I used to get frustrated with John Mauldin because he wasn’t bearish enough for my tastes – his continual talk of the ‘muddle through’ economy made me think he was more interested in keeping his clients than in discussing economic realities – his tone has shifted in recent weeks – perhaps he is acknowledging that the chances of muddling through are becoming slimmer and slimmer
as Arraya points out, John rips the FDIC a new one in this article (by pointing out the facts in a straightforward, logical manner supported by charts) – check out his comments on artificial deflation if you still place any validity in govt provided economic numbers – he also briefly mentions flash trading and some volume oddities in the equities markets – if you have money in stocks you should educate yourself on how they actually work (and not how you think they work)
snippets from John’s letter:
“Yes, we are seeing statistical growth in the economy this quarter and probably the next. But unemployment is rising and wages and incomes are falling. We will go into that next week.
We are in for a very poor, jobless recovery, and the risk of falling into a double-dip recession is quite high. The stock market is pricing in a steep V-shaped recovery in both GDP and corporate profits. I am not convinced.”
“How Can Just Four Stocks Be 40% of the NYSE Volume?
Before I hit the send button, a brief comment on a very odd market happening. It appears that recently up to 40% of the volume in the NYSE is in just four low-priced financial stocks. “According to Reuters, four beaten-up financial companies – Bank of America (BAC), Citigroup (C), Fannie Mae (FNM), and Freddie Mac (FRE) – have accounted for upwards of 40 percent of the trading volume on the New York Stock Exchange to begin this week.”
The stocks are basically churning in price. Why is this? There are a lot of theories, so let me offer one of my own. I think it has a lot to do with flash trading. As I wrote in a previous letter, with high-frequency program trading hedge funds and sophisticated brokers can make as much as 0.5 cents buying and selling a share of stock at breakeven. Supposedly, the exchanges pay these premiums for adding liquidity. But we are seeing liquidity in stocks where none is needed.”
[4plex: John is implying that the volume oddity is an unintended consequence of flash trading – other analysts have suggested that the 4 stocks in question are being manipulated, pointing to the fact that 3 of them have been bailed out by the govt in one way or another and the 4th one is on life-support – who knows what the truth is]
