Manifestor

Corporate Profitability Is the Real Problem

Companies profitability is decided more by their sales overseas as the share of US economy in global economy has shrank significantly. One needs to travel around to see how the rest of the world has turned around and started thriving.

Moreover, time is getting very ripe for M&A activity as companies are lean and mean, with hoardes of cash and the most prudent way for them to expand is to acquire weaker companies which are themselves lean and mean thanks to relentless layoffs.

In short, this is going to be a jobless recovery but recovery and rising markets nonetheless.

Employment in US will rise only when innovation takes hold and we get some breakthrough technology either in energy, stem-cell/biotechnology or information/computer technology or some such. This cannot be predicted. Big companies are not incentivized enough to promote innovation. They only have to ddeliver profis and profit growth which they can do through cost cutting, expanding customer base and buying other companies.

In the mean time, to user 353732's comment, at this moment it looks like the Big Money are not just all the big houses but all those willing to see beyond the current malaise namely the risk takers, and the Outside Money (Retail Money) are the Perma Bears of the SA and other similar communities! When finally the bears break down will be time to sell.

VIX: Past and Future

How about loose cannon commentors. Any one to keep a check on them !

I got two key insights from this article. One, going long on volatility doesn't pay since volatility spikes on events that are not predicable. Can at best be used as a hedge against those events. Two, the impending swoon in the S&P has been moving in timeframe from spring to summer to fall, as of now. Lesson: whenever a fall in the market is anticipated, it doesn't happen. Will happen only when everyone has given up anticipating the fall.

Good article. Thanks.

Who's Blowing This Bubble - And When Will It Pop?

I have a good indicator for when to get out of this rally. When the commentors in Seeking Alpha suddenly go silent or turn even moderately bullish:-) That appears to be at least an year or two away. Until then, interest rates will be low to zero, hiring will increase albeit slowly, unemployment will come down below 7%, emerging markets will again reach their peak, DOW and S&P will not be far behind, AAPL will be at $225 per share, GDP will be about 3.5% YoY, IRAQ war, Guantanamo will be history. Keep the comments coming:-)

Faber Expects a Total Collapse

May be he is talking about the eventual complete collapse of the capitalism:-)

Short the U.S.A.

Of late I have come to realize that what really defines a person is not just where one stands on various social, political and economic opinions, but more importantly on how one acts under various circumstances.

For example, how far will one take Love of Money seriously? If there is a pot of money that doesn't belong to anybody and the choice is to say share with others or keep it to yourself, which one would one choose?

Secondly, armchair critics are literally dime a dozen. It is easy to judge actions on paper. Real world, given the complexity of a global economy and the day-to-day lives of millions, and real action is quite different. People who take action to jump into a problem and be willing to do something to solve it are a rarity.

With all their shortcomings and whatever their ulterior motives, politicians must be given credit for at least trying to do something about the problems facing the country.

Who's in Charge of the Markets?

To dowjones1234: Aren't you missing the mot important ones - bush, cheney, karl rove, rumsfeld. The capital letters in their names omitted by design.

Breakout, or Potential Fake Out for the S&P?

Response to Sreeni's comment: We must thank the Seeking Alpha Bears and others such as Nouriel R. to put a curb on any runaway euphoria in the market. Having said that it appears the bear sentiment is subtly changing to "screw the fundamentals and go with the flow". Does that mean, as in your words, the individual investor (masses) is coming on board? That does create a red flag for me as far as inflation is oncerned.

Economic Growth Looks Less Likely in Face of Government Policy

"The very people who know best how to create jobs, the business class,..." This is a fallacy. They are in it to make money. Not to create jobs. Creating jobs is just an unavoidable necessity (call it an evil) but kept at a minimum to maximize profits.

Secondly, sports analogies have a primary difference that in sports there is an end, the goal is to win and the end justifies the means. Economy on the other hand is a process not an end goal. It is more important to care how the economy provides a stable environment for people to live a rewarding life, not to see how much they leave behind when they die.

My 2 cents.

Obama's Washington Post Editorial: Reading Between the Lines

Thanks for posting the article. Your comments on the other hand were both childish and distracting to say the least :-(

Dead Cats Are Bouncing

Depends on what you are rooting for. If it is the economy yes it stinks and yes you have to wait and there will come a time when you, me and everyone including the politicians will know that the economy is robust. But if it is the market and if you want to buy low and sell high, you have to get in when the economy is in the dumps, like where it is now. Of course there are risks, but the risk of getting in when the economy is good is even greater because that is when Fed would raise rates and companies will have difficulty beating expectations. Now if you are a short trader as many here are, you have to work very hard constantly feeding these blogwaves with your negativism to influence reader opinion.

U.S. Banks Putting 'Lipstick on a Pig'

It is not important that the battle (banks getting profitable) be won in the most honorable way as long as the 'win' even if it is by fudging numbers or otherwise, helps fight the bigger war- consumer/business confidence, economy and shareholder value, more effectively.

Where the Market Goes from Here

When do you intend getting into these short positions that you mentioned in your last paragraph?

Jim Welsh on the Economy: Past the Point of No Return

Seeing the list of commentors and their comments (majority) gives me a feeling it is preaching to a choir.
The overall analysis while detailed, is quite incomplete and very subjective in places not backed by enough data. The take away from this article will be different for different people for the following reasons:
1. Some would consider this as stale news since most of the analysis is based on data till the end of March. We are now in May and the April data and the market movements since mid March have been different.
2. A key factor not discussed at any length is consumer and business confidence and confidence in where the country is headed. These could do wonders to jump start the economy as the last couple of months has shown.
3. The essay extrapolates future only based on past data and current debts. Doesn't take into account considerations such as innovation, new technology, improved efficiencies, new and emerging middle class export markets in the rest of the world, geo-politics and more.
4. The world markets, emerging markets in particular, have been on a tear lately. Not mentioned in this article.

Friday's Volume Down Significantly

Possibly because Friday was May Day, a holiday in many countries around the world.

How Will Markets React to Monday's Stress Test Results?

What about the reduction in volatility? That I think was the primary benefit of the stress test. The six months for the banks to improve their capital ratio gives even more time during which the consumer, business and investor confidence can stabilize/improve. My opinion is that, by the time the next earnings season kicks in for the banking sector, the stress test and its action items would be forgotten history since all banks would claim adequate capital and growing business.

Bottom line, IMO, stress test is the classic 'placebo' pill to calm the trading public.