Balsamo

7 Comments

    • 1990 All Over Again? [view article]
      Well at least one thing is different...
      check this out

      research.stlouisfed.or...

      research.stlouisfed.or...
      May 15 08:18 AM
    • What the Bear Stearns Resolution Tells Us About the Fed [view article]
      Well, Mr Miller
      you really seem to have faith in government though i doubt that the Bush administration will be remembered for its "great achievements" in the last 8 years.

      The question is not if the fed did or didn't the right thing concerning Bear Stern. It did, but my concern is about its brighter strategy. The fed is acting like some kind of intrepid fireman running from on fire to the other while trying to get grand ma's cat from the tree.
      In acting as it does, the fed seems to loose sight of the biggest picture.

      I have already posted the following, but as your latest article quoted David Malpass from Bear...euh...JP Morgan (?), here it is.

      So went the Malpass quote :
      “We think there’s a general underestimate of the power of central banks to stimulate their economies in the short term.
      • U.S. recessions have occurred when the Fed tried to stop inflation with high interest rates (1974, 1980, 1982, 1990), a situation the Fed may put off until 2009 or 2010. In contrast, when the Fed has held interest rates down to the inflation rate or below, the result has been strong growth, as in 1977 and 2003.”

      I found it amazing.
      It just illustrates the common confusion that exists when considering stock markets and the economy. Just take a look at a historical chart of the SP 500.
      According to Malpass, recessions occur when the fed tries to stop inflation. Ok. But what tells the market. First quarter 1974 : Nice Bear market rally push the SP from around 60 to more than 100; meanwhile fed action made CPI plunge from 12.2% to around 6%....

      And Malpass to continue “strong growth resulted from the fed holding rates down as in 1977”
      What tells the market? :The SP just plunged in response to around 80…oh and the CPI jumped to 15%...
      1982 : Thanks to Volker, we all entered the longest bull market in history.

      By the way, the year 2003 quoted by Malpass is misleading as the fed started to lower rates in march 2001…And started to raise rates in July 04… Remember how the markets reacted to both dates?

      Now we can consider what Uncle Bernanke is doing now with more background.
      My conclusion is that the fed is fighting the wrong threats with the wrong tools.
      Another conclusion is that the fed should carefully define what battle diserved to be fought as he cannot and won't win on all front.

      But i agree, preserving the banking system to collapse is a priority, but i don't think that bringing the rates down another 100 bp is a requirement.
      Letting the dollar fall further is by no mean a step in restoring confidence, on the contrary. Inflation is the mother of all the ennemies the fed is trying to fight at the moment.

      One sure thing history tells us, you cannot save the stock markets by letting the inflation win.


      Mar 18 06:33 AM
    • Fed Rally on Garbage Paper! [view article]
      Well, finally we're having one of those pup-up bear market rallies that were so common in the 2000-2002 period. Let's enjoy it for a couple of days or weeks...

      What scares me is that the fed keep fighting on such short term issues disregarding the real threats.
      It's becoming more and more confusing to figure what the fed realy want to save anyway...the economy, the markets, bear stern ?????

      A couple of days ago, Jeff Miller in one if his article on this site quoted David Malpass from Bear Stern:

      “We think there’s a general underestimate of the power of central banks to stimulate their economies in the short term.
      • U.S. recessions have occurred when the Fed tried to stop inflation with high interest rates (1974, 1980, 1982, 1990), a situation the Fed may put off until 2009 or 2010. In contrast, when the Fed has held interest rates down to the inflation rate or below, the result has been strong growth, as in 1977 and 2003.”

      I found it amazing.
      It just illustrates the common confusion that exists when considering stock markets and the economy. Just take a look at a historical chart of the SP 500.
      According to Malpass, recessions occur when the fed tries to stop inflation. Ok.
      But what tells the market. First quarter 1974 : Nice Bear market rally push the SP from around 60 to more than 100; meanwhile fed action made CPI plunge from 12.2% to around 6%....untill...1977

      And Malpass to continue “strong growth resulted from the fed holding rates down as in 1977”
      What tells the market? :The SP just plunged in response to around 80…oh and the CPI jumped to 15% by 1980
      1982 : Thanks to Volker, we all entered the longest bull market in history.

      By the way, the year 2003 quoted by Malpass is misleading as the fed started to lower rates in march 2001…And started to raise rates in July 04… Remember how the markets reacted to both dates?

      Now we can consider what Uncle Bernanke is doing now with more background.

      My conclusion is that the fed is fighting the wrong threat with the wrong tools.


      Mar 12 06:41 AM
    • Thornburg's a Huge Bargain After Monday's Crash [view article]
      Well i hope this is going to turn up well for all of you...

      One thing : if you evaluated the risk to about 20%, why didn't you use a stop order to protect you against this kind of nasty surprises ?

      I think the 50% chance is a bit optimistic considering the events on the credit and the housing market.

      Good luck       Mar 07 11:37 AM
    • Thornburg's a Huge Bargain After Monday's Crash [view article]
      "The article that Jack so eliquently wrote also lured me into a massive loss of capitol. Then has the arrogance to brag on other investments he's made money in. Wow thats rich. I do have to thank him for making me realize believe none of what you read, no matter how warm and fuzzy it sounds and the lesson for me if it sounds too good to be true, run baby run. "



      Well, I am disgusted by some posters here...



      Jack never say " Hey all you ignorant nano-investors, put all your eggs in buying TMA"...He just shared his investment idea, that's all. And i feel sorry for him.
      It's Seecking Alpha here, not Ragingbull (or whatever this crap was named)...This site is dedicated to the sharing of investment ideas, considerations about the markets or thoughts about the future...But most of all it's an area of discussions...

      Well Sadinvestor, i hope you don't watch CNBC, you'd be washed out by all those buying opportunities issued there since August 07. And please don't blame anyone for your own mistake.
      And if you love to gamble, casinos are better places than the stockmarket...at least the drinks are for free...       Mar 06 01:40 PM
    • The Federal Reserve, the Economy, and Stocks [view article]
      First let me say that i admire most of your work.

      However, i have some doubts about your latest theory that says "Don't believe the bloggers, trust the experts who are adressing the problems, etc".

      So you want us to believe in the Fed, in the government.
      But who put us in this mess in the first place ? weren't they experts ? financial engineers ?
      Who permits the credit bubble to developp in the first place ? Some bloggers or Allan Greenspan ?
      Just wondering.

      By the way, as you quote "U.S. recessions have occurred when the Fed tried to stop inflation with high interest rates (1974, 1980, 1982, 1990), "...
      That may be right, but as far as the markets are concerned : 1974 saw a nice relief rally that brought the SPX to over 100 (from 60) by 1977. and 1982 is the beginning of the greatest bull market of history.

      What i see at this point is that those experts at the Fed or at the government ( the same one that couldn't see the problems coming!) are now underestimating the danger of inflation...only to adresss some short term economic issues...disregarding the real danger longer term : inflation !

      Maybe people like George Soros, Jim Rogers or Mark Faber and many others are some non-experts bloggers...they saw all the problems we're in coming a long time ago...So lets forget what they are telling us now and trust Bernanke...

      Mar 05 08:52 AM
    • Inflation's Power: The Dollar in 25 Years [view article]
      Quite scary considering you could need 6.840.000$ to get the bying power of each million you have today.

      That is the reason why inflation should be the number one enemy even if that mean going through some recessions from time to time.

      Feel free to send a copy of this article to uncle Ben

      thanks for your work       Feb 29 09:16 AM
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