dancing diva

Leading Economic Indicator Isn't Indicating the Real Recovery

Another excellent example of "lies, damn lies, and statistics". I have been suspicious for the past several months regarding the LEI. Since it uses money supply but completely ignores the velocity of money, which has been shrinking, it paints a false picture of potential economic growth.

What if It Is a 'V' Recovery?

Thank you for an excellent article. While I'm also skeptical about a v-shape recovery, I'm keeping an open mind. Most encouraging is how many people think it can't happen.

Perhaps There Are Unseen Green Shoots

The Clusterstock chart - consumer debt as a % of GDP - I found surprising. Are you sure they didn't use nominal gdp rather than real gdp? The latter should yield a very different looking chart.

Have We Bottomed Yet?

You make too many blanket statements - especially being short or picking a top on energy stocks. There are many out there where valuations are still cheap, especially in the service sector.

Additionally, you suggest picking bottoms in beaten up stocks because you have no confidence in the stock markets bottom and think they would fall less? If you have no confidence, just stay out.

Remember, traders/investors who try to pick the top or bottom of the market are called heroes - because they are the first to perish.

PS - I am long crox (and have been buying it for the past three weeks), but on valuation. There are plenty of cheap plays around. Rather than this inane article, do you homework and don't waste our time with stupid generalities.

New York Times Reports the Recession is Here: What a Shock!

I agree with you. There are plenty of bargains around that have started to bottom out.

I ascribe to the principles "when they're crying you should be buying" and "selling when they are yelling". I've been buying but plan to sell some call options on the next rally - just in case.

There are lots of tears flowing now. Perhaps someone should come up with a kleenex index as a way to interpret the bottom.

Did I Just See a Dead Cat Bounce?

Mr Ehrenberg - congratulations on spouting conventional wisdom. How about a little deeper thought?

No one denies there is a problem in either the credit market or the economy. In fact, the market had been voting with its pocketbook all month, with the downside accelerating after the Fed's statement "the risks are balanced". Well, you and I and everyone else except the Fed realized the risks were definitely not balanced. However, this weeks realization that the Rip Van Winkle Fed had finally woke up gave the market a reason to rally for the first time in a while. Like an alcoholic can't be cured until he acknowledges his dependency, neither can the economy be cured until the Fed realizes there is a problem.

Will the economy be cured by a 1/4 or 1/2 point rate cut? No. Will I short this market? No way! The reason is that most stocks are not overpriced and with the Fed working with rather than against the economy there is more hope for the future. Sentiment is far more important than the short term gdp level for the direction of the stock market.

Has Anything Really Changed in the Last Two Days?

You miss the point. The market bounced not because it thinks a 1/4 or 1/2 point will make a difference, but because the Fed finally acknowledged there was a problem. Only then can there be a solution. Prior to this week it looked like the Fed members were completely oblivious to the issues with both the credit markets and the economy.

The market needs a proactive Fed not a reactive Fed. This week gave the first glimmer of hope it will move in that direction. As long as this becomes a reality stocks will be well supported. You forget this is not like 2000 when the market multiple was nearly double the current level. There is no reason for a stock market collapse unless there is an economic one. And there will not be one if the Fed and US gov't do their jobs.