Manifestor's Comments

Corporate Profitability Is the Real Problem

Wed, 02 Sep 2009 22:19:38 -0400

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

Fri, 14 Aug 2009 14:54:49 -0400

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?

Sat, 08 Aug 2009 14:37:45 -0400

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

Tue, 21 Jul 2009 10:54:57 -0400

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

Short the U.S.A.

Sat, 18 Jul 2009 16:00:18 -0400

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?

Fri, 17 Jul 2009 15:09:18 -0400

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?

Fri, 17 Jul 2009 14:52:10 -0400

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

Thu, 16 Jul 2009 11:45:51 -0400

"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

Mon, 13 Jul 2009 13:58:58 -0400

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

Dead Cats Are Bouncing

Thu, 09 Jul 2009 12:17:04 -0400

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'

Sun, 07 Jun 2009 22:59:29 -0400

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

Tue, 26 May 2009 14:42:55 -0400

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

Wed, 06 May 2009 17:52:20 -0400

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

Sun, 03 May 2009 15:37:14 -0400

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

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

Wed, 29 Apr 2009 15:46:34 -0400

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.

One Chart, Two Stories

Sun, 26 Apr 2009 01:33:50 -0400

This graph is too narrowly focused and doesn't give an idea how far it could fall or how significant the overall fall this week was. It is important to see this graph in a broader context of the March lows and last year highs.

Are We Due for Another Surge of Bad News in Labor Market?

Fri, 24 Apr 2009 19:48:56 -0400

GM, Chrysler bankruptcy doesn't necessarily have to result in big job losses, certainly not in millions as some earlier 'commentor' wrote. Bankruptcy proceeding will be more oriented towards financial dealings with bond holders, creditors, reduction in retirement benefits etc.

The Politics of Personality: Getting Geithner

Fri, 24 Apr 2009 19:38:10 -0400

I think Paulson was one of the key facilitators of this financial crisis. He was always on the defensive, rarely had any original idea to deal with the crisis and appeared overly obsessed with China.

Ken Lewis Continues to Claim that BofA Will Not Need Additional Capital

Thu, 09 Apr 2009 15:31:39 -0400

Thanks for publishing the interview details as well. That provides an adequate counter to the initial diatribe by the author and made the blog worth reading!

Buy Before Earnings Season

Wed, 08 Apr 2009 20:55:48 -0400

I think what MHFT is saying is that the extreme pessimism (S&P down to 666 and then to 400) is a contrarian indicator.

Accounting Rule Changes Creating False Rally in Financials

Sun, 15 Mar 2009 20:38:02 -0400

It is the unintended consequences of M2M that hurt the market. The second order effect that caused an adverse feedback loop (in a down market) made the market go awry. The suspension of the uptick rule that came into effect at the same time just added salt to the injury. The problem happened so quickly that it did not give any time for the banks to deal with the downward spiral in asset price markdown.

Having said that, if market is poised to move up, the second order effect of the M2M can provide a positive feedback loop this time:-) Perhaps they should leave it alone or fake tuning it to give market the kick.

Don't Watch CNBC

Sat, 14 Mar 2009 22:46:13 -0400

All I can say is they did it again. I still remember the hypes during the NASDAQ bubble days when the CNBC brought in all those analysts who started pricing companies on the basis of Price/Sales multiples even if the companies were incurring huge losses and projected 12 month target ranges of well over 1000$. At that time some of their most ardent viewers were the day-trading home moms!

The thing I hate most in CNBC are the big noises created when new charts are brought on to the screen. Very annoying.

Bloomberg TV is less entertaining but a bit more factual and less pushy about investment ideas. That is were I stay parked.

In Defense of CNBC (Sort Of)

Sat, 14 Mar 2009 22:38:16 -0400

All I can say is they did it again. I still remember the hypes during the NASDAQ bubble days when the CNBC brought in all those analysts who started pricing companies on the basis of Price/Sales multiples even if the companies were incurring huge losses and projected 12 month target ranges of well over 1000$. At that time some of their most ardent viewers were the day-trading home moms!

The thing I hate most in CNBC are the big noises created when new charts are brought on to the screen. Very annoying.
Bloomberg TV is less entertaining but a bit more factual and less pushy about investment ideas. That is were I stay parked.

It's a Winter Warming Spell - But More Snow Ahead for Markets

Sat, 14 Mar 2009 22:04:40 -0400

While your 13 reasons are compelling, the argument is not complete until you also discuss the potential reasons for a pull out of the bear market and argue why they may not succeed. Here are a few potential reasons for a bigger upside potential:
1. Stimulus package and unemployment benefits might just create enough oomph to enhance consumer confidence and in return spending.
2. Attempts to bring and keep mortgage rates down to <5% that can stimulate significant refinance activity.
3. Stimulus packages and welfare spending in other countries starting to create a more robust domestic economy there. China plans to spend big time (in the near future) on their local rural/migratory populations on health care, education, retraining and retirement benefits. This is over and above their $587B stimulus package. Indian market is starting to look up due to the election and because the market is way oversold. Australia, Japan, Saudi Arabia and others have their own stimulus and welfare spending plans already in action.
4. M&A activities could start to perk up as strong companies decide not to wait much longer lest they loose good buying opportunities. I wont be surprised if many companies don't already have a list to work off of when the time is right.
5. Bad asset mop-up might just become successful thanks to market upswing, mark-to-market discussion and private bank interest in grabbing a good deal with treasury backing.
6. TALF program
7. Census program (additional employment)
8. Unlikely as it may be, there may be no more news big enough to wake up the shorts. Especially if the uptick rule is reinstated.
9. Retirees, contrary to conventional wisdom, may decide to take risks and jump into stock market to revive and save their retirement. That is their only chance.
10. Last but not least, weather and consumer confidence. Even the small four-day rally has made people to sit up and even splurge on small low cost luxuries. Even I decided to buy one out of the umpteen items I had so far put off buying. I even sent a small amount to a charity! They could provide just the needed push to move the indices beyond various resistance levels. They are such key motivators :-)

My 2 cents.

How the Crash Will Reshape America

Sat, 14 Feb 2009 15:06:02 -0500

The common thread in all these is the propensity for bubbles to form due to greed, mass adoption and irrational exuberance. Recent bubbles have been in Internet stock valuations (burst in year 2000), housing valuations (2006-7), oil (burst in mid 2008), material and commodities (mid 2008), financial services (late 2008), even inflation bubble (burst in early to mid 1980s), terrorism and outsourcing bubbles (still not burst! ).

The problem with these bubbles is that over time they make one group significantly more powerful than the other and depletes the strength, defenses and vitality of the victim group so much that the victim eventually revolts and the bubble has to be burst, causing serious damage to the structure of the society.

For continued prosperity, we need a way to detect these bubbles when they are still small and keep them from becoming a problem for the society. Call it more regulation or socialism or a Big Brother watching, either way, it is needed to keep a check on the greed.

But then as a natural extension, who will burst the bubble in Regulation or Socialism that is sure to form over time:-) In short, looks like bubbles can be slowed or delayed but cannot be avoided.

Three Reasons the Stimulus Will Fail

Sun, 08 Feb 2009 16:19:59 -0500

Contrarian View:

1. China, Japan and Europe need America's revival as much as, if not more than America does and so will support the debt without batting an eyelid.

2. Just the fact that in the next year to 18 months, there will be over $2T of stimulus money from various nations of the world to be spent on a variety of projects and tax cuts will raise business confidence. This in turn will over time improve consumer confidence.

3. Thirdly, the world knows that without stimulus intervention the world economy engine will just not start. So appetite for accepting debt however unpalatable it may be has to happen.

It is now well understood that tax cuts and trickle down are a poor and inefficient mechanism for stimulating an economy. They are a help (may be) when the economy is stagnating or sputtering, but not when an economy is really moribund as it is now or when the business and consumer confidence are this abysmally low.

Don't Expect Immediate Gratification from Markets

Sun, 08 Feb 2009 15:17:50 -0500

The opposing view: Pretty impressive double bottom forming on the SPX!

Why a Spending Bill Just Won't Cut It

Sun, 08 Feb 2009 13:03:28 -0500

The logic in this article is naivety at its best. Perhaps exemplifies the tax cut /trickle down camps' thinking at its core. Their teachings,
- Tax cuts with fractional/marginal trickle down benefits,
- Total dependence on private businesses to support the social fabric of the country (what an oxymoron!),
- myopic planning (exemplified by quarterly earnings)
- expecting everything to be done by states (why our water grids, electricity grids, scientific research are lagging so far behind),
- utter disregard for non-business/non-finan... rewards that result in treating people with liberal and fine arts backgrounds as second rate citizens

has what has brought us to this pathetic state of affairs. Time to try something new.

Is the Obama Plan Creating Unfounded Market Optimism?

Tue, 09 Dec 2008 14:43:27 -0500

>Since that will not happen any time soon, .....

Depends on what's your time frame for a 'soon'? Note, employment is a lagging indicator and may take more time, but the stock market, IMO, could settle at a 10-15% higher level from here (ie. S&P > 1000) in the next three months.

Is the Obama Plan Creating Unfounded Market Optimism?

Mon, 08 Dec 2008 21:21:53 -0500

The family balance sheet will look up when the stock market goes up and the house price stabilizes. True the country's debt situation is dire but that could change very quickly if the employment and stock market improves. Even the various bailout dollars lent out will return with interest! One should also consider the following:
1. Mortgage rates are on a down trend. Refinance will help the balance sheet.
2. Housing prices have come down significantly but there is hope that it is bottoming (except may be in some specific neighborhoods).
3. Credit crunch seems to be easing (small businesses can look up).
4. Inflation has come down.
5. Many world economies are implementing big spending plans
6. Season retail sales looking up
7. Finance sector stocks are starting to look up. It is a proxy for the stock market.
8. Don't hear of any more major bank/finance company failures - at least for the time being.
9. The current payroll statistics might be the result of response to stock market downward spiral. The labor market statistics are a lagging indicator.
10. Layoffs increase need for more productivity tools (computers and other automation stuff).
11. Many big and essential companies and banks are now awash with cash
12. Country is saving a bunch due to fallen oil prices
13. The stimulus plan money is only needed in phases over a two year period
14. Will be interesting to see how the labor market behaves if the S&P goes up another 10 -15% from here.

The two areas that bother me still are health care (especially for those who are laid-off) and acquiring new skills for a new job. Hopefully the stimulus plan will address these in some form.

Above all, most in the country (except for you shorts and ideologists ) want the country and the stock market to look up!