Market view and possible direction

[ModE98]

May THE FORCE be with you, fellow Jedi! The up side would be nice indeed.

[ModE98]

WOW! The French and Greek election results may make the market direction very moot this week. A socialist result in France seems to counter the dangerously high sovereign debt the EU was trying to clean up. A return to government spending and socialist economic policies may create problems that cause inter-european political turmoil between a fiscal conservative Germany and a new Socialist party in France (more goverment jobs and spending). Ugh!

It appears the idea that Socialism was on the decline just got a wake up call. If the market anticipates some problems ahead, our current minor downtrend may accelerate. We shall see what develops.

[Aman A.K.A. Ahamburger]

Interesting that you bring that up Mr. Mod. I was thinking about this the other day, I'm quoting it only so you know I'm not B.Sing ya Sir. It's on a thread on IP.

May 3, 2012 0:42:53 GMT -5 Aman A.K.A. Ahamburger said:

Germany had to high of expectations from their fellow EU members when they all got together in the 90's, all this austerity in Europe was never going to work as fast as Merkel wanted it to. It's going to take the EU twice as long to work out their debt issues as anyone else, even Japan, and the only way that Europe will be saved is with a eurobond.

The EU needs banking and they really want Russia, Turkey, Lebanon ect to keep issuing those Euro denominated bonds, and to save the EU, Europe will most likely issue Eurobonds backed by the EFSF and ESM to back up their fiscal pact. Then slowly start unwind their massive public debts over decades, instead of years; plus there will be a little bit of debt reduction mixed in as well I would imagine..

Japan to forgive Myanmar debts, restart loans
www.worldbulletin.net/?aType=haber&ArticleID=88857

Why euro bonds may be the only way out of crisis
www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/why-euro-bonds-may-be-the-only-way-out-of-crisis/article2410743/

[ModE98]

Off to another bad start for longs today. It appears we may have a bit further to fall. Just cannot see any decent economic news developing near term. Hope it stays mild.

Will just sit and ride this out, long term, as my rose-colored glasses see much better days coming in the future.

[The Virginian]

Patience Grasshopper ;D

[Aman A.K.A. Ahamburger]

Mr. Mod I try to keep one of these on, I've always got a spare if you need one....




Some good news for ya Mr. Mod... Auto sales are recovering, which has the railroads recovering. Fannie Mae's first profit since the crash, housing prices appear to be somewhat stabilizing and longer hours in the work week. As things slowly get better, the hiring starts from there because the workers are at full capacity and it's time to expand to keep productivity going.

[ModE98]

Cheers!

[Aman A.K.A. Ahamburger]

Right back at ya ModE.. Sorry for leaving ya hagin', been and INSANE last few days, more on that later... I'm sure you seen it, but for the first time since the Crash, March's revenue were greater than expenses. If that can be attained at this level, full capacity is going to be something else!

[Driftr]

May 14, 2012 1:31:35 GMT -5 Aman A.K.A. Ahamburger said:

I'm sure you seen it, but for the first time since the Crash, March's revenue were greater than expenses. If that can be attained at this level, full capacity is going to be something else!

The additional $110B in debt issued is part of the 'revenue' surplus right?

[Aman A.K.A. Ahamburger]

First, I was wrong, it's April that shows a surplus. As far as I can tell it's greater revenue than expenses. The road to a balanced budget is going to be a bumpy one though.

[Driftr]

May 14, 2012 13:13:19 GMT -5 Aman A.K.A. Ahamburger said:

First, I was wrong, it's April that shows a surplus. As far as I can tell it's greater revenue than expenses. The road to a balanced budget is going to be a bumpy one though.

Yep. If I remember right it was a $58B 'surplus'. I believe that 'surplus' included the $110B of net additional debt issued during April as part of the 'revenue'. Sound right to you?

[Aman A.K.A. Ahamburger]

Good point drift, do you mean it like governments can't function without a bond market? Tax receipts are usually positive in April because it tax month. This isn't unusual, except that it hasn't happen since 2008. With how far there is to go, there is no reason to think that a balanced budget with GDP growth cannot be attained.

[Driftr]

May 14, 2012 16:56:08 GMT -5 Aman A.K.A. Ahamburger said:

Good point drift, do you mean it like governments can't function without a bond market? Tax receipts are usually positive in April because it tax month. This isn't unusual, except that it hasn't happen since 2008. With how far there is to go, there is no reason to think that a balanced budget with GDP growth cannot be attained.

Nope. I meant it like 'we only had a cash surplus in April because we added another $110B in debt and without that $110B in cash advances on our nation's credit card we wouldn't have had a 'surplus' in April'.

[Aman A.K.A. Ahamburger]

That's how the govt operates my friend. That's why way back in 1935 Mr Warburg had a problem with how the politicains wanted to fund future growth.. Which is why it's going to take a while to get to where we need to be. (Balanced budgets and 10% capital are the new gold) The tax recipts are positive because of taxes, it's normal. Later.

[safeharbor37]

The international markets are in turmoil today and there is some speculation that this foretells hard times for the US market, but I've noticed that the US market tends to be resilient even in the face of bad news. I heard "double-dip" today, but don't think there's anything to it ~ more likely we'll just continue to sputter along with what we've become accustomed to as normal volatility.
What's interesting to me is the lack of connection of the market to the politics of the day. It's as if stimulus or no stimulus is of no interest to investors.
I did notice the Euro/Dollar exchange rate. It surely would have come in handy last fall, but a/o today, I'm not sure it is having any effect on anything other than negatively impacting US exports to Europe. I suspect that the concerns of today will succumb to the concerns of tomorrow first thing in the morning.

[ModE98]

The market closed far in the red Friday. My chart leaves me wondering.... are we about to enter a mini-bear period that may last into late October or a more prolonged one depending upon the outcome of the November election? Perhaps a bit choppy for a few weeks before a swoon. For some reason, not feeling comfortable with gemeral market outlook for next couple of months at the least. Oh well, perhaps jittery market nerves.

[kadee79]

Mod, I think you might have good reason to be jittery but I can't give you any reasons....just observations....like midwest corn/soy bean harvest...NOT!
The SE is doing better this year since we have had rain...but they don't produce the corn for ethanol & corn sweeteners that go into nearly every processed food product. Cotton & peanuts should be good, veggies doing well to in this area....not so good in some areas of Fl.

[ModE98]

Yes, kadee, reason to be apprehensive. The nation certainly did not need this heat wave and drought at this point. It could lead to more economic problems and certainly food & fuel inflation at a critical time. When people really begin to realize potential reprocussions that may lie ahead, the markets could pay a price. Hopefully, things will begin to get better soon, or else more woe. Just my cautious feelings, not necessarily a gloom & doom forecast

[ModE98]

wxyz, good thoughts, we have to filter out much of media b/s that can wear one down. Bad news sells and makes the commentators more air time with doom and gloom, we must do this and must do that, or else..... etc.

Still, "be prepared" for the drought to have some affect upon food prices, shortages, and such. Good, solid, conservative investments can see us though "dangerous times"... that is a given.

[jarhead1976]

ModE88 , just turn off everything and it goes away. Like if a tree falls ,well you know.

10 reasons why wall street will crash. When your done reading that bit of miss information I'll send ya some more.

articles.marketwatch.com/2012-03-13/commentary/31153675_1_gambling-addicts-amnesia-wall-street-journal/2

[ModE98]

jarhead .... there are 100 reasons .... we're all headed for Dante's Inferno ... the end is near. Heard it all, and seems there is never an end to bad news. Agree, learn to turn off the bad news, it just repeats and repeats. Duh!

Somewhere there really is a rose garden. Time to smell the roses.

[safeharbor37]

The DOW tops 13,000 while GDP and consumer sentiment falls ~ upon stimulus hopes [according to MSN Money]. This is more dumb stuff. Apparently the market is being sustained on a technical basis, computers doing the thinking [forgetting that SOMEONE programmed them].
Gold and the markets rising simultaneously, the EU doing the same old stuff again with the same results ~ Greece, etc. are still tottering.
There is a global slowdown yet money is being thrown at it with null results. What seems inevitable is that inflation will have to be relied on to pay off the debts being incurred, so being in cash doesn't seem the smart place to be ~ unless one is quick on the trigger and moves before left in the dust.
The election effect seems to keep everyone guessing and trying to play both sides against the middle.
It doesn't appear that difficult to see what's happening, but try to connect the dots and it doesn't make sense. I suspect that the little guy is going to get slapped around again.
[An afterthought: this could be the calm before the storm ~ or not. That would help explain the counterintuitive goings on. In any case, at the moment I don't feel secure enough to go either way. Assume fetal position.]

[BeenThere...DoneThat...]

<<< What seems inevitable is that inflation will have to be relied on to pay off the debts being incurred, >>>


...agreed, but grrr...

[Deleted]

But the upshot of Inflation (when the Fed acknowledges that it is not a Myth, but is actually in play) is that Interest Rates will have to rise, which will be nice as you will be able to make something on Savings.

Which of course has all sorts of positive effects on the economy.

[Deleted]

Which we could see if the FED leaves the rates low or tries to push them lower and the bond market Implodes.

[ModE98]

Things are leveling off in the DOW. Wonder if the latest comments and ease by the Fed is "the last hurrah"? Seems all the cards are on the table and we play with what we have, for better or for worse.
For some reason, feel caution is now the best move. Just seems we are due for some sort of correction. Will it wait until after the election...maybe.
Everyone must make their own call, the market often moves in mysterious ways, confounding even the wisest of investors.

[safeharbor37]

We could use a little inflation right about now. In my mind the danger is still deflationary depression.

If you think we don't have inflation, you aren't looking.



Anyone besides me think that the economy is floating on QEIII and will collapse once the "stimulus" is removed? [Not likely to happen before the election]
Home prices are at least 100% above their real value and the only way to bring them in line is with 100% inflation. The light you see at the end of the tunnel is a freight train coming full speed.
Consider someone who saved a million dollars and retired expecting to live off the interest. Consider that we're all in the same boat. Consider $10,000 annually to counter a 20% inflation rate.
Gentlemen, the piper must be paid.

[ModE98]

Woe is us.

[safeharbor37]

Believe it or not wxyz, but a couple of years is not exactly long term thinking.
Wages don't inflate or deflate, but reflect the value of the service being paid for.
QEIII is, effectively, printing money without anything to back ti up. That is essentially eating away the value of the dollars still out there. Pretty obviously the strength of the stock market reflects simply the lack of alternative investments ~ What does that mean for our portfolio values. One of two things: Stocks will continue to inflate due to the increasing dollars chasing stocks. ~or~ Stocks will collapse when it becomes apparent that the value of the companies in dollars is reduced by the decreased value of the dollars.
The current fiscal policy is a band-aid to prevent implosion which merely prevents the adjustments necessary to really address our problems.
I suspect that the government will use inflation to pay for the credit they are now using to support the economy. Which is fine over the long term [10+ years] because the damage to those whose wealth is in savings will largely be in the past and us old folks will probably be dead. But the problem will not be solved, just put off to recur sometime in the future to those whose memories don't extend back to this time ~ or the countless times bubbles have burst before.
We'll all [most of us] survive as we always do to make the same mistakes over and over again.

[ModE98]

That's what governments have sometimes successfully done in the past, inflate away their deficits. But, it does not always work (i.e. Germany, circa mid-1920s.), and am sure there are other examples of collapse too.