Sunday, March 1, 2009

Ignore the Negative Talking Heads, S/P 800+ Expected as Pendulum Swings Green ...


Greetings to all free market capitalists,

The unfriendly fiscal (tax) policies out of Washington couldn't come at a worse time, yet the Psychology of the Call team(POTC) is certain our new President does NOT want to be a one-term failure. Although the pendulum of psychology has swung hard against free market capitalism in the last 40 days, at such improbable depths, nothing can send stocks lower in the week ahead.
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We recommend positioning for an explosive equity rally that'll leave tea party participants, gold bugs, and bashing elephants with jaws agape.

With the S/P and Dow both on the edge of flashing 6 handles (S/P 735, Dow 7063) this administration must be conscious of what a further meltdown of capital would mean to their optimistic economic forecasts (unemployment peaking at 8.1% and GDP reversing by 4%+ in 2010). POTC believes the D.C. donkeys will do everything in their politrickle power to not see the indexes collapse in the first week of March.

Monday will be the most dangerous day of the week in our opinion, yet IF the markets hold the 7's on close, forward-thinkers should be overweight S/P for the remainder of the week, but especially the unwanted financials. BAC and JPM could return 50%+ and 30%+ respectively, and even orphaned C will rally. “Why?” you ask... read on.

With current psychology at bloodless levels, the classic conditions of oversold will be at work. IF any cordial banking policy news comes, then a jet-fuel type rally will occur. Is it possible this left-handed administration reveals BAC will not be nationalized, or a smidgen of optimism regarding bank stress tests? Of course it is, & it won't take both of those shocks for the explosive rally to begin. One alone would be enough, therefore maximum pain in the week ahead lies squarely on short accounts.

Any good news regarding bank stress tests would create the ultimate fire-starter/bear rally scenario. If you're short, you will learn how humbling trading can be. We realize a lot of seasoned/professional investors are considering buying gold now and expect the markets to collapse. We'll take the other side of that trade, but especially in the short-term. By applying Psychological Financial Fusion, forward-thinkers must not get swayed into selling this week, as fundamentals, technicals, psychology, & policy could not be any darker.

On Tuesday Treasury Secretary Geithner may yield more substance than most believe. He will reveal the 2010 budget proposal to the House Ways and Means Committee. The President will address the Committee Thursday as well.

The pendulum of last week's putrid psychology must bob a bit closer to equilibrium, and that's all it'll take for a bear rally of staggering proportions; S/P 10%+. Friday's Employment report will come like a dying female mosquito, not the bloody hammer-fist most talking heads now expect.

We hope you appreciated and found the Psychology of this Call useful. Now for some music video relief with dreams of a fun-filled Spring ahead: http://www.youtube.com/watch?v=57sfRo26fAc

12 comments:

Anonymous said...

Respect your opinion but disagree. This guy is a complete and utter ass. Market goes lower.
The weather man

Anonymous said...

I say we recover for a couple hours. Market is finished under Nobama.

Anonymous said...

s*p futures down 11+ at 11et, maybe good for a rally?

Anonymous said...

Wall Street hates Obama and Reid and Pelosi, they're gonna bomb the markets to show them up. There's no way we go higher this week IMO.

TcH3rNo said...

Bounce is coming but we will make news lows soon after. Market physics, nobody can do anything about it

Anonymous said...

Obama is a guy from the 'hood', he could care less abt the mkt. He will blame all this on 8 yrs of Republican rule, just watch. Dow to 5,000 until this Carter is ousted. One term and OUT I pray.
Disastrous President for free markets.
Adam

Anonymous said...

I find it amusing that the new administration which is just 40 days old is being blamed for everything. Was all hunky-dory the day before the inauguration? How is spending money for programs within the US any worse than spending on misguided wars justified on manufactured evidence?
And to the last poster - werent you the one who prayed for 8 years of W?

Anonymous said...

RUNNING ON EMPTY...
ok FORWARD THINK THIS: WHEN WILL AMERICA'S SHELVES GO EMPTY?


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Empty Containers Clog South Korea’s Busan Port as Trade Slumps
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By Kyunghee Park and Seonjin Cha

March 3 (Bloomberg) -- South Korea’s biggest port is running out of room to store shipping containers, said Park Jung Ho, an official at one of Busan’s nine operators. The bigger concern is that the boxes are almost all empty.

Container trade at Busan, the world’s fifth-largest port, has fallen about 40 percent in recent months, said Park, at Busan International Terminal Co. Even by stacking boxes five deep and leasing a nearby lot, he barely has room for the 31,700 containers that have piled up on his wharves.

“We are spending half of what we earn from our main business for storage space,” said Park who is responsible for placement of equipment and containers for the company.

Empty containers, idled dockworkers and laid-up vessels have become a hallmark of ports from Singapore to Rotterdam that six months ago were straining to meet the flow of electronics, toys, cars and equipment. For Busan, surrounded by the world’s five biggest shipyards, the outlook is even bleaker after the glut of vessels caused a record decline in global orders for new ships in January.

Singapore, the world’s biggest container port, handled 1.97 million 20-foot containers in January, 20 percent less than a year earlier. In Shanghai, the second-largest, traffic was down 19 percent, while Hong Kong, the No. 3, suffered a 23 percent drop. Busan handled 894,172 20-foot standard containers in January, the fewest since February 2005, the Busan Port Authority said on its Web site.

Silent Phones

“Things have really started to get bad -- laborers spend their entire day waiting for a call from the docks that they have a job,” said Kim Sang Cheul, a dockworker at Busan. “People spend all day staring at their phone as if staring at it can make it ring. You’re lucky if you get a call.”

Kim said most workers’ earnings have fallen by half and some were taking home less than 1 million won ($672) a month.

The dockworkers’ troubles may herald a similar fate for employees at the shipyards in Gyeongsang Province, where Busan is located, including Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co.

While global shipyards are still working through contracts placed since 2006, new orders have plummeted in the past four months.

“It’s pretty tough now,” said Lee Jong Chul, vice president of STX Group, owner of the world’s fifth-largest shipyard. “There have been requests for cancellations, but we persuaded owners to revise orders to a different vessel type or contract terms.”

97 Percent Drop

A total of 153.6 million deadweight tons were ordered last year worldwide, 43 percent less than in 2007, Clarkson Plc, the world’s largest shipbroker, said in its monthly shipbuilding report. In January, 0.4 million tons were ordered, a 97 percent decline from the same month a year earlier, London-based Clarkson said.

At the port, Cho Kwang Lae, deputy general manager for the Busan Port Terminal Union, spends his days meeting with importers and forwarding companies to try to find work for the 7,800 dockworkers at Busan.

“There were some laborers who worked only three days in a month,” said Cho. “The problem is this is going to get worse not better.”

On a recent Wednesday morning, 15 of 18 loading cranes on one pier were sitting idle because no vessels were docked. Less than six months ago, the 50-meter-tall blue-and-orange gantries could barely keep up, said Kim.

Working Nonstop

“The cranes were working nonstop and vessels would arrive in ports as soon as one left almost fully loaded.” he said.

Ships that do dock carry only 30 percent of their capacity, said Ryoo Chi Ho at a local shipping company. “There are no vessels arriving or leaving the port fully loaded these days.”

The Howe Robinson Container Index, which tracks weekly charter rates for container vessels, fell to 407.7 on Feb. 25, the lowest since at least 2000.

The effects of slumping trade could be seen across the city of 3.7 million people, which hosts Asia’s biggest annual film festival and is bidding to hold the 2020 summer Olympics.

Empty trailers and trucks were parked in every available space outside the port gates. A two-lane road off the main street near one of the terminals was lined with the vehicles, barely leaving room for a single car to pass.

“You hear about at least one manufacturer going bust every day,” said Chung Kyong Bo, an auto dealer in the city. “Hardly anybody buys or sells cars these days. And there are fears that the worst hasn’t hit us yet.”

Discount Apartments

In the upmarket beachside district of Haeundae, placards in bold, red words advertise new apartments at discounted prices. Shop windows around Kyungsung University are pasted with signs offering reductions on clothes, shoes and jewelry.

“There are fewer patients now at my husband’s dental clinic, and those who come want cheap jobs done on their teeth,” said Lim Jong Soon, a 36-year-old housewife. “Now instead of eating out at weekends, we eat at home.”

Like the ships in the port, the city’s cabs are also finding it harder to get business. Night clubs close six hours earlier than before because they’re empty, said Lee So Il, a 66- year-old taxi driver.

“During the good times, it was so easy to pick up customers in the early morning hours around the clubs,” said Lee. “These days, it’s hard to see where the taxi lines end.”

To contact the reporter on this story: Kyunghee Park in Hong Kong at kpark3@bloomberg.net; Seonjin Cha in Seoul at scha2@bloomberg.net
Last Updated: March 2, 2009 10:01 EST

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Anonymous said...

Thanks for the advice, this suckers going down!

Anonymous said...

Oh come on, open up your comments you neo-con chicken shits!

The Call Team said...

We completely underestimated the problems associated with commercial real estate(CRE) & insurers in the past week. We have been negative on CRE for longer than most anyone we read or hear, yet our oversold thesis hinged upon the technical conditions, now we know that was flawed, wrong, and irresponsible, as ongoing fundamental stresses in CRE and insurers pose a significant threat to capitalism. We have been very pessimistic for a very long time mind you, as we blogged about CRE and Morgan Stanley's problems less than 2 weeks ago. Our turn in sentiment was ignorant due to patriotic reasons (not wanting the market to erode further), and technical reasons we now know have become entirely unhinged. There will be a trade to make eventually based on technical reasons, and we look-forward to the world not coming to an end, you?

Anonymous said...

You've still been a lot more right than wrong. You guys are being too hard on yourselves. It's a breath of fresh air to see someone admit a mistake, and the reasons of technical rally fooled even the biggest bears actually. So I agree with wanting to be patriotic 100%, the technical stuff also makes great sense. Still short MS & VNO on your recommendation, maybe lucky, but I knew the fundies of the market are worse than most. Love your blog!