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Todd Harrison
Sept. 29, 2010, 12:01 a.m. EDT · Recommend · Post:
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The Us versus Them Depression
First Take "º
H-P meeting not as exciting as Cook rumor
By Todd Harrison
NEW YORK (MarketWatch) "” One of the first adages I learned on Wall Street was that nobody is bigger than the market. That theory is being put to the test.
When David Tepper and his animal spirits stirred last Friday, the tape took notice. Tepper's Appaloosa Management Hedge Fund has enjoyed a sweet run, including a $7-billion earn-out in 2009. The New York Times reported that Tepper, with his $4 billion personal cut, was single-handedly the top earner on Wall Street last year.
Billionaire investor Ken Fisher chimed in this week, calling the concept of "new normal" investment returns "idiotic." Dismissing notions that developed nations face below-average growth, Fisher told investors in Sydney "We are chimpanzees with no memory; the next ten years are going to be just as good as the 1990s. The problems in this current environment we think are so new and so unique. It's the same stupid old normal we've always had; we've got a great future."
While the street bought stocks on that news "” presumably with an assumption they would have time to ask questions later "” I dialed back to the spring of 2000. When the tech bubble burst at the turn of the century and the Federal Reserve cut rates in an effort to stem the crimson tide, all you heard around the street and throughout the land was "Don't fight the Fed." I didn't subscribe to that notion then "” it was a painful lesson for many to absorb "” and I'm dubious of it now.
"?Welcome to the future, San Dimas California 2688. And I'm telling you, it's great here. The air is clean, the water's clean, even the dirt, it's clean!'
Rufus, "?Bill & Ted's Excellent Adventure'
Fast-forward to present day; "Don't fight the Fed" has been taken to an entirely new level. It's no longer about rate cuts "” that bullet blasted long ago "” it's about massive intervention, intricate acronyms and the full faith and credibility of the United States government. For those who point to the past "” The Depression, the "?70s, Y2K "” I would offer, with all due respect to Fisher, that this time is indeed different. Never before has the world been so interconnected and leveraged; FDR never knew what a derivative was.
I'm hopeful for an economic recovery as I stand to benefit as much as the next guy but hope has never been a viable investment vehicle. Despite what we hear "” the recession is over and the upside is "?easy' "” let me tell you something you already know; it's not easy and it ain't over. I consider myself an optimistic realist, meaning I hope for the best but call it as I see it. I foresee another side of the financial storm before the epitaph is written on this Great Recession. Read Minyanville's "The Eye of the Financial Storm."
Society is a sum of the parts and the stock market is supposed to be our thermometer. When the chasm between perception and reality becomes untenable, a seismic readjustment inevitably occurs, as we saw a few short years ago. The current juncture is complicated by the strong state of corporate credit "” which bodes well for higher stock prices "” but there are so many fragile elements and assumed conclusions that it's difficult to separate what we're feeling versus what we're being programmed to believe.
A U.K. tabloid editor learns hitting from Wally Joyner, takes some groundballs, and finds out what shagging really means.
I've written about the two paths; there are drugs that mask the symptoms and medicine that cures the disease. The drugs "” giving the drunk another drink with hopes he doesn't sober up "” will carry us for only so long before social mood sours to the point of deterioration domestically, internationally or both.
The medicine "” debt destruction or reorganization "” will be a bitter pill for asset classes but a strong step towards an eventual outside-in globalization. Read Minyanville's "The Main Event: Inflation vs. Deflation."
The government bought time "” literally "” by reflating markets last year and allowing corporate America to roll out debt and issue stock. Risk wasn't destroyed, it simply changed shape; it migrated from one perception to another, from one balance sheet to the next. Sometimes I feel like I'm taking crazy pills; the imbalances are cumulative still and the lessons learned from the previous crisis have seemingly been squandered.
Far-fetched rumors that Tim Cook might join H-P as CEO demonstrated the main interest investors currently have in the company.
5:58 p.m. Sept. 28, 2010 | Comments: 3
- GioAlma | 11:53 p.m. Sept. 28, 2010
"HSBC's China manufacturing index rises to five-month high in September http://on.mktw.net/aXl9rh" 9:46 p.m. EDT, Sept. 28, 2010 from MarketWatch
"Hong Kong stocks climb, with property, telecoms, resources higher; Hang Seng Index up 1% http://on.mktw.net/bE6fYm" 9:04 p.m. EDT, Sept. 28, 2010 from MarketWatch
"Japanese stocks open higher after tankan survey release; Nikkei Average up 0.4% http://on.mktw.net/arHNY5" 7:04 p.m. EDT, Sept. 28, 2010 from MarketWatch
"Japan's tankan key business-sentiment index improves more than expected http://on.mktw.net/cRXTys" 6:54 p.m. EDT, Sept. 28, 2010 from MarketWatch
"After Hours: H-P shares rise after outlook; Sealy declines http://bit.ly/90Wemc" 5:07 p.m. EDT, Sept. 28, 2010 from MarketWatch
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