Doom and gloom update

[GMZ]

Its me again with another dose of reality. I wish I had better news. It appears that the mythical "green shoots" have wilted.

Consumer credit is "awful"

BLS Report from Market Ticker

-U3 unemployment 10.2%
-U6 unemployment 17.5% (this number is closest to the measure they used during the GD)

Fannie Mae has lost $100 billion in the last 6 qtrs, image from Bloomberg via Zero Hedge. Now they want 15 billion more! Their delinquent rate has jumped 300% Foreclosures spreading

More from Market Ticker about the stress tests. It seems if unemployment gets any worse we are in deep uncharted waters.

This article gives somewhat of an idea of the huge shadow inventory that is clouding over the housing market.

It seems the FHA is in a bit of trouble too.

Bankruptcy rate matches divorce rate.

Small business bankruptcy filings up 44%

What is a "saved" job? Whatever it is it costs $323,000 each, I guess they were overstated too.

Another CIT bailout?

Lets look outside the box. And a look from inside the box. More from inside

Commercial Real Estate looks poised for a crash

As if California wasnt bad enough, they go and take 2 years worth of taxes now, terrible.

As I surmised cash for clunkers was a huge rip off

It seems some New Yorkers are voting with their feet and leaving.

Interesting read here for a historical perspective. It all sounds so familiar doesnt it?

Well thats about all I can stand for right now. I wont even go into the rampant corruption Im seeing in this admin, Id like to keep these posts purely economic in nature, no politics.

 

[Thai]

Remind me not to read your post on this topic while cleaning my guns....

 

[jdmidwest]

365 and things are worse than ever. Where is the Hope to go with all the Change that has been done in the last 365 days since the election?

It is really starting to hit us in the Midwest now.

 

[ToyTech99]

All of this, yet the stock market is back up to 10K. Sure, we hit that for the first time many years ago, but it dipped MUCH lower during this recession and the pessimists predicted that we would see DOW 4,000 before our "total economic collapse".

Sorry, but that's not gonna happen.

 

[Scoobs]

All of this, yet the stock market is back up to 10K. Sure, we hit that for the first time many years ago, but it dipped MUCH lower during this recession and the pessimists predicted that we would see DOW 4,000 before our "total economic collapse".

Sorry, but that's not gonna happen.

Not to rain on your parade but the Dow at 10,000 today is only 30 stocks. The Dow first crossed 10,000 in 1999. It's gone back and forth over the line many times in between. It might be at 10,000 in 2019. On its own it's just a number.

 

[ToyTech99]

Not to rain on your parade but the Dow at 10,000 today is only 30 stocks. The Dow first crossed 10,000 in 1999. It's gone back and forth over the line many times in between. It might be at 10,000 in 2019. On its own it's just a number.

I'm not sure if you understand the markets or not, but the Dow is a representation of the overall stock market, using blue-chip stocks in it's average. It doesn't matter how many individual listings are in the Dow. It's an average and it's used by everyone to gauge the overall stock market. It's also considered a leading indicator of the economy in general, so it means everything if it is rising or falling. And the fact of the matter is that it has been rising steadily for quite a while now and recently hit the 10K mark after dipping much below that due to the recession. The point here is that many of the doom & gloom crowd tend to report bad news without even mentioning good news about the economy. Keep in mind that the Dow isn't the say-all or end-all to the state of the economy, but it is considered a leading indicator, so it is important.

 

[ToyTech99]

It's gone back and forth over the line many times in between. It might be at 10,000 in 2019. On its own it's just a number.

Forgot to say----

No, it has not gone "back and forth" over the line many times. Because the stock market always varies, of course it will go over & under the 10K mark as it is approaching the 10K mark, as that's a normal part of the cycle. But as growth continued it surpassed 10K and stayed there. In fact, the Dow remained above 10K from the end of 2003 all the way until the middle of 2008 when the recession caused it to drop quickly. So that's nearly 5 years of sustaining a Dow 10K (and higher). Look it up on Google Finance and you can see a graphical representation of the Dow over the years.

 

[ToyTech99]

Here you go..... copied a Dow graph for you to see.

 

[GMZ]

I'm not sure if you understand the markets or not, but the Dow is a representation of the overall stock market, using blue-chip stocks in it's average. It doesn't matter how many individual listings are in the Dow. It's an average and it's used by everyone to gauge the overall stock market. It's also considered a leading indicator of the economy in general, so it means everything if it is rising or falling. And the fact of the matter is that it has been rising steadily for quite a while now and recently hit the 10K mark after dipping much below that due to the recession. The point here is that many of the doom & gloom crowd tend to report bad news without even mentioning good news about the economy. Keep in mind that the Dow isn't the say-all or end-all to the state of the economy, but it is considered a leading indicator, so it is important.

Forgot to say----

No, it has not gone "back and forth" over the line many times. Because the stock market always varies, of course it will go over & under the 10K mark as it is approaching the 10K mark, as that's a normal part of the cycle. But as growth continued it surpassed 10K and stayed there. In fact, the Dow remained above 10K from the end of 2003 all the way until the middle of 2008 when the recession caused it to drop quickly. So that's nearly 5 years of sustaining a Dow 10K (and higher). Look it up on Google Finance and you can see a graphical representation of the Dow over the years.

ToyTech, ToyTech, ToyTech. I like you, you make me work to validate my positions.

A rising stock market a recovery does not make.

Here is a listing of the DOW components. Dont you find it funny that when a stock is doing badly it is delisted and replaced with something not as bad? Citi and GM were/are displaying the fundamental weakness present in our economy yet they were delisted in favor of something that was not performing so badly. Kraft foods was it?

Lets just go along with the position that on its face the market is rising. What difference does that make? About half of all trades are program trading done by large banks and institutional investors. Or to put it in a historical context after the 29 crash they had a 50% retracement of the losses, a 50% retracement would put us at...you guessed it DOW 10,000. So Im not really euphoric about the market thus far. Also with a P/E of 137 I see nothing of sound, sustainable growth. The only thing I see is a stock bubble with all the "liquidity" that has been created (from thin air mind you). The last time they were that high was after the dot com bust and they were only 47 (!!!) at that time. What does that tell you about this rally?

-Incomes are flat to slightly negative.
-Consumer credit is negative a full 50% beyond expectations. (remember the consumer is 72% of the economy!)
-Unemployment is up (U6 numbers are looking like the 30's!).
-Oil prices are up, even though demand remains at multi year lows.
-Tax revenues are down at both federal and state levels, while expenditures have skyrocketed.
-Unemployment benefits have been extended (why? if were just around the corner)
-1st time home buyer tax credit has been extended (why? if were just around the corner)

The stimulus was just a shot in the arm of a terminal patient. I dont know where the DOW will end up ultimately, but I do think it will be equal to 1oz of gold. Which coincidentally is hitting new nominal highs daily. 2000? 3000?

I really wish that you and all the stock pumpers on CNBC would be right and that real, sustainable growth will be here. Id like to use my money to open up a business doing something I love instead of saving for the rainy day (or year (s) that will happen thanks to the govt and their foolhardy attempts at controlling an abstract entity ("The Market").

 

[ToyTech99]

A rising stock market a recovery does not make.

.

I never said that.... I never even implied that. I'm simply saying that you (or the other doom & gloomers) shouldn't just report the negative stuff. The fact of the matter is that plenty of people have made plenty of money in this most recent rise in stock prices. I try to avoid playing the market like a gambling addiction, but I couldn't resist investing some money a few months ago when things looked bad. But unlike most people, I like to take earnings out when I can and ride it out with just the original investment, to minimize risk. No, I'm not a day trader, but I do make money in the market consistently.

As for the economy, yes, the Dow is a leading indicator. So is the GDP. But so what? Like I said, leading indicators aren't the say-all or end-all to the end of the recession. You might have missed that part of my last post.

 

[GMZ]

I never said that.... I never even implied that. I'm simply saying that you (or the other doom & gloomers) shouldn't just report the negative stuff. The fact of the matter is that plenty of people have made plenty of money in this most recent rise in stock prices. I try to avoid playing the market like a gambling addiction, but I couldn't resist investing some money a few months ago when things looked bad. But unlike most people, I like to take earnings out when I can and ride it out with just the original investment, to minimize risk. No, I'm not a day trader, but I do make money in the market consistently.

As for the economy, yes, the Dow is a leading indicator. So is the GDP. But so what? Like I said, leading indicators aren't the say-all or end-all to the end of the recession. You might have missed that part of my last post.

No you never said that, and I never said you did, you through it out there as a positive. But after some dissection it seems that the market rally is a bubble waiting to be popped. I did agree that the market was indeed rising, but after some digging, its rising for wholly the wrong reasons. While you can play the bubble and make money it is fundamentally unhealthy and negative for the economy as a whole to have speculative bubbles. This one will pop just like the others did. There is another bubble which is far more ominous and that is the bubble in US govt debt. I really dont want to be around when that one pops.

Take this graph and commentary by Karl Denninger for example:

The turn upward in this chart was a near-exact correlation with the end of the recession in the early part of the decade. Not only are we dramatically worse now, we haven't even begun to turn, and those who have exited the labor force continues to skyrocket.

Like I said, I dont really see any news to be positive about. The stock market is rising. Big deal. Its the same way when the housing market was going up, if you have a house with a solid equity position already its good but if youre that first time home buyer that wants to put 20% and have a 36% debt:income ratio to ensure fiscal soundness and responsibility its hell. We also see that the speculative housing bubble popped with disastrous consequences.

 

[ToyTech99]

No you never said that, and I never said you did, you through it out there as a positive.

It is a positive. And BTW, you said "I like you, you make me work to validate my positions", which is insinuating that my prior post was suggesting that the rise in the market means the economy is recovering.

You know, the problem with people like you who continually talk about the doom & gloom is that you're spreading bad news that may become a self-fulfilling prophecy. The more all of this negativity spreads throughout our society, the more likely that it may actually have an effect because people who don't know any better become convinced that we're in for a great depression. These guys who are popular on YouTube (Vision Victory, Man of Truth, etc...) may think of themselves as some sort of pseudo-saviors of society, but in reality they are doing much more harm than good. It's just a shame that they themselves don't see that. Instead, they choose to see themselves as heros, informing the common man of the impending doom to come. I'm sure they mean well, but they obviously aren't aware of how they are actually contributing to the problem. It's a good thing they only have a small following, just like the Ron Paul supporters.

 

[RonMAIDEN]

I wasn't too fond of the TARP program for the banks and while we still will be most likely saddled with $180 billion (est) bill it's much better than the projected $400 bil we put out but as far as the stimulus program for Colorado I see it at work with all the construction on our roads and this is just within a mile radius of my house so at least I can see some the stimulus at work and our housing market has seen a steady increase over the last few months but we still have a long ways to go.

I'm an optimist since I simply can't be so negative when life is too short to be a doom and gloom person.

 

[ToyTech99]

I'm an optimist since I simply can't be so negative when life is too short to be a doom and gloom person.

I agree. The problem is that most "doom & gloom" people feel that they are being realists.

 

[GMZ]

It is a positive. And BTW, you said "I like you, you make me work to validate my positions", which is insinuating that my prior post was suggesting that the rise in the market means the economy is recovering.

You know, the problem with people like you who continually talk about the doom & gloom is that you're spreading bad news that may become a self-fulfilling prophecy. The more all of this negativity spreads throughout our society, the more likely that it may actually have an effect because people who don't know any better become convinced that we're in for a great depression. These guys who are popular on YouTube (Vision Victory, Man of Truth, etc...) may think of themselves as some sort of pseudo-saviors of society, but in reality they are doing much more harm than good. It's just a shame that they themselves don't see that. Instead, they choose to see themselves as heros, informing the common man of the impending doom to come. I'm sure they mean well, but they obviously aren't aware of how they are actually contributing to the problem. It's a good thing they only have a small following, just like the Ron Paul supporters.

I wasnt insinuating anything, you dont take my posts at face value. You counter with your viewpoints, opinions, and data which in turn forces me to throw up references, data, official stats, and mainstream sources. Its good exercise

As to the negativity, if you look back at my posts I have not been calling for the sky to fall down (not yet anyway). I am simply offering a contrary opinion to the what I feel are overly optimistic viewpoint that seems to be the norm. I dont feel I over exaggerate and I try to back up what I write with data. Im not telling people to sell their house, cash in their 401K and buy gold and an RV. Just putting out a little info they probably wont get from the TV or the WSJ.

I dont see how anything will self fulfill??? If people agree with my opinion how would that induce anything negative at all? If anything it would be beneficial. If they think that things might get worse they might do something to prepare so then if it does get worse they are covered, and if things get better than they have a little extra. Is that bad?

 

[techno]

Yoda says..

A rising stock market a recovery does not make.

Sorry, I know your trying to have a semi-serious chat here, but that phrasing...

As far as the economy goes, my employer is lifting temporary economic measures that have been in place over the last 18 months as they are clearly seeing a turn for the better in sales. Our market range covers a broad spectrum of global industries and we have definitely seen the bottom of the economic downturn as it effects us. We're even bringing back workers that were laid off. It is not doom and gloom here thankfully.

 

[ToyTech99]

Is that bad?

Yes, it is bad. Think about it---if more people keep spreading this type of "news" and "opinions" and people start to buy into it, what do you think could possibly happen? When it comes to the economy, the action of the general public can have a tremendous effect. The problem here is that the majority of U.S. citizens have a really limited knowledge of our economy and how it works, so it doesn't take much to convince someone that we're headed for the biggest economic disaster ever. And of course if you do manage to convince enough people, what is the end result? How could that be good for the economy?

We're living in the information age, so people have access to all kinds of news/opinions/data/facts etc... My problem isn't someone reporting bad news or even putting a negative spin on news. I just think people should be more fair & balanced. And yes, all of this negativity can definitely cause a self-fulfilling prophecy because of the fact that the economy in general is directly affected by the actions of society and the way they choose to spend or not spend their money. I'm surprised you won't acknowledge that...

 

[ToyTech99]

Yoda says..

Sorry, I know your trying to have a semi-serious chat here, but that phrasing...

As far as the economy goes, my employer is lifting temporary economic measures that have been in place over the last 18 months as they are clearly seeing a turn for the better in sales. Our market range covers a broad spectrum of global industries and we have definitely seen the bottom of the economic downturn as it effects us. We're even bringing back workers that were laid off. It is not doom and gloom here thankfully.

I think we should start to see similar trends eventually. Unfortunately, unemployment is always the last thing to recover during an extended recession. Employers pretty much have to be convinced that we are recovering before they'll hire or rehire workers.

 

[alaskaman]

Remind me not to read your post on this topic while cleaning my guns....

That's funny Thai.:bravo:

 

[GMZ]

Yes, it is bad. Think about it---if more people keep spreading this type of "news" and "opinions" and people start to buy into it, what do you think could possibly happen? When it comes to the economy, the action of the general public can have a tremendous effect. The problem here is that the majority of U.S. citizens have a really limited knowledge of our economy and how it works, so it doesn't take much to convince someone that we're headed for the biggest economic disaster ever. And of course if you do manage to convince enough people, what is the end result? How could that be good for the economy?

We're living in the information age, so people have access to all kinds of news/opinions/data/facts etc... My problem isn't someone reporting bad news or even putting a negative spin on news. I just think people should be more fair & balanced. And yes, all of this negativity can definitely cause a self-fulfilling prophecy because of the fact that the economy in general is directly affected by the actions of society and the way they choose to spend or not spend their money. I'm surprised you won't acknowledge that...

Id like to start by replying to the bold text. Since the consumer is now 72% of the economy due to declines in other sectors, if the consumer isnt spenidng there can be no recovery, can we agree on that? Since the savings rate has gone from a negative up to 7% and now down to 3-4% IIRC, GDP will take a hit right off the top just from the savings rate. Is an increasing savings rate bad? Should we go out and spend to do our part to help the economy? The savings rate does include debt payments which IMO alters the results somewhat as the savings rate is not pure savings but disposable income being put into both savings and debt repayment.

I hate to break it to you but there is probably 2 negatives for every 1 positive out there right now. Even the type of current recession is different. Every post war recession was supply driven, this one has been credit driven in that our entire economy (due to low interest rates, easy terms, and vast securitization) was growing based on an ever exapnding supply of credit. Well it stopped expanding, and it wont be expanding like it was for a long time if ever. Loans were being made, bundled into securities, given AAA ratings, then sold for a nice sum+fees thus offloading risk and with it-the incentive for sound underwriting. Everybody was buying these securities: banks, central banks, city and state govt, pensions, hedge funds, insurance companies. They contained everything from sub prime mortgages, to credit card debt, student loans, auto loans, signature loans. It was like a huge game of musical chairs with more than enough chairs for everyone. Well now there are only a few chairs in front of the teachers (the fed) desk.

It wont return, ever. The credit driven consumer based economy is dead. I dont live in a bunker and eat freeze dried food, but I do set a little of everything aside.

I had a nice time cleaning my new G26 after an awesome range day yesterday.