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  • Stocks begin the week with sharp losses  [View news story]
    Just wait. March NFP will show even more wage growth, and the Fed will announce another rate hike in March. That should make April interesting.
    Feb 8, 2016. 11:04 AM | Likes Like |Link to Comment
  • Stocks begin the week with sharp losses  [View news story]
    "How many people have opened their own businesses after the great recession"

    Well, we do have this.

    http://1.usa.gov/1Ok4JYo
    Feb 8, 2016. 11:03 AM | 2 Likes Like |Link to Comment
  • (97)-Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #97  [View instapost]
    We are now at resistance of 1.75.

    "How come no one ever anticipates a lower rate than me? "

    Hey man, I've been calling for lower rates since 2013 specifically, and in general since 2008. I think I deserve a little respect aka Rodney Dangerfield, who once said his neighborhood was so tough, that every time he closed his window he would smash somebody's fingers in it.
    Feb 8, 2016. 10:58 AM | Likes Like |Link to Comment
  • (97)-Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #97  [View instapost]
    Next resistance is 1.75. I saw 1.77 a little bit ago.
    Feb 8, 2016. 10:15 AM | 1 Like Like |Link to Comment
  • Quick Chat 287   [View instapost]
    We are through resistance at 1.82, and currently at 1.77. Next resistance is at 1.75.
    Feb 8, 2016. 10:09 AM | 2 Likes Like |Link to Comment
  • Smelling The Recession  [View article]
    "How is QE going to get into the economy"

    It goes into the Banks, which are part of the economy. Just because they don't lend it out, doesn't mean it doesn't have an effect. Also, clients of the PDs can also participate, so they have an impact too.

    Even if there were gov spending, that would just translate into an inflationary boom via a consumption subsidy, so we would still be looking at a lower S&P and LT rates once the spending was over. We saw the same thing with the 2009 stimulus spending that petered out about the same time as QE2.

    The impact is not to strengthen the economy, but to affect asset prices. This is what BB called the "wealth effect". In other words, its an allusion. However, even with deteriorating economic conditions, there is still a chance to influence asset prices. The question will be how much, and keeping in mind the effects will be somewhat muted because of all the damage that has been done since 2009 (not that things were all that great before then, but just that we have piled on aka Hoover then FDR).

    The best type of gov spending right now, would be for the IRS to stop collecting. In fact, if you wanted real stimulus, just get rid of the IRS. We would just tax ourselves with inflation. However, nobody is ready for that yet. The culture has become too corrupted. So, I add this to my analysis that we could be looking at a very long U. Given, that, and aside from any short term rallies that may come in the next 24 mos, we are looking at a situation of a long grind down.

    So, given that, what is the best route to protect yourself. Buy for income and not appreciation?

    We are through resistance on the 10 yr this morning.
    Feb 8, 2016. 09:51 AM | 2 Likes Like |Link to Comment
  • (97)-Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #97  [View instapost]
    10 yr is through resistance this morning at 1.79.
    Feb 8, 2016. 08:27 AM | 1 Like Like |Link to Comment
  • Quick Chat 287   [View instapost]
    Occam

    I can see two scenarios. The Fed has painted itself in a corner to hike in the last month of each quarter, or December each year for the next couple of years. Right now, I am sort of leaning towards the later. If that's the case, then we could have a scenario like 1800 to 1900 for 2016, 1700 to 1800 for 2017 and so forth. If they did hike once a quarter, that could bring on such a stark drop that panic builds, people stop spending, and presto recession in 2016.

    Of course, that's where the fun begins. Once we get a recession and say 1600 or lower on the S&P, that's when you would think the Fed then starts talking about reversing course. In that case, that should be the bottom, and that would be the entry point. However, 2100 may have been the top, and recessions tend to bring more taxes and more regulations, thus 1900 may be the next top.

    We shall see, but I do see a scenario shaping up that this could be a long U with the right part of the U taking a long, long time. We'll know more in May.

    The 10 yr is at 1.82 this morning. That's resistance.
    Feb 8, 2016. 07:49 AM | 3 Likes Like |Link to Comment
  • Surrounded By Bears  [View article]
    "These are the conditions for a renewed rise."

    They are also the conditions to give the Fed cover to keep increasing rates. If the Fed stays on that course, instead of new highs, I could see 1800 to 1900 for 2016, 1700 to 1800 for 2017, and so forth until the Fed stops.

    I was also on a "Ask the Fed" conference call the other day, and the Fed employee also reminded us that when the Fed reached its target for the FF rate (1% to 1.25%), they were going to turn their attention to the balance sheet. That suggested to me they were still talking about that at the Fed.

    That's when they could bring on a full blown recession, and then that's when they would be likely to reverse, and start re-inflating.

    My point in all this is for people to understand what is going on so they don't panic and believe the talking heads when they hear, "mysterious free market forces are causing yet another economic downturn" and sell out at the bottom thinking the end is near. Rather when they hear the doom and gloom from the media, then start listening for talk from the Fed about rate cuts or QE4.

    We might not see 2100 again, but you might be able to ride it up from 1600 to 1900, or at least something in that area. We will know more in March.
    Feb 8, 2016. 07:31 AM | 1 Like Like |Link to Comment
  • Smelling The Recession  [View article]
    GDPNow is not as scary as it was.

    http://bit.ly/1KXzawv

    Again, all this could just give the Fed the cover it needs to hike in March.
    Feb 8, 2016. 06:40 AM | 1 Like Like |Link to Comment
  • Smelling The Recession  [View article]
    "going for broke we'd guess another 1-2 hikes should do it"

    Are you saying you see the curve flat after another 1-2 hikes? If so, is that when you think we see negative GDP?

    The Fed has seemed to suggest they are targeting 1% to 1.25% when it was all said and done. It sounds like you think they won't get there. If so, how long before the cut rates, or will they keep rates where they are, but engage in QE4. It seems they would have to wait a while, so as not to have egg on their face.

    10 yr is at 1.82 this morning. That's resistance.
    Feb 8, 2016. 06:36 AM | Likes Like |Link to Comment
  • Quick Chat 287   [View instapost]
    "jhooper, If you would, please recommend an analyst or article presenting a cogent data-based case in support of the long term negative outlook you describe."

    I wish I had someone that looked at things they way I do, which is why I used the word "tiresome". I get tired of the same ole, same ole dichotomy of either recession or new highs. That's why I wish I could find someone that is publishing articles without the word "recession", "bears", or "bulls".

    I call my approach the Subsidy Mix, and its based on the idea that in a theoretically free market, there would be no ups and downs, just growth, with short periods of flatter growth in between the periods of technological advancements. The reason for the booms and busts through out history is because we have never had a pure free market. Instead we have had constant gov interference herding people into and out of asset classes, thus causing the booms and busts.

    So, from that perspective, I take a big macro approach to look for the booms and busts based on gov policies that lead to risk-on (boom - equities up and upward yield curve) or risk-off (bust - equities down and flat/inverted yield curve).

    Since I can't find anyone using this express approach, I have to cobble together information from multiple sources to determine my own analysis. In this regard Miller is useful, but as I said, conventional, and thus tiresome.

    Chris Low at FTN and market updates from Centerstate provide some very good clinical data analysis. I get some pretty good feed back on SA, especially when I can pick a fight with someone, but I wish there were others considering the subsidy mix to provide more quantitative analysis. At this point, there just isn't anyone I can recommend.

    Right now, the scenario we face is that good economic data will lead to rate increases from the Fed. That will result in a reduction in the consumption subsidy the Fed has been feeding the markets, and a reduction in the consumption subsidy will lead to risk-off - equities down and rates down. However, add to this the fiscal aspect of the subsidy mix, higher taxes and regulations since 2008, and the economic data has been weakening. So, you would think the Fed wouldn't continue with the rate increases, but yet its still good enough that they might.

    The data will just reflect the macro policies changes, not lead them. As such, its more important to consider the policy changes that are driving the data. Thus, the more rate hikes we get, the lower the S&P will go, and the lower the 10 yr yield will be (flatter yield curve), but so slowly that it doesn't bring on a recession, just year after year of a slow grind down on the S&P. That is, if the Fed and fiscal policy continue on their current courses.
    Feb 7, 2016. 09:42 PM | 7 Likes Like |Link to Comment
  • Smelling The Recession  [View article]
    Until the Fed starts raising rates they will be, but not after.
    Feb 7, 2016. 03:48 PM | Likes Like |Link to Comment
  • Surrounded By Bears  [View article]
    "Well, we missed new highs by just 2 1/2 %"

    Yeah, but you didn't say you expected a high, and then a pull back. You were talking about highs, and then even higher highs after that.

    "I also advised everyone to buy the Oct. 2011 and every subsequent dip."

    Well, for a lot of people, that's always the best strategy. Just keep buying. If they want to time, then there will be times to sit in cash, but generally for that, you want to see the conditions that indicate a V (big drop and then a recovery).

    What we have shaping up now looks like a long U with a real question as to when the right leg of the U will show up. So, in this scenario, going to cash could be a big problem, which is my point from above (which apparently still hasn't sunk in).

    Which is another point I make. People can take comfort that a central bank is a subsidy for financial markets. Even though the dunderheads at the Fed will goof up from time to time (like they are doing now), they do have a tendency to re-inflate. So, its best to get rid of your Fed notes as fast as you can, and find professionally managed notes (like stocks) that provide income.

    To me, that's the major take away from all this. Its about understanding what is really going on, so you know how to protect yourself. Cash (Fed notes) is generally one of the worst places you can be, unless in those periods where you sit in cash because you have a good enough understanding to do some timing.

    People calling for higher highs in this environment are implying part of the return will be from increased valuations. Then when that part of the returns don't occur they have to say, "Well at least I'm happy with my dividends".

    Well of course, and they way things are shaping up, they will have to keep saying that for a while, but given the alternatives, what other choice will they have?
    Feb 7, 2016. 03:47 PM | Likes Like |Link to Comment
  • Smelling The Recession  [View article]
    "Bond market may be in for rude awakening"

    Maybe for short term bonds, but anything longer than 5 yrs will start coming down, thus flattening the curve.
    Feb 7, 2016. 03:17 PM | Likes Like |Link to Comment
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