Short term trades in the stock market •$$$$$•

[CascadeFarmer]

so lets say there is a deal, just a bullshit temp one obviously with no solid foundation, without the mention of QE3 being guaranteed as of right now (even though we know it'll need to be done to keep this shipwreck afloat) how long do you think the markets would rally?

That's hard to say. You just need to watch the markets and they'll tell you. The background noise is good entertainment. Supposedly the US will cut the extended unemployment benefits January 1 and that take out like 35+ billion out of the economy immediately. As all the stimulus winds down the economic 'recovery' will have to take over. I talk to businesses owners and others and they keep saying it's very tough out there.

Just read they shot down the deal in the Senate. At this point just hoping they don't get anything done until after the open on Monday. I'm OK but my profits would most likely disappear if they get it done today. I got my voodoo doll out...lol!

 

[SpasticGramps]

I think Gramps just wants to be proactive with some of the newer faces in the thread because political discussions online have a reputation for blowing up quick and we don't wanna have all this great info get locked.

That's all I was saying. You can talk about the effect "the debacle" is going to have on the markets without dropping politician's names. Doing so guarantees the thread will get closed. The puppets are only doing what the banks tell them to do anyway so they are irrelevant to the discussion. Try not to spook the herd.

so lets say there is a deal, just a bullshit temp one obviously with no solid foundation, without the mention of QE3 being guaranteed as of right now (even though we know it'll need to be done to keep this shipwreck afloat) how long do you think the markets would rally?

The Bernanke Put guarantees that the stock market will never go down (until it does). Many people have been slaughtered trying to short this market. It rallies on bad news and explodes on any hopium induced headline.

The economic numbers coming out right now are totally abysmal though. Once a "double dip" is confirmed by the herd of economists I bet we sell off hard just time for Jackson Hole and the announcement for QE3. Then we go to the moon for a while. Wash rinse and repeat until QEx fails to have any affect on the market. This is when the Bernanke Put will fail along with our totally debauched currency. I wouldn't be surprised if we passed the all time high of 14,164 Dow before it all finally implodes. Addicts always get the highest they've ever been right before they die.

 

[SpasticGramps]

Key Macro Catalysts In The Upcoming Week

Goldman's Themistoklis Fiotakis summarizes the main events in the upcoming week, which will likely see a very short term bout of buying frenzy on the debt ceiling deal, following by the realization that America can kiss fiscal stimulus goodbye and that real GDP is set to contract over the next quarter to a negative print as the last benefits from QE2 vanish and are replaced by nothing. Also, with the upcoming weekly earning focusing on financial companies as announced yesterday, there will be little help from the only bright spot in the so-called economy, especially with the flashing red sign of the July Nonfarm Payroll Print (consensus +95K, Goldman +50K, even LaSagna +50K) due on Friday. The half life of Europe's second bailout was under 5 days. We give America about the same.

From Goldman:

Three key themes dominated price action last week: First, the US debt ceiling debate emerged at the forefront of market attention as the Senate and the House of Representatives were not able to reach a solution to raise the US debt ceiling and commit to a credible plan for budget cuts. Uncertainty remains in place as we approach August 2nd, a date that has been suggested as the deadline by which US legislators need to reach a compromise. That said, there may be some room for negotiations to continue for a few more days after that.

Second, rising Italian yields reinforced underlying market nervousness over peripheral European bond market trends. 10y BTP yields rose by 52bp last week on the back of market talk about the risk of a change in the leadership of the Ministry of Finance and the market realization that the EFSF would not be in place to intervene in bond markets until the amendments on its functions are voted for in local parliaments. Risk appetite will be the most important driver of Italian yields in the days ahead, though it would be interesting to watch the Italian GDP release later this week.

Third, US data came in on balance on the soft side with US GDP, the Chicago PMI, and Durable Goods Orders all surprising to the downside. Bright spots were the ongoing strength in German retail spending and labour markets, as well as a positive surprise in initial claims. The coming week will be key for our overall view that part of the soft patch in US data may improve in the weeks ahead; we will be watching the ISM release on Monday closely and Friday’s payrolls print as well.
Asset markets have been caught in the cross-currents, with bonds being clear beneficiaries of risk aversion flows. US 10y treasury yields declined by more than 10bp last week and we were stopped out of our short recommendation in 5-year USTs. With yields at very low levels, important data releases ahead, and the US debt ceiling debate becoming even more central, this week will likely see volatile moves there.

The dollar has traded generally weak across the board with brief moments of respite due to risk aversion flows. EUR, however, has not gained much ground, also held back by ongoing Eurozone woes. Dollar reaction to the debt ceiling debate will be crucial to watch: the possibility of unexpected dollar strength due to risk aversion should not be excluded.

Equities have been the clear loser from the current trend, with the SPX declining by more than 55 points on the week. Under the surface of the index, cyclical stocks were hit and we were stopped out of our recommended long Wavefronts Growth basket positions with a loss.

Finally, last week saw the intensification of TRY pressures and the response of the central bank with the cancellation of dollar purchases and the reduction in reserve requirements for US dollars. After reaching highs of 2.4993, EURTRY pressures eased and we were trading close to 2.4108 late on Friday. We continue to recommend long EURTRY positions until we see a meaningful turn of the CBRT more firmly towards a hawkish bias. We have, however, recommended raising our stops to 2.36, above our initial target of 2.35. Inflation data this week will be the next key number to watch as will the market reaction to the news of senior army resignations over the weekend.

 

[TNTBudSticker]

Debt is settled.... 2.4 Trillion and at another time 12 congressional members and senators will vote I guess on another debt and revenue increase.Thought it would be 900 billion now and figure out the other 900 billion.

2.4 Trillion.I smell money from here ;-) Gold dropped a tad too ;-)

 

[Dudesome]

Horraaaaay I am dancing with DA ROCKWIDER Method Man and Redman right now! WOOOOOOOOOOOHOOOOOOOOOOOOOOOOO! Horraaaay

Oh yeah baby! OH YEAH!

 

[SpasticGramps]

Circus appears to be over. Can looks to be kicked until 2013. Markets set to rocket this morning along with US dollar. Shorts are in trouble today.

 

[SpasticGramps]

Well, I thought we would rally with a deal supposedly in place, but the ISM number collapsed again printing at 50.9. Huge miss on the expectations of the Wall Street economist herd. A print a 50 means economic contraction. The economic reality is really starting to set in. 2010 devaju.

Doesn't look like the markets like the framework of the deal too much either. Market not liking our Keynesian can kicking skills so much anymore I guess. Congrats shorts you look to be A OK today.

July ISM Prints At 50.9, Huge Miss Of 54.9 Consensus

Earlier today we said: "the reverse decoupling thesis will be tested once again today after the July ISM is released with consensus looking for a 54.9 print, and Zero Hedge looking for number just a tad above 50." (LaVorgna was at 54.0) Unfortunately, we were correct: the July ISM plunged from 55.3 to 50.9, or yes, "a tad above 50", on expectations of 54.9. This is the lowest ISM in two years, and confirms that the Fed's viagra no longer does anything to help the soft spot. The market took it in stride and plunged to late Friday lows. So much for the latest US debt ceiling raise market euphoria. Every single subindex dropped, with only exports and imports posting an increase, although with Imports +2.5, this more than offsets the benefits from Exports rising by just 0.5. Also, New Orders, Backlogs, Customer Inventories are all sub 50. The biggest drops occurred in Prices and and Employment, confirming that not only are employment conditions deteriorating but price making ability continue to erode.The Wall Street kneejerk commentary is hilarious, with TD's Green calling it a 'Freakshow': "TD chief economist Eric Green says in client note he is “struggling to find any silver lining” in July ISM “as the underlying components were, with the exception of export orders, lower across the board."

Charting the index: a disaster.

And the market reaction:

 

[headiez247]

There is no way they get something passed by the deadline. Impossible now. Maybe something after.

you should be careful about saying things that come across to others as facts when it is actually just your opinion since this is a thread about making financial moves.

hopefully people are smart enough to not make investments based on a strangers advice on a pot forum but still, it would suck for that to happen.

 

[CascadeFarmer]

you should be careful about saying things that come across to others as facts when it is actually just your opinion since this is a thread about making financial moves.

hopefully people are smart enough to not make investments based on a strangers advice on a pot forum but still, it would suck for that to happen.

If people make decisions based on other's recommendations they need to accept responsibility for their actions. Nothing wrong with giving opinions. If people can't determine the difference between facts and opinions they deserve what they get. I always listen to what others say and ultimately make my own call and live with it.

Gramps, and just about everyone else including me, thought the market would just take off. There were some strong gains that held overseas. I let go of my position at the open and now can only go...ooooops. Live and learn. Was very tempted to hold on for the morning to see how things shaped up. I gave up about 85% by not doing so. I knew the general economic fundamentals were weak and the budget agreement changed nothing except stop the drama.

 

[headiez247]

If people make decisions based on other's recommendations they need to accept responsibility for their actions. Nothing wrong with giving opinions. If people can't determine the difference between facts and opinions they deserve what they get. I always listen to what others say and ultimately make my own call and live with it.

Gramps, and just about everyone else including me, thought the market would just take off. There were some strong gains that held overseas. I let go of my position at the open and now can only go...ooooops. Live and learn. Was very tempted to hold on for the morning to see how things shaped up. I gave up about 85% by not doing so. I knew the general economic fundamentals were weak and the budget agreement changed nothing except stop the drama.

I totally agree, and I wasn't referring to his prediction about how the market would react today. I meant when he said a few days ago that a debt ceiling deal would be "impossible."

I think you and Gramps are clearly smart when it comes to the market (I could only wish I was that smart, if I was I would probably dabble in short term trades) and I think over time people who have money but no investment adviser might be tempted to follow the trades that you guys take. But if you say something is "impossible" you aren't giving opinion, you are stating it as fact, and I just don't want anyone on here to lose money.

If they choose to make a move based on a suggestion/opinion, then absolutely, that is their risk they are taking, I agree

 

[CascadeFarmer]

Thx for that response. If I was smart like that I'd be rich...lol. I hear what you're saying in general. ANYTHING is possible when it comes to the markets and life in general. I thought it was going to be VERY tough to get a deal done in time but knew they were/are under extreme pressure. Everyone knows the problems it will cause. To me this whole debt thing shows how tenuous things are becoming. Seeing, for me, how the game is coming to an end. The last minute deal does not bode well IMO for a variety of reasons.

After I saw the deal was 'done' reading how individual states are going to get hurt and ultimately the people cause of all the government spending that will get cut back.

When the economic crisis started a few years ago told friends there will be no real recovery and that it's more of a long term adjustment with the US sliding down in world economic rankings and standard of living.

If I had more of a cushion would have let my position ride this morning but was sick and needed to go back to sleep...bad call.

 

[headiez247]

Thx for that response. If I was smart like that I'd be rich...lol. I hear what you're saying in general. ANYTHING is possible when it comes to the markets and life in general. I thought it was going to be VERY tough to get a deal done in time but knew they were/are under extreme pressure. Everyone knows the problems it will cause. To me this whole debt thing shows how tenuous things are becoming. Seeing, for me, how the game is coming to an end. The last minute deal does not bode well IMO for a variety of reasons.

After I saw the deal was 'done' reading how individual states are going to get hurt and ultimately the people cause of all the government spending that will get cut back.

When the economic crisis started a few years ago told friends there will be no real recovery and that it's more of a long term adjustment with the US sliding down in world economic rankings and standard of living.

If I had more of a cushion would have let my position ride this morning but was sick and needed to go back to sleep...bad call.

ya i have a feeling if i ever got into short term trades id be up 24/7 and sorta obsess over it lol. But hey, people are clearly makin money off it. I for one am jealous.

 

[The iD]

yes, hooray, hazzah, excelsior! [/sarc]. no tax increases, no spending cuts, just another 20% increase in their credit limit, even tho the insolvent credit holder cant even pay the interest on their debt, let alone any of the debt. bullish? lol, surely? 30min of DC induced hot air @ open. can, meet foot. oh, ive seen youve met. then drops an ISM of 50, which will be revised sub-50 next month courtesy of the Minitrue RecDep. contractionary, like it was a surprise. fade on.

the debt ceiling was the next to final barrier before Ben can start the QE3/OT2/SD. all thats left is the 10%+ slide so he can enact it in response. imagine him @ POTUS Bday: "Come on 'Bama, baby! i heard that you just re-upped, mang. come on, baby, gimme another hit, ill suck yo dick!", as Boner pops out of a cake w/ whip cream on his nipples and a pepperoni pizza bikini to sing happy birthday Mr. Prezident.

so, it costs the US ~500B$/yr in interest payments currently, plus SS, Medicare/Medicaid, defense spending, and 1.4T that will be set aside for Bernak to monetize. twice as much money for half as long, exponential love. and when we get downgraded, whenever thatll be, our interest owed will balloon up to 1.5T$/yr even though interest would only be @ 1%. gl w/ that. so 2.4T$ buys us 1.5 more yrs. lol. classic Ponzi dynamics.

debt debate again in Nov, again in early 2012, and debt limit debate/hike again finally in late 2012 after the election (if they are lucky), when theyll raise it by another 6.7T$+ for emergency monetization and interest payments, and continue their trek towards hyperstagflation and obscurity.

expect another shitty number on Fri only confirming what we all already know; that we are in the Depression2.0. im still looking towards Jackson Hole for QE3, but am prepared for as early as when they pass this debt limit hike.

nothing changed during this entire 3wk debtacle. a deal, likely w/ no cuts or tax increases, has been the greatest probability from the beginning. them creating drama where there is none & feinting impasse is not a buy signal, except to the uninformed. also, they havent passed anything yet. a very small possibility remains, as it has throughout, that it doesnt pass vote, or that they take the game past the aug2 deadline, that would get the drop and pop you are looking for. it was always all downside and no upside. how is passing a 20% debt increase w/ no spending cuts or tax increases bullish? you wanna buy into this market? be my guest.

amazing time to be alive. stay frosty,

-iD

 

[Madrus Rose]

tried posting here last night but IC mag is so often off line or the worst/slowest site on the entire world web ....maybe they fixed it but often takes a full minute for pages to load (all those ads at the top)

looks like the Downgrade is what they're pricing in here now with the S&P wanting to see 4Tril in cuts & their only coming up with 900mil & another supposed 2Tri in Nov ..so looks like the downgrade is going to turn out fait accompli...so looks like a tag of 1260 is going to happen. That H&S pattern sure on its way to confirmation

*noteable short in the premarket as the lemmings all thought they had a free pass to gains today was SOHU that gapped up to $96 & finished 16pts down to rest on the 200ma....the dam thing was overbought at $90 let alone $96 .<g

 

[SpasticGramps]

hopefully people are smart enough to not make investments based on a strangers advice on a pot forum but still, it would suck for that to happen.

Hopefully people can discern that the statement you where referring to was opinion. I've stated time and time again that I believed a deal would be done and that it would amount to a whole bunch of nothing. Which it is. A whole bunch of can kicking nothing. I didn't think they would cut it so close. It looked "impossible" IMO on Sunday and it isn't done until it's voted on anyway. I probably shouldn't have said anything, but I have to say watching the ponzi unwind is interesting. Guessing the next step gives me something to pass the time.

If you are trading off the advice of some random asshole on the internet such as myself then you are in real trouble. This is the only thread on IC Mag where finance and economics is discussed thus it's a place I can ramble. I've stated time and time again that I don't have the balls to trade the end of this ponzi. I buy land and hedge with physical metals.

 

[The iD]

about those fizz Gramps...

im looking for a retracement back to 1300$/oz (w/ a 950$/oz poss. low) where i will BTMFD. then QE3 and we get 2k$+/oz and its game over, time to hit the reset, but not before they struggle to right the dingy. how low we can go matters how long before TurboJet begins printing full bore again. also, they could decide to open Fort Knox and unload some of their hollow Tungsten @ 60% below market value, or have CME hit them w/ margin increases, or start enforcing Dodd-Frank on PMs. i dont worry of PM seizure since im hedged w/ my lead investment. +5.56. regardless, they have a lot of plays still. glad i never sell fizz, keeps that side simple.

the best thing about PMs, is that no matter the swing in the markets, they always shine just as bright. stay frosty,

-iD

 

[Madrus Rose]

you could see Au & Ag barely selling off today when the Futs were up early in the am, something was not right with that while Platinum & Palladium were up 16pts ...everything out there was a short and Gold really gave them the finger .lol

check chart for SOHU ...

 

[Madrus Rose]

 

[SpasticGramps]

10 signs the double-dip recession has begun MSNBC
Many Americans believe that the 2008-2009 downturn never ended

Friday's news on GDP shows the double dip has arrived — an expansion of only 1.3 percent and consumer spending up 0.1 percent in the second quarter. Astonishingly low by any account. The debt ceiling trouble and lack of a longer term resolution to the deficit will make it worse.

The U.S. has entered a second recession. It may not be as bad as the first. Economists say that the Great Recession began in December 2007 and lasted until July 2009. That may be the way that the economy was seen through the eyes of experts, but many Americans do not believe that the 2008-2009 downturn ever ended. A Gallup poll released in April found that 29 percent of those queried thought the economy was in a “depression” and 26 percent said that the original recession had persisted into 2011.

It is any wonder that many Americans believe that the economic downturn is still in progress? Home prices have fallen to 2002 levels. Values have dropped nearly 50 percent in parts of Florida, California, Nevada and Arizona. Property values are also down that much in parts of troubled big cities like Detroit. Estimates are that as many as 11 million homes have underwater mortgages. Banks have inventories of as many as 2 million foreclosed homes which have not even been released to the market. Home prices could fall another 10 percent if current trends persist.

Perhaps the most powerful argument that the recession never ended or that a new one has begun is the persistence of unemployment. Fourteen million people are out of work. A third of those have been jobless for more than a year. May employment data showed the jobless rate rose unexpectedly and that the economy added only 58,000 jobs. Experts believe that the unemployment rate will not improve significantly until the monthly gain in jobs is consistently 300,000 jobs or more. And, at that rate the gains would have to go one for more than two years to bring the economy back to what is traditionally considered a reasonable unemployment figure.
There are several signs that a recession is firmly in place again and that the downturn could last for several quarters. Most are already easy for the average American to see.

1. Inflation
There is almost nothing that damages consumer confidence as badly as a rapid rise in prices. Starbucks recently increased the price of a bag of coffee by 17 percent because wholesale prices have risen by almost twice that rate in the last year. Cotton prices nearly doubled in 2010 but have fallen this year. But, apparel is made months in advance of when they reach store shelves. Summer clothing prices are up as much as 20 percent. That may change in the fall, but for the time being, the consumer’s ability to buy even the most basic clothing has been undermined. Consumers today pay more for sugar, meat, and corn-based products as well.

2. Investments have begun to yield less
Part of the recovery was driven by the stock market surge which began when the DJIA bottomed below 7,000 in March 2009. The index has risen above 12,000 and the prices of many stocks have doubled from their lows. As result, American household nest eggs that were decimated by the collapse of the market have rebounded and enabled people to splurge on themselves. However, the market has stumbled in the last quarter. The DJIA is up only 1 percent during the last three months and the S&P 500 is down slightly.


Americans, though, have few other places to put their money. Ten-year Treasuries yield about 3 percent. Gold was a good investment over the last year, but it has begun to falter as well. The market may not be a friend to investors for quite some time.

3. The auto industry
The auto industry has staged an impressive comeback, although its profitability is based as much on the layoffs it has made over the last five years as generating new sales. GM and Chrysler have emerged from bankruptcy. Year-over-year monthly sales improved late last year and through April. May sales stalled. GM’s revenue dropped by 1 percent compared to May of 2010. Ford’s sales were down about as much. There are many reasons for this trend including high gas prices and the constrained manufacturing capacity of the Japanese automakers because of the earthquake. Consumers also may be deferring big purchases because they are worried about their economic prospects. Slow car sales are not just a sign of lagging consumer confidence. They also may be a harbinger of tougher times ahead. These companies shed several hundreds thousand jobs before and during the last recession. Car firms have only just begun to hire again, but that trend will die with a plateau in sales.

4. Oil prices
Oil prices are supposed to drop as the economy slows as they did in 2008 and early 2009 when crude fell from over $140 to under $50. That drop at least allowed consumers and businesses like airlines to more easily afford fuel. Recently, crude has moved back above $100 and appears to be stuck there regardless of the economic situation. American budgets have been hurt by the rising cost of gas. Americans of more modest means have been particularly affected. A slowdown in driving usually also leads to a decline in the retail sector as consumers reduce unnecessary travel to stores. The impact on other businesses is just as great. Airlines suffer and so do firms which rely on petrochemicals. OPEC, for now, has signaled it will not increase production.

5. The federal budget
The federal budget deficit has decimated any chance for another economic stimulus package which many prominent economists like Nobel Prize-winner Paul Krugman say is essential to create a full recovery. His theory has become more of an issue as GDP growth slows to a rate of 2 percent. The first $787 billion Obama stimulus package may have saved some American jobs, but it is long over and did not work if a drop in unemployment and a sharp improvement in GDP were its primary goals. The deficit has caused a call for severe austerity measures which have already become part of the economics policies of countries from Greece to the U.K. to Japan. Job cuts in the U.S. will not be restricted to the federal level. A recent UBS Investment Research analysis predicted that state and local governments will cut 450,000 jobs this year and next. That process is already well underway. States like California and New York currently run massive deficits and the rates they must pay on bonds has risen accordingly. Newspaper headlines almost daily report on battles between state unions and governors over employment and benefits.

6. China economy slows
A slowdown in the Chinese economy is usually seen as a cause of global commodity price inflation, but the effects cut two ways. China’s appetite for energy and raw materials may fall. But, the demand for goods and services by its very large and growing middle class drops as well. Chinese purchaser manufacturing and export numbers have fallen as the central government has tightened the ability to borrow money. US exports to China are key to the health of many American businesses. John Frisbie, the president of The US-China Business Council, recently said, "Over the last decade we have seen exports to China rise from $16.2 billion to $91.9 billion — a 468 percent increase.” As that rate slows, it has a profound effect on tens of thousands of American companies and their employees. U.S. firms with large operations in China are also effected. GM is one of the two largest car firms in China along with VW. Large U.S. corporations like Wal-mart and Yum! Brands rely significantly on China to boost global sales. Without vibrant consumer spending in China, American companies will suffer.

7. Unemployment
Unemployment creates two immediate problems. People without jobs drastically curtail their spending, which will ultimately affect GDP growth. The second is the need for tens of billions of dollars every year in government aid to keep the unemployed from becoming destitute. That support has increased deficits and the domino effect is that cash-strapped governments need to make more spending cuts. It may be the biggest challenge the economy faces.

Unemployment has worsened because people over 65 to continue to work because the values of their homes — which they once counted on as the financial basis of their retirements — have dropped so sharply. Older Americans also fear that cuts in Medicare and perhaps Social Security are inevitable which increases the cost of their golden years. The jobs that older Americans have taken are often ones that younger Americans might have. People in their 20s must accept low wages to enter the workforce. This has delayed their prime consuming years well into their 30s which will damage GDP recovery now and for another decade.

The worst of the unemployment problem is the roughly 5 million Americans who have been unemployed for over a year. Their unemployment benefits have run out in many cases. The burden of their care falls to their families, friends, community organizations and non-profits. A family which has to support an unemployed person may be a family which cannot spend beyond its basic needs. To the extent that the federal or state governments can support the unemployed, the cost to run support programs increases.

8. Debt ceiling
The United States debt ceiling, currently at $14.294 trillion, will probably be raised before the government has to cut back essential services on Aug. 2. It might seem that the economic and employment effects of the debt cap are the same as the deficit, but they are actually more insidious and longer term. The first by-product of debt reduction, or at least a slowdown in its growth, is a combination of higher taxes and a lower level of government services. Higher taxes usually slow economic improvements, particularly when they are not coupled with stimulus measures.
A number of economists have pointed out the expense reduction alone will not sharply improve the United States balance sheet. The increase in Medicare and Social Securities costs, brought on by an aging population, are also likely to trigger a need for higher taxes. Tax increases could keep the economic growth of the US on hold for years. The taxation of companies decreases and often eliminates profits, particularly during an already troubled economic period. Profits which disappear usually cause cuts in purchasing and jobs. Taxes on wages and inheritance undermines consumer spending. And, a growth in national debt from already all-time highs will increase the borrowing costs of the U.S. That, in turn, drives up interest rates for everything from mortgages to credit cards.

9. Access To credit
The lack of access to credit has hurt the economic activity or both individuals and small businesses. Many very large companies can borrow money at rates as low as 2 percent because of their strong cash flows and balance sheets. Banks have been much less willing to loan money to companies with under 100 workers because these firms often rely on a few customers for revenue and usually have very little money on hand.

Early in June, the House Small Business Committee held hearings and among its findings were that concerns about risk and a slow economy has made financial institutions reluctant to lend to small businesses, the main driver of economic growth. Committee Chairman Sam Graves (R-Mo.) said Congress will need to “bridge the gap” between the two sides. There is no plan to accomplish that. Individual borrowers find themselves in a similar position. The cost of credit cards debt is still above 20 percent in many cases although the Federal Reserve loans money to large financial firms for interest rates close to zero.

Potential home buyers, who might help break the gridlock of slow house sales, often find that banks want down payments as high as 20 percent. The median down payment in nine major U.S. cities rose to 22 percent last year on properties purchased through conventional mortgages, according to an analysis done for The Wall Street Journal by real-estate portal Zillow.com. That percentage doubled in three years and represents the highest median down payment since the data were first tracked in 1997. Homes which are not sold often put such great burdens on owners that they are barely consumers of the goods and services that drive GDP. Home builders have continued to struggle. Construction jobs, which were a huge amount of the employment base in states like Florida, have not returned.

10. Housing
Housing is considered by many economists to be the single largest drag on the American economy, and the housing market has gotten much worse in the last two months. A report from The New York Federal Reserve published early this year said: “When home prices began to fall in 2007, owners’ equity in household real estate began to fall rapidly from almost $13.5 trillion in 1Q 2006 to a little under $5.3 trillion in 1Q 2009, a decline in total home equity of over 60 percent.”

Real estate research firm Zillow reported on more recent developments. “Negative equity in the first quarter reached new highs with 28.4 percent of all single-family homes with mortgages underwater, from 27 percent in Q4.” Many homeowners who want to sell their homes cannot do so because they cannot afford to pay their banks at closing. Whether for good or ill, the American home was the primary source for money used for retirements, college educations and the purchases of many expensive items such as cars.

Economists point out the this leverage helped contribute to the credit crisis as people could not cover the costs of home equity loans as real estate values collapsed. This may be true, but the drop in value happened so quickly that the balance sheets of millions of Americans were destroyed. Their ability to consume was severely damaged, further harming GDP. High mortgage payments bankrupted or nearly bankrupted people who have lost jobs or have found that their incomes had stagnated. The building industry became a shambles overnight. And, whatever the effects have been over the last three years, they are getting progressively worse as home values drop to decade lows. There is no relief in sight because potential buyers worry that price erosion has not ended.

The best part.

It may not be as bad as the first. Economists say that the Great Recession began in December 2007 and lasted until July 2009.

QE to infinity and beyond.

 

[SpasticGramps]

House Passes the bill 269-161. Senate and President to rubber stamp it. It's in the bag. I'm not going to even try and guess what the market is going to do lol.

JPMorgan has some bad news.

JPMorgan Warns Of An Even More Disappointing Non Farm Payroll Number This Friday

First it was Zero Hedge two hours ago, now it is the turn of JP Morgan's Michael Ferolli. "The employment index plunged a huge 6.4 points to 53.5, a print which adds a little downside risk to our already-below-consensus outlook for only 45,000 job growth in this Friday's July employment report." As a reminder, consensus is 90,000 or thereabouts. A negative print this Friday will bring QE3 within weeks. Which, of course, is the plan to go alongside the $2.5 trillion in debt coming to the market.

Full note:

The July manufacturing ISM was a major disappointment, falling 4.4 points to 50.9. The details of the report were also discouraging, particularly the new orders index which fell below the 50 threshhold (49.2) for the first time since June, 2009. The employment index plunged a huge 6.4 points to 53.5, a print which adds a little downside risk to our already-below-consensus outlook for only 45,000 job growth in this Friday's July employment report. Why was this report so bad? One theory offered by, among others, an ISM spokesperson is that uncertainty over the debt ceiling is holding back business. The direction of this effect is clearly negative, and should be first manifesting itself in the July data round, which begins today. Even so, there were other reasons to expect a softening in the ISM, including the fact that the June orders-inventories gap suggested weakening in the ISM, and the level of the regional surveys had also been below the national ISM. So even absent the debt ceiling fracas there were good reasons to look for slowing in the ISM report. More generally, the slowing in industrial activity could be in part due to unwanted stockbuilding in the first half of the year, as final demand surprised on the downside. In that regard, one of the few bright spots in what was otherwise a miserable report was the decline in both the inventories and the customers' inventories indices.