Thursday Outlook: Commodities, Emerging Markets 19 comments
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You can chalk Wednesday up to an oversold bounce but the news overall remains horrible. Some hope declining energy prices will provide a lift to consumers, but the real message seems economic weakness which restricts spending.
Meanwhile two major financial companies, WM and LEH, are on the ropes, so it seems. Another weekend bailout and/or takeover in the offing? It’s becoming a habit.
You can’t be happy reading about the scumbag lobbyists who dominate each political party. The change mantra is a Madison Ave. joke. Politicians will never vote themselves out of office but a constitutional amendment restricting terms would be a great start to solving corruption problems. Unfortunately, it will never happen.
Have a pleasant day.
Disclaimer: Among other issues the ETF Digest maintains long or short positions in: SDS, QID, SMN, SIJ, DUG, XLV, RXL, XLP, UGE, IEF, TLT, UUP, DRR, DBC, DEE, USO, GLD, DZZ, EFA, EFU, EEM, EEV and FXI.
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This article has 19 comments:
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Some additional easing (FED) may be necessary to allieviate market/investors fears.
It is amazing how consensus had changed from blindly bullish to bearish.
The problems we are facing today were more than two years in making I have warned investors about pending" turmoil" more than two years ago, reiterated the issuesas late as September18,2007.
If only the issues were addressed then.
In the meantime the problems have been identified an are being addressed.Little more time may bee needed to see the economic response to fiscal and the monetary measures(Lag).
We did see a 3.2% GDP growth in the previous quarter ,quickly dismissed by the economic "charlatans".
Economy looks always best on top of the cycle and the worst on the bottom of the cycle.
Yes ,there are some problems that are being addressed but we are on the way to a major market/economic rebound.
Hard to believe.
People here think on a much shorter scale. In 6 month you could lose tones of money.
The commodities sell off and the skyrocking of treasury says it all for now. I'm not sure what will happen next cuz there's nothing else to go down except stocks.
Reform, ethical conduct...THESE are the words I listen for in the campaign blurbs. Perhaps a chant, "No more quid pro quo; no more quid por quo..."
Hot Lips Palin, as referred to her by you, will chew Obama up and spit him out. No contest with Joe Biden either. Boy, are the dems running scared, or what?
On Sep 11 09:20 AM TomCat wrote:
> Well said, Simon. Let's see what the 'interview' with Hot Lips Palin
> reveals tonight. I don't think she's up to the task.
I think that instead of panicking ,the investment community must sit back and evaluate objectively the current status quo.Please remember that untill recently experts have stated that we are in recession but have alluded to hyper inflation as well (stagflation),while the real estate prices were imploding(70% of Americans were/are home owners ).
The reality is that the U.S is not in recession but is experiencing the sub average growth.In fact the reported GDP growth for the second qtr,was 3.2% .Many try to negate that number but it is real.Exports do create jobs,revenue ,growth and disposable income.
In addition the foreign investments in the U.S are and will continue to grow almost geometrically.
Clearly ,the U.S economy/markets are in the process of consolidation.
The negative distortions and gloomy dissemination of analysis, you need to take within the context of record short open interest-mega shorts continue to distort issues and the problems which we were identified and are being addressed.
Which brings me to the question pertaining to my time span on the market/economic recovery.
The data shows consolidation.Major market /economic rebound will be indisputable by October mid November.
At the risk of being repetitive ,I have been warning the investment community about the current problemsfor more than two years .
I have issued a very explicit warning about the suprime related issues which may derail economy on Sepember18,2007 (Bloomberg TV -Brian Sullivan -FED Time).
Now that the problems have been identified and are being addressed in unprecedented effort by the FED ,Treasury ,Congressand the Administration,I am very bullish if sometimes surprised by the volatility caused by the negative rumors and discussions which have no bearing to reality.
Unbelievable ,but market/and economy are in the process of the trend reversal( going up).
Two things would neutralize the negativity
a) The FED should contemplate additional easing.
b) CNBC should stop practicing "Yellow Journalism"
ROwns ,better days are ahead shortly.
I think the market has been so beaten up that in a few weeks rally be huge.
It would be a heck of a lot easier to swallow your extremely optomistic argument without the following factors: 1) Foreclosures 2) Consumer Credit 3) Unemployment 4) Stronger dollar offsetting the one bright glimpse of hope-exports.
Anyone who believes we are going to return to the golden days of "buy now, pay later" is in for a very rude awakening.
A perfect example took place yesterday. I lease a Cadillac DTS for my business which is set to expire soon. I contacted my dealer and was informed the rules have changed. Leases would be extremely difficult to come by and would be at a premium. So you can better understand the ramifications of what I'm saying, this would be my seventh Cadillac leased from this dealer in the past eighteen years and my credit is pristine (I'm an early baby boomer who never became trapped in the easy credit ways). He also informed me his dealership is leading the midwest for Cadillacs sold in September-----6. This as of September 10th. Now taking this data and extrapolating it out to include the general population, most who have far worse credit than mine, how many people do you believe are standing in line to lease vehicles? Which means for the first time in many a year, they will have to buy cars and put together a substantial downpayment. How many blue collar or middle class people do you believe have the amount of money--or credit-- necessary to finance a new vehicle?
I'm afraid we are just beginning what will be one extremely painful and long recovery. Frankly, I hope you're right and I'm dead wrong, but I've got to believe this time you're on the wrong side of the bet.
JJC
Your concerns do deserve a response .
The issue of foreclosures is a serious problem.Looking at the data it appears to me that forclosures have peaked.The housing sector is consolidating and very well may be the recipient of foreign investment(as the stock market is and will be).
Consumer credit is of concern ,but the relief is on the way.
Speculative forces(hedge funds and others) have pushed the price of crude oil into the stratosphere.The result was higher gasoline (and with a lag) food prices.Thus consumers disposable income had been decimated.As the crude continues imploding ,the lower gasoline/food prices will increase dramatically the net disposable income allowing greater consumer spending latitude(please allow for some lag).
Unemployment is an issue but it is a lagging economic indicator it reflects the past trends but not the future.WE have seen worse unemployment data in the past.
The stronger dollar will attract foreign capital especially as Europe and Emerging market economies are heading for a contraction.
This foreign investment will enhance our economic rebound and will contribute to the unprecedented stock market rally.
Stronger dollar will initially increase exports as the importers of our goods try to beat the price increases (in real terms).Our exports will not suffer for quite a while.There is something called a J -curve .This curve reflects an impact of a shift of a relative value of a currency(ie dollar) on trade (Exports ).The Curve implies that a lag of up to 18 months exist.Meanig that a major shift favoring dollar will not affect exports for up to 18 months.
One more time,I am very optimistc on the U.S economy.
The economy /market are on the verge of a major rebound.
The problerms in the financial sector have existed for years and are being addressed while their magnitude is distorted by the media and the market bears .
Why? take a look at the record short open interest in the equity market -that is why.
In the period ahead you will see Dow at 20,000 and the NASDAQ over 5000.
Hard to believe? So were my warnings about the current turmoil,issued over the period of more than two years.
Never the bottom?, This big?, Over now? vs Charge ahead and forever as if we were all sheep; and please believe yesterday never happened?
David, you are right regarding the suggestion that Washington needs to be fixed. Having worked there for a long time, I was was an eye witness to the debauchery of our political system. They spend trillions of dollars and accomplish very little (lots of self interest accomplishments but very little will keep this country great). I can't think of a single thing of significance that is working well: social security, Medicare, immigration, infrastructure, education, health care, energy independence, financial oversight, manufacturing, etc. are all floundering. The system is so focused on hidden agendas and "politics" that it is doubtful that any of these issues will ever be fixed.
David's suggestion of term limits is a good thought but remember, these folks are not stupid and they will quickly adjust and keep the status quo. Two more effective actions are 1) pass a constitutional amendment that the budget must be balanced every year and all debt has to be retired within X years with the sole exception of time of a declared war. 2) Reduce the federal budget X% every year and return power back to the states and local governments and stop becoming a socialist country.
David is right in that term limits or any other attempt to control power won't happen anytime soon. Folks are simply too distracted. It's like the frog in a pot of water that is heating up. The frog could easily jump out but that warm water feels oh so good and at some point its too late. Unfortunately, it will take a cataclysmic event such as another great depression or another terrorist attack that makes 9/11 look like a non-event before attitudes begin to change.
If we can get power back into the hands of folks (local representatives) that we know and trust, then we have a chance of turning this turned around. If we continue the status quo, we deserve what we get.