Comments on Raju Agarwal's articles RSS Syndication from SeekingAlpha.com http://seekingalpha.com/author/raju-agarwal/articles http://seekingalpha.com/article/112735-hedge-funds-oil-prices-and-resulting-recession?source=feed#comment-343758 343758 Thu, 01 Jan 2009 19:40:55 -0500
OTC's losess created a negative externalities because hedge funds and other speculators were forced to fliy to cash, either with or without a yearly positive return.

If you are going to blame the manipulation in the crude market for such volatility, then you should post about the index funds, not the hedge funds who, according to the CFTC, there is no evidence of price manipulation by those institutuions. So the finger should be pointed to index funds and not hedge funds.

]]> http://seekingalpha.com/article/112735-hedge-funds-oil-prices-and-resulting-recession?source=feed#comment-342653 342653 Wed, 31 Dec 2008 12:13:00 -0500
The market and commodity collapse came about due to an inflated housing market. That was created by Congress and the WS boys who were only too happy to keep Goldilocks in curls despite heavier downpours. Push more cash onto the public, provide homes to those who have no ability to pay, give them inflated rates which will surely fail in time, etc. Of course there was individual fraud taking place at desks all around the US as easy money was just too hard to turn away. They took advantage of the poor.

Global recession affected by the WS boys who concocted a method to sell risky junk mortgages with a bonus insurance plan to investors around the globe for high returns. Result, inability to cover the insurance claims (CDS) for the failed mortgages. Major global institutions go bankrupt, more borrowing good money after bad. A cash and then a credit crunch as cash becomes scarce as its just too risky to lend or help the weak.

I don't blame the Hedge Fund managers who also got caught in this perfect storm. They not unlike Mutual Fund managers must provide cash to their customers when asked to redeem their positions. So is it this selfish action that is creating more weakness in the markets in the last few months? How dare they take more $$$ out of our market when it is already too low! They have no choice and there is more to come.

Historically, it takes years to get to a market top. It only takes a few months to make those peaks vanish. Let's place blame closer to the WS crew who single handedly brought the world to a financial collapse on a high risk bet that crap mortgages would survive and not onto large and small investors who were attempting to make money on the impending downside of financials and commodities.

And some of us were concerned about terrorism? This is much worse.



]]> http://seekingalpha.com/article/112735-hedge-funds-oil-prices-and-resulting-recession?source=feed#comment-342518 342518 Wed, 31 Dec 2008 10:56:32 -0500
Might help to put a few restrictions on lending practices as well, that
100% ltv creates a few issues down the trail, doesn't it.
Nothing like some good old fashioned gambling aka leverage to destroy
an economy.

Now the bad news: our "leadership" is joined at the hip with the financial
services monster..kinda like "Siamese twins", so don't hold your breath
on any real reform..each decade the system decays a little more from
those good old days of Tommy Jefferson and Andy Mellon. Those
expensive co-ops in Manhattan cost lots of dough, ditto a good lobbyist.]]> http://seekingalpha.com/article/112735-hedge-funds-oil-prices-and-resulting-recession?source=feed#comment-342378 342378 jack]]> Wed, 31 Dec 2008 09:31:51 -0500 > jack]]> http://seekingalpha.com/article/112735-hedge-funds-oil-prices-and-resulting-recession?source=feed#comment-342297 342297 Wed, 31 Dec 2008 08:07:44 -0500
SO... I would increase the margin requirements on the derivatives, and I would require banks to put up A LOT more capital when they lend to hedge funds to reflect the risk of lending to unrestricted, unregulated entities.]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-305644 305644 Thu, 13 Nov 2008 19:46:21 -0500
Good luck]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-252149 252149 Thu, 11 Sep 2008 19:58:34 -0400 All it will take is C, BAC,etc to stop making big write downs and the market will rally so strongly that all the shorts will have heart failure.]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-252119 252119 Thu, 11 Sep 2008 18:47:01 -0400
ben benanke
]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251945 251945 This is one of the most bizarre leaps of illogic I've ever read on > SA. First, the secular trend in employment has been completely obfuscated > by changes in the way the statistics are derived; there is absolutely > no credible way to determine what the realistic employment numbers > are in the United States (or if there is, I'm certainly not aware > of it). > > Employment could be extrapolated, perhaps, through income trends > but goodness knows no one wants to examine THAT secular trend too > carefully. If anything, the secular trend in income is down and headed > lower. The consumer spending binge of the past 15 years has been > financed entirely on debt and illusory asset inflation, cycling together. > > > Secondly the notion that retiring baby boomers will drive employment > higher, and therefore spark the revival of the American Consumer, > is suspect at best. To begin, boomers will likely find that they > can't retire in the traditional sense and many will compete for low-wage > jobs to supplement income. This will likely pressure wages lower, > and in turn pressure consumer spending lower too. > > We are entering a seismic structural shift. The entire economic establishment > appears to be firmly attached to the cliff-edge of denial. Frankly, > I think the American Consumer is comatose and will remain so for > decades.]]> Thu, 11 Sep 2008 15:35:11 -0400

On Sep 10 05:13 PM Lex Luz wrote:

> This is one of the most bizarre leaps of illogic I've ever read on
> SA. First, the secular trend in employment has been completely obfuscated
> by changes in the way the statistics are derived; there is absolutely
> no credible way to determine what the realistic employment numbers
> are in the United States (or if there is, I'm certainly not aware
> of it).
>
> Employment could be extrapolated, perhaps, through income trends
> but goodness knows no one wants to examine THAT secular trend too
> carefully. If anything, the secular trend in income is down and headed
> lower. The consumer spending binge of the past 15 years has been
> financed entirely on debt and illusory asset inflation, cycling together.
>
>
> Secondly the notion that retiring baby boomers will drive employment
> higher, and therefore spark the revival of the American Consumer,
> is suspect at best. To begin, boomers will likely find that they
> can't retire in the traditional sense and many will compete for low-wage
> jobs to supplement income. This will likely pressure wages lower,
> and in turn pressure consumer spending lower too.
>
> We are entering a seismic structural shift. The entire economic establishment
> appears to be firmly attached to the cliff-edge of denial. Frankly,
> I think the American Consumer is comatose and will remain so for
> decades.]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251747 251747 Thu, 11 Sep 2008 12:38:10 -0400 http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251744 251744 Thu, 11 Sep 2008 12:36:16 -0400 http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251276 251276 Thu, 11 Sep 2008 06:37:27 -0400 On the other hand ,most "experts"have reflected the view that we are in recession.The stock market prices have adjusted correspondigly and offer unprecedented relative value.
By now we know hat some serious issues exist ,they have been or are being addressed.
For all of the paranoia ,we have seen the quarterly GDP growth at 3.2% which equals the long term average,however most economists were trying to dissmiss the validity of that data claiming that the exports(and reduced imports)were responsible for significant percentage of that growth.What if the U.S became a 100% export driven economy?Would the economic data be be unacceptable?
The U.S economy/markets are undergoing consolidation and transition.The recent injection of additional capital into FRE and the FNM will assist the housing market and contribute to stability in the financial and housing sector as well as broad markets and economy.
It should be noted that degree of fear is being instilled in the U.S public through various sources.We need to accept this within the context of the record open short interest in key areas(stocks) ,driven by mega speculators.
U.S markets/economy are on the way to a major rebound .
This new trend will turn into a major rally (markets) and rebound(economy) assisted by the record dollar flows into dollar denominated assets.
It is likely that the European and the Emerging market economies are heading for contracting further accelerating investment flows into the U.S
I would expect the U.S economy to be on track for the long term average growth of 3.2% . I would not be surprised to see the GDP growth of 5% or so in the third quarter of 2009.
If it sounds fantastic ,my track record is impressive.
In Junne of 2005 ,in an interview with Mark Gilbert (Bloomberg -London),I have predicted todays "upheavals".As late as September 18,2007(Bloomberg TV -Brian Sullivan) I have stated that the subprime related issues are about to surface (not over as many thought).I did discuss implication of the severity of the issues.
Back then ,I don't think too many economists/investors thought that I was serious .Now I am bullish on the U.S.I think that I am right .]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251236 251236 Thu, 11 Sep 2008 04:27:18 -0400
GDP is a totally unreliable indicator of economic heath.]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251207 251207 Thu, 11 Sep 2008 02:38:22 -0400 http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251188 251188 Thu, 11 Sep 2008 01:26:04 -0400
This is interesting. I have assumed that the correlation between housing and consumer spending had to do with leveraging the speculative gains in housing for the purpose of consumption, which is now leading to record foreclosures and bankruptcies. Given that the GSEs had to be bailed out, I find it hard to argue that the correlation is "widely overstated".

As for the second part of your statement, I must also say I don't share your optimism about increased US labor demand. What would workers be making? Maybe the question should be "What would workers be making in the US that can't be made far cheaper elsewhere?" Even the service industry is being outsourced. I believe that will keep the cost of labor down in the future, despite aging baby boomers spending their nest eggs. Fortunately for the rest of the world, but unfortunately for the US, quality standards seem to have risen far faster outside the US than within. I think the difference between this recession and its supposed future recovery will be the story of weakened demand for US products.

I do notice that you are cautiously optimistic. Average GDP growth of 2% over three years is hardly something that will fan the flames of speculation. I do hope you are right.

Final question - your S&P P/E number - where did you get it from? I've seen that figure range from yours (the low end) up to 18 (the high end). Given that earnings have also fallen in step with the index, and that the index wasn't cheap to begin with (~16 last year if I recall), I find the number of 12 to be a bit hard to believe.

Thanks for the interesting read. Rampant optimism is always more engaging than rampant pessimism, IMHO. Good luck.]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251185 251185 Thu, 11 Sep 2008 00:58:48 -0400 Better not try to catch the bottom, it is a traders market, or you could also take it as an investors market if you have a 5-10 year horizon. ]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251174 251174 Thu, 11 Sep 2008 00:28:07 -0400
distressedvolatility.com ]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251166 251166 Wed, 10 Sep 2008 23:47:39 -0400
The next President will confront the housing problem head on, and the federal balance sheet has more than enough room to weather this housing mess. By IMF stats, the U.S. debt-to-GDP ratio stands at 63%, barely more than half the hole Japan dug in the 1980s or Canada in the 1990s .

According to David Rosenberg of Merrill-Lynch the federal debt-to-GDP stands at just 37.1%, if we exclude the local (state & municipal) debt not guaranteed by Uncle Sam, and agency mortgage debt only net of the underlying portfolio of housing assets as well as social security. (This would rise merely to 37.2% adding in the net liabilities at Fannie and Freddie. )

Rosenberg says that social security (& other entitlements) are not guaranteed by Uncle Sam and the government can break or more likely discount these entitlements at will. (kinda like it did to Fannie and Freddie's shareholders). IMF numbers add the social security liabilities while Rosenberg reasons they should not be as entitlements are no guarantees.

Also the US in one of the least taxed countries in the world and really the current deficit is basically about fighting 2 major wars with no tax increases. A 5% tax increase will close the deficit and put us in a surplus.



]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251111 251111 Wed, 10 Sep 2008 21:22:21 -0400 http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251102 251102 Wed, 10 Sep 2008 21:10:52 -0400
The housing market typically lasts between 5-7 years, cycling through 4 market stages. That's the historical average, not a prediction. "I expect these headwinds to recede by the end of 2008"...I don't think so.

You're price target appears to be just a random guess, and I don't know why you put it out there. ]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251101 251101 Wed, 10 Sep 2008 21:10:28 -0400
stop trying to be an expert and focus on what you know best.

repeating statistics, or what some economist says does not constitute a vaild projection of the future.

safe to say Wall Street is CLUELESS

500 billion in losses soon to be 1.5 trillion.

WHERE OH WHERE IS THE RECOVERY????????



]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251069 251069 Wed, 10 Sep 2008 20:03:45 -0400 All our higher paying jobs have been exported for 2 decades . Now I read that US workers wages must come down so that we can be competitive with Chinese + Indian workers who work for $2/day! Bill Clinton voted for Nafta ! If you think the democrats will save you , Dream on ! The universal healthcare plan will put our medical care on par with Europe + Canada . God help you you if you have something seriously wrong with you ! The US is run by big corporations .This is called SLAVERY ! Welcome to the new USSar!]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251049 251049 Wed, 10 Sep 2008 19:25:34 -0400 http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251045 251045 Wed, 10 Sep 2008 19:06:33 -0400 http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251026 251026 Wed, 10 Sep 2008 18:46:35 -0400 http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251025 251025 Wed, 10 Sep 2008 18:46:03 -0400
A great deal of the consumer spending over the past number of years was derived from people extracting the equity from their rapidly-increasing real estate investments. Even if the housing market "stabilizes", where is that spending going to come from? The labor market may strengthen, but many people are still going to be upside-down in their homes for years to come and reluctant to spend.

In my opinion, this is a situation that is going to take many years to play itself out. ]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-251012 251012 Wed, 10 Sep 2008 18:21:57 -0400
First it was mortgages only, now it's everything plus the rest of the world combined...
]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-250980 250980 Wed, 10 Sep 2008 17:35:42 -0400
The SP500 is on it's way to 600 as earnings are collapsing in every sector, and earnings drive prices. $50 in earnings in 2009 at 12 PE is 600 my friend.
]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-250955 250955 Wed, 10 Sep 2008 17:16:10 -0400
Oh and I don't think forward earnings expectations are in any way reliable...]]> http://seekingalpha.com/article/94805-expect-the-real-rally-by-mid-2009?source=feed#comment-250954 250954 Wed, 10 Sep 2008 17:16:03 -0400
For example: Before long term house affordability is restored again we have to need another 7 trillion in lost family house equity. This main driver misses in the article (but also in the rest of MSM).

For example: The author bases his housing views on month to month house prices but the seasonal component is rather large: During the last 1996 to 2006 housing boom there were always month on month declines but that is not mentioned...
Given the seasonal component one should monthly figures compare to those of one year ago.

And what about HELOC? In 2005 HELOC and extra mortgages accounted for about 750 billion in consumer spending, ok ok some folks improved their house with it but most of it was bread and meat and beer pissed away.

All in all: This article is not worth much. ]]>