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  • 2013: Another False Start [View article]
    You both must have advanced degrees in spin doctoring. The point of your article was clearly that you were bearish on the overall market, as you outlined your 10 worries for the "market", which were all broad based themes.

    And by the way, you now bring up your November 29 bull call on HERO as evidence you were right. However, you predicted "lower entry points" in your Here Comes the Pain article, yet HERO was 4.57 / share on November 13 but was 5.02 / share on November 29. Nice try.
    Feb 18, 2013. 09:45 AM | 5 Likes Like |Link to Comment
  • 2013: Another False Start [View article]
    Mr. Jensen,

    In your November 13 "Here Comes the Pain" article, you said, "Investors should maintain a healthy cash position as we should get some lower entry points in the months ahead."

    S&P 500 up 10% since then.
    Feb 18, 2013. 08:37 AM | 6 Likes Like |Link to Comment
  • Initial Jobless Claims: -27K to 341K vs. 360K consensus, 368K prior (revised). Continuing claims -130K to 3.11M. [View news story]

    I agree with you that the spending behavior of the 92% has a greater impact on the economy than the spending behavior of the 8%. However, although 70% of the economy is consumer spending, it's the other 30% which actually drives economic cycles for the most part.

    Though for sure some portion of consumer spending is discretionary (vacations, eating out, etc.), most of it is actually non-discretionary (rent / mortgage, food, phone / cable / internet, transportation costs, insurance, etc.) Only a relatively small portion of overall consumer spending is discretionary. Conversely, businesses can cut back on spending tremendously when the music stops and they're all scrambling to find an empty chair (they refrain from buying new equipment or building new factories or offices, put off replacing aging vehicle fleets or computer systems, lay off workers, etc.) And this is exactly what happened in late 2008 / early 2009 and what made the recession so deep. Consumer spending only contracted by less than 2% during the "great recession" but business investment contracted by over 25%.

    This is why demand side economics misses the mark. It's not about people having money to spend, it's about people inventing new technologies and businesses implementing ideas which improves everyone's standard of living (computers, smart phones, gas fracking, Amazon selling goods online, Netflix DVD by mail service, etc.) People can have lots of money to spend, but they won't buy a smart phone if it hasn't been invented yet - supply creates its own demand.

    So again, I agree with you all the consternation about high unemployment since 2009 has been misguided (when it comes to forecasting the economy and stock market), but what I'm saying is it's even more misguided than what you're suggesting.
    Feb 14, 2013. 10:46 PM | Likes Like |Link to Comment
  • As Stock Prices Continue To Rise, Earnings Continue To Decline [View article]
    Slowing earnings growth is normal at this stage of an economic expansion. (We transitioned from recovery to expansion once GDP surpassed its 2007 peak level, but people still talk about us being in a recovery) Central bank monetary policy is about as accommodative as it could be, inflation pressures are still benign as capacity utilization is still relatively low and unemployment remains relatively high. Banks are very well capitalized and the tight lending standards resulting from the financial crisis are starting to ease. Borrowing costs are historically low. Housing is now a tailwind, and Chinese economy is accelerating. Much lower natural gas prices as a result of the gas fracking boom is a shot in the arm to US manufacturing. We may be on the verge of a US oil shale boom, and major advancements in materials technologies. Europe still has problems, but nowhere near what people had been fearing for the last several years. Though many decry political gridlock in the US, it sure beats one party having the political capital to pass all kinds of legislation, which would likely be a big negative. And SA is filled with articles like this and commenters agreeing with the author, so still lots of skepticism out there, no widespread euphoric sentiment. And Tack is right about tons of money already having moved away from equities for the last 3 or 4 years. A few weeks of inflows, even though they've been strong, pales in comparison. Sorry Mr. Fuller, I don't see it your way, I'm bullish.
    Feb 11, 2013. 02:38 AM | 4 Likes Like |Link to Comment
  • Q4 Outlook: Caution - Radioactive Markets [View article]
    Mr. Parnell, I took the liberty of looking back at your past articles. You were very skeptical to bearish at the beginning of this year, around the late September / early October 2011 lows, and in mid 2009. (I would have loved to see what you were saying in mid 2010, but you published no articles on SA during this time).

    I agree there's always something to worry about, often times many things to worry about which could cause markets to not do well going forward. And yes, the current risk factors do seem scary, especially the way they're endlessly discussed and portrayed in the media. But you're mistaking typical wall-of-worry stuff for actual negative market drivers. And I think you're not correctly seeing the positive drivers. A word of advice: take off your bearish tinted lenses.
    Sep 30, 2012. 11:00 AM | 9 Likes Like |Link to Comment
  • Former Obama economics advisor Christina Romer lays out her plan for "compassionate deficit reduction," which includes higher taxes on the rich and lower tax breaks for them, as well as increased medicare contributions. But she's also in favor of increased tax breaks for firms that hire more people, as well as cuts in defense, agriculture, high-speed rail and healthcare where there's inefficiency. [View news story]
    Who at SA decides to post such politically partisan NY Times articles in the Market Currents? What's the purpose of doing this? It only generates polarizing, tit-for-tat comment thread wars between liberals and conservatives (or libertarians), which cheapens the site. If you want to attract more people, you would be better served posting articles which generate a more intellectually compelling exchange of ideas.
    Sep 9, 2012. 07:41 PM | Likes Like |Link to Comment
  • "Draghi delivers," writes Ambrose Evans-Pritchard in a contrarian take on the ECB press conference. By seeking instant gratification, markets missed the point that work is underway on the sort of programs hoped for. "Over the coming weeks, we will design the appropriate modalities for such policy measures," said Draghi. Is anyone listening?  [View news story]
    Tack, I thoroughly enjoy reading your comments on SA. I find them more informative and educational than 98% of the articles. I tried to message you this directly but there's a rule I have to fill out my profile first (including posting a picture of myself), which I'm not yet ready to do.

    These times feel to me like the exact mirror image of a bubble. I guess you could call it a negativity, or pessimism bubble, where everything is to be looked at as the glass being half empty. Another financial crisis and market crash is coming around every corner, economic growth will forever be sluggish, and anyone espousing a bullish view is to be ridiculed. If you're a conservative, Obama and the Democrats are destroying the country. If you're a liberal, obstructionist Republicans are destroying the country. Central bank policy is always reckless, and hyperinflation is inevitable. People like Roubini and Gross are regarded as sages. And given the sentiment of the commenters here on SA, on balance, it should be renamed Seeking Armageddon. I can't help but think equities likely do very well in the coming years.
    Aug 3, 2012. 12:22 AM | Likes Like |Link to Comment
  • The Fed In A Tightening Box [View article]
    I'd love to know what you were saying a year ago, two years ago, and three years ago about the prospects for the US economy and stock market over the coming year. Bearish I'm guessing.

    But at least I know what you're saying now. This time next year let's see where the economy and stock market are, and then you can tell me again what I'm missing.
    Mar 19, 2012. 12:35 AM | Likes Like |Link to Comment
  • The Fed In A Tightening Box [View article]
    I'm fairly new to SA. Lots of varying opinions. So, when I encounter an author for the first time, the first thing I do is look at what they were saying at various points in time in the past, to see what their track record is. Here are articles Mr. Parnell has posted previously:

    Alarm Bells Sounding For Stocks As A New Quarter Begins - Oct 2, 2011

    Stocks: Beware The Rally - Oct 6, 2011

    5 Reasons To Fade The Recent Stock Rally - Oct 9, 2011

    Time To Move To Cash? - Nov 27, 2011

    A Blustery January Ahead For Stocks - Jan 1, 2012

    It appears, Mr. Parnell, you are looking at the world through bearish tinted glasses. Regarding today's article, the economy is not being "propped up" as you say. It is a normal part of the economic cycle for the Fed at some point to ease off the heavily accommodative stance they assumed during the previous recession.

    And regarding your contention that the economy can not stand on its own two feet, you're missing the idea that emerging markets are now the economic growth engine of the world. Tens of millions of people every year are moving out of poverty and in to the middle class, fueling economic growth in the US, and in other parts of the developed world, as they are a big source of demand for basic and finished materials. Plus, there continues to be lots of technological advancement, also fueling economic growth: horizontal drilling / fracking, smart phones, tablets, etc.

    Even if there's no more QE, short term rates are still basically zero, so the yield curve is still positively sloped, the biggest leading economic indicator there is.

    Corporate profits are at all time record high levels. At 1400 the S&P 500 is trading at 13.5X 2012 expected corporate earnings, and with bonds being so unattractive as the major competing asset class with equities (very low yields), stocks are even cheaper right now on a relative basis, even after the rally we've had over the last 5 to 6 months.

    And the skeptical sentiment you're expressing is shared by many other people these days, including most of the commenters here on SA. There's no stock market euphoria right now, not even close.

    The market may pull back a little at any time, but that's always true. Take off your glasses sir. We are in a bull market, and you're missing it.
    Mar 18, 2012. 05:43 PM | 2 Likes Like |Link to Comment
  • The Markets Since Their 2000 Highs: We're Not Bouncing Back [View article]
    No, it means buy and hold didn't work from 2000 through 2011. Your second sentence assumes the next 12 years is going to be like the last 12 years. If that were true we'd still be stuck in the Great Depression of 1929- (no ending date).

    Markets are forward looking, while info about what happened from 2000-2011 is backward looking. The market was way overvalued in early 2000, and now it's way undervalued, especially given how low interest rates are.

    The world is growing at a healthy pace (led by emerging markets), global monetary policy is very accommodative, and sentiment right now is the mirror image of what it was in early 2000. Equity markets just might end up building more wealth for people over the next 10 to 15 years than you think.
    Feb 3, 2012. 12:26 AM | 2 Likes Like |Link to Comment
  • When you look at the basic fundamentals, stocks are trading at their cheapest levels since 1990, observes Bespoke Investment Group. According to the firm’s 2012 outlook report, once investors realize it, the ensuing buying spree should push the S&P 500 by 11% to 1,400, or possibly even more, by the end of the year.  [View news story]
    By the time you see evidence that these debt problems are being solved, the stock market is already going to be up 20 - 30%, or more. You need to buy stocks when it looks like the world is about to spiral into: a depression, hyperinflation, another financial crisis, the next "shoe is about to drop", the popping of some bubble, etc. Last August through September is an example of this, as was March, 2009, October, 2002, October, 1990, and many other times throughout history which only later in 20/20 hindsight proved to be a great time to be buying stocks.

    And by the way, regarding the U.S.'s debt problem, LOTS of people have been talking about this for years, that we're about to collapse under a mountain of debt, but if this were true, then why are interest rates 2% for 10 year U.S. gov't bonds? While it's 20%+ for Greece and 10%+ for Portugal. What do you know that the multi-trillion dollar global market for U.S. gov't debt doesn't know? And by the way, what's the right way to evaluate the creditworthiness of a country, or a corporation, or a small business, or anyone? By the absolute amount of debt they have? Of course not. Maybe the bond market knows something you don't.

    You may want to consider that there's more to all this than the way you're looking at it.
    Jan 24, 2012. 07:49 AM | 2 Likes Like |Link to Comment
  • S&P goes ahead in downgrading the EFSF to double-A-plus from triple-A. The move was hardly a surprise, but could make things interesting when the rescue fund tries to sell six-month bills for the first time tomorrow.  [View news story]
    Not only do the rating agencies no longer have the power to affect the stock market, they don't even have the power to affect the debt markets of the entities they rate. Did it make future sovereign debt auctions "interesting" after S&P downgraded US gov't debt in August?

    For all the people here on Seeking Armageddon claiming that all these downgrades of European debt over the last few months is some terrible omen for the Euro zone, ask yourself this question: have the rating agencies ever demonstrated themselves to be ahead of the curve? No! They only downgrade AFTER all the widely known bad news is out and the bond market has already issued their own downgrade (rising yields). The rating agencies' downgrades are not leading indicators - it's just like how bank failures and mortgage foreclosures spike AFTER the economy actually emerges from recession.
    Jan 16, 2012. 04:31 PM | 7 Likes Like |Link to Comment