Comments on: IS THIS A REPEAT OF 1999? http://pragcap.com/is-this-a-repeat-of-1999 Wed, 17 Mar 2010 00:45:58 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Tom http://pragcap.com/is-this-a-repeat-of-1999#comment-7773 Tom Sat, 24 Oct 2009 12:49:45 +0000 http://pragcap.com/?p=11377#comment-7773 I think we're seeing a change in investor focus and expectations. My guess is that we've seen most or all of the bounce from the current earnings season and that investor focus will change from earnings to economic news. With a positive GDP on 10/29, I'm guessing expectations have largely changed from "less bad" to "better" - i.e., investors will be looking for confirmation that the rebound in the economy is continuing, which to me implies improving retail sails, housing starts and new home sales and sustained or perhaps improving positve new sales in the manufacturing ISM. I'm guessing that's where the risk lies now - i.e., a lack of "better" in the indicators. Re. a new low next year, I think a double dip would be very painful, possibly leading to a new low. It seems likely to me that: consumer spending has been supported by a dramatic improvement in equities and consumers would cut back again if the market falls; if consumer spending pulls back there will be a new round of layoffs; investors will switch from long to short exacerbating the decline. In other words, the negative feedback loop could be reignited. I have no idea if we'll see a double dip next year. For the long term, I think, as some have suggested, that there can't be sustained growth without consumer income growth. There could be a new asset bubble temporarily inflating consumer wealth or yet another surge in consumer debt, but neither seems very likely to me. I think it's all about jobs. The challenge to income growth - high unemployment and global competition are putting pressure on wages and real income. Low or no real income growth probably translates to low or no real growth in the economy (at least in "the long run"). Of course, making money in the market is all about timing, and being correct in "the long run" is generally not all that helpful. So, for now I'll be looking for confirmation from the economic indicators that the expansion is "expanding" or atleast continuing at a steady pace (i.e., slowing growth is probably not a good thing). I think we’re seeing a change in investor focus and expectations. My guess is that we’ve seen most or all of the bounce from the current earnings season and that investor focus will change from earnings to economic news. With a positive GDP on 10/29, I’m guessing expectations have largely changed from “less bad” to “better” – i.e., investors will be looking for confirmation that the rebound in the economy is continuing, which to me implies improving retail sails, housing starts and new home sales and sustained or perhaps improving positve new sales in the manufacturing ISM. I’m guessing that’s where the risk lies now – i.e., a lack of “better” in the indicators.

Re. a new low next year, I think a double dip would be very painful, possibly leading to a new low. It seems likely to me that: consumer spending has been supported by a dramatic improvement in equities and consumers would cut back again if the market falls; if consumer spending pulls back there will be a new round of layoffs; investors will switch from long to short exacerbating the decline. In other words, the negative feedback loop could be reignited.

I have no idea if we’ll see a double dip next year. For the long term, I think, as some have suggested, that there can’t be sustained growth without consumer income growth. There could be a new asset bubble temporarily inflating consumer wealth or yet another surge in consumer debt, but neither seems very likely to me. I think it’s all about jobs. The challenge to income growth – high unemployment and global competition are putting pressure on wages and real income. Low or no real income growth probably translates to low or no real growth in the economy (at least in “the long run”).

Of course, making money in the market is all about timing, and being correct in “the long run” is generally not all that helpful. So, for now I’ll be looking for confirmation from the economic indicators that the expansion is “expanding” or atleast continuing at a steady pace (i.e., slowing growth is probably not a good thing).

]]> By: TPC http://pragcap.com/is-this-a-repeat-of-1999#comment-7733 TPC Fri, 23 Oct 2009 17:08:05 +0000 http://pragcap.com/?p=11377#comment-7733 Saut is really clear about his near term bullish call. Id on't know how you're misreading that.... Saut is really clear about his near term bullish call. Id on’t know how you’re misreading that….

]]> By: TPC http://pragcap.com/is-this-a-repeat-of-1999#comment-7732 TPC Fri, 23 Oct 2009 17:00:49 +0000 http://pragcap.com/?p=11377#comment-7732 His near-term call is VERY clear. He is bullish into the end of the year. When we get to the new year we'll re-evaluate his stance. I don't know where the confusion is regarding his stance. His near-term call is VERY clear. He is bullish into the end of the year. When we get to the new year we’ll re-evaluate his stance. I don’t know where the confusion is regarding his stance.

]]> By: Yow http://pragcap.com/is-this-a-repeat-of-1999#comment-7730 Yow Fri, 23 Oct 2009 16:59:25 +0000 http://pragcap.com/?p=11377#comment-7730 sorry I meant Rob not James. sorry I meant Rob not James.

]]> By: Yow http://pragcap.com/is-this-a-repeat-of-1999#comment-7729 Yow Fri, 23 Oct 2009 16:58:57 +0000 http://pragcap.com/?p=11377#comment-7729 as long as you don't put a time line out there you can impress all the folks, some of the time. Or some of the folks, all of the time. Look at me, I'm a pundit The market will one day go down The market will one day go up As long as I'm vague and don't put time lines James can claim I'm really smart. as long as you don’t put a time line out there you can impress all the folks, some of the time. Or some of the folks, all of the time.

Look at me, I’m a pundit

The market will one day go down
The market will one day go up

As long as I’m vague and don’t put time lines James can claim I’m really smart.

]]> By: Yow http://pragcap.com/is-this-a-repeat-of-1999#comment-7728 Yow Fri, 23 Oct 2009 16:57:34 +0000 http://pragcap.com/?p=11377#comment-7728 Great! He now has his a$$ covered either way - either up or crash! And TPC can come and cheer him for his great call. Yippee! Great! He now has his a$$ covered either way – either up or crash! And TPC can come and cheer him for his great call. Yippee!

]]> By: James http://pragcap.com/is-this-a-repeat-of-1999#comment-7723 James Fri, 23 Oct 2009 15:33:15 +0000 http://pragcap.com/?p=11377#comment-7723 I still wonder if short blood is going to be used as fuel to propel this market to 1200 S&P. Everytime you throw a short a bone a herd runs and mauls each other to get it...A little too eager for that bone and it is amazing there is such a huge herd left. I am bearish myself, but haven't we seen this set up happen almost everytime...The fuel for the rally is decreasing but that doesn't mean the rally is done yet. I still wonder if short blood is going to be used as fuel to propel this market to 1200 S&P. Everytime you throw a short a bone a herd runs and mauls each other to get it…A little too eager for that bone and it is amazing there is such a huge herd left. I am bearish myself, but haven’t we seen this set up happen almost everytime…The fuel for the rally is decreasing but that doesn’t mean the rally is done yet.

]]> By: TPC http://pragcap.com/is-this-a-repeat-of-1999#comment-7722 TPC Fri, 23 Oct 2009 15:30:51 +0000 http://pragcap.com/?p=11377#comment-7722 Just trying to be prudent. I never expect to catch all the right moves, but I do hope to miss the catastrophic downside ones. Thus far I've been fortunate in my career. Thanks for the ECRI update. Just trying to be prudent. I never expect to catch all the right moves, but I do hope to miss the catastrophic downside ones. Thus far I’ve been fortunate in my career.

Thanks for the ECRI update.

]]> By: Henry http://pragcap.com/is-this-a-repeat-of-1999#comment-7720 Henry Fri, 23 Oct 2009 15:23:51 +0000 http://pragcap.com/?p=11377#comment-7720 Look like the bears are out in force. MSFT earning is good: check AMZN earning is good: check existing home sales up: check now let sell :) Very dangerous time to be long Look like the bears are out in force.
MSFT earning is good: check
AMZN earning is good: check
existing home sales up: check
now let sell :)
Very dangerous time to be long

]]> By: van http://pragcap.com/is-this-a-repeat-of-1999#comment-7719 van Fri, 23 Oct 2009 15:14:04 +0000 http://pragcap.com/?p=11377#comment-7719 I liked your 'you've got to know when to fold em call', if you're not having second thoughts about selling, you're not selling right. Note the BKX, XBD and TRN today after 'blowout EPS news'; by the way the latest ECRI looks flat: http://www.businesscycle.com/news/press/1602/ I liked your ‘you’ve got to know when to fold em call’, if you’re not having second thoughts about selling, you’re not selling right. Note the BKX, XBD and TRN today after ‘blowout EPS news’; by the way the latest ECRI looks flat:

http://www.businesscycle.com/news/press/1602/

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