Posted on 11/19/2002 4:36:46 PM PST by arete
Everyone remembers my excerpts from “The Maestro” earlier this year, talking about how Greenspan was hooked on market action in stocks, the dollar, and gold in the 1980’s. He was found in his office hitting the refresh button on his computer over 200 times a day, according to associates.
We know now that Al Green is an expert technician, after watching charts for nearly 40 years now.
Can you imagine how uncomfortable he must be when he’s outside the office? Unable to check the status of his Credit and Stock Market Bubbles?
I bet he has one of those ear implants.
Hooked up with a wireless Bloomberg Terminal transmitter imbedded in his skull somewhere.
That way, he can precisely determine exact breakdown areas on the charts in real time, and either dial the Gang of 22 from his BatPhone or utter some nonsense about the “resilient U.S. economy” when he is out on the road.
We all know what happened with the 775 number was broken on the S & P.
And today, the U.S. Dollar was about to drop out of the 105 zone into oblivion. And yesterday some type of right shoulder “top” was put in on the S & P and the mighty SOX. So at the precise area of the dollar breakdown, hours after the stock market was going to roll over, he issues some emergency “happy talk” about the economy. <>P Probably the usual stuff, like the “resilient consumer”, and that there is “no housing bubble”, and skyrocketing deficits are nothing to be worried about, and all the rest.
On cue, the dollar and U.S. stocks immediately went vertical. The intraday meltup in stocks wasn’t so bad, since the gap down this morning after yesterday’s reversal was pretty harsh. But the dollar virtually went straight up in the span of about 5 minutes.
Can you imagine being a currency trader, or a dollar swap hedger, attempting to keep things “balanced” when the most widely held and over-owned currency on the planet makes this type of move?
How many Black Box Derivative programs were short circuited by the Al Green Matrix today?
What about the HedgeHogs playing some kind of dollar swap arbitrage using 100:1 leverage?
How did they make out?
How many Kaopectate runs were made by the floor traders at the CBOT?
Yet another 150 point move on the Dow. Yet another huge move in the dollar. Volatility everywhere. Incredible.
But what do you expect?
The Muslim world, the Chinese, and other third world nations are busy accumulating gold and silver. Most of that population lives on an annual salary equal to the monthly daytrading commissions accumulated by “Rev Shark DePorre” at TheStreet.com. The Muslim warriors could care less about DRAM prices, the current direction of the SOX, or whether or not October was some type of “bottom”.
They just want to get off the dirt.
In the meantime, the rest of the Speculative Sphere is busy trading paper. Stocks, bonds, options, currencies, credit insurance, swaps, derivatives, and real estate partnerships.
Mountains upon mountains of bets, piled on top of one another. Each bet dependent upon the other side “making good” on his bargain. Greater fools selling to other greater fools.
The great ocean of liquidity. A world overflowing with repos, dollars, credits, debits, promises, and financial contracts. Everything swirling around in a giant circle. One hot potato tossed to the next guy.
Entire economic continents anxiously waiting for the next “uptick” or whatever, signaling a resumption of the U.S. consumer boom.
Massive global bets being placed on when the fabled “v-shaped” recovery will emerge, so the “rest of the world” can churn out more product to be consumed by Joe Sixpack here in the U.S.
The entire weight of the world, with all of its overcapacity, mountains of debt, and trillions of promises. All riding on the back of the mixed race Best Buy car stereo salesman and his ability to buy more 19” wheels for his Toyota Camry, and make those Macy’s credit card payments on those DKNY suits. All imported from China, Pakistan, India, or Indonesia.
All riding on the hopes that his appetite for the cover girl on Maxim Magazine remains high enough to continue consuming beyond his means to provide the illusion of “wealth” and “success”.
And so many financial speculators. All in a hurry to catch the big move. None willing to wait. Each trade based on some 1-minute candle reversal, using full margin. All using the same charting software. Billions of eyeballs glued to the same signals. Twenty four different stock market indexes, all trading in lockstep with each other. Everybody is watching what everybody else is doing. A giant herd of a point and clicks. All action is interrelated, like a mad herd of wildebeasts, running this way and that, 24/7.
That my friends, is the “Productivity Miracle”, which Al Green leans on incessantly to support his case.
Seems that the entire Globe assumes that the “Al Green Fix” will magically appear whenever there is a problem.
As Stephen Roach puts it:
“Bad things happen only to others, but not to the United States. The operative presumption was that the Authorities would rise to the occasion and do whatever it takes to prevent deflation from getting out of hand. Most investors were simply willing to give the benefit of the doubt to the coming policy ploy.”
“Investors are utterly convinced that policy can fix anything that ails America – from deflation and asset bubbles to asset-liability mismatches and geopolitical threats (i.e., Iraq and terrorism). Denial has yet to crack with respect to the potential interplay between the first two points – between a US-centric world and America’s post-bubble hangover. If America saves the day by achieving policy traction, then the imbalances of a US centric world can only become more precarious. Conversely, if the US continues to list toward deflation and double dip, financial markets are leaning precisely the wrong way. In my view, the consensus at our annual investor conference didn’t seem to grasp the enormity of a world in disequilibrium.”
Another view, summarized expertly by our own Color Commentator:
“Regarding his jawboning the Markets. It underlines again and again how vulnerable the 6 year old manic depressive, over medicated child is to the 'doctor' who is molesting her. If people really bothered to study Econ 101 they would see that there is zero art to it, that essentially it is a mish mash of theory and gaming that merely hopes to predict future behavior but fails abysmally time and again. Because people need to believe and need to have hope, they endorse the Emperor Wearing No Clothes scheme and surrender their own power to a Lizard operator who hasn't a clue where we are headed, not a clue.”
“Note how his policy has reversed radically from one rate interest extreme to the opposite. Note how he is constantly chasing after the stock market, the dollar and a host of other 'indicators'. Note how at all times he can use any piece of arcane jargon to justify his behavior at any given time, the list of fabrications, rationales, excuses and jerry rigging meanderings is unlimited in its scope.”
“An economist can highlight any indicator or short term development as proof of the efficacy of his wet dream. If one really studies economics one quickly realizes it is a non science, a dog food pursuit lost in a sea of confusion, pulsating numbers and gaming theories. Essentially it is glorified gambling strategy, this is inherent in its foundation and is why it has so much appeal in the media and the conventional press.”
“Al Green truly is a kind of larger than life pit boss, no more and no less. A kind of media sequined slime. Beneath appearances he is in fact a sad, silly, impotent old man. A pathetic imposter. I will never forget listening to the endless labyrinth arguments hashed out daily between competing Nobel laureates at Berkeley in my early years in college before I chose the high ground and switched majors to music and marijuana. These guys haven't a clue what they are doing, I have said it before and I will say it again. They exist only because people need to believe there is predictive order in a quantum universe and have tremendous fear of lack of control.”
As expected by the near record low 5-day ARMS readings yesterday, a selloff was due. Looks like Al Green’s jawboning didn’t produce much today, other than more losses for the leveraged speculators.
Need to watch 855 and 1350 levels closely, and see if we got more volume acceleration into the close.
Position Summary:
No changes.
We are 77% short, 7% long, 16% cash.
Oh Greenspan is much much worse than a media sequined slime.
Richard W.
Comments and opinions welcome.
Richard W.
Richard W.
I don't think that you are crazy. I have serious questions about the "need" for a war right now. I'm really starting to think that it has more to do with the economy than terrorists. I'm afraid that the mountain of paper assets may have grown out of control and we really need Saddam's oil and gold to prop it up.
Do you read the Market WrapUp posted by rohry here on FR nightly? Generally a good read and the regulars would welcome a new poster like yourself. Here's the link.
Ask rohry to put you on his ping list for alerts on the most recent posting.
Richard W.
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