Shit I don't like

[solarbird]

Good morning, Scotland, England, Wales, and both Irelands. A few late-night worries here in Cascadia for your early-morning displeasure; in other words, welcome to another episode of Shit I Don't Like, staring me, and featuring shit I don't like.

I don't like what happened in gold today. Also silver.

I don't like what happened in the equities markets today.

I don't like what happened in the US dollar index today.

I don't like what happened to the Euro/USD trade today.

I don't like what happened in oil today.

I don't like Alan Greenspan's brief moment of truth on CNBC today. Or, rather, I do; I don't like what he said.

I really don't like what's going on with the Swiss Franc.

Gold is down sharply, suddenly, hard. I don't understand the gold market, I don't care about it, I think it's stupid, but I pay attention to all the people who think it is money even though they like pretending it's still Renaissance Europe, because they matter. I don't like that silver shot down too, even harder. Silver is gold for people who can't afford to fiddle with gold, which is to say, quick margin calls, undercapitalised investors, and fringies - in short, it's gold for morons. If you're betting on silver as money you're not just betting a return to the gold standard, you're betting on a return to specie. Good luck with that. But bear with me.

I don't like what happened, particularly, in equities. Six straight days of losses and a Dow Theory bear-market indicating that we never actually exited the 2007 bear? Not awesome.

I don't like the USD index falling, in all this context. Correlations aren't correlating.

I don't like the Euro rising and being a lot of that US dollar index move.

I don't like oil's kick in the pants. Sure, the noisemakers said it's all manufacturing, but I think that's bullshit.

I don't like Alan Greenspan getting into lecture-to-acolyte mode on CNBC in an extended interview and settling into lecture mode and getting a pop question about Europe and answering without his usual filters for a minute before he has time go reset to public mode and try to pad it. "Oh, Europe is terrible," in that kind of body language and tone that says it's really bad - just for a moment, then popping back to hedge talk.

Because Europe's Euro problem is terrible. Really bad. And all this put together looked like a lot of people going to liquidity - going to cash - in Europe. The Euro spikes because somebody's buying a lot of it because somebody is pulling in resources... why? I've got some guesses, and I bet you do too.

And meanwhile, the Swiss Franc just keeps rising. Not so much July 1, it actually dipped a bit and there's a very interesting midday spike, but it's recovered pretty well.

So. A bunch of people in the Eurozone have been going to Switzerland. That's neat. Why do you go to Switzerland? You go to Switzerland for conferences and to ski. Not relevant! Why else do you go to Switzerland? You go to Switzerland for cookoo clocks and watches and maybe chocolate. Tasty! But also not relevant. You used to go for banking privacy, but not as much anymore. Why else do you go to Switzerland?

You go to Switzerland when you need stability and a place to hide things, including yourself. You go to Switzerland when things are going to hell.

Things feel brittle. If the job report is merely as bad as forecast, or slightly worse, we should get a broad stock bounce. We're about at a level where we should - I know, I know, I keep saying that, but it's true, I swear. If it's substantially worse, things could get ugly.

And that's Shit I Don't Like for 1 July 2010. Good luck.

Comments

[silussa.livejournal.com]

For what it's worth, in c-store retail in Florida (east coast, thankfully), we're seeing sales recovering to decent levels after last year, but the noises from our corporate office suggest a major struggle to improve profitability, which is down on increased sales.

I'm also seeing some substantial cost increases from wholesalers after almost two years of non-movement, as well as corresponding retail hikes.

[lyonesse.livejournal.com]

i think with things going to hell, i'm going to iceland. besides, iceland's already broke, and they have an interesting set of natural resources with which not to care.

[solarbird]

"We'll raise more sheep," isn't it? Geothermal, ponies, and hot springs; what else could you need? ^_^

[sarakate.livejournal.com]

Also, they are actually willing to elect politicians with senses of humor (http://r-ness.livejournal.com/526401.html).

[phillipalden.livejournal.com]

I think we know by now that Alan Greenspan is full of shit, and he's not the "great financial guru" we all thought he was.

I've stopped listening to the man.

[solarbird]

He's not a hack, either. The man knows a lot. I think his theories as applied have turned out to be problems, and a lot of that stems from being in the wrong part of the credit cycle, and his inability to recognise that is a big deal. But he's not an idiot.

[phillipalden.livejournal.com]

I never said he was an idiot, but I stand by the "full of shit" comment. This was the guy who said the markets would self-regulate. He may be a smart economist, but his blind spot is the failure to recognize that greed can blind people.

He was the "deregulation cheerleader," (after Ronald Reagan.) I knew back in 1980 that deregulation was going to be trouble. Reagan told us it would create greater choices in the marketplace and keep prices low through competition.

And we all see the end result of that.

But I greatly respect your posts about the financial picture. It's clear that you do your homework and you back up your facts with appropriate links. Keep up the good work!

[bradhicks.livejournal.com]

Nothing would astonish me less than fundamentals suggesting that we never left the 2007 downturn. Why would we have? Which of the problems that lead to the 2007 downturn have we actually solved? Any of them? The best that can be said about the last two years is that since the November '07 crash, we've stopped doing the things that were making it worse; we haven't done anything that would make things actually better.

(Psst: it's July 1st, not June 1st.)

[solarbird]

D'oh, fixed.

Officially we left the 2007 recession. I know, stop laughing.

[l33tminion]

Oil still strikes me as pretty expensive, relative to how crappy the economy is.

indicating that we never actually exited the 2007 bear

How is the economic situation now better than in 2007? Consumer credit is still gone, jobs have been permanently replaced by automation, costly wars are still being fought, the energy situation is still dismal, regulatory reforms have been very minimal.

I've got some guesses, and I bet you do too.

Care to elaborate? Your guesses would be better than mine.

[solarbird]

There are a couple of banks in Germany and one in Austria with a lot of exposure to Greek and ... Portuguese, I think? Bonds. Bad juju anyway.

I would also expect oil to be a lot cheaper than this price were we in a pre-2003 environment. Consider the implications of that, if you will.

[ravyngyngvar.livejournal.com]

When reading this post of yours, I couldn't help but think of this:

http://www.youtube.com/watch?v=j0e10baH6cE

[solarbird]

lol ^_^