tafa01 The P/E contraction junkies seem to be everywhere in the

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"Darkness! The Tables Have Turned!"

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Anonymous said...

So their big idea is... the Tobin Tax?! Looks like it's all up to J.C. "We Do Not Do QE" Trichet to keep duct-taping things together until the changing of the guard in November.

5:43 PM

Leftback said...

Not only do They Not Do QE, they hike at the most stupid moments imaginable... yes, duct tape, please, nurse, stat... no rate cuts from Tricky unless someone implodes in a huge way, but some jawboning about the possibility of one... now how about a global CB action (perhaps a weekend commando raid) to sell the yen and restore the Carry Monkey to his place in the Banana tree?

6:48 PM

Anonymous said...

FWIW Mr. Yen seemed to be saying no action until they see a six handle on dollar yen.

6:54 PM

Anonymous said...

'C from C'
Look you can have all the dreams you like,but if it leads you to committing to a counter trend rally as though it is some intermediate low then you'll get turned around more often than you like.
I have no doubt a bid cam in looking for yield because it thinks P/E's are wonderful...they always are if you think about it because they are usually looking abck at an historic high point for yield and then looking at how a sell off as made that ratio even more attractive.
All of this is very usual behaviour.
The macro looks beyond all that nonsense.It's says' what kind of economic enviroment have we got here..is it expanding naturally ,is it refplating because the central banks have played shuffle with asset relationships to encourage a response from investors etc,or is it slowing and perhaps even contracting because the underlying issues of debta nd levearge have not yet been dealt with.
If you think the latter then you won't be dreaming about price based sustainable growth going up much anytime soon.Indeed policy responses in play at the moment seem poised to to make growth seem like a very rare beast.
As far as bounces go I think the targets have been met.

7:06 PM

Anonymous said...

'C from C'adds
Actually, I thought price would swan around around at these levels long enough to get longs in and then push them back down to the recent markets lows and establish this as anew lower range going through the second half.More in line with the growth data we are seeing.

7:11 PM

Anonymous said...

Short of time and making mistakes..

"are if you think about it because they are usually looking abck at an historic high point for yield and then looking at how a sell off as made that ratio even more attractive"
For clarity I onbviously refer to very high earnings which when followed by falling price makes investors go ..yummy yummy yield

However, if the price is adjusting to a detriorating business enviroment then one should not get too focussed on the earnings made in the past. One should be looking more at what are those earnings going to be in the future and if they disappoint what is Mr Investor likely to do.

7:18 PM

Leftback said...

C from C, the yield differential (DVY/10yr) here is wide on an historical basis. The P/E contraction junkies seem to be everywhere in the media but might end up getting this 2H 2011 market massively wrong, if:

a) TEOTWAWKI doesn't arrive (US flat, no recession).
b) Rates stay locked into these 1950s levels.
c) Earnings don't deteriorate as much as expected.
d) Lower fuel costs act as a tax cut for J. Sixpack.
e) Europe sloppy but not totally pear-shaped.
f) Obama gets a decent fiscal/jobs package together.

This is not to deny the macro arguments assembled by C from C, but the trajectory may prove a little different against the ZIRP/QE background. We have said it before, but the 1970s analogies are flawed and inapplicable, in almost every way imaginable. The key is this: inflation will be sporadic and transient, b/c there is ZERO wage inflation due to union busting, and housing has nowhere to go except lower....

7:30 PM

Leftback said...

Much ado about nothing today, in the US at least.

XLU almost green, XLE and XLF dead red. Days like today are a part of the sausage machine that occurs during sector rotations, and not very indicative of overall sentiment.

8:57 PM

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