Thursday
February 5,
2015
1-855-RWT-0008
Prepared by the good people at Random Walk, LLC. (and Scott)
14 Days Until Las Vegas “Watch Me Trade and Ask Questions” Seminar
If you have questions that are detailed and will be best served on slides,
please submit them so that we can have time to prepare for the class.
Great Morning!
Closing Prices From Yesterday
Yesterday and Today
Yesterday
A trip down bizzaro lane.
Where do I begin?
The Dow was unchanged most of the day in the tightest trading range of the year, despite oil being down $2. As the day progressed oil fell to a net change of -$3.50. This is peculiar since the previous day (Tuesday) the market was up over 300 when oil was up $3.50. Logic would dictate that if oil going up $3.50 would facilitate the Dow going up 300, then oil falling would cause concern and have the Dow fall (if not 300 points, at least something), all other variables aside.
Yet by the end of the day oil was down over -$5 and the E-minis were up $5. To me…this is SUPER BULLISH. So going into the last half hour of the day the Dow was up over 100 points (40 of which was DIS).
But wait – there’s more!
With minutes to go until the close the Dow fell to almost unchanged after news about Greece surfaced. And it kept digging after the close.
Before I continue I have a question? When are we going to let that stupid counter-productive country die on the vine? They are like kids who ran away from home but still want their allowance. Every couple years that country’s actions threaten the financial stability of the whole region. I have a brother like that, but unlike the ECB I only lost $200,000 before I have given up on him.
Greece is set to be in a cash crunch in March if they don’t learn how to play nicely with others. And I can’t think of a more deserving group. They voted for the guy causing the problems, now they can hang him upside down for people to spit on him (like Mussolini). Or learn to live with a financial depression. Either way they seem to enjoy it. They keep asking for more money, but refuse the terms of the loans. They obviously didn’t hear of the phrase “beggars can’t be choosers”.
The ECB threatening (in a moment of sanity) to pull its waiver which means that it (the ECB) will no longer support the value of Greek debt. It is pretty much a game of chicken. The ECB is trying to get Greece to act like grown ups while Greece it rattling financial sabers.
Greece is under a new leader as of last month, and this Tsaias individual made it public he has no intention of necessary adhering to the previous obligations the country assumed while acquiring debt. He pretty much said that he will tell the ECB what they are willing to pay back and the ECB will have to take it. Well the ECB fired back at the end of the day and said that they are not going to take it. It is funny how the guy with the checkbook always wins these arguments.
The ECB stated that they are no longer (at this time) willing to give Greece loans by waiving their Junk Bond rating. This means it will be a LOT harder for Greece to borrow money, if they can borrow at all. Who wants to lend to someone who has no intention of paying back? Fannie and Freddie already learned their lesson on that in 2008. There was a reason why these sub-prime lenders had a 400 credit score after all. Who would have Thunk?
And there is little Greece can do unless they tax the export of Gyros by 50,000%. This immediately sparked fears of another country (after Switzerland) exiting the Euro, bond holders losing money, etc.
The chart below illustrates just how hard the market got kicked in the juevos after the news.
TODAY
Yes it is scary. The unknown always is scary. What is going on in Greece could have a temporary ripple across Europe and to the idiots (like the ECB and US) who lent money to these sloths. But if you want a country to pull out of the ECB you want the broke and stubborn ones out,not Switzerland or Germany. And this is not a spell of dispersion towards the totality of Greek citizens, just the ones who think there are free lunches.
The unknown always is scary. But this is a country that doesn’t ever want to fix its problems. Like my brother they just want another hand out, an then go about smoking pot an watching soap opera until that loan is dry. NO ONE CAN help a country (or person) that doesn’t want help.
On the close today the E-minis were down 18 points. Keep in mind they were up 5 right when the news came out. We might have a down opening as we go off of Europe’s news and markets. It could even last a while. But like when our government shutdown 2 July’s ago, the fear is worse than the reality.
For example: About two years ago Obama and the Senators told you how bad the world would be if they didn’t pass a budget. BOOOOO SCARY. It was almost Biblical, if not laughable to all but the smallest minds. Cops, firemen, teachers would be out of jobs and crime would run rampant. So far nothing has been resolved and that SAME situation that was going to end capitalism is the reason Obama is bragging about the deficit coming down (like it is his policy that is doing it).
The same thing will happen here. Boot Greece out if they don’t want to play by the rules. It will be ugly for Europe for a week or two (and the US), but it will teach people they have to play well with others and it will save countless millions being wasted into a black hole. But it will not come to that. They treat Greece the same way we treat Hawaii every time Honolulu wants to become its own country. We respond with “Who is going to pay the bills?” and they shut up.
Good night Greece, Santa Claus has left the building. But don’t worry. I suspect even Greece is more pragmatic that we fear. In the end no leader can stay in power when their people are eating scraps. They are notorious for being overly aggressive and proud, but not suicidal. They will eventually cave in and take more money. So this is just a joke – again.
And if this sounds like a rant all I can say is, “I don’t think it is”. I am tired of hearing about Greece (again and again for sure. No one there has learned a single thing. The ECB has not learned that every-time Greece takes money they sign the contract with invisible ink, and Greece hasn’t learned when to stop pushing things because you can’t eat rock.
TODAY
I HOPE to God that the US markets look at Greece for what it is. Over the long run it is a mess continuing to help these people when they have ZERO interest in fixing their economy. I don’t know how much of the last sell-off yesterday was baking Greece into the pie,and how much more is left to go.
If things are normal we will have a lot of pressure for a day (or ten) but any selling is a HUGE buying opportunity. If people look at it for what it really is, we will run up AFTER the European markets close. Think about it. We were up 70 SPX points in two days. We were 218 points from 18,000 yesterday. The markets were up with oil down $5. This market wants to go up.
A country with a GDP of $265 billion would not be a loss if it fell off the financial map of the Eurozone
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Too True To Be Funny
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