More Lost Numbers

consumer credit lossWith all the chatter and cheering going on by Friday's "better than expected" unemployment number, many failed to catch the almost doubled then expected consumer credit loss report, which came in at a loss of $10.3 billion. Keep in mind, last month's the number was later revised from an announced loss of $3.2 billion to $5.4. You can only imagine what this number will be revised to.

Sure, the number is not as significant as the unemployment, but the huge miss in expectations tells a story of where a lot of this money is coming from in the economy. More debt. Just as the popular "cash for clunkers" is temporarily bringing relief to the battered auto industry, it is also piling up more debt for the consumer into one of the biggest money pit purchases people can make. A car is not an investment, it is an income eating luxury.

Thus far today, markets have been down, mostly due to profit taking and more weakening commodities. Financials still continue to perform, with help from Freddie Mae claiming profits as well as stating their cutting the umbilical chord from the government (we'll see about that). Hopefully, we'll see a pullback here, as we are far overdue. I still remain very bearish.

9 comments:

  1. agnes Says:

    ff,

    Can the government prop up markets endlessly?

    We know the government shenanigans out there
    -changing accountancy rules for toxic assets
    -providing capital to the banks
    -providing cheap credit to the banks

    But to which extent has the government been active in the stock market directly by for example buying S&P futures?

    I guess they have done it, no?

    And if they have done it, will they keep doing it?

    If the answers to all these questions is yes, then why would anyone then short the market?

    anyone can correct me, but it's illegal for the FED to buy for example S&P futures...

    The fact that the FED does not want to be audited, clearly shows they have something to hide...

    I am asking these question because frankly I have never seen such a disconnect between fundamental and market behaviour. And I am wondering to which extent I should keep my short positions? (No I am not going long, but frankly, I wonder if it makes any sense to short this market if it's completely manipulated by Obama and his friends).

    what do you think?

  2. Finance Fanatic Says:

    Agnes,
    there is overwhelming evidence that indeed the government is involved in this recent rally. The Fed loves to dodge the question for accounting for their trillions in "off balance sheet transactions."

    The activities are very frustrating for me as well, as there definitely exists a disconnect. However, I plan to wait it out and the bandaide only sticks for so long. The consumer is getting hung out to dry in the midst of all of this, and soon that will become more recognized. I just need to endure the bs.

  3. agnes Says:

    FF

    So you don't think the government can endlessly prop up the market?

  4. James Says:

    Using the Band Aid analogy, you say it only sticks for so long, but while its sticking maybe this "false skin" is actually giving the wound time to heal. I have been anticipating a pull-back since April and as I look back I should have followed the lies like I wanted to. A profit is a profit, even if the moves are unjustified. When banks like BAC recovered from $2.60 to $6.00 I was told to stay away from investing because the increase was unjustified. It closed at $16.68 on monday. A 178% increase since April that I avoided like the plague because of all the "warnings". Fre increased 128% in one day! I don't care if it's a lie anymore, I'll take it. If I bought on the rumor and sold on the news I would be doing very well right now. Just give me the rumor and I'll be fine! I'm also curious If you disapprove of the government's actions what actions do you believe they should have taken? I don't approve of everything they are doing either but desperate times call for desperate measures, right?

  5. Anonymous Says:

    Seriously FF, call this website "Making money in a Recession on the way down". It's becoming ridiculous, sorry to say it. Your family members must've also been mad at you for urging them to sell financials a 2-3 months ago...as you mentioned in some post in the past...

    Anyways, it's always much easier after looking back, I know, so indeed, it's all about the present.

    keep up with the hibernation..:)

    Good Luck!

  6. Jeff Says:

    FF i believe the next descent is very near -- as youve mentioned before when everyone is convinced the bull market is here the rug slips out from under. i also believe this and am prepared to go heavily short soon

  7. Anonymous Says:

    couple of months back you mentioned in one of your blog that unemployment rate is the key indicator for economy.Now unemployment rate is stabilizing. why are you still bear?

  8. Finance Fanatic Says:

    Anon,
    I wouldn't call one month of 200,000+ loss of jobs a stabilizing job market. Remember, In May, job losses were considerably lower, only to get crushed the following month. As always, the key is sustainability.

    And yes, anon2, my family should have held on to financials a bit longer. They still made very good profits, so they aren't killing themselves. But as always, it is very easy to critique the market with hindsight.

  9. PENNY STOCK INVESTMENTS Says:

    Stay away from those credit cards.