The equity markets continue to work their way higher as the government-sponsored and controlled bank stress test pageantry is in full swing. In my business we commonly refer to this type of charade as “putting lipstick on a pig”. However, the herd is content at the moment to try and make that silk purse, so we must respect the trend and trade from the long side. My advice: remain alert, we are witnessing the greater fool theory in full force. Keep one foot out the door or the market will cut off your legs when it turns.
I have heard a lot of talk about Ben Bernanke’s “green shoots” comment in regards to the economy. He points to different economic numbers that have been released over the last 6 weeks as reasons to be optimistic. I was asked about this “green shoots” theory during the interview I gave on The Financial Lifeline Radio show Monday. My question in return:
What does it take to get these “green shoots”?
Answer: A lot of manure.
Enough said about “green shoots” let’s make a reality check:
Creditors object to Chrysler deal, setting up fight
NEW YORK (AFP) – – A group of Chrysler creditors objected Monday to the struggling automaker’s bid for a quick restructuring, calling it an illegal bid by the government that violates constitutional property rights. More…
NEW YORK (AFP) – – A group of Chrysler creditors objected Monday to the struggling automaker’s bid for a quick restructuring, calling it an illegal bid by the government that violates constitutional property rights. More…
RCM Comment: The government conjures up green shoots by stepping all over the Constitution. Maybe Bernanke was right, yes something is growing, but it’s green mushrooms and they are poisonous.
Mike Morgan:
The moratorium on foreclosures lasted five months. That’s over now. And real estate brokers have been warned to expect a tsunami of properties to be listed and sold.
RCM Comment: Foreclosures are increasing in the luxury space. Prime borrowers are now losing their houses and these repossessed homes are recorded as sales in the national figures. So, now you have a “green shoot” reported by the press as “increasing home sales”. Then (to add a little more manure onto the “green shoot”) the press reports the increase in median home sales prices as a positive. Of course, the increase comes from the repossessed luxury homes that are valued at higher prices, but no one in the press bothers to mention that little annoying detail.
