Results 1 to 9 of 9

Thread: The market rallies while the economy is NOT improving

  1. #1
    Featured Member
    Joined
    Nov 2006
    Posts
    950
    Thanks
    1
    Thanked 651 Times in 272 Posts

    Default The market rallies while the economy is NOT improving

    http://www.stocktiming.com/Wednesday...rketUpdate.htm

    "This morning, zillow.com reported that 28.9% of home owners are under water on their mortgage.

    That means they can't sell without making up the difference between the current home value and what they owe on the mortgage. If they don't have the money, they can't sell without forcing a foreclosure. They are stuck, and that freezes a lot of property from going into the market.

    Two things could happen in the next 6 to 12 months ... some of these people may not be able to keep paying the mortgage which would then go into default. The other thing is that some of these people will just "walk away" from their home. Data suggest that when a home owner is 25% to 30%+ under water, they have no future hope and they "walk away" from the house and let the bank have it.

    The zillow report fits with a recent Federal Reserve's Report that said: "most U.S. banks expect loan delinquencies and losses to increase this year. Why didn't that make the headline news?"

  2. #2
    God/dess verfolgung's Avatar
    Joined
    Jul 2004
    Location
    New England
    Posts
    2,143
    Thanks
    48
    Thanked 259 Times in 191 Posts

    Default Re: The market rallies while the economy is NOT improving

    Perhaps it's due to the significant writedowns which lenders have already made to their mortgage portfolios.
    If you can't win. Make the fellow in front of you break the record.


  3. #3
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: The market rallies while the economy is NOT improving

    ^^^ for the same reason that the TrimTabs unemployment data didn't make headline news either ... because it contradicts the Washington approved 'spin'


    (snip)"The Real Unemployment Report

    Posted by Tyler Durden at 3:59 PM
    TrimTabs Investment Research estimated today that the U.S. economy shed 745,000 jobs in April (20,000 more than their March job loss estimates) as wages and salaries plunged an adjusted 5.7% year-over-year. TrimTabs estimated that the economy shed a record 5 million jobs in the past 12 months.

    "If job losses continue at the present rate, the unemployment rate could top 10% by summer," said TrimTabs CEO Charles Biderman.

    In a research note, TrimTabs reported that income tax refunds are up 16.5% year-over-year this year, providing a short-term boost to consumption. Unfortunately for the economy, however, the support from refunds is winding down.

    Moreover, TrimTabs explained that President Obama’s "Making Work Pay" tax credit is too small to help the economy over the longer term.

    "The Obama tax credit will distribute $20 billion to consumers from May through July," said Biderman. "This amount is less than one-quarter of the $90 billion the Bush tax credit pumped into consumers’ pocketbooks in the same period last year."

    Finally, TrimTabs reported that real-time income tax data indicates that the personal savings rate was 1.6% in March, well below the 4.2% estimated by the Bureau of Economic Analysis. "(snip)

    from


    The conspiracy theorists will tell you that the only thing holding the recent rally together has been overly optimistic 'official' statistics and projections which are based on unrealistic underlying assumptions.


    Other news stories that got essentially zero coverage concerned an 8:1 ratio of selling by 'insiders', rotation of funds from the treasury bond market to the stock market by institutional investors, rising stock prices on falling stock volumes, commodity prices rising rapidly ( natural gas, copper, soybeans), and a host of similar stuff.

  4. #4
    God/dess threlayer's Avatar
    Joined
    Aug 2003
    Location
    Syracuse
    Posts
    5,921
    Thanks
    369
    Thanked 419 Times in 290 Posts
    My Mood
    Fine

    Default Re: The market rallies while the economy is NOT improving

    The market is quite emotional andis based on future expectations. That being the case, sometimes it is a leading indicator of the 'real' economy. Sometimes it is just stupid.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

  5. #5
    Featured Member
    Joined
    Nov 2006
    Posts
    950
    Thanks
    1
    Thanked 651 Times in 272 Posts

    Default Re: The market rallies while the economy is NOT improving

    from an older Bloomberg article:

    http://www.bloomberg.com/apps/news?p...0jc&refer=home

    "Federal Reserve Chairman Ben S. Bernanke’s indication that he will use “quantitative easing” to prevent deflation points to a stock market rally that may last for the next two years, Napier said. With quantitative easing, a tool pioneered by the Bank of Japan, central banks can stimulate inflation by printing money and flooding the market with cash in order to encourage consumers to spend.

    The government’s efforts will eventually fail as ballooning government debt devalues the dollar, causes investors to flee U.S. assets and takes the S&P 500 to its eventual bottom in 2014, Napier said. "

    and here's an interesting interview with Russel Napier:

    http://www.ft.com/cms/bfba2c48-5588-...5&fromSearch=n

  6. #6
    Veteran Member person's Avatar
    Joined
    Sep 2007
    Posts
    633
    Thanks
    33
    Thanked 34 Times in 23 Posts

    Default Re: The market rallies while the economy is NOT improving

    Bad news all week and we're going up!
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

  7. #7
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: The market rallies while the economy is NOT improving

    ^^^ if you'll take a minute to look beyond the headlines, indeed US stocks have gone up this week. But so have futures prices for oil and natural gas, so has soybeans and corn. So have other currencies (notably the Canadian Dollar, Swiss Franc and Euro).

    The point I am making is that all of these US dollar denominated prices have gone up because the 'value' of the US dollar has gone down !!! Foreign investors both gov't entity and private are now recognizing that the US intends to 'print money' as the main method of repaying the incredible amount of debt it is racking up. At the same time it is being recognized that the FED intends to keep interest rates near zero, which serves as a strong dis-incentive for holding cash in any form.


    (snip)"Strike up the band, boys, happy days are here again! Recently released short-term economic data, including unemployment claims, non-farm payrolls, home sales, and business spending, which had been so unambiguously horrific in February and March, are now just garden-variety awful. With the Wicked Witch of Depression now apparently crushed under the house of Obamanomics, the Munchkins of Wall Street have sounded the all clear, pushing the Dow Jones up 25% from its lows. But the premature conclusion of their Lollipop Guild economists, that the crash of 2008/2009 is now a fading memory, is just as delusional as their failure to see it coming in the first place.

    Once again, the facts do not support the euphoria. Over the past few months, the government has literally blasted the economy with trillions of new dollars conjured from the ether. The fact that this "stimulus" has blown some air back into our deflating consumer-based bubble economy, and given a boost to an oversold stock market, is hardly evidence that the problems have been solved. It is simply an illusion, and not a very good one at that. By throwing money at the problem, all the government is creating is inflation. Although this can often look like growth, it is no more capable of creating wealth than a hall of mirrors is capable of creating people.

    We are currently suffering from an overdose of past stimulus. A larger dose now will only worsen the condition. The Greenspan/Bush stimulus of 2001 prevented a much needed recession and bought us seven years of artificial growth. The multi-trillion dollar tab for that episode of federally-engineered economic bullet-dodging came due in 2008. The 2001 stimulus had kicked off a debt-fueled consumption binge that resulted in economic weakness, not strength. So now, even though the recent stimulus administered a much larger dose, we will likely experience a much smaller bounce. One can only speculate as to how much time this stimulus will buy and what it will cost when the bill arrives.

    My guess is that, at most, the Bernanke/Obama stimulus will buy two years before the hangover sets in. However, since this dose is so massive, the comedown will be equally horrific. My fear is that when the drug wears off, we will reach for that monetary syringe one last time. At that point, the dosage may be lethal, and the economy will die of hyperinflation."(snip)

    from

  8. #8
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: The market rallies while the economy is NOT improving

    If you need a further 'reality lesson' check out the latest S&P Price/Earnings ratio data released last friday ...



    ... which shows that even with the favorable change in accounting rules that the first quarter 'real' P/E's are already over 20 !


    Or check the fine print re the 'stress tests'

    (snip)"Everyone is entitled to be optimistic.

    But nobody, especially not anyone in the government, has the right to intentionally mislead the markets and investors as to the validity of what they're allegedly doing.

    Given the Fannie report, which was known to the government (since it is under conservatorship) for a significant amount of time prior to being filed, there is absolutely no excuse whatsoever for The Fed's "Stress Test" report to be published without a footnote indicating that the "most adverse" metrics had been proved met by the largest prime mortgage lender and guarantor in the United States already.

    Investors deserve a government that does not intentionally mislead them.

    If you are buying into this rally and the recovery of the banks based on the so-called "Stress Tests", you have been lied to and must consider the "severe" stress scenario as the "baseline", which implies that should the economy deteriorate further the banks will not make it with their alleged "capital cushions."

    Period.

    This is an outrage; we are no longer just talking about my estimates, Roubini's estimates or even the IMF's estimates.

    We are now talking about actual reported financial results.

    In short, we have all been had.

    Again."(snip)

    from

  9. #9
    Veteran Member person's Avatar
    Joined
    Sep 2007
    Posts
    633
    Thanks
    33
    Thanked 34 Times in 23 Posts

    Default Re: The market rallies while the economy is NOT improving

    Quote Originally Posted by Melonie View Post
    The point I am making is that all of these US dollar denominated prices have gone up because the 'value' of the US dollar has gone down !!!
    I know - check out an AUDUSD 10 graph But our market's gone up too. I guess Rudd's $900 cheques are working miracles.
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

Similar Threads

  1. Replies: 4
    Last Post: 09-29-2011, 06:31 PM
  2. Another sign the economy is improving
    By eagle2 in forum Dollar Den
    Replies: 11
    Last Post: 06-11-2010, 01:37 PM
  3. Service Economy vs Manufacture Economy
    By xanfiles1 in forum Dollar Den
    Replies: 20
    Last Post: 05-04-2008, 03:36 AM
  4. Cut throat or free market economy?
    By ViolaStrings in forum Stripping (was Stripping General)
    Replies: 20
    Last Post: 01-13-2007, 10:03 PM
  5. Is our Economy Really Improving?
    By Tina in forum The Lounge
    Replies: 36
    Last Post: 05-13-2004, 03:47 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •