Posted 2007-07-16 08:39
by Karl Denninger
by Karl Denninger
Or is it?
First, we've got an interesting report this morning on CNBS regarding employment.
The claim from Macroeconomic Advisers is that the BLS employment report is, to be blunt, over stating employment in construction.
Their view is that 40-150,000 jobs have actually been lost in construction (big surprise) yet the BLS is not reporting it. The company they interviewed analyzed actual ADP payroll data, as opposed to the nonsense from the "birth/death" adjustment.
Empire State Estimate (manufacturing) came in above forecast. Of course it can be fun to build inventory into a declining economy....... naw, they wouldn't do that, would they? Might!
Chatter on the street about Verizon possibly being bought by Vodaphone. Yeah, right. Huge cashflow there but the cost ($160b) and the syndication risk on that deal? I wouldn't go anywhere near it; Vodaphone hasn't announced anything either. I guess when the best "merger news" you can come up with is IHOP buying Applebees (the latter has had horrible same-store sales for a while now as "casual restaurants" take it on the chin as Chuckie slows down) there's gotta be some sort of pump, right? Oh, Vodaphone says "nuts" - at least officially.
BTW, to those who say "there's no inflation", have you been to the grocery store lately? Last night I paid $4.24 for a gallon of milk. That's up from $3.30 in May and also up 24 cents in a week. Cheese is also up significantly, along with other milk-based products (ice cream, etc.)
McDonalds claims "solid numbers" - or so says the chatter premarket from CNBS. Now we know where the people who can't afford Applebees are headed to for lunch. Of course their actual report shows a loss due to sales of ExUS locations and the report is thus full of items that make it hard to analyze. I'll see what I can do with it later, although frankly, I don't think this one is a big mover either way; after all, if you can't afford Outback or Applebees there's always Mickey-Ds. Amazing spin.....
Looking at my board this morning I see the "usual suspects" trying to pull the market higher. Alcoa continues to be the subject of chatter. Frankly, I'm still trying to figure out why someone would want to buy them? Big, sure. But poorly run it would appear in an increasingly global market. So why take them out, especially at a big premium?
Premarket it appears that most of the homebuilders are a bit weaker, giving back some of their pump from the rumor mill. We shall see how this one plays out.
The dollar continues to be in the trashcan over the weekend, trading around 80.55, but the moves are somewhat muted. People appear to be holding their breath, seeing if there's anything to set off another plunge. Or maybe 80 will hold... Of course the nasty part of this is that if you priced your stocks in Euros, you haven't made anything this year! What's worse is the inflationary impact this has on us - there's a delay on that impact, but it is as unavoidable as the sun setting in the evening.
Eaton reported a beat but most of their gains were due to non-cash results. They'll open up higher but I wouldn't cheer too much on those results; one-time non-cash adds make for nice numbers but don't tell you a thing about how the business is really doing.
The 10 is sitting right around 5.10; no big moves there.
In "The Deals Are Blowing Up" column, we have this:
Naw, you think?
Want to hear more stupidity? "There's so much liquidity in the market that the economy doesn't matter."
Yes, I really did just hear that on CNBS from one of their commentators (Ned)!
The economy doesn't matter?!
You have to be ****ing kidding me!
And people say we're not in a speculative mania?
THE ECONOMY DOESN'T MATTER?!
Read that one carefully kids. Is there really anything more you need to hear than that?
For those who missed it in my weekend update, here's the other quote:
THE SPECULATORS ARE VERY EXCITED.
THE MARKETS ARE FEEDING ON THEMSELVES.
Indeed.
This is not a speculative blow-off? Its not a bubble? We're not headed for a disaster?
Hell, you have investment strategists saying both in print and on national television that the market is not trading on fundamentals or sound value, but rather it is going higher "because the speculators are very excited" and "the economy doesn't matter."
Good thing my house is a ranch and if I jump out the window I won't hurt myself.
Oh, and guess what - the market is up this morning but so is the VIX. That's not supposed to happen, but it is. Hmmmm..... Animal instincts eh? Oook.
Oh, one of my favorite whipping boys, Countrywide Financials (CFC) effectively warned today. No, they didn't warn. But you gotta love this "business update":
Is that kinda like "we lose money on everything we do, but we'll make it up with volume"? I remember a company that like... actually a bunch of them. One of my personal favorites was Microport, which produced a Unix OS that ran on inexpensive Intel PCs. You'd think that'd be a license to print money - sell a few floppy disks for a kilobuck that cost you $2; the manuals cost more than the software did! They put out several "updates" on their business that read something like this, and eventually went bust.
Today may have been a major break. We got up to just under 14,000 on the DOW and turned, with the S&P and Nasdaq leading it downward by about a half-hour. What happened? The ABX is still ditching bigtime, and the financials and homebuilders are getting hammered. Countrywide is down nearly 4% in the middle of the day and the S&P is heading on a near-parabolic blowoff down.
Alcoa, which was leading the advance, is now down for the day. On the Nasdaq all four of Cramer's horsemen went. This is a leading indicator guys. The S&P had its breadth go massively negative right when it broke down too. This was a snap reversal and came almost entirely without warning - if you were buying into the run in the AM did that one scare 'ya?
That's a warning tremor, just like Pompeii had a few short warning squirts before the big orgasm headed its way!
In Subprime land we have this:
No kidding?
We went out today with a very interesting chart pattern. Back a month or so ago I had said that the Nasdaq usually leads a rollover; this has, historically, been a good bet.
And today we had the Dow higher while the Nasdaq led the declines.
Now a day does not a trend make. But - failure to lead in the techs is not a positive sign for the market as a whole.
And don't look at the Russell. That was pretty nasty. Oh, and 2:1 declining .vs. advancing stocks on the broader markets......
No attempt to spike the futures this afternoon at the close either.
CNBS? "Full speed ahead for the Bulls"? Yeah, ok. Not in the Russell it wasn't!
Oh, and let's talk oil for a second. $74.19 today.
Riding the rally eh? Which one? Are high oil prices good for the economy?
Or how about Cramer's Four Horsies? How'd they do today? Apple up .27%, Amazon down 1.89%, Google up 0.15% and RIMM down 0.43%. Hmmmm... that doesn't look so good on a day when the NDX was only off 0.20%! In fact, I'd say that's "underperformance." I'm telling 'ya, you're going to get Crammed er, Cramered if you keep listening to that fool...
Here's my favorite index...... ain't it pretty?
and if you want more of the horror show here are a few more.....
Pretty awful too eh? But the REAL horror is reserved for that fantastic BBB debt; why that's just fan-flipping-tastic, now trading down in the trenches way below the February plunge....
It ain't any better over in commercial land; these look pretty too.... especially that nice AAA tranche, why that's simply amazing!
And the BB? Let's not even talk about that eh?
So maybe someone can answer this question for me.
The ABX market is collapsing around you like WTC I, the CMBX market is collapsing like WTC II, and the market roars higher? Uh, guys...... are you missing something important there?
Like, uh, this ain't just a subprime story in the home mortgage space any more? It has now decisively spread to commercial real estate! That's been what's allegedly holding up the employment market as jobs "shift" to the commercial side and now that is falling apart as well, just like it has in every former residential R/E slowdown!
So gee, no it really isn't different this time and in fact we're seeing exactly the same sort of mess that happened the last previous ten times and its happening at almost exactly the same sort of rate and fashion it did the last ten times too!
Oh, and where are our Bear Stearns confessions? They were supposed to tell us how bad it was today, 'yanno! Why do I think the news is so bad they know that as soon as it gets on the street the **** will hit the fan at warp speed?
Have a great evening!
Discuss it here!
First, we've got an interesting report this morning on CNBS regarding employment.
The claim from Macroeconomic Advisers is that the BLS employment report is, to be blunt, over stating employment in construction.
Their view is that 40-150,000 jobs have actually been lost in construction (big surprise) yet the BLS is not reporting it. The company they interviewed analyzed actual ADP payroll data, as opposed to the nonsense from the "birth/death" adjustment.
Empire State Estimate (manufacturing) came in above forecast. Of course it can be fun to build inventory into a declining economy....... naw, they wouldn't do that, would they? Might!
Chatter on the street about Verizon possibly being bought by Vodaphone. Yeah, right. Huge cashflow there but the cost ($160b) and the syndication risk on that deal? I wouldn't go anywhere near it; Vodaphone hasn't announced anything either. I guess when the best "merger news" you can come up with is IHOP buying Applebees (the latter has had horrible same-store sales for a while now as "casual restaurants" take it on the chin as Chuckie slows down) there's gotta be some sort of pump, right? Oh, Vodaphone says "nuts" - at least officially.
BTW, to those who say "there's no inflation", have you been to the grocery store lately? Last night I paid $4.24 for a gallon of milk. That's up from $3.30 in May and also up 24 cents in a week. Cheese is also up significantly, along with other milk-based products (ice cream, etc.)
McDonalds claims "solid numbers" - or so says the chatter premarket from CNBS. Now we know where the people who can't afford Applebees are headed to for lunch. Of course their actual report shows a loss due to sales of ExUS locations and the report is thus full of items that make it hard to analyze. I'll see what I can do with it later, although frankly, I don't think this one is a big mover either way; after all, if you can't afford Outback or Applebees there's always Mickey-Ds. Amazing spin.....
Looking at my board this morning I see the "usual suspects" trying to pull the market higher. Alcoa continues to be the subject of chatter. Frankly, I'm still trying to figure out why someone would want to buy them? Big, sure. But poorly run it would appear in an increasingly global market. So why take them out, especially at a big premium?
Premarket it appears that most of the homebuilders are a bit weaker, giving back some of their pump from the rumor mill. We shall see how this one plays out.
The dollar continues to be in the trashcan over the weekend, trading around 80.55, but the moves are somewhat muted. People appear to be holding their breath, seeing if there's anything to set off another plunge. Or maybe 80 will hold... Of course the nasty part of this is that if you priced your stocks in Euros, you haven't made anything this year! What's worse is the inflationary impact this has on us - there's a delay on that impact, but it is as unavoidable as the sun setting in the evening.
Eaton reported a beat but most of their gains were due to non-cash results. They'll open up higher but I wouldn't cheer too much on those results; one-time non-cash adds make for nice numbers but don't tell you a thing about how the business is really doing.
The 10 is sitting right around 5.10; no big moves there.
In "The Deals Are Blowing Up" column, we have this:
"Kohlberg Kravis Roberts & Co. canceled plans to sell 1 billion euros ($1.4 billion) of loans for Dutch retailer Maxeda BV as investors shun risky debt. "
Naw, you think?
Want to hear more stupidity? "There's so much liquidity in the market that the economy doesn't matter."
Yes, I really did just hear that on CNBS from one of their commentators (Ned)!
The economy doesn't matter?!
You have to be ****ing kidding me!
And people say we're not in a speculative mania?
THE ECONOMY DOESN'T MATTER?!
Read that one carefully kids. Is there really anything more you need to hear than that?
For those who missed it in my weekend update, here's the other quote:
""Earnings are not going to be a problem," said Michael Metz, chief investment strategist at Oppenheimer & Co., in New York. "The speculators are very excited. Unless it is a major surprise, the external (factors) won't matter. The markets are feeding on themselves."
THE SPECULATORS ARE VERY EXCITED.
THE MARKETS ARE FEEDING ON THEMSELVES.
Indeed.
This is not a speculative blow-off? Its not a bubble? We're not headed for a disaster?
Hell, you have investment strategists saying both in print and on national television that the market is not trading on fundamentals or sound value, but rather it is going higher "because the speculators are very excited" and "the economy doesn't matter."
Good thing my house is a ranch and if I jump out the window I won't hurt myself.
Oh, and guess what - the market is up this morning but so is the VIX. That's not supposed to happen, but it is. Hmmmm..... Animal instincts eh? Oook.
Oh, one of my favorite whipping boys, Countrywide Financials (CFC) effectively warned today. No, they didn't warn. But you gotta love this "business update":
"'Market conditions became increasingly challenging throughout the second quarter of 2007,' said David Sambol, Countrywide's chief operating officer. 'The housing market continues to soften, and delinquencies and defaults continue to rise,' he added. "
Is that kinda like "we lose money on everything we do, but we'll make it up with volume"? I remember a company that like... actually a bunch of them. One of my personal favorites was Microport, which produced a Unix OS that ran on inexpensive Intel PCs. You'd think that'd be a license to print money - sell a few floppy disks for a kilobuck that cost you $2; the manuals cost more than the software did! They put out several "updates" on their business that read something like this, and eventually went bust.
Today may have been a major break. We got up to just under 14,000 on the DOW and turned, with the S&P and Nasdaq leading it downward by about a half-hour. What happened? The ABX is still ditching bigtime, and the financials and homebuilders are getting hammered. Countrywide is down nearly 4% in the middle of the day and the S&P is heading on a near-parabolic blowoff down.
Alcoa, which was leading the advance, is now down for the day. On the Nasdaq all four of Cramer's horsemen went. This is a leading indicator guys. The S&P had its breadth go massively negative right when it broke down too. This was a snap reversal and came almost entirely without warning - if you were buying into the run in the AM did that one scare 'ya?
That's a warning tremor, just like Pompeii had a few short warning squirts before the big orgasm headed its way!
In Subprime land we have this:
"Indexes based on the value of securities backed by the mortgages fell, with some making new lows. The benchmark 10-year note's yield last week touched a one-month low amid speculation the losses will eventually prompt the Fed to cut interest rates for the first time since 2003.
'Left to its own devices the market is looking for another shoe to drop' in mortgage-backed bonds, said James Collins, a futures analyst in Chicago at Citigroup Global Markets Inc. "
No kidding?
We went out today with a very interesting chart pattern. Back a month or so ago I had said that the Nasdaq usually leads a rollover; this has, historically, been a good bet.
And today we had the Dow higher while the Nasdaq led the declines.
Now a day does not a trend make. But - failure to lead in the techs is not a positive sign for the market as a whole.
And don't look at the Russell. That was pretty nasty. Oh, and 2:1 declining .vs. advancing stocks on the broader markets......
No attempt to spike the futures this afternoon at the close either.
CNBS? "Full speed ahead for the Bulls"? Yeah, ok. Not in the Russell it wasn't!
Oh, and let's talk oil for a second. $74.19 today.
Riding the rally eh? Which one? Are high oil prices good for the economy?
Or how about Cramer's Four Horsies? How'd they do today? Apple up .27%, Amazon down 1.89%, Google up 0.15% and RIMM down 0.43%. Hmmmm... that doesn't look so good on a day when the NDX was only off 0.20%! In fact, I'd say that's "underperformance." I'm telling 'ya, you're going to get Crammed er, Cramered if you keep listening to that fool...
Here's my favorite index...... ain't it pretty?
and if you want more of the horror show here are a few more.....
Pretty awful too eh? But the REAL horror is reserved for that fantastic BBB debt; why that's just fan-flipping-tastic, now trading down in the trenches way below the February plunge....
It ain't any better over in commercial land; these look pretty too.... especially that nice AAA tranche, why that's simply amazing!
And the BB? Let's not even talk about that eh?
So maybe someone can answer this question for me.
The ABX market is collapsing around you like WTC I, the CMBX market is collapsing like WTC II, and the market roars higher? Uh, guys...... are you missing something important there?
Like, uh, this ain't just a subprime story in the home mortgage space any more? It has now decisively spread to commercial real estate! That's been what's allegedly holding up the employment market as jobs "shift" to the commercial side and now that is falling apart as well, just like it has in every former residential R/E slowdown!
So gee, no it really isn't different this time and in fact we're seeing exactly the same sort of mess that happened the last previous ten times and its happening at almost exactly the same sort of rate and fashion it did the last ten times too!
Oh, and where are our Bear Stearns confessions? They were supposed to tell us how bad it was today, 'yanno! Why do I think the news is so bad they know that as soon as it gets on the street the **** will hit the fan at warp speed?
Have a great evening!
Discuss it here!
Discuss this entry (registration required to post)
