Thursday, January 28, 2010

Visualize the Bull

Some strange snow squalls up here today. One minute it is clear, the next you cannot see the front of your car for about 5 minutes, then all clear again.

Regular readers know that Friday Night is entertainment night here and I have featured many things in the past including:
-music
-film
-book passages
-trivia contests for prizes
-coded messages hidden in the 4 letters of DNA (after translation of course) (A-T-C-G)
-pictures of all kinds of things
and many more.

Any and all requests are welcomed and we have had some good attendance as of late so let me know what you want to see tomorrow night and I will do my best.

Bernanke Walks Through Confirmation
I expected this but I was still disappointed. Full roll call can be seen here. Make notes for election season.

Visualize the Bull
A reader had mentioned tennis and it got me thinking about a book that changed my life on many levels. The book is by Timothy Gallwey and it is called "The Inner Game of Tennis". A quick check on Amazon shows it has been reprinted and is available. I have a 1974 first edition that my mother found for me years ago at a yard sale. While titled about tennis, the book is really about the inner game of life and can be applied to any endeavor in which the biggest opponent is yourself. What does not qualify?

As I was thinking about the book I remembered a fable used as an example in the section on concentration. I will include it here to set up the next section. It uses plenty of religious themes, but that is not why I found it memorable, but be warned if easily offended by such things:
A seeker after Truth sought out a yoga master and begged him to help him achieve the enlightenment of perfect union with his true self. The Master told him to go into a room and meditate on God for as long as he could. After just two hours the seeker emerged distraught, saying that he could not concentrate, since his mind kept thinking about his much beloved bull he left at home. The Master then told him to return to the room and meditate on his bull. This time the would-be yogi entered the room and after two days had still not emerged. Finally the Master called for him to come out. From within the seeker replied, "I cannot; my horns are too wide to fit through the door." The seeker had reached such a state of concentration that he had lost all sense of separation from his object of concentration.

So why in the world would this pop into my mind?

As I review economic data almost all of it is terrible. Things are not getting better on many fronts, and the best that can be said about the others is they are getting less worse. Yet the bullishness is so pervasive at this time I wonder if these bulls are not just seekers that have looked so long and so hard for positives that they have become the bull through transference of their hopes.

In prior times (disregard the Great Depression, oh, and the 1970's) recovery ALWAYS came right on the heels of a crash. Thus it MUST be so this time. Furiously pouring over anything that fits that view they, over time, come to view everything as a positive. One might argue that I can only see the negative of things, and I always take a look from many angles to make sure I am not bending things to my own view. Nobody is perfect though!. I would add that I am not trying to sell anyone anything, or get anything I hold to go up in value (nobody likes gold or silver anyways!) so I think I may be more open to be impartial.

That all said, I present some graphs or headlines that tell a different story that the "V" shaped recovery that is at hand any second now. You can decide for yourself how this information looks to you.

From Calculated Risk, Fannie Mae and Freddi Mac delinquency rates:
FNM

FRE

The words "unlimited guarantee" come to mind.

From Mish, 4 Week Moving Average of Initial Unemployment up 3rd Straight Week:

This is besides the long term unemployed and the many that have given up.

EconomPic with the "gains" in consumer confidence:

The expectations index part must be worth almost the whole number.

Rapid rebound in revenues powering markets? Take away the banking gains due to the myriad of tricks and handout we always discuss and Rosenberg notes:
With 20% Of S&P Reporting, YoY Ex-Fin Revenue Growth Is... Negative

Moving to the "China Miracle", Illusion of Prosperity notes that:
85% of Chinese Cannot Afford Real Estate
There are plenty more China related entries on the site so check them out.

On a technical side of things for those chartists out there, Bespoke has a section up titled:
Percentage of Stocks Above 50-Day Moving Averages
As shown below, the percentage of stocks above their 50-day moving averages in the S&P 500 has dropped to 35%. This is the lowest level seen since mid-2009. Clearly breadth has gotten weak on this pullback. No sectors have more than 50% of stocks above their 50-days, and Consumer Discretionary has the highest reading at 48%. Materials is the weakest sector with a reading of 10%.
Plenty of charts if interested.

Added:
Housing Doom trolled their archives to find the most amazing stories they covered over the years as they look now with hindsight:
10 — Bank of America sued for gender bias over bonuses, Reuters 6/25 '09

9 — High Interest Rates Encourage Housing Speculation, Scoop (NZ), 4/24 '07

8 — Swiss Re In CHF1.3B US Life Block Sale To Berkshire, WSJ 1/18 '10

7 — Can’t Sell Your Home? Maybe It’s Priced Too Low, NYT 7/11 '07

6 — "Re-jiggered accounting methods gave Freddie Mac a boost Wednesday when investors rallied over better-than-expected losses", Forbes 5/14 '08

5 — Cooling U.S. economy good for Canadian housing market, CanWest 9/16 '06

4 — Barclays Capital to charter ships to move commodities, SmartBrief 4/26 '08

3 — Ambac Rises as Bond Insurers Try to Tap Treasury Plan, Bloomberg 10/17 '08

2 — Bank of America Says ‘Thank Goodness’ for Countrywide, Bloomberg 3/13 '09


1 — SEC Issues Climate-Risk Guidance Despite Tough Political Environment, NYT 1/28 '10
Classic! #7 and #2 are the best!

Have a good night.

16 comments:

Dave in Denver said...

hey gyc, fancy bumping into you on gold vs. paper LOL

hate to be the bearer of bad news, but the system is collapsing. Just got done getting filled in on the massive cuts going on in my girlfriend's school district (she teaches high school). Jobs are being cut, classes consolidated, any kind of vendor-related services slashed hard. This is going on all over Colorado and I'm sure it's worse in other States. This will add many thousands to the jobless rolls. And that's this year. She said budget shortfall projections are way too optimistic. And this is just the public school system, which is a sacred cow. Imagine how bad the cuts will be in other areas.

This is why they're smashing gold -or trying anyway. They want it as low as possible before Berananke has to announce more QE. I think I have a handle as much as anyone about just how bad things are, but everyday I get a deeper understanding that it's worse than even I think...

CT-Hilltopper said...

Get...The REAL State of the Union is here.

I'm so ticked I left out a lot.

http://wearescrewn.blogspot.com/2010/01/we-are-screwed-state-of-union.html

We are so screwed.

getyourselfconnected said...

Dave,
I think Adam of that site is even more bullish than you! LOL. I still (always) have my core holds, but $950 AU and $15.50 or so Ag is going to require me to load up a bit. I hit your site first so don't be jealous.

C-T,
On my way to check it out!

Anonymous said...

Roy Orbison. In Dreams

getyourselfconnected said...

Seriously, did anyone read the fable? It took me a while to type it in!

getyourselfconnected said...

Zero Hedge under fire tonight and the lifting of Morgan Stanley work looks rock solid. That said ZH is more insightful than most sites and republishing material that is "making the rounds" and then making your own commentary seems not a death sentence. A full mea culpa needs to be made and an apologie.

I always try and credit work, I actually worry about it sometimes, so I only steal from Illusion of Prosperity because we are friends! LOL.

Anonymous said...

One might argue that I can only see the negative of things, and I always take a look from many angles to make sure I am not bending things to my own view. Nobody is perfect though!. I would add that I am not trying to sell anyone anything, or get anything I hold to go up in value (nobody likes gold or silver anyways!) so I think I may be more open to be impartial.

Heres a question, when is the last time you were optimistic, I mean truly optimistic about the state of the US economy? My guess is the answer is never, hence the reason some (namely I) question your impartiality.

For me, I was optimistic in 01, staid in 02-03, concerned in 04, gloomy gus pessimist 2005-07. Since then, I have slowly become more and more optimistic. Despite the massive, massive govt interventions, we still have gone through the most jarring economic dislocation in decades. We are so much closer to the bottom now than we were in 2005, and this makes me much more optimistic now than I was then.

TomOfTheNorth said...

Howdy,

Agree re:ZH. A quick admission to the 'inadvertent ommission' should work.....

I read the fable and I've been shitting in the woods ever since.....

How about a Zappa instrumental for Friday? Something like Black Napkins perhaps....

sonicninjakitty said...

Hi GYSC,

I read the fable and had to think on it awhile. It is so simple yet true. BTW, is this some kind of Jedi lesson (lol)?

The book sounds interesting as life is, after all, about watching the ball go back and forth in the different courts {sigh}.

How about 'losing my religion' by REM or something by the Police like 'invisible sun' or 'king of pain' or 'synchronicity'? ("Another working day has ended; Only the rush hour hell to face; Packed like lemmings into shiny metal boxes; Contestants in a suicidal race"--Plus they are singing on a trash heap--LOL!) The whole Synchronicity album was very Jungian-primitive and seems appropos of these days. :(

I don't think you are unrealistic in your readings at all. I see the same crazy lines. At least we can take heart that China's prosperity is an illusion, too. (ha ha?)

GawainsGhost said...

Talked to my mother yesterday. She said FHA was raising its standard on mortgages, requiring a 5% minimum downpayment and limiting the seller's contribution to buyer's closing costs to 3%. So lending is tightening.

And since the majority of sales these days is financed through FHA loans, sales will slow, prices will continue to fall, and inventory will rise as foreclosures continue to mount. None of this is good, but it is necessary for the inevitable market correction following a credit bubble. Deleveraging is a bitch.

I was stunned when I noticed that our inventory is currently at more than $9 million. That's a lot of properties for only two realtors at one small company. And we aren't even in what one would call a bubble area! So it's no wonder we're both stressed almost to the limit.

For Friday Night Entertainment I would recommend a Beatles song, like "Get Back," but I know you won't play it. (Had to get that dig in there, GYC.)

Lately I've been listening to the Rolling Stones Exile on Main Street over and over. "Sweet Virginia" is a great song.

Or if you're not adverse to country music, David Allan Coe's "You Never Even Called Me By My Name" is the perfect song.

"Well I was drunk the day my mom got out of prison
And I went to pick her up in the rain
But before I could get to the station in the pickup truck
She got runned over by a damned old train

And I'll hang around as long as you will let me
And I never minded standing in the rain
And you don't have to call me Darlin', darlin'
You never even called me by my name."

Apropos of current events.

getyourselfconnected said...

Hey all!

Anon @7:58 I will address your question in tonights post, would like your feedback.

Tom,
Have you heard this one?:
A bear was growling in the woods and a bunny ran up and asked him what the problem was. The Bear said "Everytime I take a dumb the stuff clings to my fur and it's annoying! Does that happen to you?"
To this the bunny replied "Nope, never" and then the bear grabbed the bunny and wiped his butt with him. LOL!!!!!!!!! A little humor, very little.

Sonic,
I preach many from the darkside, but yes, that fable holds many truths and lessons for any of us. Glad you read it!

Gawains,
I grew up on folk and country so anything goes, excpet the Beetles.

CT-Hilltopper said...

...And where do we go from here?

Which is the way that's clear?...

If you can remember the lyrics this song is from...I'd like to request this one. Haven't heard it in a LONG time.

Just so you know GYSC, I know the song...I just want to see if you remember it. LOL

getyourselfconnected said...

OOOH, a test? Don't you know I can use the Force C-T?

getyourselfconnected said...

Crap C-T I have a tie, one I knew and one I found!! What to do?

CT-Hilltopper said...

So GYSC, its apparent that Bernanke is not going to pay for any wrongdoing in this financial crisis. Who will be the goat?

Read and discuss...

http://wearescrewn.blogspot.com/2010/01/geithner-will-be-sacrificial-goat.html

About the song, you can surprise me...I was thinking David Essex, but if you found something more recent, that's fine.

getyourselfconnected said...

OMG C-T,
I knew the later M. Damian tune but the older one was my backup! No post yet I will amend!