Horrible recession: Why are steel stocks breaking out?

[BullAlert]

Too much trading and not enough investing going on here.

As others have pointed out, the BRIC nations' demand for steel is part of the equation. A falling dollar makes US steel even cheaper. Another reason would be domestic needs for steel for infrastructure: the consumer and the homeowner may be dead here at home, but the government's need for roads, schools and bridges--as well as their ability to tax for these things--is alive and well.

Finally, cyclical stocks will rebound several months before the economy in general because of investors' greed (mine included). Everyone wants to get in first and get out first. This is why homebuilders have done so well lately. Hope that helps.

 

[dman666]

Quote from makloda:

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.

What doesn't fit with what? Do you have a textbook explaining to you exactly what should happen in each type of market? Let me guess, it has each stock in it and where they will be in 5, 10 and 20 years out. Can I get a copy? And how does the bond market tell the stock market it is wrong or vice versa? Makes no sense whatsoever.

Quote from robbie380:

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

And please tell me how the market gets it wrong pretty often? Gets it wrong from what? Your perception of what prices should be? Whatever market you look at is only a collection of prices. How can they be wrong? A trader is the only one that can get it wrong because he is either making money (being right unless your objective is to lose money) or losing money (being wrong).

 

[Landis82]

Quote from dman666:

And please tell me how the market gets it wrong pretty often? Gets it wrong from what? Your perception of what prices should be? Whatever market you look at is only a collection of prices. How can they be wrong? A trader is the only one that can get it wrong because he is either making money (being right unless your objective is to lose money) or losing money (being wrong).

You ought to tell this to the resident ET economic guru, "S2007S"
For him, the market is always wrong and the sky is falling every single day of the year . . .

 

[makloda]

Quote from dman666:
What doesn't fit with what market?

Re-read what I wrote. Take a reading comprehension course if needed.

 

[dman666]

Quote from makloda:

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.

Ok, I quoted and re-read again. What did I say that doesn't show that I comprehend what you wrote. I said "What doesn't fit with what?". That is because you say "This doesn't fit with cyclical stocks hitting new highs like clockwork.". You are assuming the stock market (specifically cyclical stocks) have a correlation with the bond market. That's why I'm asking "What doesn't fit with what?", because you assume that if there was a correlation in the past market relationship that there has to be a correlation in the future market relationship. Oh, and thanks for telling us with no doubt that financial stocks have been ripped to shreds, it's news to me!

 

[robbie380]

Quote from dman666:

And please tell me how the market gets it wrong pretty often? Gets it wrong from what? Your perception of what prices should be? Whatever market you look at is only a collection of prices. How can they be wrong? A trader is the only one that can get it wrong because he is either making money (being right unless your objective is to lose money) or losing money (being wrong).

well if you want a really really obvious answer just look at the massive risk pricing crisis that got us to the point we are at today. would you say the "market" got it right in that case by waaay over leveraging on flawed risk formulas?

or another one right off the top of my head would be the DCR and UCR trades. both are trading far from their NAVs even though the termination trigger for that trust was hit today with oil being over $111 for 3 days in a row.

so yes the "market" gets stuff wrong pretty often. if you don't see the times when it does then maybe you should dig a little deeper.

 

[makloda]

Quote from dman666:
What did I say that doesn't show that I comprehend what you wrote.

What you said had nothing to do with the point that I made. If you have a point to make, make it. Don't waste my time.

 

[robbie380]

Quote from makloda:

Re-read what I wrote. Take a reading comprehension course if needed.

maybe you should have followed your own advice before you started this thread. again...please show me links that state we are in a massive global recession that is as bad as the great depression.

 

[makloda]

Quote from dman666:
You are assuming the stock market (specifically cyclical stocks) have a correlation with the bond market. That's why I'm asking "What doesn't fit with what?", because you assume that if there was a correlation in the past market relationship that there has to be a correlation in the future market relationship.

How is a 10y annualized real growth of 1.6% a correlation? It is an economic projection implied by supply/demand in the bond market.

I am not here to argue that either cyclical equity or bond prices are "wrong". You're pissing up the wrong tree. My point is that the economic projections of these two markets are seemingly different. Something's gotta give.

 

[HedgefundTrader2]

Quote from makloda:

Somehow these charts don't make much sense in a 'rapid global economic implosion' and 'worst depression since 1933' scenario now do they. Does the equity market have got it wrong again as the bond markets are telling a very different story

Instead of trading these charts and making money, you are showing them as if they are some symptom of an incurable disease/

Get out of that doom and gloom. I traded US steel its was up 7-8 today.

Enough said. Go long or get crushed.