Tuesday, February 27, 2007

Kass: Short Side Never Looked So Good

wow! waking up today in germany and see the intraday chart of the us markets gives us skeptics and bears reward for almost 3 month of pain. i think with yesterdays "correction" some highly leveraged people are getting really nervous. and they should.

donnerwetter. nachdem ich mir gerade mit einem auge (mit dem anderen beim langlauf) die us intradaycharts angesehen habe denke ich das wir "skeptiker" für fast 3 monate entschädigt worden sind. ich wette das momentan einige hochgehebelte marktteilnehmer nervös werden. und die haben sicher allen grund dazu.

i agree 100% with doug kass and the only difference is that i´m still long gold. i find it funny how they try to blame it on china. almost every markets should have corrected a long tome ago. the fundamentals were worsening day by day. the worse the data the higher the stocks. it´s not china, its the economy stupid!

ich stimme mit doug zu 100% überein. einziger unterschied ist das ich noch immer long im gold bin. besonders lustig wie jetzt alles auf china abgewältzt wird. fakt ist das die märkte bereits vor einigen monaten hätten korrigieren müssen. teilweise hatte man das gefühl je schlechter die news desto besser für die kurse.

just ask cramer. recession is good, subprime meltdwon is good, housingcrash is good (funny because he has never seen a bubble......) his only argument was lower rates! after a recession he prays probably for a depression. this guy is really a clown (i´m too polite to call what he really is...). here are some from cramers worst

fragt mal cramer (die us ausgabe von förtsch, frick etc). der hat sich bis gestern ne fette rezession, einen crash im subprimesektor, einen crash im immobereich (merkwürdig da er die existenz eines bubble nicht erkennen konnte). sein einziges argument war das die fed dann ja die zinsen senken muß. nach der rezession hätte er wohl für die depression gebetet. der typ hat auf cnbc die höchsten einschaltquoten. will ais höflichkeit nicht sagen was ich von solchen typen halte. unter dem link oben ein paar highlights von ihm

I am on the road traveling today, but I wanted to say that on Monday, for the first time since early 2000, I went all in on the short side. That is a reflection of how negative I am about this market.

Despite too often sounding like the boy who cried "wolf" in light of the continued market ascent, I have spent the past several weeks outlining my investment rationale and my major concerns:

heightened debt loads among consumers, the government and hedge funds; rising mortgage credit losses, which will weigh on a spent-up, not pent-up consumer; nascent inflation, seen in rising raw materials spot prices and crude lately; the ever-present specter of geopolitical tensions; and corporate profit and profit margin vulnerability.

thanks to barry ritholtz http://bigpicture.typepad.com/

Above all, investors are not being paid for risk -- and excessive valuations are not being recognized. As Robert Marcin

pointed out Monday, today's median P/E of 20.5 times trailing earnings of the Value Line composite of 3,000 leading companies compares to 14.5 times at the market's top in the fall of 2000; meanwhile, credit spreads and volatility --expressions of copious complacency -- remain at record low levels.
Today was by far the largest increase (64.22%) in the VIX since 1990http://tickersense.typepad.com/

Here are some reasons we're at such a precarious point.

1. Brokerages and money center banks are rolling over badly and remain a negative short-term market tell.

2. Hedge fund net-long invested levels (61%) are at the highest level and the AAII survey has bears at the lowest level since December 2004.

3. The daytrading in the Chinese market has begun to eerily resemble daytrading in the Nasdaq, which peaked seven years ago. (The more things change, the more they are the same, though the location changes.)

4. Virtually every hedge fund has the yen carry trade on its books, and recent signs in the currency markets indicate that the trade is getting less compelling. (If it does begin to unfold, the young hot money -- especially in the emerging markets like China -- could reverse in a nanosecond).

5. Two weeks ago, England's Times of London published a report that Countrywide Financial would be acquired by Bank of America . Again, the shares rose by nearly 10%, though they have subsequently declined by nearly 15% as subprime problems have grown. The outsize reactions to less-than-legitimate sources is typical these days. (despite the crash in the subprime cfc reached almost an all time high!/trotz subprime crash fast ein ath )

6. History shows that four-year extensions of bull markets, out of deep oversolds, often morph into disaster: 1932-36 (1937 crash); 1957-61 (1962 crash); and 1982-86 (1987 crash). We're well into four years in the current stretch.

7. Writing again on history (and technical voodoo), over the last century every decade has seen a market crash/deep correction in the sixth or seventh year of that decade.

Above all, the lifeblood of the bull market is the availability of credit, and the subprime issues (dismissed by most, not surprisingly) are putting a halt to lending that for years has disregarded creditworthiness and plain common sense. As night follows day, personal spending will plunge just at a time when most believe the consumer is invincible.

The opportunities on the short side have never been more attractive, just as the signs of a breakdown of the impressive bull market run have started to appear -- a potentially lethal combination.

can´t wait for abby ....... thanks to http://www.wallstreetfollies.com/

i wanted to add that the latest action in the private equity sector with deals like eop/blackstone and the txu/kkr has shown me that the final stage of the excess is near.

make sure you read what will hopefully mark the peak of leveraged deals http://immobilienblasen.blogspot.com/2007/02/next-biggest-buyout-everkkr-may-buy-txu.html, http://immobilienblasen.blogspot.com/2007/02/kkrgoldman-spinning-utx-deal-as-green.html, http://immobilienblasen.blogspot.com/2007/02/commercial-property-madness-numbers-on.html

mir persönlich haben die letzten transaktionen der private equity firmen mit deals wie eop, txu aber auch hochtief etc gezeigt das nach oben nicht mehr viel steigerung möglich waren. kann jedem raten den wahnsinn und evtl. historischen konditionen der deals oben nachzulesen.

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