Wednesday, May 20, 2009

DEAD FAT CAT BOUNCE--Why I'm Paying Attention to Roubini Again

WIKIPEDIA--A "dead cat bounce" is a figurative term used by traders in the finance industry to describe a pattern wherein a spectacular decline in the price of a stock is immediately followed by a moderate and temporary rise before resuming its downward movement, with the connotation that the rise was not an indication of improving circumstances in the fundamentals of the stock. It is derived from the notion that "even a dead cat will bounce if it falls from a great height".

Fat Cats hate rain. In particular, they hate rain coming down on their Fat Cat parades...and what a parade we have of late. Have you noticed all the self congratulatory ticker tape noise coming from Fat Cat Street lately?

We are hearing about the Fat Cat rush to send the TARP cream back to Uncle Sam. Fat Cat institutions are scrambling to raise cat food money. Somebody, god knows who, is actually buying their Fat Cat shares on the premise that they will be best positioned to reap the felonious feline benefits of the Fat Cat recovery which is already in motion (so they would have us believe).

Fat Cats are starting to pontificate about how TARP and the whole bruhaha over Fat Cat compensation were commendable but misguided. Warrants???!#* You don't need no stiiiiinking warrants, say the Fat Cay Banditos.

Well there is one cagey Cat who keeps doing a Fat Cat rain dance, just like he did before the Fat Cat sub-prime parade got caught in the mother of all meltdown monsoons. Nouriel Roubini. Nouriel the Scaredy Cat says we are in the middle of s "suckers rally."
He is also caught in a shouting match with the fools who think the Chinese RMB/USD imbalance is not a problem. Who do you want to believe?

Lets look back at the past four months.

1. Huge Fat Cat write downs, and alot more still to go.

2. Lots of public anger about Fat Cat bonus capers. Bonus caps cause a state of Fat Cat emergency.

3. Huge economic stimulus package passed. "Infrastructure is better than restructure."

4. Plenty of Fat Cat hocus pocus (e.g., Goldman's disappearing December numbers) pump fresh Fat Cat exuberance.

5. Fat Cat first quarter numbers show Fat Cat trading gains and Fat Cat fee income from refinancing Fat Cat mortgages and recapitalising Fat Cat banks.

6. Geithner announces and completes Fat Cat stress tests. Fat Cats get a "transparent" bill of health.

Presto, why do we need to fix anything? Everything is going just fine.

"Horse Feathers"!!!!! hip cat lingo for "bull shit!"

What has not happened? Unemployment numbers have not improved. Consumers are not spending. Defaults (corporate and individual) are accelerating, not abating. Toxic Cat food has not been restructured, its been carefully buried by the Fat Cats.

As our former great exalted Fat Cat leader "W" once said: "I'm not an economist."

Well that Cat Nouriel is, and this Cat is once again paying attention to what that Cat has to say about the fabled "Dead Fat Cat Bounce."

No comments:

Post a Comment