Matt Blackman

The Recession Is Over

Anyone who makes such a sweeping conclusion based on one indicator is a few bricks short of a full load. This rally and supposed recovery may be a real recovery but it also has a lot of similarities to past bear market rallies. In other words, your conclusion is little more than wishful thinking at this point!

It's 1974 for the U.S., but 1929 for China

And the Chrysler bailout didn't happen in 1974, it was 1980...

It's 1974 for the U.S., but 1929 for China

A

President-Elect Obama and the U.S. Dollar

Interesting analysis. It is certainly not technically based. You mention that jobs losses are a lagging indicator - with very few exceptions all fundamental indicators lag. But your average number of jobs losses per month is wrong, the actual number is 93,900 (see chart 2 at tradesystemguru.com/co...). Also not sure about what you mean about some of the secondary statistics showing improvement. The latest ISM number of 38.7 is well below the contraction threshold and the lowest reading in more than 2 decades (see chart 1 at tradesystemguru.com/co... ) .

Another major challenge facing any sustained dollar rally is the deficit. If it soars to or above $1 trillion as projected, who is going to buy US Treasuries in sufficient amounts to finance it? Right now Treasury needs to sell more than $30 billion per month just to pay the roughly $400 billion annual deficit. That number will soar to above $80 billion/month in 2009 (based on the cost of the current crisis and Obama fiscal promises) and as you can see from the latest Net Treasure Income Flows, they are having trouble doing that now (see tradesystemguru.com/co... ).

I also agree with the above poster. At this point, who is in the White House is relatively unimportant for the time being. But if he follows through on his many promises, most of which are pro-tax & spend and anti-business, it will mean any recovery will take considerably longer to take effect.

Maybe the dollar will continue to rally from here but your article did little to explain how. With a target rate of 1% (with an effective fed funds rate of 0.30%) the US has the lowest interest rates of any OECD country with the exception of Japan and will bring that rate to zero based on the strategy in Washington.

Highs vs. Lows: Market Continues to Show Strength

Brett
Just curious what a long-term chart of the above looks like during major bear markets like 1974-83?

Toronto Stock Exchange Displaying Strength

Not sure where you learned your technical analysis but the TSX is not displaying any kind of strength from the charts you exhibit above. And I agree with the comment above, it is WAY too early to expect inflation to begin to play a part in propelling the TSX higher.

But one other key point you miss altogether. My research indicates that the TSX performs even worse than the SPX or DJIA in the two US post election years. Since 1950 97% of TSX gains came in the 26 months leading up to US elections versus just 3% in the 22 months afterward. Not very good odds from an historic perspective and as a trader, probability is one of the best tools available.

The Difference Between 1993 and 2009

Well done Anton. And then there is the problem with Obama's promise to raise corporate taxes and 'punish' US multinationals. The US is the only industrialized country that taxes based on citizenship instead of domicile and that has created a raft of headaches for US multinational corporations. His plan to scrap "tax breaks" that Congress has levied in an attempt to make them competitive will be very counterproductive to the ability of US corporations to compete.. but then few seem to care. For more on this see sfomag.com/article.asp...

Can We Prevent Asset Bubbles?

Thoma;
I find it hard to believe just how fiscally naive you can be. Your supercilious sermon and conclusions assume that government agencies like the Fed, do their level best to adjust indicators and economic monitors purely based on the data and completely and rather stupidly in my opinion, ignore the fact that there are external forces at work, like politicians wanting to get re-elected for example, that result in these indicators being grossly distorted. I think it is pretty much accepted among serious data-response driven market participants that the vast majority of economic indicators generated by government agencies are manipulated past the point of usefulness in any real sense.

In other words, because these indicators (like GDP, CPI, PCE etc) grossly distort the true picture, relying on them to gauge the true picture is a fool's game. And any system based on these indicators to short-circuit the build up of bubbles will be virtually useless as a result.

The Case for a Bounce

Kathy;
Curious about your comments about that the insurers who bought the CDSs will now have the $270 billion to pay their Lehman claims. Where do you think this money will come from? The US government has already committed to more than $2 trillion, where is another $270 billion coming from?

Don't Be Fooled - Short Selling Restrictions Do Work

C.S.Jefferson has just proven beyond a reasonable doubt that he has no clue how markets work.

It's a Bull Market in Government Intervention

"My question is who do we have to save next to save the world? "

The challenge as I see it is the government minions are blowing the wad trying to save Wall Street. Unfortunately, they are simply passing along the liability to taxpayers, kind of like what happened in Japan in the early 1990s after their meltdown (that is still underway).

The problem is that as the recession worsens, Main Street will be next, consumer spending will fall as more get laid off and the economy weakens. Given that the Fed and government have now discouraged foreigners from investing in Treasuries see tradesystemguru.com/im... who will be left to bail out Main Street amid rising interest rates?

Playing for a Bounce?

Sorry, here is the correct link to the naked short selling article entitled The 'Phantom Shares' Menace by John Welborn
www.cato.org/pubs/regu...

Playing for a Bounce?

Found another good article that explains the naked short selling problem..
www.sec.gov/comments/s...

Playing for a Bounce?

Greg;
Interesting article but it is clear from your last comment on the SEC's recent action "banning" naked short selling that you do not understand what naked short selling is. It is ludicrous to make the statement that by banning the practice which was "banned" in January 2005 with the Regulation Short Sales rules (RegSHO) that the government is "making it illegal for stocks to go down."

However, for some reason, the SEC decided not to enforce the RegSHO rules until recently.

Naked short selling is the destructive practice of selling a stock short without having to first borrow it like everyone with the odd exception of market makers, brokers and hedge funds have to do.

This action by the SEC does not "make it illegal for stocks to go down" as you state, it makes it illegal for those who short stocks to do so without having to first borrow the stock. This practice by the way, effectively allowed those few players the ability to counterfeit the stock which hurts everyone. I explained naked short selling in my March 23, 2007 newsletter at tradesystemguru.com/co.../

There was an excellent 25 min documentary done by Bloomberg in March 2007 entitled Phantom Shares that everyone should watch (which hopefully still works). The link can be viewed at the bottom of the page at tradesystemguru.com/co.../

I don't dispute the fact that with its recent action the government has crossed a dangerous moral hazard threshold in socializing markets but let's not start making charges that simply aren't true.

The Two-Ton Wall Street Conflict of Interest Few Dare To Talk About

As SeekingAlpha is not a political forum my comments about Obama being the leftist most candidate was not intended as an endorsement for one candidate over another. My leftist-most candidate comment was based on a rating by the left-of-center group Americans for Democratic Action of a perfect 100. McCain garnered a rating of 14 from the group. Obama's perfect score is the highest this group has awarded to any candidate running in any recent election. John Kerry scored 95 when he was running in 2004.

My comments were not intended to start a political debate only to point out that policies to increase taxes including income taxes, dividend taxes, capital gains taxes and corporate taxes have a negative impact on Wall Street. The same can be said for policies to increase trade tariffs and re-write free trade agreements, which Obama has advocated. History tells us that increasing taxes and trade barriers during a weak and deteriorating economy has the potential to further negatively impact growth.

From a business, corporate (Wall Street) point of view, McCain's plan to lower the corporate tax rate to 25% and maintain capital gains, dividend and other tax rates essentially where they are should be good for Wall Street and stock prices. Obama has discussed many positive policies that have the potential to be good for America. However, he has never advocated policies that favor business, so from a perspective of being good for stock prices going forward, will mean a more challenging environment for if he follows through on these promises.

If you are interested in a discussion of these policies from a corporate, stock market perspective, my recent article in SFO magazine discusses them at length. It can be read free at
sfomag.com/Article.asp...

Matt Blackman