Yeah it was kind of just getting it out of the way. I think another year of rallying makes a lot of sense with the public largely out of the market and with how companies are buying back stock and raising dividends now. Plus this market is still ridiculously doubted.
what do you think about margin levels right now? i saw some chart from someone (either on zero hedge or surfing yahoo finance links at work) showing margin debt and it basically went parabolic in 2000 then crashed, then parabolic and higher than before in 2007 then crashed, and is now fairly close to parabolic and already higher than 2007. people certainly seem to be getting excited. and i think in the last few weeks retail investors have started putting money in mutual funds. the last time (and only time since the 2009 low) there were retail flows into mutual funds was right before the 2011 pullback. and if the market buys any and every 2% dip for many more weeks, this 3rd big bounce from the 2009 lows will be on the edge of parabolic. not that there would be a crash, but another 100 points in short order would start to feel like AAPL at 700 or NFLX at 400 afterhours type moves (though the market can't go quite as crazy as an individual stock).
do you really see QE all the way at 0 by the end of 2014? they just barely eased into $10B out of the $85B. they'd have to do that every six weeks to get it down to 0. they don't seem all that shy about going all in with their balance sheet or continuing QE unless everything is perfect. and how much can the Fed afford to let rates go up? between the hit housing would take and the hit that every country would take trying to refinance already enormous debts, wouldn't rates going up be a pretty big problem? i guess i just can't see, from a historical perspective, how there can be a near-cataclysmic worldwide debt problem, the solution that is proposed by everybody is to add more debt, run huge deficits, and print money, and then the final page of the book says "and they all lived happily ever after." if those solutions worked, we should just do them all the time, even in "normal" circumstances. it would be the end of all our worries.
The answer is actually fairly simple: there was never a near-cataclysmic debt problem. There was a near-cataclysmic banking problem, but much of it was a paper crisis. The banks never had any real issues paying their debts as they came due - the banks that failed or threatened to fail were due to paper losses and basically hitting the equivalent of margin calls. If you buy a stock at $50 on margin and it goes to $20 due to flash crash, you're screwed because your broker will force you to sell at the low point and you're wiped out. But if you were somehow able to just hold on and let it get back to $50, everything is fine - and there's no actual crisis. In a way, that's what happened with TARP and the other bailouts. Those things bought the banks the time they otherwise wouldn't have had, and once fixed, the crisis is averted. That said, there is always still the potential for a future crisis, but it could happen next year or 15 years from now, and it could be mild or severe. But all the new debt is not immediately problematic because so much of the new wealth in the world is going to the wealthy, and they just ultimately have no real choice but to park it in government debt. Interest rates have been on a downward trend for the last 30 years - meaning more wealth is changing the government debt that's out there - and it has shown no signs of stopping. That was the case before QE as well, and will likely be the case as the economy improves and QE goes down.
it may have turned into a liquidity crisis, but it started as a solvency crisis. people were going bankrupt because they were margined (debt) up to their eyeballs trying to make money and they all insured themselves with the same company to convince themselves they weren't overmargined. eventually, bills came due that people couldn't pay. then lehman and aig collapsed and then the liquidity part took over. but we were at the end (or so it seemed) of a 25+ year credit binge and the bubble (at least in private debt) was bursting. now we've just shifted it to a public debt problem. where we still have most of the developed world with below trend growth even with exceedingly accomodative policies, all the while their debt keeps going up. you can apparently fix a private paper crisis with a public backstop, i'm not sure with what you can fix a public paper crisis. except it seems more like i went all in in my margin account and when the stock didn't go the direction i wanted, the bank said i had no more net worth, thanks for opening your account. except my rich uncle, who likes me, decided to help me out and bought enough stock to get it back to my entry point, maybe even a little higher. which is great for me, but now my rich uncle is on the hook for a lot more money in a stock that was going against him. if it keeps going up, i guess it's great. but if it doesn't, rich uncle doesn't have his own rich uncle to help him out. and while that doesn't seem so bad for me, i happen to work at the Rich Uncle Widget Company, so actually i need him to not go broke. well, i'm long TLT, so i'm pretty sure that trend is dead.
This is true of individuals - they went too far and defaulted and all that. But the system is designed to handle that, to some extent. That's a normal part of boom and bust cycles - what was unique about this cycle was the credit freeze / liquidity crisis aspect of it. I think we might be talking about different things here. I'm talking about TARP, which had basically a net cost of $0. That was basically a bridge over the liquidity crisis that cost us nothing and has relatively minor long-term consequences assuming other reforms in the financial system going forward. I think you're talking about all the federal debt accumulated since that. That certainly has a cost, but I don't think the causes there are entirely the financial crisis. In the short term, yes. But in the longer term, I think our problems are independent of the financial crisis - they are caused by technology and globalization and a variety of other things changing the relationship between profit and employment, and doing so at an incredible pace. It used to be that when companies made money, they employed more people, creating a virtuous cycle - that relationship is breaking down now. Today, you can make more and more money without employing more people. That creates new problems of a permanent lower class (thus higher government spending) and increasing inequality in distribution. Not sure what the solution is, but I think the financial crisis was just an accellerant - even without it, we were heading down this path.
I think it's likely they will be close to 0 in 12ish months. The Fed has stated they are concerned about the size of their balance sheet. Also, they are questioning the effectiveness of their bond buying programs. As a side note I hope that Congress does pass a bill to annually audit the Fed. Their balance sheet has become far too large to not be clearly audited. I'm curious what the average yield is on their MBS and treasuries and what the duration of them is. And I don't see rates going up that much. The economy is slowly improving but not exploding. Banks still aren't lending heavily and the Fed rate is still basically at 0%. People aren't on a binge to buy new homes as indicated by the meager new homes sales. On top of that home equity has actually surpassed mortgage debt for the first time in like a million years. People are staying in their homes and paying down debt. I just don't see any major catalysts to drive rates significantly higher. The American debt problems are a bit overblown. The debt held by the public is around 12.3 trillion or 73% of GDP which is very manageable. Further, the interest we are paying on our debt is small. It's around 2.4% thru 2013. http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm It would be nice to eliminate the deficit for the next decade or so in order for us to be prepared for another eventual crisis. The world debt problem isn't that bad either. I know it's not the best to only look at the world as one big piece, but I believe there is somewhere around $36 trillion in world debt ex-US to like $56 trillion gross world product ex-US. Yes, debt levels have increased, but I would expect them to moderate and decline going forward.
I like the DIV yield on PAAS and the ebitda and the cash value and I think on a long term basis is good at these levels. but all I can say today is what a bounce by Pcln and google after 1. and wtf was lnkd dumping to 207 after that report by ITG what a great entry there!
TSLA tanking after news about another fire in california. I think the NHTSA investigation results will provide the next significant bump after this, whether good or bad.
TSLA has been very interesting of late. Last Thursday to friday 140-152 this wed to fri 155 to 140 now.
sorry, when i said "people" i really meant the banks. poor way to word that. and i meant far too many were insuring themselves with aigfp to convince themselves they weren't overlevered. i agree that TARP in and of itself didn't hurt. but it was basically a "we got your back" short term funding source from our rich uncle while he ran huge deficits and printed trillions of dollars to fix the problems that were about to bring the banks down. so yes, TARP got paid back but at the cost of huge deficits and a fed balance sheet that will presumably have to be unwound at some point. it will definitely be interesting to see how income inequality plays out. people don't tend to like it when only a few have everything and a lot have almost nothing. especially when policies like QE usually help the haves have more because they own the things that are most benefitted.
Saw this article when I was reading my twitter feed http://www.bloomberg.com/news/2013-...-10-billion-steps-in-next-seven-meetings.html Fed Seen Tapering QE in $10B Steps in Next Seven Meetings The Federal Reserve will probably reduce its bond purchases in $10 billion increments over the next seven meetings before ending the program in December 2014, economists said. The median forecast in a Bloomberg survey of 41 economists matches the $10 billion reduction announced two days ago as the Fed began to unwind the unprecedented stimulus that has defined Ben S. Bernanke’s chairmanship. The Federal Open Market Committee said in a statement it will slow buying “in further measured steps at future meetings” if the economy improves as forecast. The Fed may taper its buying by about $10 billion per gathering, Bernanke said at a press conference in Washington on Dec. 18. “If we’re making progress in terms of inflation and continued job gains, then I imagine we’ll continue to do, probably at each meeting, a measured reduction” in purchases, Bernanke said, calling $10 billion in the “general range” for a “modest” reduction. If the economy slows, the Fed may “skip a meeting or two,” and if the economy accelerates it may taper a “bit faster.” Such predictable increments would extend Bernanke’s push toward greater transparency and openness at the Fed, said Dana Saporta, an economist at Credit Suisse Group AG in New York. “Doing this would avoid the drama of having to come to a consensus at each meeting,” Saporta said. “It may have been difficult enough to agree on the timing, size and composition of the first taper, so maybe no one has the appetite to do that on an ongoing basis.” Exceeded Expectations A report today showed third-quarter growth exceeded expectations. Gross domestic product climbed at a 4.1 percent annualized rate, the strongest since the final three months of 2011 and up from a previous estimate of 3.6 percent, Commerce Department figures showed in Washington. The Standard & Poor’s 500 Index rose 0.4 percent to 1,816.33 at 10:17 a.m. in New York, while the yield on the 10-year Treasury note fell 0.02 percentage point to 2.91 percent. Bernanke’s second four-year term ends Jan. 31, and Vice Chairman Janet Yellen is awaiting Senate confirmation to succeed him. The Fed coupled its decision to taper bond purchases with a stronger commitment to keep its benchmark interest rate low. Bernanke said the decision was intended to “keep the level of accommodation the same overall.” Jobless Rate Unemployment fell to a five-year low of 7 percent in November as employers added 203,000 workers to payrolls. Inflation measured by the personal consumption expenditures index was 0.7 percent in October and has remained below the Fed’s 2 percent objective for almost a year and a half. The Fed’s balance sheet rose to a record $4.01 trillion as of Dec. 18, up from $2.82 trillion when it began the third round of purchases. The FOMC began QE3, as the program is known, in September 2012 with monthly purchases of $40 billion in mortgage bonds and added $45 billion in Treasury purchases starting in December 2012. The balance sheet will expand to about $4.4 trillion by the time the program ends, according to median estimates in the survey. Economists forecast purchases in the third round eventually will reach $800 billion in mortgage bonds and $789 billion in Treasuries.
Hey robbie or any other technical traders out there- Can you give your opinion on KNDI for a shorter term position trade. Like one-three weeks out? I was getting bored here at work since I don't have a gold position at the moment, so I was running some old stock screens this weekend I used to play with when I worked in equities. Thanks.
I'm shorting TWTR. Getting long some Feb 55 puts and selling front week 65 calls and short stock. Relatively tight stop on the short stock.
twtr at $63? I was thinking WTF momentum buys to close the year. bounced off $55 since last wed. what a move.
yeah it's pretty obscene. i can't really figure out how i am going to trade this. it's still strong as hell. maybe a gap up on the half day tomorrow and sell it. it's like there is just no one around to sell it today.
