A Stock Market Rebound Closely Linked with Economic Data Surprises

[jtabeb]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

Precisely.

And it's that illusion that "the bottom is in", the banking crisis is over, Ben and Hank and Timmy saved the day, that's being sold. And sold hard [Bernanke's green shoots, Obama's "glimmers of hope", we all know the drill]. The banks need more capital, and damned if they are going to take it from TARP [and risk those bonuses] or sell shares at $1.00.

They've thrown everything they have at this, and a bunch of things they didn't have [legally], and at the first sign of traction, voila, it's all sunshine and soda pop. There doesn't need to be a real economic recovery to game the market considerably higher...just the widespread belief, however temporary, that the economy is recovering.

Hence my hat-tip to Soros " Find the Premise that is false and bet against it"

[LargoWinch]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

Yeah right, the banking crisis is over .... All major banks are insolvent zombies and they act just as vehicles for smart money hedgies (being possesed by the plutocratic capital). If it wasn't for the direct socialist government intervention, proping them up, they would all go belly up in no time.

Reading this well crafted piece of analysis, I do not know if I should cry due to the remainder of "Aunts" left to fleece or rejoy since I may profit from this.

Besides, if the racket can bring this thing up beyond the 10,000 mark, maybe we will see another article from EJ with a pair of mens boxer on the top right corner...

[LargoWinch]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

Hence my hat-tip to Soros " Find the Premise that is false and bet against it"

Yes, but it may also be dangerous to bet against the house:

"Mark to Market": Who cares?

[jtabeb]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

Yes, but it may also be dangerous to bet against the house:

"Mark to Market": Who cares?

C'mon now, you think all the tricks in the book are going to be able to make this crisis come out smelling like a batch of roses? We all have brains here.

BTW you don't bet against the house when they have all the cards, you find a different game to play. (*Cough* Physical PM *Cough*)

To play in the systems is to expose yourself to fleecing, they have better information than you and they can change the rules to suit their needs at ANY time. (why play with the entire stack against you, seems illogical)

[cjppjc]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

Yes - I want that bet. Will you take the other side? :rolleyes:

What I'd like to know is whether the buyer for these new GS shares is already lined up -- you, me, our children and grandchildren, and all loyal tax paying Americans unto the N-th generation ... oh ... as well as all holders of our almighty Dollars and Treasuries, world wide, as their paper treasure is being diluted.

Zero Hedge at http://zerohedge.blogspot.com/2009/0...for-banks.html has already speculated, with some evidence, that the AIG unwinds of its credit default swaps (CDSs) generated substantial profit to major banks. If I understand this all correctly (?:rolleyes:?) then AIG would also have to be unwinding some short positions on these banks that it would have held to hedge those swaps. AIG's side of a swap is a bet that some bank will remain healthy, so it's corresponding hedge would short that bank. To unwind that hedge, AIG would have to buy the banks stock.

So perhaps AIG has had to buy up so much Goldman Sachs stock in this unwind that now GS is having to print more such stock.

This assumes AIG hedged their CDS.

[ThePythonicCow]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

This assumes AIG hedged their CDS.

By my (unsure) reading, that Zero Hedge post I linked to includes what is claimed to be an email from an insider who is stating that AIG was doing exactly this.

See for example the following sentence quoted from that email:

Correlation desks just back their risk out via the single names desks - the correlation desk manages the delta/gamma according to their correlation model. So correlation desks carry model risk but very little market risk.

Or this quote:

As these trades are unwound, the correlation desk needs to unwind the single name risk through the single name desks - effectively the AIG-FP unwinds caused massive single name protection buying. This caused single name credit to massively underperform equities - run a chart from say last September to current of say S&P 500 and Itraxx - credit has underperformed massively. This is largely due to AIG-FP unwinds.

However --beware-- I don't really understand this lingo, so could be horribly misunderstanding what I just quoted :eek:.

[cjppjc]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

By my (unsure) reading, that Zero Hedge post I linked to includes what is claimed to be an email from an insider who is stating that AIG was doing exactly this.

See for example the following sentence quoted from that email:Or this quote:However --beware-- I don't really understand this lingo, so could be horribly misunderstanding what I just quoted :eek:.

So they hedged poorly.:p

[ThePythonicCow]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

So they hedged poorly.:p

They hedged fine . The ultimate hedge - too big to fail.

[cjppjc]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

They hedged fine . The ultimate hedge - too big to fail.

You know what I mean.

[Supercilious]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

Precisely.

And it's that illusion that "the bottom is in", the banking crisis is over, Ben and Hank and Timmy saved the day, that's being sold. And sold hard [Bernanke's green shoots, Obama's "glimmers of hope", we all know the drill]. The banks need more capital, and damned if they are going to take it from TARP [and risk those bonuses] or sell shares at $1.00.

They've thrown everything they have at this, and a bunch of things they didn't have [legally], and at the first sign of traction, voila, it's all sunshine and soda pop. There doesn't need to be a real economic recovery to game the market considerably higher...just the widespread belief, however temporary, that the economy is recovering.

Basically you are right. Look at the market sentiment, well ... according to Goldman Sucks. ...



You see .. things are getting better :rolleyes:

The problem is that the market is so artificial and manipulated that it doesn't matter very much if the banks are hollow bankrupt entities. Mark-to-Make_Believe and Circle Jerk Finance (TM) is all what is needed to pump the markets... and if that doesn't work ... well ... there is always the taxpayer ready to pay ...

If you were telling me that the illusion cannot last longer, that would be a different situation and I'd become an uber-bear, I would dig a shelter, buy guns, ammo, cans and rice, gold and silver coins etc etc

[ThePythonicCow]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

Circle Jerk Finance (TM)

I sure hope Metalman doesn't come up with a graphic for that one :eek:.

[jtabeb]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

If you were telling me that the illusion cannot last longer, that would be a different situation and I'd become an uber-bear, I would dig a shelter, buy guns, ammo, cans and rice, gold and silver coins etc etc

Yeah, that's EXACTLY what I think, to the "T" as a matter of fact. I'm glad you specified this point in the context you provide above because That is really the question we are debating about, not any fundamental health of the economy.

(Put me in the digging holes camp)

[jtabeb]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

I sure hope Metalman doesn't come up with a graphic for that one :eek:.

Can it be worse than his "Big Balls" award

[Supercilious]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

That is really the question we are debating about, not any fundamental health of the economy.

Yup this is the real question. But I'm not in the digging hole camp. If the illusion was to collapse we should see a lot, we should see a lot of people with pitchforks not only on Wall Street but also on the Hill and in front of the White House. Not talking about the fact that the Fed would be dismantled immediately.

I don't see any clear sign of the above ... the illusion will last as long as the majority of the people will continue to believe in it.

[GRG55]

Re: A Stock Market Rebound Closely Linked with Economic Data Surprises

... the illusion will last as long as the majority of the people will continue to believe in it.

LOL. In a continent overendowed with Baby Boomers, the illusion remains their reality...only because even contemplating the implications of the alternate is so horrifying for so many.

After all we are the generation that so refuses to accept reality, or personal responsibility, we had to invent botox and Cialis, and artificial joints to replace the ones we were born with after pounding them out with our growing obesity.

Bank earnings out this week. Already this am I've heard an S&P analyst recommending the "big money center banks"...Wells and JPM being his favourites, apparently. And another dismissing the results of a recent business outlook survey because...well..."that survey was taken before the turnaround started". Situation normal...