A friend told me, you bet on the resilience of the bull market.
I think that's only true in a nascent one. Right now, I think a correction has a higher probability than double sixes... much higher
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Black Monday
- Thread starter ssternlight
- Start date
A friend told me, you bet on the resilience of the bull market.
I think that's only true in a nascent one. Right now, I think a correction has a higher probability than double sixes... much higher
Quote from mtzianos:
Ofcourse, measured in any non-counterfeitable "currency" like gold, stocks are near their 2002 lows. If measured in oil or copper or any other base metal, stocks are much lower than 2002.
Actually, measured in terms of the gold price, stocks are much lower than 2002 and falling like a rock. This chart shows the number of ounces of gold required to buy the DOW.
http://stockcharts.com/h-sc/ui?c=$indu:$gold,uu[m,a]daclynay[df][pb50!b200][i]
Most goldbugs consider a value of between 2 and 1 to be "fair" ie. sell your gold and buy stocks when the ratio falls below 2. It still has a way to go before we get there though. Things will look very different when gold is $2000 and the dow is 4000. How about $6000 gold and dow 12K?
Congress is working on $70B tax cuts........does anyone know the multiplier effect of these cuts, would they propel consumptions growth of 5 times i.e. $350B to offset the money blown up in Iraq by the time troops are back home. Some say US is spending $10B in Iraq each single month.
Sorry for getting off the topic a little, but consumption growth resulting in business earnings is what gives more fuel to the markets to keep upward movement.
Sorry for getting off the topic a little, but consumption growth resulting in business earnings is what gives more fuel to the markets to keep upward movement.
Quote from toc:
Congress is working on $70B tax cuts........does anyone know the multiplier effect of these cuts, would they propel consumptions growth of 5 times i.e. $350B to offset the money blown up in Iraq by the time troops are back home. Some say US is spending $10B in Iraq each single month.
Sorry for getting off the topic a little, but consumption growth resulting in business earnings is what gives more fuel to the markets to keep upward movement.
toc, there are 2 main forces driving the cyclical bull market of the past few years:
1/ "helicopter" money i.e. a credit bubble basd on negative real interest rates (suppressed by FCB buying to prevent appreciation of their currencies), printing of counterfeit money by the Fed and other CBs. Tax cuts go in this category, as they effectively put money in the hands of the consumer. Same with non-productive gov spending (wars etc). Look for more signs of "helicopter money" in the future.
2/ Corporate earnings, which now stand at the highest % of GDP since WWII. This is in part due to the labor arbitrage forces of globalisation, "labor" has no negotiation power over "capital", leading to real incomes falling (after inflation) for many years now.
There are other aspects, but these 2 are the biggest ones from a macro perspective.
The problem with the current inflationary monetary policies is that unlike the 70s (when unions would demand pay raises), it's much more difficult to distribute "helicopter money" in a relatively analogous way among the people.
PS: I'm talking in NOMINAL DOLLARS. As shown, everything has been falling against hard assets (metals, energy, real estate etc) which can't be counterfeited by gov.
Quote from mtzianos:
toc, there are 2 main forces driving the cyclical bull market of the past few years:
1/ "helicopter" money i.e. a credit bubble basd on negative real interest rates (suppressed by FCB buying to prevent appreciation of their currencies), printing of counterfeit money by the Fed and other CBs. Tax cuts go in this category, as they effectively put money in the hands of the consumer. Same with non-productive gov spending (wars etc). Look for more signs of "helicopter money" in the future.
2/ Corporate earnings, which now stand at the highest % of GDP since WWII. This is in part due to the labor arbitrage forces of globalisation, "labor" has no negotiation power over "capital", leading to real incomes falling (after inflation) for many years now.
There are other aspects, but these 2 are the biggest ones from a macro perspective.
The problem with the current inflationary monetary policies is that unlike the 70s (when unions would demand pay raises), it's much more difficult to distribute "helicopter money" in a relatively analogous way among the people.
PS: I'm talking in NOMINAL DOLLARS. As shown, everything has been falling against hard assets (metals, energy, real estate etc) which can't be counterfeited by gov.
yes, nicely done.
You taking notes Bitchstream?
Fabulous post.
Quote from mtzianos:
toc, there are 2 main forces driving the cyclical bull market of the past few years:
1/ "helicopter" money i.e. a credit bubble basd on negative real interest rates (suppressed by FCB buying to prevent appreciation of their currencies), printing of counterfeit money by the Fed and other CBs. Tax cuts go in this category, as they effectively put money in the hands of the consumer. Same with non-productive gov spending (wars etc). Look for more signs of "helicopter money" in the future.
2/ Corporate earnings, which now stand at the highest % of GDP since WWII. This is in part due to the labor arbitrage forces of globalisation, "labor" has no negotiation power over "capital", leading to real incomes falling (after inflation) for many years now.
There are other aspects, but these 2 are the biggest ones from a macro perspective.
The problem with the current inflationary monetary policies is that unlike the 70s (when unions would demand pay raises), it's much more difficult to distribute "helicopter money" in a relatively analogous way among the people.
PS: I'm talking in NOMINAL DOLLARS. As shown, everything has been falling against hard assets (metals, energy, real estate etc) which can't be counterfeited by gov.
Quote from mtzianos:
toc, there are 2 main forces driving the cyclical bull market of the past few years:
1/ "helicopter" money i.e. a credit bubble basd on negative real interest rates (suppressed by FCB buying to prevent appreciation of their currencies), printing of counterfeit money by the Fed and other CBs. Tax cuts go in this category, as they effectively put money in the hands of the consumer. Same with non-productive gov spending (wars etc). Look for more signs of "helicopter money" in the future.
2/ Corporate earnings, which now stand at the highest % of GDP since WWII. This is in part due to the labor arbitrage forces of globalisation, "labor" has no negotiation power over "capital", leading to real incomes falling (after inflation) for many years now.
There are other aspects, but these 2 are the biggest ones from a macro perspective.
The problem with the current inflationary monetary policies is that unlike the 70s (when unions would demand pay raises), it's much more difficult to distribute "helicopter money" in a relatively analogous way among the people.
PS: I'm talking in NOMINAL DOLLARS. As shown, everything has been falling against hard assets (metals, energy, real estate etc) which can't be counterfeited by gov.
Pretty good analysis, but it leads to the inevitable question of why long bond rates were low all along. Central banks do it? Just hard for me to figure the bond vigilantes didn't sell to central banks as much as they wanted if inflation were really a problem.
Quote from rtstrading:
Could be a rebound here....put/call ratio is overdone...
I use the put/call ratio as my ONLY indicator, but I would not trust a weak bullish ratio at this point to have any VALIDITY in what IS POSSIBLE monday morning.
My only regret is getting caught in a short squeeze friday before last. so far the position would have been 30+%
Long bond rates were low for several reasons.
1. The carry trade.
2. Bond purchases by Asian Central banks as part of their dollar support campaign.
3. Under funded pension systems that were stuck "short" needed yield.
4. Investors who thought the 2000-2003 meltdown in equities could be a harbinger of massive deflation.
Bond shorts (I was painfully one of them for several years) had VERY good fundamental reasons for anticipating higher rates throughout the curve. However for the reasons mentioned, it was tough dislodging longs. Fortunately debt is like soybeans. They grow enough for everybody, sometimes you just have to wait.
1. The carry trade.
2. Bond purchases by Asian Central banks as part of their dollar support campaign.
3. Under funded pension systems that were stuck "short" needed yield.
4. Investors who thought the 2000-2003 meltdown in equities could be a harbinger of massive deflation.
Bond shorts (I was painfully one of them for several years) had VERY good fundamental reasons for anticipating higher rates throughout the curve. However for the reasons mentioned, it was tough dislodging longs. Fortunately debt is like soybeans. They grow enough for everybody, sometimes you just have to wait.
Quote from fhl:
Pretty good analysis, but it leads to the inevitable question of why long bond rates were low all along. Central banks do it? Just hard for me to figure the bond vigilantes didn't sell to central banks as much as they wanted if inflation were really a problem.