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The fact that stocks surged yesterday on the flimsy rumor of hot Chinese GDP growth - since...

The fact that stocks surged yesterday on the flimsy rumor of hot Chinese GDP growth - since disproved - is a sign the market's wild, unexplainable behavior could be making a comeback. “We’re not going to be buying quickly into a rally like this,” KeyCorp's Bruce McCain says. “We think there’s greater potential for downside than more gains from these levels.”
Comments (11)
  • montanamark
    , contributor
    Comments (1434) | Send Message
     
    how many times did cnbc parrot yesterday that chinese GDP would be strong and gloat about the market strength. this is the new standard - any little rumor no matter how flimsy, unsourced or untrue is pumped for a day and there is no recourse, no apology, no investigation; our regulators and gov just smile on.
    remember the rumor about US and Euro doing release of oil reserves? Completely unfounded but no one cares
    13 Apr 2012, 09:11 AM Reply Like
  • Tack
    , contributor
    Comments (12442) | Send Message
     
    And Gary Shilling says the Dow will plunge 40%. There are plenty of folks out there saying almost anything you may wish to hear. Those that place their faith in rumors and punditry deserve whatever happens to them.

     

    What investors should observe and assess with complete calmness is the trend of reported retail and industrial sales, as well as corporate revenues and profits. This is factual data and will ultimately dictate everything, no matter how long and how loud the pundits shout.
    13 Apr 2012, 09:16 AM Reply Like
  • 2MuchDebt
    , contributor
    Comments (215) | Send Message
     
    I agree Tack, but we should also look into the future as well. It would be silly to walk forward while looking backwards (you might run into a brick wall!) The private economy is not functioning on its own and therefore is unstable. It's on a lifeline from central banks and governments. It's become an addiction and is unhealthy. Unfortunately, this misappropriation of capital will come back to bite us as every government/central bank dollar spent yields cents on the dollar and eventually will have to be repaid by guess who; taxpayers.
    13 Apr 2012, 09:55 AM Reply Like
  • Tack
    , contributor
    Comments (12442) | Send Message
     
    2much:

     

    Most sovereign debt created worldwide is never, ver repaid and isn't even intended to be repaid because global growth is never ending, meaning that the asset, liability and equity sides of balance sheets are ever expanding. Many people do not seem to understand this distinction from the mechanics of personal debt, which must be repaid because people's earning capacity subsides or ends in time.

     

    As for looking forward, I'd much rather base my vision on interpretation of trends I see from real reported data, rather than the proclamations of myriad pundits, many of which are hyperbolic in the extreme and are probably intended to be so, just to garner TV time and the more emotional subscribers.
    13 Apr 2012, 10:02 AM Reply Like
  • 2MuchDebt
    , contributor
    Comments (215) | Send Message
     
    I understand the mechanics. However, increasing government and central bank debt significantly without repayment has serious ramifications and that is why I mentioned both government AND central bank debt must be repaid (at least to some degree). Central bank debt will eventually be "repaid" either through higher inflation or removing the money from the economy. Your way of describing sovereign debt repayment seems to imply that it doesn't matter how much debt is issued because the economy never stops growing, which is certainly not true and is in fact natural and healthy to have contractions every now and then (business cycle). You would fit right in at the Fed. Believe it or not there was a time before 2008 when central banks and governments didn't unload their pockets and the world got alone fine.
    13 Apr 2012, 10:42 AM Reply Like
  • Tack
    , contributor
    Comments (12442) | Send Message
     
    2much:

     

    I am not saying that debt can grow at any rate, just that the oft-mentioned idea that it gets "repaid" simply never happens. The debt gets absorbed over time either through growth and/or inflation. Everybody bitches and makes dire predictions, but none of it alters how it actually occurs.

     

    I am also not an endorser of either unrestrained growth in debt or, even more so, in government fiscal spending, funded via debt or taxes. But, be that as it may, debt will still not get repaid, in the classical sense.
    13 Apr 2012, 10:55 AM Reply Like
  • 2MuchDebt
    , contributor
    Comments (215) | Send Message
     
    Gotcha
    13 Apr 2012, 11:10 AM Reply Like
  • Tschurin
    , contributor
    Comments (304) | Send Message
     
    This item rests on the dubious assumptions that there is a single underlying logic to the millions of trades that comprise a market move, and that we can identify that logic.
    13 Apr 2012, 09:26 AM Reply Like
  • HoeTamer
    , contributor
    Comments (186) | Send Message
     
    Wait, Cramer just said to buy Wells Fargo, now. Wells is close to it's 52 week high and this moron is telling investors to buy it now? Don't listen to these shills, they are just pushing ratings.
    Speaking of ratings, did anyone catch the Jack Welch interview yesterday on the Kudlow Report? It's worth watching.

     

    http://bit.ly/HG4WAv
    13 Apr 2012, 09:40 AM Reply Like
  • wapiti
    , contributor
    Comments (694) | Send Message
     
    There are no analysts anymore b/c if they did analysis, they would realize a number of companies are SO SO overvalued it's scary. TSCO@ 33Xe, LULU@ 60X and 12X Sales! TPX@ 26X. CMG@ 60X The list goes on and on...
    13 Apr 2012, 09:51 AM Reply Like
  • into dark shadows
    , contributor
    Comments (321) | Send Message
     
    Thanks Bruce, finally some responsible commentary.
    Risk to the downside is legion!
    If O.W.S. and the New Black Panther Party start a race war with Eric Holders blessing(Holder was out there 2 days ago worshipping at the altar of the original race war provocateur, Al Sharpton) Farrahkahn will no doubt be right there in the trenches.
    We could devolve into chaos with blinding speed.
    13 Apr 2012, 02:35 PM Reply Like
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