The Fed needs to start raising rates!

Quote from piggie2000:

Lol why would the fed prevent this? Its called a misallocation of capital. CAPITAL THATS SUPPOSED TO BE USED FOR THE ECONOMY SUCH AS BUILDING AND HIRING IS INSTEAD BEING USED IN THE STOCK MKT. WHY WOULD ANYONE USE THE MONEY FOR THERE BUSINESS WHEN THEY CAN CHASE STOCKS AND MAKE 10-30% A WEEK IN MANY STOCKS. and we're in a huge bubble compared to 2007 as earnings growth in many co's is down 30-50% yet many stocks are back to 2006 highs. a few examples are fdx,nke,utx and mmm. earnings and rev's off big yet there stocks back to 2006 prices.when you have basically bankrupt co's like aig,fnm,fre and cit leading the vol everyday it pts to a mania.WHEN YOU HAVE STOCKS NOT REACTING TO THE DOWNSIDE ON REPORT AFTER REPORT OF TERRIBLE NEWS LIKE THE CHICAGO PMI TODAY IT MEANS THE FED HAS FLOODED SO MUCH MONEY INTO THE SYSTEM ITS GIVEN A FALSE SENSE OF SECURITY THAT ONE CAN'T LOSE. THIS RALLY OFF THE BOTTOM HAS NO FUNDAMENTAL BASIS AND HAS BEEN A MONETARY EVENT. AS ALWAYS SOMETHING WILL HAPPEN TO BRING US BACK TO THE MEAN.
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very well said piggie.

And, everybody, look at the excellent p/e this market has now (sp 500 index, according to Standard and Poors themselves): 129 !!! LOL

See: http://www2.standardandpoors.com/po...ces_500/2,3,2,2,0,0,0,0,0,1,11,0,0,0,0,0.html
 
Quote from jjj1000:

very well said piggie.

And, everybody, look at the excellent p/e this market has now (sp 500 index, according to Standard and Poors themselves): 129 !!! LOL
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Lol, the market was a better deal in 2007 when it had a P/E of what, 17, and was (Dow) at 13-14k?

Of course not. Give your head a shake.

There have been plenty of periods throughout the history of the market, during recessions, that earnings have gone to zero, or even gone negative.

Did the market revive itself after those periods? Of course. And historically, those were always the best buying opportunities.

If the market was at its peak in price, after a long period of expansion, and had a P/E of 129 -- I'd be concerned that a Japan-like 20 years of stagnation would be dead ahead. But the market has already stagnated for 10 years, is 40% off of its peak, and we're amidst probably one of the worst recessions possible.

When you think of it, its amazing that there is even a P/E of 129. And with the unproductive banking sector, over time, flushed out of the economy, and the inevitable pent-up demand that's forming as things remain slow, the comeback is certain to be much stronger than ever before.
 
Quote from Martinghoul:
I disagree with the rates view. Mainly, because so far there's been no sign that the achilles' heel of the US economy, the housing mkt, has properly recovered.
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The housing market can't recover until the employment market recovers. The employment market can't recover until the stock market recovers, as no business will add capacity or make investments, if they can merely buy back their own stock on the open market at less than the cost of creating new capacity.

All roads lead to the necessity of a much higher stock market (ie: Dow 25,000) in order to re-start the economy.


If they signal that rates will be raised, guess what happens to mtge rates and the housing mkt? I agree that, in this aspect, they're truly between the rock and the hard place and it's just a decision which is the lesser evil.
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What's wrong with giving business owners some return? I think the Fed would be more effective in reviving the economy if they were to go out and monetize the debt of firms such as ExxonMobil, rather than trying to monetize housing-related debt, or bank debt. Ideally, they would just buy S&P500 index futures or the actual indicies themselves -- would be a hell of a lot more effective, dollar for dollar, than pissing away trillions trying to prop up insolvent banks.
 
pitz i'm not going to sit here and argue with you. the fallacy in your thesis is very simple. you say the mkt looks out 2-3 years and i say bullshit. if thats the case then the mkt could overlook every recession to the next peak and avoid all valleys. the other fallacy is there is no bright spots looking out 1-2 years. the consumer is broke,his home is 40% underwater, his credit cards are maxed out and his home equity lines are gone. 1990-2007 WAS BASICALLY A CREDIT ORGIE THAT CAUSED FAKE GROWTH THAT WON'T BE REPEATED. so the old 4% gdp will be 1-2% gdp which means much much lower eps growth and thus much lower p/e's. MANY STOCKS LIKE THE ONES I LISTED HAVE REROCKETED BACK NEAR ALL TIME HIGHS THUS DISCOUNTING THE RETURN OF MASSIVE GROWTH IN THE OLD CREDIT BINGE DAYS WHICH WILL NEVER HAPPEN. it truely is different this time
 
simply put the fed is not even remotely concerned with raising rates because there is an imminent deflationary tsunami ahead.

only hyperinflation kooks and hedge fund pikers think inflation is a problem when there is no indication whatsoever of anything of the sort. funds have been buying anything but USD in pre-pre-pre-pre-preparation of inflation. when they get wrong footed AGAIN it's going to make the deflationary unwind that much worse.
 
Quote from piggie2000:

pitz i'm not going to sit here and argue with you. the fallacy in your thesis is very simple. you say the mkt looks out 2-3 years and i say bullshit. if thats the case then the mkt could overlook every recession to the next peak and avoid all valleys. the other fallacy is there is no bright spots looking out 1-2 years.
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If the dollar devalued by 70% in the next few years -- wouldn't that increase the equity valuation of every stock on the stock market (except for the banks)? Maybe that's what the market is predicting.


the consumer is broke,his home is 40% underwater, his credit cards are maxed out and his home equity lines are gone.
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True, but businesses barely have any debt (and tech firms have crazy amounts of cash on the books), workers are willing to work for anything they can get, the US has an absolutely massive export market awaiting it (when foreign US T-bond holders start cashing in) to drive production and profitability, and the elimination of the financial industry will result in capital being deployed more efficiently throughout the economy.


1990-2007 WAS BASICALLY A CREDIT ORGIE THAT CAUSED FAKE GROWTH THAT WON'T BE REPEATED. so the old 4% gdp will be 1-2% gdp
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Ummm, if fake growth was at 4%, once the financial industry is purged out of existence, then growth should be stronger and more sustainable, the result of having a greater share of the economy put towards productive purposes, than would otherwise occur. The financial industry is a drag on, not a driver of, the economy.

which means much much lower eps growth and thus much lower p/e's. MANY STOCKS LIKE THE ONES I LISTED HAVE REROCKETED BACK NEAR ALL TIME HIGHS THUS DISCOUNTING THE RETURN OF MASSIVE GROWTH IN THE OLD CREDIT BINGE DAYS WHICH WILL NEVER HAPPEN. it truely is different this time
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Well, if your scenario pans out, and the stock market crashes, then business owners will essentially be forced to send their businesses into liquidation, to collect whatever they can, employment will plummet, and the economy will never recover. Chances are, you'll need to have a gun nearby. So either way, you lose.
 
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