June 3, 2009

"How much higher do stocks have to rally until the chorus of doomsayers admit the move is for real?"







I've never seen a stock market rally as powerful as this one.

But then again, I've never seen the US Dollar sell off this shockingly, suddenly and brutally either.


All things considered, it's pretty much a wash.

Unless you were unlucky enough to be holding dollars.


64 comments:

Anonymous said...

For f*cks sake Keith. It's not about the stocks. It's about the fundamentals. None of which have changed. They've only become worse dude.

Go read Mish's or KDs like um last fifty posts for enough analysis for you to get the gyst of what I mean...

Look at the stock charts for the Great Depression - there multiple bear market rallies and then further gut wrenching drops in the market.

What fairy dust do you think is elevating the market "for realz"??!

Sheeeesh!!

-Gonzo

Anonymous said...

Keith,

Please stop promoting Cramer. At his best he talks out both sides of his mouth and loses people their savings. At his worst he is one of the criminals who created mass speculation and hysteria. You may well be right about things turning around, but Cramer is not a good poster child for you cause.

Bukko_in_Australia said...

I'm a doomsayer. I'll believe it's real once the economic fundamentals start looking real. Like real jobs. Like real reductions in personal and government debt. Like real muscle instead of a steroid high from market manipulation.

Keep dreaming on, Keith. It's what "they" want you to do.

But I'm happy to watch what I consider a sucker's rally. Go, baby, go! I'm still way down on the money that I thought my Swiss bankmaggots were managing wisely. I should have known a maggot is a maggot, even with a Sweitzersdeutsche accent. Just a little bit more, pull up, pull up, and I can bail out to stock the doombunker even better. I hope a lot of people feel just like you, Keith.

keith said...

This stock market rally is about the collapse of the US Dollar.

Those are the fundamentals that you should be looking at (with stocks and commodities are priced in dollars)

Peter Schiff nailed it.

And if you're not making moves right now, today, you're getting killed.

Anonymous said...

Rally will end this month AFAIAC.

Gotta be diversified right now Keith.

SOME dollars is a necessity.

yoski said...

"I've never seen a stock market rally as powerful as this one."
I have, NASDAQ about 1999. But it's not really about stocks. There're several areas that will do fine. Energy, gold, materials, China, Latin America even some industrials. That's where I got my money.
The biggest sucker play right now it holding long term Treasuries. Similar to long term debt of GM 5 years ago. As I said before, the world will somehow figure out how to live without US consumption and without our toxic debt. There still will be profits, stock rallys and growth. Most of it will occur outside the US and Europe.

vanilla ice said...

I'll be a permabear until this country acknowledges the severity of its financial problem and starts paying off our debts. None of which appears to be in the near future.

Anonymous said...

How many of these 3:55PM rallies do you do you really think are for real? PPT baby. They have already probably spent at least 1 trillion over the last 2 years trying to keep this market from totally collapsing. I saw commentary where one person estimates it takes about 10-20 billion to change the market direction right before the close. Keith, please tell me you don't really think this rally is for real. I do agree that massive inflation will kick in at some point, but its way too early for this rally if its for real.

vanilla ice said...

And I almost forgot, Dow to 4,000.

Saul said...

Keith,

OK, I'll put a stake in the ground. DOW 12,000.

It may go as high as 10,000, but I doubt it. I think the market will crack way before then. We are closer to the edge than I think you realize.

However, I agree, it's been an impressive rally. But see it for what it is - a bear market rally. Like I said before, this is not a falling knife, it's a rising one. Getting in now is too risky, there is a lot more downside than up.

Anonymous said...

When equilibrium is reached and decisions are made from rationality and not fear and speculation is when I will consider "moving" my money in any direction. I am pretty sure that will take some time.

DMP

Stu said...

Keith you apparently have never seen a classic BEAR RALLY either...

This market is so overpriced and so over heated on rhetoric, hype and hope. It will come crashing down before too much longer and then, as in the past, it will rise up again.

A truly classic recessionary market correction with multiple BEAR RALLYS over the course of several years is exactly what is going on here.

Can you say 1930’s all over again???

keith said...

Folks, you're missing my point.

This isn't a rally.

It's stocks and commodities, priced in dollars, adjusting to the dollar's downfall.

It just looks like a rally.

Anonymous said...

You are an idiot keith and i will never let you live down this post
Obama worship has turned your brain into flip flopping mush . You may have got housing right but you are wrong on all your other observations , Just when you appear to begin to see the light you revert back some idiotic view point.

Stu said...

Keith if the market was reacting to the dollars decline then it would seem to me that stocks would fall and not rise because the valuations are declining.

When the dollar was falling before the stock market came crashing down so you are not making any sense with this theory of yours.

Markets always move, when they are not being manipulated, based on ROI and if you are saying the dollar is falling, which it is, then the ROI is less which would cause the shift downward in the market and not the other way around.

This market is reacting to the hype and hope being plastered all over front pages of the MSM. The true investors are selling into this rise for profit (profit taking as it is commonly referred too). Look at the movement of the finance stocks. It makes no sense at all. We have 100's upon 100's of insolvent banks, but yet their stocks are rising because Fraudbama has told the world our lenders are too big to fail. Falsely propping up lenders does not make them profitable and as a result they are not profitable. They show figures that make them appear to be, but they are losiong money hand over fist.

You can move along now... a classic BEAR RALLY Keith and nothing more than that. You do not want to be the last one out either or you will lose everything literally overnight.

keith said...

If the dollar falls 50% and stocks don't gain 100%, you're in trouble.

Capiche?

Meanwhile, the dollar has fallen against the Euro 16% and the Pound 19% in the past 12 weeks. Against oil it's fallen 50% (used to cost 35 a barrel now it's 70 a barrel - and there's no pickup in demand for oil)

You're seeing a dollar debacle, resulting in the appearance of a stock market rally

And this was all planned. Read Bernanke's helicopter speech again. And then read it again.

We're monetizing the debt. We're watering down the existing mortgages. And we're going to see a stock market rally 100% in no time flat, so as to generate a 'wealth effect'. Many stocks and foreign markets are already up over 100%.

It hath been foretold.

Invest wisely.

And watch the dollar.

Andrew from Russia said...


This isn't a rally.
It's stocks and commodities, priced in dollars, adjusting to the dollar's downfall.
It just looks like a rally.


I see. So, when the dollar price of certain EM stocks triples in the January-June timeframe (examples abound in Russia, hell there are some small-cap issues whose price had quadrupled) it must be that the dollar has just been devalued threefold? Or is that just some weird speculation going on?

keith said...

It's not a one-for-one

In general, it's being fueled by dollar destruction, and rush out of dollars and into assets. Some are benefiting more than others. Much more.

Invest wisely.

Miss Goldbug said...

Someone near and dear to us has taken sips of cool-aid....

Make that gulps.

Andrew from Russia said...


In general, it's being fueled by dollar destruction, and rush out of dollars and into assets.


I agree with you on that one: it's a rush. Whatever the end result will be, the stampede itself does not look quite "healthy" and may not be worth following. Although I'm pleased to be ahead of the herd this time, I still retain 1/3rd of my assets in good old trusty greenbacks, their "irreversible" decline balancing the stock-market madness.


Some are benefiting more than others. Much more.


So what we may actually be seeing is EMs being pump'n'dumped with newly-printed bailout funds. As weird as last year's 79% RTSI crash was, this half-year's 220% rise is none better.

Stu said...

Keith I agree we are seeing a rush from the dollar into other assets, but anyone investing those dollars into dollar demoniated assets (ie. US Stocks)would be a fool. Why would you take a devalued dollar that is still falling and invest it into us stocks which are dollar valued? You would simply shift your losses from the actual currency to the devaluation of the stock due to the same reason. The same reason by the way that the stock market will come falling back down soon once the bear rally subsides. People will flee the market and look for value else where as they did at the start of this recession. Many moved to treasuries, but that is no longer an option because the Fed is the only real buyer which is destoying the dollar even further (what we are witnessing now).

Many are rushing into other currencies (NOT the pound which will be destoyed well before the dollar is IMHO) due to the fall of the dollar. You get better returns right now else where. Some are playing the currency game again relying on the dollars decline by borrowing US and buying other currencies with it. A game that gets you free cash for doing nothing, but a very risky move as we have seen in the past when currencies do not behave as you had planned.

I see this as nothing more than a bear rally. It has all the same look and feel as the last bear rally had in this country and the one before that etc.

What I will agree with you on is some new 401K money is being thrusted into our stock market by individuals as it looks clear to get back in for some. That is exactly what true investors are waiting for and what a bear rally does. It creates an illusion of value and as every day money floats back into the market the true investors that know what they are doing gear up for profit taking. They take bits and pieces now and again without it disrupting things too much (hence the blips we see), and then they do a money grab and you see a free fall in the markets like a drop of 500 points in 1 day. That is what is coming and exactly what is occuring right now.

Invest wisely is spot on and if you are a short term trader I would be investing very carefully right now because when she blows you will be the bag holder if you didn't get out or at least hedge your bets.

Dr. Huxtable said...

You have been right on a lot of calls and are sticking by your guns on this call.

And Bernake did spell out his plan for the dollar and deflation.

Miss Goldbug said...

My BIL and SIL just called yesterday to tell us they put an offer on a place up in Rocklin...

In the same breath, he says: "I hope I'm buying in at the bottom"!

I suspect he's been listening to cramer, for I hear the shill just announced homes were "a buy" and "they hit bottom".

I know this will go through because they are paying all cash. The realtor probably was shocked and salivated all over himself when he received an offer on a townhome that isnt on the market until Saturday.

It's unbelievable people listen to this fool...stupid is as stupid does.

About the stock market:

This rally is going to blow up in everyone bull-believers face. Its just a manouver by market makers and shills to push stock prices higher, just wait until October.

The gulliable will say - what happened, where's the end of the recession??!

DOW at 6,000.

Anonymous said...

The P/E ratios for S&P and DOW are through the roof.

No recovery here; move along.

tico said...

Keith,
You probably just called the top of the move. But yes it is going up and anyone arguing that is an idiot. Why I always taught traders to not trade fundamentals.
All the best!

Bukko_in_Australia said...

I saw commentary where one person estimates it takes about 10-20 billion to change the market direction right before the close.


Anon, this is the commentary you were thinking about, I do believe. It's a good read. Says there's not just a stock plunge protection team, but a currency manipulation team, and a commodity market-rigger. And GATA, of course. All done with YOUR deficit dollars.

I used to think stuff like that was paranoid horse-shit. God help me, but I'm starting to believe it. And I don't like to find myself agreeing with tin-foilers.

Anonymous said...

Great Keith!
Paper stocks are up over paper dollars as assets fall and gold speculation drives it to the moon.

Anonymous said...

PLEASE Keith, it's not a rally, it's a phoney attempt to restore consumer confidence so that they jump back into the market.
How can anyone believe this when job losses are mounting? Car dealers closing? Businesses closing?
Remember that figures regarding unemployment only reflect those that still are receiving their unemployment insurance, not all the ones that have run out and are off the rolls. The unemployed is really above 10%, they just are afraid to say the words because it will destroy their confidence game.

Anonymous said...

Keith has done it - he's called the top! See you at 450 on the S&P.

Anonymous said...

Keith I live in a wealthy area right across the street from a huge White Elephant of a condo complex built by Toll Brothers at the precise time of the big drop.
They have about a 3% occupancy. Starting at $400K they are now seeking leases and the cost has been cut in half. Still no customers.
I don't know how long they will be able to keep this up but I expect the fire sale soon. This a a GIANT condo complex.
So I'm sorry, I don't believe in the stock market rally, housing bottom, etc. Because of this monster I am looking at. If this begins to move, then I will agree perhaps things may be getting back to normalcy, but they won't. By the way lots of other stuff for sale around here too! Reason: Parents aging, children can't afford to live here (their jobs pay nowhere near what their parents made.)

Anonymous said...

"If the dollar falls 50% and stocks don't gain 100%, you're in trouble.

Capiche?"

You're assuming that company earnings are remaining constant under that scenario. Consider that earnings are falling faster than the rate our government is destroying our dollar. Under that scenario stocks should be falling, not rising.

Capiche?

Anonymous said...

The only explanation is that the real, original Kieth sold his blog several months ago for a couple of pints.

keith said...

Funny to see a bunch of US dollar bulls on this blog

And interesting that the vast majority of you are unwilling to even consider the chance that you should pivot

To each his own

Anonymous said...

will you shut up forever when it's crashed?

asillywabbit said...

The S&P would have to set a new inflation adjusted high.

During the Great Depression, there were several spectacular bear market rallies. In 1932-early 33, the market went from 42 to 71, then it turned around and went back to 55, only to turn back up to 98. The final capitulation occurred in 1937, eight years after the crash, when the market went from 186 to 120. Keep in mind that the market peaked at around 380 before the crash.

The steep yield curve is the only argument for a recovery at this point that I see.

Everything else goes against it. The market volatility, company earnings losses, the job losses.

Angry Leprechaun said...

"For f*cks sake Keith. It's not about the stocks. It's about the fundamentals. None of which have changed. They've only become worse dude."

Dead on Gonzo! I did not read past the first response to this post and you had already handed Keith his own man package on a silver platter.

Keith, what I don't get is the difference in standards you hold Obama to. A much lower standard. If this was all going on under Bush you would be going nuckin futs right now. In fact, one could argue that since a lot of the stimulus money hasn't been placed in effect yet, that this is all of Bush's TARP that has us where we are at now. And don't all of you shills jump on me as a Bush supporter, once again I am not. I am making a point.

Keith pull you head out already.

Save Keef said...

The real Keith is in Greg Swannies basement with the puppet sock stuffed in his mouth...They finally found him.

Search & rescue anyone?

Angry Leprechaun said...

"Folks, you're missing my point.

This isn't a rally.

It's stocks and commodities, priced in dollars, adjusting to the dollar's downfall.

It just looks like a rally."

No you said,"How much higher do stocks have to rally until the chorus of doomsayers admit the move is for real?"

Pull your head out.

keith said...

I hope you all will admit when you're wrong.

I will.

I've been right though for a long, long time. Right on the way down, right on the way up (so far). And I hope to be right again on the next leg down.

I'm thinking 2013. After this massive sugar high has worn off.

Angry Leprechaun said...

I can't decide if this conversation is sad, stupid, or funny.

keith said...

Actually I think Greg Swann is still shorting stocks

Anonymous said...

I've been right though for a long, long time. Right on the way down, right on the way up (so far). And I hope to be right again on the next leg down.

I'm thinking 2013. After this massive sugar high has worn off.
.


That's great Keith. It's good to be right all the time.

It would nice to have a little more clarity in this discussion though.

What do you mean that this move is "for realz"?

In one sentence you say it is dollar devaluation that is driving this rally. In that case - it's not "for realz" is it?

What exactly do you mean by recovery? I asked this question before and you didn't bother to answer it rather you'd just say "Capiche? It hath been foretold blah blah blah".

To say that we are in a recovery is on it's face absurd. Go read the headlines at Bloomberg and show me the signs of recovery.

-Gonzo

Dr. Huxtable said...

Oil Falls as U.S. Supply Unexpectedly Gains, Consumption Hits 10-Year Low

http://bloomberg.com/apps/news?pid=20601087&sid=afG9uyWJQbZc

Anonymous said...

Funny to see a bunch of US dollar bulls on this blog

And interesting that the vast majority of you are unwilling to even consider the chance that you should pivot

To each his own
----------------------------

dollar bulls? not sure about that. do you think the euro is place to be? the pound?

this has been posted before:

fiat currencies do not rise, they all fall at varying rates

or something like that

Anonymous said...

time to short the euro. DRR, get some.


December 2008

i've had it said...

Exactly Keith,

it's a wash because the dollar's been dropping.

Jim Rogers said it today. He advises against shorting the market because of the free fall of the dollar and that it will push the markets up.

-----------------------------

Jim Rogers: S&P Could Go to 50,000
Posted Jun 03, 2009 11:20am EDT by Joe Weisenthal , xlf

Ahh, Jim Rogers, always good for a nice headline (see: above). In an interview with the Economic Times of India, the famously dramatic and bearish investor, hits on all his favorite themes, like the collapse of the West, the appeal of commodities and farmland, and of course inflation and the collapse of the dollar.

While he's negative on US assets -- he says he's gotten rid of all of his dollars, for the most part -- he advises against shorting this market.

It's a bear market rally. I was going to say I don't think S&P 500 will see new highs. But I have to quickly temper that by saying against the dollar because the S&P 500 could triple from here if they print enough money and the value of the US dollar collapses, then S&P could go to 50,000, Dow Jones can go to 1,00,000.

Which is one reason why I am not shorting stocks right now. Because there is a possibility of this sort of a thing. There is a possibility that stocks could go through unheard of levels, but would be in worthless currency.

And here's his advice to would-be money managers:

Become a farmer. The world has tens of thousands of hotshot fund managers right now. If I am correct, the financial community is not going to be a great place to be in for the next 30 years. We have many periods in history when financial people were in charge, we had many periods when people who produced real goods were in charge — miners, farmers, etc.

The world, in my view, is changing and is shifting away from the financial types to producers of real goods, and this is going to last for several decades as it always has. This may sound strange but it always happens this way. Ten years from now, it may be farmers who will drive the Lamborghinis and the stock brokers will drive tractors or taxis at best.

Sounding very much like Marc Faber, also an advocate of farming, who recently said he's 100%(!) sure that the US will experience Zimbabwe-like hyperinflation.

Mike Hunt said...

Keefer,

Your post title sounds like the type of sales pitch a realtor would use.

Just because there is a rally doesn't mean it will hold. The higher it goes the more chance there is of buying and then getting trapped long.

Like you said, be ready to pivot.

Book your profits and be happy you prospered in this rally.

-Mike

keith said...

Let me put it this way folks. My US-based portfolio is up bigtime since March.

But the US dollar has tanked against the pound.

Net? Just treading water. But if I had stayed in the US dollar, I would have gotten slaughtered.

See the Jim Rogers post - thanks I've Had It. Finally, someone says what I'm saying.

Mike Hunt said...

Dollar will probably get stronger before it gets weaker, Keith. Things don't fall forever and the US dollar is still the reserve currency of the world, though the monkeys at the helm are doing their best to void that.

-Mike

Anonymous said...

Uh oh. Keith is starting to sound bullish. Must be a near term top.

In fact, the charts DO look quite toppy right now...

keith said...

I'd love a nice 10% pullback right about now...

evildoc said...

---"How much higher do stocks have to rally until the chorus of doomsayers admit the move is for real?"---


Well... I'd like to see 'em beat at least the bear market rallies at the start of the Great Depression, which heralded merely the... next... leg... down.

regards

evil

MsNJ said...

It's a recovery, for now.

Let Grandma and Grandpa get their retirement investments "back"... they will need them, since the house aint worth much these days.

Anonymous said...

When priced in gold, Dow has been nearly FLAT since the beginning of April...

Anonymous said...

boy, why are you people so dense? Time & time again I see you idiots arguing with Keith about the most simplest of things. I usually think he's dead right. I specially hate to read the comments on his (more) political posts, you repubeitards out there really come out of the woodwork then! Like roaches smelling 3-day old garbage you cant resist coming out into the light and scurrying across the floor! Its painful to see such obvious ignorance coming from so many ignorants! And they are almost proud of the simplicity being so painfully stupid brings! As if there is this enlightened grace one experiences when they decide not to be burdened by nuance, detail, or opposing views, they call it how they see it and there can be no more depth on any issue than what meets their eye and/or what they can comprehend!
About the dollar and the rally in stocks? of course, keith is right again! you people really need to read some econ lit, or understand some theory or something before you go off on keith. yikes! Do the least bit of research at least before you go off on Keith for expressing an opinion not of your world view!
-JDF

Anonymous said...

hey....sock puppet has not even mentioned pressing the advertizers site buttons for a very long time, even tho/ although he was spending the money in the pub???????????????????

Anonymous said...

when priced for housing the dollar is still down 80 percent for the last 15 plus years

Anonymous said...

when priced for avacados the dollar is down 98 percent over the last 15 plus years

Anonymous said...

when priced for meals made out of lawn grass the dollar is up!!!!!!!!!!!!!!!!!!!!!!

Lost Cause said...

Commodities plummeting, right one schedule.

Anonymous said...

keith in the 1970's we had war, inflation, falling dollar, expanding government, peak oil and oil prices, gold goin to the moon--- and stocks sucked from 1966 to 1982. Only when they brought in HIGH interest rates did it stop the nonsense and stocks boomed.

Stu said...

Keith, Mr. Rogers did NOT agree with you, but rather he agrred with me and others on this post.

Sure stocks go up in value due to inflation making things cost more, but the purchasing power is diminished because the value is in US Dollars... GET IT???

Taking US Dollars and buying US Assets valued in US Dollars is an insane approach to protecting yourself against the fall of the US Dollar. In fact you then rely on the company doing well to make money vs. the cash in your hand that you control.

The only way to protect against the fall of the US Dollar, if you feel that it is going to crash, is to rid yourself of anything US Dollar based. In other words buy foreign currency, foreign assets or let it work in foreign markets. Peter Shiff had this pegged over a year ago.

Stop the nonesense and get real will you please. ANY economist worth their salt would tell you what I am telling you right now.

Anonymous said...

Hey keith....when the dow hits 10,000 gas will cost 10.00 a gallon....hyperinflation...it hath been foretold.

Devestment said...

I don't care how high it goes. It's legal corporate gambling paper ,manipulated by assholes, cherished by robot slaves. I just don't respect it as an asset.