The Credit Crisis Financial Stocks Short Journal

There is a clear division of labor here: Its Jim's job to write and give me ideas. its my job to decide what and when to buy and sell and to hopefully bank some coin.

My original post that started this inane exchange was just to throw out another thought on the future by someone who ought to be worth listening to.
 
9.7% UR.
This should lead to a new round of sanity by forecasters as they stop being pussies and come out of the "10%" closet. 10.5% is probably conservative
 
Labor force only rose 73K. So this UR move is real people losing real jobs. Hourly earnings went up on minimum wage hikes. Hours worked is flat, hours is supposed to be a leading indicator for the labor market, and its just one tick from the all-time low. Looks like a pretty bad report
 
Quote from ralph00:

There is a clear division of labor here: Its Jim's job to write and give me ideas. its my job to decide what and when to buy and sell and to hopefully bank some coin.
More...

Heres the thing I have no problem whatever with going long garbage as a long the thesis is based on short-term trading. The reason I dont do it its because I just see as the odds being pretty bad to do that at these levels

If I try to play the otherside I will be saying I can predict when huge rallies in secular bear markets during a financial crisis have 'more room' to go, if I could do that I would be probably living in monaco right now and hold the title of one of the top market timers in the world. I bet all the folks who 'held on tight' during the sell off leading to the Whitney Bottom(Jun to July) because they 'knew' it was going higher learned something that will cost huge money over the next 10 years. They are essentially saying they can beat the dealer in Blackjack holding a 9 with the dealer showing a 10. They cant realize they got lucky and this will lead to mistakes, overconfidence will hurt them just like it hurt me
 
Rosenberg todays letter give a pretty good idea of the current level of slack in the labor market. What the market is thinking when it implies an almost 2% libor through eurodollar futures for Dec 2010 is beyond me. Same thing with financial stocks such as JPM trading at 15x forward estimates

Heres an article that makes hugely confident that I made the right decision of pilling up on eurodollar calls(I might have been too consertive by only being long with 10% of my networth though)
http://online.wsj.com/article/SB124571683373339299.html#articleTabs=article

highlight quote, Bernanke 2003
"Because of the rise in growth, we're going to see even more op-ed articles, wire stories, and editorials opining that the Fed needs to tighten soon to avoid a repeat of 1980s-style inflation. The Wall Street Journal today has an editorial along those lines.

I believe these critics are not particularly well informed and that, as a Committee, we should continue to remain patient and not choke off growth unnecessarily"
 
And gold marches on, perhaps the Kovner theory deserves more attention.

This article from hussman funds show how weak the US labor markets really are
http://www.hussmanfunds.com/rsi/jobrecovery.htm

Highlights
-If the US recession is really over(And I have my doubts since the service sector is said to be contracting). This is the weakest job recovery on record
-The current average duration of unemployment is of almost 25 weeks, the largest on record. Sits far above the typical duration of about 14 weeks.
-Temporary hires is still on decline, this is supposed to be a leading indicator for future NFP data

This probably means more price deflation. more QE, low rates. Which should help both the yellow metal(although it will probably be a bumpy ride as commodities are due to a pullback) and short-term interest rates bets
 
Daal,

Thanks for your post and the summary of the Hussman article.

Just wondering what is Kovner theory? I did a Google search and I couldn't find anything related to finance.




Quote from Daal:

And gold marches on, perhaps the Kovner theory deserves more attention.

This article from hussman funds show how weak the US labor markets really are
http://www.hussmanfunds.com/rsi/jobrecovery.htm
More...
 
Quote from m22au:

Daal,

Thanks for your post and the summary of the Hussman article.

Just wondering what is Kovner theory? I did a Google search and I couldn't find anything related to finance.
More...

Check out Bruve Kovner interview on Market Wizards 1. He talks about breakouts for 'no reason', although the USD has responsible for the $1000 and on march. Gold went from $950 or so to $990 for no reason, broke out of a triangle type pattern
 
Libor continues to plunge
http://www.bloomberg.com/apps/quote?ticker=US0003M:IND

We could be seeing this time 'being different'. I'm still a noob to libor but it seems that the reason they tended to have a spread of 11bps to fed funds(OIS) before the crisis was simply because there is less USD liquidity in europe than in the US banking system. Now that central banks have opened their printing press globally and the ECB is providing plenty of USD liquidity there PLUS the big banks have been backstoped and will not fail it seems possible that libor could almost be equal to OIS(3m expected fed funds rate). If thats the case and is sustainable this will add a further pop of 10bps or so to eurodollar futures and calls
 
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