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Thread: Market has decoupled from any connection to reality ???

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    Default Market has decoupled from any connection to reality ???

    posted by NotACusty

    And I'm lmao at how the Market has decoupled from any connection to reality. Massive job losses and it went up 250+ points?!?!? Can anyone explain this one to me. One guy on another board figures it's a play to squeeze the hell out of the shorts. Another said it would make some companies show a quick profit from the downsizing of their workforce.

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    Default Re: Market has decoupled from any connection to reality ???

    it would certainly seem that way. If nothing else, this proves that the buying or selling of shares by 'average Americans' have very little to do with US stock market valuations !

    a professional investors' BBS mentions the following possibilities ...

    - the imminent investment of 75 to 125 billion of taxpayer's money in the Detroit Automakers will significantly improve the price of their stock shares

    - backwardation of the commodity futures market in gold which was established this week guarantees a huge future devaluation of the US dollar thus a huge run-up in the US dollar denominated price of everything ... including stock shares

    - the FED quietly executed $55 billion dollars worth of net 'repos'

    - the FED not so quietly made a direct repurchase of Agency Bonds ( mostly Fannies) at 2:30 ... after which FNM / FRE shares as well as the broader the stock market launched upward.

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    Default Re: Market has decoupled from any connection to reality ???

    I think there are a lot of "consumer" buyers on the market right now. They see a sale and they have to buy some. It has nothing to do with fundamental or technical right now. I cannot make any sense out of it either.

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    Default Re: Market has decoupled from any connection to reality ???

    Thanks for the insight I hope we can keep this one running for awhile and get more input.
    Another opinion I read this morning was that the Feds have deemed this whole thing too big to fail and they will keep pumping money into the system FOREVER. Which in normal times should lead to ruinous inflation but seems to be, in the short term, still somehow deflationary.
    I'm beyond confused and in waaaaayyyy over my head :lol:

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    Default Re: Market has decoupled from any connection to reality ???

    I think there are a lot of "consumer" buyers on the market right now
    I can't agree with this assessment. In fact, a growing number of underemployed / forcibly retired / chronically unemployed 'consumers' are now selling off their 401k stock shares in order to stave off bankruptcy.

    As to the inflationary aspects of all of this 'money printing', the 'tin foil hat' crowd would tell you that you are 100% correct in regard to US dollar strength being temporary. Specifically, recent dollar strength has been the result of foreign owners of belly-up derivitaves having to buy hundreds of billions worth of US dollars on the foreign exchange market to make good (i.e. Lehman Brothers CDS). By next summer, it is speculated that the US dollar exchange rate will be headed downward like a rocket as the US treasury gets slammed by IRS revenue shortfalls and is forced to go to international lenders with huge amounts of new T bond offerings (and probably a reduced credit rating for the US gov't as well !) to try and cover some of the shortfall. In addition, our president elect is planning to have the gov't spend an extra trillion dollars on 'public works' projects as an economic stimulus measure ( see ) . At that point, the price of everything traded in global markets / imported into the USA will see US dollar denominated price inflation hit like a ton of bricks.

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    Default Re: Market has decoupled from any connection to reality ???

    Quote Originally Posted by Melonie View Post
    posted by NotACusty

    And I'm lmao at how the Market has decoupled from any connection to reality. Massive job losses and it went up 250+ points?!?!? Can anyone explain this one to me. One guy on another board figures it's a play to squeeze the hell out of the shorts. Another said it would make some companies show a quick profit from the downsizing of their workforce.
    Now a 250 point jump may be a dead cat bounce. Or it may reflect that wise investors are bargain shopping. Remember the first and only rule of investing: buy low and sell high. I, like a certain oracle from Omaha, am buying stocks.

    HTH
    Z

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    Default Re: Market has decoupled from any connection to reality ???

    I'll bet you're right Zofia as I have heard this is now a trader's market rather than an investor's market. Wild swings can generate a tremendous profit or loss for those gutsy and smart enough to play it. Oil or gold seem to be more long term real investments in the fact that historically they seem to go ever higher.

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    Default Re: Market has decoupled from any connection to reality ???

    at this point, it would appear that Obama's announcement of huge new public spending has turned the US markets around, as well as turning around the US dollar denominated price of oil, gold, and other commodities. The 'tin foil hat' crowd is of the opinion that this is related to future devaluation of the US dollar due to this extra gov't borrowing / money printing, rather than any increase in the profitability of listed companies or any major increase in demand for commodities (with certain exceptions such as concrete / steel )

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    Default Re: Market has decoupled from any connection to reality ???

    Quote Originally Posted by not_a_custy View Post
    I'll bet you're right Zofia as I have heard this is now a trader's market rather than an investor's market. Wild swings can generate a tremendous profit or loss for those gutsy and smart enough to play it. Oil or gold seem to be more long term real investments in the fact that historically they seem to go ever higher.
    I have seen enough reports to indicate that we have reached peak oil production to think that the long term trend for oil prices is up. Though, it will not be steady, but marked by huge fluctuations. To make it simple, oil in the short term reflects the strength/weakness of the worldwide economy. But, over the long term oil reflects the limited nature of its supply. At least until something more efficient comes along.

    On the other hand, I have seen no evidence that there is any real limit to the amount of gold that can be mined. So, I would not bet on its long term ability to appreciate. Rather, I view gold as a hedge against inflation at best. At worst it's a money pit.

    HTH
    Z

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    Default Re: Market has decoupled from any connection to reality ???

    Quote Originally Posted by Melonie View Post
    ... The 'tin foil hat' crowd is of the opinion that this is related to future devaluation of the US dollar due to this extra gov't borrowing / money printing, rather than any increase in the profitability of listed companies or any major increase in demand for commodities (with certain exceptions such as concrete / steel )
    Concrete is not a commodity. It is a very unique finished product. A finished product that is almost impossible to move without complete destruction and expensive disposal. Cement is a commodity. However, cement is also a very localized commodity as it is heavy and expensive to transport over long distances. (There is also the problem of moisture turning it into a hardened mass of mortar.) The constituent parts of cement are more commodity like: sand, gravel, water and limestone.

    HTH
    Z

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    Default Re: Market has decoupled from any connection to reality ???

    ^^^ the exception comment was meant to address the big gains in stock values of companies that produce structural steel and rebar, as well as pre-fab concrete items (i.e. highway dividers)

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    Default Re: Market has decoupled from any connection to reality ???

    Peak oil is one of the most interesting and potentially devastating scenarios I've read about and yet I can find no real agreement from the experts on how quickly we'll see the effects of this. I believe it was declared in 2005? Some say we have as little as 15 years before we see real shortages while others say a hundred years. Too many variables come into play such as conservation and how steadilly we increase population.
    Shale oil is quite abundant but will only become viable at 8-10 dollars agallon. Literally Mad Max when we can no longer travel, transport or grow food in massive quantity cheaply.
    Gold, I agree, is merely a short term hedge against tremendous inflation in an otherwise fairly stable society. You can't eat it or wear it or heat with it :lol:

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    Default Re: Market has decoupled from any connection to reality ???

    Peak Oil Theory has been floating around a heck of a lot longer then 2005. Just another hype and excuse to get more control over us.
    Quote Originally Posted by The Snark View Post
    But then I suppose the sort of people who write this kind of crap generally don't allow their opinions to be tainted by things like "facts" and "reality".
    Distortion becomes somehow pure in its wildness
    The note that began all can also destroy

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    Default Re: Market has decoupled from any connection to reality ???

    circling back on topic, the market reality of crude oil, under current world conditions, is that oil from 'conventional' sources has a cash cost of production of somewhere around $40 per barrel. 'Unconventional' sources have a production cost of upwards of $80 per barrel. Thus in the short term 'unconventional' oil sources such as low volume domestic stripper wells, shale oil, oil from coal etc. all become 'money losing propositions'.

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