by John Galt
August 31, 2009
Ah yes, the good old days are back again. The bananas took a much needed break this summer and went on a brief sabbatical not to gloat about their appeal, but instead to relax because God emailed them and told them to take some time off. After this message from Obama, they decided to split to greener pastures and relax in the tropics to enjoy some time off with their green brethren and look for a future where a slippery slope could be part of their dancing activities.
The markets in the last 8 weeks were bleh. You hear about the cheer leading. You hear the nonsense about what a great earnings season this was, even though revenues were down over 30% for the majority of companies reporting. You heard the crappola that the banking crisis is in check even though the FDIC numbers tend to indicate that there are more problems to come and that they will need a cash infusion and fast. You heard from Bubblevision for almost a year now about “all that cash on the sidelines” and you still hear the same line; yet money is still parked in short term Treasuries yielding less than 1% or in the very short term, less than 0.20%
It’s sort of funny, like a dancing banana, as to why you never hear those things from the clowns. Sadly, they have not stopped. I heard the same nonsense repeated this evening about how this was a “broad based” rally yet even from tonight’s edition of the Wall Street Journal Market Data pages, you can see that some of the usual suspects being day traded between the big houses composed the largest volume participants:
Thus you can see why I’m not excited and the bananas went to the islands to consume mass quantities of Banana , er Strawberry Daiquiris while sunning themselves. Now that they are tanned rested and ready, they will have a lot to say, especially to provide balance against the nonsense being broadcast from DC and Wall Street to attempt to fleece the Baby Boomers from what is left of their retirements and hopefully provide a perspective on the daily market activity. As you review that little snippet from the WSJ above, the math is simple; on a day when 1.377 billion shares traded on the NYSE in total, C and BAC accounted for just over one billion of the shares. Hence the Bubblevisionista theory that the “masses” are closing their FDIC insured Christmas Super-Saver accounts and rushing to their brokerages to buy stock is total insanity.
Thus we’ll offer the JohnGaltFla perspective on where we see things heading and remember, I’m only speculating that this bubble isn’t going to last or work for the long term; not yet at least.
Remember this chart from www.chartoftheday.com of the P/E ratio of 129 on the S&P 500? Check out the chart from the following week side by side and think:
The bottom line? It would appear that this parabolic move is about to correct and unfortunately for Ben Bernanke, in a similar fashion to the early 1930’s. Does this mean we will end up in a deflationary depression? I and the bananas find that unlikely however the probability of the Fed and Treasury engaging in the open purchase of equities to hold bogus valuations of pension funds up and to delay a total collapse, at least until Congress acts one way or another, would not shock me.
Stay tuned boys and girls, the fun is just beginning. And I fear that September of 2009 could be just as much of a month to remember as the same period in 2008. Time to make a few Banana Daiquiris, er Pina Coladas to deal with this fiasco. The last thing I need to do is upset a bunch of my BBB’s (Big Banana Boosters) especially when those big money fruits return to work after Labor Day.