10 Reasons Why We Are Headed Into a Recession [View article]
What a nice comprehensive list of problems.
I really do believe a lot of lack of wanting to take responsibility is present in the markets now and therefore a lot of people are blind to whats really happening.
Anyway, all the above points do pertains to the reality of the situation. Despite that earnings season may be optimistic (based on current sentiment), once a lot of these factors kick into place, that will turn around as well.
Going to add on to number 7)
7a) ARM and Alt-A mortgages are going to experience interest rate resets all throughout 2010 and 2011, most likely increasing the amount of defaults that will occur in the same or bigger capacity as the sub-prime mortgages. For those of you who haven't seen this graph yet, it's worth a look:
Feels like the BRIC countries should be turned into BRICJ - Japan's Yen has been growing quite strongly against the dollar as well.
The raminifications of a declining dollar are actually huge. You captured it relatively well, but at the worst it could lead to a massive paradigm shift in the the world where US is no longer the controlling power it is today (and already declining). At the best, US is going to get a lot less bargaining power in the world and the dollar could even be pushed off the rails as the leading currency.
Every time news about the problematic Euroland is released, I can't help but think that a few years ago, bailing out a company would have been unheard of. Now... bailing out an entire COUNTRY? The scary thing is that this magnitude of bad news is becoming more and more complacent for investors. This is NOT how a normal global economy should be functioning.
Why Is Baltic Dry Index Falling if World Is Recovering? [View article]
Great article.
One thing that needs to be added that pertains to the poor performance of the BDI is oversupply of ships, both of the ones that fit and don't fit through the Canal. In 2005, there was such huge global demand that was expected to continue that shippers did something that hasn't been done in a long time - build ships. After the global economy crashed, a lot of ships were left on land and are now still there waiting to be put into work... which may not happened for a while until global demand increases significantly to 2004-2005 levels.
So, one of the MAIN reasons the BDI stayed low is not only because it tracks ships that do not fit through the Canal, but also because of a general oversupply of ships that are sitting still right now. Great work though and thanks for that breakdown.
You mentioned a few stocks that would have missed the global rally since they rely on BDI prices... can you mentioned any that would have benefits and perhaps can continue to benefit for the next few years in your opinion?
Just to be a devil's advocate, however, if a huge upswing really does come around, which is not unrealistic, it will come only as a rebound to the downs that every market in the world has experienced this year.
But, when you look at what is driving ECONOMIES, not MARKETS, everything is still in a mess. Despite bailouts and rate cuts from all the world's Justice League (pardon the reference), the fundamental state the world is functioning in is not sustainable. US is faaaarrr too consumer-oriented and its causing the national deficit to increase and increase, not to mention the effect of the bailouts on the deficit. Wall street is going to change completely.
Without getting past the real problems first, the markets are just going to keep going down.
In conclusion, I agree with you...until more bad news comes out.
That's so ridiculous, it actually makes me angry... but at the same time not too surprised. It's hard to believe a government who has an inherent conflict of interests to report honestly versus report to make everything look good.
New Home Sales: Still at Depression Levels [View article]
Love the concluding sentence and completely agree with the article.
Markets will often zero in on good news in times like these... just riding out the wave and waiting for the underlying fundamentals to come back to the market.
S&P 500: The Optimist's Argument (Part 1) [View article]
Chuck, great analysis, but I'm afraid it could be easily disqualified if one looks at recent corporate earnings as a coincident indicator rather than a direct indicator of the economy.
The $3 trillion spent by the government in stimulus HAS To have come out somewhere, and in this case, I believe it came out through corporate earnings. With consumers weary of spending and still traumatized, there will NOT be a long term increase in earnings as government stimulus will eventually pull back.
With 85% of economic indicators negative, earnings cannot be viewed with high reliability because they are only indicative of government stimulus, not of the underlying situation.
Eskin can't shake the nagging feeling that this is going to be a very long bear market (what's the deal with Macro Man talking in third person?). The US economy has not even come close to realizing how weak the dollar and the fed really are, and once that happens maybe we can start realizing how bad things really are, but not for a while...
I certainly agree with you on Soro's intelligence. Reading his most recent book was quite a personal challenge to understand and I learned a lot. It's so agreeable that the US has long-term structure problems; it's more than a short-term thing. This is a good reminder to keep in mind compared to a lot more bullish article going on right now.
> Soros is a brilliant man and he knows the game. > There is so much fraud in the system that favors those who have the > power and are in the right place to take advantage of it. Banks like > Goldman is making a killing from these "gifts", as Soros calls it > or namely very cheap money (seekingalpha.com/symbo...), > and also the very sinister HFT (high frequency trading) which is > computerized insider trading that happens in a nano second.
European Stress Tests: Faked, And Not Very Well [View article]
Great insight. I couldn't agree more.
It's the same train of thought as Bernanke saying that the future is "unusually uncertain" right now.
Think about it.
All these guys sitting at the Fed, as well as whoever reports on the results of the banks' stress tests, CANNOT just say things are in terrible shape, because it will turn into more of a fulfilling prophecy than it already is and the market would literally begin a downward spiral. They have a RESPONSIBILITY to report things in a brighter light than they actually are.
I'm confident that was the case with Bernanke yesterday, and have a pretty strong conviction it was the case today as well.
Himax Technologies: A 400% Potential Upside? [View article]
I can only HOPE that revenue will be increasing at 30% a year as you mentioned, because from my research on HIMX revenues and more worryingly, net margins, have been declining significantly for the last 2 years. Yes, balance sheet shows growth, but until there's some evidence of financial performance that would match your analysis I would say this is looking downhill from here.
One Last Buying Opportunity for Oil [View article]
Ahh what a coincidence. I was JUST about to mention Jeff Rubin. I'm almost finished his book called "Why your world is about to get a whole lot smaller" (which is fantastic and very interesting by the way) and it fully coincides with this article. Almost as big of a demand as China is the OPEC countries themselves, who are burning oil at such cheap prices for themselves while it remains expensive to us, that they are becoming dependent on it for things like desalinating water for themselves etc. Either way, I'm long term bullish on oil prices.
One thing about China actually is that they rely on coal much more than oil prices right now. If prices continue to rise (As they are predicted too), the coal market could grow a lot in china as well. From what Jeff Rubin says, about 80% of the electricity in China comes from coal.
Where's the Nationalization Debate? [View article]
Yaa definitely something that's been going around, and UK's choice to nationalize is definitely not swaying this argument away from socialism. Probably one of the most extreme moves so far across the battle field, and I'm extremely against government intervention in the first place, let alone trying to allocate source through nationalization which the government can never do as efficiently as firms. Let the banks fail, new ones will prosper that are better.
10 Reasons Why We Are Headed Into a Recession [View article]
I really do believe a lot of lack of wanting to take responsibility is present in the markets now and therefore a lot of people are blind to whats really happening.
Anyway, all the above points do pertains to the reality of the situation. Despite that earnings season may be optimistic (based on current sentiment), once a lot of these factors kick into place, that will turn around as well.
Going to add on to number 7)
7a) ARM and Alt-A mortgages are going to experience interest rate resets all throughout 2010 and 2011, most likely increasing the amount of defaults that will occur in the same or bigger capacity as the sub-prime mortgages. For those of you who haven't seen this graph yet, it's worth a look:
www.doctorhousingbubbl...
Falling Dollar: Finally Front-Page News [View article]
The raminifications of a declining dollar are actually huge. You captured it relatively well, but at the worst it could lead to a massive paradigm shift in the the world where US is no longer the controlling power it is today (and already declining). At the best, US is going to get a lot less bargaining power in the world and the dollar could even be pushed off the rails as the leading currency.
Check out my blog at www.youngandinvested.com
Hungary: Europe's Latest Bailout Target [View article]
Why Is Baltic Dry Index Falling if World Is Recovering? [View article]
One thing that needs to be added that pertains to the poor performance of the BDI is oversupply of ships, both of the ones that fit and don't fit through the Canal. In 2005, there was such huge global demand that was expected to continue that shippers did something that hasn't been done in a long time - build ships. After the global economy crashed, a lot of ships were left on land and are now still there waiting to be put into work... which may not happened for a while until global demand increases significantly to 2004-2005 levels.
So, one of the MAIN reasons the BDI stayed low is not only because it tracks ships that do not fit through the Canal, but also because of a general oversupply of ships that are sitting still right now. Great work though and thanks for that breakdown.
You mentioned a few stocks that would have missed the global rally since they rely on BDI prices... can you mentioned any that would have benefits and perhaps can continue to benefit for the next few years in your opinion?
2009: Expecting a Massive Rally [View article]
Just to be a devil's advocate, however, if a huge upswing really does come around, which is not unrealistic, it will come only as a rebound to the downs that every market in the world has experienced this year.
But, when you look at what is driving ECONOMIES, not MARKETS, everything is still in a mess. Despite bailouts and rate cuts from all the world's Justice League (pardon the reference), the fundamental state the world is functioning in is not sustainable. US is faaaarrr too consumer-oriented and its causing the national deficit to increase and increase, not to mention the effect of the bailouts on the deficit. Wall street is going to change completely.
Without getting past the real problems first, the markets are just going to keep going down.
In conclusion, I agree with you...until more bad news comes out.
Jobless Claims: Sleight of Hand [View article]
New Home Sales: Still at Depression Levels [View article]
Markets will often zero in on good news in times like these... just riding out the wave and waiting for the underlying fundamentals to come back to the market.
S&P 500: The Optimist's Argument (Part 1) [View article]
The $3 trillion spent by the government in stimulus HAS To have come out somewhere, and in this case, I believe it came out through corporate earnings. With consumers weary of spending and still traumatized, there will NOT be a long term increase in earnings as government stimulus will eventually pull back.
With 85% of economic indicators negative, earnings cannot be viewed with high reliability because they are only indicative of government stimulus, not of the underlying situation.
Do Equities Want to Rally? [View article]
George Soros: The Guru Outlook [View article]
Check out my blog at www.youngandinvested.com
On Oct 29 08:35 AM bexe wrote:
> Soros is a brilliant man and he knows the game.
> There is so much fraud in the system that favors those who have the
> power and are in the right place to take advantage of it. Banks like
> Goldman is making a killing from these "gifts", as Soros calls it
> or namely very cheap money (seekingalpha.com/symbo...),
> and also the very sinister HFT (high frequency trading) which is
> computerized insider trading that happens in a nano second.
Consumer Confidence Still Worse Than Last 4 Recessions [View article]
European Stress Tests: Faked, And Not Very Well [View article]
It's the same train of thought as Bernanke saying that the future is "unusually uncertain" right now.
Think about it.
All these guys sitting at the Fed, as well as whoever reports on the results of the banks' stress tests, CANNOT just say things are in terrible shape, because it will turn into more of a fulfilling prophecy than it already is and the market would literally begin a downward spiral. They have a RESPONSIBILITY to report things in a brighter light than they actually are.
I'm confident that was the case with Bernanke yesterday, and have a pretty strong conviction it was the case today as well.
Himax Technologies: A 400% Potential Upside? [View article]
One Last Buying Opportunity for Oil [View article]
One thing about China actually is that they rely on coal much more than oil prices right now. If prices continue to rise (As they are predicted too), the coal market could grow a lot in china as well. From what Jeff Rubin says, about 80% of the electricity in China comes from coal.
I highly recommend his book!
Where's the Nationalization Debate? [View article]