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bobdark

bobdark
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  • Bubble Trouble? [View article]
    Central banks are not printing currency, they are simply creating leverage by suppressing interest rates to inflate asset prices. It's a shell game to drive up asset prices with money that really doesn't exist, but is borrowed at low interest.
    There is no real inflation happening, in fact this is all deflationary. As long-term interest rates near the zero-bound level, there is less and less room to add leverage for asset inflation. When this collapses, it is like a pyramid scheme, and the end is closer than most realize. Global growth is grinding to a halt as evidenced by decade lows in oil and copper.
    This may not blow up this year, but it certainly isn't going to continue for another 10 years. Cycles like this rarely last for more than 7 years which means that there is probably less than a year left before the implosion.
    Feb 22, 2015. 03:08 AM | 2 Likes Like |Link to Comment
  • Looking For The Positives Of Lower Fuel Prices [View article]
    Most are not looking at the deeper implications of low oil prices. Most of the US job growth and economic activity since the recession has been in oil exploration. With prices this low, those activities are shutting down along with the jobs that go with them. There are implications in high yield debt that has been funding much of this with defaults on the way and higher interest rates for corporate debt.
    Before concluding that lower oil prices have to be positive for the economy, one should analyze why the prices are declining and what are the effects beyond just the purchase price. Oil prices are declining for the same reason that copper prices are declining and that is slowing global growth. There is a supply glut as demand is dropping.
    Feb 22, 2015. 02:56 AM | Likes Like |Link to Comment
  • Use Your Illusion I: CAPEX Spending And S&P Sales Growth [View article]
    Great analysis. This confirms what some other studies showing the indexes diverging from GDP growth and consumer spending. Another aspect of this is that the expansion is based on increasing debt proportionately. Much of the bubble has been levitated through ZIRP. When interest rates normalize that will deflate the bubble. The whole thing is a house of cards and a sophisticated pyramid scheme that is going to fall back on itself. Your 1250 valuation seems even a little high and with the overshooting that happens with reversion to mean, that implies lows closer to the 2009 bottom.
    Feb 22, 2015. 02:48 AM | Likes Like |Link to Comment
  • Beware The Stock Bear [View article]
    Reading the skepticism in the comments that a major crash is now impossible confirms to me that equity markets are getting ready to fall back to 2009 levels within the next year or two and take over a couple of decades to return. Our demographics are approaching those of Japan from the early 90s. The Japanese stock exchange is still only up to half what it was from 25 years ago. We think we are immune from the same thing.
    Feb 22, 2015. 02:37 AM | 1 Like Like |Link to Comment
  • Leading And Lagging Indicators Of Stock Market Performance [View article]
    Thank you for your article. The chart with consumer spending lined up against S&P 500 is pretty clear. The divergence is huge. If that isn't a clear enough warning sign of a major top, I don't know what is.
    Feb 22, 2015. 02:29 AM | Likes Like |Link to Comment
  • Forecasting Q4 GDP: A Look At The WSJ Economists' Collective Crystal Ball [View article]
    Some good arguments here as to why Q4 2014 will probably come in under consensus - even if not initially, probably after later revisions.

    http://seekingalpha.co...
    Jan 30, 2015. 12:03 AM | Likes Like |Link to Comment
  • Is GDP Wildly Underestimating GDP? [View article]
    Asymptosis, I think the flat line is due to demographics, population getting older, birth rate started to level out in 1975, birth rate declining since 1990. http://bit.ly/1ycxfyx
    This is another red flag for expecting continued asset elevation as boomers at some point need to start cashing out.
    Jan 30, 2015. 12:00 AM | Likes Like |Link to Comment
  • Q4 2014 US GDP Estimate: +3.6% [View article]
    Quite a bit of divergence here from this estimate: http://seekingalpha.co...
    I expect something between this and 0 (1.8% ?) but that negative revisions in later quarters will take this to below zero. It is becoming obvious that reports measuring the economy are not keeping with the pace of downward impacts - i.e. the jobless claims ridiculously low today despite thousands of layoffs announced in the energy sector. The negative impact of higher USD on multinationals, lower consumer spending in December, and large revenue losses in energy exploration from the lower crude price don't seem to be making their way into the reporting.
    Jan 29, 2015. 07:33 PM | Likes Like |Link to Comment
  • A Steep Drop In Oil More Likely Forecasts The Bottom, Not Beginning, Of Any Global Recession [View article]
    The problem is that the little bit of recovery that the US has had has been mostly based on the resurgence in US oil production via fracking/shale, which has been a highly leveraged venture. The effects on employment, decreased valuations, loan defaults, and investment are just starting to be felt. The fact that the sequence of cycles including the lower copper prices is out of sync with prior recessions is probably due to excessive central bank manipulation, i.e. QE, currency pegs, excessively low interest rates. It seems there is quite a bit more downside including a real recession measured by two quarters of negative GDP growth before a bottom will be formed. The decline in oil is a fundamental demand issue related to slowing global economic growth.
    Jan 28, 2015. 09:57 PM | 2 Likes Like |Link to Comment
  • Domestics Outperforming Internationals In 2015 [View article]
    The valuations of domestics are still farther out of line than the large international stocks. It's only a matter of time until the cascading effects start hitting these as well.
    Jan 28, 2015. 09:47 PM | Likes Like |Link to Comment
  • GDP Model Update: Q4 Now Looks Negative [View instapost]
    Wow, I think this would be a mini-black swan event as far as the stock market behavior on Friday which seems to be teetering between further decline and yet another bounce. What is being missed by the other estimates - are they not adequately factoring in the impact from lower crude on the oil industry, the rise of USD or something else? Do you expect that the announced GDP will be announced on Friday at this low of a value or only after revisions several months down the road?
    Jan 28, 2015. 01:39 AM | Likes Like |Link to Comment
  • Why The U.S. Dollar Is Declining [View article]
    The problem with trying to predict the strength of the dollar is that it is very much affected by foreign currencies including policy decisions such as the European QE that are outside of US control. The correlation of the dollar to the actual US economy has been pretty inconsistent for a while. I'd bet on a collapse of the yen and the euro before the dollar significantly devalues even with a faltering US economy, especially since the global economy is faltering along with it.
    Jan 28, 2015. 01:32 AM | 1 Like Like |Link to Comment
  • Why S&P 500 Companies Are Exceeding Earnings Expectations While Falling Short On Revenues [View article]
    Fasten the seat belts, we are just beginning to see the cascading effect of lower oil prices on the economy. Most of the benefits over the last few years that have registered in the US economy have been a consequence of the booming shale and energy industry with the majority of higher paying jobs in that sector. Bottom line is that consumers are still mostly strapped and lower oil prices is not going to inspire a big boost to the economy, but rather towards paying down some of the overextended debt. On the other hand, there are looming bankruptcies and failed junk bonds tied to firms that cannot profit with crude oil prices at this level.
    Jan 23, 2015. 10:28 PM | 1 Like Like |Link to Comment
  • Is GDP Wildly Underestimating GDP? [View article]
    I think it's clear the answer is #1 - asset prices are inflated well above their justifiable value if you look at the underlying data including such metrics as wage growth, PCE, and actual realized income growth (rather than paper wealth growth). It's clear this is a bubble that will pop once interest rates no longer have any room to drop and measured economic activity catches down to the lower demand being registered across virtually all commodities.
    Jan 23, 2015. 10:23 PM | 3 Likes Like |Link to Comment
  • The Rise Of Semiconductors: Why Copper Is No Longer A Bellwether For Growth It Once Was [View article]
    I don't know about that. Copper has been correlated to GDP at a 39% level which is considered a moderately strong correlation going back to 1986 - http://bit.ly/1GLoDIL. The lack of correlation since 2011 may be an anomaly due to QE. The large decline of copper, the lowest growth rate in China GDP since 1990, the drop in crude oil price at least in part due to lower demand, the lowering estimates of global GDP growth, narrowing of the yield curve, and crash of the euro may not be totally conclusive that a global recession is coming, but they are worth seriously considering. I don't think the semi-conductor stock performance has predictive value as it is in inflated by stock buy-back and other non-capex schemes that raise P/E multiples without underlying growth. The same type of argument was used in late 2007 with the S&P peaking to deny the likelihood of a recession in 2008. We have asset bubbles all over particularly in stock market valuations and yet to see what will happen to the economy when these pop.
    Jan 23, 2015. 10:14 PM | 3 Likes Like |Link to Comment
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