MUTNODJMET'S MUSINGS

Dear Friends:

I live in California, though a redder portion. I have placed two McCain/Palin bumper sticker on my car, which is probably the only form of true support that I can express outside of my vote. Yesterday, I placed a home-made "I am Joe" sticker" on my car.

My previous stickers have not received any comment, outside of "Maverick-Barracuda -- what a great combo"! However, I have gotten three requests for the "I am Joe" sticker.

Keep in mind, this is blue California. I have printed out the requests. I wanted to pass this on, as I think this is really indicative of the message with meaning in this election cycle.

Dear Friends:

My very wise friend who works in the wonderful world of finance did me the favor of providing this piece for me to publish:


The One Thing That NEVER Changes is Human Nature

It sure is a lot better to be up 8% than down 8% in a day. This is one of those “vicious” countertrend rallies we talked about toward the end of last week. It could continue for a short time, but in order for us to be consistently bullish again – (1) credit spreads must move back to near the historic mean (400-500 basis point spread over 10-yr U.S. Treasuries instead of current 1100bp spread) and the (2) equity market stops making lower highs and lower lows. Accomplishing these would indicate the key perception changes we have consistently outline as needing to be reversed, have done so. Until the above two things happen, we will remain “out of the way” and generate slight tactical calls (buy depression and sell excitement) and sector biases depending on market activity as it takes place.

We Followed the Same Thought Process Last Cycle. As we were turning bullish in the summer of 2003 (Upside Ahead? 07/03), we used a chart produced many years ago (by Stone & Mead) that highlighted the typical psychology during a major stock market cycle. In mid-2003, credit had moved back below mean and the equity markets had successfully retested the 10/02 low, yet no one believed there could be meaningful upside ahead. We remained steadfastly bullish into 01/08 when credit spreads moved meaningfully above mean and an intermediate-term downtrend was in place (Pulling in the Horns – 01/08). We will make mistakes during the process, as we did by getting bullish again following the Bear Stearns bailout with the historic new issuance of credit, only to reverse course and go back to a tactical approach in early July as the credit market worsened significantly. Following the Bear Stearns bailout, the Treasury Department welcomed in new credit investors by saying they would backstop a financial failure, only to squash them by bowing to political pressure despite knowing what would happen given the unregulated credit derivatives market. We won’t make that mistake again. Credit investors will wait for sustainable improvement, and as a result, so will we.

A Picture is Worth a Thousand Words. We thought it would be appropriate given the financial market backdrop to use this fictitious graph (provided) to highlight the following about the current environment:

1. We are likely in toward the end of the panic phase and beginning of the deep pessimism phase that highlights the rapidly deteriorating fundamental news.
2. While we do know this was made up and not based on fact, it does appropriately denote key segments of the investment cycle.
3. Bottoms are made over time and not on a specific price point.
4. Absent a real retest, calling the recent low – “the low” is a total guess. It very well may be, but we have time to figure it out as the credit and global economic crisis gets addressed and relieved.

Update: My friend adds this:

There is a lot in here to say, and much remains to be seen how much the government's incursion into preferred shareholder of banking and finance institutions is a good idea. One wonders for example how they sleep nights after grabbing FNMA and FHLMC (Fanny May and Freddie Mac -- who had plenty of assets and cash flow with which to pay their dividends and notes) and washing out both the common and preferred shareholders who had financed those companies. They set themselves up to be the case of last resort when they did that, and then compounded their error in the Lehman situation. No one wants to commit capital when they don't have an assurance of who the government will choose/not choose to either bail out or invest in vs. who they won't, and how it will impact the existing equity and debt holders. At any rate, the current chart activity for the DJIA (Dow Jones Industrial Average) is very like the approx. 25% improvement we saw both after the 1929 crash and again in the 1987 crash. We will see the same lows on the DJIA as a retest, and only then will we be able to judge by the quality of the rally and the corresponding volume whether or not we have seen a real bottoming action. We can only hope at this point.

Just before August's Democratic convention, my journalistic instincts told me that the legacy media would be suppressing the level of dissent of Hillary Clinton supporters. Reading the news blogs avidly, I was vaguely aware of PUMA ("Party Unity My Ass"; Hillary-supporters unhappy with Obama), and suspected that there might be a blog or forum on the Internet that would help me gage the actual level of support for Obama during the nominating process.

In my quest, I found the Hillary Clinton Forum. The members there are mainly Democrats, but are generally fair-minded people who do not want a socialist, race-baiting, Chicago thug as President of the United States. I subsequently embedded myself in the group, in order to ascertain how much support Obama was actually able to count on from former Hillary voters.

During the convention, I read a blow-by-blow account of how Clinton supports were insulted by O-bots (the term the PUMAs used to describe rude, aggressive, "in-your-face" supporters of Obama. Clinton-supporters were isolated, and either forced to support Obama or have their long-held party positions endangered. If you take a look at the clips, you can see how quickly Nancy Pelosi shut-down the proceedings after the "nomination by acclimation" process was complete. You will note, if you review what happened during the convetion that the delegate count from California was passed; likely, this was due to the very vocal support of Senator Clinton by Gloria Allred, the prominent attorney and Clinton delegate. Basically, she stated her voters selected Clinton, and so would she. This was the stance taken by many Puma-delegates.

PUMAs feel that the Democrat leadership perpetrated a huge fraud in the nominating process. Many also feel uncomfortable at the extreme-left direction that party has taken.

I must say, as a flaming capitalist with a strong interest in national security, I was delighted to find this interesting group of Americans. Granted, we do not see to eye on a variety of subjects (e.g., the wisdom of Clinton's healthcare proposal, the merits of gay marriage); however, the moderators demand civility and do not tolerate any abuse posts or nasty disagreement. Therefore, this is one of the few places where political discusions occur with an elevated, repsectful tone. I have to say is this is very refreshing.

I have to say, the PUMAs are more avidly anti-Obama than my right-leaning friends on my conservative forum, if such a thing is possible. They rightly view themselves as the original victim of Obama's frauds. Many admire the national-security stance of John McCain. Quite a few are self-employed or small business owners, and mock Obama's proposal that few small businesses would be impacted by his tax raises that start at @$250,000 annually.

Many of the PUMAs are thrilled with the selection of Sarah Palin as the Republican Vice Presidential candidate. This is because these people are true feminists -- who want all women candidates treated with respect regardless of political ideology. The PUMAs found all the personal attacks on Sarah Palin and her family by the legacy media and the O-bots distasteful (e.g., "Palin is a C***" t-shirt).

These PUMAs are highly informed (the forum is constantly updated with the latest news items) and very savvy politically. In fact, one of the PUMAs outed a sex-offending Obama supporter of "astroturfing" a McCain rally to make it seem that Republicans were racist. Being highly motivated, they jump at the chance to participate in polls, and those that are willing to vote for McCain are actively supporting him with money, phone calls, displays, and emails to the campaign with ideas. These Americans have inspired me to be active, and do all that I can to ensure Obama doesn't win this November.

How many PUMAs are there? I have read from the legacy media that 95% of the people voting for Hillary are going to vote Obama. I disagree. There is a 5000-plus membership in the Hillary Clinton forum, and many of these members have family that are also like minded. The number the PUMAs give is close to 7 million. We will see; however, I would put my money on the PUMA number. These people could be key in battleground states. And here is a thought: If so many Clinton supporters were going for Obama, then why make "Hillary Supporter for Obama" stickers?

The PUMA goal is to have McCain win in 2008, and Hillary Clinton win in 2012. But for now, these people are my best frenemies.

According to Wikipedia, "in personal relationships, the use of the term 'frenemy' has become increasingly used to describe two (or more) people who are apparently friends but are actually enemies." The PUMAs, conservative Democrats, and people who despise cheaters may be the voters that prevent the compete ultra-leftist takeover of the White House and US Congress (and ultimately, the Supreme Court).