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Market Sentiment Worse than Stock Performance?

Yea, I agree with you on Australia. They should actually be doing well, as indicated by the interest rate hike and China's demand for commodities. Plus, I don't believe they had much exposure to toxic debt. The Aussie Dollar has rallied big time.

As for the dollar, one would think deflation and some demand to close trade deals would support it. US lending is down and liquidity at lower levels. I just don't think the Fed can do much to stoke inflation, though they are trying hard. My curiosity lies in the dollar's weakness in some Asian emerging market currencies I deal with.

Market Sentiment Worse than Stock Performance?

Alberta Rocks, you may be right about the dollar. I hope you are right this is just a rare moment. My gut tells me something new is in the wind, too, though. Just don't know what it is or if the ole gut is right or wrong.

What Recovery? Unemployment at 25-Year High

Good point, Wayne. I'd go a bit farther and say high unemployment might be the norm in the coming decade.

Market Sentiment Worse than Stock Performance?

It does seem the markets are chasing data. Good data, up...bad data, down. We get a green shoot and the market rallies a bit, like today expectations for data coming out today are high. Nothing wrong with that. But, stocks are climbing in sentiment (and insider trading, I guess.) Many folks want to believe it's over...and are driven by fear they will miss out on buying the bottom. In other words, a sucker rally...it's green shoots (carrot on a stick) giving us hope.

Mortgage back securities are no longer in vogue. The Fed (by March) and other investment firms are severely trimming their exposure to them. The housing bubble is over and about half a trillion dollars no longer exist. Housing prices may be affected adversely driving down consumer wealth effect. And wait until banks try to sell those unkept, repossessed homes. Good luck, it's neither a sellers or buyers market, and if mortgage rates fall. Good bye liquidity...

Unemployment, some reports say, will stay abnormally high for decades. Given the poor borrowing and lending sentiment, this might just be the case.

The dollar is tanking with inflation nowhere in the data, well, CPI, anyway. (I don't want to argue the CPI manipulation theory.) I fear the dollar may be losing it's anti market rally gains and loosing it's safe haven status. I might be premature, but it's a hunch investors might just be giving up on the dollar, regardless of what happens in the markets. Maybe this is the good news we have been waiting for: inflation may be just around the corner. This means the Fed will tighten a bit, which is good news (to me.) To be sure, gotta wait and see on this point.

The bottom line is, our economy is on life support and in a coma. I just do not see rallies with long legs until it is conscious and can breath on it's own. But, getting back to business as usual is highly unlikely for myriads of reasons: derivative money will be regulated and consumer buying will be at lower levels for a protracted period of time. Learning to walk again after brain damage, well, we might need a walker to limp along. This crisis really nailed us, and recovering will take a while.

Yes, we will have rallies and retractions. But with fundamentals out the window, investor sentiment chasing data coupled with the desire for this thing to end...don't let market rallies fool you. We are still in serious trouble. That's not just doom and gloom speak, it's just where we find ourselves...really.

To say otherwise makes one wonder if folks know the seriousness and depth of it all. Think about it, the government runs GM and fired it's CEO. The Fed has gone to extraordinary lengths to re-inflate and is loading it's balance sheets with underweight instruments of all sorts. Bank failures are expected to peak next year. Oil is reasonably priced, but doesn't seem to know which direction to go. (Is it stable?) It was nearly $150 and was projected (peak oil, remember that?) to be about $200. No wonder gold is around $1000...it's gotta be the safest thing right now. (And I am not a gold bug.)

Those an other actions speak to the seriousness and depth of our woes...our global deflationary problem. You can't run a global economy of recent years with all the money lost more recently. Who has got the money to fund buildings in Dubai these days?

Obviously my sentiment is low, but I am not alone. And I do not want to be a doom and gloomer. If you're a bull, good on ya. I realize I could be wrong and you be right. But based on what I see, the hunch in the gut...my sentiment...I am walking on egg shells.

Greenspan Still Clueless on Moral Hazard

Mr Sharp, I agree and disagree. I agree near zero interest rates, QE, currency swaps, huge bonuses, alphabet soup programs (TARP, etc.), and bank bail outs are not the preferred method to get an economy going.

But, unfortunately, this is how you save the system as it stands today. And Bernanke has done what needed to be done under our current system, even though it's not what we'd like to see get done.

I'd argue the system, per se, needs fixing, by quite possibly eliminating the Fed removed or at least federalize it. Then, we might have better options to fix a recession, like Keynesian economics. (LOL@me) But, it might actually work, in such a case.

Watching the interview above, I see a big difference in Greenspan's loose money, mortgage your home to prosper philosophy. My bet is on Bernie tightening like a mad man as soon as inflation rears it's ugly head. (Yea, I said inflation is ugly.) He will almost have to, well...if he can. In as much as Greenspan is a mouth piece for the oligarchy, Bernanke may be, too.

On Oct 02 05:37 PM Adam Sharp wrote:

> Thanks... But I think Bernanke is making even more extreme mistakes
> than Greenspan. So we need to learn from the past, and correct future
> actions.

No Chance of a 'V' Recovery

I hate to say it, but the 'h' recovery (above) appears likely, from where I am sitting, anyway.

So Much for the 'Recovery'

It was a rally, never a recovery.

Greenspan Still Clueless on Moral Hazard

I saw that interview, I gotta tell ya, glad he's retired...left Bernanke holding the bag.

He mentioned, we need to be careful about (over) regulating a natural phenomenon in our economy. Something like (the crisis) only comes around once in a life time, every hundred years or so. The implication is, hey, we'll all forget about it like it never happened. Yea, until it happens to our kids.

Well, at least he's right about one thing. The depression was about a human lifetime ago. Maybe he's right, it seems out depression era regulations didn't help much. Na, me gotta nip this thing in the bud.

The term "natural" he used to describe the crisis struck me as odd. I understand what he means, but being "natural" doesn't make it the right thing to do.

Dollar Following the Expected Pattern Indicating Upturn

Good news.

G20 Urges 'Balanced Global Demand'; China Says 'No'

Hey, got several useless umbrellas I'll let go for cheap...no, you can just have them. I am sure you won't complain, as you're apparently above such behavior..well, except for bashing yanks.

There is a difference between stating fact and whining. Learn that difference, because the one you attribute to my post is a childish one. It's the way you see the world, though childish eyes. Trust me, it shows.

On Sep 28 01:00 PM coreopsis wrote:

> Whine...sigh...always like to see Yanks doing what they do best...whine
>

Currency Swaps, U.S. Dollar, And a Tilted Playing Field

I remember the dollar rally and the Fed announcing currency swaps. Are you saying currency swaps actually help the dollar by themselves, or was it the insider play? That's quite a play on the dollar. Man. It seems to me currency swap would debase the dollar, as I feared back then, but as contradicted by the graph above.

If the Fed has unwound the program, I take that to mean they have recalled their dollar loans and remitted the euros, then wouldn't that support the dollar as they disappear form circulation? Need some thinking on this...interesting article.

Europe, The Fed and the Declining Dollar

Well argued points that give me the heebie jeebies.

Self-Regulating Derivatives? No Thanks

Derivatives have a way of 'self regulating' profits into a severe redistribution of wealth to the rich. If they and banking bonuses are regulated, and the "best minds" in the banking industry leave for more fertile grounds...I'll carry their bags. Let them go screw up someone else's financial market. Let ours heal...

Seriously, though, I'd like them to stay on and take risks, but it's gotta be done responsibly for the greater good. Make money, make a profit, just don't derail the economy in a self serving process.

While we're at it, let's refocus the insurance companies back into the business of spreading risk between it's customers and away from the banking industry.

Credit Contraction Continues in Europe

Good article...thank you.

Will Deflationary Forces Overwhelm Global Fiscal Stimulus?

The Fed and treasury have "spent the money" and still no inflation.
Oil is having a hard time staying above $70. Gold? Well, hard to say how much of the valuation is speculation and flight to safety not tied to the dollar. Gold should fall as the dollar strengthens in deflation, though, all other forces being equal. They are not equal with all the volatility in currencies and the markets (threat of double dip.)

I understand the problem to be the fed's limited ability to affect global liquidity. The Fed only controls (guessing) around 10% (8% a year ago, haven't seen figures since.) It's the falling liquidity. I argue the de-leveraging (credit destruction, as mentioned above) that is the source of global deflation and the Fed just cannot keep up. Indeed, the world's central banks cannot...or will not. I argue inducing inflation is not the easy part, it's actually proving quite hard to do. All money is contracting: dollars, euros, yen...and velocity is way down.

Wanna see inflation? Get the banks lending, again. Let loose the derivative market. Balance trade. Oh, yea, baby...coupled with the unprecedented easing, that's inflationary. Lending and borrowing are down, the derivative market will be regulated, and China said, "no."

The government will not default, to do so would be political suicide ending with the destruction of American dominance (which could end for other reasons, so...) We've had heavy debt before and paid it down. I see no reason why it can't be done, again.

I agree with one poster above, we're in this for a long haul...with significant scarring. A market rally does not a V shaped recovery make.