The Market Ticker

Today was interesting....

The futures were mostly flat this morning.

We came off a mixed market overseas the last two days, with some nasty surprises in Japan on economic activity. The Japanese have had a hell of a time of it in the last decade or so, getting positively hammered due to their own real estate stupidity - and mishandling of it in monetary policy.

Now, even with an essentially zero interest rate, they've been unable to get domestic consumption going again.

Shades of what the US has in store for us? Hope not, because that road comes with much pain for ordinary people - regardless of what the stock market does.

Oh, Cramer this morning? What a total fucking idiot! The credit markets "separated" from the stock market? Cramer, you're a fucking liar. You're not foolish, you're intentionally lying and you know it. This has never been the case and never will be the case, because corporations are linked to the credit markets as they need 'em in order to function!

His premise? That such a "break in the linkage" will lead to Fed Rate Cuts but won't hurt equities.

Heh Cramer? How'd that work out for you with your recommendations in early 2000? Oh, you don't want people to remember that, do you? Well how come?

ISM came in with construction down 0.4%, a big miss. Total ISM 52.9, which was down just a touch from expected at 53 (numbers over 50 suggest expansion.) Prices paid came down a touch. Construction spending was the big surprise.

Psst - No rate cuts guys. Not into these numbers. Ain't gonna happen.

And heh, CNBC is actually getting some reality today, with Cramer taking it straight up the ass. Good.

To recap their discussion (and mine for how long now?) How'd we get here?

Too loose credit for too long. Too low interest rates for too long. Greed for four years, people refi'ing to buy a Lexus, a vacation home, or a plasma TV. Toxic crap being put into balance sheets everywhere, under the cover of a bullshit "rating" bought and paid for, based on models that ignored the possibility of flat to down home prices (Home prices never go down? Is that like the Stock Market never goes down?)

All done so that the "animal spirits" on Wall Street could be sated, billion-dollar bonuses could be paid, and the usual suspects could rape the economy - and the middle class.

And now that there is some trouble with these premises, suddenly people scream for help from Uncle Fed, whining and complaining that if they don't get it "people are losing their jobs!!!!"

Well perhaps people need to lose their jobs. Perhaps the markets need to price risk appropriately. Perhaps those who inappropriately speculated need to get their asses handed to them. Perhaps those who played this fucking game need to get their heads cut off and their necks shit down.

I think its long past the point where this sort of shit ought to come home to roost and I am tired of the whining crybabies on Wall Street who want to be protected from their own hubris!

Fuck them!

Bernanke, GROW A PAIR OF BALLS AND KEEP YOUR WORD.

Not just yours, but that of the Administration as well.

NO BAIL OUTS FOR SPECULATORS, AND THAT INCLUDES GOLDMAN SACHS, BEAR STEARNS, MERRILL AND THE OTHER INVESTMENT BANKS. THEY PROFITED HANDSOMELY FROM THIS FRAUD UPON THE PUBLIC AND BAILING THEM OUT WITH PHONY RATE CUTS WILL SACRIFICE OUR ECONOMY AND ULTIMATELY OUR NATIONAL SECURITY SO A HANDFUL OF PEOPLE DON'T LOSE THEIR BONUS!

Oh, and is "all the bad news out"? Yeah, right:

"The Synapse High Grade ABS Fund was closed and some assets have already been sold off, said Mark Holman, who helped found the company last year with Graeme Anderson. The fund, whose main investor was Leipzig, Germany-based SachsenLB, didn't have any assets in U.S. subprime investments, he said."

Oh, so where were those investments? Hmmm..... you mean this isn't contained to "subprime" assets? Well well well.... thanks for the admission.

Finally, we are starting to see some more ink being spilled in the "real press" about the games investment banks have been using to hide losses. WHERE ARE THE REGULATORS?

"'Creative accounting' has made the news with increasing frequency in a series of scandals involving CEOs 'cooking the books' to keep share prices from falling. A key incentive for this criminal activity was that senior executives receive a large portion of their annual compensation in the form of stock options. This meant that if stock prices fell or stagnated, executives would not be able to cash in tens of millions of dollars.

The same motivation lies behind Merrill’s accounting maneuvers, where the compensation of executives and those responsible for structuring CDOs depends on performance, and reports of warehouse losses would have had a negative impact at year’s end, when Wall Street announces bonuses."

Shades of Enron, no? How'd that one turn out?

Stuff your crap into "off balance sheet" vehicles and pop a few more bips of cost on it, which works great - up until you can't move the crap. Then you're screwed, as all that garbage comes back on your balance sheet as a liability! Aieeee! No longer people are screaming about being bailed out..... is someone (or lots of someones) in the investment banking business insolvent?

Oh, and Rick Santelli over at the CBOT on CNBS called bullshit today on the games some of these assclown investment banks are playing. See, they're long (bigtime) contracts that pay off if the Fed lowers interest rates!

So let me see if I get this one right:

• First, we make bad bets that get in trouble and potentially cost us tens of billions.
• Then, we hide the sausage to prevent hurting our bonus, and incidentally, defrauding our shareholders by refusing to fairly value our holdings, thereby propping up our stock price.
• THEN, we put on a bunch of positions that make a shitload of money if the Fed cuts interest rates.
• AND FINALLY, AS IF CHEATING IN THE OTHER THREE FASHIONS IS NOT ENOUGH, WE THEN SCREAM LIKE A TWO YEAR OLD THAT THE ECONOMY WILL GO TO SHIT IF THE FED DOES NOT CUT RATES, WHEN IN FACT WE TOOK A BET AND ARE NOW TRYING TO GAME THE OUTCOME SO WE WILL MAKE THAT MONEY SO WE CAN TRY TO COVER UP OUR LOSS!

WHERE IS THE SEC? Isn't this sort of shit illegal? And if its not - shouldn't it be?

I think so - how about you?

This is not just about moral hazard any more. This is now about INTENTIONALLY gaming the system!

If The Fed cuts rates into this environment "moral hazard" is the LEAST of their worries.

Thanks Rick. God, the world needs more people like you. This sort of pigman crap needs to be spread far and wide so that people know what the fuck is going on here.In-Fucking-Credible.

Let's think here guys. We're just a smidge under all-time highs in the indices, far above the March lows. The Nasdaq is rallying in a 4-session pattern best since '06. Yahoo up 7%. Everything thinks "stocks are cheap." You hear it all over the street.

And we need rate cuts?

How about this postulate?

1. There is a lot of "hide the sausage" being played in the financials. Conduits that aren't moving yet are being hidden and not talked about. Other off-balance-sheet crap is being quietly moved around from hand to hand, but nowhere is there a mark-to-market to be found.
2. The pigmen (that'd be Wall Street) has a little problem - the selloff caught many of them offsides (remember "subprime is contained"?) Now they're in trouble, as folks like Legg Mason are long huge amounts of stock trading at P/Es of 100 (!) - AMZN anyone? They know what happens if those issues implode before they can unload them.
3. Mr. Retail Investor ain't buying. He saw this movie seven years ago, and knows how it ends. He got faked out the last time on the "surprise rate cut rally" too - January '01 - and he knows how that ended - he lost his ass, to the tune of 40%!
4. There are crazy amounts of paper sitting out there in "dealflow" that haven't gotten done yet - and needs to, or some banks are going to be sitting on that paper for a looong time. Like $300 billion of it. Of course those guys want "rate cuts" - to rescue their speculative LBO game! Otherwise, some of those banks are going to EAT that paper. Awwwwwwww.

And we have modestly-strong ISM numbers, decent employment numbers, and everyone on the street (including KudBlow) crowing about profit growth (which is how they justify today's stock prices as "cheap", natch)

So - where's the justification for a FedFunds cut?

Hmmmm.... as I have said before, "me thinks you doth protest too much."

We had quite the reversal going into the last half-hour, although at the last minute there was a mighty atempt to hold the cash over 1490 - which failed. Rejected is rejected. We threw a pin at 1490 and didn't hold it. Sorry, no dice; decision day is tomorrow.

And by the way, this is two days in a row that spell distribution. More on that in the video update just below.

But beyond technicals guys, think. All the major broker/dealers closed their books Friday. They know what the numbers are. They also know what the odds are of keeping a secret on Wall Street.

So - if you're one of them, do you remain net long the next two weeks? What do you think?

BTW, most of what you saw today was Yen Carry being put back on, believe it or not. That's scary; that people would actually be that stupid is likely to lead to some really ugly outcomes down the road - and likely not far down the road either.

Other than Novastar Financial (NFI) which ran into a bit of trouble and pulled a Convertable, and Home Depot, which priced its reverse Dutch Auction at the bottom of revised estimates, there was nothing big going on in the world today in terms of company-specific news.....

So with that, here's your technical view!