Tuesday, July 7, 2009

Rosenberg's retest rehashed

David Rosenberg seems to have been enamored with the market's choppiness, as he came out yesterday with the call that the market is ready for a retest.

But let's first look at the background of this call. We had Joe Biden saying this:

"The figures we worked off of in January were the consensus figures and most of the blue chip indexes out there," Biden said."We misread how bad the economy was, but we are now only about 120 days into the recovery package," Biden added. More jobs will be created in coming months, he said.

The Blankfein excuse! Remember Goldman's 7 point con job of what went wrong? Point (2) was "...too many financial investors and institutions simply outsourced their risk management. Rather than undertake their own analysis, they relied on the rating agencies to do the essential work of risk analysis for them. This was true at the inception and over the period of the investment, during which time they did not heed other indicators of financial deterioration."

So Biden and Obama used Goldman's technique of "outsourcing" on the economy, just like Goldman "outsourced" their risk management by "relying" on the rating agencies (the difference being that GS shorted every sub-prime securitization that they sold to their clients).

So now we have the excuse for the next stimulus plan, but this time, it won't be outsourced to Nancy Pelosi, and thus it may actually be productive.

Rosenberg begs to differ.

He says that the correction that started at 946, (when he said it could get to 1040) is now in full force, and we should expect a 20% pullback, bonds to rally, and commodity prices to fall.

Well, bonds had their rally and are now ready to fall, oil is already almost through with its correction, and with the CFTC news, we should get rid of the last speculators who have been gunning commodities and crude, which will mildly help the consumer, but help Wall Street more.

Rosie, put on shades, when he should of put on the rose-colored glasses.

And it's not that the economic news is getting dramatically better; which it isn't, it just is grudgingly----and this news is already reflected into the current prices of stocks.

And I think Rosie's crystal balls are cracked.

Imagine that!

You may say that I'm a dreamer
But I'm not the only one


Anonymous said...

better to have cracked crystal ball than have no ball at all. you get the hint?

Palmoni said...


It's not that Rosie's viewpoints are wrong--His arguments for the US economy are sound.

The market response? That's the issue.

Anonymous said...

ah, i see, so the DJ down 100, NAZ down 25, SP down 11 is a good day for you. i see...
besides he had not only economy views - he stated the SP earnings are 50 bucks at best so the market should trade around 800. Sounds pretty close to the current market to me... Also means we are going to revisit the lows or at least 700 levels... bummer... you were so bullish above 900... wake up and pinch yourself in the butt or you will be sorely disappointed with the "market response". Have a nice trading day!

Palmoni said...

I'm not living in a bubble--I put out shorts on AMZN,and BIDU and bought TWM as a hedge..

I flipped yesterday's buys at the opening--the market is looking sloppy..I was too bullish higher.

I hedged a lot of things, but now the stock losses aren't being offset by hedges..

I think he had 13X multiple on $50..that won't happen, but cracks are everywhere...I can see why the bears are starting to salivate!

Anonymous said...

I think he had 13X multiple on $50..that won't happen
why that won't happen? because you have a crystal ball and can see the future? ah, i forgot, you do not have a crystal ball. well, i am glad you finally pinched yourself and turning bearish too... Lets see how long it takes before you have another post saying how Rosie has a broken ball or someone else is a broken clock.

Ron said...

Hey Palmoni,

Thanks for at least acknowledging that you were wrong. But you are not very different than all the other guys out there; you make mistakes just like them. Why not do a post on your own wrong calls like the ones on Rosie's broken crystal ball, etc. Anyway, it's your blog; so you can do as you like. Happy trading!!

Palmoni said...

If I do that, then I get to post my "Sell Everything NOW" draft on the June 5 unemployment report, instead of the one I posted, where I said "I wouldn't be surprised though if traders hit these bids"


That would of just made it in one post, and saved me the work of rehashing some bad calls!