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Economic Disconnect

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  • A Year After the Market Bottom: How Are Things? [View article]
    bbro,
    I may not be euphoric but most other market observers are.

    Tunama4u2,
    Mutual funds have deployed almost all their cash chasing this market higher (greedy).

    Thanks for the kind words.
    Mar 9 11:19 AM | 5 Likes Like |Link to Comment
  • 'Pretend and Extend' Meet Brick Wall [View article]
    Granger,
    indeed it is not a right to have a home, but it certainly seems like it sometimes.

    Pension plans that have a charter with the little star at the bottom that says "Assumes 7-9% yeraly investment returns" need a Plan B as well.
    Feb 23 07:20 AM | 2 Likes Like |Link to Comment
  • Fed Firing Blanks, But the Noise Can Still Cause a Stampede [View article]
    With the deflationary CPI print this morning does the FED look dumb after yesterday if the rate raise was related to inflation? Also, do you think the FED/Treasury will target rents should they prove to be a deflationary force going forward (rent rise bailout?) though I imagine they will just change the calculation. Nice post and looking forward to the next one.
    Feb 19 09:45 AM | 1 Like Like |Link to Comment
  • Financial Risk Severely Mispriced [View article]
    Techfun,
    good morning and it's later than you think.
    Feb 9 01:39 PM | 1 Like Like |Link to Comment
  • Financial Risk Severely Mispriced [View article]
    Global,
    Thanks!
    Feb 9 07:12 AM | Likes Like |Link to Comment
  • Housing, Jobs, And Why Nothing Stops the Stock Market [View article]
    Manya05,
    I was very happy with all the interaction on this one as well.
    Feb 6 10:37 AM | Likes Like |Link to Comment
  • Housing, Jobs, And Why Nothing Stops the Stock Market [View article]
    Wow, quite a discussion, not sure where to start.

    Simple Accountant said:
    "Why should the stock market reflect the real economy? That to me is a silly notion. The stock market price level reflects the supply and demand for shares. That in turn is driven by reserve funds in search of return."
    Thanks simple! One of the arguments against gold as an investment is that is has no real value, unlike stocks wheich reflect cash flow and earnings and thus have a "value". Obvioulsy that is not the case! Great comment!

    Speculation noted:
    "I noticed the "Slow Stoch" indicator is at a bottom and turning up on the $SPX (S&P 500). Indicators are far from perfect, but they have worked well since March. I am wondering if it will keep working."
    Spec, heres a hint, everything has worked since March on the long side. Congrats on playing one of about a billion upside possibilities.

    I keep hearing how stocks in March were priced for "armageddon" or "the end". You really think S&P 666 is the end of the world? That could be fair value for the S&P TODAY by many metrics! Spare me that line it is absurd on its face.

    John Furlan,
    I would point you towards the fact that CSCO numbers were helped by ZERO % financing offered by CSCO to buyers which surely added to sales. Brings back memories of CSCO lending money to product buyers back in the dotcom bubble days to keep up demand. How did that work out?

    Sorry for the aggressive comment but my patience is wearing thin on false arguments.
    Feb 4 09:47 AM | 1 Like Like |Link to Comment
  • Housing, Jobs, And Why Nothing Stops the Stock Market [View article]
    User353732, you make some very sharp points and I agree. The disconnect is amazing from all things real, but my alias is EconomicDisconnect after all!

    Youngman,
    surely you are not implying that computer algos and ES futures buying is goosing the stock market artificially? That of course is impossible! (Heavy Sarcasm)

    Marketman,
    I think this is what will bring the whole game down; as you note unemployment is huge and yet a monster GDP number is printed (inventory crap) but people out of work know better than some massaged number.

    Great comments all.
    Feb 4 07:33 AM | 1 Like Like |Link to Comment
  • Housing and Mortgage Debt - Banks Knee Deep in Losses [View article]
    joof,
    The 80's bubble petered out about 1989-1991. Fair value for housing is an open question not a set price like "in 1994 home prices were undervalued". Any way you slice it there remains too much mortgage debt out there and if it takes another 12 years cyclefor the FED to get back even they will run out of time.
    Feb 2 01:04 PM | 1 Like Like |Link to Comment
  • Housing and Mortgage Debt - Banks Knee Deep in Losses [View article]
    The Phoenix,
    great points. I also did not imply that chart means a fast revision to the trendline, as you say many will still pay even while underwater. If even a 10% reduction happems though that is another 100 Billion or so in losses yet to be recognized.
    Feb 2 09:49 AM | 2 Likes Like |Link to Comment
  • Housing and Mortgage Debt - Banks Knee Deep in Losses [View article]
    j-dub,
    very nice!
    Feb 2 07:09 AM | Likes Like |Link to Comment
  • 'V' Shaped Recovery - Telling a Different Story [View article]
    Manya05 has it correct.

    American in Paris,
    try this link and then try and play the 5.7% number a either "shocking" or positive going forward:
    www.calculatedriskblog...

    Snip:
    "When was the last time we saw 5%+ GDP growth, due mostly to inventory changes, and increasing unemployment? It was in Q1 1981.

    The 1980 recession ended in Q3 1980, and inventory changes boosted Q4 GDP by 3.8%, and Q1 1981 GDP by an amazing 6.4%! However underlying demand remained weak (as defined by GDP ex-inventory changes, and PCE) ..

    and notice the boost in GDP from inventory changes in the Q4 1980, and Q1 1981. But PCE was only 1.5% in Q1 1980, and fell to 0.0% in Q2 1980. Since there was no pickup in underlying demand, the economy slid back into recession in July 1981."

    If trading obviously you wanted in premarket or late yesterday and enjoy a bump this morning. I would get out by lunch though!
    Jan 29 08:53 AM | 3 Likes Like |Link to Comment
  • Mortgage Debt Is Still the Main Show [View article]
    Want to hear a good one:
    Paul Krugman for The FED
    baselinescenario.com/2.../

    If this ever happens you are going to need to have all the gold and silver you can!
    Jan 24 01:47 PM | 1 Like Like |Link to Comment
  • Mortgage Debt Is Still the Main Show [View article]
    Lower98th,
    Yes indeed plenty of 4 letter words come to mind.

    tekaat,
    your ideas are just more of the same pretend/extend baloney that has been going on.

    Just let things go where they are going to go and stop fighting reality.
    Jan 24 12:47 PM | 2 Likes Like |Link to Comment
  • A Financial Reform Wish: End All Support for Housing Market [View article]
    All,
    I think most Americans want to make good on their debts, even if they are way behind (say on an underwater home). What I think has been the tipping point is that so many are getting free rides for up to two years while a bank tries to figure out what to do, then the bank gives the bad owner a huge break on rates and/or priciple reduction. I think even solid people are sitting at their tables in the evening and saying "This is not fair and I am not going to do this". Again, a side effect of propping up housing for some.
    Jan 21 05:56 PM | Likes Like |Link to Comment
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234 Comments
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