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Petróleo Brasileiro S.A. - Petrobra Message Board

  • musketeernumberone musketeernumberone Mar 3, 2009 3:35 PM Flag

    Obama and the Markets

    I've got a bunch of stocks up 5-10% ... Guess Obama is doing a good job today. LOL.

    But seriously, this notion that the President, who's basically done nothing so far, is moving the markets is absurd. He's no more responsible for a day like yesterday - when he did nothing - than he is for today.

    There is nothing that can be done now to avoid a long and deep recession. It's here, now. Do the right things and it might be shorter and shallower. Do the wrong things and it will be longer and deeper. But it will end... We voted this guy in because he seemed honest, smart and well intentioned. We need to let him do the job we voted him to do.

    The stock market looks like it's bouncing along a bottom, which is not to say we can't go significantly lower. But, cyclical stocks (like PBR) have had, and maintained, a powerful rally off Oct-November lows and that's good.

    American democratic capitalism is the best system around to promote individual freedom and wealth because it is flexible and, to some degree, self-correcting. A period where we strayed a bit to far into "laissez-faire" is - with much pain - correcting. We need to move beyond the "coddle the rich and large corporations" Republicanism of Bush & Co. and find a way that is more fair, more inclusive, less intrusive, less corrupt. The rich will have to pay for much of the mess, because nobody else had the dough. That's not class warfare, that's reality.

    My last political post (yeah, right...)

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    • Obama is the Man! Geitner really gets it! These guys are doing everything right.

      Where are all those foolish, republican nay-sayers now that the markets have figured it out? Do you guys even know which way is up?

    • Agree... As noted previously, these things are cyclical... the pendulum overshoots in one direction and then overshoots in the other. To some degree this is the nature of a "self-correcting", homeostatic process.

      The good news is that, as investors, we can count on things over-correcting... which creates all kinds of opportunities... it's the very essence of "buy low, sell hi" as an investment approach.

    • P.S. I'm just stirring the pot... This whole thread started with the observation that Obama probably can't influence the markets all that much... so the Administration is no more responsible for the up days than the down days...

      "But seriously, this notion that the President, who's basically done nothing so far, is moving the markets is absurd. He's no more responsible for a day like yesterday - when he did nothing - than he is for today."

    • Understand. You're successful at stirring the pot. I get frustrated at pointing fingers only at one or the other parties (and I don't mean just you - at least you're civil). They all contributed to where we are; and it's been heading here for more than the last eight yrs. So, the cyclical is compounded by the broke.

      I also realize I need to 'preview' my messages before I post. I get a little confused looking at my last few posts.

      By the way, did you delve into the financials?

    • "So, the cyclical is compounded by the broke."
      You should teach economics... LOL

      I nibbled on a diversified financial services fund and an S&P 500 fund for my retirement annuity... long term money. Also bought a Canada ETF -- healthy banks, big exposure to materials and energy, hedge against declining US dollar.

      I'm getting interested in Blackstone, Blackrock, Fortree Investment Group, t rowe price... money managers (beaten down but should have stable earnings) and publicly held hedge fund companies (devastated but with interesting opportunities looking forward).

    • <P.S. I'm just stirring the pot.>

      Glad to hear it, Musk. FWIW, the Geitner/Obama plan is doomed to fail. The recent move up is a sucker/Bear Market rally, and that includes banks and most other stocks including PBR. And no, Fred and Winny, I am not short PBR at the moment.

      The first problem with the plan is the value of the assets, http://ftalphaville.ft.com/blog/2009/03/25/54003/the-tabular-banking-ppip-disconnect/

      And the second is selling the assets at a proper valuation, http://www.businessinsider.com/henry-blodget-one-small-problem-with-geithners-plan-it-will-bankrupt-the-banks-2009-3

      I don't get what the jumping for joy was about on Main Street. Wall Street hedge funds are going to borrow money from people on Main Street to buy bad loans bought from idiot banks. Main Street is getting it in both orifices; it is worse than AIG.

      Of course, the big bank executives have whispered to Republicans that they don't want the government taking them over. And the one thing the Republicans are good at is bogey phrases like "terrorists, socialized medicine, and now nationalized banks." They want our money but not for us to have any power. This is the Republican version of a free market: private gains, public losses.

      All I can hope for is that Obama's plan is to see that this one like the one for AIG falls on its face and he can finally turn to the Republicans, "Unless you guys have better ideas, okay if we nationalize the banks now?" That is what I am hoping for Musk, but from what I have seen Obama is as clueless as Republicans.

      Yep, that is what is politically correct. Wait for your opponents ideas to blow up before doing what works. Yeesh.

      I'm not sure I need to get into it, but Elliott Spitzer's warrantless wire tap was obtained thanks to the anti-"terrorist" Patriot Act. Medicare and Medicaid are "socialized medicine" and enjoy a much better reputation than their purely capitalist cousin, the HMO.

      The point of all this is that the exuberant run PBR has just had is not sustainable. Seeing PBR spike the same day as airlines did should have been a clue to everyone that all that happened was money left from cash and t-bills and came into stocks.

      The dollar went lower as there was less demand for cash and the Real and oil went higher, but it will come back.

      I think the funniest thing about this is that Obama keeps saying if we just fix the banks all we be okay. I watched Nouriel Roubini, the only economist who has been right about anything, on Bloomberg, and he cut right through the bs.

      American household debt:equity has gone from 100% to 140%. The average American has figured out they have been lied to, that the stock market is a scam, and that instead of borrowing they need to start saving. NR says the savings rate has gone from 0 to 5%, which is hugely positive for the dollar. Even if he is access to loans, the typical U.S. consumer is not going to buy a new house or car right now at least not like he was two or three years ago.

      This isn't 2004 when the dollar's demise was easily predicted. Cash is king, and demand for it is at an all time high. You can't have this much demand for the dollar and it not get stronger. Everyone is focusing on the government's printing $3 trillion and not that U.S. household's have lost $11 trillion, and that $11 trillion number is likely to get bigger.

    • The excellent Roubini video:
      http://www.youtube.com/watch?v=ai4ZsA7c9qI&feature=related

      There was also this scary piece by Nassim Tableb author of the Black Swan and his mentor about where we go from here, http://www.youtube.com/watch?v=DLFkQdiXPbo&feature=related

    • Actually I will be very scared if these bear turn bull now.

      Fear is good for the market. Always go against how the herd thinks. -:)

    • Noteworthy parts:

      "Main Street is getting it in both orifices;"

      "This is the Republican version of a free market: private gains, public losses."

      "I'm not sure I need to get into it, but Elliott Spitzer's warrantless wire tap was obtained thanks to the anti-"terrorist" Patriot Act."

      "Even if he (ha)s access to loans, the typical U.S. consumer is not going to buy a new house or car right now at least not like he was two or three years ago.

      Comments:

      Great observations, Doc. One thing though. This morning NPR reported a surge in durable goods orders. I've noted a burst of new automobile purchases among co-workers. I suspect that folks who feel secure in their jobs and who are patriotic are thinking this is a good time to buy something. (Some of them reported buying Fords, which probably should not count as "durable goods" but that is another discussion.) (Just kidding...)

      An accountant I know claims that Spitzer first came under suspicion when the IRS flagged the checks he wrote for the services.  Then and only then came the FBi wire taps.

      "printing $3 trillion and not that U.S. household's have lost $11 trillion"

      Once those trillions start "trickling down" they begin to generate taxable transactions just about every time they change hands. I hate to sound soft-headed, but in terms of the taxation which accompanies the release of those trillions, it almost does not matter how the money reaches the public. And what is the half-life of a dollar in circulation? The only way they expire is if Grandma actually put cash into her mattress and then the house burns down. So how much tax revenue results from the release of those trillions? Lots and lots, for as long as the dollars circulate. The system is not totally "closed". The stuff that leaves our borders permanently does not generate tax revenue and it does not act to devalue any goods made and sold here. However, most of that cash that does escape to the outside represents the potential to purchase US goods and services, and if they are used that way, they too resume the generation of taxable transactions.

      The other night I looked up how much the USA spends per year on pet food, landscaping, cigarettes, and illegal drugs. The numbers made the stimulus trillions look just a little less astronomical. If I threw in golf, booze, car repairs and the money people waste traveling to sports events.... the stimulus might begin to look less apocalyptic.

    • <<FWIW, the Geitner/Obama plan is doomed to fail.>>
      << This is the Republican version of a free market: private gains, public losses. >>

      Doc, I have to commend you on the first statement because I think you are right but I'm not sure about the second since later in your post you also indicate a lack in faith in Obama and rightly so. From what I see so far, I see nothing to be impressed with. Not that I expected much different because as I've said before, it's not the President that's important any more but who's pulling the strings and that goes for either party.

      And I think it's equally likely that EITHER political party would do the same in terms of socializing the financial system's losses so I'm not sure why you would point to one pol party being more likely to do this sort of thing.

      Thing is, some socializing of losses, I don't mind as I think some of it may be necessary but it's the degree of losses that the govt is opening itself up to that bugs me... especially as it relates to certain lines of businesses (i.e. derivative trading, off balance sheet hedge funds, and investing on their own account)that are really not what I would call 'necessary' in terms of just what an economy might need to function. Just why the investment banks GS and MS, and insurance company AIG were so high on the list of needing the taxpayers and Fed's help is a little bit much IMO. And allowing GS and MS to 'temporarily' become commercial banks and feed at the trough sets an awful precedent. JMO as I fully expect that once the higher-ups in these firms see an opportunity to make hay in some new investment banking schemes (and their balance sheets are in better shape after feeding at the trough for a while), they will want to 'party on ' again so my guess is that this metamorphosis into commercial banks is quite temporary.
      But maybe some small parts of these firms are necessary for an economy to operate but I really question what proportion of these firms really are necessary and how much we can live without because I think it's huge and maybe it's high time that govt took this opportunity to examine the role these firms play and what aspects of their business really are necessary for an economy to operate.

      Indeed, why let a crisis go to waste? Wouldn't now be the time to dismember these firms and cast aside what we don't need?

      I'm thinking if this were done prior to the bailing, we might find we needed to do a lot less bailing , no?

      Of course, this whole crises snuck up on everybody and it was said that emergency measures were needed and Paulson needed total autonomy. Was this out of fear that some might of thought to deal with some of these long term issues rather than bail out his friends and keep some favored institutions alive using hidden means?

      As to the latest 'plan', the way I see it the assets are obviously worth a lot less than carried on the books and the whole thing stinks. Not only do the financial institutions who might take part in these auctions get cheap highly levered financing with NO exposure to the downside if things go badly, I'm guessing they they also have another way to game this plan.

      Thinking like a WS scam artist, my guess is that these auctions will be done in several small lots rather than a few large ones.

      The reason? Because of the nature of the game. Why take a chance and bid on large lots with all the losers tainting the mix? Wouldn't it be better to bid on a bunch of small lots so you could cherry pick and let the tax payer hold the bag on the worst ones?

      Who's side is the auctioneer working for? The taxpayer, or the institutions doing the bidding? Duh

      Will we ever know how big the lots are and how these auctions are conducted?

      My bet is the taxpayer will get to hold the bag on most of the leavings after the plums are picked.

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PBR
7.60-0.11(-1.43%)Dec 24 2:48 PMEST

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