I CALL BS ON THIS . . .
http://www.elitetrader.com/vb/showthread.php?threadid=124977
Another new low for ET.
http://www.elitetrader.com/vb/showthread.php?threadid=124977
Another new low for ET.
BS market
- Thread starter The Kin
- Start date
This might shed some light......
The Market Moves Past the Alarmist Talk
Last Update: 07-Apr-08 10:12 ET
"Credit market issues remain a concern. The economic data remain bad. Yet, the stock market has risen 6.4% over the past three weeks. This is because the stock market is wringing out the excessive pessimism of recent months. The alarmist concerns are fading.
Financials
The major driver of the stock market the past few months has been fears over credit market conditions.
The entire market had been overreacting to fluctuations in the price of Countrywide, Fannie Mae, Ambac, Citigroup, Bear Stearns, and a host of other individual financial stocks. Every whiff of write-offs or trouble caused concerns that companies would be insolvent or that a broader credit crunch would develop.
It is different now. The market is rebounding on almost any news of a financial company raising more capital. This too is an overreaction, but it shows a shift in the underlying sentiment.
Now, the market is starting to anticipate that within months, perhaps weeks, credit market conditions will stabilize. There is even talk that a rebound in the vastly underpriced mortgage-backed securities market will lead to "write-ups" rather than write-downs for some firms. Financial stocks are attracting interest because of the improved prospects for the months ahead.
The alarmist talk about the problems for financial firms had plenty of substantiation, as shown by the Bear Stearns developments. The concerns, however, are now easing.
The Credit Crunch that Never Was Still Isn't
A corollary to the improved sentiment toward financial stocks is the recognition that a true credit crunch has not developed.
Credit conditions are certainly tighter than the extremely loose conditions of a year ago. Raising debt for purely financial transactions such as for private equity is dead in the water. Subprime mortgage lending doesn't happen. But companies seeking loans for normal business operations are finding credit available.
This is evidenced by the 26% annual rate of growth in commercial and industrial loans the past seven months. Some of this may be explained by the breakdown of credit available from the markets, and a subsequent shift to credit lines. Nevertheless, it is hard to say there is a crunch given this surge in credit..
The availability of credit is further evidenced by the fact that real estate loans from commercial banks are up at a 9% annual rate over the past seven months. This can't be explained away by technical factors or a good underlying market.
The alarmist talk the past half year of a credit crunch that would hammer the entire economy was wrong and is now fading.
The Economic Data
The economic data are bad. Payrolls are declining, consumer spending growth is leveling off, and the housing market remains in a deep slump.
Yet, the markets are starting to realize that the alarmist talk about the economy is overdone.
The stock market is looking past the first and second quarter data. There is now a realization that the stimulative effects of monetary and fiscal policy are on the way.
The dramatic declines in interest rates the past half year won't lead to a recovery in the housing market in the sense that homebuilders or realtors will see a return of business to anywhere near the levels of recent years. But the hemorrhaging will stop.
This is important from an economic standpoint because it means that a previous large negative for the economy will be taken away. Housing has taken about 1% off real GDP growth every quarter for almost two years. By the third quarter that will be gone.
Early indications that housing is stabilizing are a leveling off of existing home sales the past four months, January and February housing starts above the December level, and a sharp deceleration in the rate of decline in the February residential construction data. Housing won't be strong, but the elimination of a negative will be a big plus.
The fiscal stimulus package is also looming just weeks away.
The checks to consumers this year will total about $100 billion. The checks start going out the first week of May. Approximately 25% will be sent by the end of May, and another 50% in June, with the final checks going out in early July.
The impact on consumer spending will be huge. The payments are $600 for individuals and $1200 for couples, with additional payments for qualifying dependents. High income earners are excluded. The payments thus go to consumers with a high propensity to spend.
In 2001, a similar $38 billion rebate produced a fairly quick surge in personal consumption expenditures (please see the Feb. 19 Big Picture column for data).
The stock market recognizes that this fiscal stimulus package will also have a big impact. Whether it is seen in the May, June, or July data, and the degree to which it boosts second or third quarter GDP, is debatable, but it is coming.
First quarter real GDP will be up, and by the time of the report on April 30, the markets will be looking at a fiscal stimulus package that will boost second quarter GDP.
Given the looming impact of the fiscal and monetary stimulus, the obsession of journalists over the current weak economic data and talk of a possibly severe recession is alarmist.
What it All Means
We have been stating for months that the stock market would get a bounce in the spring or summer as the worst of the economic and credit fears start to fade.
The past three weeks show the start of such a move. It won't necessarily continue in a straight line, and it doesn't mean a large rally is starting. But the market is still likely to work its way higher over the next few months as the credit and economic outlooks stabilize.
The markets are getting over the exaggerated alarmist talk that was magnified in recent months with every rumor in the credit markets and every piece of weak economic data.
This welcome and logical development doesn't mean that the outlook for the stock market is bullish. It simply means that the excessive pessimism is being wrung out of stock prices.
The longer-term market outlook is constrained by the reality that earnings growth the next couple of years will be limited by a still struggling economy, and probably by declining profit margins. (This was discussed in our March 3 Big Picture column titled "Tough Times Even Without a Recession").
Still, it is nice to see that the stock market is pricing in a more rational view even as the journalists maintain the alarmist drumbeat."
--Dick Green, Briefing.com
The Market Moves Past the Alarmist Talk
Last Update: 07-Apr-08 10:12 ET
"Credit market issues remain a concern. The economic data remain bad. Yet, the stock market has risen 6.4% over the past three weeks. This is because the stock market is wringing out the excessive pessimism of recent months. The alarmist concerns are fading.
Financials
The major driver of the stock market the past few months has been fears over credit market conditions.
The entire market had been overreacting to fluctuations in the price of Countrywide, Fannie Mae, Ambac, Citigroup, Bear Stearns, and a host of other individual financial stocks. Every whiff of write-offs or trouble caused concerns that companies would be insolvent or that a broader credit crunch would develop.
It is different now. The market is rebounding on almost any news of a financial company raising more capital. This too is an overreaction, but it shows a shift in the underlying sentiment.
Now, the market is starting to anticipate that within months, perhaps weeks, credit market conditions will stabilize. There is even talk that a rebound in the vastly underpriced mortgage-backed securities market will lead to "write-ups" rather than write-downs for some firms. Financial stocks are attracting interest because of the improved prospects for the months ahead.
The alarmist talk about the problems for financial firms had plenty of substantiation, as shown by the Bear Stearns developments. The concerns, however, are now easing.
The Credit Crunch that Never Was Still Isn't
A corollary to the improved sentiment toward financial stocks is the recognition that a true credit crunch has not developed.
Credit conditions are certainly tighter than the extremely loose conditions of a year ago. Raising debt for purely financial transactions such as for private equity is dead in the water. Subprime mortgage lending doesn't happen. But companies seeking loans for normal business operations are finding credit available.
This is evidenced by the 26% annual rate of growth in commercial and industrial loans the past seven months. Some of this may be explained by the breakdown of credit available from the markets, and a subsequent shift to credit lines. Nevertheless, it is hard to say there is a crunch given this surge in credit..
The availability of credit is further evidenced by the fact that real estate loans from commercial banks are up at a 9% annual rate over the past seven months. This can't be explained away by technical factors or a good underlying market.
The alarmist talk the past half year of a credit crunch that would hammer the entire economy was wrong and is now fading.
The Economic Data
The economic data are bad. Payrolls are declining, consumer spending growth is leveling off, and the housing market remains in a deep slump.
Yet, the markets are starting to realize that the alarmist talk about the economy is overdone.
The stock market is looking past the first and second quarter data. There is now a realization that the stimulative effects of monetary and fiscal policy are on the way.
The dramatic declines in interest rates the past half year won't lead to a recovery in the housing market in the sense that homebuilders or realtors will see a return of business to anywhere near the levels of recent years. But the hemorrhaging will stop.
This is important from an economic standpoint because it means that a previous large negative for the economy will be taken away. Housing has taken about 1% off real GDP growth every quarter for almost two years. By the third quarter that will be gone.
Early indications that housing is stabilizing are a leveling off of existing home sales the past four months, January and February housing starts above the December level, and a sharp deceleration in the rate of decline in the February residential construction data. Housing won't be strong, but the elimination of a negative will be a big plus.
The fiscal stimulus package is also looming just weeks away.
The checks to consumers this year will total about $100 billion. The checks start going out the first week of May. Approximately 25% will be sent by the end of May, and another 50% in June, with the final checks going out in early July.
The impact on consumer spending will be huge. The payments are $600 for individuals and $1200 for couples, with additional payments for qualifying dependents. High income earners are excluded. The payments thus go to consumers with a high propensity to spend.
In 2001, a similar $38 billion rebate produced a fairly quick surge in personal consumption expenditures (please see the Feb. 19 Big Picture column for data).
The stock market recognizes that this fiscal stimulus package will also have a big impact. Whether it is seen in the May, June, or July data, and the degree to which it boosts second or third quarter GDP, is debatable, but it is coming.
First quarter real GDP will be up, and by the time of the report on April 30, the markets will be looking at a fiscal stimulus package that will boost second quarter GDP.
Given the looming impact of the fiscal and monetary stimulus, the obsession of journalists over the current weak economic data and talk of a possibly severe recession is alarmist.
What it All Means
We have been stating for months that the stock market would get a bounce in the spring or summer as the worst of the economic and credit fears start to fade.
The past three weeks show the start of such a move. It won't necessarily continue in a straight line, and it doesn't mean a large rally is starting. But the market is still likely to work its way higher over the next few months as the credit and economic outlooks stabilize.
The markets are getting over the exaggerated alarmist talk that was magnified in recent months with every rumor in the credit markets and every piece of weak economic data.
This welcome and logical development doesn't mean that the outlook for the stock market is bullish. It simply means that the excessive pessimism is being wrung out of stock prices.
The longer-term market outlook is constrained by the reality that earnings growth the next couple of years will be limited by a still struggling economy, and probably by declining profit margins. (This was discussed in our March 3 Big Picture column titled "Tough Times Even Without a Recession").
Still, it is nice to see that the stock market is pricing in a more rational view even as the journalists maintain the alarmist drumbeat."
--Dick Green, Briefing.com
Just remember to separate your dollars:
-Household (mortgage/rent, insurance, utilities, food, etc.)
-Investment (401K, IRAs, annuities, etc.)
-Trading (long/short, commodities, futures, options, etc.)
The market can turn on a dime and companies can turn a dime into a dollar (Adelphia, Enron, Qwest, Tyco, Worldcom, et al. with the help of Deloitte & Touche, Ernst & Young, KPMG, PricewaterhouseCoopers, etc.). That makes relying on fundamentals a fool's game.
Accounting scandals
Great article. Says all best it can. It should be an alarm for bears and these nasty short sellers, who have been dancing on the graves of great stocks buried under these conditions. These companies are being pulled up by this market direction and the damage done to the charts should heal given another quarter or so.
We are going higher with or without a recession - thats the essence of the market and SPX today.
You answered your own question in the post and you still don't understand why?
The market IS.
Thats it. That is the whole story.
It IS.
Those who are delusional see only a mirror image; they see a market that is to them delusional. Those who see the market as BS are themselves choked full of bullshit.
"A little learning is a dangerous thing." Alexander Pope (1688 - 1744).
This means that many only know enough to remain repeatedly stupid. What is crucial is that you have to know your market intimately for what it is.
Thats it. That is the whole story.
It IS.
Those who are delusional see only a mirror image; they see a market that is to them delusional. Those who see the market as BS are themselves choked full of bullshit.
"A little learning is a dangerous thing." Alexander Pope (1688 - 1744).
This means that many only know enough to remain repeatedly stupid. What is crucial is that you have to know your market intimately for what it is.
The market is upside down. Bad news gets bought and good news sold.
My swing trading is more medium term focused and the macro economic conditions are a factor.
My swing trading is more medium term focused and the macro economic conditions are a factor.
What if the guy in the grave is dead or about to die? You can dance on his grave, and he cannot do a thing
But it is immoral to dance on graves.