Horrible recession: Why are steel stocks breaking out?

[libertad]

Excellent Commentary...........

There is a big fleet change coming for more efficient vehicles....

 

[dman666]

Quote from makloda:

Does the equity market have got it wrong again as the bond markets are telling a very different story

[

The equity market NEVER has it wrong, it's only YOU that has it either right or wrong.

 

[makloda]

Quote from dman666:
The equity market NEVER has it wrong

If the equity markets and the bond markets are telling different stories then one will likely end up having it wrong.

 

[MrDODGE]

Quote from stock_trad3r:

Obama is a raving liberal even more so than Clinton and possibly a Marxist. But if either of them is elected president the market will probably tank.

I agree

 

[risktaker]

Consensus seems to indicate this is an "asset recession" as opposed to an "industrial recession". Industrial meaning of the usual variety as in the past in terms of slowing economic output/contraction in employment, etc. Again, this "recession" seems more of a financial/asset class recession. Of course it can grow into other areas but so far the Fed is trying not to let it expand. We'll see.

 

[robbie380]

Quote from dman666:

The equity market NEVER has it wrong, it's only YOU that has it either right or wrong.

lol...the "market" is wrong pretty often.

 

[stock_trad3r]

Quote from risktaker:

Consensus seems to indicate this is an "asset recession" as opposed to an "industrial recession". Industrial meaning of the usual variety as in the past in terms of slowing economic output/contraction in employment, etc. Again, this "recession" seems more of a financial/asset class recession. Of course it can grow into other areas but so far the Fed is trying not to let it expand. We'll see.

Agree. With still so many strong sectors and stocks this is hardly recessison at all.

 

[Cutten]

Quote from makloda:

I am not here to prove anything. It is not my hypothesis, it's the bond markets' hypothesis. I am simply pointing out that there are different perceptions of where the economy is going in some cyclical equity sectors such as steel and the bond markets. Both camps can't be right at the same time. Something's gotta give.

Why can't both be right at the same time? It's pretty easy to imagine a situation where the steel industry booms based on BRIC demand whilst the US economy is in recession due to the deflation of a real estate and credit bubble. The latter would be disinflationary and good for bonds, although it has already been priced in to a large extent.

 

[Cutten]

Quote from makloda:

If the equity markets and the bond markets are telling different stories then one will likely end up having it wrong.

How are they telling different stories? Equities are down significantly in the last 6-9 months, bonds are up significantly. Both say that the economy is in trouble.

If the S&P was breaking to new highs whilst bonds soared and yields went to 3% on the 10 year, then you would have a point. But that's not what's happening.

 

[makloda]

Quote from Cutten:
Equities are down significantly in the last 6-9 months, bonds are up significantly.

I was specifically speaking about cyclical stocks. There is not doubt financial stocks have been ripped to shreds. The bond market has and still does price in anemic real growth over the next 10 years (right now ~1.6% annualized). This doesn't fit with cyclical stocks hitting new highs like clockwork.