Wednesday, December 30, 2009

We're all Madoffs now...

At least according to the influential and successful Canadian fund manager Eric Sprott. Mr. Sprott makes me look like permabull Larry Kudlow by comparison.

Via Bloomberg....

* The Standard & Poor’s 500 Index will collapse below its March lows as an expected rebound in economic growth fails to materialize

* He’s predicting the gauge will fall 40 percent to below 676.53, the 12-year low reached on March 9. “We’re in a bear market that will last 15 or 20 years, and we’ve had nine of them,” Sprott said in December.

Mr. Sprott is swimming in the deep end with heavy investments in commodities and miners, so he is talking his book to a certain degree. I don't buy the gold argument at these levels, but it's important to consider all opposing viewpoints.

However, just when I think he's off his rocker, someone points out that the current House bill - HR 4173 includes this critical clause....

FINANCIAL CRISIS MANAGEMENT(1) IN GENERAL.In unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, upon the written determination, pursuant to section 1109 of the Financial Stability Improvement Act of 2009, of the Financial Stability Oversight Council, that a liquidity event exists that could destabilize the financial system .... and with the written consent of the Secretary of the Treasury (after certification by the President that an emergency exists), may authorize any Federal reserve bank, ....Upon making any determination under this paragraph, with the consent of the Secretary of the Treasury, the Financial Stability Oversight Council shall promptly submit a notice of such determination to the Congress. The amounts made available under this subsection shall not exceed $4,000,000,000,000.

Holy Trillions Batman!

There were tons of stories during the holidays about robust online shopping. Snowbound East coasters were clicking away at a furious pace. A bigger piece of santas sleigh was being filled by right? Only not so much...

According to Comscore, total online holiday sales totalled $27.1 billion. Once the figures are adjusted for the number of shopping days last year and this, the improvement was only 3.5% (up about $900 million for the ENTIRE world of ecommerce).

The spin in the press release tries to frame this as a positive result, but since this just gets us back to 2007 levels of online sales, I don't think this can be viewed as a huge win.