We all know that the fundamentals are awful. The only thing that was keeping the market above Nov lows is because S&P and most world indices are above their Oct and Nov lows. Not any more.
As of Friday the 27th of Feb (end of the month also, a multi-year low on a weekly close has been confirmed. Confirmation of multi-year low on monthly charts will have to wait till end of March. Thus, the weekly charts gave a screaming sell on Friday. The dumping we saw today may be because of this.
Markets setting new multi-year lows today:
- Australia
- New Zealand
- Germany
- France
- UK
- Spain
- US
It is possible that the markets will rebound from here. But it is unlikely because the sentiment is still somewhat bullish. It is unblievable but true.
(After we got used to Uner’s excellent charts, this chart looks silly… I know I know).
Commercial real estate stocks have come down a lot in the last 3 weeks. However, their debt is selling at much more distressed levels than the stocks. This is indicated by nearly vertical ascent in CMBX indices (viaMarkit). SRS chart has just popped out of a bull flag, closed above 200 dma. The last time it closed above 200 dma, it advanced 40 points in 5 trading days, pulled back and then went on a tear afterwards. I think SRS may have more room to advance till S&P hits 650 or Bullish percent hits Nov low (or both), retreat some and then stage a massive climactic rally. Could be my pipe dream, but I am holding on to my SRS calls and shares.
Update on APOL:
It is holding 70-72 support. Once 70 is breached, I am expecting the gap between 58-65 to be fille fast. The stock should retest its Oct low of 48.
Off topic (Politics):
There is no dearth of ideological arguments in favor of, or against the policies of the new administration. I for one strongly contend that “tax cuts” is not a cure for all the economic problems. Not withstanding the fact that I voted for Obama (I am an independent, not a Democrat), I am not on board with every one of this administration’s efforts to revive the economy. However, the man has barely been in the office for a month. Unlike some ditto-heads, I realize that it is the fundamental forces that are driving the markets down now. Obama cannot stop this juggernaut in the short term. We all know that. That’s why I would like for the public and the congress to give him a chance to succeed in the intermediate term and long term.
The Rushians, a.k.a. Republicans in the congress have no shame. Win or lose, as always, Republicans always try to rewrite history and they are trying to do the same now. Elections have consequences. It is time the Republicans realize that they screwedup big and lost the election. Relentless smear campaigns are not the solution to any problems.
If APOL goes down so does the other for-profit edu ones too – right? Like CECO, ESI, STRA, DV, COCO etc.
What is special about APOL?
NY ROUNDUP – Monday, March 2, 2009
HIGHLIGHTS
US February Manufacturing ISM 35.8 up from 35.6 – better than expected
US Comptroller of the Currency Dugan: Questions loan loss provisions
US January construction spending drops 3.3% to $986.2 bn – worse than expected
US January personal spending up 0.6%, income up 0.4% – both more than expected
ECB working on plan for direct Central Bank lending to EMU firms
COMMENTS
The market got better than expected income, spending, ISM data today but that wasn’t good enough to beat back the pressure in equities to scratch out new lows. We close today with Equities off 4.6% – DJIA below 6800 (forget about 10K caps start worrying about 5K?); SPX broke 700 interday and we close with the broader Russell 2000 at off 5.5%. The simple way of understanding today – after Citibank and AIG many see the limits to government solutions. The AIG $61.7 bn loss gets headlines as the worst performance yet for a corporation in a quarter. Some will tell you today’s lack of confidence rests on inaction but the evidence is to the contrary. There is the smell of risk reduction rather than logic in the air. Consider the rush to gold which unwound again today closing at the key 925 support even as the future inflation outlooks remain high (witness the 5Y 5Y inflation rate). Yet bonds rally – with the 5Y gaining the most. Yield there drops 15 bps to 1.843%; 10Y off 14 bps to 2.88%. Spreads to credit remain at the wides – fear of the economy now finds more citation that due to bad risk management. The correlations are continuing to break down in all sorts of markets – so JPY did nothing today even as equities melted. So Oil fell 10% even as NOK outperforms the SEK or CAD beats out the AUD. Relative value trading has been smashed as volatility in tired ranges runs rampant over rational investors. The biggest concern remains in Emerging Markets. We started the day with the weekend results of the EU non-blanket approach to Eastern Europe and we close today with LATAM suffering – BRL off 2% and MXN off 1.8% – both reflect a rush to the USD. Safe-havens are hard to find in a world concerned about deflation even in a week full of central bank decisions. Expect the RBA and BOC rate cuts to be the focus next with the BOE and ECB following later ahead of the US jobs report on Friday. How markets react to new lows matter. The lack of panic, the smell of resignation, the crush of apathy – all points to a market ready to trade even lower as good news and bold actions carry less weight than the stale positions of hope and last year’s thinking drive the tape. All this leads many to look up the difference between a recession and a depression. The good news is depression is undefined we’ll just know it when we get there. Does the MSCI world stock index dropping 14 of the last 15 days suggest we are there? Probably not yet as we need to have higher unemployment, lower prices and another period of absolute capitulation before anyone would admit to the end.
CURRENCIES
Cross Low High
USD/EUR 1.2552 1.2634 Close: 1.2572
JPY/USD 97.02 97.77 Close: 97.75
JPY/EUR 122 123.36 Close: 122.8913
USD/GBP 1.3958 1.4208 Close: 1.4037
GBP/EUR 0.8865 0.901 Close: 0.8956
CHF/USD 1.1704 1.1797 Close: 1.1774
CHF/EUR 1.4746 1.4825 Close: 1.4802
USD/AUD 0.629 0.6357 Close: 0.6306
CAD/USD 1.28 1.2918 Close: 1.287
NZD/USD 0.4918 0.4959 Close: 0.4932
“That’s why I would like for the public and the congress to give him a chance to succeed in the intermediate term and long term.”
Would you like to share with us what you think “success” would be? That way, we will know if he did. Without a target, anything could happen and be spun as a success.
here is the problem Obama… Fommama or Beedomma.. doesn’t matter who is in charge of this mess.. you can’t solve it.
world GDP is negative… yikers. first time since WW2
we are in a world of hurt and now that hedge funds are getting no “new” money and all the old money just wants out. which way can the market go? certainly not up.
good luck trading!
I know you didn’t mean to start a political conversation but I must point out that the Democrats have had a stranglehold on both houses of Congress since 2006. Under their watch, over $9T and counting has been given away….
So yeah, The Republicans actually do have a tree to bark up.
DID YOU ALL SEE THIS:
28-Feb-09 10:46 am
FEDS GRANT EMINENT DOMAIN AS COLLATERAL TO CHINA FOR U.S. DEBTS
BEIJING, China — Sources at the United States Embassy in Beijing China have just CONFIRMED that the United States of America has tendered to China a written agreement which grants to the People’s Republic of China, an option to exercise Eminent Domain within the USA, as collateral for China’s continued purchase of US Treasury Notes and existing US Currency reserves.
The written agreement was brought to Beijing by Secretary of State Hillary Clinton and was formalized and agreed-to during her recent trip to China.
This means that in the event the US Government defaults on its financial obligations to China, the Communist Government of China would be permitted to physically take — inside the USA — land, buildings, factories, perhaps even entire cities – to satisfy the financial obligations of the US government.
Put simply, the feds have now actually mortgaged the physical land and property of all citizens and businesses in the United States. They have given to a foreign power, their Constitutional power to “take” all of our property, as actual collateral for continued Chinese funding of US deficit spending and the continued carrying of US national debt.
This is an unimaginable betrayal of every man, woman and child in the USA. An outrage worthy of violent overthrow.
————– UPDATE 1:40 pm EST
Eminent Domain is the power of government to TAKE private property for public use without the consent of the property owner. Under our Constitution, the government can only “take” when providing “just compensation” for what they’ve taken.
Who decides what constitutes “just compensation?” The government!
Homeowners who felt the government was not paying them enough for property in past “takings” have filed lawsuits. In absolutely every such case, the value placed upon the property by the government was upheld by the courts.
Our federal government has now granted to China, this power to “take”our homes and businesses in the event the US Gov’t defaults on its debts. Let’s play this out as a worst case scenario. . . .
The US Gov’t goes belly-up and China comes in and says, “they owed us $2 Trillion in Treasury Notes and another $2 Trillion in actual cash money which is now worthless. We are taking the entire state of Hawaii and the entire state of California in lieu of this bad debt. ”
With the stroke of a Chinese chop stick, Hawaii and California — all the land and buildings in those states — are now owned by China.
Please post the source/ link? Thanks
liveleak.com
that’s a huge rumor
http://www.snopes.com/politics/business/domain.asp
that’s a huge rumor.
http://www.snopes.com/politics/business/domain.asp
> I am an independent, not a Democrat
You are so full of it…and you know it!
Stock market + Obama = Crash.
Greed + Socialism = Crash.
stay in India.
This comment is utterly useless
Agreed…but what gives Mohan the rights to insult and bash people here that don’t share his political views. Just because he can insult doesn’t mean he should. He is a well respected Stock Tock member and should not abuse his power.
Stay in India? LOL.. You must be one of those narrow minded inbreds.. Did you tear up your Dixie Chick poster after they spoke their mind too? Moron
Seemed better than to say, ” go to hell”.
I’m just sick of his political biased crap and for a ‘Educator’ he sure needs a lesson in “how it lands” rather than what he means to stay.
Ok, ignorance goes both ways, I suppose. I apologize for my use of word. I should have just said, “shut up”…but that would have inhibited his USA given right of the first ammendment.
Mohan, After listening to the Media and almost 70% of the populace bash Bush for the last 6 years, you want to stop the criticism, (by a handful of people) of this Administration after 1 month?
If everyone feels that way we will be putty in Obamas hands, and he will destroy this damaged Capitalist system beyond repair, before we can vote him out. This Administration has a Plan and so far it’s working almost perfectly. Pelosi is so giddy she is practically peeing in her pants.
While they are enacting their socialist agenda, at breakneck speed I might add, they can blame any failures, as perceived by us capitalists, on the extreme severity of the crises, which they repeatedly have stated will get worse before it gets better. Since the Main Stream Media is carrying his champagne for him, we don’ t have a large enough watch dog group to call him to task. Any criticism of this Administration, eg.( Rush Limbaugh, Rick Santelli ) is quickly dissed and dismissed with help from the Media. Remember when his Chief of Staff gleefully said “We just can’t waste a good crises”? They aren’t.
The Democrats hold all the power, Congress, Senate, Presidency, why are you attacking the wimpy Republicans? All they can do is complain at this point, the Dems can and will pass any Bill they wish to.
If you want a Socialist country, where the Government controls just about everything, mandates more and more regulations, increases taxes on what will be left of private industry, demonizes Capitalism, ( by the way that means you if you are involved in the financial markets, are you ready for the trading tax coming down the pike?) which is the reason immigrants, legal and illegal come here, ( because there are no opportunities or individual liberties available to them in the Socialist countries that they come from throughout the world) then you should be a happy guy cause thats what this Administration is cramming down your throat while you sit mesmerized by His oratory skills.
Sorry to go on so long, please feel free to delete if you think its not appropriate, I respect your opinion but I disagree with you. You should never want to suppress an opposing point of view, that is not acceptable in a free society, that is what they do in Communist countries.
Look forward to reading more of your commentaries, financial or otherwise.
I agree with you Mohan 100%. Not only in your market analysis, but also in your political comment. Fact is that this crisis is unprecedented and there is no clear solution. Meaning different things have to be tried. DIFFERENT THINGS have to be tried! I hear a moron here & there make a comment about how Obama is not doing it right. He INHERITED the problem. Isn’t that clear enough?! I know that if anything can be done, he will certainly do it and that him and we as a nation will come come out of this triumphant. But this Irrational Negativity is getting a little anoying.
I also voted for him.. I am an American that lives in Sweden. For all you McCarthy era anti-socialism freaks,, guess what type of political system they have here in Sweden? Social Democracy.. Social what? Democracy. Look it up if you don’t know how it works. Not everything is black or white,, there is also inbetween. Yes,, socialism has it’s flaws,, So does extreme capitalism (if that is not obvious enough by the current situation) I do have a degree in Political Science and even though this is a not a political website, I must comment (as all is related) that I remember clearly during the campaign when the ‘Joe the Plumer’ incident that Obama said ‘Share the wealth’ the republicans started trying to pin Obama to BIG BAD SOCIALISM. They have kept up with the same ridiculous argument ever since. When you pay any taxes you are ‘sharing the wealth’, in case that’s not obvious enough.. And let us not forget that the TARP program where the government started taking stakes in private institutions was started by BUSH THE REPUBLICAN.
As long as you are on the receiving end, then socialism is all good.
Fact is…charity is good for the society, but stealing from Peter to paid Piper is not!
There is no substitute for hard work! Everybody wants a free lunch, a free house, a free college education, free universal health care.
Replies are amusing – especially the personal attacks. I guess that is the price one pays for being in the focus.
I don’t need to prove to anybody about my independence. McCain was my candidate in 2000. After the primaries, it was Bush (hey, I never claimed I don’t make mistakes). I was one of the beneficiaries of Bush tax cuts. You can’t find many people more conservative than me – be it family values or personal responsibility or hard work. Like many, I do think Bush presidency was an unmitigated disaster. But I don’t blame this mess entirely on Bush II.
Simple fact is at the government level, Reagan, Clinton, Bush II, Rubin, Phil Graham, Democrats and Republicans in Congress, and especially Greenspan share this blame. If the name of the game trading for profit, labels are irrelevant, whether it is a corporate welfare State, or socialist State.
As I have said several times, Ron Paul was my ideal candidate for the President. I am a big proponent of Austrian school of economics. But it should be followed consistently throughout the economic cycle. An Austrian solution to the problem at this juncture will be an utter devastation to the economy.
I like Rick Santelli who is one of the sane voices on CNBC. I don’t care whom he voted for. He was consistent all the way. He criticized bank bailouts and he criticized Obama’s mortgage help plan on a principled way. Only thing that felt loony about him was when he said Robert Gibbs threatened him. I didn’t see any of it.
Finally, Uner is right (he is older and wiser). This will be the last time I will post anything political on this board.