Friday, June 26, 2009

Secular winners ---The "new" window dressing

Let's take a look at some events the last few days. The above chart is the mysterious buyer of the futures a couple nights back, covered by Denninger here, and ZH.

Karl said:

"That's last night.

Over 12,000 contracts traded in two five-minute periods, over 10,000 right up on the time of that spike.

There was no news of any sort related to the US markets on the wire last night. Zero. None. I and many others were wondering what the heck caused that.

This morning, the buying began in earnest at 8:30 Central, and then again at 10:00 Eastern - one hour in front of the "announcement" again on heavy volume.

Where is the SEC?"

The Fed, however, has a new press release Thursday. Anyone think someone had wind of that?

We know that Goldman has significantly ramped their principal business.

And we know that in Wednesday's research, Goldman advised us to buy the secular winners.

Goldman Research 6/25

Notice what Goldman has to say on page 2 of their research (page 5 scribd) under Americas: Energy: "Pullback provides an opportunity to add to secular winners."

And anyone that trades with Goldman, knows that is their latest buzzword. It's not "window dressing" it's just "secular winners!" Buy 'em!

After all, doesn't Goldman need to unload some paper?

And doesn't Goldman want our market higher, if you own all this paper?

And that's why it can't go down. Because the equity market needs the psychological boost, almost more than the economy does! After all did anyone really read Greenspan's article in the FT today? People thought his article was about inflation. Was it? I think not.

"Global stock markets have rallied so far and so fast this year that it is difficult to imagine they can proceed further at anywhere near their recent pace. But what if, after a correction, they proceeded inexorably higher? That would bolster global balance sheets with large amounts of new equity value and supply banks with the new capital that would allow them to step up lending. Higher share prices would also lead to increased household wealth and spending, and the rising market value of existing corporate assets (proxied by stock prices) relative to their replacement cost would spur new capital investment. Leverage would be materially reduced. A prolonged recovery in global equity prices would thus assist in the lifting of the deflationary forces that still hover over the global economy.

I recognise that I accord a much larger economic role to equity prices than is the conventional wisdom. From my perspective, they are not merely an important leading indicator of global business activity, but a major contributor to that activity, operating primarily through balance sheets.

Stock prices, to be sure, are affected by the usual economic gyrations. But, as I noted in March, a significant driver of stock prices is the innate human propensity to swing between euphoria and fear, which, while heavily influenced by economic events, has a life of its own."

And that's the justification, to rig the market, with the imprimatur of the former Chairman of the Federal Reserve.

Now as everyone knows, I'm out there with my bullishness.

But those on inside, are working to keep it that away.

Even if they need to manipulate the markets, and trade on information no one else has!


Anonymous said...

1 day up after 50 points down in SP and Dodos are running wildly bullish... did not this happen already but 30 points higher?

palmoni said...

It did!

But I do see your points. Everything is so spun in the bulls direction--$1 billion in the clash for clunkers will add 1% to Q3 GDP. It would have to make a bear puke.

If $1 billion will add 1%, why not throw all the stimulus $ in places it will make a difference?

It would be easier to be bearish though. You could rail against the Government, Goldman, the Fed, the banks, and every other flim flam program designed to prop up the flim flams in power.

But then, they'd take your money.

However, I would trade it all, if they could take the crooks from Goldman down!

Anonymous said...

You used to be extremely bullish and ridicule ZH about their bearish overtones, just a few weeks back. Now, it seems you are questioning the "establishment" and siding with ZH. It seems you too are realizing that this game is rigged. No?

palmoni said...

I think the economy will turn, so stock prices will be higher.

But the game is "rigged" on the long side, until that happens.

My annoyance is that those on the inside know it--and they play by those rules--rules that other people don't have. And they are aided and abetted by the PTB.

I did ridicule ZH for their bearish overtones, because I thought Pollyanna was in the Government's corner.

But it would be a mistake to ridicule the quality of their work--we just come to different conclusions.

I read Wall Street research every morning--that is supposed to be cutting edge from highly paid sources. 15 minutes for 15 firms.

Big deal.

I click on ZH 6 or 7 times a day---and always find something with more bite!

Anonymous said...

Thanks for responding and being honest about it. Honesty is a scrace instrument nowadays. Yes, this too shall pass and we will overcome this. But, until, the corruption is purged, there is no hope for us.

I found ZH quite by accident. I used to be in the bullish camp, even just a few months ago. And, after listening to the dim wits who call themselves economists/market analyst and biuying into their crappy advice of 'buying into any dips', I found myself with a significant drawdown in my portfolio. It was then that I started looking for alternative point of views and stumbled across ZH. And since then, I have been hooked. I am not a perma-bull or a perma-bear anymore, I have just become a perma-realist.

In my opinion, the market is always rigged. When you have something like a dark pool, where big guys can onload and offload huge chunks of shares without affecting the price of the security in the open market, what chances do we littly guys have. Zero, zilch, nada. Forget fundamental analysis/technical analysis, the market has become a casino, and house always will have the upper hand. And we all know who runs the house.