Market Talk / June 11 - 17

[robo]

MARKET COMMENT

June 13, 2006



(Telephone rings…….)

“H-h-hello. This is Chairman Bernanke”

“Ben old pal…Hank “The Hammer” Paulson here. You remember me from Goldman Sachs days?”

“Sure do! Hey buddy, way to go on that great earnings report”!

“Oh, in case you haven’t heard, I’m no longer at GS, but I still have some connections there. I’m over at Treasury now just getting adjusted. Ya know, I’ve gotten some feedback from some of my old cohorts that perhaps this little inflation bashing is starting to, well, get a little tiresome. But, since my buddies are ahem, on the right side of things they were thinking that now might be a good time to back off a little on the rhetoric. Whatcha think?”

“Well Hank I needed to show the Street that we’re serious about this inflation thing. You think this has been accomplished? I was watching Mad Money the other day and Cramer seems to think we still have work to do since I heard maybe his ratings are suffering.”

“The hell with Cramer! You’ve taken things about as far as they should go. By the way, some of my old pals were thinking we they might, ya know, cover our their short positions and take things the other way for awhile. I mean, enough is enough. After all we could use some injections of money, er, I mean confidence don’t you think?”

“Oh I suppose if you think it best. But, according to some academic studies I’ve done about 20 years ago, this is the time to cool things down at least according to this quantitative data and research. And…”

“Excuse me, but the hell with that okay!? Just get things turned around pronto—capice? Call Maria with the word and warm up the printing presses!”

Click.
http://www.etfdigest.com/daveDaily.php

 

[robo]

Tuesday, June 13, 2006

Playing the Blame Game
The correction continued on Tuesday as we expected it would. However, we are inching closer to a rebound rally. This next low is likely to be the end of the first big wave down, with another to come after the rebound.

The media has shifted from blaming fear of inflation for the market's correction to the Japanese central bank, which is reining in some of the money they printed to goose their economy out of depression a few years ago. Well, while there might some coincidental evidence that points that way, the point you should take to heart is that this correction is coming exactly when it should have come, so it really doesn't matter who triggered it. If it hadn't been the Japanese bank, it would have been something else. In any case, the sooner investors stop playing the blame game and start looking at all the "babies that are being thrown out with the bathwater", the sooner they can make more rational investment decisions.

One of the "babies" is Gold, which is in a bull market that has many years to run. When the Crash of 1987 occured in the stock market, how many investors said to themselves, "Wow! I can now buy stocks for $10 that were selling for nearly $100 just a few days ago. What a great bargain the market has provided for me to get aboard this bull market at cheap prices." Well, actually there were a few and they were all queued up at their local brokers' offices to Buy! Buy! Buy! But, we suspect that most of the so-called "sophisticated" investors were shell-shocked and spent the next year liquidating their portfolios as the market recovered.

For example, immediately after the Crash, you could have purchased Microsoft for 37¼, down from a high earlier in the year of 128¼. Despite Microsoft turning into a real loser for the last 7 years, your shares would still be worth over $3000 each today.

The same logic applies to Gold, which is undergoing a similiar correction in its multidecade bull market trend -- exactly analogous, in fact, to the stock market in 1987!

We have some definite ideas on just when the rebound rally in stocks will be starting. The Subscriber's Notes link below will take you there.

http://marketclues.blogspot.com/

 

[Fivetears]

L2040, C and S Funds for TSP erased all gains for the year... to date.

 

[Pilgrim]

Core up 0.3%!! We may get that "one more big push down" that Tom is talking about.

 

[The_Technician]

I was looking for a dip in the EFA and the Wilshire this morning.....we may not get it.....

AGG looks down, but I don't think it will push much of that on the F fund .....it doesn't seems to directly correlate of late......still think the F is the way to go when not in the market....

Looks like we're going thru a momentary downer and getting ready for another market surge this morning.....maybe some new news is on the horizon......

 

[sugarandspice]

Core up 0.3%!! We may get that "one more big push down" that Tom is talking about.

I think that push will come tomorrow.

 

[Pilgrim]

I think that push will come tomorrow.

Why?? I was hoping to time a short term bounce, maybe starting tomorrow. In the last hour, U.S. stocks turned down and are giving it all back. I suppose things will be clearer this afternoon, after the #%^&#$&^#&#& deadline.

 

[vectorman]

Why?? I was hoping to time a short term bounce, maybe starting tomorrow. In the last hour, U.S. stocks turned down and are giving it all back. I suppose things will be clearer this afternoon, after the #%^&#$&^#&#& deadline.

Hard to pick a bottom, but would be nice to see some selling for the next couple of hours followed by a late afternoon buy back. Of course for TSPers the noon dead line is a real handicap.

 

[vectorman]

I haven't heard anyone touch on this in a while, but could this correction be connected to the Hindenburg Omen?

 

[Fivetears]

From the initial looks of it, you took a real nice stab at the I fund. Today should hold.

I think that push will come tomorrow.

 

[Fivetears]

A Link?

I haven't heard anyone touch on this in a while, but could this correction be connected to the Hindenburg Omen?

 

[vectorman]

A Link?

This was the big topic last fall at this site, I was wondering if the correction fit into the time-frame for the Hindenburg Omen. Tom or anyone?

 

[Spaf]

http://bigpicture.typepad.com/comments/files/Hindenburg.pdf

 

[Pilgrim]

I've been watching bond yields closely the past few weeks. A few minutes ago the yield curve TOTALLY inverted, i.e the 2 year bond is now paying more than the 5 year, ten year, 30 year, and Fed funds rate. Up until today, the 30 year was at least paying more.

Anyone care to predict how much of a fuss this will cause??

 

[Fivetears]

Thank-you, Sir Spaf

http://bigpicture.typepad.com/comments/files/Hindenburg.pdf

 

[Wizard]

I've been watching bond yields closely the past few weeks. A few minutes ago the yield curve TOTALLY inverted, i.e the 2 year bond is now paying more than the 5 year, ten year, 30 year, and Fed funds rate. Up until today, the 30 year was at least paying more.

Anyone care to predict how much of a fuss this will cause??

Look at the bank stocks especially the lenders they are getting gutted.

The financial sector makes up 30% of the S&P 500 - they will drag it down.

Red close? :embarrest:

 

[The_Technician]

interesting market today....the market should've taken an immediate turn around for a few days yesterday.....but this is just opportunity for positioning as I see it.......

What is this the 3rd time we have experienced interest inversion over the last month or two......???

 

[Wizard]

If this headline was not so sad it would be funny:

Stocks Bounce After Inflation Data
AP - Stocks bounced higher Wednesday after two weeks of losses wiped out the year's gains in every major index. Investors shrugged off a higher reading on inflation that almost guaranteed another Federal Reserve interest rate increase.

:worried: Anyone that is buying at these levels are going to be unhappy little campers.

 

[FundSurfer]

Buy the rumor, sell the news. Or in this case sell the rumor, buy the news because it was bad news. Obviously I don't think todays bounce will last or carry over since I bailed, but I am hopeful.

 

[Wizard]

Buy the rumor, sell the news. Or in this case sell the rumor, buy the news because it was bad news. Obviously I don't think todays bounce will last or carry over since I bailed, but I am hopeful.

Difference between inflation from the month of May 2005 to the month of May 2006 was 4.3%.

This is understated here:

DJ Fed's Fisher: Inflation Expectations 'Unacceptable'
By Laurence Norman
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Inflation expectations have risen to "unacceptable" levels and some gauges of price pressures are also too high, Federal Reserve Bank of Dallas Richard Fisher said Wednesday.
Referring to the latest University of Michigan consumer sentiment survey, which showed a 3.2% increase in expected yearly inflation, Fisher said "over a decade, 3.2% yearly would reduce the value of a dollar to 73 cents. To me, this is more than discomforting. It is unacceptable." Fisher also referenced an inflation gage - called the Trimmed-Mean Personal Consumption Expenditure Deflator - which has been running at an annual 2.4% rate.
He said the "deflator is running at a rate that is just too corrosive to be accepted by a virtuous central banker," according to the text of his speech held at a community luncheon hosted by the San Antonio branch of his bank.
Fisher's comments come ahead of the Federal Reserve's June 28/29 policy meeting when the central bank is expected to raise rates to 5.25% from the current 5.0%. That would be the 17th consecutive rate hike.
Early Wednesday, the government reported that core consumer prices in May were up 0.3% on the month, the third straight month of above-forecast core CPI readings.
A number of Fed officials have expressed concerns in recent days that core price pressures were at or beyond the upper end of their comfort zone. Copyright © 2006 Dow Jones & Company, Inc.- - 01 08 PM EDT 06-14-06

Back for three posts and all ready go 4 bad reps. Damn I am good.

Sorry reality is a bitch and I just state it like it is.