JLarkin

Why I Covered Half My Shorts

I liked your article. I guess the Fed and Treasury are big enough to support the economy for a long time. The headwinds I see coming are, due to the fact that consumers really haven't pulled back all that much yet, a steeper drop in consumer spending (PCE) that could overwhelm even the Fed; a vicious cycle of more layoffs due to lack of demand; a commercial real estate crash, which will decimate the regional banks; and corporate and municipal defaults, and deflation. The big "players" will be saved no matter what. How all this affects the stock market or commodities is anyone's guess.

Why the Bulls Are Skating on Thin Ice

Michael, I am confused about the initial claims numbers. You wrote as if half a million jobs are lost every week: "Another 550,000+ Americans filed initial jobless claims -- the 35th straight week above the half-a-million mark."

If we lost 2.4 million jobs in six months, then we lost 400,000 jobs per month, or about 100,000 jobs per week.

I thought 550,000 was an annual number based on the most recent week, i.e. new weekly claims x 52. Can you clear this up for me?

A New Worry for Stock Market Bulls

I see other bloggers out there claiming the S&P web page shows the S&P P/E ratio is 145 (TTM) or something like that. Where did you find 17, which sounds more realistic to me? Is 17 based on the forward looking 12 months?

Four Reasons We're Headed Even Higher

Jason, you contradict yourself right here, "Housing has hit a bottom. The rate of decline of economic data is showing improvement." If economic data is still declining, no matter the rate, then we have not hit bottom, right? The rise in housing is seasonal! I'm not sure why you malign Doug Kass, I understand his record is very good. How good is your record from 2007 - 2009?

More Asset Bubbles and a Dollar Primed for Collapse

Alexander, you sound a lot like Peter Schiff.

The China 'Bubble': Buy, Sell, Or Hold?

I agree with Susan. After a decade or so of working with manufacturing companies in China, one sees the poor practices everwhere. Government stimulus will drive the Chinese economy for a while, but then what? Maybe foreign demand will come back and everything will be ok, but I'm not so sure.

2,400 toy factories in Dongguan have been decimated to around 1,200 now. Plants closed, workers rioting, the managers ran away to HK before giving workers their final paychecks. Lead paint, falsified reports, etc. This is what goes on. China will hide a lot of their problems, but eventually they will come out.

In the long run, maybe 10-20 years, China will realize its potential, but that day is not today.

GM Shares Just Won't Quit

I have read several places that the new GM will include a 10% stake for old GM stockholders. Perhaps that is why the price > 0.

Return of the 'Decoupling' Myth

I don't know how successful China's strategy will be of, let's say, moving toward decoupling or less dependence on exports. The stimulus will work for a while, but based on my limited travels to China where I saw numerous abandoned construction projects (roads, buildings, etc.), you have to wonder how many bridges to nowhere are now being built in China.

The US consumer is down, but not necessarily out. Savings are being replenished, and demand is certainly pent-up. At some point, maybe when the layoffs level out, consumers are going to start buying again, buying all those things they promised themselves during the lean period.

Gary Shilling: Say Goodbye to the Great Gatsby Era

A very good article, as opposed to so much mediocre stuff that one reads on SA. Roubini, Shilling, Schiff have all gotten it mostly right, and got a few things wrong here and there. Schiff was wrong about foreign markets decoupling from the US and wrong about the dollar, at least up til now. CNBC's even talking about a correction, so it seems we are going to bounce along S&P 700 to 900 or some other range for a while.

I'd like to see some good articles about deflation vs. inflation. All the fiat money that is being created vs. all the wealth being destroyed, do they offset one another? Why did the dollar strengthen?

More Economic Markers Pointing to Recovery

This is most likely a sucker's rally. According to Roubinin, IMF, etc. there are 4 Trillion in toxic losses to be written down before it's over. Banks have acknowledged less than 1 T. Foreclosures are rising, commercial real estate is the next shoe to drop on the head of the banks (especially regional), consumers are not spending, fearing layoffs, and our GDP is 70% consumption. Credit card charge offs are rising into double digits now. Maybe after BAC and C are taken over and restructured we will have cause for optimism.

Caterpillar's Loss Not a Good Harbinger of Economic Things to Come

That's spelled "rosy", Tom.

Let's Not Get Carried Away: It's Still a Bear Market

capital pains, you got it right.


On Mar 26 01:30 AM capital pains wrote:

> These past 2 weeks have been the personification of "don't fight
> the tape"..The cheerleaders at CNBC have been just breathless with
> enthusiasm, practically orgasmic. The "Fast Money" monkeys are extremely
> pleased with themselves. Contrary to their past track records, these
> unseemly traders just can't pick a loser lately.
> As we continue to borrow our way out of debt, (what's counter-intuitive
> about that !), the next debacle is coming down the pike: The collapse
> of the commercial real estate market. True, the TALF program will
> be forced to include bad securitized commercial loans.
> However, the astronomical bill for this will be jaw-dropping. 700
> or so banks will fail due to their inflated Tier 1 assets marks.
> Absurdly inflated valuations for relatively worthless commercial
> backed securitizations.
> The stock market can stay irrational longer than you can stay solvent.
> The global economy is horrendous. Social unrest is spreading across
> Europe. Asia's exports have fallen through the floor. Our country
> is on a respirator. etc etc etc .
> Cash is King ..Sell into this overblown bear market rally .

Wells Fargo and US Bancorp - Hitch a Ride with These Two

"These regional banks are generally more attractive currently - provided that their bad assets are under control and that they operate in an economically attractive part of the country"

Martin, you don't mention the fact that commercial real estate (CRE) is now starting to fall off a cliff. It has typically lagged residential real estate by several months. Many cities have 20% vacancy downtown with *more* high rises coming on line in 2009. CRE is going to get very ugly. Regional banks are large holders of CRE loans, and they are about to see record rates of default in 2009-2010. See the calculatedrisk.com blog for the data.

Secondly, what about credit card defaults? Those are now rising and will likely get to very high levels in 2010. I would be very cautious about holding bank stocks for the long term. Day trading is a different story.

Danger: Stock Market Crash - Recession - Depression Ahead

Great comment Larry. To do otherwise is just gambling.
John


On Mar 18 10:18 AM Larry House wrote:

> Well, you are absolutely right that we will only really know in hindsight.
> We diversify our investments to hopefully reduce risk, and also because
> we can't be sure which asset is going to do well. I think the same
> thing makes sense with what may happen in the larger economy. We
> can't be sure what we are in, so one should invest (which includes
> hold cash) to try to cover all bases. There is no perfect way to
> do this, but that is the challenge we face.
>
> I know we all want to take hold of any glimmer of hope, but so many
> of the weaknesses in the economy--consumers, banks--are just at the
> beginning of the cycle. More weakness is almost surely ahead in these
> areas. To think at this point that we are past the danger point and
> can jump back into risky assets with abandon is a fool's game.<br/>
>
> My plan, and I am not suggesting it for anyone else, is to keep some
> exposure to a wide variety of assets that include stocks, bonds,
> precious metals, commodities, and cash. I reject the idea that one
> should be all out of stocks, etc. because of the uncertainty. By
> the time it is certain, it will be too late invest.

Cramer Grilled on Jon Stewart

Jon Stewart hit the nail on the head. Anyone who watches CNBC, e.g. Squawk Box, knows that the network is very pro-Wall St., very bullish, and has no interest whatsoever in getting at the underlying facts. When Nouriel Roubini, the NYU economist, started predicting the collapse of the housing bubble and the credit crunch over two years ago, the CNBC crew would roll their eyes, and counterpoint with six other guests who predicted everything was rosy.

Squawk Box truly is just a Wall St. infomercial. In spite of a great guest list, even their guests admit that they don't want to say anything "negative". The point of a news network, the "fourth estate", is to use freedom of the press to challenge the spin and lies coming out of government or... Wall St. But CNBC has a different take; they pump up the market and suck up to corporations (sponsors?).

At least they give air time to Roubini, Schiff, and others who have been pointing out the house of cards for months and months. That is to their credit. But journalism? Please, they never do any digging or investigation of the lies told on their shows. It's sickening how badly they've sold out to self promotion and corporate interests.

The other week, CNBC anchors were talking about how unemployment may be due to Obama's policies. Please... unemployment has been rising and earnings falling for fourteen months, and these bimbos are suggesting that it's due to Obama?

Pump up the market, Republicans, etc. No journalism, no facts, just trash talk.