Amusing premarket today.
What sparked this? A partial collapse in oil prices. Oh, and the dollar. Oh, and Gold. Don't look at Gold.
I have, for quite some time, been running in my nightly videos a working "Elliott" count on Gold that put forward a nightmare scenario for Gold Bulls, with the thesis that the Gold mania was built on a false premise which had collapsed - that is, the "Gold to $3,000!" trade was built upon a hyper-inflationary scenario that was simply not going to happen.
Why not? Mostly because hyperinflation kills the bankers. Oh, they get paid, but paid in worthless money.
Yes, they'd prefer not to be owners of foreclosed houses. But they prefer that outcome to being paid back with money that, in aggregate, buys a 12 pack of beer.
Further, the count suggested (strongly!) that Gold had in fact topped just over $1,000, and had entered a 5-wave decline, with the latest upward blip being 4 of 5.
The bad news is that 5 comes next, and appears to have begun this morning, with disastrous results for anyone who bought that blip upwards the last week or so believing that "this is the bottom."
The worse news? If my count is right 3 can't be the shortest move, which means that we're headed to at least $700 - and perhaps lower.
The worse news is that we've done exactly nothing in terms of solving the credit problems. There are still stupid amounts of bad credit (debt) out there and nothing has changed here, because there has been no substantive moves by the government to force losses to be recognized.
We're playing Japan here.
Politically, there is a bomb brewing in the markets, in that Palin's selection by John McCain has thrown a wrench into what was a neatly-oiled Democrat (and Republican) attack machine. The 'Crats reacted with an incredible amount of vitriol and just flatly-false allegations (including a bald claim by DailyKos that Sarah Palin's son Trig was really not hers) which, when proven false (oops - the supposed claimed mother is now five months pregnant, making it physically impossible for her to be Trig's mother!) the "apology" for such a scurrilous attack was yet another scurrilous attack.
The desperation has largely been misread, I believe. What's really going on here? A ripping up of the Yellow Pages-sized "playbook" of how you go about attacking the candidates by both sides, and a quick, cocktail-napkin rewrite.
Among the arguments on the Republican side is the fact that apparently Biden has told Israel to "get used to the idea of a nuclear Iran" a couple of years ago. That ought to go over real well when Iran's government has threatened to nuke Israel! On the Democrat side they've undoubtedly now got half the population of Alaska up there trying to dig up some new (or old!) dirt on Palin to attack John McCain with in an attempt to refill the hopper - they were clearly expecting someone like a Romney that would make it easy to focus on the "he's a big business lover and we're for the peeeeeooooooppppllleee!" argument. Now having that line of inquiry destroyed they are desperately searching for something new.
Now let's talk about Lehman. Once again CNBC is out pumping a claim that Korea's Development Bank is interested. But last night Korea's government once again refuted the story, but it simply refuses to die.
Never mind that KDB's CEO is the former head of Lehman's Seoul branch, and SEC regulations don't apply in Korea.
Nor does any of this chatter deal with the obvious regulatory problems; a 25% stake held by a foreign contingent? This passes regulatory muster? Hmmmmm..... I'm not so sure I'd be buying that one.... and that assumes there is anything to the rumor in the first place.
There's another big problem with such a so-called "investment" - all the pumping is lifting Lehman shares dramatically, which makes such a buy-in much more expensive! They could have bought that stake at $13 a few days ago - now, after four days of this crap straight, the price has risen to over $17, a thirty percent increase!
What's a decent ROI on this deal? Well, it better be real good now, otherwise you're instantly underwater.
And this, of course, begs the question - would anyone in their right mind let this sort of thing "slip out" and become the subject of a week's worth of chatter straight-up if a deal was actually in process? Why would anyone in their right mind pay 30% more for something than they have to?
I find it amusing beyond words that "the crowd" will chase a trade like this to the point of piling in.
Anyone remember how it worked out the last time? Citibank, or any of those other "Sovereign Wealth Fund" investments? How many are breathing air nowadays? Wilbur Ross jumping in when AHM collapsed, thinking it was the "deal of the century"?
This much is certain - when they bring Larry Kudlow out on CNBC in the morning to ask a floor trader "give me a hot stock", the hype machine is in full-on panic mode.
If you're trapped long, this is a good place to slide quietly toward the door. I made my money for the day overnight and unfortunately, as I wasn't up all night, I didn't get the opportunity to switch-hit when the pumping started, and I sure as hell am not going to chase this thing here.
If my read on the "count" in the broad markets is correct, this current move northward may be the last time you see "13" as the first two digits on the SPX for a long time.
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