27
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Arrack979 Posts: 1271 Incept: 2008-07-15
Blue State Hell
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I think the best lines of logic in all this ticker are those such as why are rates still @ 0% if the economy is so good now, why the home buyer credit is housing is stabilized and onlu going up from here. These are simple concepts that people instantly understand. Almost everyone I know feels things are going to be fine, but has a nagging feeling that they are wrong. These quick points are the kind of thing that snaps them back to reality. The Fed, media, etc have an easy sell - the recovery. Everyone wants to believe the message they are selling. Its easy to be a salesman when you know the customer already wants the product. ---------- Cash IS a position, just like fetal and reverse cowgirl
2009-11-15 06:40:00
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Jhonab Posts: 215 Incept: 2009-03-24
Denmark
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Karl, thank you for this Ticker that puts together a lot of the pieces from your thoughts on the economy. One thing, though, that I don't follow. You write: 'Second, as I have repeatedly noted, I was an unabashed Bull from 2003-2007. Why? Because the economic numbers were there to back the advance. Oh sure, it was a liquidity-driven move, but the fact remains that 2000-2001 wasn't even a recession from a consumer point of view - there was no over-levered consumer problem, there was no issue with debt defaults in housing or credit cards, and consumer credit y/o/y never went below zero on a rate-of-change basis.' This seems to imply that if the banksters are able to create credit using cheap liquidity supplied by the FED, then you have no quarrel with the monetary base going through the roof, thus leading stocks and consumption high. The above paragraph seems to imply that it is when consumer credit hits the wall and indeed goes into reverse, that we get a problem. But I don't see how this is consistent with your view in the 'one dollar' Ticker - that banksters et al should not be allowed to loan unsecured. I mean, how do you inflate the monetary base in order to drive or support consumption without financial wizardry, WHEN WAGES DON'T RISE or even are stagnating? I read this as a claim that the Greenspan put in the years 2000-2007 which translated into massive expansion of the money supply through inflating the monetary base as you understand this term - assets that an owner can and will use as collateral for loans - was somehow 'sound', because consumer credit didn't hit zero or go into reverse, that part I just have a hard time understanding. I may have misread you or misunderstood you on this point, and otherwise I find the Ticker very convincing. Last modified:
2009-11-15 07:01:05 by jhonab
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Willy2 Posts: 91 Incept: 2009-05-10 Netherlands
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"Japanese pensionfunds have begun selling their assets to meet their pension obligations." This is a force pushing rates up NOT down. And this WILL, sooner or later, push rates in the US up as well !! This is a quote from an article written by Ambrose Evans Pritchard called "We should be worried about Japan, not America". Weblink: http://www.telegraph.co.uk/finance/comme....
2009-11-15 07:22:01
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Cash-out Posts: 2343 Incept: 2007-10-23
Live Free or Die - NH
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Two things to unwind all this a) GS sells b) GS (now short) signals they sold... Will Obama allow this, yes if there is a support my voter base strategy attached... ---------- More prepared than ready.
2009-11-15 07:30:23
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Chanvrehomme Posts: 10 Incept: 2009-07-29 Chicago, IL
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Yeah like the guy from Denmark said...... Same old same old... YOU WILL LOVE THIS http://www.jolietpubliclibrary.org/Digit.... Research the names behind the rosy prognostications...liars and thieves, then and now.... ALL members of government that are connected to Goldman or the Council on Foreign Relations must be banned from holding any position of power any longer. This step alone will rid our world of a lot of evil. BTW I was out in the "country"(Central Ill) yesterday watching the late harvest of the corn crop....not a disaster yet, but not good. ---------- The Silver/Gold ratio was fixed at 15:1 in 1792.....do the MATH......
2009-11-15 07:36:30
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Mo Posts: 5502 Incept: 2007-06-26
Florida Online
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Even if the bad debt is defaulted and all the robber barrons are locked up, the problem won't be solved. The basis of the problem is the low wages in China and India. Until the wages in the west fall to meet those in China and India or the populations in those countries are reduced to roughly that of the US, jobs will continue to move to Asia. This is the fact that no one wants to even think about, let alone talk about. We disguised the problem by artifically increasing 'income' in the US via ruinous credit. Now the credit has become ruinous debt. And the underlying imbalance in population and wages still exists. ---------- "The World has been cancelled. It doesn't even look like the world. There is one island that is maintained and is said to be owned by the Sheikh and the rest looks like a pile of muck." Last modified:
2009-11-15 08:20:37 by mo
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Bluebird Posts: 524 Incept: 2008-05-02
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Noelgallagher said "When will the average person get fed up?" If my family is any indication, it will be when they no longer have access to credit cards.
2009-11-15 08:22:36
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Sangell Posts: 61 Incept: 2009-08-16
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My guess is there can be no real recovery and thus all the monetary and fiscal stimulus to create a Potemkin one. Any substantial growth in real economic activity is going to run up against the oil constraint which will cut off the recovery. It's the modern CATCH 22.
2009-11-15 08:28:39
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Chainlink Posts: 521 Incept: 2008-10-26
Florida and Michigan
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That's good Chanvrehomme. I was skeptical they were photoshopped headlines, but I guess coming from ONE SOURCE makes the uniformity credible. I am stock/treasury/bank illiterate, but my forest-view helped me see the wreckage ahead. I saw the zero construction traffic, empty parking lots, impossible-to-fulfill mortgage payments years ago. How it's holding together this long, I don't know. Trust me...it is worse than many figure...I have my feet in both worlds in two states, and unless you RESIDE here in South Florida, you cannot believe how many assumed, bedrock underlyers are going to collapse in a sand heap soon. Other than Mike Morgan before he had his heart attack, NO ONE has properly expressed the vacant residential and commercial RE around here, or the caliber of crime and volatile mix of unemployed here, and the abdication of responsible spending when the county was full of revenue. We have huge, baseball and sport parks built at the edge of the ****ing Everglades, where population PRE-foreclosure was like 100 per square mile. This new area I'm referring to has an incredible abandoned foreclosure rate. You have to see the waste and overbuilding to believe it. And of course, no bank signs advertising it for sale...just that shadow inventory that the ******* banks will try to get another bailout for, or TRY TO RENT in the new Govt. Section 8 to everyone coming down the pike. I used to have perfect credit; 80% down in my business ravaged it. I'm still holding my head above water, and with fewer alive in my industry, I might pull through. But if someone like me who theoretically did stuff right is running on vapors, what does that show about the rest? I believe credit write offs will be MUCH WORSE than anyone thinks...maybe about 50%. I believe mortgages and car loans will be at that 50% mark. I hate to admit this...but I talk with enough bill collectors to get a feel for what they're asking (besides payment)...they just want a feel for what's going to be collectable and what is a write off NOW. I'll sell a kidney to get my debts taken care of, worse case if business doesn't allow, but baring my soul is my only way to convey, HOW BAD IT IS. I've usually had a good feel for how I stack up with others, and me being in bad shape means 80% are in worse shape. We all have in-laws, family, or friends, in that bottom demographic. But that 15% bottom demographic during the flush years of the boom, now has NO INCOME, let alone 'regular income'. And another 15% now, are where that most irresponsible 15% was. They might look 'clean' and talk the talk, but that 30% is going to be vying for limited resources...with the street smarts and reservoir of lies that enabled them to grift for years. Remember Katrina...why didn't they evacuate? For some of these people, not only did they NOT HAVE A CAR, no one they KNOW has one...of course not wanting to leave was a valid reason, too... I guess what I'm saying, is, we assume similar motivators in this percentage. But they are the ones that blow their whole check on lottery tickets, cigarettes, and liquor (white, Spanish, black). They are the ones that have never used a bank...check cashing stores only. No insurance, vehicle or health. When this 15% formerly, now 30% starts making the news, they will have NOTHING to lose. There are no green shoots, no positive indicators. Only lies, falsified statistics, and numbers that reflect HISTORIC SICKNESS. Growing unemployment already at Depression levels here, and soon to be in every urban area. On a postive note: Happy Nov. 15th Deer Season Opener to my friends and loved ones in Michigan!!! Wish I could be there.
2009-11-15 08:30:28
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Jhonab Posts: 215 Incept: 2009-03-24
Denmark
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Mo - exactly. The entire West engaged in one last gargantuan orgy, driven by inflating assets and cashing them in, while wages remained the same og stagnated, or as Karl states in the Ticker - high paying manufacturing was shifted to the East and replaced with McJobs servicing the 'rich and prosperous' western consumer with hamburgers and coffee a-go-go. This is a result of globalization, which the politcians kept telling us would NOT turn into 'a race to the bottom', because the West would simply turn into service-economy-mode or knowledge-economy-mode. This would make up for the jobs leaving, and the global wage arbitrage would return goods so cheap that everyone would prosper. One staggering example of 'knowledge-based economy' is the grand scheme of 'climate change'. This is the main driver in so many academic areas, it gives rise to uncountable government committes and initiatives, that creates exactly no wealth, quite the contrary. How can this imbalance adjust? Wages up in the West - forget it, would only reinforce the proces. Wages up in communist China - this can only happen if independent unions were allowed to organize labor, and when has that ever occurred in a worker's paradise? Third solution: trade barriers, tariffs on imports: "In the first nine months of this year, 19 economies launched 88 probes into Chinese products, involving $10.2 billion of export goods. During the period, the United States alone carried out 14 probes into Chinese products, affecting exports valued at $5.84 billion, soaring by 639 percent from a year earlier, according to sources of the Ministry of Commerce. "We must continue to promote trade and investment liberalization and facilitation and oppose protectionism in all its manifestations," President Hu said. China will not allow it. (China Daily, http://www.chinadaily.com.cn/enmobile/20.... Last modified:
2009-11-15 08:40:07 by jhonab
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Mo Posts: 5502 Incept: 2007-06-26
Florida Online
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Jhonab, historically nature's 'solution' is famine and pestilence. When those fail to materialize, the human solution is war.
---------- "The World has been cancelled. It doesn't even look like the world. There is one island that is maintained and is said to be owned by the Sheikh and the rest looks like a pile of muck."
2009-11-15 08:41:44
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