Is This The Start Of A New Bull Market? [View article]
Excellent! I was wondering what justification you'd use (given that everything else is the exact opposite of 1983 as you noted).
But you're right - if the Fed quintuples the money supply, it is very likely that stocks will reprice along with everything else. Ford stock might very well top $100 if a Ford F150 goes for $200,000!
Market recap: Stocks closed sharply lower after a late selloff, perhaps sparked by profit-taking from money managers looking to rebalance at month's end. Although the Dow finished with its sixth straight monthly gain, today was the eighth session in a row where the index swung in a triple-digit range. Treasury prices fell again; 10-year yields, now at 2.19%, rose more than in any month since Dec. 2010. Oil and gold fell (I, II). [View news story]
I agree - another 8 to 12%, maybe 15%, and certain stocks will look decent again...
Should We Allow Kyle Bass To Bet On The Economic Implosion Of Japan? [View article]
If the Japanese people don't want their economy to implode due to the value of their enormous debt decreasing as interest rates increase, then perhaps they should just continue to self-finance at 1% or less even as the BOJ devalues the Yen by 30% a year and import costs to Japan also increase by 30% a year.
Otherwise, they need to shut up and lie in the bed they've made for themselves. Did nobody in Japan think that massive government debts for twenty years might lead to problems? Did nobody consider that maybe a 10-year bond paying 0.32% might just collapse in value if rates ever went up to 1%, or 3%, or 5%?
The author seems to think that it's "immoral" for some people to actually consider these possibilities and position themselves to profit if it happens. Why doesn't he (and like minded "investors") use their own personal funds to purchase JGBs at under 1% so that the people of Japan can be spared any financial or economic discomfort?
But Stocks Don't Tend To Fall When The Fed Tightens Interest Rates [View article]
How many of those 11 "major tightening cycles" involved the Fed reducing a money-printing QE program equal to 6% of the annual US GDP, and then raising rates from 0%?
The 30-year fixed-rate mortgage moved to its highest level in a year, according to the latest Freddie Mac survey, averaging 3.81% from 3.59% in the prior week. The 15-year fixed-rate mortgage also increased, rising to 2.98% vs. 2.77% last week. A year ago, the rates averaged 3.75% and 2.97%, respectively. [View news story]
As rates go up, principal amounts must go down for the payment to remain affordable for the same buyer. So prices will have to go down as rates rise, unless the buyer is somehow expected to come up with more money each month - or maybe take an "interest-only balloon payment ARM" like they would have in 2006?
Baby Boomers Are Not Likely To Cause The Next Housing Crisis (Part 1) [View article]
The older suburbs of the northeast, mid-atlantic, and midwest will be hit the hardest by this generational mismatch.
Anyone owning property around Boston, Philly, Chicago, all of New Jersey, or Long Island should take the next good opportunity to unload (if they have a 10 to 20 year sale horizon anyway) just to get ahead of the curve. When the prices start to fall it will be a long downward slide.
California will probably escape this problem for one reason - the house selling white boomers will be "replaced" by Asian immigrants who either don't mind doubling up in houses or will get family loans/cash to make the payments. I can imagine a couple million Chinese (0.4% of their emerging middle class) immigrating to California over the next 20 years, which will be more than enough to support prices in LA and San Fran where buildable land is running out.
The rest of the sun belt should be fine as long as the decay-inducing politics of the northeast don't take hold and turn those areas into high-tax, slow-growth, post-prosperity areas too.
Largest Pullbacks From An Intra-Year High [View article]
So what's the average - about 15%? So either this year will be a rare very low year (under 7%), an average year (7 to 20%), or an also quite rare really bad year. Completely unpredictable at this point, however it is LIKELY that the small dip on 4/18 will not be the largest pullback.
Once QE ends all the market distortions due to QE will be unwound as well. It will not be pretty, but those that have built their investment houses on the sandy foundations of QE will quickly see their folly.
If QE worked, then the fear of ending QE would not exist, because the economy (and stock markets) would be so healthy that casting off QE would be seen as a relief, like a young child finally having that itchy cast removed from their broken arm, now that it has healed and feels strong.
Instead, the market shrieks in panic when even a whisper of tapering QE is heard, because QE is the only thing holding this market up. Unlike the young child who has healed, this market is an old lady with a walker - she can never go anywhere without it again. Tell her you're going to take her walker away and see how she reacts.
QE has not made the economy stronger. It has not restored consumer confidence, business confidence, or market confidence. It has temporarily averted a debt-deflation where assets are repriced to their true values and ownership changes from weak hands to strong hands. That process will happen eventually, it has just been delayed by a illusionary game where the banker creates a lot of new money and everyone pretends that it is real and that they have some of it and are therefore wealthy. Eventually the banker will want to be paid back, as they always are.
The Fed seems a little stuck right now between taper talk and trying to remind everyone that they are a "little crazy" and just might increase QE at the next meeting.
A 15% to 20% drop right about now would give them all the cover they need to do nothing at the June meeting, or maybe even ramp it up a little, just to prove that they're still willing to "go both ways" if needed.
20% is just back to 1320 on the S&P, which is just about where it was in early June last year. The big boys have made (or will make) profits on this rally and are probably prepared for a drop, and with a new QE promise the ramp back to 1700 can commence.
Another -10% pause in October, and then 1750 by Christmas.
The Fed has is going to try to be "credibly noncredible" while also remaining completely in control, which is just nonsense.
What they probably should do is just lay out an automatic schedule for tapering QE - maybe reduce it by $5 billion a month for the next 17 months. Then, when that's finally gone, they can begin the rate rise/hold/lower dance that used to be the only Fed Kabuki we had to worry about.
Friday Finale: Final Chance To Go Away In May [View article]
Is This The Start Of A New Bull Market? [View article]
But you're right - if the Fed quintuples the money supply, it is very likely that stocks will reprice along with everything else. Ford stock might very well top $100 if a Ford F150 goes for $200,000!
Market recap: Stocks closed sharply lower after a late selloff, perhaps sparked by profit-taking from money managers looking to rebalance at month's end. Although the Dow finished with its sixth straight monthly gain, today was the eighth session in a row where the index swung in a triple-digit range. Treasury prices fell again; 10-year yields, now at 2.19%, rose more than in any month since Dec. 2010. Oil and gold fell (I, II). [View news story]
Should We Allow Kyle Bass To Bet On The Economic Implosion Of Japan? [View article]
Otherwise, they need to shut up and lie in the bed they've made for themselves. Did nobody in Japan think that massive government debts for twenty years might lead to problems? Did nobody consider that maybe a 10-year bond paying 0.32% might just collapse in value if rates ever went up to 1%, or 3%, or 5%?
The author seems to think that it's "immoral" for some people to actually consider these possibilities and position themselves to profit if it happens. Why doesn't he (and like minded "investors") use their own personal funds to purchase JGBs at under 1% so that the people of Japan can be spared any financial or economic discomfort?
But Stocks Don't Tend To Fall When The Fed Tightens Interest Rates [View article]
I think this one will be a little different.
The 30-year fixed-rate mortgage moved to its highest level in a year, according to the latest Freddie Mac survey, averaging 3.81% from 3.59% in the prior week. The 15-year fixed-rate mortgage also increased, rising to 2.98% vs. 2.77% last week. A year ago, the rates averaged 3.75% and 2.97%, respectively. [View news story]
The Bizarro World Of Tesla Longs [View article]
From coal, natural gas, or uranium in the ground to forward motion of the car?
Same question for crude oil to motion in an ICE car?
Baby Boomers Are Not Likely To Cause The Next Housing Crisis (Part 1) [View article]
Anyone owning property around Boston, Philly, Chicago, all of New Jersey, or Long Island should take the next good opportunity to unload (if they have a 10 to 20 year sale horizon anyway) just to get ahead of the curve. When the prices start to fall it will be a long downward slide.
California will probably escape this problem for one reason - the house selling white boomers will be "replaced" by Asian immigrants who either don't mind doubling up in houses or will get family loans/cash to make the payments. I can imagine a couple million Chinese (0.4% of their emerging middle class) immigrating to California over the next 20 years, which will be more than enough to support prices in LA and San Fran where buildable land is running out.
The rest of the sun belt should be fine as long as the decay-inducing politics of the northeast don't take hold and turn those areas into high-tax, slow-growth, post-prosperity areas too.
The Japanese Financial System Is Beginning To Spin Wildly Out Of Control [View article]
Largest Pullbacks From An Intra-Year High [View article]
The 7 Reasons Why People Hate QE [View article]
If QE worked, then the fear of ending QE would not exist, because the economy (and stock markets) would be so healthy that casting off QE would be seen as a relief, like a young child finally having that itchy cast removed from their broken arm, now that it has healed and feels strong.
Instead, the market shrieks in panic when even a whisper of tapering QE is heard, because QE is the only thing holding this market up. Unlike the young child who has healed, this market is an old lady with a walker - she can never go anywhere without it again. Tell her you're going to take her walker away and see how she reacts.
QE has not made the economy stronger. It has not restored consumer confidence, business confidence, or market confidence. It has temporarily averted a debt-deflation where assets are repriced to their true values and ownership changes from weak hands to strong hands. That process will happen eventually, it has just been delayed by a illusionary game where the banker creates a lot of new money and everyone pretends that it is real and that they have some of it and are therefore wealthy. Eventually the banker will want to be paid back, as they always are.
Where Is The Bubble? [View article]
Without a drop, it's hard to imagine them being able to do anything except "no change", or whispers of tapering.
Where Is The Bubble? [View article]
A 15% to 20% drop right about now would give them all the cover they need to do nothing at the June meeting, or maybe even ramp it up a little, just to prove that they're still willing to "go both ways" if needed.
20% is just back to 1320 on the S&P, which is just about where it was in early June last year. The big boys have made (or will make) profits on this rally and are probably prepared for a drop, and with a new QE promise the ramp back to 1700 can commence.
Another -10% pause in October, and then 1750 by Christmas.
More Fed - It Never Ends [View article]
The Fed has is going to try to be "credibly noncredible" while also remaining completely in control, which is just nonsense.
What they probably should do is just lay out an automatic schedule for tapering QE - maybe reduce it by $5 billion a month for the next 17 months. Then, when that's finally gone, they can begin the rate rise/hold/lower dance that used to be the only Fed Kabuki we had to worry about.
Japanese Equities Too Strong To Ignore [View article]