People "still" just don't get it ?!?!?
- "It's about Valuations - stupid"...
Cisco breaks the Bear-mark of 50 today... Daimler Chrysler closed 7 plants & laid off 20,000 workers today...we just saw yet another round of Market Caps getting "halved" overnight in tech company after tech company.
Wal Mart & Home Depot and retailer after retailer have warned that this Xmas Retail Season will "not" be one to write home about. Will this Xmas be the deathknell for E-tailing the the nail in Amazon.coms coffin ? - will Amazon's collapse be the watershed event for the entire iNet mania ?
Tech companies are reeling in forward guidance on both earnings & revenue growth; Cap Ex is getting slashed - more expectations for lower guidance given lowered GDP numbers.
Company after company cites the strong dollar -weak Euro as reason for their earnings & revenue misses.
The Airlines; basically have their Oil hedges coming off in the next quarter - if Oil holds; they'll get decimated here.
We have NOT accepted the inflationary pressures of Oil here and the real bleed thru is still coming; let this winter be normal,let alone harsh & the Soft Landing is virtually guaranteed to be anything but...
Last week Merrill's Chief Quant said Tech's earnings are de-accelerating & said the profit (growth) cycle is cyclical and that tech valuations still need to come down dramatically & will...
Today Dain Rauscher's Chief Market analyst basically said Tech is dead ...
We ignored the refusal of Buffet to participate in this "new paradigm bubble", we ignored Julian Robertson's exit; we ignored Soros & Druckenmiller throwing in the towel, ignored Shopkorns exodus and now the legendary fund manager Jeff Vinik closes down his hedge fund and walks away from the market.
... "denial" should be our 51st state !
("state" of mind.... )
This is not the perrennial Bear Gloom & Doom take; quite the contrary - this is Def Com 5 for the "Pigs get fat, but Hogs get slaughtered" mantra... it's last call & the party is over.... greed was good - but it's not good to perpetutity....
We have an intersting dislocation to reality in the US Dollar; the US account deficit is at levels that fundamentally require the exodus from a currency; but yet King Dollar remains at levels that are not just fundametnally opposed to our current account deficit - but; also are at levels that are creating quite apparent stress fractures in numerous Global Economies & Currencies.
We just had the greatest & most reckless expansion of credit in US history. We just had the greatest liquidity infusion in Global History. We "still" have near alltime historic highs in margin leverage/inflation in the US Markets - along with alltime high levels of foreign investment in US Stocks, Bonds & Debt... hello people ?!!?
The "Bond King" Bill Gross of Pimco just warned us, we've read about the junk bond crisis, Greenspan is pushing for new Bank Failure reform & has not too subtley addressed the derivative issue on more than one occassion of late & warned the markets "not" to expect another LTC type of bail out.
Greenspan will NOT tolerate this level of margin leverage remaining in the markets - that alone is a wake up call & fundametnally assures that we've not even come close to a bottom in the NAZ.
George Coles link to the ariticle on the problems the US dollar is causing had some great points:
- "folks increasingly are paying attention to the stubbornly robust U.S. currency. The reason is growing recognition that the dollar's strengthening trend has gone about as far as it can without causing major problems in the U.S. and global economies. Also causing
nail-biting is what a sudden dollar reversal would mean for markets and economic stability from New York to Sydney."
- "it's hard to ignore the fact that the dollar's strength is becoming a problem as well. Corporate America is increasingly feeling the pain, not only from the dollar's strength -- which makes U.S. exports less competitive -- but from the soft euro. U.S. companies with European operations are seeing profits dwindle as they're translated back into dollars."
- "The euro may be grabbing the headlines, but it's hardly the only currency on the defensive nowadays. The
South African rand recently hit a record low against the greenback, as did the Philippine peso. The Thai baht reached a 28-month low versus the dollar, returning to levels seen during the Asian financial crisis. Singapore's dollar also plunged, as did the Brazilian real and the Chilean peso. Brady bonds have gotten creamed. Finally, the Korean won is at its lowest level in six months"
- "Yet there comes a point where the dollar's advance ceases to benefit anyone and takes a greater share of global capital than it deserves. In Washington, there's much soul-searching about whether the dollar already has reached that point and what to do about it. Ray Dalio of Bridgewater Associates notes that the current squeeze on global dollar liquidity is similar to ones that involved
the yen in 1994 and '95 and a variety of emerging-market currencies in 1997 and '98. The current squeeze is driving up the dollar and hurting stock markets everywhere."
- "Indeed, this sort of crisis might be reemerging because the dollar is causing tensions in economies that compete for liquidity, carry a considerable amount of dollar-denominated debt and are big net importers of oil. And economic problems that pose systemic risk to the global economy will only exacerbate and spread that process."
- "If the stock market cracks or capital flees the U.S., it may take not just the Fed, but the International Monetary Fund as well to save the day."
...BUT ! - hasn't Greenspan continually said the Fed coudln't / wouldn't "Save the Day"... and the IMF doesn't have enough fingers to plug even the Argentine-Brazil/SA dikes; yet alone anything of Global Proportions... and we ask "what" crisis could trigger the bank/derivative collapse that Greenspan is trying to push reforms thru on ?
Argentina, Brazil - So America
Korea & their relationship to Japan, the Nikkei
The Euro
The US junk bond market; unsustainable US Dollar - Account Deficit relationship
.... and we wonder why Vinik just walked ?
Merrill's Chief Quant last friday basically said Tech Earnings were going to continue to "come in" and that we just exited the up cycle to Tech Growth and that tech is indeed "cyclical"... very somber comments on Tech.
Today; Dain Rauschers Quant appeared and said "tech is dead"... againt he over-owned concept & valuation and cap ex concerns, higher energy costs, euro pressures etc. ...same song ~
The ESF has blatantly kept this market afloat going into the US Presidential Elections... post election; the ESF returns to only "stabilizing" free falls & supplying liquidity for the mass exodus that is coming imho...
This is the first year in a decade where mutual fund investors will lose money YTD. Given the still near record level of margin leverage in this market & the over-owned tech exposure & the over leveraged individual company & sub sector exposure by Institutional Tech Investors; once mutual fund redemptions start; once Greenspan begins to suck out this unacceptable level of margin leverage from this market - the Institutional selling in these over-owned & over-exposed sectors are going to finally bring a very real type of capitualtion blow off to the NAZ and it won't be pretty...
We've never had so many obvious early warning signs, so many icons exit, so many anomalies that can not be sustained.
This is truly going to be the mother of all Hog Slaughters ...ie: Pigs get fat, but hogs get slaughtered...
... the writing's on the wall & all the early warning signals are flashing.
Don't be bacon ~
- short the bubble into all rallies
- get fat, but don't get greedy on "one last Oil run"
- continually move/rotate into Gold/XAU stocks on weakness |
