Daisy Cutter Wednesday

Insane day today as news came hot and heavy before the market open. I will discuss below, but I did want to take a second to say a few things. Much more so than on a blog where I think writers put things out that are more calm, Twitter allows for instant transmission of what people are thinking. Obviously this has great advantages, but along with that the avenue comes one where emotions and words can pour out pretty fast. That can be a bad thing at times. I saw some things today that disappointed me very much, and I gather my questioning the actions this morning of all the intervention going on was none too popular either. It is what it is. As always, my email is at the top right and I will discuss anything with anyone at anytime.

Daisy Cutter Wednesday
Major bombs dropped today on the market!

What's easy tonight is that I have already covered the helping hands lent to the markets. All the major Central Banks agreed to currency swap lines with open ended commitment. Of course this happened before on September 15, 2011:
Central banks to provide dollar liquidity

I dubbed this "The Unlimited Dollar Funding Machine" and covered what it meant in this post:
Hope is Not a Strategy, But is it Tradeable?
This move allows Euro banks access to basically free dollars and as they are ready to lend out into the economy (snark) this will help them in that effort. All in all, it buys time for them with less stress in finding overnight funding. It's possible a major bank was in serious trouble, but it matters little now.

Today the Bank of China also eased on money rates, first time in three years. The reason is probably that China is seeing inflation there fall below target and want to heat things up with loans for more ghost cities(snark). The key word is easing.

Economic data has started to come in not only better than expected (small beats meaningless to me), but significantly so. Home sales (pending is dangerous but ok), jobs and some PMI numbers have come in well over expectations.

And last, I discussed the final piece to the puzzle Monday night in the post:
Ghosts of V - Shaped Recoveries
If this is not the picture you want to set up a year end run into next year then it's just not going to happen.

Markets are extreme overbought here. Overbought can be worked off by meandering sideways for a bit, but with jobs numbers on Friday any beat may well push this higher again. Tough spot.

Robert Sinn, who is just killing it with his writing, hits the right notes after a day like today so please stop on by:
Regret

The Three Reactions to a Massive Rally
A little fun?

Already long:

Neutral/No spots:

Short, maybe since Friday:

Have a good night.

Tuesday Tour Around the Web

I was at work early today then stayed late. A bit short on time and tired so it's a blogfest where I find all the best stuff from the web and compile it for you. Yes, you are welcome.

Josh Brown penned a missive today that brings up a great debate point along with a historical event:
In the Name of Corporate Profitability, 1781 and Today
You really need to read about the Zong Massacre. Here is the debate point:

There is a question now about whether or not productivity gains and the ability to "remain lean" will allow Corporate America to maintain these historic levels of profitability. I would answer that perhaps companies can keep this game going awhile longer, but at what cost to the country around them?

This is key. If companies were to hire more here the costs would eat away at margins huge and hence stock prices. The time lag for when people would gain by higher paying jobs may be a poor time for stocks. And as we know, stock prices matter more than anything else. Going to think on this one a bit.

Erik Swarts of Market Anthropology has a wonderful big picture post up that I really think is worth your time:
A Few Thoughts
He drops Wikipedia use in the article which will always grab my attention.

iBankCoin's ChessNwine has an important article up tonight and it's a must read for any market participant:
The Two Most Important and Least Discussed Aspect of Trading
Readers know that I am not a trader that relies on market returns for income. I don't know that I ever could do that. But whether you are trading for a living or trading to build wealth for the long term you have to be very aware of one thing: your bankroll. How you make decisions will be HEAVILY influenced if you "need" a certain thing to happen on a trade. The best way to need any result is to have too much money that you cannot lose at work. From Chess:

There are plenty of talented traders out there who blow up their accounts not because they got outmaneuvered by the guy (or robot) on the other side of their trade, but because they were simply not bankrolled properly and felt compelled to overtrade in poor market conditions to try to “pay the bills.” Well, I have news for you: If you need to trade to pay your electric bill and utilities, then you are in the wrong profession. Being properly bankrolled also gives you the peace of mind that you do not have to, in fact, trade all day, every day.

There is more in the article so take a look.

I don't know what is going on in Iran. A missile compound over there was clearly destroyed and news about that is very thin. Tensions have been rising in the area and we all know those losers are insane. Zero Hedge takes a look at Pimco's Oil price thinking should something happen:
Pimco's 4 "Iran Invasion" Oil Price Scenarios: From $140 To "Doomsday"

Not market related but the Mars Science Laboratory rover Curiosity is set to land at Gale Crater on Mars this summer! The new rover is a monster! Check out the section on how they plan to land it on the surface of Mars, very complicated:
Mars Science Laboratory
Cannot wait.

Have a good night.

Ghosts of V - Shaped Recoveries

New roof is in progress. Getting ready for the winter. It should be done by tomorrow.

Ghosts of V - Shaped Recoveries
Markets moved substantially higher today after the Sunday rumors and new money programs were announced. It was your average panic buying party with about every single stock making large one day gains. After a steep drop what you want to see is firming action and basing, but the market never does what would be best. Another large gap opening just makes more of a mess of things to my eyes.

Robert Sinn has an excellent take on the wild day, and it's well worth a look:
The Low Volume Reset
Snippet:

The enormous macro uncertainty combined with the day to day market whipsaws have moved many investors/traders to the sidelines permanently. What will it take to bring them back into the game

Rather than hash out the action today I wanted to touch on a subject I think is always in play inside the heads of market players.

"Got a lot of past, Joe. Things accumulate."
-Andrew Cord in Highlander episode "Brothers in Arms"

Faced with debt downgrades, a slowing global economy, persistent high unemployment, and maybe 3 or 4 other concerns one may wonder why buyers line up to plow into a rally at the drop of a hat. The answer lies in the past. I think the ghosts of the past two V-shaped recoveries linger in the psyche of us all. The March 2009 ignition of a monster rally and August's 2010 blow away bottom cannot be forgotten. Chart form (weekly chart):

(don't worry about the lines, just showing the V shape!)

I believe that people can be haunted by memories, both good and bad. I know the V move is something I think about all the time. I cannot be the only one.

At a time when intervention by higher powers (not the spiritual kind!) is all but a sure thing, no one wants to miss the train when it's leaving the stimulus station. It can be very difficult to board later on after a longer run than you thought possible.

This also explains the market dynamic of everything goes up, or everything goes down. When things get going it's not going to matter too much what you have, but it will matter if you don't have anything. It's a nasty part of the market but I think it foolish to not acknowledge it.

How much do ghosts of V-Shaped recoveries factor into your thinking?

Have a good night.

Great Expectations

Watched the New England Patriots just demolish the Philadelphia Eagles tonight. Sometimes I can almost forget how bad the Pats defense is, what a show.

Great Expectations
It's been strange to see so much fear about Euro zone debt woes when everyone single person on planet Earth knew, and I mean KNEW, some kind of work around was always going to happen. I guess the pressure needed to build enough to get the ECB and crew to make a little pee pee in their pants. Plenty of rumors out tonight about a silly big bailout package and it's party time freak out all over.

Business Insider has a rundown here:
Futures Are Exploding Higher After Weekend Talk Of Mega-Bailouts And Stability Pacts

Funny thing is it was some obscure Italian paper, La Stampa, that broke the news but catch this line:

The euro rose after Italian daily La Stampa said the International Monetary Fund is preparing a 600- billion euro ($794 billion) loan for Italy in case the debt crisis worsens, without saying where it got the information.

This is rich.

Adding fuel to the free money Trillion dollar roll is news the FED, wait for it, will buy another lump of mortgage paper:
Dealers See Fed Buying $545 Billion Mortgage Bonds in Third Ease

So I am supposed to say stuff like "trade what you see", "don't fight the FED", "the market is what the market is" or some other platitude but I just can't get into it. This is really stupid stuff.

I don't even want to discuss it tonight. More monkey games of throwing bananas. Over reaction and wasted efforts all around. Markets will never have fair pricing of much of anything (debt, credit, stocks, name it) with all the interventions coming all the time. It's all becoming false, a false market built on assumed caps and bailouts. I am getting bored, really.

New Outside the (Cardboard) Box Post
Long time readers may remember my friend Tom of the North and his wonderful work on his site. Tom has a new post up and it's pure genius. Required reading for Sunday night:
Supercommittee Reorients For Success
Sample to get you going on over there:

Washington, D.C. – As their budget cutting duties are winding down with the recently announced and widely anticipated stalemate, sources close to the process are reporting that the Congressional Supercommittee is in advanced negotiations with a large investment management company, possibly Black Rock, to form a new investment vehicle directly managed by the Supercommittee itself. Tentatively named the Supercommittee High Yield Terran Equity Fund (SHYTE Fund), the fund structure would allow its Supercommittee managers to invest in any global asset or asset class where a Supercommittee member/member of Congress/SHYTE Fund investment manager has the ability to directly influence the performance of the asset or asset class through legislative action, or has privileged access to information regarding a particular asset or asset class that would constitute an iron-clad trading advantage.

The whole article is excellent. Thanks Tom.

Have a good night.

Slow Saturday

Having a nice quiet weekend after the holiday. Quiet can be very good.

I wrote a post for the iBankCoin Blogger Network today. Why not swing by and check it out? You can leave a comment there and vote from 1-5 stars. Here it is:
Why You Should be Trading this Market
The Blogger Network is a really cool feature. If you ever wanted to put an idea out there, this is the easiest way for it to be seen.

Reader Watchtower asked in the comments section about the recent yield blowouts of Italy, Spain and Belgium and how this relates to the Euro as a whole. I was thinking about that this morning and I tweeted the following idea:

Thing about bailouts/backstops/guarantees is market will make you show the whole hand; era of jawboning is over, it's show or go now.

I think that market is pressuring the ECB now very hard (Hello Germany!) to go the "unlimited" route. Once you start intervening the market players are going to push the envelope as far as possible. That's what is causing the yield jumps, it's not that Belgium will go bust any sooner or later than a month ago it's just pressure being placed via that avenue. Remember that CDS is now a serious question and without that protection (real or imagined as it is) yields are going higher. It's a risk premium.

Have a good night.

Black Friday Night Entertainment

I hope you all dodged being hit with pepper spray across the country as you went Black Friday shopping. If you are not too tired from all the buying and not in jail, it's still a Friday night here at the blog!

Saw Twilight "Breaking Dawn part 1" today, it's no Oscar winner that's for sure.

Market Commentary
It's ugly. It's bad. That is all. More on Sunday.

Friday Night Entertainment
Let's see what I can find to interest you.

The Brinicle
Caught this over at Geekologie and it's well worth the time spent. When ultra salty melt water flows down into the ocean it is able to make an ice plume, a brinicle, all the way to the sea floor. The ice is fast developing and will kill anything that it traps in the process. Poor starfish:

Way beyond cool. Pun intended.

Fun with Images
It's easier this way.

Facebook beat down!:

see more epicfails

This pepper spray meme has gone too far now, it's everywhere:

see more epicfails

One more. Good beer:

see more After 12

Film Clips
Rental advice.

Wes Craven has made many films, most great but some turkey's. I can see where he wanted to go with "Deadly Friend", and it's worth a watch, but it's still a "so bad it's good" sort of flick. Here is the trailer:


One of my favorite lines: "But something tells me you're going to remember me this time" in "American Beauty":

New era classic.

Rock Blogging
Music for the masses.

Loyal reader Watchtower pinged me with a request for an 1980's tune that I have never heard. Try out Nik Kershaw and "Wouldn't It be Good":

Not bad.

I know I am going to inundate you with Nightwish's song "Sleeping Sun" but I think it one of the more beautiful songs I have ever heard. Via the wonders of YouTube here is a piano version of the song:

So pretty.

Some ideas from Twitter.

@seaside_elec was thinking something inspirational, like "Eye of the Tiger" from Survivor would help things turn around. You never know!:


From @TimWolfgang, try out Bright Eyes and "First Day of My Life":

Not bad at all.

From @29thHarvickfan, a little "Thunderstruck" by AC/DC but you know I going live at Donnington!:

Look at that crowd! That's why rock is the best. Hip hop lovers just want to be SEEN at a concert, would kill to be there. Real rock lovers will KILL to be there and don't care about being seen. Big difference.

Two left.

One of my top 10 songs, "The Boxer" by Simon and Garfunkel:


Last call! You should know what to do.

Closing the show with "You Can't Kill Rock and Roll" by Ozzy with Randy Rhoads. Finest guitar player I have ever heard:


Have a good night.

Happy Thanksgiving

I am not going to offer anything about the markets. Today was a nasty washout sort of day. My post the other night calling the market "Damaged Goods" is holding up. The technical damage is bad, and the hit to confidence as I wrote last night is not helping. Great time to take a break and think over things.

All You Ever Wanted to Know About Turkey
I am hoping all the readers have a great Thanksgiving. I have plenty to be thankful for this year and I am sure you do too. Grab some turkey and some drinks and have a great time, as hard as that annoying member of the family makes it.

Now about Turkey.

Here are a bunch of random facts about Turkey I culled from the Wikipedia page. Enjoy!

-The Aztecs associated the turkey with their trickster god Tezcatlipoca, perhaps because of its humorous behavior
-The 16th-century English navigator William Strickland is generally credited with introducing the turkey into England
-Mature toms are too large to achieve natural fertilization without injuring the hens, so their semen is collected, and hens are inseminated artificially. Several hens can be inseminated from each collection, so fewer toms are needed (of course right?)
-A baby turkey is called a poult:

cute
-Unlike chicken, duck, and quail eggs, turkey eggs are not commonly sold as food due to the high demand for whole turkeys and lower output of eggs as compared with other fowl. The value of a single turkey egg is estimated to be about US $3.50 on the open market, substantially more than a carton of one dozen chicken eggs.

Turkey in Cinema?
Some turkey sightings in films.

-Of course, in "A Christmas Story" the turkey gets gobbled up by the dogs next door!
-In "Rocky I" when Rocky comes to take Adrian out, Pauly throws the turkey outside so she has no excuse not to go.
-In National Lampoons "Christmas Vacation" the overcooked turkey deflates upon cutting.

And of course, Adam Sandler's "Thanksgiving Song":


Enjoy the holiday.

Have a good night.