wndysrf Posted June 18, 2004 Report Share Posted June 18, 2004 Johnny Law II has been spinning plates now for months. It?s a delicate balancing act. Kind of like dating that psycho girl with the hot body and the manic/depressive mood swings. She?s so hot, you don?t want to chase her off. No way you will ever find another with a body like that. But at the same time, she?s such a nutcase, you don?t want her to think there is any chance of marrying her. So she must be stiff armed occasionally and reminded that you are ?just dating?. So the relationship continues to be managed with ?words?, to keep her mood hanging in the balance. The words must be carefully chosen, inserted at key critical junctures. When she?s pulling away from you and is in danger of falling into a deep depression: ?You look great in that outfit? ?You?re breasts look larger than normal? ?You are within a hairsbreadth of landing that big casting call? But when she starts getting too close, and drags you into Pottery Barn to start picking out new furniture.: ?But I?m busy with my career, and I need more time? ?My goal is to move to Vegas for 6 months, start flipping houses for a living, then I can consider settling down in L.A. after I?m rich? ?Maybe I?ll take a sabbatical and go surfing in Indonesia for awhile? The goal is to keep the plate spinning, keeping the relationship going as long as possible without making any commitments. Today?s leveraged financial markets are no different than a manic/depressive psycho chick. She must be micro managed delicately, to avoid lurching over the cliff and into the abyss. The Fed Chairman has become a master at steering trillion dollar financial markets with ?words?, which send the proper message to 9000 HedgeFunds who instinctively know how to ?read the message? and punch in the necessary keystrokes, led by the infamous Black Box labeled ?990N?. First, he says ?there is no inflation?, interest rate moves will be ?measured?. Then the 9000 HedgeFunds get ?the signal? and immediately buy stocks, sending the world financial markets on a Meltup. Then the same canned market commentary comes out of Bloomberg, proving how all world economies and financial markets are joined at the hip, operating in lockstep. ?The Dow Jones Average was up 240 points, on speculation that lower rates will spur economic growth, and improve corporate profits.? ?Japanese stocks surged higher, led by a 6% advance by Advantest, on speculation that easier monetary policy will increase IT spending in the country?s largest export market.? ?European stocks rose higher, led by ASML, on speculation that inflation is under control, and economic growth will increase corporate profits.? Unfortunately, an unexpected trading glitch by a 27-year old trader trying to manage $4.9 trillion of Derivative Hedges at the Fannie Mae Trading Desk sends the bond market dive bombing out of control, sending rates spiraling upward and the homebuilders come under immediate pressure out of concern of inflation. So Johnny Law II and his henchman come out the next day and say: ?Fed will act aggressively to control inflation? ?Fed is ready to hike rates sooner, if necessary? ?Treasury Department is not behind the curve in controlling inflation? The next day, the 9000 HedgeFunds reverse their positions and go short. The 27-year old FNM HedgeBook runners also reverse their positions. Bloomberg: ?The Dow fell by 175 points today, led by a 5% decline in the SOX, on speculation that higher interest rates will slow the economy, and IT spending will be delayed until the second half.? ?The Nikkei was down 225 points, led by a 7% fall in bank stocks, on speculation that the Fed?s willingness to raise rates in the U.S. will dampen loan demand from exporters.? ?The DAX plummeted by 85 points, led by the automakers, on speculation that higher interest rates would slow down consumer spending in the U.S., reducing demand for luxury cars.? Just the usual balancing act between rescuing stocks one day, then bonds the next day. Then a couple of pipelines blow up, sending energy futures up 5%. Now both stocks and bonds could be under pressure at the same time. A new change in strategy: ?Fed says inflation is benign, despite high energy prices? ?Fed says increasing supplies to reduce crude prices to $30 per barrel? ?Fed says consumers are resilient, higher gasoline prices unlikely to slow spending.? Crude futures immediately plunge, and another stock market rally is launched, and bonds are held in check. The 9000 HedgeFunds switch positions again, and go long stocks. The next day, the Trade Deficit figures are announced. The dollar spirals out of control, which is always bullish for stocks. The HedgeFunds double down and buy even more stocks, this time with Credit Lines. Even further emboldened that any and all market corrections will be Stick Saved. More words to Stick Save the Dollar, another wobbling plate: ?Fed says Asian Central Banks unlikely to dump dollars? ?Fed says New Macro Model says deficits don?t matter? ?Fed says dollar-denominated Structured Notes are the safest and most sound investments? ?Treasury secretary supports a strong dollar policy? Now Johnny Law is fumbling with 3 spinning plates: Stocks, Bonds, and the Dollar. Then the day after that, fears of an overextended real estate market appear in the newspapers. Homebuilder stocks are pressured, and a crisis of confidence in real estate prices emerges. Greenspan: ?There is no housing bubble? Broaddous: ?Demand exceeds supply in housing, demographic trends are favorable? Poole: ?Wages will catch up with productivity, consumers to get raises to meet higher debt payments? Bernanke: ?Interest rates to remain favorable for housing, monetization remains an option for the Fed.? Snow: ?The Treasury Department supports first time homebuyers, new assistance programs to be announced soon.? Now another plate added: Real Estate. 4 Spinning Plates now.... ???.. You get the picture. More and more plates every day. Take your hand off one, and another starts wobbling. But nothing that a few "words" can't correct. The entire Global Speculative Sphere is now hanging in the balance. No longer looking at price charts, trends, liquidity flows, or other supply and demand data. Anybody and everybody is now on FedWatch. Waiting and watching to see what the next ?words? will be uttered out of the Fed Bullhorners and the Treasury Department Loudspeakers. It has gotten to the point that Yearnings Guidance from Johnny Chambers or Michael Dell don?t even matter any more. Trillion Head Herds of Wildebeasts, launching this way and that, based on the Official Jawboning. What will it take to send the Trillion Head Herd of Wildebeasts over the cliff? The U.S. today approved proposed tariffs on Chinese furniture imports. All The Bank of China has to do is make a public announcement: ?Mr. Greenspan has been lying about the inflation data? ?We believe that he has fostered unprecedented levels of financial speculation and reckless central banking practices? ?Therefore, we no longer support the U.S. Dollar? After that, there are no more ?words? uttered by the Fed which will have any credibility. Would be funny if they planned the announcement over the weekend, while the White Shoe Paper Speculators were in the midst of their Hamptons orgies with the Russian Escorts, only to find the dollar gapped down into the Airball Zone, and stock futures down 7% Monday morning. Would 990N have the nerve to buy the open?? How many plates are still spinning now?? Link to comment Share on other sites More sharing options...
Sudaca Posted June 18, 2004 Report Share Posted June 18, 2004 Big volume breakout on PCU, up 12.5% today alone..... what a ride! Link to comment Share on other sites More sharing options...
machinehead Posted June 18, 2004 Report Share Posted June 18, 2004 VXN (CBOE's Nasdaq volatility index) went below 20 today, for the first time ever (though it only goes back to 2001). Looks like a bearish divergence, with the NDX index more than 5% below its Jan. 2004 high. Too many hopers, not enough screamers ... :cry: Link to comment Share on other sites More sharing options...
Ags Nightmare Posted June 18, 2004 Report Share Posted June 18, 2004 Nice work Wndy....you just described perfectly the current stae of our Amway market,,,,when substance and reality no longer matter...revert to words cause thats all we got left to stay where we are at let alone rise,,, Ag Link to comment Share on other sites More sharing options...
wndysrf Posted June 18, 2004 Author Report Share Posted June 18, 2004 Why buy any downside protection when 990N is always right around the corner with fresh buy tickets?? Link to comment Share on other sites More sharing options...
Guest Posted June 18, 2004 Report Share Posted June 18, 2004 whoops! Link to comment Share on other sites More sharing options...
Sudaca Posted June 18, 2004 Report Share Posted June 18, 2004 Hall of famer, SHorty!! Link to comment Share on other sites More sharing options...
Ags Nightmare Posted June 18, 2004 Report Share Posted June 18, 2004 Thats a keeper shorty...excellent.. Ag Link to comment Share on other sites More sharing options...
Tchaikofsky Posted June 18, 2004 Report Share Posted June 18, 2004 Close: The market opened lower, reversed course for a respectable rally, and ended near the mid-point of its daily range in what was a fairly choppy session - no doubt the byproduct of the quadruple witching options expiration... The event, however, did not lead to heavier than average volume totals (in fact, volume was light - just as it has been for the past 5 weeks) or strong breadth figures... Conviction on the part of buyers and sellers alike was fairly poor, although the indices did end with modest gains... Biotech, airline, material, industrial, and areas of technology (networking, computer) kept the broader market above water, and offset some selling in post secondary education, retail, and energy... The latter occurred despite the climb in the price of crude oil, to $39/bbl, in response to concerns about Mideast violence on the heels of the June 30 Iraqi government 'handover' deadline... ================================ WTF happened with Mister Softee today? Did they: Discover a cure for cancer? Invent a new homeland security weapon? Create a financial division? Link to comment Share on other sites More sharing options...
Slothrop Posted June 18, 2004 Report Share Posted June 18, 2004 Sadly, XAU prints a shooting star style stick. Last time we had one of these marked a top. Link to comment Share on other sites More sharing options...
Goldmember Posted June 18, 2004 Report Share Posted June 18, 2004 Have a good weekend y'all.... Link to comment Share on other sites More sharing options...
Yaryman Posted June 18, 2004 Report Share Posted June 18, 2004 Real Estate where I rent. Click on the link for homes under $500,000 No "cheap" homes, yet the 2700 sq foot home down the street going for $1.05 million ain't moving. Link to comment Share on other sites More sharing options...
wndysrf Posted June 18, 2004 Author Report Share Posted June 18, 2004 5:49 Al-Qaida head in Saudi Arabia killed - news reports Dow up 375 points Monday Nasdaq up 88 points Crude down $4 Gold down $21 Dollar up 250 pips Link to comment Share on other sites More sharing options...
Sudaca Posted June 18, 2004 Report Share Posted June 18, 2004 Mark, check PM Link to comment Share on other sites More sharing options...
Drano Posted June 18, 2004 Report Share Posted June 18, 2004 Have a good weekend y'all.... How can I do that? I think I burned my retinas out on that chart! Link to comment Share on other sites More sharing options...
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