WHY THIS ISN’T A NEW SECULAR BULL MARKET
6 January 2010 by Cullen Roche
5 Comments
Tyler over at Zero Hedge has an excellent chart from David Rosenberg at Gluskin Sheff comparing the secular bull in 1982 with the current environment. It clearly shows why we’re not in a new bull market. Though I agree with Rosenberg that the market remains in a secular bear, the power of money printing is likely to keep showering markets with kool-aid. Combined with very low earnings expectations and Mr. Rosenberg is likely wrong in his timing once again.
Click for larger image
Source: Gluskin Sheff
He should also add:
(a) national liabilities
(b) # graduate students in science, engineering etc. per annum
(c) % of people whose first car was brand new; % of people who bought homes at 25
…
very grim …
He says he expanded on what I sent him, but I still think my original was better. I’ll email it to you.
And by the way, we also agree that continued money-printing likely means that the sugar high continues for a while.
TPC, I am not sure I agree that the metrics make sense in this environment compared to 82. Back then we didn’t have vast sums of money from overseas (from the commodity countries), we didn’t trade commodities much (keeping the price high), we didn’t have many hedge funds (with leverage), the investment banks weren’t hedge funds in disguise, companies were not nearly as efficient about managing a lean supply chain (outsourcing has eliminated a huge % cost base), temporary labor wasn’t as efficiently used (Amazon uses 7000 temps during the holidays and dumps them afterwards), we didn’t have vast amounts of technology (automation), we didn’t leverage the internet, nobody had cell phones…I could write all night. What most people can’t believe (myself included, mostly) is that 99% of all traders are momentum traders (a few like John Paulson actually make strategic bets, but of course they can afford it), and prices go up because they go up, it’s that simple.
Great thoughts as always Edna. It’s hard to imagine that the United States is about to experience a great bull market with all of the problems we have. And though we’re moving away from a US centric global economy it’s still highly dependent on the US.
It’s gonna take years to overcome all of the massive problems we have. And money printing is not the answer that everyone thinks it is.
Of course, it never makes sense to compare one period to another (as I often say), but even with all the vast advances we’ve made in the global economy I still find it hard to believe that we’re in a new bull with all of the issues in US.