Even as retail investors and hedge funds sour on the stock market, your mutual-fund manager may be betting on stocks with a far a larger share of his assets than he has in a very long time.
Mutual-fund cash levels dropped to just 3.4% of assets in July--record lows--according to this BoA chart via Pragmatic Capitalism.
Presumably, they're going "all in" on the market, though it could also be partly a function of fund redemptions from their customers.
Says Kevin Duffy:
The fact that Jim Cramer and Larry Kudlow are still employed and bullish is all you need to know from a sentiment standpoint.
Ironically, some of these professionals are making the mistake of confusing relative bearishness among individuals as a contrary indicator and reason for optimism.
I like to call this the "double contrary," a rationalization that was quite prevalent during the last market peak in 2007.
--Gus Lubin, "Mutual Fund Cash Levels Hit Record Lows", BusinessInsider.com, September 13, 2010.
About Those Expiring Tax Cuts . . .
4) The bold and confident assertions made about the links between tax rates and economic growth, market performance, and prosperity are almost certainly wrong.
Turn on CNBC or look at the Wall Street Journal op-ed page these days, and you’ll learn that we must keep tax rates on capital gains, dividends, and income precisely where they are because shifting them to different levels will retard economic growth.
Keep this in mind: The people who designed the current, unsustainable tax system promised us that lower marginal rates, and lower taxes on capital and dividends, would boost the economy, promote investment, create jobs, spur market performance, and raise everybody’s income. They were wrong. (It’s no coincidence that these same people also warned us that raising taxes in 1993 would kill market returns and the economy. They were wrong then, too. They’re pretty much always wrong.)
As I’ve pointed out, the years under the current tax regime have been a lost decade. Pick your metric—median income, employment, stock market returns, economic growth—the low-tax ’00s sucked. Yet proponents of keeping the tax cuts persist in making the argument: To avoid a repeat of the past decade, we must have the exact same tax policies as we did for the past decade.
Shorter version: You suck now, you sucked then, you are highly likely to suck in the future, too!
http://www.ritholtz.com/blog/2010/09/about-those-expiring-tax-cuts/
Ben Ferguson is a Jackass
Conservative radio talk-show host Ben Ferguson was on CNBC today for a discussion of trade policy. I have never heard of this guy before, but I can’t believe what a jackass he is. He actually thinks that we should lower wages to match Chinese wages:
http://www.trivisonno.com/ben-ferguson-is-a-jackass
Erin Burnett is So Cute!
She think that iPads are made in USA. How adorable!
Note to Burnett: Apple products are made in China.
Burnett, who obviously is a Democrat, was gushing over President Obama’s miracle plan to save the economy by “doubling” exports. At 45 seconds into the clip below, she asks the guest:
http://www.trivisonno.com/erin-burnett-is-so-cute
Overbought Rally at Critical Juncture
September 17, 2010
Both the S&P 500 Index (SPX) and it’s tracking ETF the S&P Deposit Receipts (NYSE: SPY) have moved higher for some three weeks now, but they have reached levels that could slow, or stop, the rally.
http://timing.typepad.com/timer/2010/09/overbought-rally-at-critical-juncture.html
The NAAIM Survey of Manager Sentiment
http://www.naaim.org/naaimadsenttrend.aspx
September 17, 2010
'We Just Added and Added and Added to the Debt'
In the latest edition of The Wall Street Journal's "The Big Interview," David Stockman, Ronald Reagan's first Budget Director, doesn't pull any punches when he discusses the damage that has been -- and is still being -- done to our nation's finances:
http://www.financialarmageddon.com/
Rather than trying to pick the market direction, we feel hedged position are the most attractive now, for this market could go either way
about 11 hours ago via Facebook
http://twitter.com/optstrategist
Has the Market Topped?
http://www.cnbc.com/id/15840232/?video=1593646097&play=1
http://twitter.com/dougkass
Friday, September 17, 2010
Unconvicted
The bears will argue that almost every top in the past year started out as a sideways range such as the one we have been in since Monday. Additionally, expiration often serves to help a trend persist only to see it reverse after expiration.The bulls will argue that the market is working off the overbought reading by going sideways as too many money managers are under invested.
Both have good arguments but gun to my head I would have to side with the bears. Even if the bulls manage to push this market above strong resistance at 1130, that move would likely be a last hoorah, as the market is very extended.
Thank you to the many readers that had kind words to say about the blog this week. Thank you for reading. Have a great weekend.
http://capitalobserver.blogspot.com/
The ECRI Weekly Leading Index
September 17, 2010 weekly update
Today the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) registered negative growth for the 15th consecutive week, coming in at -9.2, a slight improvement over last week's -10.1. The index had been hovering around -10 for the previous five weeks. The latest weekly number is based on data through September 10.
The magnitude of decline from the peak in October 2009 is unprecedented in the Institute's published data back to 1967. Recently, however, the Institute has disclosed that two earlier decades of data not available to the general public contained comparable declines in WLI growth (in 1951 and 1966) when no recession followed (HT Barry Ritholtz).
http://dshort.com/articles/ECRI-Weekly-Leading-Index.html
by Sy Harding
Where's The Beef? September 17, 2010.
Remember that fast-food commercial of the 90’s, wondering where the extra beef being advertised in their competitors’ burgers was supposed to be?
I have the same problem with the economic recovery that Wall Street is touting as being back on track. Economic growth slowed from 5.0% in the December quarter, to 3.7% in the first quarter of this year, to only 1.6% in the second quarter. That rate of decline would have it in negative territory in this quarter if it continued.
http://www.streetsmartreport.com/comm3.html
09/17/2010
New Long-Term Buy Signal
by Carl Swenlin
Today another long-term buy signal was generated when the S&P 500 Index 50-EMA crossed up through the 200-EMA. Normally, we have high confidence in these signals, but, unfortunately, the long-term model has generated four, count 'em, four "long-term" signals in less than three months. On the chart below the red arrows mark the sell signals and the green arrows the buy signals. Prices have entered a trading range and, as you can see, they move just far enough in one direction to trigger a signal, then they reverse and go just far enough in the opposite direction to trigger the reverse signal.
http://blogs.decisionpoint.com/chart_spotlight/2010/09/new-long-term-buy-signal.html
