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Sedans Luxury Lounge
21402 messages, Last post on Nov 27, 2009 at 7:29 AM
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Replying to: tagman (Mar 25, 2009 11:16 am) I will stick with my convictions of a week or two ago. We have seen THE low in the stock market, we will not have hyper inflation (some inflation of course), the dollar is not going to the crapper, and gold is not going to $3,000. Even if eventually (years down the road) we go to a world-wide currency, that does not mean it's the end of the world for the U.S. There would simply be a conversion from the $ to the new currency. You can call my outlook Nirvana  but this is the way I strongly feel. I think that even Dewey will start to get a more optimistic in the near future  .
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Replying to: tagman (Mar 25, 2009 11:16 am) I see prices falling right back to the low 40's. Oil glut, loads of spare production capacity and low demand. Hardly a recipe for rising oil prices unless you plan on storing it for a long time to come. While RBOB is up from 80 cents to $1.49, here in NJ I'm still paying $1.99-2.07 for 93 octane, just 20 cents above the low points, so the stations are unable to pass on the RBOB price increases and that is probably why refinery utilization is down so much. Traders are looking at refinery utilization without looking at what's really happening at the pump. I travel through some of the most heavily congested roads in the NY/NJ area and I haven't hit a tie-up in months and my buddy at the station a mile from me recently told me his pump sales are now lower than ever. I'm thinking those RBOB prices are being manipulated unless NY/NJ is in a void that the rest of the US isn't. Charlie, agree. I'm looking for a 1,000+ number on the S&P and 10,000+ on the Dow by year end and I think the 666 and 6,500 were once in a life-time buy-ins. I think we'll trade range from there though because I think the consumer is still in save mode thru next year,
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Replying to: ljflx (Mar 25, 2009 5:59 pm) Charlie, agree, I'm lookinh for a 1,000+ on the S&P and 10,000+ on the Dow by year end and I think the 666 and 6,500 were once in a life-time buy-ins. I think we'll trade range from there though because I think the consumer is still in save mode thru next year, Len, NJ is not alone in this scenario, but here in IA the price differential between the lows and now is more like 40-45 cents. I agree with you that the stock market is not going straight up by any means. 1,000 on the S & P and 10,000 on the Dow definitely seem like good resistance levels for this year. |
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Replying to: jlbl (Mar 25, 2009 1:58 pm) Spain shares something with the USA and to a lesser degree Canada and that is a relatively high percentage of home ownership versus renting: A decade ago Andrew Oswald of the University of Warwick in Britain argued that excessive home-ownership kills jobs. He observed that, in Europe, nations with high rates of home-ownership, such as Spain, had much higher unemployment rates than those where more people rented, such as Switzerland. He found this effect was stronger than tax rates or employment law. If there are few homes to rent, he argued, jobless youngsters living with their parents find it harder to move out and get work. Immobile workers become stuck in jobs for which they are ill-suited, which is inefficient: it raises prices, reduces incomes and makes some jobs uneconomic. Areas with high home-ownership often have a strong “not-in-my-backyard” ethos, with residents objecting to new development. Homeowners commute farther than renters, which causes congestion and makes getting to work more time-consuming and costly for everyone. Mr Oswald urged governments to stop subsidising home-ownership. Few listened. Some cannot sell their homes at all. Others could, but don’t want to take a big loss on an investment they thought was safe as houses. Either way, they are stuck. If a good job comes up in another town, they cannot take it. THE ECONOMIST
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Replying to: cyclone4 (Mar 25, 2009 4:01 pm) you maybe right. Maybe it is possible to borrow yourself out of a debt crisis with substantially more debt. If that is the case then yes you are 100 percent correct. But here's the problem: Once lenders(China, Sovereign funds, pension funds) know that trillions of new Government debts and possibly even a few more trillions beyond that will be issued then they will begin to lose interest real fast especially when they know that these new debts may cause far more unpredictable instability. Both the US Treasury and the UK are now faced with this problem. News from today March 25, 2009 US government bonds retreated after a record $34bn auction of five-year Treasuries attracted only tepid demand and highlighted concerns about a flood of forthcoming supply. The market’s concerns were exacerbated by a failed auction of 40-year bonds in the UK. FINANCIAL TIMES |
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Replying to: ljflx (Mar 25, 2009 5:59 pm) I'm still bottom fishing, but I don't see the Dow above an 8500-9500 range this year. There are still stocks that should roll doubles, though. My business is way up in the last 45 days... doubled!!... except for my clients related to the auto industry... that sector continues to be sluggish... no surprise really. TM |
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Replying to: tagman (Mar 25, 2009 8:22 pm) The Delphi Oracle at the Temple of Apollo predicts that the Dow will be at 5023.69 by the end of 2009. I dont know the unknowable unknowns out there in this very crazy and unpredictable world we live in so I will accept the Oracle's prediction and in addition I will accept all three of your predictions. (Rumsfeld-speak for "who knows") |
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Replying to: dewey (Mar 25, 2009 8:24 pm) Here's my problem with all the low valuations out there and I've even seen one at 3250 for the dow and 325 for the S&P. Plus I love seeing the prediction extremes, reminds me of the hopeless predictions of $400 oil last year at this time. They always happen at the end of a cycle. The lows are all based on a stalled or failed banking system caused by a sustained writedowns of bank assets in a circular mark to market condition.These same predictions need to find an outlet for $4 trillion of sidelined money (right now) plus all the money that comes out of the market to go down to the low levels they forecast. So most of them also push gold to unheard of levels (many are at 2500, some are at 3500) with no fundamental support at all. Last year at this time there was a total disconnect of fundamentals and oil prices. We actually had rising inventories and rapidly decreasing demand while sick speculation took oil to $147 (with predictions of demand outstripping supply, while a glut was forming in the real world) in the biggest momentum trading since Nasdaq 5,000. Now you have these low Dow/S&P predictions which are predicated on phenomenal bank writedowns freezing up the system. One analysis I read that supported another Dow prediction under 4000 was predicated on having bank loan assets written down to levels that were represntative of 40% of book. That is crazy as performing loans are nearly at 80%. So we again have a prediction (just like oil at $400, and the Nasdaq 10,000 forecasts back in 2000) that is in total disconnect with reality and if accounting rules require asset writedowns to 40% when the are performing at 80% then someone should get rid of FASB in a hurry.. I'm always a fundamentals and cash flow guy and ultimately fundamentals always win. That's why I'm so against writing down asset values on performing loans. It makes no sense. I'm all for mark to market but it has to be based in realism, not based on an illiquid market which the rule itself propogates, or in the other extreme allows unlimited borrowing. The rule taken literally, takes the position that everyone will be selling their homes/assets at the same time because it values everything on the latest sale. Reality and the rule are at a disconnect. It's a good rule for individual companies that try to cheat the system (Enron, Worldcom etc) with over-valued assets inflating P&L's but it doesn't work on whole markets where a high majority of the assets are performing well, Right now we have the opposite of Enron. Enron had great profits and no cash flow. Banks have great cash flow and no profits. I have seen a lot of momentum trading in my life and the longer it goes on the more it tricks people. So I can't entirely rule out the low market predictions. but IMO if they happen then you'll see a market move back up at 2X or 3X of the low in no time just like oil dropped to 1/3rd of it's value in no time.
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Replying to: dewey (Mar 25, 2009 8:24 pm) Tornados also happen and are not very predictable, except to see a possibility. But even so, the norm is a tendency towards stability. In spite of the market's extremes, it ultimately finds stability more often. TM
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Replying to: dewey (Mar 25, 2009 7:39 pm) The remaining 10% on which I don't exactly disagree but just feel uncomfortable, is said in this quote of a commentary to The Economist article to which you referred in your post: "From London to Los Angeles, there are no affordable rentals. In many cases it was cheaper to Buy than to Rent, especially when the Tax benefits are taken into account. Even as housing prices are falling in California, Rents are still going up. More than ever before, we need Rent Control." People started to buy their own houses in Spain when rentals got free. I know there is no fair middle point in this. It is one of the many things just going from one end to the other in an endless cycle. Meanwhile, my parent's old house still waits for a buyer; I've got tired of a late row of problematic tenants.  Regards, Jose
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