The Views from Near and Far
There are always two ways (at least two ways) to look at everything, including the market. In fact, whether one looks at the market from near or far makes a big difference in what you see.
Like most complex equations with multiple inputs, synthesizing the different inputs is critical to what comes out on the other end of your equation. In this case, I’m talking specifically about two inputs – the perspective from near and from far away. And I am talking about how they affect one’s view of what’s happening in the market and where it’s likely going to go next.
Yesterday was a good example.
Early in the morning (in my travels), I saw that the Dow futures were up 82, and I thought, it could be a good day and we might finally tip the scales resting on the pivot point fulcrum we’ve been teetering on for a couple of weeks now.
As the morning rolled on, before the open, company after company reported earnings, and they all handily beat consensus estimates – some by huge margins. From a distance, if that’s all you saw, you’d be inclined to think, as I did, that the market was headed for a great day.
But that was just the far view…
Closer to the action (which I wasn’t always seeing, because I was in transit), as one after another earnings report came out, again before the opening, the futures ticked down, lower and lower.
I didn’t catch the open, so let’s pretend I still don’t know what happened at that moment. The opening is important because sometimes it sets the tone for the day, especially if the futures are up big and the market opens up strong and rises steadily from there. Of course, that’s not always true, especially these days. But stay with me.
Later in the day, I’m walking past a TV monitor that has CNBC on, and I see the Dow down 116. That’s a far view, again.
We ended up rallying towards the end of the day, and the Dow closed down only 68 points.
Now this morning the Dow futures are up around 75 points (as I write this), presumably erasing yesterday’s loss and getting us back to where we were the day before.
But again, that’s the view from afar.
Sure, I see all that, and take the far view. But, I also take the near view.
Up close, earnings look great, and the U.S. looks like it’s “basing” and laying the groundwork for reasonable growth.
All that is tentative, however, when we look closer.
Not closer here… closer at Europe.
We are very much dependent on what happens there, because our financial institutions are connected by means of short-term funding mechanisms, capital flows between institutions, and, besides a lot more mechanical interconnectedness, there’s the whole “perception” thing.
Banks are nothing more than citadels of trust, exactly the same as our relationship with paper money. There’s nothing backing either, other than our perception that they are backed by the full faith and resources of governments, markets, and our own hopes.
Well, let’s not even go there.
My point is, if banks in Europe take big hits and some collapse, you better believe the contagion effect will spill over here.
No, Europe is not out of the woods. In fact things there are getting worse, not better.
We are still on that pivot point we talked about last week. And in spite of Europe, we can still go either way.
The important numbers I’m watching and hoping we break above are: 13,300 on the Dow, 1422 on the S&P, and 3130 on the Nasdaq.
On the downside, I’m going to get worried, maybe very worried, if we break below: 12,734 on the Dow, 1343 on the S&P, and 2900 on the Nasdaq Composite.
We’re in-between near and far, so we wait. At least, I’m waiting.
Onto other than market stuff…
Your Overwhelming Response
Thank you, thank you. So many of you, an overwhelming number of you, responded to “Subprime Student Slaves.”
You wrote to me, posted comments, and spoke up about what’s happening to our education and the travesty that’s befallen it, courtesy of loan sharks and greedy schools and administrators.
I’m working on compiling a lot of what you wrote into a letter (probably a longish one) addressing our collective outrage and suggesting some fixes. I’m going to publish it, and send it to Congress and the President.
For those of you who wrote me, may I add your name (no contact info, or anything like that, just your name as you signed your comments) to the bottom of my letter?
I want to show our solidarity, and there’s always strength in numbers.
Please let me know if you don’t want me to use your name, and I won’t, of course. If you don’t mind and don’t respond, I will attach your name.
Also, if you want to send me short comments (the shorter the better), write to me below or send an email to customerservice@wallstreetinsightsandindictments.com. I will compile those too and forward them, along with my correspondences to the powers that be, or should be doing something.
Thank you again. And my apologies for not getting you something yesterday. Hope you understand.
Shah
Dear Mr. President and Congress
You can’t give something for nothing and expect a return. Give a kid a hundred bucks and tell him he doesn’t have to pay it back for 10 years? He’ll spend it in a nanosecond. That’s what is happening with student loans and their education. They have no skin in the game. Its a free ticket to party and maybe learn something on someone else’s dime. There is no worry about paying it back, because so many students are doing the same thing. Safety in numbers right? The gov’t is not going to put me in jail if I don’t payback my loan. Same stupid mistake was made with housing. Quit giving our hard earned taxpayer money away! Make them pay for some of their college UP FRONT! There are great education alternatives to college in Tech schools. Show them what their payments will be when they graduate and hold them accountable. College is not for everyone.
You show way too much common sense to be living in America.I have a friend who is a leading member of the teacher’s union,here in California.He says the group is so radical left that he just keeps his mouth shut at meetings.Says the majority don’t even support Obama,Pelosi and other liberals,because they are too conservative.Teachers’ union owns the “education” system in California.Common sense is not something on their agenda.As long as Americans continue worshipping big govt and looking to govt as their God or Santa Claus,no significant change is possible.
jrj90620, you,ve said it all. As a business owner when I pay for seminars there are no shows due to every excuse you could ever think of, if I pay partially everyone shows up. “Got some skin in the game,” it the big motivator.
I heard on some television show and wrote this down:
The top 4 contributors to Obamas campaign are 1) University of California, 2) Harvard, 3) Stanford, 4) Columbia University. Below these is Google with $800,000. The universities that plead the need for money seem to have plenty for the liberal candidates. Imagine.
Societies that overemphasise Credentials…holding to ransom individuals’ Capabilities by over-regulating their exercise of them; over-elaborating minimum standards; and demanding tolls for their fulfillment… strangle themselves. They lose the ability to distinguish a wall from a wall-paper.
Public universities need to have reciprocal arrangements with each other to allow out-of-state students to attend without having to pay the outrageous out-of-state tuition. This would create more diversity among students and give them opportunities more suited to their interests than what they might have available in-state.
Reciprocity suggests that each state’s taxpayers would not be paying for other states’ students, creating something close to equilibrium.
the problem with credentials is that the holders often view them as an entitlement.
We all see the problem with higher education costs and the huge student debt being incurred, however why are students the only economic group excluded from bankruptcy relief?
Creating an indentured servant class of highly educated Americans is not a good plan from any angle.
The other groups shouldn’t be able to write off their debts,easily, through bankruptcy, either.
Didn’t comment on your piece, but I agree with everything you wrote. Put me down as a supporter of your efforts. Hopefully you can work something in about creating responsible young people, who then can use their new education for something useful, not just looking for new forms of entertainment, which is one of the crassest forms of laziness. Thanks! Wayne Halstead
To solve our educational problems you must first get rid of the Department of Education. The responsibility for education should be put back to the local level where parents can impact the system to be sure their kids are learning sound subjects and not “feel good” garbage as well as liberal socialism!
There is a requirement to teach the Constitution during the week of September 17th each year! I wonder how many schools are doing it at all, let
alone adequately and honestly?
There is also no reason why teachers should not be judged on performance and compensated accordingly rather than because they belong to a union and the union bosses dictate to the schools the pay scale, etc. This is no
way to run an educational system!
Incentivise skills and knowledge (K&S) wanted via the student loan program: Pick the fields of study where K&S wanted; Set grades eligible for, essentially, investment, e.g. A&B or A&B&C; Choose investment strategy, e.g.(i) outright grants for excellent performance (ii) zero interest loans for very good performance, (iii) very low interest loans for good performance, (iv)+ other permutations and combinations, e.g. part grant, part loan.
Idea is to help serious needy students while excluding skivers with no skin in the game.
This idea is on the right track but the first and foremost objective here should be to adequately fund the areas of research and study that the country needs to revitalize: science and technology most of all. Leaving student loans aside, the federal government needs to commit additional funds to hard science research along the lines of what was done in the late 50′s and 60′s as part of the space race and Cold War. The competitive needs of the country are no less great now then they were at that time, and in some respects they are even greater.
Student lending programs should be restructured so that more money is available for study, both undergraduate and advanced in the areas that the country needs the most, but adequate funding must also be found for job skill training so those who do not choose college may still have the opportunity to learn the skills needed for steady employment, without having to mortgage their future to a proprietary school.
Dear Mr. Gilani- thank you for taking this on. My son is $70,000 in debt and has had to suspend his payments several times since he could not afford them (he graduated FIVE years ago and still hasn’t gotten a full time job!) and he has discovered that things his school (the Art Institute of Pittsburgh) refused to teach because they WEREN’T NEEDED were precisely the things he did need to know in the real world. He is an extremely talented artist, trying to get a full time job in the game art industry, and has been hamstrung by the idiots running his former school. I truly hope there is something you can do to help. God bless you for trying.
I’ve been conditioned into skeptical mistrust by reporters and politicians who simply define problems and never attempt or seem to feel the need to do anything about them. I am delighted with your announced plan of attack but fear the politicians will just ignore it as usual. I feel you are a courageous person who wants to correct the present problems that most citizens agree are unjust and non-democratic. It is necessary to force this type of situation to change, however. Wikileaks showed the power of exposure. This needs a similar power behind it. A letter-writing campaign that strangles the normal channels of written communication UNTIL THE PEOPLE GET JUSTICE might work. Here your wide client base would be an advantage, were each of us to inundate our representatives with mail TO THE EXTENT THAT THE COUNTRY CAME TO RECOGNIZE ITS POWER AND JOINED IN.
On the other hand, Mr. Ghilani, you may just be the shill who gets out into the open, crackpots like me, who still think there might be a way to get a trustworthy government, and who, like me, might be capable of thinking up a workable solution for ‘how to get there’.
Knowing who the crackpots are would be the first step. So, there is time.
These United States today remind me of a men’s 8-oared racing shell at the starting line. There are 7 competiing boats. When the gum goes off, 3 guys in our boat decided to not row and watch the race instead. Any chance we are going to win that race! No way, not when we have 18,000,000 citizens now in government (Fed/State/Local) at about $60,000 average salaries (don’t foget paid vacations, paid medical, pensions even before we in the Private Sector then cover their Officing and most of them keep busy thinking ujp ways to get raises while thinking up ways to extract more taxes from the Private Sector so they can cover their cost to us while making up more rules to layer out into the Private Sector! Government is a cost. Government is a cost that has to be factored-into every product/service that the Private Sector creates to sell in the marketplaces of the world: Government has zero money of it’s own and depends 100% on the workers in the Private Sector creating and selling real wealth in the marketplaces of the world, IN COMPETITION WITH workers who get paid far less, have few if any perks or costs like Medical and/or Social Security or Unemployment benefits, yet we have to give up our wages earned through SELLING our products whose costs include government and the highest wages in the world. It does NOT compute! Government needs to be reduce by 40% (will take about 7 years –can’t do that overnight obviously– and taxing the private sector has to be REDUCED, not raised, so we can compete more fairly: Imagine what BOEING could do it it were excused from paying taxes to government so that it could lower it’s costs on it’s new planes and lower PRICES and see AIRBUS fade away as a competitor! The only logical way to recover here is to have all 140,000,000 of us (civilian workforce size right now INCLUDING all in government but not including the Military) –the logical way to become waaay more competitive by reducing all wages by 15%except for small businesseswithfewer of say 25 total employees –they live a reality that big business do not and the little businesses cannot afford in-house CPAs or Lawyers etc. ,) so that means that as say 100,000,000 wages go down (all at same moment) by say !10,000 a year, we reduce our wage costs by about $1 TRILLION bucks a year, as a group. That would allow us to lower our PRICES by the same amount, and that would let us sell a lot more of OUR products/services out into the world and that wouold increase DEMAND and to fill that increasing demand, guess what! We need to start HIRING MORE WORKERS to fill the increasing demand for our products/services! Everyone is involved, Our costs go down, our Production and Sales go up, our employment goes up (and isn’t that what everyone wants to happen!
The problem here is lack of creativity, along with selfishness (and greed) and no one caring a damn about our children or the moral or physical health of this beautiful Country (and our kids deserve a hell of a lot more from their adults than they are getting, this spoiled bunch of adults here today give nol thoughnt to anyone but ourselves (and to hell with what is going to happen to our kids when OUR obscene DEBT is handed on to them to have to pay because their elders were too damn self-centered and selfish to care about anything but ourselves and Now and let someone else sort out this mess!!
Maureen: 2 comments if I may:
1. I have 2 boys, both college graduates in their early 30′s who have yet to find a meaninful position of which they (or i!) can be proud, so I am empathetic with your son’s position.
2. At age 65, I have an MBA in Finance, pent 5 years in Wall Street and have over 30 years sellling money to/with sales reps to customers trying to acquire computer HW (high end) via leasing. I’ve also kicked off the Jujnior Achievement program in my small town in Western NC.
Do you realize the VERY FEW who have any sense of Financial Literacy?? Talk about Critical classes that are not being taught in HS or College??? When I go to the President of the local college, i’m told ;we have no budget $$$.
How sad that no one seems to care, starting with our bozos in Washington They can’t even balance a budget and think that $15 Trillion in debt will be repaid in 10 years……? What a joke!!!!
I want waterer they’re smoking!!!
The student loan Trillion Dollar Boondoggle is SO SIMILAR to the Fannie Mae/Freddy Mac SINK HOLE, it conjures a vision of a giant Venus Fly Trap sponsored by the Fed; its open mouths are baited with honey and money while
small flying insects, (unsuspecting students) hover over the bait, NOT aware of
the pending danger awaiting them, their families and our entire citizenry when the trap springs shut after they feed.
Yes, we CAN have it ALL…we just can’t afford it; neither can government!
God Bless A broke America!
I don’t see how the Ed system can be fixed without having our butts kicked first as we need big changes. The ones that got us here think they’re doing great. Have a child in 10 th grade Early College program. She’s breezing through Calculus but has to spend 75% of her time to satisfy the ego of the psychotic Phd teaching American History. If the 15 yr old survives the +20 hr days she will be too burned out to do anything for years to come. Science and Engineering are the keys to the future. It speaks volumes that our top Technology leaders of the last 30 years are college dropouts.
I will testify before Congress that we need to reduce the interest charges on existing student loans as a form of amnesty, so they can have positive futures and the opportunities our generation experienced.
Add my name to yourlist
Noticed that no one suggests letting private industry money educate those that they choose for advancement within their company. Or, industry associations, or professional groups, can found and fund their own “universities”. Accreditation will follow the success of their graduates.
I am sure that non-government solutions can be found.
AGREE WITH YOUR COMMENTS. YOU CAN USE MY NAME.
Mr. Gilani,
I am with you. I if I read your comments enough I may become a savy investor. I learned to fly after age 60 so apparently you can teach old dogs new tricks. I also agree with your other astute readers.
add my name to your list. thanks for tackling this issue.
Many people I know are taking BS courses in Community and State Colleges
here in order to secure student loans, as they are the only loans available to them in this new environment of lendless banks.
These loans are the only way many people have of borrowing, so they have adapted to the new game rules. Be a student- get money!
Yes, you can use my name.
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Shah, I applaud your efforts to take on the “educators” but I continue to be dismayed by the ignorance of some who continue to push for more “Science and Engineering” students in the US. I have just finished a 36+ year career in “Science and Engineering” with a Federal Agency and continue to read in my “professional magazine” (Chemical and Engineering News) about the high unemployment and lowering of salary offers to science and engineering graduates in the US. This is not a recent phenomenon but stems as far back as 1969 after the US placed the first human on the moon. Shortly thereafter, over 250,000 space scientists and engineers were rewarded with “pink slips” and headed out to the job market only to be “employed” as taxi drivers and other non-technical jobs. Fortunately (or unfortunately, I think) Wall Street jumped in and hired these scientists who created the abomination of “Derivatives” which ultimately contributed to the over leveraging and the crash of 2008. To my way of thinking, the Federal Government should not be in the business of “encouraging” students to go into any particular field nor should the Government be subsidizing student loans. Caveat emptor should be the mantra.
Agree 100 %. Thank you for saying what a lot of us have been thinking, but find it difficult to express in a meaningfull way.
It is the same old story: The education cost will rise to what the market will bear.
You can add my name.
I went to a two year community college and then to a four year state college to finish my four year degree. Owed no money at the end and got a great education. When my kids went to college, I refused to pay for any degree which had no real job attached (no political science, sociology etc. degrees—sorry). My daughter is a chemical engineer and my son is an industrial designer. They seem to be able to find work.
The schools are getting expensive because they can. If you can sell hope without the reality, you can stay in business. Students, parents, colleges and financial outlets have all played a part in the problem. All facets need examination.
Show me the European or Asian college/university with huge sports stadiums, bloated and useless sports programs, over-the-top dorms, administrators paid obscene salaries, and a general student perception one of the main purposes of higher “education” is to learn how to get drunk and act like a child. Show me this happening to the same degree as in U.S. and then I can stop being appalled by our stupidity.
I am seriously excited by three very practical suggestions listed above: 1. Lower the interest rates on the loans. Maybe better yet, eliminate them. 2. Encourage private business to invest in the education of the engineers, technicians and scientists that they need. Cooperation with universities and technical schools would help to get the sort of workers businesses need to compete with the rest of the world. 3. The best suggestion is to give money for tuition to students after they have proved themselves by getting good grades. It would require very careful decisions by either private businesses or the federal government to set up a program that neither universities or students could take advantage of, but it could be done. Please add my name to your list of supportors.