DOW rockets in the final hours. Are Boom times back?

[barnaby33]

Pure CNBC bullshit. They announced the bailout, then started back pedaling. Too late the rally had already been ignited. There was no other good news today, this was a pure rumor pump. If it doesn’t happen look out below, because that rally and more will come off quickly. Even if it does happen, all its doing is shuffling the deck chairs. The “bailout” was merely a planned injection of cash from the very same banks that would have to deal with the lowered ratings on the debt they hold if Ambak loses its rating. Its all a giant ponzi scheme.

Chris I hate to gainsay you, but seriously are you smoking crack these days? A huge rally? Our banking system is pretty close to INSOLVENT if Ambak goes tits up. Every major wall street bank has billions in crap CDO’s on its books and more in SPE’s, ensured by you-know-who.

Most people on the street I talk to have a very dim view of whats happening in the economy, J6P may not know how much he’s been fucked, but he can feel something is not right.

The FED is draining liquidity from its primary brokers to loan to smaller institutions via the TAF. That explains why they threw 5 banks a section 23A exemption back in August allowing the banks to lend their brokerage arms more than 10% of assets.

Unemployment is on the rise the dollar is weak and inflation in consumer prices seems rampant, where is the bullishness in all this?

Davelj, you are right, its a shitty asset crisis, unfolding right before our eyes. The FED is trying to make sure its not the bagholder and so is everyone else. Problem is all those wink wink nod nod counterparty agreements are going to unravel, the couterparties don’t have the money. Who’s left holding the sausage, sure looks like the banks so far.

Josh

[drunkle]

cnbc announced a “possible” bailout… but we knew they’ve been trying to get something together for what, the past month?

ppt sounds right, a 200 point move on “news” that isn’t news and that people are leary of anyway.

ppt or shorts covering, getting freaked by the potential pop. self fulfilling thingme.

[drunkle]

cnbc announced a “possible” bailout… but we knew they’ve been trying to get something together for what, the past month?

ppt sounds right, a 200 point move on “news” that isn’t news and that people are leary of anyway.

ppt or shorts covering, getting freaked by the potential pop. self fulfilling thingme.

[drunkle]

cnbc announced a “possible” bailout… but we knew they’ve been trying to get something together for what, the past month?

ppt sounds right, a 200 point move on “news” that isn’t news and that people are leary of anyway.

ppt or shorts covering, getting freaked by the potential pop. self fulfilling thingme.

[drunkle]

cnbc announced a “possible” bailout… but we knew they’ve been trying to get something together for what, the past month?

ppt sounds right, a 200 point move on “news” that isn’t news and that people are leary of anyway.

ppt or shorts covering, getting freaked by the potential pop. self fulfilling thingme.

[drunkle]

cnbc announced a “possible” bailout… but we knew they’ve been trying to get something together for what, the past month?

ppt sounds right, a 200 point move on “news” that isn’t news and that people are leary of anyway.

ppt or shorts covering, getting freaked by the potential pop. self fulfilling thingme.

[LA_Renter]

The bullish case for the stock market is based on S&P estimates that earnings for the S&P 500 will rise 20% in the 3rd and 4th quarters of 2008, from 2007 also I’m getting a pony this Christmas……….with spots. Seriously that what’s the whole bullish case is right now, the FED has dropped its drawers and a HUGE rebound will begin in earnest during the second half of 08. Of course as data and earnings start coming in that throw water on this assumption the market will more than likely make its LOW. What has happened in past recessions is that the FED would lower interest rates and this would act as a stimulus on one of the nations largest industry’s……Real Estate. Right now home values are still way too high and RE is basically inelastic to Fed easing at this point in time. So exactly what is the vehicle (asset class) that is going to drive us out of the malaise?? There isn’t one that is not inflationary. IMHO the bullish case on the second half rebound is Bullsh#t.

[LA_Renter]

The bullish case for the stock market is based on S&P estimates that earnings for the S&P 500 will rise 20% in the 3rd and 4th quarters of 2008, from 2007 also I’m getting a pony this Christmas……….with spots. Seriously that what’s the whole bullish case is right now, the FED has dropped its drawers and a HUGE rebound will begin in earnest during the second half of 08. Of course as data and earnings start coming in that throw water on this assumption the market will more than likely make its LOW. What has happened in past recessions is that the FED would lower interest rates and this would act as a stimulus on one of the nations largest industry’s……Real Estate. Right now home values are still way too high and RE is basically inelastic to Fed easing at this point in time. So exactly what is the vehicle (asset class) that is going to drive us out of the malaise?? There isn’t one that is not inflationary. IMHO the bullish case on the second half rebound is Bullsh#t.

[LA_Renter]

The bullish case for the stock market is based on S&P estimates that earnings for the S&P 500 will rise 20% in the 3rd and 4th quarters of 2008, from 2007 also I’m getting a pony this Christmas……….with spots. Seriously that what’s the whole bullish case is right now, the FED has dropped its drawers and a HUGE rebound will begin in earnest during the second half of 08. Of course as data and earnings start coming in that throw water on this assumption the market will more than likely make its LOW. What has happened in past recessions is that the FED would lower interest rates and this would act as a stimulus on one of the nations largest industry’s……Real Estate. Right now home values are still way too high and RE is basically inelastic to Fed easing at this point in time. So exactly what is the vehicle (asset class) that is going to drive us out of the malaise?? There isn’t one that is not inflationary. IMHO the bullish case on the second half rebound is Bullsh#t.

[LA_Renter]

The bullish case for the stock market is based on S&P estimates that earnings for the S&P 500 will rise 20% in the 3rd and 4th quarters of 2008, from 2007 also I’m getting a pony this Christmas……….with spots. Seriously that what’s the whole bullish case is right now, the FED has dropped its drawers and a HUGE rebound will begin in earnest during the second half of 08. Of course as data and earnings start coming in that throw water on this assumption the market will more than likely make its LOW. What has happened in past recessions is that the FED would lower interest rates and this would act as a stimulus on one of the nations largest industry’s……Real Estate. Right now home values are still way too high and RE is basically inelastic to Fed easing at this point in time. So exactly what is the vehicle (asset class) that is going to drive us out of the malaise?? There isn’t one that is not inflationary. IMHO the bullish case on the second half rebound is Bullsh#t.

[LA_Renter]

The bullish case for the stock market is based on S&P estimates that earnings for the S&P 500 will rise 20% in the 3rd and 4th quarters of 2008, from 2007 also I’m getting a pony this Christmas……….with spots. Seriously that what’s the whole bullish case is right now, the FED has dropped its drawers and a HUGE rebound will begin in earnest during the second half of 08. Of course as data and earnings start coming in that throw water on this assumption the market will more than likely make its LOW. What has happened in past recessions is that the FED would lower interest rates and this would act as a stimulus on one of the nations largest industry’s……Real Estate. Right now home values are still way too high and RE is basically inelastic to Fed easing at this point in time. So exactly what is the vehicle (asset class) that is going to drive us out of the malaise?? There isn’t one that is not inflationary. IMHO the bullish case on the second half rebound is Bullsh#t.

[davelj]

I’m sympathetic to Chris’s views as a trader because it’s so hard to game the short-term machinations of the market, and a “technical system” – for lack of a better description – such as one that Chris uses is almost certainly better than using fundamentals in the short term.

Having said that, I have my doubts as to whether such systems are going to “work” properly in the current environment because the credit/insolvency crisis (which is “fundamental” in nature) that we’re witnessing is so rare. Therefore, using past trading data – which is the basis for all technical systems – isn’t of much use unless it incorporates and heavily emphasizes those previous periods that are similar to this one, such as the lead-up to the ’90-’91 and ’80-’82 recessions. Obviously, I could be totally wrong, but I think we’re in very rarely charted territory and one could argue downright uncharted territory when taking into account the derivative situation.

EPS on the S&P 500 were $85.19 in 2006. Including the financials write-downs and the huge GE write-down, EPS were $71.56 for 2007. For 2008, the EPS estimate began at $92.30 in March of ’07 and is now at $71.20… and that assumes 20%+ Y/Y growth in the second half of ’08. Given that we are likely just creeping into recession (or perhaps have been in one for the last couple of months), it seems HIGHLY unlikely that we’re going to see 20% Y/E EPS growth on the S&P in the second half; thus we could easily see $65 in EPS in 2008 which, by the way, gets us back to NORMAL profit margins on the S&P historically. That means we could very well be trading at a 21x EPS multiple on (finally) normalized earnings power for 2008. That ain’t cheap.

Jeremy Grantham recently said that trend line (that is, “mean reverting”) margins, earnings and valuations (assuming interest rates are similar to today’s) puts the S&P at 1100 in 2011 – that’s 18% below today’s prices. Again, I realize that I’m talking about fundamentals here, but no matter where this market rallies over the next couple of months, I think the intermediate term trajectory – that is, over the next 12-18 months, is down down down. At some point, the fundamentals matter and the long-awaited mean reversion will kick in, just as it did briefly in 2001-2002. And regardless of who’s President, they ain’t gonna be able to save the credit markets from a severe ass whoopin’.

Again, day-to-day trading… who knows? The credit markets are screaming that something’s seriously wrong. Eventually the equity market’s going to listen. The tail can’t wag the dog forever.

[davelj]

I’m sympathetic to Chris’s views as a trader because it’s so hard to game the short-term machinations of the market, and a “technical system” – for lack of a better description – such as one that Chris uses is almost certainly better than using fundamentals in the short term.

Having said that, I have my doubts as to whether such systems are going to “work” properly in the current environment because the credit/insolvency crisis (which is “fundamental” in nature) that we’re witnessing is so rare. Therefore, using past trading data – which is the basis for all technical systems – isn’t of much use unless it incorporates and heavily emphasizes those previous periods that are similar to this one, such as the lead-up to the ’90-’91 and ’80-’82 recessions. Obviously, I could be totally wrong, but I think we’re in very rarely charted territory and one could argue downright uncharted territory when taking into account the derivative situation.

EPS on the S&P 500 were $85.19 in 2006. Including the financials write-downs and the huge GE write-down, EPS were $71.56 for 2007. For 2008, the EPS estimate began at $92.30 in March of ’07 and is now at $71.20… and that assumes 20%+ Y/Y growth in the second half of ’08. Given that we are likely just creeping into recession (or perhaps have been in one for the last couple of months), it seems HIGHLY unlikely that we’re going to see 20% Y/E EPS growth on the S&P in the second half; thus we could easily see $65 in EPS in 2008 which, by the way, gets us back to NORMAL profit margins on the S&P historically. That means we could very well be trading at a 21x EPS multiple on (finally) normalized earnings power for 2008. That ain’t cheap.

Jeremy Grantham recently said that trend line (that is, “mean reverting”) margins, earnings and valuations (assuming interest rates are similar to today’s) puts the S&P at 1100 in 2011 – that’s 18% below today’s prices. Again, I realize that I’m talking about fundamentals here, but no matter where this market rallies over the next couple of months, I think the intermediate term trajectory – that is, over the next 12-18 months, is down down down. At some point, the fundamentals matter and the long-awaited mean reversion will kick in, just as it did briefly in 2001-2002. And regardless of who’s President, they ain’t gonna be able to save the credit markets from a severe ass whoopin’.

Again, day-to-day trading… who knows? The credit markets are screaming that something’s seriously wrong. Eventually the equity market’s going to listen. The tail can’t wag the dog forever.

[davelj]

I’m sympathetic to Chris’s views as a trader because it’s so hard to game the short-term machinations of the market, and a “technical system” – for lack of a better description – such as one that Chris uses is almost certainly better than using fundamentals in the short term.

Having said that, I have my doubts as to whether such systems are going to “work” properly in the current environment because the credit/insolvency crisis (which is “fundamental” in nature) that we’re witnessing is so rare. Therefore, using past trading data – which is the basis for all technical systems – isn’t of much use unless it incorporates and heavily emphasizes those previous periods that are similar to this one, such as the lead-up to the ’90-’91 and ’80-’82 recessions. Obviously, I could be totally wrong, but I think we’re in very rarely charted territory and one could argue downright uncharted territory when taking into account the derivative situation.

EPS on the S&P 500 were $85.19 in 2006. Including the financials write-downs and the huge GE write-down, EPS were $71.56 for 2007. For 2008, the EPS estimate began at $92.30 in March of ’07 and is now at $71.20… and that assumes 20%+ Y/Y growth in the second half of ’08. Given that we are likely just creeping into recession (or perhaps have been in one for the last couple of months), it seems HIGHLY unlikely that we’re going to see 20% Y/E EPS growth on the S&P in the second half; thus we could easily see $65 in EPS in 2008 which, by the way, gets us back to NORMAL profit margins on the S&P historically. That means we could very well be trading at a 21x EPS multiple on (finally) normalized earnings power for 2008. That ain’t cheap.

Jeremy Grantham recently said that trend line (that is, “mean reverting”) margins, earnings and valuations (assuming interest rates are similar to today’s) puts the S&P at 1100 in 2011 – that’s 18% below today’s prices. Again, I realize that I’m talking about fundamentals here, but no matter where this market rallies over the next couple of months, I think the intermediate term trajectory – that is, over the next 12-18 months, is down down down. At some point, the fundamentals matter and the long-awaited mean reversion will kick in, just as it did briefly in 2001-2002. And regardless of who’s President, they ain’t gonna be able to save the credit markets from a severe ass whoopin’.

Again, day-to-day trading… who knows? The credit markets are screaming that something’s seriously wrong. Eventually the equity market’s going to listen. The tail can’t wag the dog forever.

[davelj]

I’m sympathetic to Chris’s views as a trader because it’s so hard to game the short-term machinations of the market, and a “technical system” – for lack of a better description – such as one that Chris uses is almost certainly better than using fundamentals in the short term.

Having said that, I have my doubts as to whether such systems are going to “work” properly in the current environment because the credit/insolvency crisis (which is “fundamental” in nature) that we’re witnessing is so rare. Therefore, using past trading data – which is the basis for all technical systems – isn’t of much use unless it incorporates and heavily emphasizes those previous periods that are similar to this one, such as the lead-up to the ’90-’91 and ’80-’82 recessions. Obviously, I could be totally wrong, but I think we’re in very rarely charted territory and one could argue downright uncharted territory when taking into account the derivative situation.

EPS on the S&P 500 were $85.19 in 2006. Including the financials write-downs and the huge GE write-down, EPS were $71.56 for 2007. For 2008, the EPS estimate began at $92.30 in March of ’07 and is now at $71.20… and that assumes 20%+ Y/Y growth in the second half of ’08. Given that we are likely just creeping into recession (or perhaps have been in one for the last couple of months), it seems HIGHLY unlikely that we’re going to see 20% Y/E EPS growth on the S&P in the second half; thus we could easily see $65 in EPS in 2008 which, by the way, gets us back to NORMAL profit margins on the S&P historically. That means we could very well be trading at a 21x EPS multiple on (finally) normalized earnings power for 2008. That ain’t cheap.

Jeremy Grantham recently said that trend line (that is, “mean reverting”) margins, earnings and valuations (assuming interest rates are similar to today’s) puts the S&P at 1100 in 2011 – that’s 18% below today’s prices. Again, I realize that I’m talking about fundamentals here, but no matter where this market rallies over the next couple of months, I think the intermediate term trajectory – that is, over the next 12-18 months, is down down down. At some point, the fundamentals matter and the long-awaited mean reversion will kick in, just as it did briefly in 2001-2002. And regardless of who’s President, they ain’t gonna be able to save the credit markets from a severe ass whoopin’.

Again, day-to-day trading… who knows? The credit markets are screaming that something’s seriously wrong. Eventually the equity market’s going to listen. The tail can’t wag the dog forever.

[Author]

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