[BUMP]500,000 jobs lost, the economy falling off a cliff, 10% of homedebtors in foreclosure or late on payments, the autos going out of business........
And the market pops.
Hmmmm....
Hmmmm...
I know 99% of you are probably thinking "sucker's rally" or "we're nowhere near bottom", but I think a bull case could be argued. I'm not going to say "bottom" but I'm going to make the argument so you can poke holes in it...
Top 10 Reasons For a New Bull Market (in stocks, not houses)
1) Obama coming in, with a plan (vs. having no president and no plan, which the market hates), with Hank Paulson finally being shown the door
2) Gas and commodity prices plunging like never before = more coin immediately in consumers' pockets - this is like having cash sent in the mail by the government, maybe even better
3) The easiest money ever - The Fed and Treasury pumping money like never before, conspiring to drive down interest rates, allowing for refi's which again will put more monthly money in consumers' pockets, while sopping up housing inventory
4) Money bombs everywhere - $7 trillion and counting, with Obama and the Dems about to drop $1 trillion more, along with 1/2% interest rates from the Fed and worldwide central banks cutting to 0% as fast as they can, and the US saying that no more banks or financial firms will do a Lehman. They're all too big to fail.
5) The fact that American consumers are addicted to spending and shopping and it's gonna take more than a worldwide financial meltdown to get them off the crack, especially during that orgy of over-consumption called Christmas
6) Huge price discounts by retailers create panic buying (witness the Wal-Mart death), with
great new products and technologies hitting the market (Blackberry Storm, iPhone, Wii)
7) Trillions in cash sitting on the sideline with no place to go now that t-bills and savings are paying near zero
8) China, Russia, Brazil, India and the rest of the emerging economies stabilizing, and their consumers poised to consume and not just save (and buy cars, and buy iPods, etc), while a global rush of innovation and productivity increases resumes
9) Everyone was thinking deflation, when instead, a few smart folks were pounding the table and saying nope, it's gonna be inflation. And inflation it will be, and once the mindset changes, people will start thinking again that they better buy now before it gets more expensive
10) As of a few days ago, in your lifetime, it's never looked worse. EVERYONE was negative. EVERYONE was a bear. EVERYONE was pricing in a great depression. EVERYONE was disgusted by the stock market.
I could easily do a Top 10 Reasons For a Continued Bear Market, but there's the bull case. Have at it. And anyone buying next week? If so, what?
Posts
61 comments:
Yes, our people can rehash their old, tired, failed patterns of trading. That is true.
But you can momentum trade against them at any time. You don't even have to think about the macro-economy, or specify any particular period, just look at the recent moves and content yourself with a 1/3 counter trend rally/plunge.
The markets have been decimated over the last 8 years, but good traders could have made tons of money.
So, yes, when you stop discussing macro economics and start talking volatility exploitation, you go from shit to roses in a nano second. Just don't get to greedy.
RE #9 - Denninger and Mish both were well rooted in the deflation camp. I like Mish and his style.
Denninger is a complete jack ass and has cost his readers a shit load of money. Still waiting for the bond market dislocvation Karl...since last year...
Too bad they could not see that every failed empire has monetized its debt in the end. A poster (No Thing) was banned by Karl for promoting this line of thinking on the TF...Photoguy was also run off the site by Karl for promoting EXACTLY waht is happening.
Yesterday -these and others in the inflationary camp were proved right... it started with Benny and the Ink Jets buying agency paper because no-one else will...Benny said he would and now he has...add to that China and its revalue of the Yuan and well...
THAT said...
Oil and lack of it will be the great equalizer.
Expect hyperinflation and massive job losses and asset value destruction. China's imports will be dirt cheap and we won't be able to compete and forced to continue to adjust (READ BK GM).
OR
1970s style hyperstagflationary depression (on steroids).
That of course will end with the die off of the human species in ubder 10 years. BUt don't say that too loud...wonks think we are pulling out of this in a few months...maybe a year at most.
No without cheap energy.
Cannot rule out the possibility of Helicoptor's success in changing the sentiments of the Sheeple. Feel Nov. 21 was the bottom for S&P. Further most of the deleveraging and redemptions are out of the way as far as stocks are concerned.
If i hadn't just bought a new 50inch plasma (my contribution to jump start our economy) i would have taken a baseball bat to it while watching that flip floping, cocaine sniffing,usually wrong mental patient jim cramer .
Are you kidding me!!! has this tool no shame.
I've gotta believe this conversation is taking place behind the scenes in DC:
Plan A:
* Reinflate housing
* Reinflate the stock market
* Take the dollar down to stimulate exports and foreign purchase of US assets
* Devalue US debt
* Get this party back on
Plan B:
* Prepare for the Great Depression 2.0, mass unemployment, crime, riots, wars, disease and famine
One final thought...
and something the Denningers of the world don't get...and never will becaus ethey refuse to leave their prides at the door.
Ready?
Because of peak energy...every share traded on world exchanges are...
OVER VALUED...
Think about that.
100% of all companies base thier profits on the availability of CHEAP energy.
Peak credit occurred in 2006.
Peak oil occurred in 2006.
No surprise here folks why we are in a death spiral.
No Keith...
There may be fits and spurts in the markets...
Hell we may even make it back to 14k again on the DJIA for the reasons you have stated, but then it's lights out...for good and for ever.
Prepare accordingly.
We may have a big bear market rally (+50%), but we are headed for a depression. So I expect the DOW to fall to around 5,000 during the next 12 to 24 months.
I've expected a 60% retracement from the low (8,000 becomes 12,800) over six months followed by another downleg and retest of the low
But because of non-stop liquidations, there's been no sustainable rally
But Friday's action was interesting. Horrific news, and a market rally. We'll see what next week brings.
And yes, this is a market for traders if your time horizon is short - or not to be in the market at all
But if your time horizon is long, and you don't mind short terms losses, when it comes to any physical asset (housing, commodities, stocks) it's a time for buying I'd say
This will end in inflation.
Inflation, then deflation, then inflation. As many HP'ers predicted for years.
When will the turn come? That's really the only unanswered question.
Nice effort Keith; I don't see that scenario happening, though!
Paulson and Bernanke are not as moronic as we might think--they have it all planned. But for their plans A, B, (?) to work, they will need an act of Sarah Paulin's God!
IMO, your secenario will not work for many reasons. Chief among them:
1. for the government to make up for the liquidity wiped out by the tumbling stocks and the housing collapse, it will have to inject more than $12 trillion. Paulson's Plan A was that by "merely" showing the government's resolve to bailout the banks would make the Dow jump back up to 13,000. If it did, Paulson wouldn't have to spend the $700 billion he'd obtained from Congress. But the market kept going down and he had to show the money. He ended up spending half of it, only to realize that the banks hoarded the cash and the cridit tightened even further. The market rally that could have done the trick didn't happen, and that's when Paulson scapped Plan A and threw the ball at Bernanke for Plan B.
2. Bernanke's Plan B is to turn to the housing market. He loosened the credit and stomped on the printing press accelerator. He's got no choice but to keep printing dollars, flooding the market with fiat money, as the US Gov is unable to sell enough debt to foreign countries to raise the needed trillions. (Those countries need money for their own stimulus packages and they are not that confident that the US won't default on its debt).
3.Bernanke's plan B is to print just enough money to make up for the trillions mopped up by the crisis, and that's an impossible task, as there are so many unknowns. Now, if your scenario is to materialize and the stock market goes bullish, it's going to be the end of the dollar and the US economy will go into a hyperinflation shock.
It's a tough balancing act for the Fed. While money is being printed, their only hope is that the credit market loosens up and the Dow stays under 10,000 points.
Plan C, D, E...? Well! That's left to Obama's team! That is why I believe Obam's chances in becoming a successful Black-American President are so slim. Obama was dealt a very bad hand. He's got a huge pile of s*it on his hands.
4. Regardless of what happens next, the most untractable problem that will continue to be a threat to the US viability as a superpower is not whether we are in a recession or a depression right now. It's the government's foreign and entitlements' debt($99 trillion, according to one credible estimate), of which $66 trillion is outstanding and will require the US government, in order to meet its obligations, to scrap (forever) 97% of its military budget, its health sector and its infrastructure budgets (and some more). It's frightening!
I leave you with this video on US Gov debt woes by no other than Richard Fisher, the Chairman and CEO of the Federal Reserve Bank of Dallas. He calls it as it is: "a frightful storm!" -enjoy!
http://tinyurl.com/6xkjse
The market is still not as negative as it was in 2002, when cash in Canadian mutual funds stood at over 15%. In Canada, mutual funds today are currently holding 12% in cash.
But I would not be surprised to see a rally over the next few months when hedge funds stop liquidating just because of portfolio rebalancing. Bonds are overweight, and investment policies are leaning more and more toward equities as bond yields go lower and lower. Institutional players might generate this rally. This rally would happen during the deflation mode.
Then the rally will be sideswiped by this...
1. Inflation rearing its ugly head. Supply is going to quickly disappear as we get a huge number of bankruptices across many sectors. By that time our leaders will have finished handing out money to corporations and will be distributing cash to households. That with shrinking capacity and inventories will trigger inflation.
Everybody thinks that equities protect from inflation. It's wrong. Equities tank while inflation is increasing because pricing does not keep up with input costs and margins collapse. Equities take off when inflation stabilizes.
2. The economy will be worse than what most expect. People are just starting to accept that we are having a recession. Most don't understand that the structure of our economy is about to change. A worse scenario is not priced in.
3. Many Boomers will be forced into retirement and will be liquidating their investments to survive the downturn.
4. 18% of people have already started using their retirement funds to make ends meet and the tough times are only now starting. If people are selling their investments, equities won't be very strong.
And this would be consistent with what happened during the Great depression when markets came back after the crash only to tank again.
"1) Obama coming in, with a plan (vs. having no president and no plan, which the market hates), with Hank Paulson finally being shown the door..."
Uh, Keith, can you please elaborate on what Obama's "plan" is? Money bombs? Mass distribution of "change" decals and t-shirts? You tube addresses?
Please, inquiring minds want to know. Because from where I sit, this guy -- like all of the other globalist pawns in government -- doesn't have a friggin' clue about what to do to get us out of this mess.
At this point it really doesn't matter what Obama's plan is - hell, it could be a can of silly string for everyone, and a tax cut, and the market would love it.
What the market hates is no plan, and no leader. And that's what we have today - anarchy in America.
For Obama's plan, I'd refer you to change.gov
And yes, it starts with a money bomb, and then goes from there
I don't know how you can change the fact that people are losing jobs and wages won't keep up with this proposed inflation cycle . People are still in debt and many have lost
their 401k holdings and most likely will move to cash accounts with further 401k money . The Baby boomers can't afford any risk at this point .
Now maybe Foreign money will stimulate the stock market here in America ,and maybe foreigners will come over here and buy all the cheap property now . Americans are tapped out ,and they will continue to lose jobs that were created by the false debt economy .
Without serious job creation to offset the loss of jobs in the USA ,the people here will not be able to prosper by any upticks in assets values or stocks .
"Peak oil" is a fraud. Plain and simple -- it's as fact-free a conspiracy theory as "9/11 truth" or "Hillary murdered Vince Foster" or "The world will collapse in Y2K due to old computer code."
The decline in oil prices more than demonstrates this -- as does the fact that most new discovery was placed on HOLD as a result of those pricing declines. If prices pop back up, those new sites will be resumed and a flood of new supply will enter the market, holding prices down.
You cannot beat economics.
Keith, I think you are too addicted to the Messiah. You think Obama will come in and save the day. We are in a big mess because our Central Bank continued to inflate, inflate, inflate, inflate, and inflate ourselves out of each and every recession from that nasty one in 1980-1982. Each time they did that, they just made the coming downturn more worse. Now, we are faced with a big mess. Even if the Fed inflates ourselves out of this economic mess, they will make the next coming downturn much nastier.
How can we inflate ourselves out of this mess when housing so expensive as it already is? The stock market is still way too high and consumers, businesses and the government is way too much in debt.
I believe we will have a huge deflation. All of these overvalued prices have to come down. The sooner it happens, the better off all of us will be.
Also, Americans need to taste what economic pain feels like. They really need it. We are way to irresponsible and just waste/piss away our money (a guy at work who is single and in his 20's bought a Dodge Charger for $40,000).
Yes we can. Yes we can. Yes we can. Yes we can. Yes we can.
Obama will change everything.
Yes we can. Yes we can. Yes we can.
Year Round Golf and Pro Atheletes?
I disagree with the guy who continues to discuss "Peak Oil" and his gloom and doom scenario. If we are in peak oil territory, then why have oil prices collapsed? Gas prices went from $4.39 to now $1.50 to $1.80 range in my area. Some peak oil. Add to this the fact that when prices were way too high, most projects for oil exploration were put off.
Hey -
Obama says he is going to SAVE jobs now.
Thought his "plan" was to CREATE NEW jobs?
I don't think they have a plan.
http://www.youtube.com/watch?v=iGpIT2bVZDw&eurl=http://www.dailykos.com/
"peak oil is a fraud"
posted by an ANON...
um yeah - ok.
I think I hear your mom calling you...best run along now.
A recipe entry is a good idea. I know this is mostly men posting here so I would be really interested in their favorite recipe. Keith consider it!
Men make this sauce and spoon it over fresh grapefuit Christmas morning.
Cabernet Cranberry Sauce
1pck cranberries
2 cups OJ
2cups carbernet
1 cup sugar
add to saucepan, boil until crnberries start to pop. Strain through a seive,smashing the cranberries to get all of juice out. Continue cookingtill sauce is reduced to 1 cup.
chill and spoon over fresh fruit.
Wow. A bunch of smart comments here.
Really. Where'd you guys all come from?
Sane, reasonable, less ego than expected, respectful...impressive.
And I agree with most of what's been written here.
My 2 cents?
Deflationary spiral deep into a real depression then we get to inflate out with no real growth for 10+years.
We will look back on these as the good old days.
No transparency, no rally. Consumer and investor confidence is shot. We're too far into the viscious cycle that economists hate to talk about.
The decline is also happening much faster than anyone expected due to it's global incarnation, and the scarier thing in my mind are the number of people who will be negatively effected. The sadest thing in my mind are the upcoming misfortunes of people who simply tried to do the right thing because they believed in something good.
One way or another the laws of nature will ensue, and my guess is sooner than later.
isn't it odd that oil tanks as soon as bush and his oil buds are leaving office?They pos have robbed americans of billions.
the only time I have made any money in the stock market is when there is panic.you have to have a set of brass balls to buy in a down market.Only the sheeple buy high and sell low.step up to the plate and finally become a real investor, grow a set?
The Auto bailout on Monday or Tuesday (now a sure thing) will lift the market, and yes, I am in the "Santa" rally camp also. . .but I will be selling some of my dogs into strength. Eventually we will see massive inflation, so for the first time, I am looking at gold futures or back to oil and energy. . .when the dollar tanks again, oil will go up fast. . .also under the radar is a very cold winter shaping up (below normal most of November in the East and Western Europe) This will draw down on heating oil and natural gas.
.
YES WE CAN......WHAT?
.
I'll buybuybuy @ Dow 5000, until then, I'm on the sidelines, all cash.
Also looking investments in dried food, bottled water, shotguns and ammo. I'm hoping I've got enough gold in 1/10th ounce increments to get the old lady and the dog out of the desert with me when Rome burns.
Cash in the Ira's and buy a few acres of farmland/woods in the rustbelt where we can grow 'taters and raise chickens while the city people riot over their entitlements being cut and their "dollars" turning into teepee.
That's MY plan. What's yours?
My big disagreement with this supposed rally is that....EVERYONE now expects one!! It seems every bear has now changed their tune and there are more bottom callers than ever on CNBC. I suppose it could have a decent chance of happening but it just seems like too many are already expecting it...thus probably already positioned for it.
taters n chicken...dont forget some spice as grease get heavy
Who will buys stocks is the question. Remeber the short seller ban? It wont be shorts covering.
here's the opposite of the bull argument - check out the dominoes about to fall in Europe:
http://www.stratfor.com/analysis/20081029_hungary_just_first_fall
The good news? It'll be cheaper than ever to travel to my favourite countries...
This is a Santa Claus rally, nothing more. 1st quarter 09, new record lows will be set. Merry Recessmas!
The rally on Friday wasn't really a rally. Remember, the market was down most of the day. It didn't start to go up big until late in the trading session.
Clearly, the Feds and other big players are injecting themselves into the market, as they have done repeatedly on days when there is bad news (or the bad news is released the night before). Anyone who has watched the "bad news days" knows how the markets have reacted postively in the afternoon...typically after 3pm; there clearly is govt. and big institutional intervention. These players are the only forces keeping the market from collapsing. The pollyanas on CNBC and FoxBusiness can't keep the market up, only the Fed and the big players can.
Also, fund managers are looking to spruce up their portfolios before year end to tack on a few more pecentage points (still negative) to their returns. This happens every single year. I bet if you look at the historic movement of the market in December you will not see any difference between the past and the present. So, yesterday's rally means nothing despite the poor jobs report. Most of that was priced in the day before when the market went down.
The poster who says that if the market goes up a lot (12k/13k) there will be a lot of inflation makes a good point. A high stock market and all the trillions in money bombs will send prices soaring.
I foresee various small rallies in the market over the next twelve months, but happening with an increasingly worsening economy: layoffs, business closings, inflation, house foreclosures, consumers not spending, etc. I don't think the money bombs can stop this from happening. Consumer and investor psychology point to a severe recession, if not worse.
keith is right in that this is a trader's market. that's how i'm making money today. i buy one day and then get out the same or next day. and then i repeat. i'm up 10% since october with this strategy. i'm shooting for a 20% return for the three months ending december. i just financed my new klipsch/polk/yamaha surround sound system doing this!
This market doesn't have much more rally IMO. Earnings are going to suck, led by retail and big oil. This screw job of paulson and bernanke trying to force the markets higher is only intended to last until the inauguration. The usa is fubar, book it down hard.
What about ZIRP? Is it coming just in time for Xmas?
Keith, I agree with you and think the long term investor should be pumping dough into this weakness. Where P/E is are just crazy and what you can get for your money looks solid in a long term return. Be dilligent and pick cautiously, but pick!!!
SCAM, SCAM, SCAM
Let the investors suffer instead, sounds more like a bear market then a Santa Claus Rally when your shares get diluted.
While everyone else are forced to endure, workers with stock options wants it both ways.
http://www.mercurynews.com
/breakingnews/ci_11150811
The cost of exercising some options is now higher than the value of the company stock — which means those options are currently worthless.
It's been a problem for employees, which offered to exchange old options for new ones with a lower strike price this fall.
"It's a huge issue in the tech industry," said analyst Brett Harson of the compensation advisory firm Radford Surveys and Consulting, who noted that Silicon Valley has long relied on stock options to recruit and reward top talent and even mid-level employees.
He predicted a wave of tech companies will ask shareholders for authority to address the issue by repricing or exchanging old options in coming months.
Some of those efforts may run into opposition if as investors complain that no one is offering to make up the value they have lost in recent months.
And if the swap leads to more shares in the market, their value could be diluted.
Maybe it is just a sucker rally.
http://www.fresnobee.com/local
/story/1057644.html
In Fresno Co., more than one in 10 owners are late or in foreclosure.
With the economy worsening, the much-anticipated bottom of the housing market likely will be pushed further into the future.
"Things are going to get worse before they get better," said northern Virginia housing economist Thomas Lawler.
Most troubling, he said, is that the mortgage bankers' report reflects conditions before October's stock market plunge and the resulting economic fallout.
"The number of homes that are in the foreclosure process is so high -- right before the economy has fallen off a cliff," Lawler said.
Job losses are already having an impact on rising delinquency rates for traditional 30-year, fixed-rate loans made to borrowers with strong credit.
Random musings...
I just paid $1.99 per gallon of gas!
Oil prices,
House prices, etc.
manipulated by speculators with fiat money.
This is not true supply and demand.
These are 21st century, computer driven, at the speed of light, tulip manias.
Govt. should close these loopholes,end the fed, so that average people can stop being bilked of their money.
Inflation? How do you get that money into peoples hands? Oh yeah, just send them a freshly printed check. Er, I forgot.
For the dollar to tank everyone has to drop it, change direction like a school of fish, and buy something else. What will that be?
The bulk of the Alt-A and options Arms have not even started to recast, and the job market is beginning to look more like the job market of 1974.
If there is a Santa Claus, then he better come quick.
http://media.mcclatchydc.com/smedia
/2008/12/05/18/546-20081205-
US-jobless.large.prod_affiliate.
91.jpg
More troubling, prime mortgages given to borrowers with the strongest credit now represent a rising percentage of those mortgages that are delinquent or entering foreclosure proceedings.
The MBA's chief economist, Jay Brinkmann, in a conference call with reporters, said that fixed-rate prime mortgages make up 21 percent of the foreclosures, a big percentage considering that they make up 65 percent of all outstanding mortgages.
Adjustable-rate prime mortgages account for 24 percent of foreclosures, he said, and 14 percent of all outstanding loans.
"I think what we're going to see is a growing delinquency problem among prime mortgages that's driven by some of these job loss factors," Brinkmann said.
The states suffering the greatest job losses through the end of October — California and Florida — are also the ones at the center of the housing bust.
"Clearly the job losses in California and Florida are adding to the problems that already existed in the housing market fundamentals in those states," Brinkmann said.
Many new job losses there involve college-educated professionals and workers with lots of technical training, groups associated with home ownership.
http://www.mcclatchydc.com
/227/story/57166.html
Blogger Roccman said...
"peak oil is a fraud"
posted by an ANON...
um yeah - ok.
I think I hear your mom calling you...best run along now.
December 6, 2008 4:09 PM
Roccman, is that the best cogent argument that you can make? ("I hear your mother calling you now"). Whenever someone on this board disagrees with the Great Roccman, you say something like "go to your mother", "um ok", etc...
Make a strong argument for your position sir. Making petty personal attacks is indicative of a lost argument.
"with Hank Paulson finally being shown the door"
Thats worth 1000 points right there
Keith,
I think we're at a fork in the investing road now, we could get your senario A with tons of borrowing,
"Plan A:
* Reinflate housing
* Reinflate the stock market
* Take the dollar down to stimulate exports and foreign purchase of US assets
* Devalue US debt
* Get this party back on"
or we could be like Japan over the last 15 years, pinting, borrowing and spending money with no real results. Their debt to GDP is 2x what ours is and they still have 1%long term rates. Maybe we just caused too much harm to the system and it has caused a fision like reaction that we just can's stop. We may have deflation no matter what we do. I don't know.
Short term, we will get a short "Santa" rally for a couple of week, into the inauguration. That's a "sell the news" event though.
With the yield on corporate bonds being what they are, my market multiple is 12, that times next years S&P earnings of $60 gets me to 720 on the S&P, 15% below where we are now.
The best risk/reward trade right now is short term AAA corporate bonds. 6+% yield, very little downside risk and if the economy improves, you'll have a 15% return in a year.
Well what about those Alternative Fuel start-up companies whose stock prices were going up like a raising star.
http://www.technologyreview.com
/business/21775/?a=f
The price of oil has dipped to levels that could be far too low for many advanced-biofuel startups to succeed, especially those that attracted investment this summer, while oil was well above $100 a barrel.
Tight credit markets will also make it difficult for advanced biofuel companies to move ahead with plans for scaling up technologies and building commercial-scale production plants.
Attempts at developing alternative fuels in the 1980s largely failed after oil prices plummeted, and the recent drop in oil prices has many concerned that something similar could happen today.
"The decline in oil prices more than demonstrates this -- as does the fact that most new discovery was placed on HOLD as a result of those pricing declines. If prices pop back up, those new sites will be resumed and a flood of new supply will enter the market, holding prices down.
You cannot beat economics."
Oil princing is very inelastic. That means small imbalances in supply and demand cause huge price swings in either direction. With worldwide demand collasping to the tune of 10% and deleveraging in oil futures all going on at the same time it is not surprising to see prices collapse.
A thrid factor is delvirery speed. With fuel costs high the ships transporting the oil are operating at a lower speed to keep fuel costs low. A doubling in speed will roughly cause a quadrupleing in fuel consumption. Now, with fuel costs low delivery speed is increasing since:
1. the fixed per day costs are constant
2. The faster you turn things around the more deliveries & profit you can make as a ship owner.
So instead of about 700 million barrles being out at sea at any given time we will probably only have 400 million barrels out at sea. If you will we just drew down about 300 million barrels in stored oil.
It will take about 12-24 month until falling supply will catch up with falling demand. Depleation ratios are about 8% if no new investment is entering the oil sector. Don't worry, oil will be back @ $100+ before too long.
If you don't believe me, go out and buy a Hummer, Detroit will thank you for it.
How about a Top 10 Reasons for Public Hangings of Corrupt Politicians"
Start at the top. War Criminals Firt. Begin immediately.
Go 24/7 until all are processed.
TV, Cable and internet to cover.
Beautiful.
Uth Oh... Did I hear someone say that iPhones are selling so the economy is good?
Lighten up Keith, it's just a joke.
Yep. It is rally time, big time.
good one!
no, it's "there are people in the showrooms" or "there were people in the restaurant this weekend"
Some depression! DOPES!
Meanwhile, I've got my finger on the "buy" button this morning but trying hard to talk myself out of it
I've recently bought XLF and F.
XLF is down 75% or so. I just don't see any more downside. It has been made clear that the govt will not allow Citi to fail. Which means it will not allow BofA to fail nor WF nor anyone else. To me XLF is now like Treasury notes with regards to safety but with 10X the return.
And F, well I'm placing my bets once again that the govt will not allow Ford to fail. I bought at $2.67 and don't see it falling below this level, not with 58 Dems and Obama, all oh whom are whores for the UAW.
I wish this weren't how thing worked. I wish both banks and the Big 3 were left to die. But I don't make the rules and I will go along and profit from the reckless policies of the govt.
Keith, re: showrooms/restaurants
Over the weekend I was at Chili's and swear to God have never seen the place more packed. I was told it would be a 60 minute wait for a table to which I said, thanks but no thanks and walked out.
I was all in the "depression is coming' camp, but you don't have 60 minute waits at Chili's in a depression for crying out loud.
Maybe I live in area that is withstanding this better than others, but still....
When people have their credit cut off who were used to shopping at Nordstroms and eating at Ruths Chris, they'll end up back at Wal-Mart and Chili's
McDonald's is doing well too
I see a 2009 - 2011 trend - living equal to your income bracket again
Sorry Nordstroms. Sorry Neiman. Sorry Toll Brothers.
Back to K-Mart, Burger King and KB Home.
I was all in the "depression is coming' camp, but you don't have 60 minute waits at Chili's in a depression for crying out loud.
-----------------
Weren't movie theaters full during the great depression?
Too funny, people really are clueless. Some are waiting for 0 GDP and 100% unemployment before believing in a depression! DOPES3!!!
Im soliciting opinions here, My wife and I are hot on buying an 3700 sf adobe house on 1.5 ac with an irrigation well. The price is @ about $110 a sf in the Albuquerque area. also it has passive solar baseboard heat. and passive southern exposure (sunroom). Do ya'll think this is the to strike as inflation seems to be baked into the cake? Also we will be using a va loan with near 0% down payment.
Keith, all I see is corporate layoffs and debt defaults coming in just like the Tribune Company defaulting to the tune of $12 Billion. I wonder who holds that debt?
Rumor mill says Intel is preparing for "deep cuts".
And, corporate defaults are just getting started. Not to mention the coming melt down in commercial real estate which we all know is at least 100% financed.
This debtor society is deleveraging. Unless corporate profits turn around don't look for a bull market any time soon! The pumpers will have their day but it won't hold.
Cash is still king! Not stocks!
No Santa Rally this year! 4Q write-downs will be huge.
I expect we will begin getting the 4Q earnings warnings within a couple weeks as we get closer to year end and retailers fess up to very poor Christmas sales.
http://tinyurl.com/63qehl
We just had the santa rally - the stock market has been up something like 9 of the last 11 sessions.
But be prepared for more volatility too. There will be 'profit taking'.
And despite a rallying stock market, the real economy is still getting worse as layoffs continue, unemployment continues to rise, incomes are stagnant at best, foreclosures continue and credit remains tight.
The stock market can do anything in the short term, it is frequently irrational. But in the medium-long term we are still in decline. Except, of course, for those items we need, which will be subject to inflation: commodities.
Anon said:
Do ya'll think this is the to strike as inflation seems to be baked into the cake? Also we will be using a va loan with near 0% down payment.
December 8, 2008 4:22 PM
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Well, ya'all, remember the fundamentals and you should be OK:
1. Houses always go up.
2. They are not making any more land.
3. Buy Now or be priced out forever.
4. Offer 5-10% more than the asking price so you can guarantee you will get it. Use that wonderful 0% down scheme to get cash back at closing.
Go for $ 50 - 100K minimum. Ask your real estate professional for details.
5. Interest Rates are low and there is plenty of reduced price inventory. NOW is a Great Time to Buy...
Just Kidding.
DIE U IGNORANT PIGS (ya'all).
"Anonymous said...
A recipe entry is a good idea. I know this is mostly men posting here so I would be really interested in their favorite recipe. Keith consider it!"
Sure Betty Crocker, let's turn a hard core blog into a cookbook. Here's my recipe which will come in handy for many Americans for some time to come:
SHIT Sandwich;
2 pcs of bread (toasted optional)
1/3 pound of human shit (about the same amount as contained in a garden variety fast-food processed meat quarter pounder served near you and almost as nutritious)
Place shit between bread slices and serve on napkin. If you think of it as steak, not shit, it tastes pretty good. Garnish with toothpick and glass of ice water, with ice.
Get used to it. This is the new national meal.
Like any more recipes?
Bon Apetit!
DIE
My business partner and I were discussing the impact of this problem - it is indeed much, much worse then even the Great Depression.
There are still Trillions in Derivatives (Credit Default Swaps) that haven't even started to blow-up yet.
Anyone have an idea how bad that will be? Not even Mr. Buffet has an idead on that one.
When we start seeing more and more white-collar workers suffering from this fall-out - schools closing down, hospitals closing down, city facilities closing down - we'll realize just how severe this problem really is.
We really can't handle the truth, because the truth is too scary to even think about - but it's coming to our neighborhoods pretty soon.
"My business partner and I were discussing the impact of this problem - it is indeed much, much worse then even the Great Depression.
There are still Trillions in Derivatives (Credit Default Swaps) that haven't even started to blow-up yet.
Anyone have an idea how bad that will be? Not even Mr. Buffet has an idead on that one.
When we start seeing more and more white-collar workers suffering from this fall-out - schools closing down, hospitals closing down, city facilities closing down - we'll realize just how severe this problem really is.
We really can't handle the truth, because the truth is too scary to even think about - but it's coming to our neighborhoods pretty soon."
Apparently your business partner and you do not read much history. This will not be as bad as the great depression for many reasons. One of the most basic reasons is that even though many banks have and will fail, the people and businesses with money in them will get their money back. In the 30's, seniors, businesses, anyone that had money in a bank that failed got 0 back. Nada. Zip. We have currently up to $250,000 in FDIC protection today.
Second, in the great depression the government did not print money, in fact they did the opposite. They tightened money supply. The economy basically was allowed to dry up like desert farm land. In addition, the Gold standard was in effect, so there was no way even to print money. Sure it prevented inflation, but also did not allow for much policy response. Also, Hoover was their generations Bush. Dumb as a rock on economics and definitely drinking the Republican Kool Aid.
Third, the speed of information was far slower in those days. The world was far less adaptive and you could not coordinate policy.
In those days it really was a lack of money, not a lack of good psychology. This crisis is 90% investor psychology, hype, bad government decisions, bad leadership in many boardrooms, lack of will to change, politics and ignorance. This economic collapse is a perfect textbook example of people being told the system will fail, and the system fails.
Think about it for a minute. If Lehman collapsed and we were not experiencing massive foreclosures due to government inaction for years, 24/7 news coverage on 35 news outlets telling you it was "the big one", a Treasury secretary, President, Fed Chair and SEC chairman that were utterly worthless and instilled no confidence, no uptick rule in the stock market so hedgies could bury a company while buying swaps that pay them on the bonds on the company they just shorted to fail and a really long and brutal presidential campaign - do you think it would have had more affect on the market than the blowup of LTCM in 1998? Sure there would have been a selloff, but nothing systemic. Even 2002 was not this bad, why, because we were all fixated on a war that at that time people believed in, and a President that told us all would be well.
Face it, I am not a political person, but this is just a perfect storm of election year politics, hype, poor management at all levels of government and a refusal by Bush and his administration to budge from ideology.
In 1929 there was no cash on the sidelines. Now the problem is that all the cash is at the top, and none is rolling down. Under that scenario another depression is impossible unless we want a monarchy. This is nothing more than a waiting game of when the banks decide to release the billions they have stockpiled. All these supposed losses banks have, are not even realized losses. Understand that when a bank has a mark to market "loss" it is basically saying that their bond, security, swap etc. is worth X right now. They have lost nothing until it is sold to someone else. They are still getting the cash flow from that bond. In most cases it would take a 93% default rate to really mortally wound some of these banks. The only thing that changes is the amount of reserves they must have per the banking regs. Thanks to your tax money and the TARP, reserves are out of sight. Surplus. If you don't believe me, just look at what the banks are doing with the TARP money. If they really needed it, would they be buying other banks with it, or just using it to fund day to day operations..
Banks are currently positioning themselves to begin loaning again. Most of these execs could care less about CDS, CDO's etc. All along it has been a game of chicken between uncle sam and the banks. Bank says "we won't loan any money, unless you give us money" Government says "we don't want to bail you out" Banks say "ok, then we will constrict money and kill your economy - we own you" Government (Paulson - idiot) says "ok fine, you win, we will give you money" They take that money, buy up other banks, grow bigger, and will begin loaning money when they damn well feel like it.
The game now is to watch and try and figure out when the "damn well feel like it" phase begins. Now the wildcard is if Obama tells the banks that if they do not begin to loan the money out, the government will recall the TARP loans. He would have to accompany that with a threat to basically open a new Freddie and Fannie, and tell people that they could directly borrow for home mortgages, business loans, Commercial paper rollovers etc. from this entity. That would then put the banks in a vise quickly since they would have to compete against an entity that could offer lower cost loans to business and individuals with less hassle. Simple competition. You would then see banks climbing all over each other to loan money again. End of crisis in short order.
This "crisis" is caused by control - nothing more, nothing less.
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