All In or All Out

If changing perceptions about values is the main goal of the Fed, it seems to be succeeding. Stocks and treasuries have certainly switched positions on the comfort scale recently with equities now being repeatedly called an "all in " and owning treasuries now being claimed by managers to be the worst investment possible. The bull cheer in stocks comes after a two and a half year bull run along and with a Fed as recently as last month declaring yields would remain at historic lows for several more years.

If the Fed has helped to alter value perceptions then it comes from a lot of work as the great liquidator. Not to be confused with liquifier, rather a proxy liquidator. Banks unable to retrieve debts owned them, Fed in effect liquidates the trade by providing zero cost money to the lender and lets them hold the diminished asset as if to say, go ahead and get whatever you can for it. The same thing is going on by European central banks although not nearly as effectively. Just in case the CDS claims are made, flood the system with cash, though probably no where near the money needed if necessary.

There is a natural bias at work here of coarse. The world is long stock despite what "cash on the sidelines" rant one might believe. The perception of a recovering economy then leads to a bias toward higher rates or bearish bond recommendations.

The Fed has consistently seen a much darker side to the economy. A potential storm's impending arrival seemingly as hard to peg as typical forecasts as to weather to call it a storm watch or a storm warning. Regardless, the Feds actions to prepare for any bad weather has had the effect of herding returns into assets outside the comfort zone of virtually zero risk treasuries. Now these dollars are corralled into a smaller and smaller fenced area as prices for assets such as stock are significantly higher.

If the Feds accommodation is an accurate perception into storm forecasting, then bullish sentiment of stocks and bearish sentiment on bonds probably mark a top for each.

AAPL GOOG Match Up

The battle between these two monsters will be interesting to watch. Here are the number comparisons supplied by Wolfram Alpha

This Time For Sure Again

Waiting for the next leg up in stocks seems to be a given if you listen and read the vested interests, which is just about anyone providing market information these days. Never have so many wanted so much for things to break out on the upside. I have heard endless price forecasts based on the "golden cross" where the 50 day average crosses the 200 day average. It is hard to believe people actually rely on these tools but given the weak state of hedge fund mechanics it is not a surprise. Having looked at enough data for 20 lifetimes it is clear this trick of the trade comes from the secular bull markets developed from the great run originating from the Great Depression. What they don't tell you is the cost against any future gains incurred when the two averages cross back and forth, over and over again before breaking out. I guess they call that the "golden shower".

Anyway, golden cross, money on the sidelines, and describing losses of more than 50% by Greek bond holders as concessions and not defaults are all part of the kool-aid being sucked down. It's a default and CDSs will be exercised in one fashion or another.

Markets have a great habit of using the formula, " this equals that," and as a result, repeatedly makes great errors in pricing.

Facebook Saves Economy

Facebook is now hiring thousands of people to create their own Facebook site. Imagine being paid to put nothing but information about yourself and fellow Facebookians so that millions can experience you and any fascinating facts or not so factual facts. Financial amounts have not been disclosed because negotiations between those who wish to provide important personal information are being interfered with by those who are boring. Just putting a picture of you and your dog is not going to make you rich. You need to put a picture of you and your dog eating together at a table with party hats and T shirts that say Eat Me. And that is only a start.

Now remember, if you cannot get paid for providing personal information you will have to do it for nothing. That means just having a Facebook site and adding pictures of yourself and friends for no particular reason.