It certainly has been a while! Sorry for the LONG delay, but I finally dove into the den/library room construction and as with most things it was a bit more involved than I would have wanted. The room is looking totally awesome right now, and I should be wrapping up the finish work over the next week. Good Stuff.
Are you enjoying the wild markets and things economic? I must admit being away has been tough with all that is going on that I would like to discuss, but I cannot match the fine writing and up to the minute coverage the blogs in the blogroll supply. Us them. Often. I have a few macro points to make to get some ideas out there. Thanks to all that keep checking in, hardcore fans are the best and Kevin, G, and Watchtower are some of the best readers a writer can ask for.
Who's Brilliant Idea Was This?
A while back a truly amazing mind came up with the following theorem:
"Right now the major banks/brokerages are in fact insolvent, and their stocks are zeroes. The possibility of a FED/Treasury led bailout puts some kind of value on these firms and the market action is torn between a price of zero and some other small sum."
I know, it was me of course! After a long month it has become apparent that many firms are now basically zeroes (LEH, MER, FNM, FRE) but the possibility of missing a wild 50% move up on a bailout set price is too much for many to pass up. Sad stuff which leads me to.......
Fundamentally Strong Stocks Do Not Gyrate 30% on an Almost Daily Basis
Newly formed or newly "discovered" markets in merging counties tend to have crazy volatility due to there being so little information about there particulars. Market gyrations of 30% are common as momentum players and speculators rush in and out. This is expected. The US financial system should not be one of these markets. When a stock as widely held (and I empathizes WIDELY HELD) as Fannie Mae can move 30% down one day, 25% up another, and move 80% in 6 months something is seriously wrong. The US financial stocks right now resemble a banana republic market. I do not care about the money making possibilities here (there are many) but instead want to focus on the fact that there is no tether to any reality right now for these entities. Penny stocks behave this way, not cornerstones of a financial system. This is ugly indeed.
Lowe's and Home Depot Throw in the Towel
To me the stunning drop in business at HD and Lowe's shows that finally the consumer is giving up. Drops of 25% on a yearly basis is big time stuff here. Turnaround clowns are still pinning the tail on the early 2009 donkey recovery, but secular changes do not change direction so fast. Again, an important data point.
Fall is Upon Us
As predicted here and elsewhere this has been a LONG summer. The data is deteriorating for the US economy. The housing story is getting worse. The banks are out of cash and out of time. There are things in motion that cannot be stopped (Alt-A meltdown, Bond refinancing at terrible terms, overseas funds saying "No Mas" to debt offerings). The FED and the Treasury have been exposed ass clueless and powerless. While the overall market has been ok so far, it is still vacation really. The fall is going to be wild, and volatility is going to be bad. I will have more to say in a future post, but my basic premise is that by the end of October we are going to know if we are just screwed (which stinks but can be overcome) or totally f#cked (game over). Care to place a bet?
This is a great ultra slow motion video of a lightning strike, check it out:
Have a good night.